VIZ BRANZ LIMITED. (Incorporated in the Republic of Singapore) (Company Registration No K) CIRCULAR TO SHAREHOLDERS. in relation to the

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1 CIRCULAR DATED 2 AUGUST 2013 THIS CIRCULAR IS ISSUED BY VIZ BRANZ LIMITED. THIS CIRCULAR IS IMPORTANT AS IT CONTAINS THE RECOMMENDATION OF THE INDEPENDENT DIRECTORS (AS DEFINED HEREIN) OF VIZ BRANZ LIMITED AND THE ADVICE OF SAC CAPITAL PRIVATE LIMITED TO THE INDEPENDENT DIRECTORS OF VIZ BRANZ LIMITED. THIS CIRCULAR REQUIRES YOUR IMMEDIATE ATTENTION AND YOU SHOULD READ IT CAREFULLY. If you are in any doubt in relation to this Circular or as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. If you have sold or transferred all your ordinary shares in the capital of the Company ( Shares ) held through The Central Depositary (Pte) Limited ( CDP ), you need not forward this Circular to the purchaser or transferee, as arrangements will be made by CDP for a separate Circular to be sent to the purchaser or transferee. If you have sold or transferred all your Shares which are not deposited with the CDP, you should immediately forward this Circular to the purchaser, the transferee or the bank, stockbroker or agent through whom you effected the sale or transfer for onward transmission to the purchaser or the transferee. The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular. VIZ BRANZ LIMITED (Incorporated in the Republic of Singapore) (Company Registration No K) CIRCULAR TO SHAREHOLDERS in relation to the MANDATORY UNCONDITIONAL CASH OFFER by CREDIT SUISSE (SINGAPORE) LIMITED (Incorporated in the Republic of Singapore) (Company Registration No D) for and on behalf of PLUTO RISING PTE. LTD. (Incorporated in the British Virgin Islands) (Company Registration No ) to acquire all the issued and paid-up ordinary shares in the capital of Viz Branz Limited other than those already owned, controlled or agreed to be acquired by Pluto Rising Pte. Ltd. and parties acting in concert with it and treasury shares held by Viz Branz Limited Independent Financial Adviser to the Independent Directors of Viz Branz Limited SAC CAPITAL PRIVATE LIMITED (Company Registration Number: N) (Incorporated in the Republic of Singapore) SHAREHOLDERS SHOULD NOTE THAT THE OFFER DOCUMENT STATES THAT ACCEPTANCES MUST BE RECEIVED BY THE CLOSE OF THE OFFER AT 5.30 P.M. (SINGAPORE TIME) ON 16 AUGUST 2013 UNLESS IT IS OTHERWISE EXTENDED BY THE OFFEROR (AS DEFINED HEREIN). ACCORDINGLY, SHAREHOLDERS WHO WISH TO ACCEPT THE OFFER MUST DO SO BY SUCH TIME AND DATE.

2 CONTENTS DEFINITIONS... 3 LETTER TO SHAREHOLDERS INTRODUCTION THE OFFER INFORMATION ON THE OFFEROR AND MERCURY RISING RATIONALE FOR THE OFFER AND THE OFFEROR S INTENTIONS FOR THE COMPANY COMPULSORY ACQUISITION AND LISTING STATUS ADVICE AND RECOMMENDATIONS OVERSEAS SHAREHOLDERS INFORMATION PERTAINING TO CPFIS INVESTORS ACTION TO BE TAKEN BY SHAREHOLDERS RESPONSIBILITY STATEMENT APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY APPENDIX 3 - INFORMATION ON THE OFFEROR APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION APPENDIX 7 SUBJECT PROPERTIES APPENDIX 8 VALUATION REPORTS

3 DEFINITIONS Except where the context otherwise requires, the following defi nitions shall apply throughout this Circular: Articles : The articles of association of the Company Books Closure Date : Books closure date for determination of entitlements to any Distribution CDP : The Central Depository (Pte) Limited CEO : Chief Executive Officer Circular : This circular to Shareholders dated 2 August 2013 in relation to the Offer Closing Date : 5.30 p.m. (Singapore time) on 16 August 2013 or such later date(s) as may be announced from time to time by or on behalf of the Offeror, being the closing time and date for the lodgement of acceptances of the Offer Code : The Singapore Code on Take-overs and Mergers Companies Act : Companies Act, Chapter 50 of Singapore Company : Viz Branz Limited Company Convertible : Convertible securities, warrants, options and derivatives Securities in respect of the Shares or securities which carry voting rights in the Company CPF : Central Provident Fund CPF Agent Banks : Agent banks included under the CPFIS CPFIS : Central Provident Fund Investment Scheme CPFIS Investors : Investors who have purchased Shares using their CPF contributions pursuant to the CPFIS Directors : The directors of the Company (including the Independent Directors) as at the Latest Practicable Date, and Director means any one of them Distribution : Any dividend, right and/or distribution Encumbrance : Any mortgage, debenture, lien, charge, pledge, title retention, right to acquire, security interest, option, pre-emptive or similar right, right of first refusal and any other encumbrance or condition whatsoever FAA : Form of Acceptance and Authorisation for Offer Shares which forms part of the Offer Document and which is issued to Shareholders whose Shares are deposited with CDP FAT : Form of Acceptance and Transfer for Offer Shares which forms part of the Offer Document which is issued to Shareholders whose Shares are not deposited with CDP 3

4 DEFINITIONS Financial Adviser or : Credit Suisse (Singapore) Limited, being the financial Credit Suisse adviser to the Offeror FY : Financial year ended or ending 30 June Group : The Company and its subsidiaries, and Group Company means any one of them IFA or SAC Capital : SAC Capital Private Limited, the independent financial adviser to the Independent Directors in connection with the Offer IFA Letter : Has the meaning ascribed to it in Paragraph 6.1 of the Letter to Shareholders Independent Directors : The Directors who are considered independent for the purpose of making recommendations to the Shareholders in respect of the Offer, being Messrs Yuen San Seng, Chng Khoon Peng, Tan Kok Hiang and Tan Hwee Yong Interested Director or CBB : The Directors who faces an irreconcilable conflict of interests as a party acting in concert with the Offeror, being Mr Ben Chng Beng Beng Latest Practicable Date : 23 July 2013, being the latest practicable date prior to the printing of this Circular Letter to Shareholders : The letter from the Directors to the Shareholders as set out from page 7 to page 14 of this Circular Listing Manual : The listing manual of the SGX-ST, as amended up to the Latest Practicable Date Market Day : A day on which the SGX-ST is open for trading of securities Mercury Rising : Mercury Rising Pte. Ltd. Offer : The mandatory unconditional cash offer to acquire the Offer Shares on the terms and conditions set out in the Offer Document, the FAA and/or the FAT Offer Announcement : The announcement relating to the Offer made on the Offer Announcement Date Offer Announcement Date : 5 July 2013, being the date of the Offer Announcement Offer Document : The document (including the FAA and the FAT) dated 19 July 2013 issued by the Financial Adviser for and on behalf of the Offeror in respect of the Offer, and any other document(s) which may be issued for and on behalf of the Offeror to amend, revise, supplement and/or update the document(s) from time to time Offer Price : S$0.78 in cash for each Offer Share Offer Shares : All the Shares in issue not already owned, controlled or agreed to be acquired by the Offeror Concert Group and treasury Shares held by the Company 4

5 DEFINITIONS Offeror : Pluto Rising Pte. Ltd. Offeror Concert Group : The Offeror and persons acting or presumed to be acting in concert with the Offeror Offeror Convertible Securities : Convertible securities, warrants, options and derivatives in respect of Offeror Shares or securities which carry voting rights in the Offeror Offeror Shares : Issued and paid-up ordinary shares in the capital of the Offeror Overseas Shareholders : Shareholders whose addresses are outside Singapore as shown in the Register or the Depository Register (as the case may be) PRC : The People s Republic of China Register : The register of holders of Shares as maintained by the Registrar Registrar or M & C : M & C Services Pte Ltd SGX-ST : Singapore Exchange Securities Trading Limited SGXNET : Singapore Exchange Network, the corporate announcement system maintained by the SGX-ST for the submission of announcements by listed companies Shares : Issued and paid-up ordinary shares in the capital of the Company Shareholders : The holders of Shares, including persons whose Shares are deposited with CDP or who have purchased Shares on the SGX-ST Share Acquisition : Has the meaning ascribed to it in Paragraph 1.1(a) of the Letter to Shareholders Subject Properties : The properties as set out in the third column of Appendix 7 to this Circular SIC : The Securities Industry Council of Singapore Valuation Reports : Has the meaning ascribed to it in Paragraph 13 of Appendix 2 to this Circular Valuers : Collectively, Colliers International Consultancy & Valuation (S) Pte Ltd, Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd and Henan Xin Surplus Asset s Appraisal Firm S$ and cents : Singapore dollars and cents, respectively, being the lawful currency of Singapore % or per cent. : Per centum or percentage 5

6 DEFINITIONS Acting in Concert and Associated Company. Unless otherwise defi ned, the expressions acting in concert and associated company shall have the same meanings as ascribed to them respectively in the Code. Depositor and Depository Register. The expressions Depositor and Depository Register shall have the same meanings as ascribed to them respectively in Section 130A of the Companies Act. Expressions. Words importing the singular shall, where applicable, include the plural and vice versa. Words importing the masculine gender shall, where applicable, include the feminine and neuter genders. References to persons shall, where applicable, include corporations. Headings. The headings in this Circular are inserted for convenience only and shall be ignored in construing this Circular. Rounding. Any discrepancies in the fi gures in this Circular between the listed amounts and the totals thereof are due to rounding. Accordingly, the fi gures shown as totals in this Circular may not be an arithmetic aggregation of the fi gures that precede them. Shareholders. References to you, your and yours in this Circular are, as the context so determines, to Shareholders. Statutes. Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defi ned under the Companies Act, the Code, the Listing Manual or any statutory modifi cation thereof and not otherwise defi ned in this Circular shall, where applicable, have the same meaning as ascribed to it under the Companies Act, the Code, the Listing Manual or any statutory modifi cation thereof, as the case may be, unless the context otherwise requires. Subsidiary. The expression subsidiary shall have the same meaning as ascribed to it in the Companies Act. Time and Date. Any reference to a time of day and date in this Circular is made by reference to Singapore time and date respectively unless otherwise stated. Total number of Shares as at the Latest Practicable Date. In this Circular, the Company has 354,996,976 Shares (excluding treasury Shares) and 6,120,000 treasury Shares. Cautionary Note on Forward-Looking Statements All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as expect, anticipate, believe, estimate, intend, project, plan, strategy, forecast and similar expressions or future or conditional verbs such as if, will, would, should, could, may and might. These statements reflect the Company s current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders should not place undue reliance on such forward-looking statements, and neither the Company nor the IFA undertakes any obligation to update publicly or revise any forwardlooking statements, subject to compliance with all applicable laws and regulations and/or the rules of the SGX-ST and/or any other regulatory or supervisory body or agency. 6

7 LETTER TO SHAREHOLDERS VIZ BRANZ LIMITED (Incorporated in the Republic of Singapore) (Company Registration No K) Directors: Registered Office: Mr Yuen San Seng (Non-Executive Chairman and Independent Director) 50 Raffles Place, #32-01 Mr Ben Chng Beng Beng (Group Managing Director and Deputy Chairman) Singapore Land Tower Mr Chng Khoon Peng (Executive Director) Singapore Mr Tan Kok Hiang (Non-Independent, Non-Executive Director) Mr Tan Hwee Yong (Independent Director) 2 August 2013 To: The Shareholders of Viz Branz Limited Dear Sir / Madam MANDATORY UNCONDITIONAL CASH OFFER BY THE OFFEROR FOR THE OFFER SHARES 1. INTRODUCTION 1.1 Offer Announcement. As set out in the Offer Announcement: (a) the Offeror had acquired from Mr Chng Khoon Peng an aggregate of 135,800,219 Shares, amounting to approximately 38.25% of the issued and paid up Shares (excluding treasury Shares) ( Share Acquisition ); and (b) following the completion of the Share Acquisition, the Offeror Concert Group owns 206,210,002 Shares, comprising approximately 58.09% of the total number of issued and paidup Shares (excluding treasury Shares) and the Financial Adviser announced on 5 July 2013, for and on behalf of the Offeror, inter alia, the firm intention on the part of the Offeror to make the Offer in accordance with Rule 14 of the Code. 1.2 Offer Document. Shareholders should by now have received a copy of the Offer Document issued by the Financial Adviser, for and on behalf of the Offeror, setting out, inter alia, the terms and conditions of the Offer. The principal terms and conditions of the Offer are set out on pages 7 and 8 of the Offer Document. Shareholders are advised to read the terms and conditions contained therein carefully. 1.3 Circular. The purpose of this Circular is to provide Shareholders with relevant information pertaining to the Company and to set out the recommendation of the Independent Directors and the advice of the IFA to the Independent Directors with regard to the Offer. 2. THE OFFER 2.1 Offer Price. As set out in the Offer Document, the offer price for each Offer Share will be as follows: For each Offer Share: S$0.78, payable in cash The Offer Shares will be acquired: (a) (b) fully paid; free from any Encumbrance whatsoever; and 7

8 LETTER TO SHAREHOLDERS (c) together with all rights, benefi ts and entitlements attached as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all Distributions declared, paid or made by the Company on or after the Offer Announcement Date. Accordingly, if any Distribution is declared, paid or made by the Company on or after the Offer Announcement Date, and: (i) (ii) if the settlement date in respect of the Offer Shares accepted pursuant to the Offer falls on or before the Books Closure Date, the Offeror will pay the relevant accepting Shareholders the Offer Price for each Offer Share, as the Offeror will receive the Distribution in respect of those Offer Shares from the Company; and if the settlement date in respect of the Offer Shares accepted pursuant to the Offer falls after the Books Closure Date, the amount of the Distribution in respect of such Offer Shares will be deducted from the Offer Price payable for such Offer Shares, as the Offeror will not receive the Distribution in respect of those Offer Shares from the Company. 2.2 Unconditional Offer. The Offer is not subject to any conditions and is unconditional in all respects. 2.3 Warranty. As set out in Paragraph 4 of the Offer Document, a Shareholder who tenders his Offer Shares in acceptance of the Offer will be deemed to have unconditionally and irrevocably warranted that he sells such Offer Shares, as or on behalf of the benefi cial owner(s) thereof, (a) fully paid, (b) free from all Encumbrances whatsoever, and (c) transferred together with all rights, benefi ts and entitlements attached to them as at the Offer Announcement Date and thereafter attaching thereto, including but not limited to the right to receive and retain all Distributions declared, paid or made by the Company on or after the Offer Announcement Date. 2.4 Details of the Offer. Further details of the Offer are set out on pages 7 and 8 and Appendix 1 to the Offer Document in relation to (a) the duration of the Offer, (b) the settlement of the consideration for the Offer, (c) the requirements relating to the announcement of level of acceptances of the Offer, and (d) the right of withdrawal of acceptances of the Offer. A copy of each of the Offer Announcement and the Offer Document is available on the website of the SGX-ST at Closing Date. Shareholders should note that the Offer will close at 5.30 p.m. (Singapore time) on 16 August 2013, being the Closing Date, unless it is otherwise extended by the Offeror. 3. INFORMATION ON THE OFFEROR AND MERCURY RISING Paragraph 8 of the Offer Document sets out information on the Offeror and Mercury Rising, an extract of which is set out in italics below. Unless otherwise defi ned, all terms and expressions used in the extract below and in the extracts in Paragraphs 4, 5, 7.1, 8 and Appendix 3 below shall have the same meanings as those defi ned in the Offer Document. 8. INFORMATION ON THE OFFEROR The Offeror is a special purpose vehicle incorporated on 14 June 2013 for the purpose of the Offer under the laws of the British Virgin Islands. The Offeror has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. The Offeror is wholly owned by Mercury Rising and its sole director is CBB. Mercury Rising is also a special purpose vehicle incorporated on 14 June 2013 for the purpose of the Offer under the laws of the British Virgin Islands. Mercury Rising has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. Mercury Rising is wholly owned by CBB, who is also its sole director. 8

9 LETTER TO SHAREHOLDERS CBB is currently the Managing Director and Deputy Chairman of the Group. As at the Latest Practicable Date, CBB does not hold any Shares in the Company directly, and is deemed to have an interest in all the Shares held by the Offeror. Further information on the Offeror is set out in Appendix 3 to this Circular. 4. RATIONALE FOR THE OFFER AND THE OFFEROR S INTENTIONS FOR THE COMPANY The full text of the rationale for the Offer and the Offeror s intentions for the Company has been extracted from Paragraphs 10 and 11 of the Offer Document and is set out in italics below. Shareholders are advised to read the extract below carefully. 10. RATIONALE FOR THE OFFER The Offer is made by the Offeror in compliance with Rule 14.1 of the Code, arising from the Share Acquisition. 11. OFFEROR S INTENTIONS FOR THE COMPANY It is the current intention of the Offeror that the Group continues with its existing activities and there are presently no plans to (a) introduce any major changes to the business or operations of the Group, (b) re-deploy any of the fi xed assets of the Group or (c) discontinue the employment of any of the existing employees of the Group, other than in the ordinary course of business. The Offeror however reserves the right and discretion, subsequent to the Offer, to conduct a review of the Group s management and operations, restructure its shareholdings or shareholdings of the Company and evaluate strategic options and possibilities with a view to optimising and/or unlocking value in the Offeror and/or the Group at an opportune time. 5. COMPULSORY ACQUISITION AND LISTING STATUS Paragraph 13 of the Offer Document sets out the intentions of the Offeror relating to its right of compulsory acquisition and the listing status of the Company, an extract of which is set out in italics below. 13. COMPULSORY ACQUISITION AND LISTING STATUS 13.1 Compulsory Acquisition Pursuant to Section 215(1) of the Companies Act, in the event that the Offeror receives valid acceptances pursuant to the Offer in respect of not less than 90% of the total number of issued Shares (other than those Shares already held by the Offeror, its related corporations or their respective nominees as at the date of the Offer and excluding treasury Shares), the Offeror will be entitled to compulsorily acquire all the Offer Shares held by Dissenting Shareholders on the same terms as those offered under the Offer. In such an event, the Offeror intends to exercise its rights of compulsory acquisition and the Company will become a wholly-owned subsidiary of the Offeror upon the completion of such compulsory acquisition. In addition, the Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares at the Offer Price in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90% or more of the total number of issued Shares (excluding treasury Shares). Shareholders who wish to exercise such right are advised to seek their own independent legal advice. 9

10 LETTER TO SHAREHOLDERS 13.2 Listing Status Under Rule 1105 of the Listing Manual, in the event that the Offeror Concert Group, as a result of the Offer or otherwise, own or control more than 90% of the total number of issued Shares (excluding any treasury Shares), the SGX-ST may suspend the trading of the Shares on the SGX-ST until it is satisfi ed that at least 10% of the total number of issued Shares (excluding treasury Shares) are held by at least 500 Shareholders who are members of the public. Under Rule 1303(1) of the Listing Manual, where the Offeror succeeds in garnering acceptances exceeding 90% of the total number of issued Shares (excluding treasury Shares), thus causing the percentage of the total number of issued Shares (excluding treasury Shares) held in public hands to fall below 10%, the SGX-ST will suspend trading of the Shares only at the close of the Offer. In addition, under Rule 724 of the Listing Manual, if the percentage of the total number of issued Shares (excluding treasury Shares) held in public hands falls below 10%, the Company must, as soon as practicable, announce that fact and the SGX-ST may suspend the trading of all the Shares. Rule 724 of the Listing Manual further provides that the SGX-ST may allow the Company a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of Shares in public hands to at least 10%, failing which the Company may be delisted. It is the intention of the Offeror to make the Company its wholly-owned subsidiary and to delist the Company from the SGX-ST. It is therefore not the intention of the Offeror to preserve the listing status of the Company and in the event that the trading of Shares on the SGX-ST is suspended pursuant to Rule 724, Rule 1105 or Rule 1303(1) of the Listing Manual, the Offeror does not intend to undertake or support any action for any such trading suspension to be lifted by the SGX-ST. 6. ADVICE AND RECOMMENDATIONS 6.1 General. Shareholders should read and carefully consider the recommendations of the Independent Directors and the advice of the IFA to the Independent Directors dated 2 August 2013, which is set out in Appendix 1 to this Circular ( IFA Letter ), before deciding whether to accept or reject the Offer. 6.2 Independence of Directors. The SIC has ruled that Mr Ben Chng Beng Beng is exempted from assuming responsibility for any recommendations on the Offer that the Directors may make to Shareholders on the basis that he faces an irreconcilable confl ict of interest as a party acting in concert with the Offeror as he is the sole director of the Offeror and the sole shareholder and director of Mercury Rising which is the sole shareholder of the Offeror. Notwithstanding the exemption sought for Mr Ben Chng Beng Beng, he will assume responsibility for the accuracy of facts stated and opinions expressed in documents and advertisements issued by, or on behalf of, the Company to Shareholders in connection with the Offer Save for Mr Ben Chng Beng Beng, all of the Directors consider themselves independent for the purposes of making a recommendation on the Offer. 6.3 Advice of the IFA to the Independent Directors. (a) IFA. SAC Capital has been appointed as the independent fi nancial adviser to advise the Independent Directors in respect of the Offer. (b) Factors Taken into Consideration by the IFA. In arriving at its recommendation, the IFA has taken into account several key considerations, set forth in Paragraph 7 of the IFA Letter. Shareholders should read Paragraph 7 of the IFA Letter in conjunction with, and in the context of, the full text of the IFA Letter. 10

11 LETTER TO SHAREHOLDERS (c) Advice of the IFA. After having regard to the considerations set out in the IFA Letter, and based on the circumstances of the Company and the information as at the Latest Practicable Date, the IFA has made certain recommendations to the Independent Directors, an extract of which is set out in italics below. Shareholders should read the extract in conjunction with, and in the context of, the full text of the IFA Letter. Unless otherwise defi ned or the context otherwise requires, all terms and expressions used in the extract below shall have the same meanings as those defi ned in the IFA Letter. Based on our analysis set out above and after considering all relevant information available to us as at the Latest Practicable Date, from a fi nancial point of view, we are of the opinion that the Offer Price is, on balance, fair and reasonable. The Independent Directors may wish to consider advising Shareholders who: (a) (b) wish to reali se all or part of their investments in the Shares; and/or are uncertain of the longer term performance and prospects of the Group, to (i) accept the Offer; or (ii) sell the Shares in the open market if they can obtain a price higher than the Offer Price (after deducting related expenses). In this regard, we note that the Shares had traded above the Offer Price for the period after the Offer Announcement Date and up to the Latest Practicable Date. The Independent Directors may also wish to consider advising Shareholders who: (a) (b) are prepared to take a longer term view of their investment in the Shares; and/or are positive about the prospects of the Group, to retain all or part of their shareholdings in the Company. 6.4 Recommendations of the Independent Directors. The Independent Directors, having considered carefully the terms of the Offer and the advice given by the IFA in the IFA Letter, CONCUR with the advice given by the IFA in respect of the Offer. Accordingly, the Independent Directors recommend the Shareholders who: (a) wish to realize all or part of their investments in the Shares; and/or ( b) are uncertain of the longer term performance and prospects of the Group, to (i) accept the Offer; or (ii) sell the Shares in the open market if they can obtain a price higher than the Offer Price (after deducting related expenses). The Independent Directors also recommend the Shareholders who: (a) (b) are prepared to take a longer term view of their investment in the Shares; and/or are positive about the prospects of the Group, to retain all or part of their shareholdings in the Company. 6.5 No Regard to Specific Objectives. In rendering the advice and the recommendations above, both the IFA and the Independent Directors have not had regard to the specifi c investment objectives, fi nancial situation, tax status, risk profi les or unique needs and constraints of any individual Shareholder. As different Shareholders would have different investment objectives and profi les, the Independent Directors recommend that any individual Shareholder who may require advice in the context of his specifi c investment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professional adviser immediately. 11

12 LETTER TO SHAREHOLDERS SHAREHOLDERS ARE ADVISED TO READ THE FULL TEXT OF THE IFA LETTER WHICH IS SET OUT IN APPENDIX 1 TO THIS CIRCULAR CAREFULLY. SHAREHOLDERS SHOULD NOTE THAT THE IFA S OPINION SHOULD NOT BE RELIED UPON BY ANY SHAREHOLDER AS THE SOLE BASIS FOR DECIDING WHETHER OR NOT TO ACCEPT THE OFFER. 7. OVERSEAS SHAREHOLDERS 7.1 Availability of Offer. The availability of the Offer to Shareholders whose addresses are outside Singapore, as shown on the Register or in the Depository Register (as the case may be), being the Overseas Shareholders, may be affected by the laws of the relevant overseas jurisdiction. Overseas Shareholders should refer to Paragraphs 16.1 to 16.4 of the Offer Document, an extract of which is set out in italics below Overseas Shareholders The availability of the Offer to Overseas Shareholders may be affected by laws and regulations of the relevant overseas jurisdictions. Accordingly, all Overseas Shareholders should inform themselves about and observe any applicable legal requirements. Where there are potential restrictions on sending this Offer Document, the FAA and/or the FAT to any overseas jurisdiction, each of the Offeror and Credit Suisse reserves the right not to send these documents to any overseas jurisdiction. For the avoidance of doubt, the Offer is made to all Shareholders holding Offer Shares, including to those to whom this Offer Document, the FAA and/or the FAT have not been or will not be sent. Copies of this Offer Document and any other formal documentation relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and will not be capable of acceptance by any such use, instrumentality or facility within any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction. The Offer (unless otherwise determined by the Offeror and permitted by applicable law and regulation) will not be made, directly or indirectly, in or into, or by the use of mails of, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce of, or any facility of a national, state or other securities exchange of, any Restricted Jurisdiction, and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities Overseas Jurisdiction It is the responsibility of any Overseas Shareholder who wishes to accept the Offer, to satisfy himself as to the full observance of the laws of the relevant jurisdiction, including the obtaining of any governmental or other consent which may be required, or compliance with other necessary formalities and legal requirements and the payment of any taxes, imposts, duties or other requisite payments due in such jurisdiction. Such Overseas Shareholders shall be liable for any such taxes, imposts, duties or other requisite payments payable, and the Offeror and any person acting on its behalf (including Credit Suisse, CDP and the Registrar) shall be fully indemnifi ed and held harmless by such Overseas Shareholders for any such taxes, imposts, duties or other requisite payments that may be required to be paid. In accepting the Offer, the Overseas Shareholder represents and warrants to the Offeror and Credit Suisse that he is in full observance of the laws of the relevant jurisdiction in that connection, and that he is in full compliance with all necessary formalities and legal requirements. Each of the Offeror and Credit Suisse reserves the right not to treat any acceptance of the Offer in or from any overseas jurisdiction and/or in respect of an Overseas Shareholder as valid. Overseas Shareholders accepting the Offer should note that if they have, in the FAT, provided addresses in overseas jurisdictions for the receipt of remittances of payment by the Offeror, such acceptance may be rejected. 12

13 LETTER TO SHAREHOLDERS Any Overseas Shareholder who is in doubt about his position should consult his professional advisers in the relevant jurisdictions Copies of the Offer Document Overseas Shareholders may obtain copies of the Offer Document, the FAA and/or the FAT and any related documents, during normal business hours and up to 5:30 p.m. (Singapore time) on the Closing Date from, as the case may be, (a) the Registrar, M&C Services Pte Ltd at 112 Robinson Road, #05-01, Singapore or (b) CDP at 4 Shenton Way, #02-01, SGX Centre 2, Singapore Electronic copies of the Offer Document, the FAA and/or the FAT may also be obtained from the website of the SGX-ST at Alternatively, an Overseas Shareholder may, subject to compliance with applicable laws, write in to the Registrar at the aforementioned address to request for the Offer Document, the FAA and/or the FAT and any related documents to be sent to an address in Singapore by ordinary post at his own risk, provided always that the last date for despatch in respect of such request shall be a date falling three (3) Market Days prior to the Closing Date. It is the responsibility of the Overseas Shareholder who wishes to request for the Offer Document, the FAA and/or the FAT and any related documents to satisfy himself as to the full observance of the laws of the relevant jurisdiction in that connection, including the obtaining of any governmental or other consent which may be required, and compliance with all necessary formalities and legal requirements. In requesting for this Offer Document, the FAA and/or the FAT and any related documents, the Overseas Shareholder represents and warrants to the Offeror and Credit Suisse that he is in full observance of the laws of the relevant jurisdiction in that connection, and that he is in full compliance with all necessary formalities and legal requirements Notice Each of the Offeror and Credit Suisse reserves the right to notify any matter, including the fact that the Offer has been made, to any or all Shareholders (including Overseas Shareholders) by announcement to the SGX-ST or paid advertisement in a daily newspaper published or circulated in Singapore, in which case, such notice shall be deemed to have been suffi ciently given notwithstanding any failure by any Shareholder to receive or see such announcement or advertisement. 7.2 Copies of Circular. This Circular may not be sent to Overseas Shareholders due to potential restrictions on sending such documents to the relevant overseas jurisdictions. Any affected Overseas Shareholder may, nevertheless, obtain copies of this Circular during normal business hours up to the Closing Date, from the offi ces of the Registrar at 112 Robinson Road, #05-01, Singapore , download a copy of the this Circular from the website of the SGX-ST at www. sgx.com, or make a request to the Registrar for this Circular to be sent to an address in Singapore by ordinary post at his own risk, up to fi ve (5) Market Days prior to the Closing Date. 8. INFORMATION PERTAINING TO CPFIS INVESTORS The Offer Document sets out information pertaining to CPFIS Investors in Paragraph 16.5 of the Offer Document, an extract of the relevant paragraph is set out in italics below. Unless otherwise defi ned, all terms and expressions used in the extract below shall have the same meanings as those defi ned in the Offer Document CPFIS Investors CPFIS Investors will receive further information on how to accept the Offer from their respective CPF Agent Banks directly. CPFIS Investors are advised to consult their respective CPF Agent Banks should they require further information, and if they are in any doubt as to the action they should take, CPFIS Investors should seek independent professional advice. CPFIS Investors who wish to accept the Offer are to reply to their respective CPF Agent Banks by the deadline stated in the letter from their respective CPF Agent Banks. CPFIS Investors who accept the Offer will receive the Offer Price payable in respect of their Offer Shares in their CPF investment accounts. 13

14 LETTER TO SHAREHOLDERS 9. ACTION TO BE TAKEN BY SHAREHOLDERS Shareholders who wish to accept the Offer must do so not later than the Closing Date, abiding by the procedures for the acceptance of the Offer as set out in Appendix 2 to the Offer Document, and in the accompanying FAA and/or FAT. Acceptances should be completed and returned as soon as possible and, in any event, so as to be received, on behalf of the Offeror, by CDP (in respect of the FAA) or the Registrar (in respect of the FAT), as the case may be, not later than the Closing Date. Shareholders who do not wish to accept the Offer need not take any further action in respect of the Offer Document, the FAA and/or the FAT which have been sent to them. 10. RESPONSIBILITY STATEMENT The Directors (including any who may have delegated detailed supervision of this Circular) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this Circular (other than the IFA Letter for which the IFA has taken responsibility) are fair and accurate and that no material facts have been omitted the omission of which would make any statement in this Circular (other than the IFA Letter for which the IFA has taken responsibility) misleading, and they jointly and severally accept responsibility accordingly. Where any information in this Circular (other than the IFA Letter for which the IFA has taken responsibility) has been extracted or reproduced from the Offer Document or from published or publicly available sources, the sole responsibility of the Directors has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, refl ected or reproduced in this Circular. Yours faithfully For and on behalf of the Board of Directors VIZ BRANZ LIMITED Mr Yuen San Seng Non-Executive Chairman and Independent Director 14

15 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER SAC CAPITAL PRIVATE LIMITED (Incorporated in the Republic of Singapore) (Company Registration Number N) 1 Robinson Road #21-02 AIA Tower Singapore August 2013 To: The Independent Directors of Viz Branz Limited (in relation to the Offer) Mr Yuen San Seng Mr Chng Khoon Peng Mr Tan Kok Hiang Mr Tan Hwee Yong Dear Sirs MANDATORY UNCONDITIONAL CASH OFFER FOR ALL THE ISSUED AND PAID-UP ORDINARY SHARES IN THE CAPITAL OF VIZ BRANZ LIMITED Unless otherwise defi ned or the context otherwise requires, all terms defi ned in the Circular shall have the same meanings herein. 1. INTRODUCTION On 5 July 2013 (the Offer Announcement Date ), Credit Suisse (Singapore) Limited ( Credit Suisse ) announced (the Offer Announcement ), for and on behalf of Pluto Rising Pte. Ltd. (the Offeror ), that the Offeror is making a mandatory unconditional cash offer (the Offer ) for all the Offer Shares (as defi ned below). The Offeror had on 5 July 2013, acquired 135,800,219 issued ordinary shares ( Shares ) in the capital of Viz Branz Limited (the Company ) from Mr Chng Khoon Peng, representing approximately 38.25% of the total number of the issued Shares (excluding treasury Shares) (the Share Acquisition ). As a result of the Share Acquisition, the Offeror and persons acting or presumed to be acting in concert with the Offeror (collectively, the Offeror Concert Group ) own 206,210,002 Shares, representing approximately 58.09% of the total number of issued Shares (excluding treasury Shares). In accordance with Section 139 of the Securities and Futures Act (Cap. 289 of Singapore) (the Securities and Futures Act ) and Rule 14.1 of the Singapore Code on Take-Overs and Mergers ( Code ), the Offeror has incurred an obligation to make a mandatory unconditional cash offer for all the Shares (other than those already owned, controlled or agreed to be acquired by the Offeror Concert Group and treasury Shares held by the Company) (the Offer Shares ). The formal Offer Document was despatched to Shareholders on 19 July In connection with the Offer, the Company has appointed us as the independent fi nancial adviser to the directors of the Company (the Directors ) who are independent in relation to the Offer (the Independent Directors ) to advise on the fi nancial terms of the Offer. This letter, which sets out, inter alia, our evaluation and advice, has been prepared for the use of the Independent Directors in connection with their consideration of the Offer and their recommendation to Shareholders arising thereof. 15

16 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER 2. OUR TERMS OF REFERENCE We have been appointed as the independent fi nancial adviser to the Independent Directors to provide an assessment of the fi nancial terms of the Offer in order to advise the Independent Directors in respect of their recommendation to Shareholders on the Offer. We were not privy to the negotiations in relation to the Offer or any other offers. We do not, by this letter, make any representation or warrant the merits of the Offer. We have not been requested to express, and we do not express, an opinion on the relative merits of the Offer as compared to any other alternative transactions. We have not been instructed or authorised to solicit, and we have not solicited, any indications of interest from any third party with respect to the Shares. We have not conducted a comprehensive independent review of the business, operations or fi nancial condition of the Company and its subsidiaries (collectively, the Group ) or the Offeror. Our evaluation is confi ned to the fi nancial terms of the Offer and we have not evaluated the commercial rationale or merits of the Offer or the future growth prospects or earnings potential of the Group after the completion of the Offer. Accordingly, we do not express any view as to the prices at which the Shares may trade or on the future fi nancial performance of the Group after the completion of the Offer. In the course of our evaluation, we have held discussions with the Directors and the management of the Group (the Management ) and have relied on the information and representations, whether written or verbal, provided to us by the Directors and/or the Management, including the information contained in the Circular. We have not independently verifi ed such information or representations and accordingly cannot and do not warrant or accept responsibility for the accuracy, completeness or adequacy of these information or representations. We have, however, made such enquiries and exercised such judgement (as we deemed necessary) in assessing the information and representations provided to us, and have found no reason to doubt the reliability of such information or representations which we have relied on. The Directors (including those who may have delegated detailed supervision of the Circular) have confi rmed that, having made all reasonable enquiries and to the best of their knowledge and belief, (a) all material information available to them in connection with the Offer has been disclosed in the Circular; (b) such information is true and accurate in all material respects; and (c) there is no other information or fact, the omission of which would cause any information disclosed to us or the facts stated in the Circular to be inaccurate, incomplete or misleading in any material respect. Whilst care has been exercised in reviewing the information which we have relied on, we have not independently verifi ed the information but nonetheless have made such enquiries and exercised such judgement as were deemed necessary and have found no reason to doubt the reliability of the information or facts. Accordingly, no representation or warranty, expressed or implied, is made and no responsibility is accepted by us concerning the accuracy, completeness or adequacy of such information or facts. We have not made any independent evaluation or appraisal of the assets and liabilities of the Group. We have also not been furnished with any such evaluation or appraisal, except for the valuation summary and reports prepared by Colliers International Consultancy & Valuation (S) Pte Ltd, Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. and Henan Xin Surplus Assets Appraisal Firm, being the independent valuers appointed by the Company in connection with the Offer (the Independent Valuers ). As we are not experts in the evaluation or appraisal of the assets set out in the valuation summary and reports, we have placed sole reliance on the Independent Valuers in the evaluation or appraisal of the aforementioned assets. Our opinion and advice, as set out in this letter, are based on the market, economic, industry and other applicable conditions prevailing on, and the information made available to us as of, the Latest Practicable Date. Such conditions may change signifi cantly over a relatively short period of time and we assume no responsibility to update, revise or reaffi rm our opinion and advice in the light of any subsequent development after the Latest Practicable Date that may affect our opinion and advice contained herein. 16

17 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER In rendering our opinion and advice, we have not had regard to the specifi c investment objectives, fi nancial situation, tax position or unique needs and constraints of any Shareholder or any specifi c group of Shareholders. We recommend that any individual Shareholder or specifi c group of Shareholders who may require specifi c advice in relation to his or their investment portfolio(s) should consult his or their legal, fi nancial, tax or other professional adviser. Our opinion and advice in relation to the Offer should be considered in the context of the entirety of this letter and the Circular. The Company has been separately advised by its own professional advisers in the preparation of the Circular (other than this letter). We have had no role or involvement and have not provided any advice, fi nancial or otherwise, in the preparation, review and verifi cation of the Circular (other than this letter). Accordingly, we take no responsibility for and express no views, expressed or implied, on the contents of the Circular (other than this Ietter). 3. THE OFFER 3.1 In accordance with Rule 14.1 of the Code and section 139 of the Securities and Futures Act, and subject to the terms and conditions set out in the Offer Document issued, the Offeror has made the Offer for the Offer Shares on the following basis: For each Offer Share: S$0.78, payable in cash (the Offer Price ) 3.2 The Offer Shares will be acquired: (a) (b) (c) fully paid; free from any Encumbrance whatsoever; and together with all rights, benefi ts and entitlements attached as at the Offer Announcement Date and thereafter attaching thereto, including the right to receive and retain all Distributions declared, paid or made by the Company on or after the Offer Announcement Date. Accordingly, if any Distribution is declared, paid or made by the Company on or after the Offer Announcement Date, and: (i) (ii) if the settlement date in respect of the Offer Shares accepted pursuant to the Offer falls on or before the Books Closure Date, the Offeror will pay the relevant accepting Shareholders the Offer Price for each Offer Share, as the Offeror will receive the Distribution in respect of those Offer Shares from the Company; and if the settlement date in respect of the Offer Shares accepted pursuant to the Offer falls after the Books Closure Date, the amount of the Distribution in respect of such Offer Shares will be deducted from the Offer Price payable for such Offer Shares, as the Offeror will not receive the Distribution in respect of those Offer Shares from the Company. 3.3 Unconditional Offer. The Offer is not subject to any conditions and is unconditional in all respects. 17

18 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER 3.4 Warranty. As set out in Paragraph 4 of the Offer Document, a Shareholder who tenders his Offer Shares in acceptance of the Offer will be deemed to have unconditionally and irrevocably warranted that he sells such Offer Shares, as or on behalf of the benefi cial owner(s) thereof, (a) fully paid, (b) free from all Encumbrances whatsoever ; and (c) transferred together with all rights, benefi ts and entitlements attached to them as at the Offer Announcement Date and thereafter attaching thereto, including but not limited to the right to receive and retain all Distributions declared, paid or made by the Company on or after the Offer Announcement Date. 3.5 Details of the Offer. Further details of the Offer are set out on pages 7 and 8 and Appendix 1 to the Offer Document in relation to (a) the duration of the Offer, (b) the settlement of the consideration for the Offer, (c) the requirements relating to the announcement of the level of acceptances of the Offer; and (d) the right of withdrawal of acceptances of the Offer. A copy of each of the Offer Announcement and the Offer Document is available on the website of the SGX-ST at Shareholders are advised to read the information carefully. 3.6 Closing Date. Shareholders should note that the Offer will close at 5.30 p.m. (Singapore time) on 16 August 2013, being the Closing Date, unless it is otherwise extended by the Offeror. 4. INFORMATION ON THE OFFEROR AND THE MERCURY RISING 4.1 The Offeror Paragraph 8 of the Offer Document sets out information on the Offeror and Mercury Rising, an extract of which is set out in italics below. Unless otherwise defi ned, all terms and expressions used in the extract below and in the extracts in Paragraphs 4, 5, 7.1, 8 and Appendix 3 shall have the same meanings as those defi ned in the Offer Document. 8. INFORMATION ON THE OFFEROR The Offeror is a special purpose vehicle incorporated on 14 June 2013 for the purpose of the Offer under the laws of the British Virgin Islands. The Offeror has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. The Offeror is wholly owned by Mercury Rising and its sole director is CBB. Mercury Rising is also a special purpose vehicle incorporated on 14 June 2013 for the purpose of the Offer under the laws of the British Virgin Islands. Mercury Rising has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. Mercury Rising is wholly owned by CBB, who is also its sole director. CBB is currently the Managing Director and Deputy Chairman of the Group. As at the Latest Practicable Date, CBB does not hold any Shares in the Company directly, and is deemed to have an interest in all the Shares held by the Offeror. Further information on the Offeror is set out in Appendix 3 of the Circular. 5. RATIONALE FOR THE OFFER AND THE OFFEROR S INTENTIONS FOR THE COMPANY The full text of the rationale for the Offer and the Offeror s intentions for the Company has been extracted from Paragraphs 10 and 11 of the Offer Document and is set out in italics below. Shareholders are advised to read the information carefully. 10. RATIONALE FOR THE OFFER The Offer is made by the Offeror in compliance with Rule 14.1 of the Code, arising from the Share Acquisition. 18

19 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER 11. OFFEROR S INTENTIONS FOR THE COMPANY It is the current intention of the Offeror that the Group continues with its existing activities and there are presently no plans to (a) introduce any major changes to the business or operations of the Group, (b) re-deploy any of the fi xed assets of the Group or (c) discontinue the employment of any of the existing employees of the Group, other than in the ordinary course of business. The Offeror however reserves the right and discretion, subsequent to the Offer, to conduct a review of the Group s management and operations, restructure its shareholdings or shareholdings of the Company and evaluate strategic options and possibilities with a view to optimising and/or unlocking value in the Offeror and/ or the Group at an opportune time. 6. COMPULSORY ACQUISITION AND LISTING STATUS Paragraph 13 of the Offer Document sets out the intentions of the Offeror relating to its right of compulsory acquisition and the listing status of the Company, an extract of which is set out in italics below. Shareholders are advised to read the information carefully. 13. COMPULSORY ACQUISITION AND LISTING STATUS 13.1 Compulsory Acquisition Pursuant to Section 215(1) of the Companies Act, in the event that the Offeror receives valid acceptances pursuant to the Offer in respect of not less than 90% of the total number of issued Shares (other than those Shares already held by the Offeror, its related corporations or their respective nominees as at the date of the Offer and excluding treasury Shares), the Offeror will be entitled to compulsorily acquire all the Offer Shares held by Dissenting Shareholders on the same terms as those offered under the Offer. In such an event, the Offeror intends to exercise its rights of compulsory acquisition and the Company will become a wholly-owned subsidiary of the Offeror upon the completion of such compulsory acquisition. In addition, the Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares at the Offer Price in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90% or more of the total number of issued Shares (excluding treasury Shares). Shareholders who wish to exercise such right are advised to seek their own independent legal advice. Listing Status Under Rule 1105 of the Listing Manual, in the event that the Offeror Concert Group, as a result of the Offer or otherwise, own or control more than 90% of the total number of issued Shares (excluding any treasury Shares), the SGX-ST may suspend the trading of the Shares on the SGX-ST until it is satisfi ed that at least 10% of the total number of issued Shares (excluding treasury Shares) are held by at least 500 Shareholders who are members of the public. Under Rule 1303(1) of the Listing Manual, where the Offeror succeeds in garnering acceptances exceeding 90% of the total number of issued Shares (excluding treasury Shares), thus causing the percentage of the total number of issued Shares (excluding treasury Shares) held in public hands to fall below 10%, the SGX-ST will suspend trading of the Shares only at the close of the Offer. In addition, under Rule 724 of the Listing Manual, if the percentage of the total number of issued Shares (excluding treasury Shares) held in public hands falls below 10%, the Company must, as soon as practicable, announce that fact and the SGX-ST may suspend the trading of all the Shares. 19

20 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Rule 724 of the Listing Manual further provides that the SGX-ST may allow the Company a period of three months, or such longer period as the SGX-ST may agree, to raise the percentage of Shares in public hands to at least 10%, failing which the Company may be delisted. It is the intention of the Offeror to make the Company its wholly-owned subsidiary and to delist the Company from the SGX-ST. It is therefore not the intention of the Offeror to preserve the listing status of the Company and in the event that the trading of Shares on the SGX-ST is suspended pursuant to Rule 724, Rule 1105 or Rule 1303(1) of the Listing Manual, the Offeror does not intend to undertake or support any action for any such trading suspension to be lifted by the SGX-ST. 7. FINANCIAL ASSESSMENT OF THE OFFER In assessing the fi nancial terms of the Offer, we have taken into account the following factors which we consider to have a signifi cant bearing on our assessment: (a) (b) (c) (d) (e) Market quotation and trading liquidity of the Shares; Book net tangible asset value ( NTA ), ex-cash book NTA and revalued NTA of the Group; Comparison of valuation statistics of companies broadly comparable to the Group; Comparison with recent successful privatisation transactions and delisting offers of companies listed on the SGX-ST; and Other relevant considerations Market Quotation and Trading Liquidity of the Shares Share price performance and trading liquidity A graphical representation of the daily closing prices and volume traded of the Shares for the period commencing 12 months prior to the Offer Announcement and ending on the Latest Practicable Date is set out below: Source: Bloomberg L.P. 20

21 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER A summary of the salient announcements relating to the Group s business operations and the Offer during the aforesaid period is as follows: Date Event 10 July 2012 Announcement on the non-binding approach in relation to a possible share transaction by a substantial Shareholder (the Possible Share Transaction ). 11 July 2012 Announcement on the clarifi cation in relation to the business times article entitled Major Viz Branz Shareholder Gets Buy More Offer dated 11 July 2012 as well as the Company s announcement dated 10 July 2012, of which the Company clarifi ed that the Possible Share Transaction by the substantial Shareholder involved the possible sale of such substantial Shareholder s Shares to the third party which may or may not lead to an offer being made for the Shares. 6 August 2012 Announcement providing an update on the Possible Share Transaction that discussions remained ongoing with the third party as well as other potential interested parties who approached the substantial Shareholder in relation to the Possible Share Transaction. 27 August 2012 Announcement on the unaudited results for the financial year ended 30 June 2012 ( FY2012 ), which reported a 47.8% increase in net profi t attributable to Shareholders from S$11.5 million in the fi nancial year ended 30 June 2011 ( FY2011 ) to S$17.0 million in FY September 2012 Announcement providing an update on the Possible Share Transaction, that the substantial Shareholder entered into a (generally) non-binding indicative preliminary letter of indication of interest with one of the potential interested party to facilitate and advance further discussions. In addition, it was also announced the Company decided to put on hold its proposed bonus issue as announced on 25 May 2012 as it may potentially constitute a frustrating action on the part of the Company (if and in the event that the Possible Share Transaction by the substantial Shareholder leads to an offer being made for the Shares). 2 October 2012 Announcement providing an update on the Possible Share Transaction, that discussions remain ongoing between the substantial Shareholder and the potential interested party. 8 October 2012 Announcement provid ing an update on the Possible Share Transaction, that the substantial Shareholder, being Mr Ben Chng Beng Beng, had disposed of 57,000,000 Shares, representing approximately 16.06% of the entire issued and paid-up share capital of the Company to Lam Soon Cannery Private Limited, for an aggregate sale consideration of S$41,895,000 at the sale price of S$0.735 per Share. 21

22 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Date Event 17 October 2012 Announcement on the application to the SGX-ST for an extension of 2 months, till 31 December 2012, in holding the company s annual general meeting for FY2012 (the Application ). As part of the statutory audit of the Company s fi nancial statements for FY2012, the Company s auditors are conducting additional audit procedures (the Additional Audit Procedures ) on transactions between the Group and the Myanmar distributors, and also seeking clarifi cations from Mr Chng Khoon Peng on the bases underlying his allegations. The Application was therefore made to enable the Additional Audit Procedures to be completed. If the Additional Audit Procedures can be completed earlier, the Company will proceed to hold its annual general meeting expeditiously and prior to 31 December October 2012 Announcement on the SGX-ST s approval to the extension of time for holding the Company s FY2012 annual general meeting subject to, inter alia, approval of the same being obtained from the Accounting and Corporate Regulatory Authority of Singapore ( ACRA ). 30 October 2012 Announcement on the approval from ACRA for extension of time under Section 201(2) of the Companies Act ( Cap. 50 of Singapore) for laying its accounts before Shareholders. 14 November 2012 Announcement on the unaudited interim fi nancial results for the 3-month fi nancial period ended 30 September 2012 ( 1Q2013 ) which reported a 15.4% increase in net profi t attributable to Shareholders from S$3.9 million in the 3-month fi nancial period ended 30 September 2011 to S$4.5 million in 1Q November 2012 Announcement on withdrawal of allegations and complaint by Mr Chng Khoon Peng. 6 December 2012 Announcement on the audit opinion in relation to the FY2012 fi nancial statements, that its auditors have given a disclaimer of opinion, the background and basis of which were set out in the auditors report dated 6 December February 2013 Announcement on the unaudited interim fi nancial results for the 6- month fi nancial period ended 31 December 2012 ( 1H2013 ) which reported a 3.2% increase in net profi t attributable to Shareholders from S$9.3 million in the 6-month fi nancial period ended 31 December 2011 to S$9.6 million in 1H2013. Announcement on the withdrawal of the proposed bonus issue as announced on 25 May February 2013 Notice of book closure date for tax-exempted (fi rst-tier) dividend of S$0.01 per Share in which share transfer books and register of members of the Company will be closed from 5.00 p.m. on 6 March 2013 to 7 March

23 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Date Event 13 May 2013 Announcement on the unaudited interim fi nancial results for the 9- month fi nancial period ended 31 March 2013 ( 9M2013 ) which reported a 4.4% increase in net profi t attributable to Shareholders from S$13.6 million in the 9-month fi nancial period ended 31 March 2012 ( 9M2012 ) to S$14.2 million in 9M July 2013 Announcement on the Offer Announcement. 18 July 2013 Announcement on the acquisition of 523,000 Shares by Lam Soon Cannery Private Limited on 17 July July 2013 Announcement on the despatch of offer document dated 19 July 2013 in relation to the Offer. Announcement on the acquisition of 260,000 Shares by Lam Soon Cannery Private Limited on 18 July July 2013 Announcement on the acquisition of 181,000 Shares by Lam Soon Cannery Private Limited on 19 July July 2013 Announcement on the acquisition of 146,000 Shares by Lam Soon Cannery Private Limited on 22 July Source: Announcements relating to the Group on the SGX-ST Additional information on the traded closing prices of the Shares, volume-weighted average prices ( VWAPs ) and average daily trading volumes for the period commencing 12 months prior to the Offer Announcement and ending on the Latest Practicable Date is set out below: Highest closing price (S$) Lowest closing price (S$) VWAP (S$) Premium / (Discount) of Offer Price over / (to) VWAP (%) Average daily trading volume (1) ( 000) Average daily trading volume as percentage of free float (2) (%) Periods prior to Offer Announcement Last 12 months Last 6 months Last 3 months Last one month Last Market Day prior to the Offer Announcement (3) Period after the Offer Announcement and up to Latest Practicable Date After Offer Announcement and up to Latest Practicable Date (0.9) Latest Practicable Date (2.4) 1, Source: Bloomberg L.P. 23

24 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Notes: (1) The average daily trading volume of the Shares is calculated based on the total volume of Shares traded divided by the number of Market Days during the relevant periods. (2) Free fl oat refers to the Shares other than those held by the Directors, substantial Shareholders and their associates (as defi ned in the Listing Manual) which amounts to 61,757,384 Shares as at the date of the Offer Announcement (for the periods prior to the Offer Announcement) and 60,421,514 Shares as at the Latest Practicable Date (for the period after the Offer Announcement and up to Latest Practicable Date). (3) This refers to the last Market Day on which the Shares were traded prior to the Offer Announcement, being 4 July 2013, before the trading halt of the Shares at a.m. on 4 July We note the following with regard to the Share prices: (a) (b) during the 12-month period prior to the Offer Announcement, the closing prices of the Shares ranged between a low of S$0.600 (on 6 July 2012) and a high of S$0.735 (on 16 July 2012 and 23 July 2012). The Offer Price represents a premium of 30.0% and 6.1% over the lowest and the highest closing prices of the Shares respectively during the 12-month period; the Offer Price represents a premium of 9.9%, 12.4%, 12.4% and 12.9% over the VWAP of the Shares for the 12-, 6-, 3- and one-month periods prior to the Offer Announcement respectively; (c) the Offer Price represents a premium of 9.1% over the closing price of S$0.715 on 4 July 2013, being the last Market Day on which the Shares were traded prior to the Offer Announcement and before the trading halt of the Shares at a.m. on 4 July 2013; (d) (e) the Offer Price represents a marginal discount of 0.9% to the VWAP of the Shares of S$0.787 for the period after the Offer Announcement and up to the Latest Practicable Date; and the Offer Price represents a marginal discount of 2.5% to the closing price of the Shares of S$0.800 on the Latest Practicable Date. We also note the following with regard to the trading liquidity of the Shares: (a) (b) (c) the average daily trading volume of the Shares for the 12-, 6-, 3- and one-month periods prior to the Offer Announcement represented only 0.98%, 0.22%, 0.29%, and 0.49% of the free fl oat respectively; during the 12-month period prior to the Offer Announcement, the Shares were traded on 236 Market Days out of a total of 251 Market Days (or 94.0% of the total number of Market Days during the period), with an average daily trading volume of approximately 604,000 Shares; and during the period after the Offer Announcement and up to the Latest Practicable Date, the Shares were traded on all 12 Market Days out of a total of 12 Market Days (or % of the total number of Market Days during the period), with an average daily trading volume of approximately 746,000 Shares representing 1.23% of the free fl oat. 24

25 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Relative performance of the Shares versus the market index For the period commencing 12 months prior to the Offer Announcement and ending on the date of the Offer Announcement The chart below sets out the relative returns (daily basis) of the Shares in relation to the relative returns (daily basis) of the FTSE Strait Times All Share Index 1 (the FSTAS Index ) for the period commencing 12 months prior to the Offer Announcement and ending on the date of the Offer Announcement: Source: Bloomberg L.P. We observe that during the aforesaid period, the Shares have generally outperformed the FSTAS Index in relative terms except for an intermittent period in May As at 4 July 2013 (being the last Market Day on which the Shares were traded prior to the Offer Announcement and before the trading halt of the Shares at a.m. on 4 July 2013), the Share price had appreciated by 19.2% while the FSTAS Index had appreciated by 6.9% over the same period. For the period commencing on the Market Day after the Offer Announcement and ending on the Latest Practicable Date We have also reviewed the relative performance of the Shares against the closing prices of the FSTAS Index on 4 July 2013 (being the last Market Day on which the Shares were traded prior to the Offer Announcement and before the trading halt of the Shares at a.m. on 4 July 2013) and on the Latest Practicable Date: As at 4 July 2013 As at Latest Practicable Date % change Company (S$) FSTAS Index Source: Bloomberg L.P. We note that the Share price had appreciated by 11.9% as compared to a marginal appreciation of 3.2% in the FSTAS Index over the aforesaid period. 1 The FSTAS Index is a modifi ed market capitalisation weighted index comprising all companies within the top 98% by full market capitalisation of the SGX-Mainboard universe (i.e. large-, mid- and small-capitalisation indices combined). 25

26 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Based on the above observations, it would appear that the market price of the Shares as at the Latest Practicable Date may be supported by the Offer and purchases by Lam Soon Cannery Private Limited since the Offer Announcment, and may or may not be sustained at the current level prevailing as at the Latest Practicable Date after the close of the Offer. Shareholders should note that the past trading performance of the Shares should not in any way be relied upon as an indication or a promise of its future trading performance Book NTA, Ex-Cash book NTA and Revalued NTA of the Group Book NTA of the Group Based on its latest unaudited fi nancial statements as at 31 March 2013, the unaudited NTA of the Group as at 31 March 2013 amounted to S$105.7 million (or S$0.298 per Share based on 354,996,976 issued Shares (excluding treasury Shares) as at 31 March 2013). Accordingly, the Offer Price represents a signifi cant premium of 161.7% over the unaudited NTA per Share of S$0.298 as at 31 March Ex-cash book NTA of the Group Based on its latest unaudited fi nancial statements as at 31 March 2013, we also note that the Group has signifi cant cash and bank balances (net of borrowings and fi nance leases) of S$46.1 million, representing 43.6% of the NTA of the Group. This represents net cash of S$0.130 per Share. Adjusting for the net cash, the ex-cash NTA of the Group as at 31 March 2013 would be S$59.6 million, or S$0.168 per Share (the Ex-Cash book NTA per Share ). The Offer Price, after adjusting for the net cash per Share (the Ex-Cash Offer Price ), would be S$0.650 and represents a signifi cant premium of 286.9% over the Ex-Cash book NTA per Share of S$0.168 as at 31 March 2013 (the Ex-Cash Price-to-book NTA ). The Directors have confi rmed that to the best of their knowledge and belief, save for the Revalued Properties (as defi ned below), (a) they are not aware of any circumstances which may cause the book NTA of the Group as at the Latest Practicable Date to be materially different from that recorded in the unaudited balance sheet of the Group as at 31 March 2013; (b) there have been no material disposals or acquisitions of assets by the Group since 31 March 2013 and up to the Latest Practicable Date; and (c) there are no contingent liabilities or bad or doubtful debts which are likely to have a material impact on the unaudited NTA of the Group as at 31 March Revalued NTA of the Group In connection with the Offer and in compliance with Rule 26 of the Code, the Company has commissioned the Independent Valuers to conduct independent valuations of the properties owned by the Group as at 31 March 2013 (collectively, the Revalued Properties ), except for a square-metre residential property located at building G, 20 th fl oor, Yidong Mansion No 6, Bus Station Road, Jiangan District, Wuhan, the PRC and a square-metre offi ce located at room 1501, No 111 Tai Kang road, Tai Kang City Plaza, Tai Fu Centre, Guangzhou, the PRC. The aggregate unaudited net book value ( NBV ) of the Revalued Properties of S$37.0 million as at 31 March 2013 represents 13.4% of the aggregate Offer value of approximately S$276.9 million (computed as the Offer Price of S$0.78 multiplied by 354,996,976 Shares as at 31 March 2013). Further details on the Revalued Properties are set out in the valuation summary from the Independent Valuers (the Valuation Reports ) in Appendix 8 of the Circular. The bases for the independent valuations of the Revalued Properties are set out in the full reports which are available for inspection at the registered offi ce of the Company and involve certain assumptions, limitations and disclaimers as stated therein. Shareholders are advised to read the above in conjunction with the valuation reports in their entirety. 26

27 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER As set out in the Valuation Reports, the estimated aggregate market valuation of the Revalued Properties as at 31 March 2013 is S$56.6 million. We set out below a summary of the market values of the Revalued Properties as extracted from the Valuation Reports and the Group s net revaluation surplus after potential tax liabilities: Location Description Market value (S$ 000) NBV (S$ 000) Net revaluation surplus (1) (S$ 000) 14 Woodlands Link, Viz Branz House, Singapore Woodlands Link, Singapore Factory cum warehouse building Factory cum warehouse building 11,000 7,689 2,163 9,500 5,092 4,199 Plot 5A6 Jinyuan District Industrial Estate (Land Parcel No.: ), Chaoshan Road, Shantou, Guangdong, PRC Plot 5A7 Jinyuan District Industrial Estate (Land Parcel No.: ), Chaoshan Road, Shantou, Guangdong, PRC 4A1A3 Jinyuan District Industrial Estate, (Land Parcel No.: T3-10), Chaoshan Road, Shantou, Guangdong, PRC Shi Ji Road, Zhongyuan Green Food Industrial Park, Xuediar, Xinzheng, Henan, China Post code Factory 4,328 (2) 2, Factory 4,326 (2) 2, Factory 24,202 (3) 15,162 5,286 Factory 3,260 (4) 3, TOTAL 56,616 37,007 13,072 Notes: (1) Net revaluation surplus is calculated as the difference between the market values as stated in the Valuation Reports and their corresponding book values as at 31 March 2013 and net of potential tax liabilities. The potential tax liabilities are computed by the Management assuming the hypothetical sale of the Revalued Properties at the respective valuation amounts and applicable tax rates. (2) As the market valuations of the properties are in RMB, the values of the properties are converted based on the closing exchange rate of S$1.00 : RMB4.852 as at 1 July (3) As the market valuation of the property is in RMB, the value of the property is converted based on the closing exchange rate of S$1.00 : RMB4.849 as at 18 July (4) As the market valuation of the property is in RMB, the value of the property is converted based on the closing exchange rate of S$1.00 : RMB4.847 as at 19 July

28 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER The revalued NTA ( RNTA ) of the Group as at 31 March 2013 is computed as follows: Aggregate (S$ 000) Per Share (1) (S$) Premium represented by Offer Price (%) NTA as at 31 March , Add: Net revaluation surplus from the Revalued Properties 13, RNTA as at 31 March , Note: (1) Based on 354,996,976 issued Shares. We note that the Offer Price represents a signifi cant premium of 132.8% over the RNTA per Share of S$0.335 as at 31 March Shareholders should note the following: (a) (b) the above analysis is provided solely for illustration purposes and in compliance with the applicable requirements of the Code; the RNTA is not necessarily a realisable value given that the market values of the Revalued Properties may vary and are dependent on, inter alia, the prevailing market and economic conditions. There is also no assurance that the eventual sale prices (if any) will be identical to those appraised by the Independent Valuers in the Valuation Reports or that the revaluation surpluses eventually recorded by the Group on the Revalued Properties (if any) will be the same as indicated above ; and (c) the potential tax liabilities have been provided pursuant to the requirement under Rule 26.3 of the Code on the assumption of a hypothetical sale of the Revalued Properties, and such tax liabilities will not crystallise if the Group does not dispose of the Revalued Properties. The Directors have confi rmed that as at the Latest Practicable Date, the Group does not have any plans for an impending material disposal and/or conversion of the use of the Group s assets and/or any material change in the nature of the Group s businesses, and the Group has not received any offers for the Revalued Properties at the market values set out in the Valuation Reports. In this respect, it would appear that the likelihood of such tax liabilities crystallising is low Comparison of Valuation Statistics of Companies Broadly Comparable to the Group In order to derive a reasonable range of valuation for the purposes of assessing the fi nancial terms of the Offer, we have referred to selected companies listed and traded on the SGX-ST which business activities are broadly comparable with those of the Group to give an indication of the current market expections with regard to the perceived valuation of these businesses. The Group is principally engaged in the manufacturing and exporting of instant beverages and snack food. We have, in consultation with the Management, used the following SGX-ST listed companies which are principally engaged in the beverage, instant food and/or snacks business with market capitalisations less than S$1.0 billion (collectively, the Comparable Companies ). 28

29 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Details on the Comparable Companies, including their business descriptions and selected key fi nancial and valuation statistics, are set out below and in the annex to this letter: (a) (b) (c) (d) (e) (f) (g) Consciencefood Holdings Limited ( Consciencefood ); Etika International Holdings Limited ( Etika ); Food Empire Holdings Limited ( Food Empire ); Hosen Group Ltd ( Hosen ); Sino Grandness Food Industry Group Limited ( Sino Grandness ); Synear Food Holdings Limited ( Synear Food ); and Tsit Wing International Holdings Limited ( Tsit Wing ). Shareholders should note that there is no company or group listed on any relevant stock exchange which may be considered identical to the Group in terms of business activities, market capitalisation, scale of operations, risk profi le, geographical spread, operating and fi nancial leverage, accounting policies, adherence to accounting standards, tax factors, track record and future prospects. In addition, each of the Comparable Companies may engage in other separate business activities which are not related to the beverage, instant food and/or snack business. As such, any comparison made herein is strictly limited in scope and merely serves as an illustrative guide to Shareholders. In assessing the fi nancial terms of the Offer, we have used the following valuation parameters in our analysis: Valuation parameter Price-earnings ratio ( PER ) Description The historical PER, which illustrates the ratio of the market price of a company s shares relative to its historical consolidated earnings per share, is commonly used for the purpose of illustrating the profi tability, and hence valuation of a company. We have considered the historical PERs of the Comparable Companies based on their respective last transacted prices on the Latest Practicable Date and latest full-year net earnings per share vis-à-vis the corresponding historical PER of the Group based on the Offer Price. Ex-cash PER In view of the signifi cant unaudited net cash position (i.e. cash and bank balance less borrowings and fi nancial lease) of the Group as at 31 March 2013, we have also computed the historical PER on an ex-cash basis. In this regard, we have considered the historical ex-cash PER of the Comparable Companies based on their respective last transacted prices (less net cash per share, if applicable) on the Latest Practicable Date and latest full-year net earnings per share vis-à-vis the corresponding historical ex-cash PER of the Group based on the Offer Price (less net cash per Share). 29

30 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Valuation parameter Price-to-book NTA ratio Description An NTA-based approach is useful to illustrate the extent that the value of each share is backed by assets, and would be more relevant in the case where the group were to change the nature of its business or realise or convert the use of all or most of its assets. The NTA-based valuation approach may provide an estimate of the value of a company or group assuming the hypothetical sale of all its assets over a reasonable period of time at the aggregate value of the assets used in the computation of the NTA, with the balance to be distributed to its shareholders after the settlement of all the liabilities and obligations of the company or group. We have considered the historical price-to-book NTA ratios of the Comparable Companies based on their respective last transacted prices on the Latest Practicable Date and latest available NTA per share vis-à-vis the corresponding historical price-to-book NTA ratio of the Group based on the Offer Price. Ex-cash price-to-book NTA ratio Enterprise value to EBITDA ( EV/EBITDA ) ratio In view of the signifi cant unaudited net cash position (i.e. cash and bank balance less borrowings and fi nancial lease) of the Group as at 31 March 2013, we have also computed the historical price-to-book NTA ratio on an ex-cash basis. In this regard, we have considered the historical ex-cash price-to-book NTA ratios of the Comparable Companies based on their respective last transacted prices (less net cash per share, if applicable) on the Latest Practicable Date and latest available book NTA (less net cash, if applicable) per share vis-à-vis the corresponding historical ex-cash price-to-nta ratio of the Group based on the Offer Price (less net cash per Share) and latest available NTA per Share (less net cash per Share). The historical EV/EBITDA ratio illustrates the ratio of the market value of a company s business relative to its historical consolidated pre-tax operating cashfl ow performance, without regard to its capital structure, and provides an indication of current market valuation relative to operating performance. EV is the sum of a company s market capitalisation, preferred equity, minority interests, short- and long-term debts less cash and cash equivalents, and represents the actual cost to acquire the entire company. EBITDA refers to historical consolidated earnings before interest, tax, depreciation and amortisation expenses. EBITDA can be used to analyse the profi tability between companies as it eliminates the effects of fi nancing and accounting decisions. We have considered the historical EV/EBITDA ratios of the Comparable Companies based on their respective last transacted prices on the Latest Practicable Date, latest available balance sheet values and latest full-year EBITDA vis-à-vis the corresponding historical EV/EBITDA ratio of the Group based on the Offer Price. 30

31 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER The following table sets out the comparative valuation statistics of the Comparable Companies vis-à-vis the Group as implied by the Offer Price: Company Historical PER (times) Historical price-to-book NTA ratio (times) Historical EV/EBITDA ratio (times) Consciencefood Etika (1) Food Empire Hosen Sino Grandness (2) Synear Food (3) Tsit Wing (4) High Mean (5) Median (5) Low Group Source: Bloomberg L.P., annual reports and/or announcements of the respective companies and SAC Capital s computations Notes: (1) Based on the net asset value of the group. (2) On 1 July 2013, the board of directors of Sino Grandness announced that the Company had on 28 June 2013 obtained a no-objection letter from the SGX-ST for the spin-off of its beverage business segment for a listing on an internationally recognised stock exchange. (3) On 15 October 2012, Synear Food and Fortune Domain Limited jointly announced a delisting proposal to seek the voluntary delisting of the Company from the SGX-ST at an exit offer price of S$0.186 per share. (4) On 11 June 2013, DBS Bank announced, for and on behalf of Hero Valour Limited, a mandatory conditional cash offer to acquire all the issued and paid-up ordinary shares in the capital of Tsit Wing at an offer price of S$ in cash per share. (5) Being an outlier, Hosen has been excluded from the computation of the mean and median historical PER. Historical PER comparison We note that the historical PER of times of the Group as implied by the Offer Price is: (a) (b) within the range of historical PERs of the Comparable Companies of between 5.79 times and times; and at a premium of 13.9% and 3.4% over the mean and median historical PERs of the Comparable Companies of times and times respectively. Historical price-to-book NTA comparison We note that the historical price-to-book NTA ratio of 2.62 times of the Group as implied by the Offer Price is: (a) (b) above the range of historical price-to-book NTA ratios of the Comparable Companies of between 0.37 times and 2.22 times; and at a signifi cant premium of 91.2% and 95.5% over the mean and median historical price-to-book NTA ratios of the Comparable Companies of 1.37 times and 1.34 times respectively. 31

32 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Historical EV/EBITDA comparison We note that the historical EV/EBITDA ratio of 9.29 times of the Group as implied by the Offer Price is: (a) (b) within the range of historical EV/EBITDA ratios of the Comparable Companies of between 2.14 times and times; and at a premium of 8.0% and 11.9% over the mean and median historical EV/EBITDA ratios of the Comparable Companies of 8.60 times and 8.30 times respectively. As set out in section 6.2 above, we note from the unaudited balance sheet of the Group as at 31 March 2013 that the Group was in a net cash position of S$46.1 million, representing 43.6% of the NTA of the Group. In view thereof, we have also considered the PER and NTA of the Comparable Companies on ex-cash basis vis-à-vis the Group as implied by the Ex-Cash Offer Price: Company Historical ex-cash PER (times) Historical ex-cash price-to-book NTA ratio (times) Consciencefood Etika (1) 2.17 (1) Food Empire Hosen (1) 0.84 (1) Sino Grandness 7.07 (1) 2.22 (1) Synear Food Tsit Wing High Mean (2) 1.37 Median (2) 1.35 Low Group Notes: (1) Historical ex-cash PER and historical ex-cash price-to-book NTA ratios were not relevant as these companies were in a net-borrowings position. Accordingly, the historical PER and historical price-to-book NTA ratios were used. (2) Being an outlier, Hosen has been excluded from the computation of the mean and median historical ex-cash PER. Historical ex-cash PER comparison We note that the historical Ex-Cash PER of times of the Group as implied by the Ex-Cash Offer Price is: (a) within the range of historical ex-cash PERs of the Comparable Companies of between 3.11 times and times; and (b) at a premium of 11.1% and 23.0% over the mean and median historical ex-cash PERs of the Comparable Companies of times and times respectively. 32

33 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Historical ex-cash price-to-book NTA comparison We note that the historical Ex-Cash Price-to-book NTA ratio of 3.87 times of the Group as implied by the Ex-Cash Offer Price is: (a) (b) above the range of historical ex-cash price-to-book NTA ratios of the Comparable Companies of between 0.24 times and 2.22 times; and at a signifi cant premium of 182.5% and 186.7% over the mean and median historical ex-cash price-to-book NTA ratios of the Comparable Companies of 1.37 times and 1.35 times respectively Comparison with Recent Successful Privatisation Transactions and Delisting Offers of Companies Listed on the SGX-ST We note that as set out in paragraph 13 of the Offer Document, the Offeror intends to make the Company its wholly-owned subsidiary and does not intend to preserve the listing status of the Company. Accordingly, the Offeror when entitled, intends to exercise its rights of compulsory acquisition under Section 215(1) of the Companies Act and does not intend to take steps for any trading suspension of the Shares by the SGX-ST to be lifted in the event that, inter alia, less than 10% of the total number of issued Shares (excluding any Shares held by the Company as treasury Shares) are held in public hands. In view of the above and for the purposes of providing an illustrative guide as to the attractiveness of the Offer Price relative to other take-over transactions, we have compared the fi nancial terms of the Offer with (a) selected recent successful privatisation transactions announced during the 12-month period prior to the Offer Announcement, whether by way of a general offer under the Code or a scheme of arrangement under Section 210 of the Companies Act where the offeror has stated its intentions to delist the target company from the Offi cial List of the SGX-ST; and (b) selected recent completed delisting offers under Rule 1307 of the Listing Manual announced during the 12-month period prior to the Offer Announcement (collectively, the Take-over Transactions ). As some of the Take-over Transactions had undertaken revaluations and/or adjustments to their assets which may have a material impact on their last announced book values, we have also, where relevant, compared the financial terms of such offer transactions with the revalued NAV (or revalued NTA where applicable) and/or adjusted NAV (or adjusted NTA where applicable) of the Take-over Transactions where available. We wish to highlight that the Take-over Transactions set out below are by no means exhaustive. In addition, as the Group is not directly comparable to the target companies involved in the Take-over Transactions in terms of business activities, scale of operations, market capitalisation, geographical spread, risk profi le, accounting policies, fi nancial performance, operating and fi nancial leverage, track record and future prospects, the comparison merely serves as a general guide to provide an indication of the premia/discounts paid in connection with the privatisation/delisting of companies listed on the SGX-ST. Each of the Take-over Transactions must be judged on its own commercial and fi nancial merits. Shareholders should also note that the premium (if any) to be paid by an offeror in a privatisation/delisting transaction varies in different circumstances depending on, inter alia, the attractiveness of the underlying business to be acquired, the synergies to be gained from integration with an existing business, the trading liquidity of the target company s shares, prevailing market expectations and the presence of competing bids. Accordingly, any comparison made herein is strictly limited in scope. 33

34 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Company Hup Soon Global Corporation Limited Cerebos Pacific Limited Hersing Corporation Ltd Sakari Resources Limited Luye Pharma Group Ltd. Gul Technologies Singapore Ltd Kian Ann Engineering Ltd Nature of transaction Date of announcement Offer price per share (S$) Premium of offer price over last transacted price prior to announcement of offer (%) Offer price-to-nta ratio (times) Privatisation 26 July Delisting 1 August Privatisation 8 August Privatisation 27 August (1) 25.8 (2) 2.80 Privatisation 28 August (3) 2.31 Delisting 23 September (4) 1.78 Privatisation 15 October (5) 1.00 Harry s Holding Ltd. Privatisation 10 November Asia Pacific Breweries Limited China Farm Equipment Limited SC Global Developments Ltd Privatisation 15 November 2012 (6) (7) Privatisation 3 December Privatisation 5 December Kinergy Ltd Privatisation 14 December Rokko Holdings Ltd. Privatisation 17 December PCA Technology Limited WBL Corporation Limited Privatisation 1 February Privatisation 13 May 2013 (8) Pan Pacific Hotels Delisting 10 May Group Limited (9) Tsit Wing International Holdings Limited Privatisation 11 June High Mean (10) Median (10) Low Company Privatisation 5 July / 2.33 (11) Source: Announcements and circulars to shareholders in relation to the respective Take-over Transactions and SAC Capital s computations 34

35 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Notes: (1) Being the offer price of S$1.90 less dividends of S$ (the Sakari Net Offer Price ) as (i) the dividend was announced prior to the announcement of the voluntary conditional cash offer for shares in Sakari Resources Limited; and (ii) the settlement date in respect of the offer shares tendered in acceptance of the offer falls after the record date of the dividend. (2) The market premium in the table above was computed based on the Sakari Net Offer Price of S$ and the last transacted price prior to its announcement of the voluntary conditional cash offer. (3) On 30 July 2012 (the Luye Trading Suspension Date ), the trading prices and volume of Luye Pharma Group Ltd ( Luye Pharma ) surged in the morning of 30 July 2012 and last traded at S$1.25 before Luye Pharma suspended the trading of its shares. On the same day, Luye Pharma announced that Luye Pharmaceutical Investment Co., Ltd. ( LPIC ) acquired 15.22% of the shares in Luye Pharma, bringing its total interest to 92.63% and that the shares held in public hands had fallen to below 10%. The market premium in the table above was computed based on the offer price of S$1.30 and the last transacted price of S$1.12 on the Market Day prior to the Luye Trading Suspension Date. The offer price of S$1.30 would represent a premium of 4.0% over the last transacted price of S$1.25 prior to its offer announcement date. (4) On 13 September 2012, Gul Technologies Singapore Ltd ( Gul Technologies ) announced a holding announcement that it was aware that a party was exploring certain corporate action that may or may not lead to an offer for Gul Technologies (the Gul Holding Announcement ). On 23 September 2012, Gul Technologies and the offeror released a joint announcement for the delisting proposal of Gul Technologies (the Delisting Proposal Announcement ). The market premium in the table above was computed based on the offer price of S$0.162 and the last transacted price of S$0.117 prior to the Gul Holding Announcement. The offer price of S$0.162 would represent no premium or discount to the last transacted price of S$0.162 prior to the Delisting Proposal Announcement. (5) On 17 August 2012 (the Kian Ann Holding Announcement Date ), Kian Ann Engineering Ltd ( Kian Ann ) announced a holding announcement that it had been approached by a party in relation to a possible transaction involving the shares in the company and there is no assurance that any defi nitive or binding agreements or any transaction will result from such discussions. On 15 October 2012, Kian Ann and the offeror jointly announced the proposed acquisition of the company by the offeror to be effected by way of a scheme of arrangement under Section 210 of the Companies Act. The market premium in the table above was computed based on the offer price of S$0.44 and the last transacted price of S$0.30 prior to the Kian Ann Holding Announcement Date. The offer price of S$0.44 would represent a premium of 7.3% over the last transacted price of S$0.41 prior to its offer announcement date. (6) On 18 August 2012 (the Heineken Pre-Conditional Offer Announcement Date ), Credit Suisse (Singapore) Limited and Citigroup Global Markets Singapore Pte. Ltd. (collectively, the Heineken Financial Advisers ) announced, for and on behalf of Heineken International B.V. ( Heineken ), that Heineken had entered into two conditional sale and purchase agreement with Fraser and Neave Limited ( F&NL ) for acquisition of shares (the APB Share Acquisition ) in Asia Pacifi c Breweries Limited ( APB ). On 15 November 2012 (the Heineken Offer Announcement Date ), the Heineken Financial Advisers announced, for and on behalf of Heineken, of the completion of the APB Share Acquisition and the mandatory unconditional offer for the shares in APB. (7) On 16 July 2012, APB announced that Oversea-Chinese Banking Corporation Limited ( OCBC ) and Great Eastern Holdings Limited ( GEH ) were approached with an offer to purchase, inter alia, their combined stakes in APB (the OCBC and GEH Announcement ). The market premium in the above table was computed based on the offer price of S$53.00 and the last transacted price of S$34.69 prior to the OCBC and GEH Announcement. The offer price of S$53.00 would represent a premium of 4.8% and 0.8% over the last transacted prices of S$50.57 and S$52.60 prior to the Heineken Pre-conditional Offer Announcement Date and the Heineken Offer Announcement Date respectively. (8) On 26 November 2012 (the STC Offer Announcement Date ), Standard Chartered Bank announced, for and on behalf of Straits Trading Company Limited ( STC ), the possible mandatory conditional offer (the STC Offer ) for all the stock units of WBL Corporation Limited ( WBL Corporation ). On 30 January 2013 (the UE Pre-conditional Offer Announcement Date ), J.P. Morgan (S.E.A) Limited ( JPM ) announced, for and on behalf of UE Centennial Venture Pte. Ltd. ( UE Offeror ), the pre-conditional voluntary offer for all stock units in WBL Corporation (the UE Pre-conditional Offer ) at a price of S$4.00 in cash per offer stock unit. The lapse of STC Offer was subsequently announced on 4 March On 9 May 2013 (the UE Offer Announcement Date ), JPM announced that UE Offeror revised the stock unit offer price to S$4.50. On 13 May 2013, JPM announced that the UE Pre-conditional offer has become and have been declared unconditional in all respects. The market premium in the table above was computed based on the offer price of S$4.50 and the last transacted price of S$3.49 prior to the STC Offer Announcement Date. The offer price of S$4.50 would represent a premium of 7.1% and 0% over the last transacted price of S$4.20 and S$4.50 prior to the UE Pre-conditional Offer Announcement Date and the UE Offer Announcement Date. As at the closing date of the offer, UE Offeror and its concert parties owned, controlled or have agreed to acquire stock units representing 96.31% of the total number of issued stock units. While WBL has not been delisted from the SGX-ST as at the Latest Practicable Date, UE Offeror had stated that it has no intention to undertake or support any action for any listing suspension to be lifted. 35

36 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER (9) Whilst Pan Pacifi c Hotels Group Limited ( Pan Pacific ) has not been delisted from the SGX-ST as at the Latest Practicable Date. the percentage shareholding of Pan Pacifi c had fallen to below 10% as announced on 19 July (10) Being an outlier, Asia Pacifi c Breweries Limited has been excluded from the computation of the mean and median offer price-to-n T A ratio. (11) Being the Offer Price-to-RNTA ratio. We note that in respect of the Take-over Transactions: (a) the premium of the Offer Price over the last transacted price of the Shares prior to the Offer Announcement of 9.1% is: (i) (ii) within the range of the corresponding premia of the Take-over Transactions of between 0.0% and 57.1%; and below the corresponding mean and median premia of 30.3% and 28.9% of the Takeover Transactions respectively; (b) the price-to-nta ratio as implied by the Offer Price of 2.62 times is: (i) within the range of price-to-nta ratios of the Take-over Transactions of between 0.54 times and times; and (ii) at a significant premium of 106.3% and 147.2% over the mean and median price-to-nta ratios of the Take-over Transactions of 1.27 times and 1.06 times respectively; (c) the price-to-rnta ratio as implied by the Offer Price of 2.33 times is: (i) within the range of price-to-nta ratios of the Take-over Transactions of between 0.54 times and times; and (ii) at a significant premium of 83.5% and 119.8% over the mean and median price-to-nta ratios of the Take-over Transactions of 1.27 times and 1.06 times respectively Other Relevant Considerations Historical financial performance and condition of the Group The salient fi nancial information on the Group for the fi nancial years ended 30 June 2010 ( FY2010 ), FY2011, FY2012, 9M2012 and 9M2013 is set out below: Income statement Audited Unaudited (S$ 000) FY2010 FY2011 FY2012 9M2012 9M2013 Revenue 152, , , , ,856 Gross profi t 54,526 52,494 58,952 44,734 48,916 Profi t before tax 20,317 17,766 25,206 19,538 21,111 Profi t attributable to owners of the Company 13,772 11,492 16,965 13,623 14,178 36

37 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Balance sheet Audited as at 30 June Unaudited (S$ 000) March 2013 Current assets 93,325 98, , ,578 Current liabilities 39,572 42,499 52,326 59,116 Working capital 53,753 56,461 60,438 72,462 Non-current assets 47,212 45,619 42,885 42,132 Non-current liabilities 10,679 7,865 6,780 6,917 Equity attributable to owners of the Company 88,761 92,773 94, ,781 Cash fl ow statement Audited Unaudited (S$ 000) FY2010 FY2011 FY2012 9M2012 9M2013 Net cash fl ows from operating activities 8,295 19,121 25,809 19,160 20,352 Net cash fl ows used in investing activities (1,870) (1,708) (585) (254) (1,437) Net cash fl ows used in fi nancing activities (4,011) (10,280) (19,164) (18,613) (5,829) Net increase in cash and cash equivalents 2,414 7,133 6, ,086 Cash and cash equivalents at end of fi nancial year/period 26,608 33,741 39,801 34,034 52,887 Source: Annual report of the Company for FY2011 and FY2012 and announcement of the Group s unaudited fi nancial statements for 9M2013 We note the following: (a) (b) The Group s revenue increased by 8.5% from S$152.7 million in FY2010 to S$165.7 million in FY2011, mainly due to higher sales turnover of instant beverages and snack food. The Group s revenue increased by 4.2% from S$165.7 million in FY2011 to S$172.7 million in FY2012, mainly due to increased sales turnover of all its 3 business segments of instant beverages, snack food and fl exible packaging and printing businesses. Profi t attributable to owners of the Company decreased by 16. 7% from S$13.8 million in FY2010 to S$11.5 million in FY2011, mainly due to rising raw material prices and strengthening of the Singapore dollar against the US dollar and Renminbi. Profi t attributable to owners of the Company increased by 47.8% from S$11.5 million in FY2011 to S$17.0 million in FY2012, mainly due to improved gross profi t margin as a result of the higher sales volume and selling price, a more stable foreign exchange environment and management controlling its cost of sales; The Group s revenue decreased by 3.9% from S$134.2 million in 9M2012 to S$128.9 million in 9M2013, mainly due to an overall decrease in sales across all its business segments. Profi t attributable to owners of the Company increased by 4.4% from S$13.6 million in 9M2012 to S$14.2 million in 9M2013, mainly due to improved gross profi t margin as a result of an increase in selling prices, reduction in material prices, effi cient inventory control and favourable product sale mix; (c) The Group s working capital had generally been increasing from S$53.8 million as at 30 June 2010 to S$72.5 million as at 31 March 2013; 37

38 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER (d) Shareholders equity had generally been increasing from S$88.8 million as at 30 June 2010 to S$105.8 million as at 31 March 2013; (e) (f) The Group has recorded net cashflows from operating activities of between S$8.3 million and S$25.8 million, for each of FY2010, FY2011, FY2012, 9M2012 and 9M2013 respectively. In respect of cashfl ow from investing activities, the Group utilised between S$0. 3 million and S$1.9 million for each of FY2010, FY2011, FY2012, 9M2012 and 9M2013 respectively. In respect of cashfl ows from fi nancing activities, the Group utilised between S$4.0 million and S$19.2 million for each of FY2010, FY2011, FY2012, 9M2012 and 9M2013 respectively; and The Group s cash and cash equivalents had generally been increasing from S$26.6 million in FY2010 to S$52.9 million in 9M2013. We also note that the following statement on the signifi cant trends and competitive conditions of the industry the Group operates for the next 12 months was made in its unaudited 9M2013 fi nancial results announcement on 13 May 2013: The major markets that we operate in have become more competitive and challenging. As a result, advertising and promotion expenses may increase in future in order to maintain our market share. Additionally, any slow down in economic growth of these markets will have an impact on our performance. Our ability to increase selling prices and fl uctuation in raw material prices; US Dollar and Renminbi against Singapore Dollar will continue to have an impact on the Group s performance Limitation on subsequent offers by the Offeror Pursuant to Rule 33.2 of the Code, neither the Offeror nor any person acting in concert with it may (except with the consent of the SIC), within 6 months of the Closing Date, make a second offer to or acquire any Shares from any Shareholder on terms better than those made available under the current Offer. Shareholders should also note that as the Offeror owns more than 50% of the voting rights of the Company, the Offeror Concert Group will be free to increase their shareholding in the Company in accordance with the Code after the close of the Offer without incurring a take-over obligation The Offer is already unconditional As at the Latest Practicable Date, the Offeror Concert Group owns, control or has agreed to acquire an aggregate of 206,288,002 Shares (representing approximately 58.11% of the existing issued Share capital of the Company). Accordingly, as at the Latest Practicable Date, the Offer is unconditional. As such, Shareholders who accept the Offer are assumed of receiving the Offer Price in respect of all their acceptances of the Offer with no transaction costs involved. As at the Latest Practicable Date, the Offeror Concert Group would be in a position to signifi cantly infl uence, inter alia, the management, operating and fi nancial policies of the Group and is in a position to be able to pass all ordinary resolutions on matters in which the Offeror Concert Group does not have an interest and which are tabled for Shareholders approval at a general meeting Comparison to sale price in a recent share sale exercise On 8 October 2012, the Company announced that Mr Ben Chng Beng Beng had disposed of 57,000,000 Shares to Lam Soon Cannery Private Limited at a sale price of S$0.735 per Share. The Offer Price of S$0.780 is at a premium of 6.1% as compared to the purchase price made by Lam Soon Cannery Private Limited. 38

39 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Prior to the Latest Practicable Date, on 18, 19, 22 and 23 July 2013, the Company announced that Lam Soon Cannery Private Limited purchased Shares in the Company at average prices of between S$ and S$ These Share prices represent a marginal premium of between 1.3% and 1.9% respectively compared to the Offer Price. As at the Latest Practicable Date, Lam Soon Cannery Private Limited owns 20.45% of the Shares Comparison with invitation price at initial public offering and dividend payouts We note that the invitation price of the Company at its intitial public offering is S$0.22 per invitation share (the IPO Price ) on June Adjusted for the share split exercise of every 1 ordinary share in the capital of the Company into 2 Shares, undertaken by the Company in September 2010, the adjusted IPO Price would be S$0.11 (the Adjusted IPO Price ). Accordingly, the Offer Price of S$0.78 is at a signifi cant premium of S$0.67 (or 609.1%) over the Adjusted IPO Price. We further note that the Company has been consistent in paying an annual dividend since its listing, further details of which are set out below: Financial year Dividend per Share (cents) (1) FY2002 (2) FY2003 (2) FY2004 (2) FY2005 (2) FY2006 (2) FY2007 (2) FY2008 (2) FY2009 (3) FY FY FY FY Total Notes: (1) Dividend per Share information was provided by the Company. The dividend per Share prior to the date of share split has been adjusted for the share split exercise. (2) Refers to the respective fi nancial year ended 31 December. (3) The fi nancial year end was changed from 31 December to 30 June. For FY2009, the fi nancial year was based from the period of 1 January 2009 to 30 June Accordingly, a Shareholder who has held the Shares since its listing in June 2002 and up to June 2013 would, taking into account the Offer Price, recognise a return of cents (including dividends received, but not taking into account any applicable taxes, brokerage and commissions). This would translate into a compounded annual rate of return of approximately 20.95% over the period. Shareholders should note that the past dividend payouts by the Company should not in any way be relied upon as an indication or a promise of its future dividend payouts. The Directors have confi rmed that the Company does not have a fi xed dividend policy and that they had recommended the past dividends payouts after taking into consideration, inter alia, the Company s cash and fi nancial position, working capital requirements and future expansion. 39

40 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Compulsory acquisition and listing status of the Company Compulsory acquisition Pursuant to Section 215(1) of the Companies Act, in the event that the Offeror receives valid acceptances pursuant to the Offer in respect of not less than 90% of the total number of issued Shares (other than those already held by the Offeror, its related corporations or their respective nominees as at the date of the Offer and excluding treasury Shares), the Offeror would be entitled to compulsorily acquire all the Offer Shares from Shareholders who have not accepted the Offer after the Offeror has received valid acceptances in respect of not less than 90% of the Offer Shares (the Dissenting Shareholders ) on the same terms as those offered under the Offer. In such an event, the Offeror intends to exercise its rights of compulsory acquisition and the Company will become a wholly-owned subsidiary of the Offeror upon the completion of such compulsory acquisition. In addition, the Dissenting Shareholders have the right under and subject to Section 215(3) of the Companies Act, to require the Offeror to acquire their Shares at the Offer Price in the event that the Offeror, its related corporations or their respective nominees acquire, pursuant to the Offer, such number of Shares which, together with the Shares held by the Offeror, its related corporations or their respective nominees, comprise 90% or more of the total number of issued Shares (excluding treasury Shares). Shareholders who wish to exercise such a right are advised to seek their own independent legal advice. Listing status Shareholders should note that, as set out in paragraph 13 of the Offer Document, pursuant to Rule 1105 of the Listing Manual, in the event that the Offeror Concert Group, as a result of the Offer or otherwise, own or control more than 90% of the total number of issued Shares (excluding any treasury Shares), the SGX-ST may suspend the trading of the Shares on the SGX-ST until it is satisfi ed that at least 10% of the total number of issued Shares (excluding treasury Shares) are held by at least 500 Shareholders who are members of the public. Under Rule 1303(1) of the Listing Manual, where the Offeror succeeds in garnering acceptances exceeding 90% of the total number of issued Shares (excluding treasury Shares), thus causing the percentage of the total number of issued Shares (excluding treasury Shares) held in public hands to fall below 10%, the SGX-ST will suspend trading of the Shares only at the close of the Offer. In addition, pursuant to Rule 724 of the Listing Manual, if the percentage of the total number of issued Shares (excluding treasury Shares) held in public hands falls below 10%, the Company must, as soon as practicable, announce that fact and the SGX-ST may suspend the trading of all the Shares. Rule 724 of the Listing Manual further states that the SGX-ST may allow the Company a period of 3 months, or such longer period as the SGX-ST may agree, to raise the percentage of the Shares held in public hands to at least 10%, failing which the Company may be delisted. It is the intention of the Offeror to make the Company its wholly-owned subsidiary and to delist the Company from the SGX-ST. It is therefore not the intention of the Offeror to preserve the listing status of the Company and in the event that the trading of Shares on the SGX-ST is suspended pursuant to Rule 724, Rule 1105 or Rule 1303(1) of the Listing Manual, the Offeror does not intend to undertake or support any action for any such trading suspension to be lifted by the SGX-ST. Shareholders should note that as at the Latest Practicable Date, there is no assurance that, (i) the Offeror would be in a position to exercise their rights to compulsory acquisition under Section 215(1) of the Act; (ii) Shareholders would be in a position to require the Offeror to acquire their Shares under Section 215(3) of the Act; or (iii) there would remain a suffi cient public fl oat in the Shares to maintain the listing status of the Shares. 40

41 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER As at the Latest Practicable Date, the shareholdings of (i) the Offeror Concert Group, (ii) the Directors, and (iii) the substantial shareholder of the Company and their associates in aggregate amount to 294,575,462 Shares, representing 82.98% of the Shares. Accordingly, the free fl oat 2 would constitute 17.02% of the Shares. Shareholders should note that the free fl oat may fall below 10% should there be any acquisitions (whether through acceptances arising from the Offer or otherwise) by any of these parties of more than 24,921,816 Shares (in aggregate), representing 7.02% of the Shares Absence of alternative take-over offers from third parties As at the Latest Practicable Date, other than the Offer, there is no publicly available evidence of an alternative take-over offer for the Shares from any third party. Further, the Directors have confi rmed that as at the Latest Practicable Date, apart from the Offer, they have not received any other offer from any other party. 8. OUR OPINION AND ADVICE In arriving at our advice in respect of the Offer, we have taken into account, inter alia, the following key considerations: (a) an assessment of the market quotation and trading liquidity of the Shares as follows: (i) in relation to the Share prices: (aa) the Offer Price represents a premium of 30.0% and 6.1% over the lowest and the highest closing prices of the Shares respectively during the 12-month period; (bb) the Offer Price represents a premium of 9.9%, 12.4%, 12.4% and 12.9% over the VWAP of the Shares for the 12-, 6-, 3- and one-month periods prior to the Offer Announcement respectively; (cc) (dd) the Offer Price represents a premium of 9.1% over the closing price of S$0.715 on 4 July 2013, being the last Market Day on which the Shares were traded prior to the Offer Announcement and before the trading halt of the Shares at a.m. on 4 July 2013; the Offer Price represents a marginal discount of 0.9% to the VWAP of the Shares of S$0.787 for the period after the Offer Announcement and up to the Latest Practicable Date; and (ee) the Offer Price represents a marginal discount of 2.5% to the closing price of the Shares of S$0.800 on the Latest Practicable Date; (ii) in relation to the trading liquidity of the Shares: (aa) the average daily trading volume of the Shares for the 12-, 6-, 3- and onemonth periods prior to the Offer Announcement represented only 0.98%, 0.22%, 0.29%, and 0.49% of the free fl oat respectively; (bb) during the 12-month period prior to the Offer Announcement, the Shares were traded on 236 Market Days out of a total of 251 Market Days (or 94.0% of the total number of Market Days during the period), with an average daily trading volume of approximately 604,000 Shares; and 2 Free fl oat refers to the Shares other than those held by the Directors, substantial Shareholders and their associates (as defi ned in the Listing Manual). 41

42 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER (cc) during the period after the Offer Announcement and up to the Latest Practicable Date, the Shares were traded on all 12 Market Days out of a total of 12 Market Days (or % of the total number of Market Days during the period), with an average daily trading volume of approximately 746,000 Shares representing 1.23% of the free fl oat; (iii) in relation to the relative performance of the Shares versus the FSTAS Index: (aa) the Shares having generally outperformed the FSTAS Index in relative terms during the period commencing 12 months prior to the Offer Announcement and ending on the date of the Offer Announcement except for an intermittent period in May 2013; (bb) the Share price having appreciated by 11.9 % as compared to a marginal appreciation of 3.2% in the FSTAS Index during the period from 4 July 2013 (being the last Market Day on which the Shares were traded prior to the Offer Announcement and before the trading halt of the Shares at a.m. on 4 July 2013) to the Latest Practicable Date; and (cc) the market price of the Shares as at the Latest Practicable Date may be appeared to be supported by the Offer and purchases by Lam Soon Cannery Private Limited since the Offer Announcement, and may or may not be sustained at the current level prevailing as at the Latest Practicable Date after the close of the Offer; (b) a comparison with the book NTA, Ex-Cash Price-to-book NTA and RNTA of the Group as follows: (i) (ii) (iii) the Offer Price representing a signifi cant premium of 161.7% over the unaudited NTA per Share of S$0.298 as at 31 March 2013; the Ex-Cash Offer Price representing a signifi cant premium of 286.9% over the Ex-Cash Price-to-book NTA per Share of S$0.168 as at 31 March 2013; and the Offer Price representing a signifi cant premium of 132.8% over the RNTA per Share of S$0.335 as at 31 March 2013; (c) a comparison with the valuation statistics of the Comparable Companies as follows: (i) (ii) (iii) the historical PER of times of the Group as implied by the Offer Price being (aa) within the range of historical PERs of the Comparable Companies of between 5.79 times and times; and (bb) at a premium of 13.9% and 3.4% over the mean and median historical PERs of the Comparable Companies of times and times respectively; the historical price-to-book NTA ratio of 2.62 times of the Group as implied by the Offer Price being (aa) above the range of historical price-to-book NTA ratios of the Comparable Companies of between 0.37 times and 2.22 times; and (bb) at a signifi cant premium of 91.2% and 95.5% over the mean and median historical price-to-book NTA ratios of the Comparable Companies of 1.37 times and 1.34 times respectively; and the historical EV/EBITDA ratio of 9.29 times of the Group as implied by the Offer Price being (aa) within the range of historical EV/EBITDA ratios of the Comparable Companies of between 2.14 times and times; and (bb) at a premium of 8.0% and 11.9% over the mean and median historical EV/EBITDA ratios of the Comparable Companies of 8.60 times and 8.30 times respectively; 42

43 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER (d) a comparison with the valuation statistics of the Comparable Companies on the ex-cash basis as follows: (i) (ii) the historical Ex-Cash PER of times of the Group as implied by the Ex-Cash Offer Price being (aa) within the range of historical ex-cash PERs of the Comparable Companies of between 3.11 times and times; and (bb) at a premium of 11.1% and 23.0% over the mean and median historical ex-cash PERs of the Comparable Companies of times and times respectively; and the historical Ex-Cash Price-to-book NTA ratio of 3.87 times of the Group as implied by the Ex-Cash Offer Price being (aa) above the range of historical ex-cash price-to-book NTA ratios of the Comparable Companies of between 0.24 times and 2.22 times; and (bb) at a signifi cant premium of 182.5% and 186.7% over the mean and median historical ex-cash price-to-book NTA ratios of the Comparable Companies of 1.37 times and 1.35 times respectively; (e) a comparison with the Take-over Transactions as follows: (i) (ii) (iii) the premium of the Offer Price over the last transacted price of the Shares prior to the Offer Announcement of 9.1% being (aa) within the range of the corresponding premia of the Take-over Transactions of between 0.0% and 57.1%; and (bb) below the corresponding mean and median premia of 30.3% and 28.9% of the Take-over Transactions respectively; the price-to-nta ratio as implied by the Offer Price of 2.62 times being (aa) within the range of price-to-nta ratios of the Take-over Transactions of between 0.54 times and times; and (bb) at a signifi cant preimum of 106.3% and 147.2% over the mean and median price-to-nta ratios of the Take-over Transactions of 1.27 times and 1.06 times respectively; and the price-to-rnta ratio as implied by the Offer Price of 2.33 times being (aa) within the range of price-to-nta ratios of the Take-over Transactions of between 0.54 times and times; and (bb) at a signifi cant premium of 83.5% and 119.8% over the mean and median price-to-nta ratios of the Take-over Transactions of 1.27 times and 1.06 times respectively; and (f) other relevant considerations in relation to the Offer as follows: (i) (ii) (iii) (iv) (v) (vi) (vii) the historical fi nancial performance and condition of the Group, as set out in paragraph of this letter; the limitation on subsequent offers by the Offeror, as set out in paragraph of this letter; the Offer is already unconditional, as set out in paragraph of this letter; the comparison of the Offer Price to sale price in a recent share sale exercise, as set out in paragraph of this letter; the comparison of the Offer Price with the Adjusted IPO Price and dividend payouts, as set out in paragraph of this letter; the compulsory acquisition and listing status of the Company, as set out in paragraph of this letter; and the absence of alternative take-over offers from third parties, as set out in paragraph of this letter. 43

44 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Based on our analysis set out above and after considering all relevant information available to us as at the Latest Practicable Date, from a fi nancial point of view, we are of the opinion that the Offer Price is, on balance, fair and reasonable. The Independent Directors may wish to consider advising Shareholders who: (a) (b) wish to reali se all or part of their investments in the Shares; and/or are uncertain of the longer term performance and prospects of the Group, to (i) accept the Offer; or (ii) sell the Shares in the open market if they can obtain a price higher than the Offer Price (after deducting related expenses). In this regard, we note that the Shares had traded above the Offer Price for the period after the Offer Announcement Date and up to the Latest Practicable Date. The Independent Directors may also wish to consider advising Shareholders who: (a) (b) are prepared to take a longer term view of their investment in the Shares; and/or are positive about the prospects of the Group, to retain all or part of their shareholdings in the Company. The Independent Directors should note that we have arrived at our advice based on the information made available to us as at the Latest Practicable Date. Our advice on the Offer cannot and does not take into account the future trading activity or patterns or price levels that may be established for the Shares as these are governed by factors beyond the scope of our review and do not fall within our terms of reference in connection with our evaluation of the fi nancial terms of the Offer. We have prepared this letter for the use of the Independent Directors in connection with and for the purposes of their consideration of the Offer, and any recommendation made by the Independent Directors in respect of the Offer shall remain their responsibility. Whilst a copy of this Ietter may be reproduced in the Circular, no other person may reproduce, disseminate or quote this letter (or any part thereof) for any purpose (other than the intended purpose in relation to the Offer) at any time and in any manner without the prior written consent of SAC Capital in each specifi c case. This Ietter is governed by and shall be construed in accordance with the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter. Yours faithfully For and on behalf of SAC CAPITAL PRIVATE LIMITED Bernard Lim Aik Kwang Partner Lau Sze Mei Manager 44

45 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Latest full financial year Company (Country of Listing) Business description (as extracted from Bloomberg) Share price as at Latest Practicable Date (S$) Market capitalisation S$ (million) Financial year-end Revenue (million) Net profit after tax attributable to shareholders (million) Consciencefood Consciencefood processes food and produces instant noodles and snack noodles. The company markets its noodles primarily in Indonesia December RP775,193.0 RP87,391.0 Etika Etika manufactures and distributes September RM984.8 RM22.0 sweetened condensed milk and evaporated milk. The company also repacks and distributes complementary products such as full cream and instant high calcium non-fat milk powder, instant coffee powder, and tea dust. Food Empire Food Empire manufactures and markets December USD237.7 USD20.5 instant beverage products, frozen convenience food, confectionery and snack food. The company also exports its products to markets such as Russia, Eastern Europe, Central Asia, the Middle East and Indochina. Hosen Hosen distributes fast moving consumer goods (FMCG s) under its house brand as well as under third party leading brands. The company has its own lines of canned fruits, vegetables, seafood, meat products and beverages December SGD71.2 SGD0.6 45

46 APPENDIX 1 - LETTER FROM THE IFA TO THE INDEPENDENT DIRECTORS IN RESPECT OF THE OFFER Latest full financial year Company (Country of Listing) Business description (as extracted from Bloomberg) Share price as at Latest Practicable Date (S$) Market capitalisation S$ (million) Financial year-end Revenue (million) Net profit after tax attributable to shareholders (million) Sino Grandness Sino Grandness processes food and also cans fruits and vegetables including asparagus, long beans, mushrooms, bamboo shoots, sweet corn, chillies, lychees, pineapples, and peaches December RMB1, RMB290.0 Synear Food Synear Food produces and markets quick freeze food products. The company also produces dumplings, desserts and snacks December RMB1,874.6 RMB68.0 Tsit Wing Tsit Wing supplies coffee, tea and related grocery items to food establishments. The company also undertakes the entire manufacturing process from processing, roasting, grinding to packaging of coffee, and cleaning, blending to packaging of tea. Tsit Wing also distributes in-house brands of fast moving consumer goods (FMCGs) and manage café outlets December HKD601.7 HKD22.5 Source : Bloomberg L.P., annual reports and/or announcements of the respective companies 46

47 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY 1. DIRECTORS The names, addresses and descriptions of the Directors as at the Latest Practicable Date are set out below: Name Address Description Mr Yuen San Seng 9 Tanjong Rhu Road # The Waterside Singapore Mr Ben Chng Beng Beng 11 Ardmore Park #04-01 Singapore Mr Chng Khoon Peng Mr Tan Kok Hiang Mr Tan Hwee Yong 47 Jalan Besar Padang Besar Padang Besar Perlis Malaysia 17 Belimbing Avenue Singapore Block 578 Hougang Avenue 4 # Singapore Non-Executive Chairman and Independent Director Group Managing Director and Deputy Chairman Executive Director Non-Independent, Non-Executive Director Independent Director 2. THE COMPANY The Company was incorporated in Singapore on 9 March 1994 and is listed on the Mainboard of the SGX-ST since 11 July The Company has its registered offi ce at 50 Raffl es Place, #32-01Singapore Land Tower Singapore PRINCIPAL ACTIVITIES The Group is principally engaged in the manufacturing and exporting of fi ne-quality instant beverages, mixes, snack food and non-dairy creamer. The Group has manufacturing operations in Singapore, the People s Republic of China, Myanmar, Thailand and Vietnam, and its products are sold under various brands in markets such as the People s Republic of China, South-East Asia, Indochina, Iran, Japan, Africa, the Middle East as well as the United States of America. 4. SHARE CAPITAL 4.1 Issued Capital The Company has only one class of shares, being ordinary shares. As at the Latest Practicable Date, the issued and paid-up share capital of the Company is S$34,538, comprising 354,996,976 Shares (excluding treasury Shares). The Company has 6,120,000 treasury Shares as at the Latest Practicable Date. The Company has not issued any Shares since the end of FY2012. There is no restriction in the Memorandum and Articles of Association of the Company on the right to transfer any Shares, which has the effect of requiring the Shareholders, before transferring them, to offer them for purchase to members of the Company or to any other person. 4.2 Rights in Respect of Capital, Dividends and Voting The rights of Shareholders in respect of capital, dividends and voting are contained in the Articles of Association of the Company. For ease of reference, selected texts of the Articles of Association of the Company relating to the same have been extracted and reproduced in Appendix 6 to this Circular. 47

48 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY 5. COMPANY CONVERTIBLE SECURITIES As at the Latest Practicable Date, there are no outstanding Company Convertible Securities. 6. DISCLOSURE OF INTERESTS 6.1 Interests of the Company in Offeror Shares and Offeror Convertible Securities As at the Latest Practicable Date, neither the Company nor its subsidiaries have any direct or indirect interests in Offeror Shares or Offeror Convertible Securities. 6.2 Dealings in Offeror Shares and Offeror Convertible Securities by the Company Neither the Company nor its subsidiaries have dealt in Offeror Shares or Offeror Convertible Securities during the period commencing six (6) months prior to 5 July 2013, being the Offer Announcement Date and ending on the Latest Practicable Date. 6.3 Interests of the Directors in Offeror Shares and Offeror Convertible Securities As at the Latest Practicable Date, save for Mr Ben Chng Beng Beng who is deemed to have an interest in all the Shares of the Offeror, none of the Directors have any direct or indirect interests in Offeror Shares or Offeror Convertible Securities. 6.4 Dealings in Offeror Shares and Offeror Convertible Securities by the Directors As at the Latest Practicable Date, save for Mr Ben Chng Beng Beng, none of the Directors have dealt in Offeror Shares or Offeror Convertible Securities during the period commencing six (6) months prior to 5 July 2013 being the Offer Announcement Date, and ending on the Latest Practicable Date. 6.5 Interests of the Directors in Shares and Company Convertible Securities Save as disclosed below, as at the Latest Practicable Date, none of the Directors have an interest, direct or indirect, in the Shares or Company Convertible Securities. Direct Interest as at the Latest Practicable Date Deemed Interest as at the Latest Practicable Date Name No. of Shares (%) 1 No. of Shares (%) 1 Mr Yuen San Seng 650, Mr Ben Chng Beng Beng 206,288, Mr Chng Khoon Peng Mr Tan Kok Hiang 2,044, Mr Tan Hwee Yong 130, Dealings in Shares and Company Convertible Securities by the Directors Save as disclosed below, as at the Latest Practicable Date, none of the Directors have dealt in the Shares or Company Convertible Securities during the period commencing six (6) months prior to 5 July 2013, being the Offer Announcement Date, and ending on the Latest Practicable Date. Dealing Party Date Nature of Dealing No. of Shares Price per Share Mr Chng Khoon Peng 5 July 2013 Off market sale 135,800,219 S$0.78 Offeror 2 5 July 2013 Off market purchase 135,800,219 S$0.78 Offeror 2 8 July 2013 Market purchase 78,000 S$0.78 Notes: 1. Based on 354,996,976 Shares (excluding treasury Shares) as at the Latest Practicable Date. 2. Mr Ben Chng Beng Beng is deemed interested in all the Shares held or acquired by the Offeror (as the case may be) as he is the sole shareholder of Mercury Rising which is the sole shareholder of the Offeror. 48

49 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY 6.7 Interests of the IFA in Shares and Company Convertible Securities None of the IFA, its related corporations or funds whose investments are managed by the IFA or its related corporations on a discretionary basis, own or control any Shares or Company Convertible Securities as at the Latest Practicable Date. 6.8 Dealings in Shares and Company Convertible Securities by the IFA None of the IFA, its related corporations or funds whose investments are managed by the IFA or its related corporations on a discretionary basis, have dealt for value in the Shares or Company Convertible Securities during the period commencing six (6) months prior to 5 July 2013, being the Offer Announcement Date, and ending on the Latest Practicable Date. 6.9 Interests of the IFA in Offeror Shares and Offeror Convertible Securities None of the IFA, its related corporations or funds whose investments are managed by the IFA or its related corporations on a discretionary basis, own or control any Offeror Shares or Offeror Convertible Securities Dealings of the IFA in Offeror Shares and Offeror Convertible Securities None of the IFA, its related corporations or funds whose investments are managed by the IFA or its related corporations on a discretionary basis, have dealt for value in the Offeror Shares or Offeror Convertible Securities during the period commencing six (6) months prior to 5 July 2013, being the Offer Announcement Date, and ending on the Latest Practicable Date Accepting or Rejecting the Offer Each of the Directors who directly holds Shares in the Company, being Messrs Yuen San Seng, Tan Kok Hiang and Tan Hwee Yong, intends to accept the Offer in respect of each of their shareholdings as set out against their names in Paragraph 6.5 of this Appendix 2 above. 7. OTHER DISCLOSURES 7.1 Directors Service Contracts A service agreement (each a Service Agreement ) was entered into between the Company and each of Executive Directors, Mr Chng Khoon Peng and Group Managing Director and Deputy Chairman, Mr Ben Chng Beng Beng on 26 June 2002 and the Service Agreements were supplemented pursuant to supplemental agreements dated 27 April 2011 (collectively the Agreements ). Pursuant to the Agreements, each of Messrs Chng Khoon Peng and Ben Chng Beng Beng shall be paid a monthly remuneration of $18,000 and $25,000 respectively. In addition, each of them will be paid an annual wage supplement of one (1) month. The Service Agreement is not for a fi xed term and runs from 26 June 2002 until such date that the agreement is terminated by (a) not less than three months written notice (i) at any time by reason of ill health or accident or where there is incapacitation of a total period of 60 days or more (whether consecutive or not) in the past 12 months; or (ii) by not less than three (3) months notice in writing of such termination or by giving an amount equal to three (3) months salary in lieu of notice; or (b) summary notice if there is a serious breach (or a repetition or continuation thereof), disreputable conduct or acts of bankruptcy or creditors compounding. Save as disclosed above, as at the Latest Practicable Date, there (i) are no service contracts between any Director or proposed director with any Group Company with more than 12 months to run, which the employing company cannot, within the next 12 months, terminate without payment of compensation, and (ii) were no such service contracts entered into or amended between any of the Directors or proposed director and any Group Company during the period between the start of the six (6) months immediately preceding the Offer Announcement Date and the Latest Practicable Date. 49

50 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY 7.2 No Payment or Benefit to Directors As at the Latest Practicable Date, save as disclosed below it is not proposed, in connection with the Offer, that any payment or other benefi t be made or given to any Director or to any director of any other corporation which is, by virtue of Section 6 of the Act, deemed to be related to the Company as compensation for loss of offi ce or otherwise in connection with the Offer. 7.3 No Agreement Conditional upon Outcome of the Offer Save as disclosed in this Circular, as at the Latest Practicable Date, there are no agreements or arrangements made between any Director and any other person in connection with or conditional upon the outcome of the Offer. None of the Directors will resign from offi ce pursuant to or in connection with the Offer. 7.4 Material Contracts entered into by the Offeror As at the Latest Practicable Date, there are no material contracts entered into by the Offeror in which any Director has a material personal interest, whether direct or indirect. 8. FINANCIAL INFORMATION OF THE GROUP A summary of the audited consolidated fi nancial information of the Group for FY2010, FY2011, FY2012 and the unaudited consolidated fi nancial statements of the Group for the third quarter ended 31 March 2013 ( 3Q2013 ) is set out below. The summary of the fi nancial information of the Group as set out in this Paragraph 8 is extracted from, and should be read together with, the audited consolidated fi nancial statements and the unaudited fi nancial statements of the Group for the relevant fi nancial periods and the notes related thereto, copies of which are available on the website of the SGX-ST at and available for inspection at the Company s registered offi ce at 50 Raffl es Place #32-01 Singapore Land Tower Singapore The audited consolidated fi nancial statements for FY2012 and the unaudited consolidated fi nancial statements 3Q2013, are respectively set out in Appendices 4 and 5 to this Circular. 50

51 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY Consolidated Statements of the Group s Comprehensive Income Audited Unaudited FY2010 FY2011 FY2012 3Q2013 $ 000 $ 000 $ 000 $ 000 Revenue 152, , , ,856 Exceptional items Cost of sales (98,221) (113,181) (113,774) (79,940) Gross profit 54,526 52,494 58,952 48,916 Other items of income Other income Interest income Other items of expense Marketing and distribution expenses (20,214) (19,968) (20,307) (18,141) Administrative expenses (13,864) (14,815) (13,699) (9,925) Other expenses (60) (1) (81) (52) Financial expenses (998) (492) (436) (310) Other fi nancial cost (209) (214) (191) (102) Profit before tax 20,317 17,766 25,206 21,111 Income tax expense (5,940) (5,553) (7,336) (6,115) Profit for the year 14,377 12,213 17,870 14,996 Other comprehensive income: Foreign currency translation (246) (2,010) Total comprehensive income for the year 14,131 10,203 18,766 15,289 Profit for the year attributable to: Owners of the Company 13,772 11,492 16,965 14,178 Non-controlling interests ,377 12,213 17,870 14,996 Total comprehensive income for the year attributable to: Owners of the Company 13,526 9,550 17,828 14,461 Non-controlling interests ,131 10,203 18,766 15,289 Earnings per Share attributable to owners of the Company (cents per Share) - Basic Diluted

52 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY Statements of the Group s Financial Position Audited Unaudited FY2010 FY2011 FY2012 3Q2013 $ 000 $ 000 $ 000 $ 000 Assets Non-current assets Property, plant and equipment 41,932 40,519 38,851 38,205 Investment in subsidiaries Intangible assets Land use rights 5,079 4,948 3,916 3,836 47,212 45,619 42,885 42,132 Current assets Inventories 26,738 28,552 26,161 24,662 Trade and other receivables 27,472 25,103 21,353 23,936 Other current assets 3,691 3,244 1,033 1,609 Fixed deposits pledged 8,816 8,320 24,416 28,484 Cash and cash equivalents 26,608 33,741 39,801 52,887 93,325 98, , ,578 Total assets 140, , , ,710 Equity and liabilities Current liabilities Trade and other payables 11,873 19,319 12,965 14,413 Other liabilities 12,374 10,099 9,850 11,529 Loans and borrowings 12,302 10,830 26,511 29,554 Provision for taxation 3,023 2,251 3,000 3,620 39,572 42,499 52,326 59,116 Net current assets 53,753 56,461 60,438 72,462 Non-current liabilities Loans and borrowings 7,995 4,965 2,654 2,005 Deferred tax liabilities 2,684 2,900 4,126 4,912 10,679 7,865 6,780 6,917 Total liabilities 50,251 50,364 59,106 66,033 Net assets 90,286 94,215 96, ,677 Equity attributable to the owners of the Company Share capital 34,179 36,383 36,383 36,383 Treasury shares (693) (719) (1,174) (1,174) Other reserves 7,132 5,995 6,686 7,122 Retained earnings 48,143 51,114 52,975 63,450 88,761 92,773 94, ,781 Non-controlling interests 1,525 1,442 1,673 1,896 Total equity 90,286 94,215 96, ,677 Total equity and liabilities 140, , , ,710 52

53 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY Set out below is also a summary of the net dividend per Share declared in respect of each of FY2010, FY2011, FY2012 and 3Q2013 by the Company. This information was extracted from the Company s annual reports for FY2010, FY2011, FY2012 and the unaudited consolidated fi nancial statements of the Group for 3Q2013. Financial Period Cents In respect of FY2010 (interim dividend of 1.00 cents, special dividend of cents and fi nal dividend of 0.75 cents) (1) In respect of FY2011 (interim dividend of 1.75 cents, fi nal dividend of 0.50 cents) In respect of FY2012 (interim dividends of 0.30 cents, 1.00 cents and 2.00 cents and fi nal dividend of nil cents) In respect of 3Q2013 (interim dividend of 1.00 cents) 1.00 Note: (1) The interim dividend of 1.00 cents per Share and the special dividend of 1.50 per Share was declared before the share sp lit exercise in FY2010 of one (1) ordinary share in the capital of the Company (both issued and unissued) into two (2) ordinary shares in the capital of the Company ( Share Sp li t ). The fi nal dividend of 0.75 cents per Share was declared after the Share Sp lit had occurred. Save as disclosed in the unaudited fi nancial statements of the Group for 3Q2013, and any other information on the Group which is publicly available (including without limitation, the announcements released by the Group on the SGX-ST), there have been no material changes to the fi nancial position of the Company since 30 June 2012, being the date of the last audited accounts of the Company laid before the Shareholders in general meeting. 9. SIGNIFICANT ACCOUNTING POLICIES A summary of the signifi cant accounting policies of the Group is set out in the notes to the audited consolidated fi nancial statements of the Group for FY2012, a copy of which is attached as Appendix 4 to this Circular. Save as disclosed in the notes to the audited consolidated fi nancial statements of the Group for FY2012, there are no signifi cant accounting policies or any matter from such notes, which are of any major relevance for the interpretation of the accounts of the Group referred to the in the Appendices. 10. CHANGES IN ACCOUNTING POLICIES The adoption of new and revised FRS and INT FRS effective on 1 July 2012 has no material impact on the fi nancial statements of the Group. Accordingly, there is no change in the accounting policy of the Group which will cause the fi gures disclosed in this Circular not to be comparable to a material extent. 11. MATERIAL CONTRACTS As at the Latest Practicable Date, neither the Company nor any of its subsidiaries have entered into any material contracts with interested persons (other than those entered into in the ordinary course of business) during the period commencing three (3) years before 5 July 2013, being the Offer Announcement Date, and ending on the Latest Practicable Date. For completeness, as disclosed in the public announcements made by the Company via SGXNET and the annual report of the Company for FY2010, FY2011 and FY2012, the Group had entered into several interested person transactions in the ordinary course of its business during the period commencing three (3) years before 5 July 2013, being the Offer Announcement Date, and ending on the Latest Practicable Date. 53

54 APPENDIX 2 - ADDITIONAL GENERAL INFORMATION ON THE COMPANY 12. MATERIAL LITIGATION Neither the Company nor any of its subsidiaries are engaged in any material litigation as plaintiff or defendant which might materially and adversely affect the fi nancial position of the Group as a whole. The Directors are not aware of any proceedings pending or threatened against the Company or any of its subsidiaries or of any facts likely to give rise to any proceedings which might materially or adversely affect the fi nancial position of the Group taken as a whole. 13. VALUATION ON SUBJECT PROPERTIES The Company has commissioned independent valuations of the Subject Properties (the Valuation Reports ). Extracts of the Valuation Reports are set out in Appendix 8 to this Circular. The basis of valuation of the Subject Properties is the open market value for the existing use. 14. GENERAL 14.1 Costs and Expenses All expenses and costs incurred by the Company in relation to the Offer will be borne by the Company Consent of SAC Capital SAC Capital has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of the IFA Letter which is set out in Appendix 1 to this Circular and all references to its name in the form and context in which they appear in this Circular Consent of the Registrar M & C has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its name and all the references to its name in the form and context in which they appear in this Circular Consent of the Valuers Each of the Valuers have given and have not withdrawn their written consents to the issue of this Circular with the inclusion of their names and the extract from their respective Valuation Reports and all the references thereto in the form and context in which they appear in this Circular. 15. DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection at the registered offi ce of the Company at 50 Raffl es Place, #32-01, Singapore Land Tower, Singapore , during normal business hours until the Closing Date: (i) (ii) the Memorandum and Articles of Association of the Company; the annual reports of the Company for FY2010, FY2011 and FY2012; (iii) the unaudited fi nancial statements of the Group for 3Q2013; (iv) (v) (vi) the IFA Letter; the full technical Valuation Reports on the Subject Properties ; and the letters of consent referred to in Paragraphs 14.2, 14.3 and 14.4 above. 54

55 APPENDIX 3 - INFORMATION ON THE OFFEROR The following information on the Offeror has been extracted from Appendix 3 to the Offer Document and set out in italics below. 1. DIRECTOR The name, address and description of the sole director of the Offeror as at the Latest Practicable Date are as set out below: Name Address Description Mr Ben Chng Beng Beng c/o 14 Woodlands Link, Singapore Director 2. SHARE CAPITAL As at the Latest Practicable Date, the Offeror has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. 3. SUMMARY OF FINANCIAL INFORMATION As the Offeror was incorporated on 14 June 2013, no audited fi nancial statements of the Offeror have been prepared as at the Latest Practicable Date. 4. MATERIAL CHANGES IN FINANCIAL POSITION Save for the making and fi nancing of the Offer, as at the Latest Practicable Date, there has been no known material change in the fi nancial position of the Offeror since its incorporation. 5. PRINCIPAL ACTIVITIES AND SHARE CAPITAL The Offeror is a special purpose vehicle incorporated on 14 June 2013 for the purpose of the Offer under the laws of the British Virgin Islands. The Offeror has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. The Offeror is wholly owned by Mercury Rising and its sole director is CBB. Mercury Rising is also a special purpose vehicle incorporated on 14 June 2013 for the purpose of the Offer under the laws of the British Virgin Islands. Mercury Rising has an authorised capital of S$50,000 divided into 50,000 ordinary shares and an issued share capital of S$1.00 comprising 1 ordinary share. Mercury Rising is wholly owned by CBB, who is also its sole director. 6. REGISTERED OFFICE The registered offi ce of the Offeror is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. 55

56 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 DIRECTORS REPORT The directors are pleased to present their report to the members together with the audited consolidated financial statements of Viz Branz Limited (the Company ) and its subsidiaries (collectively, the Group ) and the statement of financial position and statement of changes in equity of the Company for the financial year ended 30 June Directors The directors of the Company in office at the date of this report are: Yuen San Seng Ben Chng Beng Beng Chng Khoon Peng Tan Kok Hiang Tan Hwee Yong 2. Arrangements to enable directors to acquire shares and debentures Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate. 3. Directors interests in shares and debentures The following directors, who held office at the end of the financial year, had, according to the register of directors shareholdings required to be kept under Section 164 of the Singapore Companies Act, Chapter 50 (the Act ), an interest in shares of the Company as stated below: The Company Viz Branz Limited At the beginning of financial year Direct interest At the end of financial year At 21 July 2012 (Ordinary shares) Yuen San Seng 1,000, , ,000 Ben Chng Beng Beng 178,334, ,409, ,409,783 Chng Khoon Peng 82,541, ,800, ,800,219 Tan Kok Hiang 2,044,140 2,044,140 2,044,140 Tan Hwee Yong 130, , ,000 By virtue of Section 7 of the Act, Mr Chng Khoon Peng and Mr Ben Chng Beng Beng, are deemed to have interests in the shares of the subsidiaries of the Company. Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, share options, warrants or debentures of the Company, or of related corporations, either at the beginning of the financial year or at the end of the financial year. 56

57 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 DIRECTORS REPORT 4. Directors contractual benefits Except as disclosed in the financial statements, since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director, or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest. 5. Options No options were issued by the Company or its subsidiaries during the financial year. As at 30 June 2012, there were no options on the unissued shares of the Company or its subsidiaries which were outstanding. 6. Audit Committee The Audit Committee (AC) comprises Messrs Tan Hwee Yong, Yuen San Seng and Tan Kok Hiang. The Chairman of the AC is Mr Tan Hwee Yong. Majority of the members, including the Chairman, are independent non-executive directors. The AC carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Cap. 50, Listing Manual and the Best Practice Guide of the SGX-ST, and the Code of Corporate Governance. The functions performed are detailed in the Group s Report on Corporate Governance in the Annual Report. On behalf of the board of directors: Ben Chng Beng Beng Director Tan Kok Hiang Director 6 December

58 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 STATEMENT BY DIRECTORS We, Ben Chng Beng Beng and Tan Kok Hiang, being two of the directors of Viz Branz Limited, do hereby state that, in the opinion of the directors, (i) (ii) the accompanying statements of financial position, consolidated statement of comprehensive income, statements of changes in equity, and consolidated statement of cash flows together with notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2012 and the results of the business, changes in equity and cash flows of the Group and the changes in equity of the Company for the year ended on that date, and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due. On behalf of the board of directors: Ben Chng Beng Beng Director Tan Kok Hiang Director 6 December

59 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 INDEPENDENT AUDITOR S REPORT For the financial year ended 30 June 2012 To the members of Viz Branz Limited Report on the financial statements We were engaged to audit the accompanying financial statements of Viz Branz Limited (the Company ) and its subsidiaries (collectively, the Group ) set out on pages 33 to 98, which comprise the statements of financial position of the Group and the Company as at 30 June 2012, the statements of changes in equity of the Group and the Company and the consolidated statement of comprehensive income and consolidated statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information. Management s responsibility for the financial statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act ) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Because of the matters described in the Basis for Disclaimer of Opinion paragraphs, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Basis for Disclaimer of Opinion As disclosed in Note 1.2 to the financial statements, an Executive Director ( ED ) has alleged, amongst others, that there are unknown, private and irregular payment arrangements between the Managing Director ( MD ) and two Myanmar distributors of the Group whereby collection of payments from the Myanmar distributors were paid to the MD s bank account and payment was only thereafter made from the bank account to the Group (the allegations ). On 26 March 2012, the Company announced that it received notification that the ED had lodged a complaint with the Commercial Affairs Department ( CAD ) relating to these allegations against the MD. On 30 November 2012, the Company announced that the ED has in writing withdrawn without any reservation whatsoever his previous allegations, and further stated that he intends to withdraw his complaints lodged with CAD. We were not provided with access to the complaints lodged with the CAD to enable us to understand the full content of the complaints made. In addition, we are unable to ascertain the progress and/or outcome of any investigation by the CAD and the effect, if any, of the intended withdrawal of complaints by the ED. We were not able to obtain sufficient and appropriate evidence to ascertain the nature of the transactions with the Myanmar distributors and whether the transactions are properly recorded and presented in the financial statements. Consequently, we were unable to perform the audit procedures necessary to satisfy ourselves as to the resolution of the allegations made. As a result, we are unable to determine whether any adjustments to the financial statements are necessary. Note 26 to the financial statements sets out disclosures of related party transactions including the above mentioned arrangement with the Myanmar distributors. We are unable to carry out the audit procedures necessary to satisfy ourselves on the completeness and accuracy of the related party transactions disclosed in the financial statements. 59

60 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 INDEPENDENT AUDITOR S REPORT For the financial year ended 30 June 2012 Disclaimer of Opinion Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements. Report on other legal and regulatory requirements Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we do not express an opinion on whether the accounting and other records required by the Act to be kept by the Company, Gold Roast Food Industry Pte Ltd and VB Global Trade Pte. Ltd., have been properly kept in accordance with the provisions of the Act. In our opinion, the accounting and other records required to be kept by other subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act. During the course of the audit, we noted that there are instances of breach of the requirements in the Memorandum and Articles of Association of the Company with details as disclosed in Note 24 to the financial statements. Ernst & Young LLP Public Accountants and Certified Public Accountants Singapore 6 December

61 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the financial year ended 30 June 2012 (Amounts in Singapore dollars) Note $ 000 $ 000 Revenue 4 172, ,675 Cost of sales (113,774) (113,181) Gross profit 58,952 52,494 Other items of income Other income Interest income Other items of expense Marketing and distribution expenses (20,307) (19,968) Administrative expenses (13,699) (14,815) Other expenses (81) (1) Financial expenses 6 (436) (492) Other financial cost 6 (191) (214) Profit before tax 7 25,206 17,766 Income tax expense 9 (7,336) (5,553) Profit for the year 17,870 12,213 Other comprehensive income: Foreign currency translation 896 (2,010) Total comprehensive income for the year 18,766 10,203 Profit for the year attributable to: Owners of the Company 16,965 11,492 Non-controlling interests ,870 12,213 Total comprehensive income for the year attributable to: Owners of the Company 17,828 9,550 Non-controlling interests ,766 10,203 Earnings per share attributable to owners of the Company (cents per share) - Basic Diluted The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 61

62 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 STATEMENTS OF FINANCIAL POSITION As at 30 June 2012 (Amounts in Singapore dollars) Group Company Note $ 000 $ 000 $ 000 $ 000 Assets Non-current assets Property, plant and equipment 11 38,851 40,519 Investment in subsidiaries 12 35,734 34,827 Intangible assets Land use rights 14 3,916 4,948 42,885 45,619 35,753 34,850 Current assets Inventories 15 26,161 28,552 Trade and other receivables 16 21,353 25,103 20,378 25,819 Other current assets 17 1,033 3, Fixed deposits pledged 25 24,416 8,320 24,416 8,320 Cash and cash equivalents 25 39,801 33,741 6,644 7, ,764 98,960 51,453 41,323 Total assets 155, ,579 87,206 76,173 Equity and liabilities Current liabilities Trade and other payables 18 12,965 19, ,269 Other liabilities 19 9,850 10,099 1,423 1,686 Loans and borrowings 20 26,511 10,830 24,416 8,320 Provision for taxation 3,000 2, ,326 42,499 26,714 11,406 Net current assets 60,438 56,461 24,739 29,917 Non-current liabilities Loans and borrowings 20 2,654 4,965 Deferred tax liabilities 9 4,126 2, ,780 7,865 4 Total liabilities 59,106 50,364 26,714 11,410 Net assets 96,543 94,215 60,492 64,763 Equity attributable to the owners of the Company Share capital 22 36,383 36,383 36,383 36,383 Treasury shares 22 (1,174) (719) (1,174) (719) Other reserves 23 6,686 5,995 Retained earnings 52,975 51,114 25,283 29,099 94,870 92,773 60,492 64,763 Non-controlling interests 1,673 1,442 Total equity 96,543 94,215 60,492 64,763 Total equity and liabilities 155, ,579 87,206 76,173 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 62

63 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 STATEMENTS OF CHANGES IN EQUITY For the financial year ended 30 June 2012 (Amounts in Singapore dollars) Equity, total Equity attributable to owners of the Company, total Share capital Attributable to owners of the Company Treasury shares Statutory reserve fund Foreign currency translation reserve Premium paid on acquisition of noncontrolling interests Retained earnings Noncontrolling interests $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Group Opening balance at 1 July ,215 92,773 36,383 (719) 7,559 (1,356) (208) 51,114 1,442 Profit for the year 17,870 16,965 16, Other comprehensive income Foreign currency translation Total comprehensive income for the year 18,766 17, , Contributions by and distributions to owners Purchase of treasury shares (Note 22(b)) (455) (455) (455) Dividends on ordinary shares (Note 24) (15,276) (15,276) (15,276) Dividend paid by subsidiaries to non-controlling shareholders (707) (707) Reclassifications from statutory reserve fund (172) 172 Total contributions by and distributions to owners (16,438) (15,731) (455) (172) (15,104) (707) Closing balance at 30 June ,543 94,870 36,383 (1,174) 7,387 (493) (208) 52,975 1,673 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 63

64 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 STATEMENTS OF CHANGES IN EQUITY For the financial year ended 30 June 2012 (Amounts in Singapore dollars) Equity, total Equity attributable to owners of the Company, total Share capital Attributable to owners of the Company Treasury Warrants shares reserve Statutory reserve fund Foreign currency translation reserve Premium paid on acquisition of noncontrolling interests Retained earnings Noncontrolling interests $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Group Opening balance at 1 July ,286 88,761 34,179 (693) 398 6, ,143 1,525 Profit for the year 12,213 11,492 11, Other comprehensive income Foreign currency translation (2,010) (1,942) (1,942) (68) Total comprehensive income for the year 10,203 9,550 (1,942) 11, Contributions by and distributions to owners Issue of ordinary shares via conversion of warrants 1,806 1,806 2,204 (398) Purchase of treasury shares (Note 22(b)) (26) (26) (26) Dividends on ordinary shares (Note 24) (7,110) (7,110) (7,110) Dividend paid by subsidiaries to non-controlling shareholders (697) (697) Transfer to statutory reserve fund 1,411 (1,411) Total contributions by and distributions to owners (6,027) (5,330) 2,204 (26) (398) 1,411 (8,521) (697) Changes in ownership interests in subsidiaries Acquisition of non-controlling interests without a change in control (247) (208) (208) (39) Total changes in ownership interests in subsidiaries (247) (208) (208) (39) Total transaction with owners in their capacity as owners (6,274) (5,538) 2,204 (26) (398) 1,411 (208) (8,521) (736) Closing balance at 30 June ,215 92,773 36,383 (719) 7,559 (1,356) (208) 51,114 1,442 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 64

65 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 STATEMENTS OF CHANGES IN EQUITY For the financial year ended 30 June 2012 (Amounts in Singapore dollars) Company Equity, total Share capital Treasury shares Warrants reserve Retained earnings $ 000 $ 000 $ 000 $ 000 $ 000 Opening balance at 1 July ,763 36,383 (719) 29,099 Profit for the year, representing total comprehensive income for the year 11,460 11,460 Contributions by and distributions to owners Dividends on ordinary shares (Note 24) (15,276) (15,276) Purchase of treasury shares (Note 22(b)) (455) (455) Total transactions with owners in their capacity as owners (15,731) (455) (15,276) Closing balance at 30 June ,492 36,383 (1,174) 25,283 Opening balance at 1 July ,259 34,179 (693) ,375 Profit for the year, representing total comprehensive income for the year 11,834 11,834 Contributions by and distributions to owners Dividends on ordinary shares (Note 24) (7,110) (7,110) Purchase of treasury shares (Note 22(b)) (26) (26) Issue of ordinary shares via conversion of warrants 1,806 2,204 (398) Total transactions with owners in their capacity as owners (5,330) 2,204 (26) (398) (7,110) Closing balance at 30 June ,763 36,383 (719) 29,099 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 65

66 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 30 June 2012 (Amounts in Singapore dollars) Note $ 000 $ 000 Operating activities Profit before tax 25,206 17,766 Adjustments for: Amortisation of intangible assets Amortisation of land use rights Depreciation of property, plant and equipment 11 2,929 3,144 Property, plant and equipment written off Net loss/(gain) on disposal of property, plant and equipment 17 (53) Gain on disposal of intangible assets (30) Loss on disposal of land use rights 28 Impairment loss on goodwill 375 Interest expense Interest income (640) (322) Unrealised exchange difference loss/(gain) 888 (1,981) Total adjustments 4,229 1,461 Operating cash flows before changes in working capital 29,435 19,227 Changes in working capital Decrease/(increase) in: Inventories 2,406 (1,814) Trade and other receivables 3,770 2,369 Other current assets 2, (Decrease)/increase in: Trade and other payables (6,749) 7,446 Other liabilities (249) (2,275) Total changes in working capital 1,531 6,173 Cash flows from operations 30,966 25,400 Interest received Interest paid (436) (492) Income taxes paid (5,361) (6,109) Net cash flows from operating activities 25,809 19,121 Investing activities Addition to intangible asset 13 (18) (37) Purchase of property, plant and equipment 11 (1,916) (1,813) Proceeds from disposal of property, plant and equipment Proceeds from disposal of intangible asset 50 Proceeds from disposal of land use rights 889 Cash outflow on acquisition of subsidiary 12 (168) Net cash flows used in investing activities (585) (1,708) The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 66

67 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 CONSOLIDATED STATEMENT OF CASH FLOWS For the financial year ended 30 June 2012 (Amounts in Singapore dollars) Note $ 000 $ 000 Financing activities Acquisition of non-controlling interests (247) Dividends paid on ordinary shares 24 (15,276) (7,110) Dividends paid to non-controlling shareholders of subsidiaries (707) (697) Purchase of treasury shares 22(b) (455) (26) Repayment of obligations under finance leases (523) (540) Proceeds from loans and borrowings 31,500 17,181 Repayment of loans and borrowings (17,607) (21,143) Proceeds from conversion of warrants 1,806 (Increase)/decrease in short-term deposits pledged (16,096) 496 Net cash flows used in financing activities (19,164) (10,280) Net increase in cash and cash equivalents 6,060 7,133 Cash and cash equivalents at 1 July 33,741 26,608 Cash and cash equivalents at 30 June 25 39,801 33,741 The accompanying accounting policies and explanatory notes form an integral part of the financial statements. 67

68 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Corporate information 1.1 The Company Viz Branz Limited (the Company) is a limited liability company incorporated and domiciled in Singapore and is listed on the Singapore Exchange Securities Trading Limited (SGX-ST). The registered office and principal place of business of the Company is located at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore and 14 Woodlands Link, Singapore respectively. The principal activities of the Company are those of investment holding and provision of management and administrative support services to its subsidiaries. The principal activities of the subsidiaries are disclosed in Note 12 to the financial statements. 1.2 Allegations made by CKP The Company had on 20 March 2012 received a letter from Chng Khoon Peng ( CKP ), an Executive Director of the Company, addressed to the Enforcement Department, Risk Management & Regulation Group, Singapore Exchange Limited relating to allegations against Ben Chng Beng Beng ( CBB ), being the Group s Managing Director and Deputy Chairman ( Letter from CKP ). On 26 March 2012, the Company received notification from CKP, an Executive Director of the Company, that CKP had lodged a complaint with the Commercial Affairs Department ( CAD ) relating to allegations as stated in Letter from CKP. The Letter from CKP had alleged, amongst others, hitherto unknown, private and irregular payment arrangement between CBB and two Myanmar distributors of the Group, whereby monies due to the Company from the Myanmar distributors were paid into a third party account operated by CBB from which payment was only thereafter made from the third party account to the Company. The Company had responded on 26 March 2012 that these allegations have already been looked into and carefully considered previously by the Company and its audit committee. The conclusion was that there was no merit in these allegations. Thereafter, the Company had met and explained to CKP the conclusion and made available for inspection the relevant documents. The Company believes that by the end of the meeting, the Company had addressed CKP s concerns. Since 26 March 2012, the Company has not received any communication from CAD. On 29 November 2012, the Company received a letter from CKP informing that having considered all the explanations and reviewing all the documents given to him, he was satisfied and was withdrawing all his allegations unreservedly. Accordingly then he would also withdraw his complaint to the CAD. As at the date of this report, the Company does not have access to the complaints lodged with CAD and the Company has yet to receive the letter from CKP relating to withdrawal of complaints previously lodged with CAD. In addition, due to the limitation of accounting system, Myanmar distributors are unable to provide certain information relating to transactions with the Group. 68

69 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies 2.1 Basis of preparation The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below. The financial statements are presented in Singapore Dollars (SGD or $) and all values in the tables are rounded to the nearest thousand ($ 000) as indicated. 2.2 Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year except in the current financial year, the Group has adopted all the new and revised standards and Interpretations of FRS (INT FRS) that are effective for annual periods beginning on or after 1 July The adoption of these standards and interpretations did not have any effect on the financial performance or position of the Group and the Company. 2.3 Standards issued but not yet effective The Group has not adopted the following standards and interpretations that have been issued but are not yet effective: Description Effective for annual periods beginning on or after Amendments to FRS 12 Income Taxes Deferred Tax: Recovery of Underlying 1 January 2012 Assets Amendments to FRS 1 Presentation of Financial Instruments: Presentation of 1 July 2012 Items of Other Comprehensive Income Revised FRS 19 Employee Benefits 1 January 2013 Revised FRS 27 Separate Financial Statements 1 January 2014 Revised FRS 28 Investments in Associates and Joint Ventures 1 January 2014 FRS 110 Consolidated Financial Statements 1 January 2014 FRS 111 Joint Arrangements 1 January 2014 FRS 112 Disclosure of Interests in Other Entities 1 January 2014 FRS 113 Fair Value Measurements 1 January 2013 Amendments to FRS 107 Financial Instruments: Disclosures Offsetting 1 January 2013 Financial Assets and Financial Liabilities Amendments to FRS 32 Financial Instruments: Presentation Offsetting 1 January 2014 Financial Assets and Financial Liabilities Improvements to FRSs January 2013 Amendments to FRS 101 Government Loans 1 January

70 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.3 Standards issued but not yet effective (cont d) Except for the Amendments to FRS 1, FRS 110, FRS 112 and FRS 113, the directors expect that the adoption of the other standards and interpretations above will have no material impact on the financial statements in the period of initial application. The nature of the impending changes in accounting policy on adoption of the Amendments to FRS 1, FRS 110, FRS 112 and FRS 113 are described below. Amendments to FRS 1 Presentation of Items of Other Comprehensive Income The Amendments to FRS 1 Presentation of Items of Other Comprehensive Income ( OCI ) is effective for financial periods beginning on or after 1 July The Amendments to FRS 1 changes the grouping of items presented in OCI. Items that could be reclassified to profit or loss at a future point in time would be presented separately from items which will never be reclassified. As the Amendments only affect the presentation of items that are already recognised in OCI, the Group does not expect any impact on its financial position or performance upon adoption of this standard. FRS 110 Consolidated Financial Statements and FRS 27 Separate Financial Statements (Revised) FRS 110 establishes a single control model that applies to all entities (including special purpose entities). The changes introduced by FRS 110 will require management to exercise significant judgement to determine which entities are controlled, and therefore are required to be consolidated by the Group, compared with the requirements that were in FRS 27. Therefore, FRS 110 may change which entities are consolidated within a group. The revised FRS 27 was amended to address accounting for subsidiaries, jointly controlled entities and associates in separate financial statements. The Group does not expect adoption of these standards to have material impact to the financial statements. FRS 112 Disclosure of Interests in Other Entities FRS 112 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. FRS 112 requires an entity to disclose information that helps users of its financial statements to evaluate the nature and risks associated with its interests in other entities and the effects of those interests on its financial statements. The Group is currently determining the impact of the disclosure requirements. As this is a disclosure standard, it will have no impact on the financial position and financial performance of the Group when implemented in FRS 113 Fair Value Measurements FRS 113 provides a single source of guidance for all fair value measurements. FRS 113 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted by FRS. The Group is currently determining the impact of this new standard on the Group s financial statements. 70

71 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.4 Basis of consolidation and business combinations (a) Basis of consolidation Basis of consolidation from 1 July 2010 The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: - De-recognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost; - De-recognises the carrying amount of any non-controlling interest; - De-recognises the cumulative translation differences recorded in equity; - Recognises the fair value of the consideration received; - Recognises the fair value of any investment retained; - Recognises any surplus or deficit in profit or loss; - Re-classifies the Group s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. Consolidation of the subsidiaries in the PRC is based on the subsidiaries financial statements prepared in accordance with FRS. Profits reflected in the financial statements prepared in accordance with FRS may differ from those reflected in the PRC statutory financial statements of the subsidiaries, prepared for PRC reporting purposes. In accordance with the relevant laws and regulations, profits available for distribution by the PRC subsidiaries are based on the amounts stated in the PRC statutory financial statements. 71

72 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.4 Basis of consolidation and business combinations (cont d) (a) Basis of consolidation (cont d) Basis of consolidation prior to 1 July 2010 Certain of the above-mentioned requirements were applied on a prospective basis. The following differences, however, are carried forward in certain instances from the previous basis of consolidation: - Acquisition of non-controlling interests, prior to 1 July 2010, were accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired were recognised in goodwill. - Losses incurred by the Group were attributed to the non-controlling interest until the balance was reduced to nil. Any further losses were attributed to the Group, unless the non-controlling interest had a binding obligation to cover these. Losses prior to 1 July 2010 were not reallocated between non-controlling interest and the owners of the Company. - Upon loss of control, the Group accounted for the investment retained at its proportionate share of net asset value at the date control was lost. The carrying value of such investments as at 1 July 2010 have not been restated. (b) Business combinations Business combinations from 1 July 2010 Business combinations are accounted for by applying the acquisition method. Identifiable assets are acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received. When the Group acquires a business, it assess the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not remeasured until it is finally settled within equity. In business combinations achieved in stages, previously held equity interests in the acquiree are remeasured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss. The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the noncontrolling interest s proportionate share of the acquiree s identifiable net assets. 72

73 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.4 Basis of consolidation and business combinations (cont d) (b) Business combinations (cont d) Business combinations from 1 July 2010 (cont d) Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree s identifiable assets and liabilities is recorded as goodwill. The accounting policy for goodwill is set out in Note 2.8(a). In instances where the latter amount exceeds the former, the excess is recognised as gain on bargain purchase in profit or loss on the acquisition date. Business combinations prior to 1 July 2010 In comparison to the above mentioned requirements, the following differences applied: Business combinations are accounted for by applying the purchase method. Transaction costs directly attributable to the acquisition formed part of the acquisition costs. The noncontrolling interest (formerly known as minority interest) was measured at the proportionate share of the acquiree s identifiable net assets. Business combinations achieved in stages were accounted for as separate steps. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in equity. Any additional acquired share of interest did not affect previously recognised goodwill. When the Group acquired a business, embedded derivatives separated from the host contract by the acquiree were not reassessed on acquisition unless the business combination resulted in a change in the terms of the contract that significantly modified the cash flows that otherwise would have been required under the contract. Contingent consideration was recognised if, and only if, the Group had a present obligation, the economic outflow was more likely than not and a reliable estimate was determinable. Subsequent adjustments to the contingent consideration were recognised as part of goodwill. 2.5 Transactions with non-controlling interests Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Changes in the Company owners ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 73

74 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.6 Foreign currency The Group s consolidated financial statements are presented in Singapore Dollars, which is also the Company s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. (a) Transactions and balances Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the settlement of monetary items or on translating monetary items at the end of the reporting period are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation. (b) Consolidated financial statements For consolidation purpose, the assets and liabilities of foreign operations are translated into SGD at the rate of exchange ruling at the end of the reporting period and their profit or loss are translated at the exchange rates prevailing at the date of the transactions. The exchange differences arising on the translation are recognised in other comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss. In the case of a partial disposal without loss of control of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences are re-attributed to non-controlling interest and are not recognised in profit or loss. For partial disposals of associates or jointly controlled entities that are foreign operations, the proportionate share of the accumulated exchange differences is reclassified to profit or loss. 2.7 Property, plant and equipment All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs is set out in Note The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. 74

75 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.7 Property, plant and equipment (cont d) When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows: Years Leasehold buildings and improvements Plant, machinery and equipment 3 10 Furniture and fittings 3 10 Office equipment 3 6 Air-conditioners 5 10 Renovations 3 Motor vehicles 3 5 Assets under construction are not depreciated as these assets are not yet available for use. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on de-recognition of the asset is included in the profit or loss in the year the asset is derecognised. 2.8 Intangible assets (a) Goodwill Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cashgenerating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods. 75

76 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.8 Intangible assets (cont d) (a) Goodwill (cont d) Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained. Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2005 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.6. Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 January 2005 are deemed to be assets and liabilities of the Company and are recorded in SGD at the exchange rates prevailing at the date of acquisition. (b) Other intangible assets Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite useful lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. (i) Trademarks The total cost of establishment and initial registration of trademarks is capitalised and amortised on a straight line basis over their estimated useful lives of 10 years. (ii) Club membership Club membership was acquired separately and is amortised on a straight line basis over its finite useful life of 30 years. (iii) Software Software was acquired separately and is amortised on a straight line basis over its estimated useful life of 3 years. 76

77 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.9 Land use rights Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and any accumulated impairment losses. The land use rights are amortised on a straight-line basis over the lease term of 50 years Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. The Group bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses are recognised in profit or loss. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset s or cash-generating unit s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit or loss Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Company s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. 77

78 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.12 Financial assets Initial recognition and measurement Financial assets are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement Loans and receivables Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. De-recognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned Impairment of financial assets The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset is impaired. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment. 78

79 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.13 Impairment of financial assets (cont d) If there is objective evidence that an impairment loss on financial assets carried at amortised cost has incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. The impairment loss is recognised in profit or loss. When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of the financial asset. To determine whether there is objective evidence that an impairment loss on financial assets has incurred, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand and unpledged fixed deposits that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value Inventories Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and condition are accounted for as follows: Raw materials purchase costs on a first-in first-out basis. Finished goods and work-in-progress costs of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. These costs are assigned on a firstin first-out basis. Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying value of inventories to the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. 79

80 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.16 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the amount of the obligation can be estimated reliably. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost Financial liabilities Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. Subsequent measurement After initial recognition, other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. De-recognition A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss Borrowing costs Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 80

81 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.19 Employee benefits (a) Defined contribution plans The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. In particular, the Singapore companies in the Group make contributions to the Central Provident Fund scheme in Singapore, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed. The subsidiaries incorporated in the PRC are required to provide certain staff pension benefits to their employees under existing PRC legislation. Pension contributions are provided at rates stipulated by PRC legislation and are contributed to a pension fund managed by government agencies, which are responsible for paying pensions to the PRC subsidiaries retired employees. (b) Employee leave entitlement 2.20 Leases Employee entitlements to annual leave are recognised as a liability when they accrue to employees. The estimated liability for leave is recognised for services rendered by employees up to the end of the reporting period. The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to 1 January 2005, the date of inception is deemed to be 1 January 2005 in accordance with the transitional requirements of INT FRS 104. As lessee Finance leases which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. 81

82 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.21 Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements. The following specific recognition criteria must also be met before revenue is recognised: (a) Sale of goods Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. (b) Interest income Interest income is recognised using the effective interest method. (c) Dividend income Dividend income is recognised when the Group s right to receive payment is established Taxes (a) Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the end of the reporting period, in the countries where the Group operates and generates taxable income. Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. 82

83 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.22 Taxes (cont d) (b) Deferred tax Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences, except: Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and In respect of deductible temporary differences associated with investments in the subsidiaries, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of each reporting period. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 83

84 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.22 Taxes (cont d) (b) Deferred tax (cont d) Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it incurred during the measurement period or in profit or loss. (c) Sales tax Revenues, expenses and assets are recognised net of the amount of sales tax except: Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables that are stated with the amount of sales tax included. The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet Segment reporting For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 31, including the factors used to identify the reportable segments and the measurement basis of segment information Share capital and share issue expenses Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted against share capital Treasury shares The Group s own equity instruments, which are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group s own equity instruments. Any difference between the carrying amount of treasury shares and the consideration received, if reissued, is recognised directly in equity. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them respectively. 84

85 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.26 Contingencies A contingent liability is: (a) (b) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or a present obligation that arises from past events but is not recognised because: (i) (ii) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or The amount of the obligation cannot be measured with sufficient reliability. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent liabilities and assets are not recognised on the balance sheet of the Group, except for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably determined Related parties A related party is defined as follows: (a) A person or a close member of that person s family is related to the Group and Company if that person: (i) (ii) (iii) Has control or joint control over the Company; Has significant influence over the Company; or Is a member of the key management personnel of the Group or Company or of a parent of the Company. (b) An entity is related to the Group and the Company if any of the following conditions applies: (i) (ii) (iii) (iv) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. One entity is a joint venture of a third entity and the other entity is an associate of the third entity. 85

86 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Summary of significant accounting policies (cont d) 2.27 Related parties (cont d) (v) (vi) The entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company. The entity is controlled or jointly controlled by a person identified in (a). (vii) A person identified in (a) (i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). 3. Significant accounting judgments and estimates The preparation of the Group s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future periods. 3.1 Judgments made in applying accounting policies In the process of applying the Group s accounting policies, management has made the following judgments, apart from those involving estimations, which has the most significant effect on the amounts recognised in the consolidated financial statements: Income taxes The Group has exposure to income taxes in numerous jurisdictions. Significant judgment is involved in determining the Group-wide provision for income taxes. The PRC subsidiaries make tax submissions and obtain clearances from the local tax authorities in accordance with local practices. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group s income tax payables and deferred tax liabilities at the end of the reporting period was $3,000,000 (2011: $2,251,000) and $4,126,000 (2011: $2,900,000) respectively. 86

87 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Significant accounting judgments and estimates (cont d) 3.2 Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Useful lives of plant, machinery and equipment The cost of plant, machinery and equipment for the manufacture of food and beverages and packaging materials is depreciated on a straight-line basis over the plant, machinery and equipment s estimated economic useful lives. Management estimates the useful lives of these plant, machinery and equipment to be within 3 to 10 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amount of the Group s plant, machinery and equipment at the end of each reporting period is disclosed in Note 11 to the financial statements. A 5% difference in the expected useful lives of these assets from management s estimates would result in approximately 0.34% (2011: 1%) variance in the Group s profit before tax. (b) Impairment of non-financial assets An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions in an arm s length transaction of similar assets or observable market prices less incremental costs for disposing the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash inflows and the growth rate used for extrapolation purposes. 4. Revenue Revenue represents sale of goods, net of sales tax, discounts and returns. Intra-group transactions have been excluded from Group revenue. 87

88 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Other income Group $ 000 $ 000 Gain on disposal of property, plant and equipment Gain on disposal of intangible assets 30 Scrap sales Government grant 3 Others Interest income, Finance expenses and Other financial cost Group $ 000 $ 000 Interest income from: - Fixed deposits (640) (322) Interest expense on: - Bills payable to banks Bank term loans Obligations under finance leases Other financial cost: - Bank charges

89 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Profit before tax The following expense/(income) items have been included in arriving at profit before tax: Group $ 000 $ 000 Amortisation of intangible assets (Note 13) Amortisation of land use rights (Note 14) Depreciation of property, plant and equipment (Note 11) 2,929 3,144 Directors fee Employee benefits expenses (Note 8) 18,551 15,972 Net foreign exchange loss 288 2,477 Inventories recognised as an expense in cost of sales (Note 15) 113, ,181 Audit fees: - Auditors of the Company Other auditors Non-audit fees: - Auditors of the Company Other auditors 11 Operating lease expense (Note 27(b)) 1,139 1,080 Impairment loss on goodwill 375 Property, plant and equipment written off Loss on disposal of property, plant and equipment 48 Loss on disposal of land use rights 28 Allowance for inventory obsolescence Write-back of allowance for inventory obsolescence (317) (265) Allowance for doubtful trade receivables Write-back of allowance of trade receivables (198) (264) 8. Employee benefits Group $ 000 $ 000 Employee benefits expense (including directors remuneration): Salaries, bonuses and other costs 16,472 14,269 Central Provident Fund and other pension costs 1,520 1,186 Other personnel expenses ,551 15,972 89

90 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Income tax expense Major components of income tax expense The major components of income tax expense for the year ended 30 June 2012 and 2011 are: Group $ 000 $ 000 Consolidated statement of comprehensive income: Current income tax - Current year 6,197 5,382 - Over provision in respect of previous years (87) (45) Deferred income tax - Current year 1, Under provision in respect of previous years 7 9 Income tax expense recognised in the consolidated statement of comprehensive income 7,336 5,553 Relationship between tax expense and profit before tax A reconciliation between tax expense and the product of profit before tax multiplied by the applicable corporate tax rate for the year ended 30 June 2012 and 2011 is as follows: Profit before tax 25,206 17,766 Tax at the domestic rates applicable to profits in the countries where the Group operates 5,964 4,144 Adjustments: Non-deductible expenses 1,136 1,107 Income not subject to taxation (1) Effect of partial tax exemption (427) (258) Provision for withholding tax relating to earnings of PRC subsidiaries Deferred tax assets not recognised Overprovision in respect of previous years (80) (36) Income tax expense recognised in the consolidated statement of comprehensive income 7,336 5,553 The above reconciliation is prepared by aggregating separate reconciliations for each national jurisdiction. The Company The Company is subjected to tax rate of 17% (2011: 17%). 90

91 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Income tax expense (cont d) Singapore subsidiaries Gold Roast Food Industry Pte Ltd ( GRFI ), VB Global Trade Pte. Ltd. ( VBGT ), Gold Roast (Thailand) Pte Ltd ( GRT ), Gold Roast (Vietnam) Pte Ltd ( GRV ) and VB Distribution Pte. Ltd ( VBD ) The corporate income tax rate applicable to the Singapore subsidiaries was 17% (2011: 17%). No provision for income tax has been made for GRT, GRV and VBD as these subsidiaries have no taxable income for the financial years ended 30 June 2012 and 30 June PRC subsidiaries Based on the Income Tax Law of the PRC for Enterprises with Foreign Investment, the subsidiaries in the PRC are entitled to an exemption from PRC Corporate Income Tax (CIT) for two years commencing from their first profit-making year of operation and a 50% relief from PRC CIT for the following three years. During the 5 th Session of the 10 th National People s Congress of the PRC, which was concluded on 16 March 2007, the PRC Corporate Income Tax Law (the New CIT Law) was approved and became effective on 1 January The New CIT Law introduces a wide range of changes which include, but not limited to, the unification of the income tax for domestic-invested and foreign-invested enterprises at 25%. Based on the implementation and administrative rules and regulations relating to the New CIT Law, PRC subsidiaries which have been granted tax concessions will continue to enjoy these concessions until the expiry of such concession period. Thereafter, they will be subjected to income tax at the rate of 25%. Shantou Gold Roast Food Ind. Co., Ltd. ( GR ), Shantou Oriental Packaging Ind. Co., Ltd. ( OP ) and Shantou Oriental Confectionery Food Co., Ltd. ( OC ) With effect from 1 January 2008, in line with the New CIT Law, enterprises which do not enjoy full tax exemptions will be subject to the CIT rate of 25%. However, the State Administration of Taxation has allowed a transitional period to be progressively applied for foreign-invested enterprises which operate in any of the Economic Development Zones of the PRC. Accordingly, the CIT rates applicable to GR, OP and OC are 24% from 1 January 2011 to 31 December 2011 and 25% from the PRC statutory financial year from 1 January 2012 to 31 December 2012 onwards. No provision for income tax has been made for OC as it has no taxable income for the financial years ended 30 June 2012 and 30 June Xinzheng Viz Branz Foods Co., Ltd ( XZVB ) Given that XZVB s first profit making year was in 2007, it enjoyed tax exemption from 1 January 2007 to 31 December 2008 and preferential income tax rate of 12.5% from 1 January 2009 to 31 December Thereafter, the subsidiary will be subjected to income tax at the rate of 25%. 91

92 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Income tax expense (cont d) Bridge Shine Coffee (Shanghai) Co., Ltd ( BSC ) and Bridge Shine Coffee Equipment (Shanghai) Co., Ltd ( BSE ) and Goldwaves Food (Shanghai) Co., Ltd ( GW ) BSC, BSE and GW are subject to income tax at 25%. No provision for income tax has been made for BSC and GW as these subsidiaries have no assessable profits for the financial years ended 30 June 2012 and 30 June Vietnam subsidiary Gold Roast (Vietnam) Company Limited ( GR Vietnam ) GR Vietnam is subjected to tax rate of 15% (2011: 15%). GR Vietnam is entitled to an exemption from CIT for two years commencing from the first year in which taxable profit is earned, which was the financial year ended 31 December 2003, based on the Tax Assessment Minute dated 9 April In accordance with the provisions of tax incentives issued by the Ministry of Finance of Vietnam, GR Vietnam has obtained Official Letter No. 7380/CT- DTNN dated 8 November 2006 from the Tax Department of Binh Duong Province, which allows it to be exempted from CIT for three years from 2003 to 2005 and entitled to 50% reduction of CIT for seven years commencing from Thailand subsidiary Gold Roast (Thailand) Co., Ltd. ( GR Thailand ) GR Thailand is subjected to tax rate of 30% (2011: 30%). No provision for income tax has been made for GR Thailand as it has no taxable income for the financial years ended 30 June 2012 and 30 June Deferred tax Deferred tax as at 30 June relates to the following: Deferred tax liabilities: Consolidated statement of financial position Group Consolidated statement of comprehensive income Company Statement of financial position $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Differences in depreciation for tax purposes 1,219 1,400 (181) (152) Undistributed earnings of PRC subsidiaries 2,907 1,496 1, Other items 4 (4) 4 4,126 2,900 1,

93 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Income tax expense (cont d) Unrecognised tax losses As at 30 June 2012, the Group has tax losses of approximately $641,000 (2011: $288,000) that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these tax losses is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. Tax consequences of proposed dividends There are no income tax consequences (2011: nil) attached to the dividends to the shareholders proposed by the Company but not recognised as a liability in the financial statements (Note 24). Deferred income tax related to other comprehensive income As at 30 June 2012, there is no deferred income tax (2011: nil) related to other comprehensive income. 10. Earnings per share Earnings per share computation Basic earnings per share are calculated by dividing profit for the year, net of tax, attributable to owners of the Company by the weighted average number of ordinary shares outstanding (excluding treasury shares) during the financial year. There are no potential dilutive ordinary share for 30 June 2012 and 30 June The following table reflects the profit and share data used in the computation of basic and diluted earnings per share for the years ended 30 June: Group $ 000 $ 000 Profit for the year, net of tax, attributable to owners of the Company used in the computation of basic and diluted earnings per share 16,965 11,492 Weighted average number of ordinary shares for basic earnings per share computation 355, ,038 Basic earnings per share (cents) Diluted earnings per share (cents)

94 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Property, plant and equipment Group Leasehold buildings and improvements Plant, machinery and equipment Furniture and fittings Office equipment Airconditioners Renovations Motor vehicles Assets under construction Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Cost: At 1 July ,376 29, ,055 5,873 78,457 Additions ,813 Disposals (1,851) (2) (26) (1,879) Write off (77) (48) (26) (1) (152) Transfer/Reclassification 6, (6,414) Exchange differences (112) (6) (12) (25) (155) At 30 June 2011 and 1 July ,098 28, , ,084 Acquisition of subsidiary Additions 4 1, ,916 Disposals (1,544) (94) (15) (365) (2,018) Write off (258) (30) (99) (1) (18) (406) Transfer/Reclassification 9 (9) Exchange differences At 30 June ,558 28, , ,648 94

95 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Property, plant and equipment (cont d) Group Leasehold buildings and improvements Plant, machinery and equipment Furniture and fittings Office equipment Airconditioners Renovations Motor vehicles Assets under construction Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Accumulated depreciation and impairment loss: At 1 July ,824 24, ,445 36,525 Charge for the year 802 1, ,144 Disposals (1,813) (2) (25) (1,840) Write off (63) (48) (26) (1) (138) Exchange differences (96) (5) (12) (13) (126) At 30 June 2011 and 1 July ,563 24, ,657 37,565 Attributable to acquisition of a subsidiary Charge for the year 836 1, ,929 Disposals (932) (61) (15) (365) (1,373) Write off (230) (30) (98) (1) (18) (377) Exchange differences At 30 June ,467 25, ,541 38,797 Net carrying amount: At 30 June ,535 4, ,519 At 30 June ,091 3, ,851 95

96 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Property, plant and equipment (cont d) Company Plant, machinery and equipment $ 000 Cost: At 1 July 2010, 1 July 2011, 30 June 2011 and 30 June Accumulated depreciation: At 1 July 2010, 1 July 2011, 30 June 2011 and 30 June Net carrying amount: At 30 June 2011 and 30 June 2012 The carrying amount of certain leasehold buildings of the Group s subsidiaries that remained temporarily idle during the financial year ended 30 June 2012 was $4,524,000 (2011: $5,558,000). Assets held under finance leases The carrying amount of property, plant and equipment held under finance leases at the end of the reporting period were $793,000 (2011: $1,370,000). Leased assets are pledged as security for the related finance lease liabilities. Assets pledged as security In addition to assets held under finance leases, the Group s leasehold buildings with a carrying amount of $12,999,000 (2011: $13,290,000) were pledged to banks to secure the Group s bank term loans and other banking facilities (Notes 20 and 21). 12. Investment in subsidiaries Company $ 000 $ 000 Shares, at cost 35,875 35,628 Additional investments during the year Impairment losses (1,048) (1,048) 35,734 34,827 96

97 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Investment in subsidiaries (cont d) Name Country of incorporation Principal activities Proportion (%) of ownership interest Held by the Company (1) Gold Roast Food Industry Pte Ltd Singapore Manufacturing and distribution of beverages and snack food (2a) Shantou Gold Roast Food Ind. Co., Ltd. People s Republic of China Manufacturing and distribution of beverages and snack food (1) VB Global Trade Pte. Ltd. Singapore Distribution of beverages and snack food (1) Gold Roast (Thailand) Pte Ltd (1) Gold Roast (Vietnam) Pte Ltd Singapore Investment holding Singapore Investment holding (2a) Shantou Oriental Packaging Ind. Co., Ltd People s Republic of China Printing of flexible packaging materials (2b) Xinzheng Viz Branz Foods Co., Ltd People s Republic of China Manufacturing and distribution of snack food (1) VB Distribution Pte. Ltd. Singapore General wholesale trade 100 (6) Goldwaves Food (Shanghai) Co., Ltd People s Republic of China Coffee roasting business 100 (5) Bridge Shine Coffee (Shanghai) Co., Ltd People s Republic of China Coffee roasting business

98 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Investment in subsidiaries (cont d) Name Country of incorporation Principal activities Proportion (%) of ownership interest Held by the Company (cont d) (6) Bridge Shine Coffee Equipment (Shanghai) Co., Ltd People s Republic of China Business of selling coffee machines (2a)(i) Shantou Oriental Confectionery Food Co., Ltd. People s Republic of China Manufacturing and distribution of beverages and snack food Held by subsidiary Thailand Manufacturing (4) Gold Roast (Thailand) Co., Ltd. and distribution of beverages and snack food (currently dormant) (3) Gold Roast (Vietnam) Company Limited Vietnam Manufacturing and distribution of beverages (1) Audited by Ernst & Young LLP, Singapore (2a) (2b) Audited by Si Wei Certified Public Accountants Co., Ltd, PRC for PRC statutory audit purposes Audited by Henan Shiji Lianhe Certified Public Accountants Co. Ltd., PRC for PRC statutory audit purposes (3) Audited by Ernst & Young, Vietnam (4) Audited by Mr Thanakorn Wongthiang, Certified Public Accountant, Thailand for Thailand statutory audit purposes (5) Audited by Shanghai Shi Cheng Certified Public Accountants Co., Ltd, PRC for PRC statutory audit purposes (6) Audited by Shanghai Jin Cheng Certified Public Accountants Co., Ltd, PRC for PRC statutory audit purposes (i) Shantou Oriental Confectionary Food Co., Ltd was incorporated as a sino-foreign cooperative joint venture with a PRC partner. The PRC joint venture partner does not have any share in the results or assets of the subsidiary. 98

99 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Investment in subsidiaries (cont d) Acquisition of subsidiary On 13 January 2012, the Company acquired 100% interest in Goldwaves Food (Shanghai) Co., Ltd ( GW ) for a cash consideration of $168,000. Subsequent to the acquisition, the Company injected additional capital of $739,000 to the subsidiary. The fair value of the identifiable assets and liabilities of GW as at the acquisition date were: Fair value recognised on acquisition $ 000 Property, plant and equipment 11 Inventories 15 Trade and other receivables 20 Other current assets Trade and other payables (395) Total identifiable net liabilities at fair value (207) Goodwill arising from acquisition (Note 13) 375 Cash paid, representing total consideration transferred/cash outflow on acquisition 168 Impact of acquisition on profit or loss The revenue and profit contribution from GW is deemed insignificant to the Group for the financial year ended 30 June

100 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Intangible assets Group Software Trademarks Club memberships Goodwill Total $ 000 $ 000 $ 000 $ 000 $ 000 Cost: At 1 July ,424 Additions Disposals (50) (50) At 30 June 2011 and 1 July ,411 Additions Arising from acquisition of a subsidiary At 30 June ,804 Accumulated amortisation and impairment: At 1 July ,223 Amortisation Disposals (30) (30) At 30 June 2011 and 1 July ,259 Amortisation Impairment At 30 June ,686 Net carrying amount: At 30 June At 30 June Company Trademarks Club membership Total $ 000 $ 000 $ 000 Cost: At 1 July 2010, 30 June 2011, 1 July 2011 and 30 June Accumulated amortisation and impairment: At 1 July Amortisation At 30 June 2011 and 1 July Amortisation At 30 June Net carrying amount: At 30 June At 30 June

101 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Intangible assets (cont d) Software, trademarks and club membership Software has an average remaining amortisation period for the Group of 1 to 9 years (2011: 1 to 3 years). Trademarks have average remaining amortisation periods for the Group and the Company of 1 to 8 years and 1 to 2 years respectively (2011: 1 to 9 years and 1 to 3 years respectively). Club membership has an average remaining amortisation period for the Group and the Company of 16 years (2011: 17 years). Amortisation expenses The amortisation of software, trademarks and club memberships is included in the Administrative expenses line item in the consolidated statement of comprehensive income. Goodwill Goodwill acquired through business combinations have been allocated to cash-generating units ( CGU ) for the impairment testing. The carrying amounts of goodwill allocated to each CGU are as follows: Group $ 000 $ 000 Goldwaves Food (Shanghai) Co., Ltd ( GW ) 375 Impairment loss (375) Carrying value Impairment loss recognised During the financial year, an impairment loss was recognised to write-down the carrying amount of goodwill arising from acquisition of GW. The impairment loss of $375,000 (2011: Nil) has been recognised in profit or loss under the line item administrative expenses. 101

102 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Land use rights Group $ 000 $ 000 Cost: At 1 July 6,556 6,556 Disposals (1,233) At 30 June 5,323 6,556 Accumulated amortisation: At 1 July 1,608 1,477 Amortisation for the year Disposals (316) At 30 June 1,407 1,608 Net carrying amount: At 30 June 3,916 4,948 Amount to be amortised: - Not later than one year Later than one year but not later than five years Later than five years 3,384 4,293 3,916 4,948 The Group has land use rights over 4 (2011: 5) plots of state-owned land in the People s Republic of China (PRC) where the Group s PRC manufacturing and storage facilities reside. The land use rights are not transferable and have a remaining tenure of 31 to 44 years (2011: 32 to 45 years). 15. Inventories Group $ 000 $ 000 Statement of financial position: Raw materials 19,492 20,746 Work-in-progress 1,690 1,433 Finished goods 3,833 5,179 Goods-in-transit 1,146 1,194 26,161 28,552 Statement of comprehensive income: Inventories recognised as an expense in cost of sales 113, ,181 Inclusive of the following charge/(credit): - Allowance for inventory obsolescence Write-back of allowance for inventory obsolescence (317) (265) The write-back of allowance for inventory obsolescence was made when the related inventories were sold above their carrying amounts in the financial year ended 30 June

103 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Trade and other receivables Group Company $ 000 $ 000 $ 000 $ 000 Trade receivables 18,768 23,067 Other receivables: - Deposits Dividend receivable from subsidiaries 10,815 12,453 - VAT/GST recoverable Other receivables 1,148 1,232 Total other receivables 2,410 1,956 10,817 12,453 Amounts due from subsidiaries 9,561 13,366 Amount due from related party Total trade and other receivables 21,353 25,103 20,378 25,819 Add: Advances to employees (Note 17) Add: Cash and short-term deposits (Note 25) 64,217 42,061 31,060 15,488 Total loans and receivables 85,839 67,486 51,438 41,307 Trade receivables Trade receivables are non-interest bearing and are generally on 30 to 90 days terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition. At the end of the reporting period, trade receivables arising from export sales amounting to $1,459,000 (2011: $nil) are arranged to be settled via letter of credit issued by reputable banks in countries where the customers are based. Trade receivables denominated in foreign currencies as at 30 June are as follows: Group $ 000 $ 000 Japanese Yen 80 United States Dollar 1,034 1,303 Malaysian Ringgit 629 1,079 Hong Kong Dollar

104 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Trade and other receivables (cont d) Related party balances Amount due from related party is trade related, unsecured, non-interest bearing, repayable upon demand and are to be settled by cash. Amounts due from subsidiaries are non-trade, unsecured, non-interest bearing and repayable upon demand. Receivables that are past due but not impaired The Group has trade receivables amounting to $2,615,000 (2011: $5,113,000) that are past due at the end of the reporting period but not impaired. These receivables are unsecured and the analysis of their aging at the end of the reporting period is as follows: Group $ 000 $ 000 Trade receivables past due but not impaired: Lesser than 30 days 1,711 3, days 853 1, days days ,615 5,113 Receivables that are impaired The Group s trade receivables that are impaired at the end of the reporting period and the movement of the allowance accounts used to record the impairment are as follows: Group Individually impaired $ 000 $ 000 Trade receivables - nominal amounts 818 1,032 Less: Allowance for doubtful receivables (788) (912) Movement in allowance accounts: At 1 July 912 3,138 Charge for the year Write back (198) (264) Written off (49) (2,227) Exchange difference 36 (50) At 30 June

105 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Trade and other receivables (cont d) Receivables that are impaired (cont d) Trade receivables that are individually determined to be impaired at the end of the reporting period relate to invoices aged more than 150 days. These receivables are not secured by any collateral or credit enhancements. Amounts due from subsidiaries that are impaired At the end of the reporting period, the Company has provided an allowance of $101,000 (2011: $199,000) for impairment of the amount due from a subsidiary with nominal amount of $101,000 (2011: $199,000). The subsidiary has been suffering losses for the current and past two financial years $ 000 $ 000 Movement in allowance accounts: At 1 July Write back (98) (63) At 30 June Other current assets Group Company $ 000 $ 000 $ 000 $ 000 Prepaid operating expenses 764 2, Advances to employees ,033 3, Advances to employees Advances to employees are unsecured, non-interest bearing, and are for business-related expenditure which have not been incurred as at year end. 105

106 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Trade and other payables Group Company $ 000 $ 000 $ 000 $ 000 Trade payables 4,524 6,482 Bills payable to banks 3,937 8,115 Other payables 4,504 4, Amount due to subsidiaries Total trade and other payables 12,965 19, ,269 Add: - Other liabilities (Note 19) 9,850 10,099 1,423 1,686 - Loans and borrowings (Note 20) 29,165 15,795 24,416 8,320 Total financial liabilities carried at amortised cost 51,980 45,213 26,521 11,275 Trade payables/other payables These amounts are non-interest bearing and normally settled on 30 to 90 days terms. Trade payables denominated in foreign currencies as at 30 June are as follows: Group $ 000 $ 000 United States Dollar Malaysian Ringgit 7 10 Bills payable to banks Bills payable to banks bear interest at rates ranging from 1.80% to 2.03% (2011: 1.60% to 2.03%) per annum and have an average maturity period of 120 days. A corporate guarantee for $3,937,000 (2011: $8,115,000) has been given by the Company in respect of the bills facilities granted to the subsidiaries. Amount due to subsidiaries These amounts are non-trade related, unsecured, non-interest bearing and repayable on demand. 106

107 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Other liabilities Group Company $ 000 $ 000 $ 000 $ 000 Accrued operating expenses 7,908 8, ,020 Accruals for bonus 1,942 1,207 1, ,850 10,099 1,423 1, Loans and borrowings Group Company $ 000 $ 000 $ 000 $ 000 Current: Obligations under finance leases (Note 27(c)) Short-term bank loans 24,416 8,320 24,416 8,320 Bank term loans (Note 21) 1,594 1,917 26,511 10,830 24,416 8,320 Non-current: Obligations under finance leases (Note 27(c)) Bank term loans (Note 21) 2,580 4,460 2,654 4,965 Total loans and borrowings 29,165 15,795 24,416 8,320 A corporate guarantee for $43,830,000 (2011: $41,660,000) has been given by the Company in respect of the banking facilities granted to subsidiaries. Obligations under finance leases These obligations are secured by a charge over the leased assets (Note 11). In addition, finance lease obligations of a subsidiary are pledged by a corporate guarantee of approximately $473,000 (2011: $968,000) issued by the Company. Short-term bank loans These short-term bank loans bear interest ranging from 0.55% to 0.85% (2011: 0.70% to 0.80%) per annum and have a maturity period ranging from 3 to 27 days (2011: 7 to 21 days). These shortterm bank loans are secured against certain fixed deposits. 107

108 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Bank term loans Group $ 000 $ 000 Bank term loan (1) 1,767 2,106 Bank term loan (2) 66 Bank term loan (3) 1,667 2,167 Bank term loan (4) 740 1,511 Bank term loan (5) 527 4,174 6,377 Notes: (1) This bank term loan bears interest at 2.50% per annum (2011: 2.50% per annum), is repayable over 10 years by 120 monthly instalments and is to be repaid in full in April (2) This bank term loan bears interest at 4.75% per annum (2011: 4.75% per annum) and has been repaid in full in August (3) This bank term loan bears interest at 1 month swap rate plus 2.25% per annum (2011: 1 month swap rate plus 2.25% per annum), is repayable over 7 years by 84 monthly instalments and is to be repaid in full in October (4) This bank term loan bears interest at 5.00% per annum (2011: 5.00% per annum), is repayable over 4 years by 48 monthly instalments and is to be repaid in full in May (5) This bank term loan bears interest at 5.00% per annum (2011: 5.00% per annum) and has been repaid in full in October (2011: 3) of the bank term loans are secured by a legal mortgage over a subsidiary s leasehold factory buildings with a net book value of $12,999,000 (2011: $13,290,000). In addition, a corporate guarantee for $17,767,000 (2011: $15,497,000) has been given by the Company in respect of banking facilities, including the bank term loans, granted to the subsidiary. 22. Share capital and treasury shares (a) Share capital Group and Company No. of shares No. of shares 000 $ $ 000 Issued and fully paid ordinary shares: At 1 July 361,116 36, ,612 34,179 Issue of shares on exercise of warrants (1) 10,490 2,098 Adjustment for share split on 17 September 2010 (2) 179,102 Issue of shares on exercise of warrants (3) 2, Shares issuance expenses (126) At 30 June 361,116 36, ,116 36,

109 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Share capital and treasury shares (cont d) (a) Share capital (cont d) (1) Conversion of warrants into nil shares (2011: 10,490,000 shares) at $0.20 per share. (2) On 17 September 2010, the Company split each ordinary share into two ordinary shares. (3) Conversion of warrants into nil shares (2011: 2,912,000) shares at $0.08 per share. The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. The ordinary shares have no par value. (b) Treasury shares Group and Company No. of shares No. of shares 000 $ $ 000 At 1 July 4, , Adjustment for share split 2,259 Acquired during the financial year 1, At 30 June 6,120 1,174 4, Treasury shares relate to ordinary shares of the Company that are held by the Company. The Company acquired 1,502,000 (2011: 100,000) shares through purchases on the Singapore Exchange during the financial year. The total amount paid to acquire the shares was $455,000 (2011: $26,000) and this was presented as a component within shareholders equity. 23. Other reserves Group $ 000 $ 000 Statutory reserve fund 7,387 7,559 Foreign currency translation reserve (493) (1,356) Premium paid on acquisition of non-controlling interests (208) (208) 6,686 5,

110 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Other reserves (cont d) (a) Warrants reserve Group and Company No. of shares No. of shares 000 $ $ 000 At 1 July 11, Conversion during the year (10,490) (398) At 14 September before warrant split 1,470 Adjustment for warrant split 1,470 Conversion during the year (2,912) Warrants expired (28) At 30 June The Company issued 41,422,000 warrants at an issue price of $0.05 per warrant whereby each warrant carries the right to subscribe for 1 new ordinary share in the capital of the Company at an exercise price of $0.15. On 14 September 2010, each outstanding unconverted warrant was split into two warrants and the exercise price of the warrant was adjusted to $0.08. The 28,000 unexercised warrants expired on 30 June (b) Statutory reserve fund In accordance with the Foreign Enterprise Law applicable to the subsidiaries in the People s Republic of China (PRC), the subsidiaries are required to make appropriation to a Statutory Reserve Fund (SRF). At least 10% of the statutory profits after tax as determined in accordance with the applicable PRC accounting standards and regulations must be allocated to the SRF until the cumulative total of the SRF reaches 50% of the subsidiaries registered capital. Subject to approval from the relevant PRC authorities, the SRF may be used to offset any accumulated losses or increase the registered capital of the subsidiaries. The SRF is not available for dividend distribution to shareholders. During the financial year, GR s statutory reserve fund reached 50% of GR s registered capital. The Board resolved that GR will stop allocating its profit after tax to the statutory reserve fund from 1 January (c) Foreign currency translation reserve The foreign currency translation reserve represents exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group s presentation currency. 110

111 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Dividends Declared and paid during the financial year: Group and Company $ 000 $ 000 Dividends on ordinary shares: - Interim tax exempt dividend for 2012: 0.30 cents (2011: 0.75 cents) per share 1,065 2,667 - Interim tax exempt dividend for 2012: 1.00 cents (2011: 0.50 cents) per share 3,550 1,778 - Interim tax exempt dividend for 2012: 2.00 cents 7,100 - Interim tax exempt dividend for 2011: 0.50 cents (2010: nil cents) per share 1,780 - Final tax exempt dividend for 2011: 0.50 cents (2010: 0.75 cents) per share 1,781 2,665 15,276 7,110 Proposed but not recognised as a liability as at 30 June: Dividends on ordinary shares, subjected to shareholders approval at the Annual General Meeting (AGM) - Final tax exempt dividend for 2012: nil cents (2011: 0.50 cents) per share 1,781 During the current financial year, the Company has made 3 declarations/payments of interim onetier tax exempt dividend in respect of financial year ended 30 June In accordance with the Memorandum and Articles of Association ( M&A ) of the Company, the Directors may from time to time pay to the Members such interim dividends as in their judgment the position of the Company justifies provided no such dividends shall be declared more than once in six months. Accordingly, there is breach of the M&A. The Company intends to rectify the breach of the M&A requirement through a special resolution in the forthcoming Annual General Meeting. 25. Cash and short-term deposits Group Company $ 000 $ 000 $ 000 $ 000 Cash at banks and on hand 17,360 17, ,111 Short-term deposits 46,857 24,218 30,668 13,377 Cash and short-term deposits 64,217 42,061 31,060 15,488 Cash at banks held by entities domiciled in Singapore earn interest at floating rates based on daily bank deposit rates. 111

112 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Cash and short-term deposits (cont d) Cash at banks held by entities domiciled in the PRC earn interest at an effective interest rate of 0.36% (2011: 0.36%) per annum. Short-term deposits are made for varying periods depending on the immediate cash requirements of the Group and earn interests at 0.02% to 3.10% (2011: 0.10% to 2.85%) per annum. They are pledged for the short-term bank loans as disclosed in Note 20. Cash and short-term deposits denominated in foreign currencies at 30 June are as follows: Group Company $ 000 $ 000 $ 000 $ 000 Japanese Yen United States Dollar 2,244 17, ,105 Hong Kong Dollar Swiss Franc 434 For the purpose of the consolidated statement of cash flows, cash and cash equivalents comprise the following at the end of the reporting period: Group $ 000 $ 000 Cash and short-term deposits 64,217 42,061 Less: Fixed deposits pledged (24,416) (8,320) Cash and cash equivalents 39,801 33,

113 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Related party transactions (a) Sales and purchases of goods and services In addition to the related party information disclosed elsewhere in the financial statements, the following significant transactions between the Group and related parties took place at terms agreed between the parties during the financial year: Group $ 000 $ 000 Sales of finished goods to Gold Roast Food Ltd, Partnership ( GRP ) (1) 1,413 1,357 Sales to certain customers which are facilitated by Ms Chng Soo Yeian (2) 3,536 3,621 Collection of payments from certain customers which were facilitated by Mr Ben Chng Beng Beng (3) 9,174 10,937 (1) GRP is a company in which certain directors have an interest. (2) Sales to certain customers which are facilitated by Ms Chng Soo Yeian (being the sister of Mr Ben Chng Beng Beng ( Mr Chng ) (Deputy Chairman and Managing Director) and the daughter of Mr Chng Khoon Peng (Executive Director)). As part of such facilitation, Ms Chng collated the orders and arranged for delivery of the goods and collections of payments therefrom. No remuneration whatsoever was paid by the subsidiary to Ms Chng for the same. (3) Collection of payments arising from sales by the Company to certain customers were facilitated by Mr Chng. Mr Chng would at the directions of these customers and on their behalf, pay for the subsidiary s invoices via their funds deposited with him (which funds, pursuant to personal arrangements between the customers and Mr Chng, are also applied for various other personal purposes of these customers). No remuneration whatsoever was paid by them nor the subsidiary to Mr Chng for the same. (b) Compensation of key management personnel Group $ 000 $ 000 Directors fee Salaries, bonuses and other costs 2,193 2,907 Central Provident Fund and other pension costs Consultant fee ,714 3,380 Comprise amounts paid to: Directors of the Company 1,578 2,262 Other key management personnel 1,136 1,118 2,714 3,380 The directors fee is subject to the approval of the shareholders at the forthcoming AGM of the Company. The remuneration of key management personnel is determined by the remuneration committee having regard to the performance of the individuals and market trend. 113

114 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Commitments (a) Capital commitments Capital expenditure contracted for as at the end of the reporting period but not recognised in the financial statements is as follows: Group $ 000 $ 000 Capital commitments in respect of property, plant and equipment 561 (b) Operating lease commitments as lessee In addition to the land use rights disclosed in Note 14, the Group has entered into commercial leases relating to the rental of office and factory premises. Minimum lease payments and amortisation of land use rights recognised as an expense in the consolidated statement of comprehensive income for the financial year ended 30 June 2012 amounted to $1,139,000 (2011: $1,080,000) and $115,000 (2011: $131,000) respectively. Future minimum rental payable under non-cancellable operating leases (excluding land use rights) at the end of the reporting period are as follows: Group $ 000 $ 000 Not later than one year Later than one year but not later than five years 2,368 2,353 Later than five years 8,884 8,530 12,184 11,

115 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Commitments (cont d) (c) Finance lease commitments The Group has finance leases for certain items of plant and equipment and motor vehicles. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows: Minimum lease payments Group Present value of payments Minimum lease payments Present value of payments $ 000 $ 000 $ 000 $ 000 Not later than one year Later than one year but not later than five years Total minimum lease payments ,176 1,098 Less: Amounts representing finance charges (35) (78) Present value of minimum lease payments ,098 1,098 (d) Corporate guarantees The Company has issued corporate guarantees of $43,830,000 (2011: $41,660,000) in favour of several banks in relation to banking facilities granted to subsidiaries. In addition, a corporate guarantee of approximately $473,000 (2011: $968,000) was issued in respect of the finance lease obligations of a subsidiary. (e) Continuing financial support As at 30 June 2012, the Company has given undertakings to provide financial support to certain subsidiaries to enable them to operate as going concerns and to meet their obligations for at least 12 months from the respective dates of their directors reports. 28. Fair value of financial instruments A. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are a reasonable approximation of fair value Trade and other receivables and payables (Notes 16 and 18), Other liabilities (Note 19), and Loans and borrowings at floating rate (Note 20) The carrying amounts of these financial assets and liabilities are a reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. 115

116 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Fair value of financial instruments (cont d) B. Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not a reasonable approximation of fair value The fair value of financial liabilities by classes that are not carried at fair value and whose carrying amounts are not a reasonable approximation of fair value are as follows: Group Carrying Carrying amount Fair value amount Fair value $ 000 $ 000 $ 000 $ 000 Financial liabilities: - Obligations under finance leases ,098 1,104 - Loans and borrowings at fixed rate (non-current) (Note 20) 1,413 1,268 2,794 2,683 Determination of fair value The fair values as disclosed in the table above are estimated by discounting expected future cash flow at market incremental lending rates for similar types of lending, borrowing or leasing arrangements at the end of the reporting period. 29. Financial risk management objectives and policies The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk. The board of directors reviews and agrees policies and procedures for the management of these risks, which are executed by the Chief Financial Officer. The audit committee provides independent oversight to the effectiveness of the risk management process. It is, and has been throughout the current and previous financial year, the Group s policy that no derivatives shall be undertaken except for the use as hedging instruments where appropriate and cost-efficient. The Group and the Company do not apply hedge accounting. The following sections provide details regarding the Group s and Company s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks. There has been no change to the Group s exposure to these financial risks or the manner in which it manages and measures the risks. (a) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group s and the Company s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and short-term deposits), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties. 116

117 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management objectives and policies (cont d) (a) Credit risk (cont d) The Group s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the result that the Group s exposure to bad debts is not significant. For transactions that do not occur in the country of the relevant operating unit, the Group does not offer credit terms without the approval of the Chief Operating Officer. Exposure to credit risk At the end of the reporting period, the Group s and the Company s maximum exposure to credit risk is represented by: - The carrying amount of each class of financial assets recognised in the statements of financial position; - A nominal amount of $43,830,000 (2011: $41,660,000) relating to corporate guarantees provided by the Company in favour of several banks in relation to banking facilities granted to subsidiaries; and - A nominal amount of approximately $473,000 (2011: $968,000) relating to a corporate guarantee provided by the Company issued in respect of the finance lease obligations of a subsidiary. Credit risk concentration profile The Group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group s trade receivables at the end of the reporting period is as follows: By country: $ 000 % of total $ 000 % of total Singapore 1,497 8% 2,200 10% People s Republic of China 8,089 43% 8,323 36% Myanmar 7,203 38% 10,191 44% Vietnam 156 1% 209 1% Others 1,823 10% 2,144 9% 18, % 23, % By industry sectors: Food industry 18,673 99% 22,829 99% Others 95 1% 238 1% 18, % 23, % 117

118 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management objectives and policies (cont d) (a) Credit risk (cont d) At the end of the reporting period, approximately: - 58% (2011: 60%) of the Group s trade receivables were due from 3 major customers of the Group who are located in the People s Republic of China and Myanmar; and % (2011: 0.32%) of the Group s trade and other receivables were due from related parties while almost all of the Company s receivables were balances due from related parties. Financial assets that are neither past due nor impaired Trade and other receivables that are neither past due nor impaired are with creditworthy debtors with good payment record with the Group. Cash and short-term deposits that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default. Financial assets that are either past due or impaired Information regarding financial assets that are either past due or impaired is disclosed in Note 16 (Trade and other receivables). (b) Liquidity risk Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of funds. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group s and the Company s objective is to maintain a balance between continuity of funding and flexibility through the use of stand-by credit facilities. The Group s liquidity risk management policy is to maintain sufficient liquid financial assets and stand-by credit facilities with different banks. At the end of the reporting period, approximately 91% (2011: 69%) of the Group s loans and borrowings (Note 20) will mature in less than one year based on the carrying amount reflected in the financial statements. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. Access to source of funding is sufficiently available and debt maturing within 12 months can be rolled over with existing lenders. 118

119 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management objectives and policies (cont d) (b) Liquidity risk (cont d) Analysis of financial instruments by remaining contractual maturities The table below summarises the maturity profile of the Group s and the Company s financial assets and liabilities at the end of the reporting period based on contractual undiscounted repayment obligations. Group Financial assets: One year or less One to five years Over five years Total One year or less One to five years Over five years Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Trade and other receivables 21,353 21,353 25,103 25,103 Cash and shortterm deposits 64,217 64,217 42,061 42,061 Total undiscounted financial assets 85,570 85,570 67,164 67,164 Financial liabilities: Trade and other payables 12,965 12,965 19,319 19,319 Other liabilities 9,850 9,850 10,099 10,099 Loans and borrowings 26,626 2,774 29,400 11,078 4, ,416 Total undiscounted financial liabilities 49,441 2,774 52,215 40,496 4, ,834 Total net undiscounted financial assets/ (liabilities) 36,129 (2,774) 33,355 26,668 (4,998) (340) 21,

120 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management objectives and policies (cont d) (b) Liquidity risk (cont d) One year or less One to five years Over five years Total One year or less One to five years Over five years Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Company Financial assets: Trade and other receivables 20,378 20,378 25,819 25,819 Cash and shortterm deposits 31,060 31,060 15,488 15,488 Total undiscounted financial assets 51,438 51,438 41,307 41,307 Financial liabilities: Trade and other payables ,269 1,269 Other liabilities 1,423 1,423 1,686 1,686 Loans and borrowings 24,419 24,419 8,321 8,321 Total undiscounted financial liabilities 26,524 26,524 11,276 11,276 Total net undiscounted financial assets 24,914 24,914 30,031 30,

121 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management objectives and policies (cont d) (c) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest rates. The Group s and the Company s exposure to interest rate risk arises primarily from their loans and borrowings. All of the Group s and the Company s financial assets and liabilities at floating rates are contractually repriced at intervals of less than 6 months (2011: less than 6 months) from the end of the reporting period. The Group s policy is to manage interest cost using a mix of fixed and floating rate debts. The Group s policy is to keep 30% to 50% (2011: 30% to 50%) of its loans and borrowings at fixed rates of interest. Sensitivity analysis for interest rate risk At the end of the reporting period, if SGD interest rates had been 75 (2011: 75) basis points lower/higher with all other variables held constant, the Group s profit before tax would have been $26,000 (2011: $33,000) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility as in prior years. (d) Foreign currency risk The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily SGD and Renminbi (RMB). The foreign currencies in which these transactions are denominated are mainly United States Dollars (USD). Approximately 14% (2011: 12%) of the Group s sales are denominated in foreign currencies whilst almost 76% (2011: 78%) of costs are denominated in the respective functional currencies of the Group entities. The Group s trade receivable and trade payable balances at the end of the reporting period have similar exposures. The Group and the Company also hold cash and short-term deposits denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances are mainly in USD. The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including the People s Republic of China (PRC), Vietnam and Thailand. The Group s net investments in the PRC, Vietnam and Thailand are not hedged as currency positions in RMB, Vietnam Dong and Thai Baht are considered to be long-term in nature. 121

122 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management objectives and policies (cont d) (d) Foreign currency risk (cont d) Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group s profit before tax to a reasonably possible change in the USD, MYR, HKD, CHF and JPY exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Profit before tax $ 000 $ 000 USD - strengthened 3% (2011: 3%) (42) weakened 3% (2011: 3%) 42 (526) MYR - strengthened 3% (2011: 3%) weakened 3% (2011: 3%) (19) (32) HKD - strengthened 3% (2011: 3%) weakened 3% (2011: 3%) (21) (15) CHF - strengthened 3% (2011: 3%) 13 - weakened 3% (2011: 3%) (13) JPY - strengthened 3% (2011: 3%) 5 - weakened 3% (2011: 3%) (5) 30. Capital management The primary objective of the Group s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30 June 2012 and 30 June As disclosed in Note 23(b), certain subsidiaries of the Group are required by the Foreign Enterprise Law of the PRC to contribute to and maintain a non-distributable statutory reserve fund whose utilisation is subject to approval by the relevant PRC authorities. This externally imposed capital requirement has been complied with by the subsidiaries for the financial years ended 30 June 2012 and The Group is in compliance with the capital requirements imposed by the bankers in respect of the banking facilities granted for the financial years ended 30 June 2012 and

123 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Capital management (cont d) The Group monitors capital using the debts to equity ratio, which is total loans and borrowings divided by total capital. Capital includes equity attributable to the owners of the Company less the abovementioned restricted statutory reserve fund. The Group s policy is to keep the debts to equity ratio below 50%. Group $ 000 $ 000 Loans and borrowings (Note 20) 29,165 15,795 Equity attributable to the owners of the Company 94,870 92,773 Less: Statutory reserve fund (Note 23) (7,387) (7,559) Total capital 87,483 85,214 Debts to equity ratio 33% 19% 31. Segment information For management purposes, the Group is organised into business units based on their products and services, and has three reportable segments as follows: (i) (ii) (iii) Flexible packaging printing - Provision of printing services on packaging materials. Instant beverages - Comprises mainly cereal mix, coffee mix and tea mix. Snack foods and others - Comprises crackers, coffee beans and coffee machines. Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which in certain respects, as explained in the tables below, is measured differently from operating profit or loss in the consolidated financial statements. Group financing (including finance costs) and income taxes are managed on a group basis and are not allocated to operating segments. Transfer prices between operating segments are at terms agreed between the parties. 123

124 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Segment information (cont d) Flexible packaging printing Instant beverages Snack foods and others Adjustments/ Eliminations Note Per consolidated financial statements $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue External customers 11,194 10, , ,863 14,359 11, , ,675 Inter-segment 8,694 8,235 (8,694) (8,235) A Total revenue 19,888 18, , ,863 14,359 11,421 (8,694) (8,235) 172, ,675 Results: Interest income Depreciation and amortisation ,506 2, ,096 3,341 Other non-cash (income)/expenses, net (127) (64) (46) 64 B (76) 83 Segment profit 1, ,525 16,712 1, ,206 17,766 Assets: Additions to noncurrent assets ,047 1, C 1,934 1,850 Segment assets 10,596 11, , ,673 40,424 24,059 (100) D 155, ,579 Segment liabilities 1,315 1,746 52,103 44,942 1, ,312 2,763 E 59,106 50,

125 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Segment information (cont d) Notes A B Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements Inter-segment revenues are eliminated on consolidation. Other non-cash (income)/expenses consist of the following items as presented in the respective notes to the financial statements: $ 000 $ 000 Allowance for inventory obsolescence Write-back of allowance for inventory obsolescence (317) (265) Allowance for doubtful trade receivables Write-back of allowance of trade receivables (198) (264) Unrealised exchange loss/(gain) on allowance for doubtful trade receivables 36 (50) Property, plant and equipment written off Net loss/(gain) on disposal of property, plant and equipment 17 (53) Loss on disposal of land use rights 28 Gain on disposal of intangible asset (30) (76) 83 C D E Additions to non-current assets consist of additions to property, plant and equipment and intangible assets. Inter-segment assets are deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position. The following items are added to segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position: $ 000 $ 000 Other payables and accruals Income tax payable Deferred tax liabilities 2,908 1,496 4,312 2,

126 APPENDIX 4 - AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE GROUP FOR FY2012 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Segment information (cont d) Geographical information Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows: Revenues Non-current assets $ 000 $ 000 $ 000 $ 000 People s Republic of China 93,570 83,405 27,767 29,117 South-East Asia and Indochina 73,250 75,561 15,118 16,502 Others 5,906 6, , ,675 42,885 45,619 Non-current assets information presented above consist mainly of property, plant and equipment, land use rights and intangible assets as presented in the consolidated statement of financial position. Information about a major customer Revenue from one major customer amounted to $33,558,000 (2011: $33,312,000), arising from sales by the instant beverages segment. 32. Authorisation of financial statements for issue The financial statements for the year ended 30 June 2012 were authorised for issue in accordance with a resolution of the directors on 6 December

127 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 VIZ BRANZ LIMITED (Company Registration No K) Financial Statement And Dividend Announcement for the Third Quarter and Period Ended 31 March (a) An income statement and statement of comprehensive income or a statement of comprehensive income for the group together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Income Statement 3Q Q 2012 % increase/ YTD Mar YTD Mar (decrease) $'000 $'000 $'000 $'000 % increase/ (decrease) Revenue 42,781 43,037 (1) 128, ,212 (4) Cost of sales (25,891) (28,397) (9) (79,940) (89,478) (11) Gross profit 16,890 14, ,916 44,734 9 Other items of income Other income (18) Interest income Other items of expense Marketing and distribution expenses (5,771) (4,948) 17 (18,141) (15,386) 18 Administrative expenses (3,716) (2,864) 30 (9,925) (9,954) N.A Other expenses - (12) N.M (52) (81) (36) Financial expenses (101) (113) (11) (310) (323) (4) Other financial cost (25) (36) (31) (102) (160) (36) Profit before tax 7,501 6, ,111 19,538 8 Income tax expense (2,642) (2,328) 13 (6,115) (5,230) 17 Profit for the period 4,859 4, ,996 14,308 5 Other comprehensive income: Foreign currency translation 579 (848) N.M (65) Total comprehensive income for the period 5,438 3, ,289 15,146 1 Profit attributable to: Owners of the Company 4,598 4, ,178 13,623 4 Non-controlling interests ,859 4, ,996 14,308 5 Total comprehensive income attributable to: Owners of the Company 5,149 3, ,461 14,438 N.A Non-controlling interests ,438 3, ,289 15,146 1 Breakdown and explanatory notes to the income statement Group Group 3Q Q 2012 % increase/ YTD Mar YTD Mar (decrease) $'000 $'000 $'000 $'000 % increase/ (decrease) Amortisation of intangible assets (9) (10) (10) (29) (42) (31) Amortisation of land use rights (27) (27) N.A (80) (88) (9) Depreciation of property, plant and equipment (665) (714) (7) (2,049) (2,224) (8) Employee benefits expenses (5,583) (4,036) 38 (14,612) (14,098) 4 Loss on disposal of land use rights - - N.A - (28) N.M Net loss on disposal of property, plant and equipment - (3) N.M (30) (17) 76 Interest on borrowings (101) (113) (11) (310) (323) (4) Net foreign exchange gain/(loss) (32) (72) (239) (70) Property, plant and equipment written off - - N.A (4) (29) (86) Allowance for inventory obsolescence (120) (64) 88 (196) (223) (12) Write-back of allowance for inventory obsolescence (75) (69) Allowance for doubtful trade receivables (19) (106) (82) (73) (162) (55) Write-back of allowance of trade receivables Impairment loss on goodwill - (375) N.M - (375) N.M N.M: Not meaningful N.A : Not applicable 127

128 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Assets Group Company 31-Mar Jun Mar Jun-12 $'000 $'000 $'000 $'000 Non-current assets Property, plant and equipment 38,205 38, Investment in subsidiaries ,106 35,734 Intangible assets Land use rights 3,836 3, ,132 42,885 36,122 35,753 Current assets Inventories 24,662 26, Trade receivables 21,224 18, Other receivables 2,535 2,410 14,585 10,817 Other current assets 1,609 1, Amounts due from subsidiaries - - 9,986 9,561 Amount due from related party Fixed deposits pledged 28,484 24,416 28,484 24,416 Cash and cash equivalents 52,887 39,801 17,923 6, , ,764 70,994 51,453 Total assets 173, , ,116 87,206 Equity and liabilities Current liabilities Trade payables 5,098 4, Other payables and accruals 17,163 14,354 2,011 1,937 Amounts due to subsidiaries - - 6, Obligations under finance leases Bank term loans 993 1, Short-term bank loans 28,484 24,416 28,484 24,416 Bills payable to banks 3,681 3, Provision for taxation 3,620 3, ,116 52,326 36,721 26,714 Net current assets 72,462 60,438 34,273 24,739 Non-current liabilities Obligations under finance leases Bank term loans 1,952 2, Deferred tax liabilities 4,912 4, ,917 6, Total liabilities 66,033 59,106 36,721 26,714 Net assets 107,677 96,543 70,395 60,492 Equity attributable to owners of the Company Share capital 36,383 36,383 36,383 36,383 Treasury shares (1,174) (1,174) (1,174) (1,174) Other reserves 7,122 6, Retained earnings 63,450 52,975 35,186 25, ,781 94,870 70,395 60,492 Non-controlling interests 1,896 1, Total equity 107,677 96,543 70,395 60,492 Total equity and liabilities 173, , ,116 87,

129 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 1(b)(ii) Aggregate amount of group's borrowings and debt securities. Amount repayable in one year or less, or on demand As at 31-Mar-13 As at 30-Jun-12 Secured Unsecured Secured Unsecured $'000 $'000 $'000 $'000 33,235-30,448 - Amount repayable after one year Details of any collateral As at 31-Mar-13 As at 30-Jun-12 Secured Unsecured Secured Unsecured $'000 $'000 $'000 $'000 2,005-2,654 - (a) Legal mortgages over a subsidiary's leasehold factory buildings with a net book value of $12,780,000 (30-Jun-12: $12,999,000). (b) Corporate guarantee for $43,579,000 (30-Jun-12: $43,830,000) and $48,000 (30-Jun-12: $473,000) given by the Company in respect of banking facilities and finance lease obligations granted to subsidiaries. (c) Net carrying amount of property, plant and equipment amounting to $360,000 (30-Jun-12: $793,000) were financed under finance lease arrangements. (d) Short-term bank loans of $28,484,000 (30-Jun-12: $24,416,000) are secured by certain fixed deposits of the same amount. 129

130 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 1(c) A statement of cash flows (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year. Group Group 3Q Q 2012 YTD Mar YTD Mar $'000 $'000 $'000 $'000 Operating activities Profit before tax 7,501 6,885 21,111 19,538 Adjustments for: Amortisation of intangible assets Amortisation of land use rights Depreciation of property, plant and equipment ,049 2,224 Property, plant and equipment written off Net loss on disposal of property, plant and equipment Loss on disposal of land use rights Impairment loss on goodwill Interest expense Interest income (181) (179) (521) (460) Unrealised exchange difference loss/(gain) 571 (842) Total adjustments 1, ,272 3,496 Operating cash flows before changes in working capital 8,693 7,106 23,383 23,034 Changes in working capital (Increase)/decrease in: Inventories 2,593 1,583 1, Trade receivables 3,041 4,897 (2,456) (614) Other receivables (125) (115) Other current assets (528) 1,401 (576) 1,858 Amount due from related party 16 (264) (2) (348) Increase/(decrease) in: Trade payables (2,385) (3,144) 574 (1,388) Other payables and accruals (2,385) (3,237) 2,809 1,603 Bills payable to banks (1,363) (287) (256) (2,013) Total changes in working capital (795) 1,406 1,467 (381) Cash flows from operations 7,898 8,512 24,850 22,653 Interest received Interest paid (101) (113) (310) (323) Income taxes paid (1,706) (1,470) (4,709) (3,630) Net cash flows from operating activities 6,272 7,108 20,352 19,160 Investing activities Addition to intangible asset - (4) (2) (18) Purchase of property, plant and equipment (492) (1,023) (1,472) (1,585) Proceeds from disposal of property, plant and equipment Proceeds from disposal of land use rights Cash outflow on acquisition of subsidiary - (168) - (168) Net cash flows used in investing activities (492) (1,165) (1,437) (254) Financing activities Dividends paid on ordinary shares (3,550) (11,715) (3,550) (15,276) Dividends paid to non-controlling shareholders of subsidiaries - - (605) (707) Purchase of treasury shares (455) Repayment of obligations under finance leases (150) (143) (445) (379) Repayment of bank term loans (412) (404) (1,229) (1,796) Proceeds from short-term bank loans 6,213 14,648 9,840 26,861 Repayment of short-term bank loans (1,309) (4,391) (5,772) (12,406) Increase in fixed deposits pledged (4,904) (10,257) (4,068) (14,455) Net cash flows used in financing activities (4,112) (12,262) (5,829) (18,613) Net increase (decrease) in cash and cash equivalents 1,668 (6,319) 13, Cash and cash equivalents at beginning of period 51,219 40,353 39,801 33,741 Cash and cash equivalents at end of period (Note A) 52,887 34,034 52,887 34,034 Note A : Cash and cash equivalents Cash and cash equivalents comprise the following: Group 31-Mar-13 $' Mar-12 $'000 Cash at banks and on hand 16,238 16,094 Short-term deposits 65,133 40,715 Less: Fixed deposits pledged (28,484) (22,775) Cash and cash equivalents 52,887 34,

131 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Attributable to owners of the Company Group Equity attributable to owners of the Company, total Share capital Treasury Shares Statutory reserve fund Foreign currency translation reserve Premium paid on acquisition of noncontrolling interests Retained earnings Equity, total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Noncontrolling interests July 2011 to March 2012 Opening balance at 1 July ,215 92,773 36,383 (719) 7,559 (1,356) (208) 51,114 1,442 Profit for the period 9,751 9, , Other comprehensive income Foreign currency translation 1,686 1, , Total comprehensive income for the period 11,437 10, ,627-9, Contributions by and distributions to owners Purchase of treasury shares (455) (455) - (455) Dividends on ordinary shares (3,561) (3,561) (3,561) - Dividend paid by subsidiaries to non-controlling shareholders (707) (707) Transfer to statutory reserve fund (678) - Total transaction with owners in their capacity as owners (4,723) (4,016) - (455) (4,239) (707) Closing balance at 31 December ,929 99,659 36,383 (1,174) 8, (208) 56,150 1,270 Profit for the period 4,557 4, , Other comprehensive income Foreign currency translation (848) (812) (812) - - (36) Total comprehensive income for the period 3,709 3, (812) - 4, Contributions by and distributions to owners Dividends on ordinary shares (11,715) (11,715) (11,715) - Reclassifications from statutory reserve fund (941) Total transaction with owners in their capacity as owners (11,715) (11,715) - - (941) - - (10,774) - Closing balance at 31 March ,923 91,480 36,383 (1,174) 7,296 (541) (208) 49,724 1,

132 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year. Attributable to owners of the Company Group Equity attributable to owners of the Company, total Share capital Treasury Shares Statutory reserve fund Foreign currency translation reserve Premium paid on acquisition of noncontrolling interests Retained earnings Equity, total $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Noncontrolling interests July 2012 to March 2013 Opening balance at 1 July ,543 94,870 36,383 (1,174) 7,387 (493) (208) 52,975 1,673 Profit for the period 10,137 9, , Other comprehensive income Foreign currency translation (286) (268) (268) - - (18) Total comprehensive income for the period 9,851 9, (268) - 9, Contributions by and distributions to owners Dividend paid by subsidiaries to non-controlling shareholders (605) (605) Transfer to statutory reserve fund (76) - Total transaction with owners in their capacity as owners (605) (76) (605) Closing balance at 31 December , ,182 36,383 (1,174) 7,463 (761) (208) 62,479 1,607 Profit for the period 4,859 4, , Other comprehensive income Foreign currency translation Total comprehensive income for the period 5,438 5, , Contributions by and distributions to owners Dividends on ordinary shares (3,550) (3,550) (3,550) - Transfer to statutory reserve fund (77) - Total transaction with owners in their capacity as owners (3,550) (3,550) (3,627) - Closing balance at 31 March , ,781 36,383 (1,174) 7,540 (210) (208) 63,450 1,

133 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q2013 Company July 2011 to March 2012 Share Treasury Retained Equity, total capital Shares earnings $'000 $'000 $'000 $'000 Opening balance at 1 July ,763 36,383 (719) 29,099 Profit for the period, representing total comprehensive income for the period Contributions by and distributions to owners Purchase of treasury shares (455) - (455) - Dividends on ordinary shares (3,561) - - (3,561) Total transaction with owners in their capacity as owners (4,016) - (455) (3,561) Closing balance at 31 December ,256 36,383 (1,174) 26,047 Profit for the period, representing total comprehensive income for the period Contributions by and distributions to owners Dividends on ordinary shares (11,715) - - (11,715) Total transaction with owners in their capacity as owners (11,715) - - (11,715) Closing balance at 31 March ,197 36,383 (1,174) 14,988 July 2012 to March 2013 Opening balance at 1 July ,492 36,383 (1,174) 25,283 Loss for the period, representing total comprehensive income for the period (383) - - (383) Closing balance at 31 December ,109 36,383 (1,174) 24,900 Profit for the period, representing total comprehensive income for the period 13, ,836 Contributions by and distributions to owners Dividends on ordinary shares (3,550) - - (3,550) Total transaction with owners in their capacity as owners (3,550) - - (3,550) Closing balance at 31 March ,395 36,383 (1,174) 35,186 1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. Treasury Shares No. of Shares ('000) $'000 Balance as at 31 March 2013 and 30 June ,120 1,174 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. 31-Mar Jun-12 Total number of issued shares 354,996, ,996,976 1(d)(iv) A statement showing all sales, transfers, disposal, cancellation and/or use of treasury shares as at the end of the current financial period reported on. Not applicable. 133

134 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have not been audited or reviewed by the Company's auditors. 3 Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of a matter). Not applicable. 4 Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statement have been applied. The Group and the Company have applied the same accounting policies and methods of computation in the preparation of the financial statements for the current reporting period compared with those of the audited financial statements as at 30 June If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change. The adoption of new and revised FRS and INT FRS effective on 1 July 2012 has no material impact on the financial statements of the Group. 6 Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. 3Q Q 2012 YTD Mar 2013 YTD Mar 2012 (a) Based on weighted average number of ordinary shares in 1.30 cents 1.22 cents 3.99 cents 3.83 cents issue Weighted average number of shares 354,996, ,996, ,996, ,629,121 Earnings per share for 31 March 2013 and 31 March 2012 were computed by dividing the profit attributable to the owners of the Company by the weighted average number of ordinary shares of 354,996,976 and 355,629,121 respectively. (b) On a fully diluted basis 1.30 cents 1.22 cents 3.99 cents 3.83 cents Adjusted weighted average number of shares 354,996, ,996, ,996, ,629,121 There are no potential dilutive ordinary shares for 31 March 2013 and 31 March Net asset value (for the issuer and Group) per ordinary share based on the total number of issued shares excluding treasury shares of the issuer at the end of the:- Group Company (a) current financial period reported on; 29.8 cents 19.8 cents and (b) immediately preceding financial year 26.7 cents 17.0 cents Net asset value per ordinary share as at 31 March 2013 and 30 June 2012 were calculated based on the existing number of shares in issue of 354,996,976 ordinary shares. 134

135 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. It must include a discussion of the following: (a) (b) any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors; and any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Income Statement In 3Q FY2013 Group sales turnover were $42.8m as compared to $43.0m for 3Q FY2012. YTD March FY2013 total sales went down to $128.9m from $134.2m in the preceding corresponding period, decreased by $5.3m or 3.9%. Sales of instant beverages decreased by $0.5m or 1.3%, from $37.5m in 3Q FY2012 to $37.0m in 3Q FY2013. Sales of flexible packaging were $2.1m in the current quarter versus $2.3m in 3Q FY2012. Other business segments increased by $0.5m, or 16.6%, from $3.2m to $3.7m in 3Q FY2013. In the current reporting YTD period ended 31 March FY2013, instant beverages sales dropped to $113.0m, down $2.0m or 1.7% from $115.0m in the YTD period ended 31 March FY2012. For the same reporting periods, sales of flexible packaging went down by $2.0m or 23.8% to $6.4m from $8.4m. Other business segments recorded lower sales by 12.0% or $1.3m from $10.8m to $9.5m. In terms of geographical markets, sales in the PRC increased by $2.1m or 9.5%, from $22.0m in 3Q FY2012 to $24.1m in 3Q FY2013. Sales in the SEA and Indochina sector went down by $2.6m or 13% to $17.4m in 3Q FY2013 as compared to $20.0m in the previous corresponding period. Other export markets booked higher sales of $1.2m versus $1.0m in 3Q FY2012. In the current reporting YTD period ended 31 March FY2013, the PRC market achieved higher sales of $72.5m, up $0.6m or 0.8% from $71.9m in the YTD period ended 31 March FY2012. For the same reporting periods, sales in the SEA and Indochina sector went down by $4.7m or 8.1% to $53.2m from $57.9m. Other export market recorded a drop in sales by 27.3% or $1.2m from $4.4m to $3.2m. In 3Q FY2013 gross margin improved to 39% as compared to 34% attained in 3Q FY2012. Gross margin for YTD period ended 31 March FY2013 stood at 38% versus 33% in the preceding corresponding period. Increase in selling prices as well as reduction in material prices, efficient inventory control and favourable product sale mix contributed to the improved gross margin. Due to more competitive environment, our advertising and promotion expenses increased by $2.6m for the 9 months period compared to previous corresponding period. The increase is mainly in Indochina and SEA. Lower exchange loss of $0.07m was booked in current reporting period as compared to $0.24m loss in the previous corresponding period mainly due to the strengthening of the Renminbi against the Singapore Dollar. Balance Sheet Fixed deposits, cash and cash equivalents increased by $17.2m to $81.4m as at 31 March 2013 from $64.2m as at 30 June Net current assets went up by $12.1m from $60.4m as at 30 June 2012 to $72.5m as at 31 March 2013 mainly due to increase in fixed deposits, cash and trade receivables offset by higher payables and bank loans. Correspondingly, the current ratio went up to more than 2.2 times during the period. Cash Flows Positive cash flows from operating activities amounted to $6.3m in 3Q FY2013 and $20.4m for YTD period ended March FY2013. These were mainly due to operating profits and reduction in inventory levels. Net cash used in investing activities in 3Q FY2013 amounted to $0.5m due to acquisition of fixed assets. Net cash used in financing activities in 3Q FY2013 was $4.1m mainly due to dividends payments. 9 Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. In our announcement of 1H FY2013 results on 6 February 2013, we highlighted that the fluctuations in raw material prices and the US Dollar, Renminbi and Swiss Franc against Singapore Dollar would affect the performance of the Group. In 3Q FY2013 we managed to improve gross margin to 39% through increase in selling prices as well as effective inventory control coupled with reduction in raw materials prices. The appreciation of the Renminbi against Singapore Dollar resulted in lower exchange loss of $0.07m in current reporting period as compared to a loss of $0.24m in the previous corresponding period. 135

136 APPENDIX 5 - UNAUDITED FINANCIAL STATEMENTS OF THE GROUP FOR 3Q A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the Group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. The major markets that we operate in have become more competitive and challenging. As a result, advertising and promotion expenses may increase in future in order to maintain our market share. Additionally, any slow down in economic growth of these markets will have an impact on our performance. Our ability to increase selling prices and fluctuation in raw material prices; US Dollar and Renminbi against Singapore Dollar will continue to have an impact on the Group's performance. 11 Dividend (a) Current financial period reported on Any dividend declared for the current financial period reported on? No (b) Corresponding period of the immediately preceding financial year? Any dividend declared for the corresponding period of the immediately preceding financial year? Yes Name of dividend: Interim Dividend Type: Cash, tax exempt (one-tier) Dividend amount per share (in cents): 2.00 cents per ordinary share (c) Date payable Not applicable. 12 If no dividend has been declared/recommended, a statement to that effect. No dividend has been declared. 13 Interested Person Transactions The aggregate value of interested person transactions entered into during the period were as follows: Name of interested person Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders' mandate pursuant to Rule 920) Aggregate value of all interested person transactions conducted during the financial year under review under shareholders' mandate pursuant to Rule 920 (excluding transactions less than $100,000 ) $'000 $'000 Sales of finished goods to Gold Roast Food Ltd, Partnership Sales of finished goods to Lam Soon Edible Oils Sdn Bhd 1, Negative Assurance on Interim Financial Statements We, Ben Chng Beng Beng and Tan Kok Hiang, being two directors of Viz Branz Limited (the "Company"), do hereby confirm on behalf of the directors of the Company that, to the best of our knowledge, nothing has come to the attention of the board of directors of the Company which may render the third quarter and period ended 2013 unaudited financial results to be false or misleading in any material aspects. BY ORDER OF THE BOARD Tan Kok Hiang Director 13 May

137 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION The provisions in the Articles relating to rights of Shareholders in respect of capital, dividends and voting are reproduced below. All capitalised terms used in the following extract shall have the same meanings ascribed to them in the Articles, a copy of which is available for inspection at the registered offi ce of the Company at 50 Raffl es Place, #32-01, Singapore Land Tower, Singapore , during normal business hours until the Closing Date. SHARES 5 Subject to the Statutes, no shares may be issued without the prior approval of the Company in General Meeting but subject thereto and to these Articles relating to new shares and to any special right attached to any share for the time being Issued, the Directors may allot (with or without conferring any right of renunciation), grant options over or otherwise dispose of the same to such persons on such terms and conditions (including such consideration) and at such time as the Directors determine. Shares under control of Company in General Meeting. Provided Always that the rights attaching to shares of a class other than ordinary shares shall be expressed in the resolution creating the same. 6(1) Subject to the limits referred to in Article 57, the Company in General Meeting may by Ordinary Resolution authorise the Directors to exercise any power of the Company to issue shares, such authority being confi ned to a particular exercise of that power or generally. Any such authority may be unconditional or subject to conditions and shall continue in force until the conclusion of the Annual General Meeting commencing next after the Iate on which the approval was given or the expiration of the period within which the next Annual General Meeting after that date Is required by law to be held whichever is the earlier but may be previously revoked or varied by the Company in General Meeting. Authority of Directors to issue shares. 6(2) Subject to the terms and conditions of any application for shares, the Directors shall allot shares applied for within ten Market Days of the closing date (or such other period as may be approved by the Exchange) of any such application. The Directors may, at any time after the allotment of any share but before any person has been entered in the Register as the holder thereof or before such share is entered against the name of a Depositor in the Depository Register, as the case may be, recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of such share a right to effect such renunciation upon and subject to such terms and conditions as the Directors may think fi t. 7 Any share in the Company may be Issued with such preferred, qualifi ed, deferred or other special rights, privileges arid conditions or such restrictions, whether in regard to dividend1 return of capital, voting or, otherwise, as the Company may from time to time by Ordinary Resolution determine, and subject to the Statutes, the Company may Issue preference shares which are or1 at the option of the Company, are liable to be redeemed on such terms and in such manner as the Company before the issue thereof may by Ordinary Resolution determine. 8 The Company shall have the power to issue further preference capital ranking equally with or in priority to the preference capital then already issued. Company may issue shares with preferred, qualified, deferred and other special rights. Issue of f u r t h e r preference shares. 137

138 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION 9 Subject to the provisions of the Statutes, all or any of the special rights or privileges for the time being attached to any preference share for the time being issued may from time to time (whether or not the Company is being wound up) be modifi ed, affected, altered or abrogated and preference capital other than redeemable preference shares may be repaid if authorised by a Special Resolution passed by holders of such preference shares at a special meeting called for the purpose. To any such special meeting, all provisions of these Articles as to General Meetings of the Company shall mutatis mutandis apply but so that the necessary quorum shall be two persons at least holding or representing by proxy not fess than one third of the issued preference shares concerned and that every holder of the preference shares concerned shall be entitled on a poll to one vote for every such share held by him and that any holder of the preference shares concerned present either in person or by proxy may demand a poll Provided Always that where the necessary majority for such a Special Resolution is not obtained at the meeting, consent in writing if obtained from holders of three-fourths of the preference shares concerned within two months of the meeting shall be as valid and effectual as a Special Resolution carried at the meeting 10 Preference shares may be issued subject to such limitation thereof as may be prescribed by the Exchange. Preference shareholders shall have the same rights as ordinary Members as regards the receiving of notices, reports and balance sheets and the attending of General Meetings of the Company. Preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital of the Company or winding up or sanctioning the sale of the undertaking of the Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six months in arrears. 11 If by the conditions of allotment of any share, the whole or part of the amount or issue price thereof shall be payable by instalments, every such instalment shall, when due, be paid to the Company by the holder for the time being of the share or his legal personal representative. 12(1) The Company shall not be bound to register more than three persons as the joint holders- of any share except in the case of executors, administrators or trustees of the estate of a deceased Member. Alteration of rights of preference shareholders. Rights of preference shareholders. Instalments of shares. Joint holders. 12(2) Subject to Article 12(1), any two or more persons may be registered as joint holders of any share and the joint holders of a share shall be severally as well as jointly liable for the payment of all instalments and calls and interest (if any) due in respect of such share.. 12(3) The joint holder fi rst named in the Register or the Depository Register, as the case may be, shall as regards voting, proxy, service of notices and delivery of certifi cates and dividend warrants, be deemed to be the sole owner of such share. 13 No person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be required in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any other rights in respect of any share other than an absolute right to the entirety thereof in the registered holder or in the person whose name is entered in the Depository Register in respect of that share, as the case may be, except only where these Articles otherwise provide or as required by the Statutes or pursuant to any order of Court No trusts recognised. 138

139 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION 14 No person shall exercise any rights of a Member in respect of a share until his name shall have been entered in the Register as the registered holder thereof or in the Depository Register in respect of such share, as the case may be, and, unless the Directors otherwise determine, such person shall have paid all calls and other moneys for the time being due and payable on any share held by him. 15(1) The Company may, subject to and in accordance with the Act and any other relevant legislation, rules or regulations enacted or prescribed by any relevant authority from time to time, purchase or otherwise acquire its issued shares on such terms and in such manner as the Company may from time to time think fi t. Any share which is so purchased or acquired by the Company may be deemed to be cancelled immediately on purchase or acquisition by the Company or, subject to the provisions of the Act, be held and dealt with by the Company as treasury shares. On the cancellation of any share as aforesaid, the rights and privileges attached to that share shall expire. 15(2) The Company shall not exercise any right in respect of treasury shares other than as provided by the Act. Subject thereto, the Company may hold or deal with its treasury shares in the manner authorised by, or prescribed pursuant to, the Act. Exercise of rights of Members. Power to purchase or acquire its issued share. Treasury shares. INCREASE OF CAPITAL 55 The Company in General Meeting may from time to time by Ordinary Resolution, whether all the shares for the time being issued have been fully paid up or not, increase its capital by the creation and issue of new shares, such aggregate increase to be of such amount as the Company by the resolution authorising such increase shall direct. 56 (1) Unless otherwise determined by the Company in General Meeting or except as permitted by the listing rules of the Exchange, all new shares shall, before issue, be offered to such persons who as at the date of the offer are entitled to receive notices from the Company of General Meetings, in proportion, as nearly as the circumstances admit, to the number of the existing shares to which they are entitled Power to increase capital. Issue of new shares to Members. 56 (2) The offer shall be made by notice specifying the number of shares offered and limiting a time within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most benefi cial to the Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered in the manner hereinbefore provided 57 Notwithstanding Article 55 above, the Company may pursuant to Section 161 of the Act by Ordinary Resolution in General Meeting give to the up to fi fty per Directors a general authority, either unconditionally or subject to such cent. conditions as may be specifi ed in the Ordinary Resolution, to issue shares whether by way of rights, bonus or otherwise, and make or grant offers, agreements or options (collectively, Instruments ) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares, and (notwithstanding the Notice issue. Issue shares. of of 139

140 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION authority conferred by the Ordinary Resolution may have ceased to be in force) issue shares in pursuance of any instrument made or granted by the Directors while the Ordinary Resolution was in force, provided that:- (a) (b) (c) the aggregate number of shares to be issued pursuant to the Ordinary Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to the Ordinary Resolution) does not exceed fi fty per cent (or such other limit as may be prescribed by the Exchange) of the issued share capital of the Company (as calculated in accordance with sub-paragraph (b) below), of which the aggregate number of shares to be issued other than on a pro-rata basis to the Members of the Company (including shares to be issued in pursuance of Instruments made or granted pursuant to the Ordinary Resolution) does not exceed twenty per cent (or such other limit as may be prescribed by the Exchange) of the issued share capital of the Company (as calculated in accordance with sub-paragraph (b) below); (subject to such manner of calculation as may be prescribed by the Exchange) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (a) above, the percentage of issued share capital shall be based on the issued share capital of the Company at the time that the Ordinary Resolution is passed, after adjusting for new shares arising from the conversion or exercise of any convertible securities or exercise of employee share options or vesting of share awards on issue at the time that the Ordinary Resolution is passed, and any subsequent consolidation or subdivision of shares; and unless previously revoked or varied by the Company in General Meeting, such authority conferred by the Ordinary Resolution shall not continue beyond the conclusion of the Annual General Meeting of the Company next following the passing of the Ordinary Resolution or the date by which such Annual General Meeting is required by law to be held, or the expiration of such other period as may be prescribed by the Act (whichever is the earliest). 58 Subject to any directions that may be given in accordance with the powers contained in the Memorandum of Association or these Articles, any capital raised by creation of new shares shall be considered as part of the original capital and all new shares shall be subject to the same provisions with reference to the payment of calls, transfer, transmission, forfeiture, lien and otherwise as if it had been part of the original capital. New capital considered part of original capital. ALTERATION OF CAPITAL 59(1) The Company may by Ordinary Resolution:- (a) consolidate and divide its capital; or Alteration of capital. (b) subdivide its existing shares or any of them (subject nevertheless to the provisions of the Act) provided always that in such subdivision the proportion between the amount paid and the amount (if any) unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived. The resolution by which the subdivision is effected may determine that, as between the holders of the resulting shares, one or more of 140

141 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION such shares may have any such preferred, deferred or other special rights or be subject to any restriction as the Company has power to attach to unissued or new shares; or (c) subject to the Statutes, convert any class of shares into any other class of shares. 59(2) The Company may by Special Resolution reduce its share capital or any other undistributable reserve in any manner and subject to any incident uthorised and consent required by law. Without prejudice to the generality of the foregoing, upon cancellation of any share purchased or otherwise acquired by the Company pursuant to these Articles and the Act, the number of issued shares of the Company shall be diminished by the number of shares so cancelled, and where any such cancelled share is purchased or acquired out of the capital of the Company, the amount of the share capital of the Company shall be reduced accordingly. MODIFICATION OF CLASS RIGHTS 60 Subject to the Statutes and save as provided by these Articles, all or any of the special rights or privileges attached to any class of shares in the capital of the Company for the time being issued may, at any time, as well before as during liquidation, be modifi ed, affected, altered or abrogated, either with the consent in writing of the holders of not less than threefourths of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting, but so that the quorum thereof shall be not less than two persons personally present and holding or representing by proxy one-third of issued shares of the class, and that any holder of shares of the class, present in person or by proxy, shall on a poll be entitled to one vote for each share of the class held or represented by him, and if at any adjourned meeting of such holders such quorum as aforesaid is not present, any two holders of shares of the class who are personally present shall be a quorum. The Directors shall comply with the provisions of Section 186 of the Act as to forwarding a copy of any such consent or Resolution to the Registrar of Companies. Modifi cation of class rights. VOTES OF MEMBERS 84(1) Subject to and without prejudice to any special privileges or restriction as. to voting for the time being attached to any special class of shares for the time being forming part of the capital of the Company and to Article 15(2):- Voting rights. (a) (b) every Member who is present in person or by proxy shall have one vote on a show of hands, provided the Chairman shall be entitled to treat the fi rst named proxy as the authorised representative to vote where a Member is represented by two proxies; and every Member who is present in person or by proxy, in case of a poll, shall have one vote for every share which he holds or represents and upon which all calls or other sums due thereon to the Company have been paid. 141

142 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION 84(2) For the purpose of determining the number of votes which a Member, being a Depositor, or his proxy may cast at any General Meeting upon a poll being called, the number of shares held or represented shall, In relation to the shares of that Depositor, be the number of shares entered against his name in the Depository Register as at the Cut-Off Time as certifi ed by the Depository to the Company. 85 In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the Register or the Depository Register, as the case may be. 86 Unless the Directors otherwise determine, no person other than a Member who shall have paid everything for the time being due from him and payable to the Company in respect of his shares, shall be entitled to be present or to vote on any question either personally or by proxy at any General Meeting. 87 A Member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll by the committee, curator bonis, or other person in the nature of committee or curator bonis appointed by that Court, and any such committee, curator bonis, or other person may, on a poll, vote by proxy. 88 On a poll, votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. Right of joint holders. Members only entitled to vote upon full payment. Votes of Members of unsound mind. Vote personal or by proxy. 89(1) A proxy need not be a Member. Proxies. 89(2) A Member shall not be entitled to appoint more than two proxies to attend and vote at the same General Meeting Provided Always that where the Member is a Depositor, the Company shall be entitled and bound: (a) (b) (c) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered against his name in the Depository Register as at the Cut-Off Time as certifi ed by the Depository to the Company; to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor Is or are able to cast on a poll a number which is the number of shares entered against the name of that Depositor in the Depository Register as at the Gut- Off Time as certifi ed by the Depository to the Company, whether that number be greater or smaller than the number specifi ed in any Instrument of proxy executed by or on behalf of that Depositor; and In determining rights to vote and other matters in respect of a completed Instrument of proxy submitted to it, to have regard to the instructions (if any) given by and the notes (If any) set out In the Instrument of proxy. 142

143 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION 89(3) In any case where a form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specifi ed in the form of proxy. If no proportion Is specifi ed, the Company shall be entitled to treat the fi rst named proxy as representing the entire number of shares entered against his name in the Depository Register and any second named proxy as an alternate to the fi rst named or at the Company s option to treat the instrument of proxy as invalid, 90 Any corporation which is a Member may, by resolution of its directors or other governing body, authorise any person to act as its representative at any meetings of the Company or any class of Members of the Company, and such representative shall be entitled to exercise the same powers on behalf of the corporation which he represents as if he had been an individual shareholder and such corporate Member shall for the purpose of these Articles (but subject to the Act) be deemed to be present in person at any such meeting if a person so authorised is present thereat. 91 An instrument appointing a proxy shall be in writing in any usual or common form (including the form approved from time to time by the Depository) or in any other form which the Directors may approve and:- (1) in the case of an individual shall be signed by the appointor or his attorney; Corporation may appoint representative. Execution of instrument of proxy on behalf of appointor. (2) in the case of a corporation shall be either given under its common seal or signed on its behalf by an attorney or a duly authorised offi cer of the corporation. 92 Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or the power of attorney or other authority, if any, or a duly certifi ed copy thereof shall (failing previous registration with the Company) if required by law, be duly stamped and be deposited at the Offi ce, not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid Lodgement of instrument appointing proxy. 93 The signature on an instrument of proxy need not be witnessed. No witness needed for instrument of proxy. 94 A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal or revocation of the proxy or transfer of the share in respect of which the vote is given Provided Always that no notice in writing of the death or revocation or transfer shall have been received at the Offi ce one hour at least before the time fi xed for holding the meeting. 95 An instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll and to speak at the meeting When vote by proxy valid though authority revoked. Instrument d e e m e d to confer authority. 143

144 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION DIVIDENDS 132 The profi ts of the Company, subject to any special rights relating thereto created or authorised to be created by these Articles and subject to the provisions of these Articles as to the reserve fund shall be divisible among the Members in proportion to the amount of capital paid up or credited as paid up on the shares held by them respectively. 133 The Company in General Meeting may by Ordinary Resolution declare a dividend on or in respect of any share to the Members according to their rights and interest in the profi ts and may fi x the time for payment. No larger dividend shall be declared than is recommended by the Directors but the Company in General Meeting may declare a smaller dividend. 134 No dividend shall be payable except out of the profi ts of the Company. No dividend shall carry interest The declaration of the Directors as to the net profi ts of the Company shall be conclusive 136. The Directors may from time to time pay to the Members such interim dividends as in their judgment the position of the Company justifi es provided no such dividends shall be declared more than once in six months. 137 The Directors may retain any dividends on which the Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities, or engagements in respect of which the lien exists. Appropriation of profi ts. Declaration of dividend. Dividend payable out of profi ts. Declaration conclusive. I n t e r i m dividend. Debts may be deducted. 138 A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer or the entry of the shares against the Depositor s name in the Depository Register, as the case may be Any General Meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specifi c assets, and in particular of wholly or partly paid-up shares, debentures, or debenture stock of the Company, or wholly or partly paid-up shares, debentures or debenture stock of any other company, or in any one or more of such ways, and the Directors shall give effect to such resolution; and where any diffi culty arises in regard to the distribution, they may settle the same as they think expedient, and in particular may issue fractional certifi cates, and may fi x the value for distribution of such specifi c assets, or any part thereof and may determine that cash payment shall be made to any Member upon the footing of the value so fi xed, In order to adjust the rights of all parties, and may vest any such specifi c assets in trustees upon such trusts for the persons entitled to the dividends as may seem expedient to the Directors. Where requisite, a proper contract shall be fi led in accordance with Section 63 of the Act, and the Directors may appoint any person to sign such contract on behalf of the persons entitled to the dividend, and such appointment shall be effective. Effect transfer. Dividend specie. of in 144

145 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION 140. The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmissions of shares hereinbefore contained entitled to become a Member, or which any person under those provisions is entitled to transfer until such person shall become a Member in respect of such shares or shall duly transfer the same In case several persons are registered in the Register or entered In the Depository Register, as the case may be, as the holders of any share, any resolution of the Directors or the Company in General Meeting declaring a. dividend on shares of any class may specify that the dividend shall be payable to such persons at the close of business on a particular date and thereupon the dividend shall be payable in accordance with their respective holdings so registered. Any person registered in the Register or in the Depository Register, as the case may be, as the holder or joint holder of any share or is entitled jointly to a share In consequence of the death or bankruptcy of the holder may give effectual receipts for dividends, bonuses, other moneys payable or properties distributable and payment on account of dividends on or in respect of such shares. P o w e r to retain dividends. Payment to and receipt by joint holders. 142 Notice of declaration of any dividend, whether interim or otherwise, may be given by advertisement. 143 Unless otherwise directed, any dividend may be paid by cheque, dividend warrant or Post Offi ce Order, sent through the post to the registered address appearing in the Register or the Depository Register, as the case may be, of the Member or person entitled or where two or more persons are registered in the Register or entered In the Depository Register, as the case may be, as joint holders or are entitled to the dividend as a result of the death or bankruptcy of the holder, to that one whose name shall stand fi rst on the Register or the Depository Register, as the case may be, in respect thereof and every cheque, dividend warrant or Post Offi ce Order so sent shall be made payable to the order of the person to whom it is sent or to any person and address as such Member(s) or person(s) may direct in writing. The Company shall not be responsible for the loss of any cheque, dividend warrant or Post Offi ce Order, which shall be sent by post duly addressed to and at the sole risk of the Member or person for whom it is intended. Payment of the cheque, dividend warrant or Post Offi ce Order by the bank upon which they are respectively drawn shall be a full arid valid discharge to the Company. Notwithstanding the provisions of these Articles payment by the Company to the Depository of any dividend payable to a Depositor shall also be a full and valid discharge of the Company from liability to the Depositor in respect of that payment to the extent of the payment made to the Depository. Notice dividend. Payment post. of by 144 The Depository will hold all dividend unclaimed for six years after having been declared and paid before release to the Directors, and the Directors may invest or otherwise make use of the unclaimed dividends for the benefi t of the Company until claimed. Unclaimed dividends. 145

146 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION BONUS ISSUES, CAPITALISATION OF PROFITSAND RESERVES 145(1) The Directors may, with the sanction of the Company by way of an Ordinary Resolution, including any Ordinary Resolution passed pursuant to Article 5: Capitalisation of profi ts and reserves. (a) issue bonus shares for which no consideration is payable to the Company to the persons registered as holders of shares in the Register or (as the case may be) the Depository Register at the close of business on: (i) (ii) the date of the Ordinary Resolution (or such other date as may be specifi ed therein or determined as therein provided); or (in the case of an Ordinary Resolution passed pursuant to Article 5) such other date as may be determined by the Directors, in proportion to their then holdings of shares; and (b) capitalise any sum for the time being standing to the credit of any of the Company s reserve accounts or other undistributable reserve or any sum standing to the credit of the profi t and loss account by appropriating such sum to the persons registered as holders of shares In the Register or (as the case may be) the Depository Register at the close of business on: (i) (ii) the date of the Ordinary Resolution (or such other date as may be specifi ed therein or determined as therein provided); or (in the case of an Ordinary Resolution passed pursuant to Article 5) such other date as may be determined by the Directors, in proportion to their then holdings of shares and applying such sum on their behalf In paying up in full unissued shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued, unissued shares of any other class not being redeemable shares) for allotment and distribution credited as fully paid up to and amongst them as bonus shares In the proportion aforesaid. 145(2). The Directors may do all acts and things considered necessary or expedient to give effect to any such bonus issue or capitalisation under Article 134(1), with full power to the Directors to make such provisions as they think fi t for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefi t thereof accrues to the Company rather than to the Members concerned). The Directors may authorise any person to enter, on behalf of all the Members interested, into an agreement with the Company providing for any such bonus issue or capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned 146

147 APPENDIX 6 - EXTRACTS FROM THE COMPANY S ARTICLES OF ASSOCIATION 145(3) In addition and without prejudice to the powers provided for by Articles 145(1) and 145(2), the Directors shall have the power to issue shares for which no consideration is payable and to capitalise any undivided profi ts or other moneys of the Company not required for the payment or provision of any dividend on any shares entitled to cumulative or non-cumulative preferential dividends (including profi ts or other moneys carried and standing to any reserve or reserves) and to apply such profi ts or other moneys in paying up in full unissued shares, in each case on terms that such shares shall, upon issue, be held by or for the benefi t of participants of any share incentive or option scheme or plan implemented by the Company and approved by shareholders in General Meeting, in such manner and on such terms as the Directors shall think fi t 147

148 APPENDIX 7 - SUBJECT PROPERTIES The Subject Properties are set out in the list below. The full Valuation Reports of the respective Subject Properties are available for inspection at the registered offi ce of the Company at 50 Raffl es Place, #32-01 Singapore Land Tower, Singapore during normal business hours up to the Closing Date. List of Properties Registered Owner Valuer Subject Property Gold Roast Food Industry Pte Ltd Gold Roast Food Industry Pte Ltd Shantou Oriental Confectionary Food Co., Ltd Shantou Gold Roast Food Ind. Co., Ltd Shantou Gold Roast Food Ind. Co., Ltd Xinzheng Viz Branz Foods Co., Ltd Colliers International Consultancy & Valuation (S) Pte Ltd Colliers International Consultancy & Valuation (S) Pte Ltd Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd Henan Xin Surplus Assets Appraisal Firm 14 Woodlands Link, Viz Branz House, Singapore Woodlands Link, Singapore Plot 5A6 Jinyuan District Industrial Estate, Chaoshan Road, Shantou, Guangdong, PRC Plot 5A7 Jinyuan District Industrial Estate, Chaoshan Road, Shantou, Guangdong, PRC 4A1A3 Jinyuan District Industrial Estate, Chaoshan Road, Shantou, Guangdong, PRC Shi Ji Road, Zhongyuan Green Food Industrial Park, Xuediar, Xinzheng, Henan, China Post code

149 APPENDIX 8 - EXTRACTS OF THE VALUATION REPORTS This Appendix 8 sets out the extracts from the Valuation Reports in respect of the Subject Properties and should be read together with, the full technical Valuation Reports of the Valuers. The full Valuation Reports of the respective Subject Properties are available for inspection at the registered offi ce of the Company at 50 Raffl es Place, #32-01 Singapore Land Tower Singapore For the Subject Properties situated in China, the Valuation Reports and the extracts thereof are in Chinese, and a translation has been prepared for ease of reference. In the event of any inconsistency between the Chinese and the translated version of the Valuation Reports and the extracts thereof, the Chinese version shall prevail. 149

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155 APPENDIX 8 - EXTRACTS OF THE VALUATION REPORTS Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. Letter to Client To Shantou Jinwei Food Manufacture Co., Ltd.: We have accepted your delegation and conducted a real estate appraisal on the real estate property located at Plot 5A6 Jinyuan District Industrial Estate (Land Parcel No.: ), Chaoshan Road, Shantou, Guangdong, PRC on 1 July 2013, with a purpose of providing you a reference of the objective and reasonable value of the abovementioned real estate property. In accordance with: (i) the purpose of the appraisal, (ii) the relevant laws, regulations and rules in the PRC, (iii) the principles of appraisal, and (iv) the procedure of appraisal, applying scientific and reasonable methods of appraisal and having taken into account of various factors which affect the real estate market price, our appraiser(s) conducted the appraisal which reflects the objective and reasonable value of the said real estate property at the said time of appraisal. Based on our assessment and estimate, the objective and reasonable value of the appraised object (including the attached land use right)at the time of appraisal was determined at RMB21,001,503 (Twenty-One Million One Thousand Five Hundred and Three Yuan Only), and the objective and reasonable value of the attached land use right was determined at RMB5,651,904 (Five Million Six Hundred and Fifty-One Thousand Nine Hundred and Four Yuan Only). Please refer to the attached Real Estate Appraisal Report (Results) and Real Estate Appraisal Report (Technical) for the detailed procedure of appraisal. Legal representative: (Signature) Li Xiangqun PRC Registered Real Estate Appraiser (PRC Registered Appraiser) PRC Registered Real Estate Valuer Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. (Company stamp) 3 July

156 APPENDIX 8 - EXTRACTS OF THE VALUATION REPORTS 156

157 APPENDIX 8 - EXTRACTS OF THE VALUATION REPORTS Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. Letter to Client To Shantou Jinwei Food Manufacture Co., Ltd.: We have accepted your delegation and conducted a real estate appraisal on the real estate property located at Plot 5A7 Jinyuan District Industrial Estate (Land Parcel No.: ), Chaoshan Road, Shantou, Guangdong, PRC on 1 July 2013, with a purpose of providing you a reference of the objective and reasonable value of the abovementioned real estate property. In accordance with: (i) the purpose of the appraisal, (ii) the relevant laws, regulations and rules in the PRC, (iii) the principles of appraisal, and (iv) the procedure of appraisal, applying scientific and reasonable methods of appraisal and having taken into account of various factors which affect the real estate market price, our appraiser(s) conducted the appraisal which reflects the objective and reasonable value of the said real estate property at the said time of appraisal. Based on our assessment and estimate, the objective and reasonable value of the appraised object (including the attached land use right) at the time of appraisal was determined at RMB20,990,839 (Twenty Million Nine Hundred and Ninety Thousand Eight Hundred and Thirty-Nine Yuan Only), and the objective and reasonable value of the attached land use right was determined at RMB5,642,954 (Five Million Six Hundred and Forty-Two Thousand Nine Hundred and Fifty-Four Yuan Only). Please refer to the attached Real Estate Appraisal Report (Results) and Real Estate Appraisal Report (Technical) for the detailed procedure of appraisal. Legal representative: (Signature) Li Xiangqun PRC Registered Real Estate Appraiser (PRC Registered Appraiser) PRC Registered Real Estate Valuer Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. (Company stamp) 3 July

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159 APPENDIX 8 - EXTRACTS OF THE VALUATION REPORTS Letterhead of Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. Letter to Client To Shantou Jinwei Food Manufacture Co., Ltd.: We have accepted your delegation and conducted a real estate appraisal on the industrial site and the above-ground buildings located at 4A1A3 Jinyuan District Industrial Estate, (Land Parcel No.: T3-10), Chaoshan Road, Shantou, Guangdong, PRC on 18 July 2013, with a purpose of providing you a reference of the objective and reasonable value of the abovementioned real estate property. In accordance with: (i) the purpose of the appraisal, (ii) the relevant laws, regulations and rules in the PRC, (iii) the principles of appraisal, and (iv) the procedure of appraisal, applying scientific and reasonable methods of appraisal and having taken into account of various factors which affect the real estate market price, our appraiser(s) conducted the appraisal which reflects the objective and reasonable value of the said real estate property at the said time of appraisal. Based on our assessment and estimate, the objective and reasonable value of the appraised object (including the attached land use right) at the time of appraisal was determined at RMB117,356,310 (One Hundred and Seventeen Million Three Hundred and Fifty-Six Thousand Three Hundred and Ten Yuan Only), and the objective and reasonable value of the attached land use right was determined at RMB34,154,409 (Thirty-Four Million One Hundred and Fifty-Four Thousand Four Hundred and Nine Yuan Only). Please refer to the attached Real Estate Appraisal Report (Results) and Real Estate Appraisal Report (Technical) for the detailed procedure of appraisal. Legal representative: (Signature) Li Xiangqun PRC Registered Real Estate Appraiser (PRC Registered Appraiser) PRC Registered Real Estate Valuer Guangdong Horizon Assets and Real Estate Appraisal Co., Ltd. (Company stamp) 22 July

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