Sin Heng Heavy Machinery - Ipo
275
Invitation in respect of 168,000,000 Invitation Shares (comprising 88,000,000 New Shares and 80,000,000 Vendor Shares):- (a) 9,600,000 Offer Shares at S$0.26 for each by way of public offer; and (b) 158,400,000 Placement Shares by way of placement, comprising: (i) 141,300,000 Placement Shares at S$0.26 each for applications by way of Placement Shares Application Forms (or such other forms of applications as the Placement Agent deems appropriate); (ii) 300,000 Internet Placement Shares at S$0.26 each for applications made through the internet website of DBS Vickers Securities (Singapore) Pte. Ltd.; and (iii) 16,800,000 Reserved Shares at S$0.26 each reserved for our employees, business associates and those who have contributed to the success of our Group, payable in full on application (subject to the Over-allotment Option). HEIGHTS LIFTING TO GREATER Joint Issue Manager, Underwriter and Placement Agent Joint Issue Manager SIN HENG HEAVY MACHINERY LIMITED (Incorporated in the Republic of Singapore on 30 March 1981) (Company Registration Number 198101305R) PROSPECTUS DATED 25 JANUARY 2010 (REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 25 JANUARY 2010) This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax, or other professional adviser. We have applied to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in, and for quotation of, all our ordinary shares (the “Shares”) in the capital of Sin Heng Heavy Machinery Limited (the “Company”) already issued (including the Vendor Shares), the new Shares (the “New Shares”) which are the subject of this Invitation (as defined herein) as well as the Shares which may be issued upon the exercise of the options to be granted under the SHHM Employee Share Option Scheme (the “ESOS Shares”). Such permission will be granted when we have been admitted to the Official List of the SGX-ST. The dealing in, and quotation of, our Shares, the New Shares and the ESOS Shares will be in Singapore dollars. Acceptance of applications for the Invitation Shares will be conditional upon, inter alia, the issue of the New Shares and permission being granted to deal in, and for quotation of, the New Shares, all of our existing issued Shares (including the Vendor Shares) and the ESOS Shares. If completion of this Invitation does not occur because permission is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk, without interest or any share of revenue or other benefit arising therefrom, and you will not have any claims against us, the Vendor, the Joint Issue Managers, the Underwriter or the Placement Agent (as defined herein). The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of this Invitation, our Company, our subsidiaries, our existing Shares (including the Vendor Shares), the New Shares or the ESOS Shares, as the case may be. In connection with this Invitation, the Vendor has granted DBS Bank Ltd. (“DBS Bank”) an over-allotment option (the “Over-allotment Option”) exercisable by DBS Bank, as stabilising manager, in full or in part on one or more occasions from the date of commencement of trading of our Shares on the SGX-ST (the “Listing Date”) until the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when DBS Bank or its appointed agent has bought, on the SGX-ST, an aggregate of 16,800,000 Shares, representing not more than 10.0% of the total Invitation Shares to undertake stabilising actions, to purchase up to an aggregate of 16,800,000 Additional Shares, representing not more than 10.0% of the total Invitation Shares at the Invitation Price, solely for the purpose of covering the over-allotment (if any) of the Invitation Shares subject to any applicable laws and regulations. The total number of issued Shares immediately after the completion of this Invitation regardless of whether the Over-allotment Option is exercised will be 459,640,000 Shares. The exercise of the Over-allotment Option will not increase the total number of issued Shares after this Invitation. A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our New Shares, our existing Shares (including the Vendor Shares) or the ESOS Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Prospectus in any other jurisdiction. No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority. THIS DOCUMENT IS FOR DISTRIBUTION IN HONG KONG ONLY TO PERSONS WHO ARE “PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP 571) OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE. THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE. BY ACCEPTING THIS DOCUMENT YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. NO PART OF THIS MATERIAL MAY BE (1) COPIED, PHOTOCOPIED OR DUPLICATED IN ANY FORM BY ANY MEANS OR (2) REDISTRIBUTED OR PASSED ON, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON IN WHOLE OR IN PART, FOR ANY PURPOSE. Investing in our Shares involves risks including those described in the section entitled “RISK FACTORS” of this Prospectus. 88,000,000 s by way of ations as the made through nd ees, business up, Managers, the Underwriter or ained or opinions expressed in of this Invitation, our Company, the case may be. ent option (the “Over-allotment the date of commencement of he Listing Date, or (ii) the date esenting not more than 10.0% Additional Shares, representing g the over-allotment (if any) of ediately after the completion of exercise of the Over-allotment ngapore (the “Authority”). The e Authority does not imply that have been complied with. The e Vendor Shares) or the ESOS have not lodged or registered the date of registration of this AL INVESTORS” WITHIN THE DE UNDER THAT ORDINANCE. ONG KONG. YOU ARE ADVISED NTS OF THIS DOCUMENT , YOU BE BOUND BY THE FOREGOING FORM BY ANY MEANS OR (2) T , FOR ANY PURPOSE. S” of this Prospectus.
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Transcript of Sin Heng Heavy Machinery - Ipo
Our two core business divisions are complementary in nature. Our Equipment Rental Business involves the rental of cranes and aerial lifts while our Trading Business involves the trading of both new and used cranes and aerial lifts. We also undertake sales and distribution of spare parts for cranes and aerial lifts.
In addition, as part of our equipment rental business, we undertake turnkey project engineering services which are currently being carried out mainly in Singapore.
As at 15 December 2009, we have a fl eet of 88 cranes with total lifting capacity exceeding 9,500 tons, as well as 213 aerial lifts with access heights of up to 45.7 metres.
Invitation in respect of 168,000,000 Invitation Shares (comprising 88,000,000 New Shares and 80,000,000 Vendor Shares):-
(a) 9,600,000 Offer Shares at S$0.26 for each by way of public offer; and
(b) 158,400,000 Placement Shares by way of placement, comprising:
(i) 141,300,000 Placement Shares at S$0.26 each for applications by way of Placement Shares Application Forms (or such other forms of applications as the Placement Agent deems appropriate);
(ii) 300,000 Internet Placement Shares at S$0.26 each for applications made through the internet website of DBS Vickers Securities (Singapore) Pte. Ltd.; and
(iii) 16,800,000 Reserved Shares at S$0.26 each reserved for our employees, business associates and those who have contributed to the success of our Group,
payable in full on application (subject to the Over-allotment Option).
HEIGHTS
LIFTING TO GREATER
CORPORATE PROFILE
FINANCIAL HIGHLIGHTS
Home-grown Sin Heng Heavy Machinery Limited is one of the leading heavy lifting service providers in Singapore, focusing on the mid-to-high lifting capacity segment.
Joint Issue Manager, Underwriter and Placement Agent
Joint Issue Manager
SIN HENG HEAVY MACHINERY LIMITED(Incorporated in the Republic of Singapore on 30 March 1981)(Company Registration Number 198101305R)
PROSPECTUS DATED 25 JANUARY 2010 (REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 25 JANUARY 2010)
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, fi nancial, tax, or other professional adviser.
We have applied to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in, and for quotation of, all our ordinary shares (the “Shares”) in the capital of Sin Heng Heavy Machinery Limited (the “Company”) already issued (including the Vendor Shares), the new Shares (the “New Shares”) which are the subject of this Invitation (as defi ned herein) as well as the Shares which may be issued upon the exercise of the options to be granted under the SHHM Employee Share Option Scheme (the “ESOS Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the SGX-ST. The dealing in, and quotation of, our Shares, the New Shares and the ESOS Shares will be in Singapore dollars.
Acceptance of applications for the Invitation Shares will be conditional upon, inter alia, the issue of the New Shares and permission being granted to deal in, and for quotation of, the New Shares, all of our existing issued Shares (including the Vendor Shares) and the ESOS Shares. If completion of this Invitation does not occur because permission is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk, without interest or any share of revenue or other benefi t arising therefrom, and you will not have any claims against us, the Vendor, the Joint Issue Managers, the Underwriter or the Placement Agent (as defi ned herein).
The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of this Invitation, our Company, our subsidiaries, our existing Shares (including the Vendor Shares), the New Shares or the ESOS Shares, as the case may be.
In connection with this Invitation, the Vendor has granted DBS Bank Ltd. (“DBS Bank”) an over-allotment option (the “Over-allotment Option”) exercisable by DBS Bank, as stabilising manager, in full or in part on one or more occasions from the date of commencement of trading of our Shares on the SGX-ST (the “Listing Date”) until the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when DBS Bank or its appointed agent has bought, on the SGX-ST, an aggregate of 16,800,000 Shares, representing not more than 10.0% of the total Invitation Shares to undertake stabilising actions, to purchase up to an aggregate of 16,800,000 Additional Shares, representing not more than 10.0% of the total Invitation Shares at the Invitation Price, solely for the purpose of covering the over-allotment (if any) of the Invitation Shares subject to any applicable laws and regulations. The total number of issued Shares immediately after the completion of this Invitation regardless of whether the Over-allotment Option is exercised will be 459,640,000 Shares. The exercise of the Over-allotment Option will not increase the total number of issued Shares after this Invitation.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our New Shares, our existing Shares (including the Vendor Shares) or the ESOS Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Prospectus in any other jurisdiction.
No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority.
THIS DOCUMENT IS FOR DISTRIBUTION IN HONG KONG ONLY TO PERSONS WHO ARE “PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP 571) OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE. THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE. BY ACCEPTING THIS DOCUMENT YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. NO PART OF THIS MATERIAL MAY BE (1) COPIED, PHOTOCOPIED OR DUPLICATED IN ANY FORM BY ANY MEANS OR (2) REDISTRIBUTED OR PASSED ON, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON IN WHOLE OR IN PART, FOR ANY PURPOSE.
Investing in our Shares involves risks including those described in the section entitled “RISK FACTORS” of this Prospectus.
19.4*
FY2007
63.4*
26.0*
FY2008
105.9*
33.4
FY2009
103.6
Revenue (S$’ million)
Trading
Equipment Rental
CAGR:28.7%
Total: 82.7* Total: 131.8* Total: 137.0
FY2007
9.2
FY2008
17.2
FY2009
22.0
Net Profi t (S$’ million)
Net Profi t Margin
CAGR:54.8%
13.0%
11.1%
16.0%
Equipment Rental Revenue(by customers’ industries)
FY 2009
FY 2009
(1) Others comprise mainly equipment rental companies
(2) Others comprise Australia, Brunei, Hong Kong,
Japan, Maldives, Mauritius, Myanmar, New Zealand,
South Africa, South Korea, Taiwan, Thailand and
Vietnam
Infrastructure & Geotechnic 37.2%
Construction 23.8%
Offshore & Marine 14.6%
Oil & Gas 13.4%
Others(1) 11.0%
Trading Revenue(by geographical markets)
Singapore 54.4%
Indonesia 26.3%
Middle East 10.2%
Malaysia 6.8%
India 1.1%
Others(2) 1.2%Net Profi t
Net Profi t Margin
88,000,000
s by way of ations as the
made through nd
ees, business up,
Managers, the Underwriter or
ained or opinions expressed inof this Invitation, our Company,the case may be.
ent option (the “Over-allotment the date of commencement of he Listing Date, or (ii) the date esenting not more than 10.0%
Additional Shares, representingg the over-allotment (if any) ofediately after the completion of exercise of the Over-allotment
ngapore (the “Authority”). Thee Authority does not imply thathave been complied with. Thee Vendor Shares) or the ESOShave not lodged or registered
the date of registration of this
AL INVESTORS” WITHIN THEDE UNDER THAT ORDINANCE.
ONG KONG. YOU ARE ADVISED NTS OF THIS DOCUMENT, YOU
BE BOUND BY THE FOREGOING FORM BY ANY MEANS OR (2)T, FOR ANY PURPOSE.
S” of this Prospectus.
SIN
HE
NG
HE
AV
Y M
AC
HIN
ER
Y LIM
ITE
D
SIN HENG HEAVY MACHINERY LIMITED26 Gul Road Singapore 629346
Tel : (65) 6861 6111 Fax : (65) 6863 8616
* Figures do not add up due to rounding differences
Our two core business divisions are complementary in nature. Our Equipment Rental Business involves the rental of cranes and aerial lifts while our Trading Business involves the trading of both new and used cranes and aerial lifts. We also undertake sales and distribution of spare parts for cranes and aerial lifts.
In addition, as part of our equipment rental business, we undertake turnkey project engineering services which are currently being carried out mainly in Singapore.
As at 15 December 2009, we have a fl eet of 88 cranes with total lifting capacity exceeding 9,500 tons, as well as 213 aerial lifts with access heights of up to 45.7 metres.
Invitation in respect of 168,000,000 Invitation Shares (comprising 88,000,000 New Shares and 80,000,000 Vendor Shares):-
(a) 9,600,000 Offer Shares at S$0.26 for each Offer Share by way of public offer; and
(b) 158,400,000 Placement Shares by way of placement, comprising:
(i) 141,300,000 Placement Shares at S$0.26 each for applications by way of Placement Shares Application Forms (or such other forms of applications as the Placement Agent deems appropriate);
(ii) 300,000 Internet Placement Shares at S$0.26 each for applications made through the internet website of DBS Vickers Securities (Singapore) Pte. Ltd.; and
(iii) 16,800,000 Reserved Shares at S$0.26 each reserved for our employees, business associates and those who have contributed to the success of our Group.
payable in full on application (subject to the Over-allotment Option).
HEIGHTS
LIFTING TO GREATER
CORPORATE PROFILE
FINANCIAL HIGHLIGHTS
Home-grown Sin Heng Heavy Machinery Limited is one of the leading heavy lifting service providers in Singapore, focusing on the mid-to-high lifting capacity segment.
Joint Issue Manager, Underwriter and Placement Agent
Joint Issue Manager
SIN HENG HEAVY MACHINERY LIMITED(Incorporated in the Republic of Singapore on 30 March 1981)(Company Registration Number 198101305R)
PROSPECTUS DATED 25 JANUARY 2010 (REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 25 JANUARY 2010)
We have applied to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in, and for quotation of, all our ordinary shares (the “Shares”) in the capital of Sin Heng Heavy Machinery Limited (the “Company”) already issued (including the Vendor Shares), the new Shares (the “New Shares”) which are the subject of this Invitation (as defi ned herein) as well as the Shares which may be issued upon the exercise of the options to be granted under the SHHM Employee Share Option Scheme (the “ESOS Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the SGX-ST. The dealing in, and quotation of, our Shares, the New Shares and the ESOS Shares will be in Singapore dollars.
Acceptance of applications for the Invitation Shares will be conditional upon, inter alia, the issue of the New Shares and permission being granted to deal in, and for quotation of, the New Shares, all of our existing issued Shares (including the Vendor Shares) and the ESOS Shares. If completion of this Invitation does not occur because permission is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk, without interest or any share of revenue or other benefi t arising therefrom, and you will not have any claims against us, the Vendor, the Joint Issue Managers, the Underwriter or the Placement Agent (as defi ned herein).
The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of this Invitation, our Company, our subsidiaries, our existing Shares (including the Vendor Shares), the New Shares or the ESOS Shares, as the case may be.
In connection with this Invitation, the Vendor has granted DBS Bank Ltd. (“DBS Bank”) an over-allotment option (the “Over-allotment Option”) exercisable by DBS Bank, as stabilising manager, in full or in part on one or more occasions from the date of commencement of trading of our Shares on the SGX-ST (the “Listing Date”) until the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when DBS Bank or its appointed agent has bought, on the SGX-ST, an aggregate of 16,800,000 Shares, representing not more than 10.0% of the total Invitation Shares to undertake stabilising actions, to purchase up to an aggregate of 16,800,000 Additional Shares, representing not more than 10.0% of the total Invitation Shares at the Invitation Price, solely for the purpose of covering the over-allotment (if any) of the Invitation Shares subject to any applicable laws and regulations. The total number of issued Shares immediately after the completion of this Invitation regardless of whether the Over-allotment Option is exercised will be 16,800,000 Shares. The exercise of the Over-allotment Option will not increase the total number of issued Shares after this Invitation.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our New Shares, our existing Shares (including the Vendor Shares) or the ESOS Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Prospectus in any other jurisdiction.
No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority.
THIS DOCUMENT IS FOR DISTRIBUTION IN HONG KONG ONLY TO PERSONS WHO ARE “PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP 571) OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE. THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE. BY ACCEPTING THIS DOCUMENT YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. NO PART OF THIS MATERIAL MAY BE (1) COPIED, PHOTOCOPIED OR DUPLICATED IN ANY FORM BY ANY MEANS OR (2) REDISTRIBUTED OR PASSED ON, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON IN WHOLE OR IN PART, FOR ANY PURPOSE.
Investing in our shares involves risks including those described in the section entitled “RISK FACTORS” of this Prospectus.
19.4
FY2007
63.4
26.0
FY2008
105.9
33.4
FY2009
103.6
Revenue (S$’ million)
Trading
Equipment Rental
CAGR:28.7%
Total: 82.7 Total: 131.8 Total: 137.0
FY2007
9.2
FY2008
17.2
FY2009
22.0
Net Profi t (S$’ million)
Net Profi t Margin (%)
CAGR:54.8%
13.011.1
16.0
Equipment Rental Revenue(by customers’ industries)
FY 2009
FY 2009
(1) Others comprise mainly equipment rental companies
(2) For the period under review, others comprise
Australia, Brunei, Hong Kong, Japan, Maldives,
Mauritius, Myanmar, New Zealand, South Africa,
South Korea, Taiwan, Thailand and Vietnam
Infrastructure & Geotechnic 37.2%
Construction 23.8%
Offshore & Marine 14.6%
Oil & Gas 13.4%
Others(1) 11.0%
Trading Revenue(by geographical markets)
Singapore 54.4%
Indonesia 26.3%
Middle East 10.2%
Malaysia 6.8%
India 1.1%
Others(2) 1.2%Net Profi t
Net Profi t Margin
88,000,000
offer; and
s by way of ations as the
made through nd
ees, business up.
ained or opinions expressed inof this Invitation, our Company,the case may be.
ent option (the “Over-allotment the date of commencement of he Listing Date, or (ii) the date esenting not more than 10.0%
Additional Shares, representingg the over-allotment (if any) ofediately after the completion of exercise of the Over-allotment
ngapore (the “Authority”). Thee Authority does not imply thathave been complied with. Thee Vendor Shares) or the ESOShave not lodged or registered
the date of registration of this
AL INVESTORS” WITHIN THEDE UNDER THAT ORDINANCE.
ONG KONG. YOU ARE ADVISED NTS OF THIS DOCUMENT, YOU
BE BOUND BY THE FOREGOING FORM BY ANY MEANS OR (2)T, FOR ANY PURPOSE.
S” of this Prospectus.
SIN
HE
NG
HE
AV
Y M
AC
HIN
ER
Y LIM
ITE
D
SIN HENG HEAVY MACHINERY LIMITED26 Gul Road Singapore 629346
Tel : (65) 6861 6111 Fax : (65) 6863 8616
OUR CUSTOMER BASE
OUR MAJOR PROJECTS
EQUIPMENT RENTALFor our equipment rental business, we serve mainly customers in Singapore in the following industries:
Infrastructure and Geotechnic:Our cranes are used in the launching of heavy precast columns, slabs and beams
Construction:Our cranes are used in construction of buildings and upgrading works
Offshore and Marine:Our cranes are used in the fabrication of oil rigs and deep sea-going vessels
Oil and Gas:Our cranes are deployed for the construction and maintenance of petrochemical plants and refi neries
TRADINGOur wide trading customer base comprises more than 100 customers spanning USA, Europe, the Middle East, Asia, Australia and Africa.
19811989to • Changi Airport Flyover• Central Expressway• Benjamin Sheares
Bridge• Ayer Rajah Expressway• Toa Payoh Flyover
19901999to• Pan-Island Expressway • Reclamation of
Jurong Island• Cuppage Centre
• Hewlett Packard Factory• Raffl es Hospital• SIA Complex• Woodsville Interchange• Fusionpolis
• Changi Airport Terminal 2 extension
• Petrochemical Corporation of Singapore’s petrochemical complex
• Extension of Queensway to AYE
• Changi Water Reclamation Plant
• Changi Airport Terminal 3• Marina Bay
Financial Centre• Marina Bay
Integrated Resort
• Sentosa Light Rail System• Braddell / Thomson /
Lornie Road Interchange• Resort World at Sentosa• Singapore Flyer• Kallang – Paya Lebar
Expressway
2000CURRENTto
• Boon Lay MRT extension
• Jurong Rock Cavern Underground Oil Storage
OUR EQUIPMENT FLEET
Cranes/Aerial Lifts
Lifting Capacity/ Access Heights
Number of units in our fl eet
Crawler Cranes 5 – 450 tons 47
All Terrain Cranes
100 – 500 tons 6
Truck Cranes 50 – 160 tons 5
Rough Terrain Cranes
7 – 80 tons 30
Boom Lifts 12 – 45.7m 127
Scissor Lifts 6 – 12m 86
Boom Lifts
al Lifts
es
OUR CUSTOMER BASE
OUR MAJOR PROJECTS
EQUIPMENT RENTALFor our equipment rental business, we serve mainly customers in Singapore in the following industries:
Infrastructure and Geotechnic:Our cranes are used in the launching of heavy precast columns, slabs and beams
Construction:Our cranes are used in construction of buildings and upgrading works
Offshore and Marine:Our cranes are used in the fabrication of oil rigs and deep sea-going vessels
Oil and Gas:Our cranes are deployed for the construction and maintenance of petrochemical plants and refi neries
TRADINGOur wide trading customer base comprises more than 100 customers spanning USA, Europe, the Middle East, Asia, Australia and Africa.
19811989to • Changi Airport Flyover• Central Expressway• Benjamin Sheares
Bridge• Ayer Rajah Expressway• Toa Payoh Flyover
19901999to• Pan-Island Expressway • Reclamation of
Jurong Island• Cuppage Centre
• Hewlett Packard Factory• Raffl es Hospital• SIA Complex• Woodsville Interchange• Fusionpolis
• Changi Airport Terminal 2 extension
• Petrochemical Corporation of Singapore’s petrochemical complex
• Extension of Queensway to AYE
• Changi Water Reclamation Plant
• Changi Airport Terminal 3• Marina Bay
Financial Centre• Marina Bay
Integrated Resort
• Sentosa Light Rail System• Braddell / Thomson /
Lornie Road Interchange• Resort World at Sentosa• Singapore Flyer• Kallang – Paya Lebar
Expressway
2000CURRENTto
• Boon Lay MRT extension
• Jurong Rock Cavern Underground Oil Storage
OUR EQUIPMENT FLEET
Cranes/Aerial Lifts
Lifting Capacity/ Access Heights
Number of units in our fl eet
Crawler Cranes 5 – 450 tons 47
All Terrain Cranes
100 – 500 tons 6
Truck Cranes 50 – 160 tons 5
Rough Terrain Cranes
7 – 80 tons 30
Boom Lifts 12 – 45.7m 127
Scissor Lifts 6 – 12m 86
Boom Lifts
al Lifts
es
COMPETITIVE STRENGTHS
We are an established heavy lifting specialist for infrastructure and geotechnic projects
Since 1981, we have participated in many major infrastructure and geotechnic projects in Singapore and established a proven track record as a heavy lifting specialist
This enables us to compete for future infrastructure and geotechnic projects in Singapore and the region
Our crane fl eet is focused on the mid-to-high lifting capacity segment and is complemented by our aerial lift fl eet
Our comprehensive fl eet of cranes and aerial lifts enable us to offer a more complete and integrated range of lifting solutions
Our growing fl eet of cranes and aerial lifts provides us with a competitive advantage when we bid for projects as different stages of a project will require different lifting equipment
Our growing fl eet also provides assurance to our customers that we have the necessary lifting resources on hand to perform our work effi ciently and without delay
We have an established track record in the maintenance, reconditioning and refurbishment of cranes and aerial lifts
We deliver our rental equipment to our customers only after it has been inspected, reconditioned by our maintenance service team, and has had its functionality certifi ed by independent professional engineers
Our maintenance service team provides round-the-clock standby for our equipment rental customers, and we can respond immediately and cater for ad-hoc assignments
Our reputation as a reliable heavy lifting service provider and seller of lifting equipment has enabled us to win repeat business from our existing customers
We have a strong management team with in-depth knowledge and expertise
Our Executive Directors have collectively more than 50 years of experience in the rental and trading of cranes and aerial lifts, and enjoy close working relationships with our suppliers and customers
Our Executive Directors and project managers also provide turnkey project engineering solutions to our customers
We have an extensive network of suppliers and a wide customer base across various industries worldwide
Spanning over 28 years of operations, we have built strong relationships with an extensive network of suppliers globally, enabling us to purchase new cranes and aerial lifts as well as used ones in good working conditions at competitive prices
We source for new cranes directly from manufacturers such as the Kobelco Group, and used cranes from various end-users, equipment rental companies, manufacturers and trading houses
We typically purchase our aerial lifts from suppliers (including original equipment manufacturers) based in the United States of America, Australia, Japan and Europe
Our equipment rental and trading customers regularly return to us for repeat business and also refer other prospective customers to us
s e when a ent
ncessary
ed,e ed by
round-alately
Renew and expand our equipment rental fl eet in Singapore
With an advanced and larger equipment rental fl eet, we will be able to target a larger pool of customers
By renewing our equipment rental fl eet, we aim to:
• lower the average age of our cranes, reduce equipment downtime, thereby resulting in a more reliable fl eet
• focus on building our fl eet of cranes in the mid-to-high lifting capacity segment which are deployed for larger projects
• offer niche services through acquisition of specialised equipment that have greater lifting performance and height access, and offer a more complete set of lifting services
Expand our business and operations through acquisitions, joint ventures and/or strategic alliances
To explore opportunities to collaborate with suitable partners in related industries through strategic alliances, joint-ventures, acquisitions and investments
PROSPECTS
FUTURE PLANS
Infrastructure, Public Sector Construction and Private Sector Construction
According to the Building and Construction Authority, the average annual construction demand for 2010 and 2011 is projected to range between S$20 billion and S$27 billion. Compared to the average annual construction demand of S$13 billion from 1998 to 2006, the projection of at least S$20 billion annually for 2009, 2010 and 2011 is at least 54% higher.
Construction demand in the public sector is fuelled by projects such as the MRT projects (Downtown line, the North-South Line Extension and Jurong East Connection), major road projects including the S$4 billion Marina Coastal Expressway and the new HDB fl ats; the BCA also expects higher demand for private institutional and other buildings to provide support to the overall private sector construction demand
With our track record in key infrastructure projects, we expect our equipment rental business to benefi t from the increased demand
for cranes and aerial lifts to support infrastructure projects
Offshore and Marine and Oil and Gas Industries
The expected recovery in the global economy may lead to increase demand for petrochemical products, which may in turn spur increased investments in these industries, such as the construction of new oil refi neries or petrochemical facilities and offshore vessels. Our equipment rental business is likely to benefi t from increased demand for cranes and aerial lifts arising from these activities
In the short term, construction and civil engineering activities in countries where the governments have initiated infrastructure projects (as part of their fi scal stimulus packages) are expected to provide support for the demand for cranes and aerial lifts. The expected increase in demand for cranes and aerial lifts may also benefi t our trading business.
With the projected recovery of the global and regional economies over the next few years, construction, civil engineering, offshore and marine and oil and gas related activities are expected to pick up and result in increasing demand for cranes and aerial lifts.
For example, we may collaborate with partners in our focus industries for more business opportunities, in particular higher margin projects with requirements for turnkey project engineering services
We may also use our net proceeds to acquire equipment rental companies
Expand our equipment rental fl eets in Malaysia and Vietnam
We intend to explore and develop new business opportunities in Malaysia and Vietnam where we currently have a presence
We plan to increase our fl eet in both countries through the acquisition of cranes and aerial lifts to meet the expected increase in demand for lifting services
CORPORATE INFORMATION ............................................................................................................ 1
DEFINITIONS ...................................................................................................................................... 3
GLOSSARY OF TECHNICAL TERMS ................................................................................................ 10
SELLING RESTRICTIONS.................................................................................................................. 11
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS .................................... 12
DETAILS OF THE INVITATION
LISTING ON THE SGX-ST ............................................................................................................ 14
INDICATIVE TIMETABLE FOR LISTING........................................................................................ 18
PROSPECTUS SUMMARY
OVERVIEW OF OUR GROUP........................................................................................................ 19
SUMMARY OF OUR FINANCIAL INFORMATION ........................................................................ 20
RISK FACTORS .................................................................................................................................. 21
INVITATION ........................................................................................................................................ 29
INVITATION STATISTICS .................................................................................................................... 31
USE OF PROCEEDS AND INVITATION EXPENSES ........................................................................ 33
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS .................................... 35
PLAN OF DISTRIBUTION .................................................................................................................. 38
SELECTED CONSOLIDATED FINANCIAL INFORMATION .............................................................. 41
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW .................................................................................................................................... 43
SEASONALITY .............................................................................................................................. 52
REVIEW OF PAST OPERATING PERFORMANCE ...................................................................... 52
REVIEW OF FINANCIAL POSITION.............................................................................................. 57
LIQUIDITY AND CAPITAL RESOURCES ...................................................................................... 59
CAPITAL EXPENDITURES AND DIVESTMENT .......................................................................... 61
COMMITMENTS AND CONTINGENT LIABILITIES ...................................................................... 62
FOREIGN EXCHANGE EXPOSURE ............................................................................................ 62
CAPITALISATION AND INDEBTEDNESS ........................................................................................ 65
DILUTION ............................................................................................................................................ 67
DIVIDEND POLICY ............................................................................................................................ 68
CONTENTS
i
GENERAL INFORMATION ON OUR GROUP
SHARE CAPITAL ............................................................................................................................ 70
GROUP STRUCTURE.................................................................................................................... 73
SUBSIDIARIES AND ASSOCIATED COMPANY .......................................................................... 74
SHAREHOLDERS .......................................................................................................................... 75
VENDOR ........................................................................................................................................ 78
MORATORIUM................................................................................................................................ 80
HISTORY ............................................................................................................................................ 81
BUSINESS
BUSINESS OVERVIEW.................................................................................................................. 84
MAINTENANCE AND SAFETY STANDARDS .............................................................................. 91
PRODUCTION CAPACITY AND UTILISATION.............................................................................. 91
MARKETING AND BUSINESS DEVELOPMENT .......................................................................... 92
MAJOR CUSTOMERS .................................................................................................................. 93
MAJOR SUPPLIERS ...................................................................................................................... 94
INVENTORY MANAGEMENT ........................................................................................................ 95
CREDIT MANAGEMENT................................................................................................................ 95
RESEARCH AND DEVELOPMENT .............................................................................................. 97
STAFF TRAINING .......................................................................................................................... 97
AWARDS AND CERTIFICATION.................................................................................................... 97
INTELLECTUAL PROPERTY ........................................................................................................ 97
PROPERTIES AND FIXED ASSETS ............................................................................................ 98
INSURANCE COVERAGE.............................................................................................................. 99
COMPETITION .............................................................................................................................. 99
COMPETITIVE STRENGTHS ........................................................................................................ 100
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
PROSPECTS.................................................................................................................................. 102
TREND INFORMATION.................................................................................................................. 108
ORDER BOOK................................................................................................................................ 108
BUSINESS STRATEGIES AND FUTURE PLANS ........................................................................ 108
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
MANAGEMENT REPORTING STRUCTURE ................................................................................ 110
DIRECTORS .................................................................................................................................. 110
EXECUTIVE OFFICERS ................................................................................................................ 116
STAFF ............................................................................................................................................ 118
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES .... 118
SERVICE AGREEMENTS .............................................................................................................. 119
CORPORATE GOVERNANCE ...................................................................................................... 120
CONTENTS
ii
GOVERNMENT REGULATIONS ........................................................................................................ 123
EXCHANGE CONTROLS.................................................................................................................... 126
INTERESTED PERSON TRANSACTIONS
PAST TRANSACTIONS .................................................................................................................. 128
PRESENT AND ON-GOING TRANSACTIONS.............................................................................. 135
INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES .. 137
INTERESTS OF EXPERTS............................................................................................................ 137
GUIDELINES FOR FUTURE INTERESTED PERSON TRANSACTIONS .................................... 138
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS.................. 138
POTENTIAL CONFLICT OF INTERESTS .......................................................................................... 140
SHHM EMPLOYEE SHARE OPTION SCHEME ................................................................................ 144
CLEARANCE AND SETTLEMENT .................................................................................................... 153
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS ................................................ 154
SHARE CAPITAL ............................................................................................................................ 156
MATERIAL CONTRACTS .............................................................................................................. 156
LITIGATION .................................................................................................................................... 157
MISCELLANEOUS ........................................................................................................................ 157
CONSENTS .................................................................................................................................... 158
DOCUMENTS AVAILABLE FOR INSPECTION ............................................................................ 158
STATEMENT BY DIRECTORS OF OUR COMPANY AND THE VENDOR.................................... 158
APPENDIX A A(i) – INDEPENDENT AUDITORS’ REPORT AND THE CONSOLIDATED FINANCIAL
STATEMENTS OF SIN HENG HEAVY MACHINERY LIMITED .............................................. A(i)-1
A(ii) – INDEPENDENT AUDITORS’ REPORT ON THE UNAUDITED GROUP PROFORMA FINANCIAL INFORMATION .................................................................................................... A(ii)-1
APPENDIX BTAXATION............................................................................................................................................ B-1
APPENDIX CDESCRIPTION OF OUR SHARES .................................................................................................... C-1
APPENDIX DRULES OF THE SHHM EMPLOYEE SHARE OPTION SCHEME...................................................... D-1
APPENDIX ESUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR COMPANY ............ E-1
APPENDIX FTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND ACCEPTANCE .............. F-1
CONTENTS
iii
COMPANY : Sin Heng Heavy Machinery Limited
BOARD OF DIRECTORS : Derrick Lee Meow Chan(Non-Executive Chairman)Tan Cheng Soon Don(Managing Director)Tan Cheng Guan(Executive Director)Tan Cheng Kwong(Executive Director)Leong Wing Kong(Non-Executive Director)Teo Yi-Dar(Non-Executive Director)Yeo Yun Seng(Independent Director)Tan Keh Yan, Peter(Independent Director)Renny Yeo Ah Kiang(Independent Director)
COMPANY SECRETARY : Noraini Binte Noor Mohamed Abdul Latiff, ACIS
REGISTERED OFFICE, HEAD OFFICE : 26 Gul RoadAND PRINCIPAL PLACE OF BUSINESS Singapore 629346
VENDOR : Sin Heng Holdings LtdClarendon House 2 Church StreetHamilton HM 11Bermuda
SHARE REGISTRAR AND SHARE : Boardroom Corporate & Advisory Services Pte. Ltd.TRANSFER OFFICE 3 Church Street #08-01
Samsung HubSingapore 049483
JOINT ISSUE MANAGER, UNDERWRITER : DBS Bank Ltd.AND PLACEMENT AGENT 6 Shenton Way
DBS Building Tower OneSingapore 068809
JOINT ISSUE MANAGER : Stirling Coleman Capital Limited4 Shenton Way #07-03SGX Centre 2Singapore 068807
AUDITORS AND REPORTING : Deloitte & Touche LLPACCOUNTANTS 6 Shenton Way #32-00
DBS Building Tower TwoSingapore 068809
Partner-in-charge: Jeremy Toh Yew Kuan(A member of the Institute of Certified PublicAccountants of Singapore)
CORPORATE INFORMATION
1
SOLICITORS TO THE COMPANY : Arfat Selvam Alliance LLC55 Market Street #08-01Singapore 048941
SOLICITORS TO THE JOINT ISSUE : WongPartnership LLPMANAGERS, UNDERWRITER AND One George Street #20-01PLACEMENT AGENT Singapore 049145
LEGAL ADVISERS TO THE COMPANY AS : Tay & PartnersTO MALAYSIA LAW 6th Floor, Plaza See Hoy Chan
Jalan Raja Chulan 50200 Kuala Lumpur Malaysia
LEGAL ADVISERS TO THE COMPANY AS : VILAF – HONG DUCTO VIETNAM LAW HCO Building (Melia), Suite 603
44B Ly Thuong Kiet StreetHanoiVietnam
RECEIVING BANKER : DBS Bank Ltd.6 Shenton WayDBS Building Tower OneSingapore 068809
PRINCIPAL BANKER : DBS Bank Ltd.6 Shenton WayDBS Building Tower OneSingapore 068809
CORPORATE INFORMATION
2
In this Prospectus and the accompanying Application Forms and, in relation to the ElectronicApplications, the instructions appearing on the screens of the ATMs and the IB websites of the relevantParticipating Banks and the internet website of DBS Vickers, unless the context otherwise requires, thefollowing definitions apply throughout where the context so admits:-
Companies within our Group
“Company” or “SHHM” : Sin Heng Heavy Machinery Limited
“Group” : Our Company and our subsidiaries
“SHAL” : Sin Heng Aerial Lifts Pte. Ltd. (formerly known as Chiyoda SangyoInternational (S) Pte. Ltd.)
“SHMSB” : SH Heavy Machinery Sdn. Bhd.
“SHV” : Sin Heng Vietnam Company Limited
Other Corporations and Organisations
“BCA” : The Building and Construction Authority of Singapore
“CDP” : The Central Depository (Pte) Limited
“CDT” : The Committee of Distributive Trade of the Ministry of DomesticTrade, Cooperatives and Consumerism of Malaysia
“CPF” : The Central Provident Fund
“DBS Bank”, “Joint Issue : DBS Bank Ltd.Manager”, “Underwriter” or “Placement Agent”
“DBS Vickers” : DBS Vickers Securities (Singapore) Pte. Ltd.
“HDB” : The Housing Development Board
“Joint Issue Managers” : DBS Bank and Stirling Coleman
“LTA” : The Land Transport Authority
“MAS” or “Authority” : The Monetary Authority of Singapore
“MDTCC” : The Ministry of Domestic Trade, Cooperatives and Consumerism ofMalaysia
“MOM” : The Ministry of Manpower
“SEAVI” : SEAVI Advent Equity V (C) Ltd
“SEAVI Advent” : SEAVI Advent Corporation Limited
“SEAVI Advent Funds” : SEAVI Advent Equity IV Fund Limited Partnership, SEAVI AdventAsia Fund GmbH & Co. Parallel-KG, Fortis Private Equity AsiaFund N.V., SEAVI Advent Equity V Trust, SEAVI Advent Equity V(Cayman) L.P. and Ocean Private Equity Fund II Ltd
“SEPL” or “Associated Company” : Songcheon Engineering Pte. Ltd.
DEFINITIONS
3
“SGX-ST” : Singapore Exchange Securities Trading Limited
“SHH” or “Vendor” : Sin Heng Holdings Ltd
“Stirling Coleman” or “Joint : Stirling Coleman Capital LimitedIssue Manager”
“TALH” : TAL Holdings Pte Ltd
“TFSA” : TFSA Investments Ltd
General
“Act” or “Companies Act” : The Companies Act (Chapter 50) of Singapore as amended,supplemented or modified from time to time
“Additional Shares” : Up to 16,800,000 existing issued Shares to be sold upon theexercise of the Over-allotment Option
“Application Forms” : The printed application forms to be used for the purpose of thisInvitation and which form part of this Prospectus
“Application List” : The list of applications for subscription and/or purchase of theInvitation Shares
“Articles of Association” : The articles of association of our Company
“Associate” : (a) in relation to an entity, means:-
(i) in a case where the entity is a substantial shareholder,controlling shareholder, substantial interest-holder orcontrolling interest-holder, its related corporation,related entity, associated company or associatedentity; or
(ii) in any other case, (A) a director or an equivalentperson, (B) where the entity is a corporation, acontrolling shareholder of the entity, (C) where theentity is not a corporation, a controlling interest-holderof the entity, (D) a subsidiary, a subsidiary entity, anassociated company, or an associated entity, or (E) asubsidiary, a subsidiary entity, an associatedcompany, or an associated entity, of the controllingshareholder or controlling interest-holder, as the casemay be, of the entity; and
(b) in relation to an individual, means:-
(i) his immediate family (being spouse, child, adoptedchild, step-child, sibling and parent);
(ii) a trustee of any trust of which the individual or anymember of the individual’s immediate family is (A) abeneficiary; or (B) where the trust is a discretionarytrust, a discretionary object; when the trustee acts inthat capacity; or
DEFINITIONS
4
(iii) any corporation in which he and his immediate family(whether directly or indirectly) have interests in votingshares of an aggregate of not less than 30.0% of thetotal votes attached to all voting shares
The terms “associated company”, “associated entity”, “controllinginterest-holder”, “controlling shareholder”, “related corporation”,“related entity”, “subsidiary”, “subsidiary entity” and “substantialinterest-holder” shall have the same meanings ascribed to themrespectively in Section 1 of the Fourth Schedule of the Securitiesand Futures (Offers of Investments) (Shares and Debentures)Regulations 2005
“ATM” : Automated teller machine of a Participating Bank
“Audit Committee” : The audit committee of our Company as at the date of thisProspectus, unless otherwise stated
“Board” or “Board of Directors” : The board of Directors of our Company as at the date of thisProspectus, unless otherwise stated
“business trust” : Has the same meaning as in Section 2 of the Business Trusts Act2004 (Chapter 31A) of Singapore
“BVI” : British Virgin Islands
“Controlling Shareholder” : A person who holds directly or indirectly 15.0% or more of the totalvotes attached to all the voting shares in our Company or in factexercises control over our Company
“Closing Date” : The date of the closing of the Application List
“Directors” : The directors of our Company as at the date of this Prospectus,unless otherwise stated
“Electronic Applications” : Applications for the Offer Shares made through an ATM or the IBwebsite of one of the relevant Participating Banks or applicationsfor the Internet Placement Shares made through the internetwebsite of DBS Vickers, subject to and on the terms and conditionsof this Prospectus
“entity” : Includes a corporation, an unincorporated association, apartnership and the government of any state, but does not includea trust
“EPS” : Earnings per share
“ESOS” : SHHM Employee Share Option Scheme
“ESOS Shares” : The new Shares which may be issued upon the exercise of theoptions to be granted under the SHHM Employee Share OptionScheme
“Executive Directors” : The executive Directors of our Company as at the date of thisProspectus, unless otherwise stated
“Executive Officers” : The executive officers of our Group as at the date of thisProspectus, unless otherwise stated
DEFINITIONS
5
“FY” : Financial year ended or ending 30 June, as the case may be
“FY2009 Final Dividend” : The tax exempt (one-tier) final dividend of S$3.0 million paid on 18December 2009 in respect of FY2009
“FY2010 Interim Dividend” : The interim dividend of S$12.0 million declared on 21 December2009 and to be paid prior to the registration of this Prospectus withthe MAS in respect of FY2010
“GDP” : Gross Domestic Product
“IB” : Internet Banking
“Independent Directors” : The non-executive independent Directors of our Company as at thedate of this Prospectus, unless otherwise stated
“Internet Placement Shares” : The 300,000 Placement Shares available for applications throughthe internet website of DBS Vickers, subject to and on the termsand conditions of this Prospectus
“Invitation” : The invitation by our Company and the Vendor to the public inSingapore to subscribe for and/or purchase the Invitation Shares atthe Invitation Price, subject to and on the terms and conditions ofthis Prospectus
“Invitation Price” : S$0.26 for each Invitation Share
“Invitation Shares” : The 168,000,000 Shares which are the subject of this Invitationcomprising the New Shares and the Vendor Shares
“IPO” : Initial public offering
“Latest Practicable Date” : 15 December 2009, being the latest practicable date prior to thelodgement of this Prospectus with the Authority
“Leverage Loan” : The loan of S$37.0 million granted by DBS Bank on 10 July 2008to finance in part the acquisition of 1,858,200 ordinary shares inthe capital of our Company, with a loan maturity of four years
“Listing Date” : The date of commencement of trading of our Shares on the SGX-ST
“Listing Manual” : The Listing Manual of the SGX-ST, as amended from time to time
“Management Agreement” : The management agreement dated 25 January 2010 entered intobetween our Company, the Vendor, DBS Bank and StirlingColeman
“Market Day” : A day on which the SGX-ST is open for trading in securities
“MRT” : Mass Rapid Transit
“NAV” : Net asset value
“New Shares” : The 88,000,000 new Shares for which our Company invitesapplications to subscribe for pursuant to this Invitation, subject toand on the terms and conditions of this Prospectus
DEFINITIONS
6
“Nominating Committee” : The nominating committee of our Company as at the date of thisProspectus, unless otherwise stated
“Non-Executive Directors” : The non-executive Directors of our Company as at the date of thisProspectus, unless otherwise stated
“NTA” : Net tangible assets
“Offer” : The offer by our Company and the Vendor of the Offer Shares tothe public in Singapore for subscription and/or purchase at theInvitation Price, subject to and on the terms and conditions of thisProspectus
“Offer Shares” : The 9,600,000 Invitation Shares which are the subject of the Offer
“Over-allotment Option” : The over-allotment option exercisable by DBS Bank as stabilisingmanager, in full or in part, on one or more occasions from theListing Date until the earlier of:-
(i) the date falling 30 days from the Listing Date, or
(ii) the date when DBS Bank or its appointed agent has bought,on the SGX-ST, an aggregate of 16,800,000 Shares,representing not more than 10.0% of the total InvitationShares, to undertake stabilising actions,
to purchase up to an aggregate of 16,800,000 Additional Shares,representing not more than 10.0% of the total Invitation Shares atthe Invitation Price. Unless we indicate otherwise, all information inthis Prospectus assumes that the Over-allotment Option is notexercised
“Participating Banks” : DBS Bank (including POSB), United Overseas Bank Limited andits subsidiary, Far Eastern Bank Limited (the “UOB Group”), andOversea-Chinese Banking Corporation Limited (“OCBC”)
“PER” : Price earnings ratio
“period under review” : The period which comprises FY2007, FY2008 and FY2009
“Placement” : The placement by the Placement Agent of the Placement Shareson behalf of our Company and the Vendor for subscription and/orpurchase at the Invitation Price, subject to and on the terms andconditions of this Prospectus
“Placement Agreement” : The placement agreement dated 25 January 2010 entered intobetween our Company, the Vendor and DBS Bank as thePlacement Agent
“Placement Shares” : The 158,400,000 Invitation Shares which are the subject of thePlacement
“Prospectus” : This prospectus dated 25 January 2010
“Remuneration Committee” : The remuneration committee of our Company as at the date of thisProspectus, unless otherwise stated
DEFINITIONS
7
“Reserved Shares” : The 16,800,000 Placement Shares reserved for our employees,business associates and those who have contributed to thesuccess of our Group
“Securities Account” : The securities account maintained by a Depositor with CDP, butdoes not include a securities sub-account
“Security Interest” : Has the same meaning as ascribed to it in the section entitled“Interested Person Transactions – Corporate Guarantee given byour Company and SHAL”
“Service Agreements” : The service agreements entered into between our Company andour Executive Directors as described in the section entitled“Service Agreements” of this Prospectus
“SFA” : The Securities and Futures Act (Chapter 289) of Singapore, asamended, modified or supplemented from time to time
“SGXNET” : The corporate announcement system maintained by the SGX-STfor the submission of announcements by listed companies
“Share Lending Agreement” : The share lending agreement as described in the section entitled“Plan of Distribution - Share Lending” of this Prospectus
“Shareholders” : Registered holders of Shares, except where the registered holderis CDP, the term “Shareholders” shall, in relation to such Shares,mean the Depositors whose Securities Accounts are credited withShares
“Shares” : Ordinary shares in the capital of our Company
“Sub-Division” : The sub-division of every one Share into 200 Shares as describedin the section entitled “Share Capital” of this Prospectus
“Substantial Shareholder” : A person who has an interest in voting shares of our Company thetotal votes attached to which is not less than 5.0% of the totalvotes attached to all the voting shares in our Company
“Underwriting Agreement” : The underwriting agreement dated 25 January 2010 entered intobetween our Company, the Vendor and DBS Bank as theUnderwriter
“USA” : The United States of America
“Vendor Shares” : 80,000,000 existing issued Shares for which the Vendor invitesapplications to purchase at the Invitation Price, subject to and onthe terms and conditions of this Prospectus
Currencies, Units and Others
“A$” : Australian dollars, the lawful currency of Australia
“Euro” : Euro, the lawful currency of the European Union
“JPY” : Japanese yen, the lawful currency of Japan
“RM” : Malaysian Ringgit, the lawful currency of Malaysia
“SGD” or “S$” and “cents” : Singapore dollars and cents, respectively
DEFINITIONS
8
“sqft” : Square feet
“sqm” : Square metre
“US$” : United States dollars, the lawful currency of the United States ofAmerica
“VND” : Vietnamese Dong, the lawful currency of Vietnam
“%” : Percentage
The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed tothem respectively in Section 130A of the Act.
Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter genders andvice versa. References to persons shall include corporations.
Any discrepancies between the amounts listed and the totals in tables shown are due to rounding.Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figureswhich precede them.
Any reference in this Prospectus, the Application Forms and/or the Electronic Applications to any statuteor enactment is a reference to that statute or enactment as for the time being amended or re-enacted.Any word defined under the Act, the SFA or any statutory modification thereof and used in thisProspectus, the Application Forms and/or the Electronic Applications shall, where applicable, have themeaning ascribed to it under the Act, the SFA or any statutory modification thereof, as the case may be.
Any reference in this Prospectus, the Application Forms and/or the Electronic Applications to Sharesbeing allotted to an applicant includes allotment to CDP for the account of that applicant.
Any reference to a time of day in this Prospectus, the Application Forms and/or the ElectronicApplications shall be a reference to Singapore time, unless otherwise stated.
Any reference to “we”, “us”, “our”, “ourselves” or other grammatical variations thereof in this Prospectus isa reference to our Company, our Group or any member of our Group as the context requires.
Information contained on our website does not constitute part of this Prospectus and no representation,warranty or covenant, expressed or implied, is made by any of our Company, the Joint Issue Managers,the Underwriter and the Placement Agent, or any of their affiliates, directors, officers, employees, agents,representatives or advisers as to the accuracy or completeness of the information contained on suchwebsite.
DEFINITIONS
9
The glossary contains an explanation of certain terms used in this Prospectus in connection with ourGroup. The terms and their assigned meanings may not correspond to standard industry or commonmeanings, as the case may be, or usage of these terms.
“dry hire” : hire of our heavy lifting equipment without operator
“mid-to-high lifting capacity” : cranes which have lifting capacity of 100 tons and above which aredeployed for larger projects
“wet hire” : hire of our heavy lifting equipment with operator
GLOSSARY OF TECHNICAL TERMS
10
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/or purchase theInvitation Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is notauthorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No actionhas been or will be taken under the requirements of the legislation or regulations of, or of the legal orregulatory authorities of, any jurisdiction, except for the filing and/or registration of this Prospectus inSingapore in order to permit a public offering of the Invitation Shares and the public distribution of thisProspectus in Singapore. The distribution of this Prospectus and the offering of the Invitation Shares incertain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may comeinto possession of this Prospectus are required by us, the Vendor, the Joint Issue Managers, theUnderwriter and the Placement Agent to inform themselves about, and to observe and comply with, anysuch restrictions at their own expense and without liability to us, the Vendor, the Joint Issue Managers,the Underwriter and the Placement Agent.
Persons to whom a copy of this Prospectus has been issued shall not circulate to any other person,reproduce or otherwise distribute this Prospectus or any information herein for any purpose whatsoevernor permit or cause the same to occur.
HONG KONG
This Prospectus does not constitute an offer to the public in Hong Kong to subscribe for the InvitationShares.
This Prospectus has not been and will not be registered with the Registrar of Companies in Hong Kong.Accordingly, except as mentioned below, no copy of this Prospectus may be issued, circulated ordistributed in Hong Kong.
A copy of this Prospectus may, however, be issued by the Placement Agent or its designated sub-placement agents to professional investors (within the meaning of the Securities and Futures Ordinance(Chapter 571 of the Laws of Hong Kong)) for the Placement Shares in Hong Kong, or otherwise pursuantto, and in accordance with the conditions of, any applicable exemptions as set out in the Securities andFutures Ordinance (Chapter 571 of the Laws of Hong Kong) in a manner which does not constitute anoffer of the Placement Shares to the public in Hong Kong or an issue, circulation or distribution in HongKong of a prospectus for the purposes of the Companies Ordinance (Chapter 32 of the Laws of HongKong). The offer of the Placement Shares is personal to the person named in the accompanyingApplication Form, and application for the Placement Shares will only be accepted from such person. Anapplication for the Placement Shares is not invited from any person in Hong Kong other than a person towhom a copy of this Prospectus has been issued by the Placement Agent or its designated sub-placement agents, and if made, will not be accepted, unless the applicant satisfies the Placement Agentor its designated sub-placement agents that he is a professional investor as defined in the Securities andFutures Ordinance (Chapter 571 of the Laws of Hong Kong).
No person to whom a copy of this Prospectus is issued may issue, circulate or distribute this Prospectusin Hong Kong or make or give a copy of this Prospectus to any other person, other than their legal,financial, tax or other appropriate advisers who are subject to a duty of confidentiality to such person.
The Placement Agent has agreed with our Company that it (and its sub-placement agents, if any) has notoffered or sold, and will not offer or sell, in Hong Kong, by means of any document, any of our Sharesother than permitted under the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and theSecurities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
This Prospectus may not be issued in Hong Kong to any person other than a professional investor withinthe meaning of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) orotherwise pursuant to and in accordance with the conditions or any other applicable exemptions set outin the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) and the Securities and FuturesOrdinance (Chapter 571 of the Laws of Hong Kong).
SELLING RESTRICTIONS
11
All statements contained in this Prospectus, statements made in press releases and oral statements thatmay be made by us or our Directors, Executive Officers or employees acting on our behalf that are notstatements of historical fact, constitute “forward-looking statements”. You can identify some of theseforward-looking statements by terms such as “expect”, “believe”, “plan”, “intend”, “estimate”, “forecast”,“project”, “anticipate”, “may”, “will”, “would” and “could” or similar words and phrases. However, you shouldnote that these words are not the exclusive means of identifying forward-looking statements. Allstatements regarding our expected financial position, business strategy, plans and prospects are forward-looking statements. These forward-looking statements, including statements as to:-
(a) our revenue and profitability;
(b) expected growth in demand;
(c) expected industry trends;
(d) anticipated expansion plans; and
(e) other matters discussed in this Prospectus which are not historical facts,
are only predictions. These forward-looking statements involve known and unknown risks, uncertaintiesand other factors that may cause our actual results, performance or achievements to be materiallydifferent from any future results, performance or achievements expected, expressed or implied by theseforward-looking statements. These risks, uncertainties and other factors include, among others:-
(a) changes in political, social, economic and stock or securities market conditions and the regulatoryenvironment in Singapore and other countries in which we conduct business;
(b) changes in currency exchange or interest rates;
(c) our anticipated growth strategies and expected internal growth;
(d) changes in the availability and prices of materials;
(e) changes in customer demand;
(f) changes in competitive conditions and our ability to compete under these conditions;
(g) changes in our future capital needs and the availability of financing and capital to fund theseneeds;
(h) other factors beyond our control; and
(i) the factors described in the section entitled “Risk Factors” of this Prospectus.
These factors are discussed in greater detail in this Prospectus, in particular but not limited to thediscussion under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis ofResults of Operations and Financial Condition”. All forward-looking statements made by or attributable tous, the Vendor, our Directors, our Executive Officers or our employees acting on our behalf, or personsacting on our behalf, contained in this Prospectus are expressly qualified in their entirety by such factors.These forward-looking statements are applicable only as of the date of this Prospectus.
Given the risks and uncertainties that may cause our actual future results, performance or achievementsto be materially different from that expected, expressed or implied by the forward-looking statements inthis Prospectus, we advise you not to place undue reliance on those statements which apply only as atthe date of this Prospectus. Neither we, the Vendor, the Joint Issue Managers, the Underwriter and the
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
12
Placement Agent nor any other person represents or warrants to you that our actual future results,performance or achievements will be as discussed in those statements. Further, our Company, theVendor, the Joint Issue Managers, the Underwriter and the Placement Agent disclaim any responsibilityto update any of those forward-looking statements to reflect future developments, events orcircumstances for any reason, even if new information becomes available or other events occur in thefuture.
Our actual future results may differ materially from those anticipated in these forward-looking statementsas a result of the risks faced by us. We, the Vendor, the Joint Issue Managers, the Underwriter and thePlacement Agent disclaim any responsibility to update any of those forward-looking statements or publiclyannounce any revisions to those forward-looking statements to reflect future developments, events orcircumstances. We are subject to the provisions of the SFA and the Listing Manual regarding corporatedisclosure. In particular, pursuant to Section 241 of the SFA, if after this Prospectus is registered butbefore the close of this Invitation, we become aware of:-
(a) a false or misleading statement or matter in this Prospectus;
(b) an omission from this Prospectus of any information that should have been included in it underSection 243 of the SFA; or
(c) a new circumstance that has arisen since this Prospectus was lodged with the Authority and wouldhave been required by Section 243 of the SFA to be included in this Prospectus, if it had arisenbefore this Prospectus was lodged,
and that is materially adverse from the point of view of an investor, we may lodge a supplementary orreplacement prospectus with the Authority.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
13
LISTING ON THE SGX-ST
We have applied to the SGX-ST for permission to deal in, and for quotation of, the New Shares, all ourShares already issued (including the Vendor Shares) and the ESOS Shares on the SGX-ST. Suchpermission will be granted when we have been admitted to the Official List of the SGX-ST. Ouracceptance of applications for the Invitation Shares will be conditional upon, inter alia, the issue of theNew Shares and permission being granted by the SGX-ST to deal in, and for quotation of, the NewShares, all of our existing issued Shares (including the Vendor Shares) and the ESOS Shares. If the saidpermission is not granted for any reason, monies paid in respect of any application accepted will, subjectto applicable laws, be returned to you at your own risk, without interest or any share of revenue or otherbenefit arising therefrom, and you will not have any claim whatsoever against us, the Vendor, the JointIssue Managers, the Underwriter or the Placement Agent. No Shares shall be allotted or allocated on thebasis of this Prospectus later than six months after the date of registration of this Prospectus by theAuthority.
The SGX-ST assumes no responsibility for the correctness of any statements made, reports contained oropinions expressed in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken asan indication of the merits of this Invitation, our Company, our subsidiaries, our existing Shares (includingthe Vendor Shares), the New Shares or the ESOS Shares as the case may be.
A copy of this Prospectus has been lodged with and registered by the Authority. The Authority assumesno responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority doesnot imply that the SFA, or any other legal or regulatory requirements, have been complied with. TheAuthority has not, in any way, considered the merits of our New Shares, our existing Shares (includingthe Vendor Shares) or the ESOS Shares, as the case may be, being offered or in respect of which aninvitation is made, for investment. We have not lodged or registered this Prospectus in any otherjurisdiction.
We are subject to the provisions of the SFA and the Listing Manual regarding corporate disclosure. Inparticular, pursuant to Section 241 of the SFA, if after this Prospectus is registered but before the close ofthis Invitation we become aware of:–
(a) a false or misleading statement in this Prospectus;
(b) an omission from this Prospectus of any information that should have been included in it underSection 243 of the SFA;
(c) a new circumstance that has arisen since this Prospectus was lodged with the Authority and wouldhave been required by Section 243 of the SFA to be included in this Prospectus, if it had arisenbefore this Prospectus was lodged,
and that is materially adverse from the point of view of an investor, we may lodge a supplementary orreplacement prospectus with the Authority.
Where prior to the lodgement of the supplementary or replacement prospectus, applications have beenmade under this Prospectus to subscribe for and/or purchase the Invitation Shares and:–
(a) where the Invitation Shares have not been issued and/or allocated to the applicants, we forourselves (as well as on the behalf of the Vendor) shall either:–
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement prospectus, give the applicants notice inwriting of how to obtain, or arrange to receive, a copy of the same and provide theapplicants with an option to withdraw their applications, and take all reasonable steps tomake available within a reasonable period the supplementary or replacement prospectus tothe applicants who have indicated they wish to obtain, or who have arranged to receive, acopy of the supplementary or replacement prospectus; or
DETAILS OF THE INVITATION
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(ii) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to withdraw their applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications shall bedeemed to have been withdrawn and cancelled, and we shall, within seven days from thedate of lodgement of the supplementary or replacement prospectus, pay the applicants allmonies the applicants have paid on account of their applications for the Invitation Shareswithout interest or any share of revenue or other benefit arising therefrom and at their ownrisk and the applicants shall not have any claim against us, the Vendor, the Joint IssueManagers, the Underwriter or the Placement Agent; or
(b) where the Invitation Shares have been issued and/or allocated to the applicants, we for ourselves(as well as on behalf of the Vendor) shall either:–
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement prospectus, give the applicants notice inwriting of how to obtain, or arrange to receive, a copy of the same and provide theapplicants with an option to return to us the Invitation Shares which they do not wish toretain title in, and take all reasonable steps to make available within a reasonable period thesupplementary or replacement prospectus to the applicants who have indicated that theywish to obtain, or who have arranged to receive, a copy of the supplementary orreplacement prospectus; or
(ii) within seven days from the date of lodgement of the supplementary or replacementprospectus, give the applicants the supplementary or replacement prospectus, as the casemay be, and provide the applicants with an option to return to us the Invitation Shares whichthey do not wish to retain title in; or
(iii) treat the issue and/or the allocation of the Invitation Shares as void, in which case the issueand/or the allocation shall be deemed void and we for ourselves (as well as on behalf of theVendor) shall within seven days from the date of lodgement of the supplementary orreplacement prospectus, pay the applicants all monies the applicants have paid on accountof their applications for the Invitation Shares without interest or any share of revenue orother benefit arising therefrom and at their own risk and the applicants shall not have anyclaim against us, the Vendor, the Joint Issue Managers, the Underwriter or the PlacementAgent.
An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) above to withdraw hisapplication shall, within 14 days from the date of lodgement of the supplementary or replacementprospectus, notify us of this, whereupon we for ourselves (as well as on behalf of the Vendor) shall, withinseven days from the receipt of such notification, pay to him all monies paid by him on account of hisapplication for those Shares without interest or any share of revenue or other benefit arising therefromand at his own risk and the applicant shall not have any claim against us, the Vendor, the Joint IssueManagers, the Underwriter or the Placement Agent.
An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) above to return the InvitationShares issued to him shall, within 14 days from the date of lodgement of the supplementary orreplacement prospectus, notify us of this and return all documents, if any, purporting to be evidence oftitle to those Invitation Shares, to us, whereupon we for ourselves (as well as on behalf of the Vendor)shall, within seven days from the receipt of such notification and documents, if any, pay to him all moniespaid by him for those Invitation Shares without interest or any share of revenue or other benefit arisingtherefrom and at his own risk and the applicant shall not have any claim against us, the Vendor, the JointIssue Managers, the Underwriter or the Placement Agent, and the issue and/or allocation of thoseInvitation Shares shall be deemed to be void.
DETAILS OF THE INVITATION
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Pursuant to Section 242 of the SFA, the Authority may issue a stop order (the “Stop Order”) if aprospectus that has been registered (i) contains any statement which, in the Authority’s opinion, is falseor misleading; (ii) omits any information that should have been included in it under Section 243 of theSFA; or (iii) does not in the Authority’s opinion comply with the requirements of the SFA. In the event thatthe Authority issues a stop order, and applications to subscribe for and/or purchase the Invitation Shareshave been made prior to the stop order, then:-
(a) where the Invitation Shares have not been issued and/or allocated to the applicants, theapplications for the Invitation Shares shall be deemed to have been withdrawn and cancelled andwe (for ourselves as well as on behalf of the Vendor) shall, within 14 days from the date of the stoporder, pay to the applicants all monies the applicants have paid on account of their applications forthe Invitation Shares without interest or any share of revenue or other benefit arising therefrom andat their own risk and the applicants shall not have any claim against us, the Vendor, the Joint IssueManagers, the Underwriter or the Placement Agent; or
(b) where the Invitation Shares have been issued and/or allocated to the applicants, the issue and/orallocation of the Invitation Shares shall be deemed to be void and we (for ourselves as well as onbehalf of the Vendor) shall, (i) if no documents purporting to evidence title to those InvitationShares have been issued to the applicants, within seven days from the date of the stop order, payto the applicants all monies paid by them for those Invitation Shares, or (ii) if documents purportingto evidence title to those Invitation Shares have been issued to the applicants, within seven daysfrom the date of the stop order, inform the applicants to return such documents to us within 14days from that date and within seven days from the date of receipt of such documents or the dateof the stop order, whichever is the later, pay to the applicants all monies paid by them for thoseInvitation Shares.
Where monies are to be returned, it shall be paid to the applicants without interest or any share ofrevenue or other benefit arising therefrom and at their own risk and the applicants shall not have anyclaim against us, the Vendor, the Joint Issue Managers, the Underwriter or the Placement Agent.
If we are required by applicable Singapore laws to cancel issued Invitation Shares and repay applicationmonies to applicants (including instances where a stop order under the SFA is issued), we shall purchasethe Invitation Shares which have been issued at the Invitation Price.
This Prospectus has been seen and approved by our Directors and the Vendor and they individually andcollectively accept full responsibility for the accuracy of the information given in this Prospectus andconfirm, having made all reasonable enquiries, that to the best of their knowledge and belief, (i) the factsstated and opinions, intentions and expectations expressed in this Prospectus are true, fair and accurateand not misleading in all material respects as at the date of this Prospectus, (ii) there are no materialfacts the omission of which would make any statement in this Prospectus misleading, and (iii) thisProspectus constitutes a full and true disclosure of all material facts about this Invitation, our Group, theVendor and the Invitation Shares.
Neither our Company, the Vendor, the Joint Issue Managers, the Underwriter, the Placement Agent norany parties involved in this Invitation is making any representation to any person regarding the legality ofan investment in our Shares by such person under any investment or any other laws or regulations. Noinformation in this Prospectus should be considered as being business, legal or tax advice regarding aninvestment in our Shares. Each prospective investor should consult his own legal, financial, tax or otherprofessional adviser regarding an investment in our Shares.
The Invitation Shares are offered for subscription or purchase solely on the basis of the informationcontained and the representations made in this Prospectus.
DETAILS OF THE INVITATION
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No person has been or is authorised to give any information or to make any representation not containedin this Prospectus in connection with this Invitation and, if given or made, such information orrepresentation must not be relied upon as having been authorised by us, the Vendor, the Joint IssueManagers, the Underwriter or the Placement Agent. Neither the delivery of this Prospectus and theApplication Forms nor any document relating to this Invitation shall, under any circumstances, constitutea continuing representation or create any suggestion or implication that there has been no change in theaffairs of our Company or our subsidiaries or in any statement of fact or information contained in thisProspectus since the date of this Prospectus. Where such changes occur and are material or arerequired to be disclosed by law, we will promptly make an announcement of the same to the SGX-ST andif required under the SFA, a supplementary or replacement prospectus will be issued and made availableto the public after a copy thereof has been lodged with the Authority. All applicants should take note ofany such announcement, and/or supplementary or replacement prospectus and, upon the release ofsuch an announcement, and/or supplementary or replacement prospectus, shall be deemed to havenotice of such changes.
Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise orrepresentation as to the future performance or policies of our Company or our subsidiaries. ThisProspectus has been prepared solely for the purpose of this Invitation and may not be relied upon by anypersons other than the applicants in connection with their application for the Invitation Shares or for anyother purpose.
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/orpurchase the Invitation Shares in any jurisdiction in which such offer, solicitation or invitation isunlawful or is not authorised or to any person to whom it is unlawful to make such an offer,solicitation or invitation.
Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, subjectto availability, during office hours from:-
DBS Bank Ltd. Stirling Coleman Capital Limited6 Shenton Way #36-01 4 Shenton Way #07-03
DBS Building Tower One SGX Centre 2Singapore 068809 Singapore 068807
and from branches of DBS Bank (including POSB), members of the Association of Banks in Singapore,members of the SGX-ST and merchant banks in Singapore.
An electronic copy of this Prospectus is also available on:-
(a) the SGX-ST website at http://www.sgx.com; and
(b) the Authority’s OPERA website at http://masnet.mas.gov.sg/opera/sdrprosp.nsf.
The Application List will open at 10.00 a.m. on 1 February 2010 and will remain open until 12.00 noon onthe same day or for such further period or periods as our Company and the Vendor may, in consultationwith the Joint Issue Managers, in their absolute discretion, decide, subject to any limitation under allapplicable laws. In the event a supplementary or replacement prospectus is lodged with the Authority, theApplication List will remain open for at least 14 days after the lodgement of the supplementary orreplacement prospectus.
Details of the procedures for applications to subscribe for and/or purchase the Invitation Shares are setout in Appendix F of this Prospectus.
DETAILS OF THE INVITATION
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INDICATIVE TIMETABLE FOR LISTING
An indicative timetable for this Invitation and trading of our Shares is set out below for your reference:-
Indicative date and time Event
26 January 2010, 9.00 a.m. Commencement of public offer
1 February 2010, 12.00 noon Close of Application List
2 February 2010 Balloting of applications or otherwise as may beapproved by the SGX-ST, if necessary (in the event ofexcess applications for the Offer Shares)
3 February 2010, 9.00 a.m. Commence trading on a “ready” basis
8 February 2010 Settlement date for all trades done on a “ready” basison 3 February 2010
The above timetable is only indicative as it assumes that the date of closing of the Application List is 1February 2010, the date of admission of our Company to the Official List of the SGX-ST is 3 February2010, the SGX-ST’s shareholding spread requirement will be complied with and the New Shares will beissued and fully paid-up and the Vendor Shares will be fully paid prior to 3 February 2010. The actualdate on which our Shares will commence trading on a “ready” basis will be announced when it isconfirmed by the SGX-ST.
The above timetable and procedure may be subject to such modifications as the SGX-ST may in itsdiscretion decide, including the commencement date of trading on a “ready” basis.
This Invitation will be open from 26 January 2010, 9.00 a.m. to 1 February 2010, 12.00 noon.
In the event of any changes in the closure of the Application List or the time period during which thisInvitation is open, we will publicly announce the same:-
(i) through a SGXNET announcement to be posted on the Internet at the SGX-ST websitehttp://www.sgx.com; and
(ii) in a major English newspaper in Singapore.
We will provide details of the results of this Invitation (including the level of subscription for the InvitationShares and the basis of allocation of the Invitation Shares pursuant to this Invitation), as soon aspracticable after the closure of the Application List through the channels described in (i) and (ii) above.
Investors should consult the SGX-ST announcement of the “ready” trading date on the Internet (atthe SGX-ST website http://www.sgx.com) or newspapers, or check with their brokers on the dateon which trading on a “ready” basis will commence.
DETAILS OF THE INVITATION
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The information contained in this summary is derived from and should be read in conjunction with the fulltext of this Prospectus. Because it is a summary, it does not contain all the information that potentialinvestors should consider before investing in the Shares of our Company. Potential investors should readthis entire Prospectus carefully, especially the matters set out in the section entitled “Risk Factors” of thisProspectus, before deciding to invest in our Shares.
OVERVIEW OF OUR GROUP
Our Company was incorporated in Singapore on 30 March 1981 under the Act as a private companylimited by shares, under the name “Sin Heng Heavy Machinery Pte. Ltd.”. We were converted into apublic limited company on 21 December 2009 and our name was changed to “Sin Heng HeavyMachinery Limited”.
Our Business
We are one of the leading heavy lifting service providers in Singapore, servicing the infrastructure andgeotechnic, construction, offshore and marine, oil and gas industries. Our core business activities arerental and trading of cranes and aerial lifts. We also undertake sales and distribution of spare parts forcranes and aerial lifts. For FY2009 our equipment rental business and trading business contributedapproximately 24.3% and 75.7% of our total revenue respectively.
Further details are set out in the section entitled “Business” of this Prospectus.
Our Competitive Strengths
Our Directors believe our competitive strengths are as follows:-
� We are an established heavy lifting specialist for infrastructure and geotechnic projects
� Our crane fleet is focused on the mid-to-high lifting capacity segment and is complemented by ouraerial lift fleet
� We have an established track record in the maintenance, reconditioning and refurbishment ofcranes and aerial lifts
� We have a strong management team with in-depth knowledge and expertise
� We have an extensive network of suppliers and a wide customer base across various industriesworldwide
Further details are set out in the section entitled “Competitive Strengths” of this Prospectus.
Our Business Strategies and Future Plans
� Renewal and expansion of our equipment rental fleet in Singapore to target a larger customer baseand provide more complementary product offerings
� Expansion of our business and operations through acquisitions, joint ventures and/or strategicalliances
� Expansion of our equipment rental fleets in Malaysia and Vietnam
Further details are set out in the section entitled “Business Strategies and Future Plans” of thisProspectus.
PROSPECTUS SUMMARY
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Where you can find us
Both our principal place of business and registered office are located at 26 Gul Road, Singapore 629346.Our telephone and facsimile numbers are (65) 68616111 and (65) 68638616, respectively. Our websiteaddress is www.sinheng.com.sg. Information contained on our website does not constitute part of thisProspectus and no representation, warranty or covenant, expressed or implied, is made by any of ourCompany, the Vendor, the Joint Issue Managers, the Underwriter and the Placement Agent, or any oftheir affiliates, directors, officers, employees, agents, representatives or advisers as to the accuracy orcompleteness of the information contained on such website.
SUMMARY OF OUR FINANCIAL INFORMATION
The following table represents a summary of the financial highlights of our Group. The data presented inthis table are derived from the section entitled “Selected Consolidated Financial Information” and thefinancial statements and notes thereto which are included elsewhere in this Prospectus. You should readthose sections and the section entitled “Management’s Discussion and Analysis of Results of Operationsand Financial Condition” of this Prospectus for a further explanation of the financial data summarisedhere.
Selected items on the operating results of our Group
Audited S$’000 FY2007 FY2008 FY2009
Revenue 82,740 131,833 136,986
Gross profit 17,296 27,249 31,461
Profit before income tax 11,298 21,117 25,938
Profit for the year 9,177 17,163 21,982
Selected items on the financial position of our Group
AuditedAs at
30 June 2009S$’000
Non-current assets 61,754
Working capital 12,742
Share capital and reserves 65,949
PROSPECTUS SUMMARY
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Prospective investors should carefully consider and evaluate each of the following considerations and allother information contained in this Prospectus before deciding to invest in our Shares. To the best of ourDirectors’ knowledge and belief, all risk factors which are material to investors in making an informedjudgement of our Group have been set out below. If any of the following considerations, uncertainties ormaterial risks develop into actual events, our business, financial condition and/or results of operationscould be materially and adversely affected. In such cases, the trading price of our Shares could declinedue to any of these considerations, uncertainties or material risks, and investors may lose all or part oftheir investment in our Shares.
This Prospectus also contains forward-looking statements having direct and/or indirect implications onour future performance. Our actual results may differ materially from those anticipated by these forward-looking statements due to certain factors, including the risks and uncertainties faced by us, as describedbelow and elsewhere in this Prospectus.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
Our equipment rental business is reliant on the infrastructure and geotechnic, construction,offshore and marine and oil and gas industries which are cyclical in nature
For the period under review, our equipment rental business contributed approximately 23.4%, 19.7% and24.3% of our total revenue in FY2007, FY2008 and FY2009 respectively.
In FY2009, we derived approximately 37.2%, 23.8%, 14.6% and 13.4% of our equipment rental revenuefrom our customers who are engaged in the infrastructure and geotechnic, construction, offshore andmarine and oil and gas industries, respectively. These industries are cyclical in nature and economicdownturns and resulting pricing pressures experienced by them in the past have resulted in themreducing their capital and operating expenditures. A slowdown in these industries or the occurrence ofany event that may adversely affect these industries such as the demand and supply for oil, fluctuationsin oil prices, changes in the regulatory environment and natural disasters will result in a decrease indemand for our services, and accordingly our business, profitability and financial performance may beadversely affected. In particular, the fluctuations in oil prices since 2007, including a significant decline inoil prices between mid-2008 and the first quarter of 2009, together with the deterioration in the globaleconomic situation, have resulted in the postponement or cancellation of certain projects by ourcustomers. Should such postponements of projects be prolonged or if we experience a significantpostponement or cancellation of our confirmed projects, our business, profitability and financialperformance may be adversely affected.
Our equipment rental business is dependent on the general economic conditions in Singapore
For the period under review, our revenue from our equipment rental business was principally derived fromSingapore. Although we intend to expand our equipment rental business to other geographical markets,namely Malaysia and Vietnam, we expect the revenue contribution from our Singapore equipment rentalbusiness to continue to be significant. As our equipment rental customers are mainly operating in theinfrastructure and geotechnic, construction, offshore and marine and oil and gas industries in Singaporeand equipment rental contracts are generally on a short-term basis, the demand for our rental equipmentis largely dependent on the general economic conditions in Singapore. General negative economicsentiments, a slowdown or recession in the Singapore economy will lead to a decrease in demand for ourequipment rental services which may have an adverse impact on our profitability and financialperformance.
Our trading business may be adversely affected by disruptions in the global financial markets
For the period under review, our trading business contributed approximately 76.6%, 80.3% and 75.7% ofour total revenue in FY2007, FY2008 and FY2009 respectively. Since the second half of 2008, disruptionin the global credit markets, coupled with the repricing of credit risks, deterioration in housing markets (incountries such as USA and United Kingdom) and a slowdown in the global economy have createdincreasingly difficult conditions in the global financial markets. These adverse conditions have resulted inhistoric volatility, reduced liquidity, widening of credit spreads and a lack of price transparency in certain
RISK FACTORS
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markets. In addition, these conditions have also resulted in the failure of a number of financial institutionsin the United States and unprecedented interventions by governmental authorities and central banksaround the world. The disruptions, uncertainty or volatility in the credit markets could limit the ability ofour trading customers to borrow funds from banks or financial institutions or require them to do so atunattractive interest rates. As such, they may not be able to obtain financing to purchase cranes and/oraerial lifts from us and accordingly our profitability and financial performance may be adversely affected.For example, the global financial crisis which started in the second half of 2008 caused our tradingrevenue to decrease slightly by approximately S$2.3 million or 2.2% from approximately S$105.9 millionin FY2008 to approximately S$103.6 million in FY2009. We sold an aggregate of 108 cranes and 89aerial lifts in FY2009 as compared to 150 cranes and 135 aerial lifts in FY2008.
Our continued success is dependent on our key management personnel
We are dependent to a significant extent on the continued services of our Managing Director, Mr TanCheng Soon Don, and our Executive Directors, Mr Tan Cheng Guan and Mr Tan Cheng Kwong, whohave been instrumental in spearheading and implementing our growth, corporate development andoverall business strategies. They are also responsible for overseeing the day-to-day operations of ourGroup. There is no assurance that we will be able to retain the aforesaid key management personnelnotwithstanding that we have entered into the Service Agreements (as described in the section entitled“Service Agreements” of this Prospectus) with them. The loss of any key management personnel withoutsuitable or timely replacements may have an adverse impact on our business, operations and financialperformance.
We may be dependent on financing to fund our purchase of cranes and aerial lifts and our futuregrowth
We require financing to fund our purchase of cranes and aerial lifts. If we are unable to secure financingfor this purpose, our ability to renew or expand our fleet to meet our equipment rental and tradingrequirements may be adversely affected. In such event, our future financial performance may beadversely affected.
In view of the fast-changing business requirements and market conditions, certain business opportunitiesthat may increase our revenue may arise from time to time, and accordingly we may be required toexpand our capabilities and business through acquisitions, investments, joint-ventures and/or strategicpartnerships with parties who are able to add value to our business. If such situation arises, we mayrequire additional funds to take advantage of these opportunities.
If our funding requirements are met by way of additional debt financing, we may be subject to restrictionsunder such debt financing arrangements which may:
� limit our ability to pay dividends or require us to seek consent for the payment of dividends;
� increase our vulnerability to general adverse economic and industry conditions;
� limit our ability to pursue our growth plans;
� require us to dedicate a substantial portion of our cash flow from operations to payment for ourdebt, thereby reducing the availability of our cash flow to fund other capital expenditure, workingcapital requirements and other general corporate purposes; or
� limit our flexibility in planning for, or reacting to, changes in our business and our industry.
Disruptions in global financial markets could limit our ability to borrow funds or cause our borrowing to bemore expensive. As such, we may be forced to pay unattractive interest rates, thereby increasing ourinterest expense, which may have an adverse impact on our profitability and financial performance.
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Our reputation may be adversely affected if there are major lapses in our equipment rentalservices
Since our establishment, we have built up our reputation in Singapore as one of the leading providers ofheavy lifting services. We believe that we have built significant goodwill in our “Sin Heng” brand and thuscustomer loyalty. Hence, if there are any major lapses in our equipment rental services such asmalpractices or negligence by our crane operators, frequent breakdowns of our rental cranes or aeriallifts, or due to circumstances beyond our control resulting in adverse publicity about us, our reputationmay be adversely affected and our customers may lose confidence in our equipment rental services. Inany such event, our business, and hence our profitability and financial performance may be adverselyaffected.
We are exposed to foreign exchange risks
Currently, our revenue and purchases are denominated in various currencies, including JPY, US$, Euroand S$. Other than S$, the sales of our equipment are generally denominated in US$. For FY2007,FY2008 and FY2009, approximately 6.4%, 6.5% and 16.8% of our Group’s revenue were respectivelydenominated in US$. Our Group’s purchases are typically denominated in JPY and for FY2007, FY2008and FY2009, such purchases constituted approximately 96.7%, 84.9% and 79.2% respectively of ourGroup’s total purchases.
To the extent that our revenue and purchases are not sufficiently matched in the same currency and tothe extent that there are timing differences between collection and payments, we will be exposed to anyadverse fluctuations in the exchange rates between the various foreign currencies and S$.
In addition, as our reporting currency is the Singapore dollar, the financial results of our foreignsubsidiaries will need to be translated to Singapore dollars for consolidation purposes. As such, anymaterial fluctuations in foreign exchange rates will result in translation gains or losses on consolidation.Any such translation gains or losses will be recorded as translation reserves or deficits as part of ourShareholders’ equity.
Although we hedge our foreign currency exposure by entering into foreign currency forward contractswhen necessary, given the number of currencies involved and the volatile currency exchange rates, wecannot predict the effect of exchange rate fluctuations on our future operating results. In the event we areunable to effectively hedge our foreign currency exposure, our profitability and financial performance maybe adversely affected.
Please refer to the section entitled “Management’s Discussion and Analysis of Results of Operations andFinancial Position – Foreign Exchange Exposure” of this Prospectus for more details.
Increased competition in the crane and aerial lifts rental and trading business may affect ourability to maintain our market share and growth
We operate in the crane and aerial lifts rental and trading business, which is highly competitive. Ourcompetitors may possess greater financial resources and better rental equipment. Any of them may alsohave a larger customer base and offer a wider range of services coupled with greater marketingresources. Entry of new competitors in the market or market consolidation could also increase the degreeof competition within the industry. Our continued success depends on our ability to compete with ourcompetitors as well as to adapt quickly to any changes in market conditions and demands. There is noassurance that we will continue to be able to compete successfully in the future against existing orpotential competitors or to adapt to changes in market conditions and demands. In the event we areunable to compete successfully against existing or potential competitors or to adapt to changes in marketconditions and demands, our business and financial performance may be adversely affected.
We are exposed to credit risks of our customers for our equipment rental business
For projects that are less than a month in duration, we typically invoice our customers at the end of theproject a lump sum fee for services rendered. For longer term projects, we will invoice our customers ona monthly basis in advance plus any overtime fees payable based on the amount of work done for theimmediately preceding month. We typically grant our customers credit terms of between 60 days to 90days from the date of our invoice.
RISK FACTORS
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We are therefore exposed to payment delays and/or defaults by our customers. This risk increases with,inter alia, the quantum of services our customers obtain from our Group. For FY2007, FY2008 andFY2009, our average receivables turnover days for our equipment rental business were 30 days, 25 daysand 31 days respectively, and our allowance for impairment losses as at the end of these periodsamounted to approximately S$60,000, S$60,000 and nil respectively. A deterioration in the financialpositions of our customers in particular our major customers, may lead to defaults in their payment to uswhich may materially and adversely affect our Group’s profits and cash flow. We cannot assure you thatthe risks of default by our customers will not increase in the future or that we will not experience cashflow problems as a result of such defaults. Should these risks develop into actual events, our profitabilityand financial performance may be adversely affected.
Our customers’ business is generally project-based and we face the risk of any delay orpremature termination of their secured projects and/or they may not be able to secure newprojects
Demand for our cranes and aerial lifts is dependent on our customers’ ability to continuously andconsistently secure new customers and/or new projects. In respect of our equipment rental business, wedo not normally enter into long-term equipment rental contracts exceeding 12 months with our customers.If our customers are unable to secure new projects and/or their secured projects are delayed orprematurely terminated because of factors such as changes in their businesses, poor market conditionsor lack of funds on the part of the plant owners/operators or main contractors of projects, our businessand financial performance may be adversely affected.
We are dependent on a few of our major customers
We are dependent on our major customers, who accounted in aggregate for approximately 12.8%, 18.6%and 23.1% of our Group’s total revenue in FY2007, FY2008 and FY2009 respectively. Please refer to thesection entitled “Business - Major Customers” of this Prospectus for more details on our major customers.There is no assurance that we will be able to retain our major customers or continue to receive ordersfrom them at current levels or prices. Any material cancellations, reduction in orders or prices and/orclaims for whatever reasons by any of our major customers, may adversely affect our profitability andfinancial performance.
We are dependent on our major suppliers
Since we commenced operations, we have maintained long standing relationships with a reliable group ofsuppliers, from whom we source good quality and competitively priced cranes. Our equipment rental andtrading business is dependent on our ability to obtain a supply of such good quality equipment from oursuppliers at competitive prices. We are dependent on our major suppliers, who accounted in aggregatefor approximately 81.8%, 68.5% and 84.8% of our Group’s equipment purchases in FY2007, FY2008 andFY2009 respectively. In particular our aggregate transactions with Kobelco Group and AM. Trading forpurchase of both new and used Kobelco cranes accounted for approximately 44.3%, 43.6%, and 56.2%of our purchases in FY2007, FY2008 and FY2009 respectively. Please refer to the section entitled“Business - Major Suppliers” of this Prospectus for more details on our major suppliers. As we generallydo not have long term supply contracts with our major suppliers, there can be no assurance that we willhave access to sufficient supply of good quality new and used cranes and aerial lifts at competitiveprices. In the event we are unable to obtain good quality equipment from our major suppliers atcompetitive prices, we may have to seek alternative sources from other suppliers and may be chargedhigher prices. Accordingly, our operations, profitability and financial performance may be adverselyaffected.
There is no assurance that our expansion plans will be successful
As described under the section entitled “Business Strategies and Future Plans” of this Prospectus, ourgrowth strategies include the renewal and expansion of our equipment rental fleet to target a largercustomer base thus providing more complementary product offerings, expansion of our business andoperations through acquisitions, joint ventures and/or strategic alliances and expansion of our business inMalaysia and Vietnam. There are risks inherent in doing business overseas. These risks include
RISK FACTORS
24
unexpected changes in government regulations, difficulties in staffing and managing foreign operations,social and political instability, potentially adverse tax consequences, legal uncertainty regarding liabilityand enforcement, reduced protection for intellectual property rights in some countries, tariffs and othertrade barriers, variable and unexpected changes in local law and barriers to the repatriation of capital orprofits. Any of the above factors may adversely affect our overseas expansion and the growth of ourbusiness.
In addition, our expansion plans will require substantial capital expenditure and financial resources. Thesuccess of our expansion plans depends on many factors, some of which are not within our control. Inthe event that we are not able to achieve a sufficient level of revenue or manage our costs effectively or ifthe commencement of these expansion plans are delayed, our future financial performance and positionmay be adversely affected.
Our insurance policies may be inadequate to cover our assets, operations and any loss arisingfrom business interruptions
We may face the risk of loss or damage to our properties, machinery and inventories due to fire andtheft. Such events may cause a disruption or cessation in our operations, and thus may adversely affectour financial results. Our insurance coverage may not be sufficient to cover all of our potential losses. Ifthere are losses which exceed the insurance coverage or are not covered by our insurance policies, wewill remain liable for any debt or other financial obligation related to such losses. We do not have anyinsurance coverage for business interruptions.
Due to the nature of our operations, there is also a risk of accidents occurring either to our employees orto third parties on our premises and/or on our customers’ premises during the course of operations. In theevent that any claims arise in respect of such occurrences and liability for such claims are attributed to usor that our insurance coverage is insufficient, we may be exposed to losses which may adversely affectour profitability and financial position.
The usage of our cranes in Singapore are subject to regulations and licensing requirements
Our crane rental customers in Singapore are mainly regulated by the LTA and the HDB. These regulatorybodies stipulate limits on the number of years of service (commencing from the date of manufacture) ofcranes used at worksites. Depending on certain working loads of the cranes, the maximum allowableservice years may range from 15 years to 30 years. Our equipment rental revenue is dependent on ourability to supply cranes that meet the requirements imposed by the regulatory bodies. Accordingly, therenewal of our fleet of cranes is critical to enable us to service our crane rental customers. Newregulations or changes to existing regulations on the use of cranes or failure to renew our fleet of cranesmay have an adverse effect on our operations and financial performance.
We are exposed to risk in respect of outbreaks of Severe Acute Respiratory Syndrome (“SARS”),avian influenza, Influenza A (H1N1) and/or other communicable diseases which, if uncontrolled,could affect our financial performance and prospects
An outbreak of SARS, avian influenza, Influenza A (H1N1) and/or other communicable diseases, ifuncontrolled, could affect our operations, as well as the operations of our customers, sub-contractors andsuppliers. Any occurrence of a pandemic, an epidemic or outbreak of other disease may have an adverseeffect on our business operations including our ability to travel and deploy personnel for projects. Further,in the event that any of our employees is infected or suspected to be infected with SARS, avian influenza,Influenza A (H1N1) and/or other communicable diseases, we may be required to quarantine some of ouremployees and shut down part of our operations to prevent the spread of the disease. Such events mayresult in delays in the completion of our projects and failure to meet our customers’ expectations whichmay lead to loss of business or affect our ability to attract new business. An outbreak of SARS, avianinfluenza, Influenza A (H1N1) and/or other communicable diseases may therefore have an adverseimpact on our business, financial performance and financial position.
RISK FACTORS
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We face the risk of terrorist attacks and other acts of violence or wars which may affect themarkets in which we operate
Terrorist attacks or armed conflicts may lead to political and economic instability in the markets in whichwe or our customers have operations and may adversely affect the industries in which our customersoperate. Such terrorist attacks or armed conflicts may also have a direct adverse impact on our physicalassets or our customers’ projects and severely limit our ability to carry out our operations in a timely andcost-effective manner. We are unable to foresee terrorist attacks or armed conflicts as well as the adverseimpact of such events on our business, operations and financial position.
RISKS RELATING TO OUR OVERSEAS OPERATIONS
Any adverse changes in the political, economic, regulatory or social conditions in the foreigncountries that we sell our cranes to, have operations in or in which we intend to expand ourbusiness may have a material and adverse effect on our operations, financial performance andfuture growth
We have a business presence and intend to expand our operations in Malaysia and Vietnam. In thefuture, we may also expand our business to other countries. Our business and future growth is dependenton the political stability as well as economic, regulatory and social conditions in countries to which we sellour cranes to, have operations in or intend to expand our operations. Any economic downturn or adversechanges in policies implemented by the governments in these countries such as in policies relating tocurrency and interest rate fluctuations, capital controls or capital restrictions, labour laws, constructionlaws, changes in laws and regulations governing the licensing and use of cranes and other liftingequipment and providers of these equipment, duties and taxation and limitations on imports and exportsmay materially and adversely affect our operations, financial performance and future growth.
We require various licences and permits to operate our business in other jurisdictions
We require various licences and permits for our business in other jurisdictions. The licences and permitsrequired for our Malaysian business are the certificate of fitness in respect of our cranes issued pursuantto the Factories and Machinery Act, 1967 and the Factories and Machinery (Notification, Certificate ofFitness and Inspection) Regulations, 1970 and certificate of registration of crane operator confirming thata person is qualified to handle a crane under the Factories and Machinery (Person-In-Charge)Regulation, 1970. Pursuant to the Guidelines on Foreign Participation in the Distributive Trade Services inMalaysia (“the CDT Guidelines”), with effect from 1 December 2004, all proposals for foreign involvementin the distributive trade in Malaysia must obtain the approval of the CDT, MDTCC. Non-compliance of theCDT Guidelines may cause operational difficulties in obtaining work permits and necessary municipallicences from local authorities where these are needed. Please refer to the section entitled “GovernmentRegulations” of this Prospectus for more details on the CDT Guidelines. We cannot guarantee that CDTwill not enforce the CDT Guidelines on SHMSB. Our Malaysian subsidiary was incorporated only in April2009 and did not contribute significantly to our Group’s total revenue in FY2009. In the event we arerequired to comply with the CDT Guidelines, our interests in our Malaysian subsidiary may be diluted andhence our financial performance may be adversely affected.
In Vietnam, the Law on Investment of Vietnam requires that when a foreign investor establishes acompany in Vietnam, it requires an Investment Certificate. Please refer to the section entitled“Government Regulations” of this Prospectus for more details on the requirements of the InvestmentCertificate.
These licences and permits are generally subject to conditions stipulated therein and/or relevant laws orregulations under which they are issued. Failure to comply with the stipulated conditions could result inthe revocation or non-renewal of the relevant licence or permit. As such, we have to constantly monitorand ensure our compliance with such conditions. Should there be any failure to comply with suchconditions resulting in the revocation of any of the licences and permits or the failure to obtain or procurethe necessary licences and permits, we will not be able to carry out our operations in the country. In suchan event, our operations and financial performance may be adversely affected.
RISK FACTORS
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Foreign exchange controls may limit our ability to utilise our cash effectively and affect our abilityto receive dividends and other payments from our foreign Group companies
Our foreign Group companies are subject to the rules and regulations on currency conversion in thecountries they operate in. Please refer to the section entitled “Exchange Controls” of this Prospectus formore details on the foreign exchange controls applicable to our foreign Group companies. Our foreignGroup companies did not contribute significantly to our Group’s total revenue in FY2007, FY2008 andFY2009. However, as our foreign operations expand, their contributions to our Group revenue in thefuture may become significant. Nevertheless their ability to pay dividends or make other distributions tous may be restricted by foreign exchange control restrictions. We cannot assure you that the relevantregulations will not be amended to the disadvantage of our Group or Shareholders. Consequently, theability of our foreign Group companies to distribute dividends and other payments to us may be adverselyaffected.
RISKS RELATING TO INVESTMENT IN OUR SHARES
Our Share price may decline as a result of divestments of Shares by our Shareholders
Our Vendor, SHH, will be our Controlling Shareholder after this Invitation. SHH is a wholly-ownedsubsidiary of TFSA which is 70.0% owned by SEAVI and 30.0% owned by TALH. The Vendor may, in itsabsolute discretion, dispose all or part of its interests in our Company after the expiry of its moratoriumundertaking or (in the event of distribution of Shares by the Vendor to its shareholders) TFSA, SEAVI orTALH may, in their discretion, dispose all or part of their interests in our Company after such distribution.Please refer to the section entitled “Moratorium” of this Prospectus for further details. Such divestment orany other substantial divestment of interests in our Company by any of our major Shareholders may havea material adverse impact on the market price of our Shares. In addition, such divestments could make itmore difficult for us to issue new Shares in the future at a time and price we deem appropriate, therebylimiting our ability to raise capital.
Future sale of our Shares may adversely affect the price of our Shares
Any future sale or availability of our Shares can have a downward pressure on the price of our Shares.The sale of a significant amount of our Shares in the public market after this Invitation, or the perceptionthat such sales may occur, could materially affect the market price of our Shares. These factors alsoaffect our ability to sell additional equity securities. Except as otherwise described in the section entitled“Moratorium” of this Prospectus, there will be no restriction on the ability of the Substantial Shareholdersto sell their Shares either on the SGX-ST or otherwise.
Our Share price may fluctuate following this Invitation
The market price of our Shares may fluctuate significantly and rapidly as a result of, among others, thefollowing factors, some of which are beyond our control:
� variations of our operating results;
� changes in securities analysts’ estimates of our financial performance;
� announcements by us of significant acquisitions, strategic alliances or joint-ventures;
� success or failure of our efforts in implementing business and growth strategies;
� additions or departures of key personnel;
� fluctuations in stock market prices and volume;
� our involvement in any litigation; and
� changes in conditions affecting our industries, the general economic and stock market conditions.
RISK FACTORS
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There has been no prior market for our Shares and this Invitation may not result in an active orliquid market for our Shares
Prior to this Invitation, there has been no public market for our Shares. Therefore, we cannot assureinvestors that an active public market will develop or be sustained after this Invitation. There is also noassurance that the market price for our Shares will not decline below the Invitation Price. The marketprice of our Shares could be subject to significant fluctuations due to various external factors and eventsincluding the liquidity of our Shares in the market, differences between our actual financial or operatingresults and those expected by investors and analysts, the general market conditions and broad marketfluctuations.
Control by existing Shareholders may limit your ability to influence the outcome of decisionsrequiring the approval of Shareholders
Upon the completion of this Invitation, our Controlling Shareholders will beneficially own approximately63.4% of our enlarged share capital. Please refer to the section entitled “General Information on OurGroup – Shareholders” of this Prospectus for more details on our Controlling Shareholders. As a result,these persons, if they act together, will be able to exercise significant influence over all matters requiringShareholders’ approval, including the election of directors and the approval of significant corporatetransactions. These persons will also have veto power, if they act together, with respect to anyshareholder action or approval requiring a majority vote except where they are required by the rules ofthe Listing Manual to abstain from voting. Such concentration of ownership may also have the effect ofdelaying, preventing or deterring a change in control of our Group which may benefit our Shareholders.
RISK FACTORS
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THE INVITATION
Invitation size : 168,000,000 Invitation Shares comprising 88,000,000 New Shares and80,000,000 Vendor Shares (excluding the Additional Shares) by way ofpublic offer and placement. The New Shares, upon issue and allotmentand the Vendor Shares, upon allocation, will rank pari passu in allrespects with our existing issued Shares.
Invitation Price : S$0.26 for each Invitation Share.
The Offer : The Offer comprises an invitation by our Company and the Vendor to thepublic in Singapore to subscribe for and/or purchase the 9,600,000 OfferShares at the Invitation Price, subject to and on the terms and conditionsof this Prospectus.
The Placement : The Placement comprises a placement by the Placement Agent onbehalf of our Company and the Vendor of 158,400,000 Placement Shares(including 16,800,000 Reserved Shares and 300,000 Internet PlacementShares) at the Invitation Price by way of placement, subject to and on theterms and conditions of this Prospectus.
Reserved Shares : Out of the 158,400,000 Placement Shares, 16,800,000 Reserved Shareswill be reserved for subscription and/or purchase by our employees,business associates and those who have contributed to the success ofour Group. In the event that any of the Reserved Shares are not takenup, they will be made available to satisfy excess applications for thePlacement Shares or, in the event of an under-subscription for thePlacement Shares, to satisfy excess applications from members of thepublic for the Offer Shares.
Purpose of the Invitation : Our Directors believe that the listing of our Company and the quotation ofour Shares on the SGX-ST will enhance our public image locally andinternationally and enable us to tap the capital markets to fund ourbusiness growth. This Invitation will also provide members of the public,our employees, our business associates and others who have contributedto the success of our Group with an opportunity to participate in theequity of our Company.
Over-allotment Option : In connection with this Invitation, the Vendor has granted DBS Bank anover-allotment option (the “Over-allotment Option”) exercisable by DBSBank, as stabilising manager, in full or in part on one or more occasionsfrom the Listing Date until the earlier of:-
(i) the date falling 30 days from the Listing Date, or
(ii) the date when DBS Bank or its appointed agent has bought, onthe SGX-ST, an aggregate of 16,800,000 Shares, representing notmore than 10.0% of the total Invitation Shares to undertakestabilising actions,
to purchase up to an aggregate of 16,800,000 Additional Shares,representing not more than 10.0% of the total Invitation Shares at theInvitation Price, solely for the purpose of covering the over-allotment (ifany) of the Invitation Shares subject to any applicable laws andregulations. Unless we indicate otherwise, all information in thisProspectus assumes that the Over-allotment Option is notexercised.
INVITATION
29
Price stabilisation : In connection with this Invitation, DBS Bank, as the stabilising manager,may, in its discretion but subject always to applicable laws andregulations in Singapore, over-allot or effect transactions which stabiliseor maintain the market price of the Shares at levels which might nototherwise prevail in the open market. Such transactions may be effectedon the SGX-ST and in all jurisdictions where it is permissible to do so, ineach case, in compliance with all applicable laws and regulatoryrequirements. The number of Shares that DBS Bank may buy toundertake stabilising action shall not exceed an aggregate of 16,800,000Shares representing not more than 10.0% of the total Invitation Shares.However, there is no assurance that DBS Bank or any person acting onits behalf will undertake stabilisation action. Such stabilisation activities, ifcommenced, may be discontinued by DBS Bank at any time at DBSBank’s discretion in accordance with the laws of Singapore and shall notbe effected after the earlier of (a) the date falling 30 days from the ListingDate, or (b) the date when DBS Bank or its appointed agent has bought,on the SGX-ST, an aggregate of 16,800,000 Shares, representing notmore than 10.0% of the total Invitation Shares, to undertake stabilisingaction.
Listing status : Our Shares will be quoted on the SGX-ST in Singapore dollars, subjectto admission of our Company to the Official List of the SGX-ST andpermission for dealing in, and for quotation of, our Shares being grantedby the SGX-ST and the Authority not issuing a stop order.
Risk factors : Investing in our Shares involves risks, including those which aredescribed in the section entitled “Risk Factors” of this Prospectus.
INVITATION
30
INVITATION PRICE
NTA
The NTA per Share based on the consolidated balance sheet of our Group as at30 June 2009 adjusted for the FY2009 Final Dividend and the FY2010 InterimDividend (“Adjusted NTA per Share”):-
(a) before adjusting for the estimated net proceeds from the issue of the NewShares and based on our Company’s pre-Invitation share capital of371,640,000 Shares
(b) after adjusting for the estimated net proceeds from the issue of the NewShares and based on our Company’s post-Invitation share capital of459,640,000 Shares
Premium of Invitation Price over the Adjusted NTA per Share based on theconsolidated balance sheet of our Group as at 30 June 2009:-
(a) before adjusting for the estimated net proceeds from the issue of the NewShares and based on our Company’s pre-Invitation share capital of371,640,000 Shares
(b) after adjusting for the estimated net proceeds from the issue of the NewShares and based on our Company’s post-Invitation share capital of459,640,000 Shares
EPS
Historical net EPS based on the combined results of our Group for FY2009 andour Company’s pre-Invitation share capital of 371,640,000 Shares
Historical net EPS based on the combined results of our Group for FY2009 andour Company’s pre-Invitation share capital of 371,640,000 Shares, assuming thatthe Service Agreements had been in place from the beginning of FY2009
PER
Historical PER based on the Invitation Price and the historical EPS for FY2009
Historical PER based on the Invitation Price and the historical EPS for FY2009,assuming that the Service Agreements had been in place from the beginning ofFY2009
Net Cash Flow from Operations
Historical net cash flow from operations per Share for FY2009 based on ourCompany’s pre-Invitation share capital of 371,640,000 Shares
Historical net cash flow from operations per Share for FY2009 based on ourCompany’s pre-Invitation share capital of 371,640,000 Shares, assuming that theService Agreements had been in place from the beginning of FY2009
INVITATION STATISTICS
31
26.00 cents
13.71 cents
15.77 cents
89.64%
64.87%
5.91 cents
5.86 cents
4.40 times
4.44 times
5.57 cents
5.52 cents
Ratio of Invitation Price to Net Cash Flow from Operations
Invitation Price to historical net cash flow from operations per Share for FY2009
Invitation Price to historical net cash flow from operations per Share for FY2009,assuming that the Service Agreements had been in place from the beginning ofFY2009
Market Capitalisation
Our market capitalisation based on the Invitation Price and our Company’s post-Invitation share capital of 459,640,000 Shares
INVITATION STATISTICS
32
4.67 times
4.71 times
S$119.5 million
The gross proceeds from this Invitation will be approximately S$43.7 million. The gross proceeds to beraised by our Company from the issuance of New Shares will be approximately S$22.9 million and grossproceeds to be raised by the Vendor from the sale of the Vendor Shares will be approximately S$20.8million.
The estimated amount of expenses of this Invitation incurred, including underwriting and placementcommission, brokerage, management fees, audit and legal fees, listing fees and all other incidentalexpenses incurred in relation to this Invitation is approximately S$3.3 million. These expenses (save forthe listing fees, certain professional fees and miscellaneous expenses relating to this Invitation which theVendor will bear) will be borne by our Company and the Vendor in the proportion in which the number ofInvitation Shares offered by each of our Company and the Vendor pursuant to this Invitation bears to thetotal number of Invitation Shares. Accordingly, approximately S$1.3 million will be borne by our Companyand approximately S$2.0 million will be borne by the Vendor. The following table sets out the breakdownof the estimated Invitation expenses to be borne by our Company:-
As a percentage of gross proceeds to be
raised by our CompanyS$’000 (%)
Listing fees 74.9 0.33
Professional fees and expenses 473.6 2.07
Underwriting commission, placement commission and brokerage 673.2 2.94
Miscellaneous expenses 104.5 0.46
Total 1,326.2 5.80
The net proceeds to be raised by our Company from the issue of the New Shares after deducting ourshare of the estimated expenses incurred in relation to this Invitation of approximately S$1.3 million(excluding any discretionary fee payable to the Underwriter at the sole discretion of our Company and theVendor) is estimated to be approximately S$21.6 million. The estimated expenses of approximately S$1.3million incurred by our Company will be expensed off or capitalised in accordance with applicableaccounting standards. For illustration purposes only, based on the estimated expenses, approximatelyS$0.5 million will be recognised as expenses in the profit and loss statement for FY2010 and the balanceof approximately S$0.8 million will be capitalised in the balance sheet for FY2010.
The intended uses of the gross proceeds are set out below:-
As a percentage ofgross proceeds to be
raised by our CompanyUse of the gross proceeds S$’000 (%)
To fund the renewal and expansion of our equipment rental fleet 10,000.0 43.71in Singapore
To fund potential acquisitions, joint ventures and/or strategic alliances 2,000.0 8.74
To fund the expansion of our equipment rental fleets in Malaysia 5,000.0 21.85and Vietnam
To fund the general working capital requirements of our Group 4,553.8 19.90
To pay for expenses incurred in connection with the Invitation 1,326.2 5.80
Gross proceeds 22,880.0 100.0
USE OF PROCEEDS AND INVITATION EXPENSES
33
Please refer to the section entitled “Business Strategies and Future Plans” of this Prospectus for furtherdetails on our plans above. Our future plans may be funded, apart from the net proceeds from the issueof the New Shares, either through internally generated funds and/or external borrowings.
Pending the deployment of the net proceeds as aforesaid, the funds may be placed in short-termdeposits with financial institutions, used to invest in short-term money market instruments and/or used forworking capital requirements as our Directors may deem appropriate.
We will make periodic announcements on the use of the net proceeds from the issue of the New Sharesas and when the funds are materially disbursed, and provide a status report on the use of the netproceeds in our annual report.
In the event that any part of our proposed uses of the net proceeds from the issue of the New Sharesdoes not materialise or proceed as planned, our Directors will carefully evaluate the situation and mayreallocate the intended funding to other purposes and/or hold such funds on short-term deposits for solong as our Directors deem it to be in the interest of our Company and our Shareholders, taken as awhole. Any change in the use of the net proceeds will be subject to the listing rules of the SGX-ST andappropriate announcements will be made by our Company on SGXNET.
Net Proceeds From The Sale Of Vendor Shares
The estimated net proceeds attributable to the Vendor from the sale of the Vendor Shares (afterdeducting the Vendor’s share of the estimated expenses related to this Invitation of approximately S$2.0million) will be approximately S$18.8 million. This will be used mainly to partially repay the LeverageLoan. Please refer to the section entitled “Interested Person Transactions” of this Prospectus for moreinformation about the Leverage Loan.
If the Over-allotment Option is exercised in full, the additional net proceeds (after the payment of the fees,commissions and other expenses related to the purchase of the Additional Shares) which the Vendor willreceive is approximately S$4.2 million. The proceeds will be used by the Vendor as it deems fit.
USE OF PROCEEDS AND INVITATION EXPENSES
34
Pursuant to the management agreement dated 25 January 2010 (the “Management Agreement”) enteredinto between our Company, the Vendor, DBS Bank and Stirling Coleman, our Company and the Vendorappointed DBS Bank and Stirling Coleman to manage this Invitation. The Joint Issue Managers will eachreceive a management fee from our Company and the Vendor for their services rendered in connectionwith this Invitation.
Pursuant to the underwriting agreement dated 25 January 2010, (the “Underwriting Agreement”) enteredinto between our Company, the Vendor and DBS Bank, our Company and the Vendor appointed DBSBank to underwrite the Offer Shares. DBS Bank may, in its absolute discretion, appoint one or more sub-underwriters to sub-underwrite the Invitation Shares. The Underwriter has agreed to underwrite thesubscription of the Offer Shares on the terms and conditions in the Underwriting Agreement. OurCompany and the Vendor agreed to pay to the Underwriter an underwriting commission of 2.75% of theInvitation Price for each Offer Share payable by us and the Vendor (as the case may be) in the proportionin which the number of Invitation Shares offered by each of our Company and the Vendor pursuant to thisInvitation bears to the total number of Invitation Shares. Payment of the commission shall be madewhether or not any allotment or allocation of the Offer Shares is made to the Underwriter or its nominees.DBS Bank may, at its absolute discretion, appoint one or more sub-underwriters to underwrite the OfferShares.
Pursuant to the placement agreement dated 25 January 2010 (the “Placement Agreement”) entered intobetween our Company, the Vendor and DBS Bank as the Placement Agent, the Placement Agent agreedto subscribe for and/or purchase and/or procure subscribers and/or purchasers for the Placement Sharesat the Invitation Price at a placement commission of 2.75% of the Invitation Price for each PlacementShare payable by our Company and the Vendor, in the proportion in which the number of InvitationShares offered by each of our Company and the Vendor pursuant to this Invitation bears to the totalnumber of Invitation Shares. DBS Bank may, at its absolute discretion, appoint one or more sub-placement agents for the Placement Shares.
For Offer Shares, brokerage fee at the rate of 0.25% of the Invitation Price for each Offer Share will bepaid by our Company and the Vendor (as the case may be) in the proportion in which the number ofInvitation Shares offered by each of our Company and the Vendor pursuant to this Invitation bears to thetotal number of Invitation Shares, to the members of the Association of Banks in Singapore, members ofthe SGX-ST and merchant banks in Singapore in respect of successful applications made on ApplicationForms bearing their respective stamps, and to the Participating Banks in respect of successfulapplications made through Electronic Applications at their respective ATMs or IB websites (save that inrespect of DBS Bank, the brokerage payable by our Company and the Vendor is 0.50% of the InvitationPrice per Offer Share subject to a minimum amount of S$10,000).
Subscribers and/or purchasers of Placement Shares may be required to pay a commission of up to1.00% of the Invitation Price for each Placement Share (including the prevailing goods and services tax,if applicable). A discretionary fee of up to 0.25% of the aggregate gross proceeds of the Invitation(including those relating to any over-allotment) is payable to the Underwriter at the sole discretion of ourCompany and the Vendor.
Save as aforesaid, no commission, discount or brokerage, has been paid or other special terms grantedby our Company within the two years preceding the date of this Prospectus or is payable to any Director,promoter, expert, proposed Director or any other person for subscribing and/or purchasing or agreeing tosubscribe and/or purchase or procuring or agreeing to procure subscriptions for and/or purchase of anyshares in, or debentures of, our Company or our subsidiaries.
If there shall have been, since the date of the Management Agreement and/or the UnderwritingAgreement and prior to Closing Date on the occurrence of certain events including, inter alia:-
(a) any breach of the warranties or undertakings in the Management Agreement and/or theUnderwriting Agreement;
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
35
(b) any occurrence of certain specified events which comes to the knowledge of the Joint IssueManagers and/or the Underwriter which if it had occured before the date of the ManagementAgreement and/or the Underwriting Agreement would have rendered any of the warranties in theManagement Agreement and/or the Underwriting Agreement untrue or incorrect in any materialrespect;
(c) any adverse change, or any development involving a prospective adverse change, in the condition(financial or otherwise) of our Company or of our Group as a whole; or
(d) any introduction or prospective introduction of or any change or prospective change in anylegislation, regulation, order, notice, policy, rule, guideline or directive (whether or not having theforce of law and including, without limitation, any directive, notice or request issued by theAuthority, the Securities Industry Council of Singapore or the SGX-ST) or in the interpretation orapplication thereof by any court, government body, regulatory authority or other competentauthority in Singapore;
(e) any change, or any development involving a prospective change, in local, national or international,financial (including stock market, foreign exchange market, inter-bank market or interest rates ormoney market), political, industrial, economic, legal or monetary conditions, taxation or exchangecontrols;
(f) the imposition of any moratorium, suspension or material restriction on trading in securitiesgenerally on the SGX-ST;
(g) any imminent threat or occurrence of any local, national or international outbreak or escalation ofhostilities whether war has been declared or not, or insurrection, or armed conflict (whether or notinvolving financial markets);
(h) any other occurrence of any nature whatsoever;
(i) any litigation or claim being threatened or instigated by any third party against any member of ourGroup, which will or is likely to result in our Group incurring laibility that is material to our Group asa whole; or
(j) the issue of a stop order by the Authority in accordance with Section 242 of the Securities andFutures Act,
which event or events shall in the reasonable opinion of the Joint Issue Managers or the Underwriter (asthe case may be) (i) result or be likely to result in a material adverse fluctuation or material adverseconditions in the stock market in Singapore or elsewhere; or (ii) be likely to prejudice the success of theoffer, subscription or sale of the Invitation Shares whether in the primary market or in respect of dealingsin the secondary market; or (iii) make it impracticable, inadvisable, inexpedient or uncommercial toproceed with any of the transactions contemplated in the Management Agreement or the UnderwritingAgreement (as the case may be) or (iv) be likely to have a material adverse effect on the business,trading position, operations or prospects of our Company or our Group as a whole, the Joint IssueManagers and/or the Underwriter (as the case may be) may at any time prior to the Closing Date bynotice in writing to our Company and the Vendor rescind or terminate the Management Agreement andthe Underwriting Agreement.
Notwithstanding the foregoing, the Joint Issue Managers and/or the Underwriter (as the case may be)may by notice in writing to our Company and the Vendor terminate the Management Agreement and/orthe Underwriting Agreement (as the case may be) if:-
(a) at any time up to the commencement of trading of the Shares on the SGX-ST, a stop order shallhave been issued by the Authority in accordance with Section 242 of the SFA; or
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
36
(b) at any time after the registration of this Prospectus with the Authority but before the close of theApplication List, the Joint Issue Managers and/or the Underwriter (as the case may be) becomeaware of:-
(i) a false or misleading statement in this Prospectus;
(ii) an omission from this Prospectus of any information that should have been included in itunder Section 243 of the SFA; or
(iii) a new circumstance that has arisen since this Prospectus was lodged with the Authority andwould have been required by Section 243 of the SFA to be included in this Prospectus if ithad arisen before this Prospectus was lodged,
that is in the opinion of the Joint Issue Managers and/or the Underwriter (as the case may be),materially adverse from the point of view of an investor; and
(c) the Invitation Shares have not been admitted to the Official List of the SGX-ST on or before31 March 2010 (or such other date as our Company, the Vendor and the Joint Issue Managersmay agree).
The obligations under the Placement Agreement are conditional upon the Management Agreement andthe Underwriting Agreement not being terminated or rescinded pursuant to the provisions of theManagement Agreement and the Underwriting Agreement. In the case of the non-fulfilment of any of theconditions in the Management Agreement and the Underwriting Agreement or the release or discharge ofthe Joint Issue Managers and/or the Underwriter (as the case may be) from their obligations under orpursuant to the Management Agreement and/or the Underwriting Agreement, the Placement Agreementshall be terminated and the parties shall be released from their respective obligations under thePlacement Agreement.
In the event that the Management Agreement, the Underwriting Agreement and/or the PlacementAgreement is terminated, our Company reserves the right, at the absolute discretion of our Directors andthe Vendor, to cancel this Invitation.
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
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The Invitation Price is determined by us and the Vendor in consultation with DBS Bank after taking intoconsideration, inter alia, prevailing market conditions and estimated market demand for the InvitationShares determined through a book-building process. The Invitation Price is the same for all InvitationShares and is payable in full on application.
Investors may apply to subscribe for any number of Invitation Shares in integral multiples of 1,000Shares. In order to ensure a reasonable spread of Shareholders, we have the absolute discretion toprescribe a limit to the number of Invitation Shares to be allotted or allocated to any single applicantand/or to allot or allocate Invitation Shares above or under such prescribed limit as we shall deem fit.
Offer Shares
The Offer Shares are made available to members of the public in Singapore for application at theInvitation Price. The terms, conditions and procedures for applications are described in Appendix F of thisProspectus.
In the event that not all the Offer Shares are validly applied for as at the close of the Application List, thatnumber of Offer Shares not applied for shall be made available to satisfy excess applications for thePlacement Shares to the extent there are excess applications for the Placement Shares as at the close ofthe Application List.
In the event of excess applications for the Offer Shares as at the close of the Application List and full orexcess applications for the Placement Shares as at the close of the Application List, the successfulapplications for the Offer Shares will be determined by ballot or otherwise as determined by ourDirectors, after consultation with the Joint Issue Managers, and approved by the SGX-ST.
Placement Shares (excluding Reserved Shares)
Application for the Placement Shares (excluding Internet Placement Shares and Reserved Shares) maybe made by way of Application Form or such other forms of application as DBS Bank deems appropriate.Application for the Internet Placement Shares is to be made through the internet website of DBS Vickers.The terms and conditions and procedures for application and acceptance are described in Appendix F ofthis Prospectus.
In the event that not all the Placement Shares are validly applied for as at the close of the ApplicationList, that number of Placement Shares not applied for shall be made available to satisfy excessapplications for the Offer Shares to the extent there are excess applications for the Offer Shares as at theclose of the Application List.
In the event that not all the Internet Placement Shares are validly applied for as at the close of theApplication List, that number of Internet Placement Shares not subscribed for and/or purchased shall bemade available to satisfy applications for the Placement Shares by way of Placement Shares ApplicationForms (or such other forms of application as DBS Bank may deem appropriate) to the extent that thereare excess applications for such Placement Shares (not including the Internet Placement Shares) as atthe close of the Application List or to satisfy excess applications for the Offer Shares to the extent thatthere are excess applications for the Offer Shares as at the close of the Application List.
Reserved Shares
To recognise contributions to our Company, we have reserved 16,800,000 Placement Shares forsubscription and/or purchase by our employees, business associates and those who have contributed tothe success of our Group at the Invitation Price. These Reserved Shares are not subject to anymoratorium and may be disposed of after the admission of our Company to the Official List of the SGX-ST. In the event that any of the Reserved Shares are not validly applied for, they will be made available tosatisfy excess applications for the Placement Shares to the extent there are excess applications for thePlacement Shares as at the close of the Application List or, in the event that not all the PlacementShares are validly applied for as at the close of the Application List, to satisfy excess applications madeby members of the public for the Offer Shares to the extent there are excess applications for the OfferShares as at the close of the Application List.
PLAN OF DISTRIBUTION
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Over-allotment & Stabilisation
In connection with this Invitation, the Vendor has granted DBS Bank an over-allotment option (the “Over-allotment Option”) exercisable by DBS Bank, as stabilising manager, in full or in part on one or moreoccasions from the Listing Date until the earlier of:-
(i) the date falling 30 days from the Listing Date, or
(ii) the date when DBS Bank or its appointed agent has bought, on the SGX-ST, an aggregate of16,800,000 Shares, representing not more than 10.0% of the total Invitation Shares to undertakestabilising actions,
to purchase up to an aggregate of 16,800,000 Additional Shares, representing not more than 10.0% ofthe total Invitation Shares at the Invitation Price, solely for the purpose of covering the over-allotment (ifany) of the Invitation Shares made in connection with this Invitation subject to any applicable laws andregulations. The total number of issued Shares immediately after the completion of this Invitationregardless of whether the Over-allotment Option is exercised will be 459,640,000 Shares. The exercise ofthe Over-allotment Option will not increase the total number of issued Shares after this Invitation. In theevent that the Over-allotment Option is exercised, the Vendor will pay a commission of 2.75% of theInvitation Price for each Additional Share purchased by DBS Bank.
In connection with this Invitation, DBS Bank as the stabilising manager, may, in its discretion but subjectalways to applicable laws and regulations in Singapore, over-allot or effect transactions which stabilise ormaintain the market price of the Shares at levels which might not otherwise prevail in the open market.Such transactions may be effected on the SGX-ST and in all jurisdictions where it is permissible to do so,in each case, in compliance with all applicable laws and regulatory requirements. The number of Sharesthat DBS Bank may buy to undertake stabilising action shall not exceed an aggregate of 16,800,000Shares representing not more than 10.0% of the total Invitation Shares. However, there is no assurancethat DBS Bank or any person acting on its behalf will undertake stabilisation action. Such stabilisationactivities, if commenced, may be discontinued by DBS Bank at any time at DBS Bank’s discretion inaccordance with the laws of Singapore and shall not be effected after the earlier of (a) the date falling 30days from the Listing Date, or (b) the date when DBS Bank or its appointed agent has bought, on theSGX-ST, an aggregate of 16,800,000 Shares, representing not more than 10.0% of the total InvitationShares, to undertake stabilising action.
We will publicly announce the total number of Additional Shares which is subject to the Over-allotmentOption, through a SGXNET announcement to be posted on the internet at the SGX-ST websitehttp://www.sgx.com, not later than the day immediately following the close of the Application List.
Neither our Company nor DBS Bank makes any representation or prediction as to the direction ormagnitude of any effect that the transactions described above may have on the price of our Shares. Inaddition, neither our Company nor DBS Bank makes any representation that DBS Bank or any personacting for it will engage in such transactions or that such transactions, once commenced, will not bediscontinued without notice (unless such notice is required by law). DBS Bank, being the managereffecting the stabilising activities, will be required to make an announcement through the SGX-ST on thecessation of stabilising activities and the amount of the Over-allotment Option that has been exercisednot later than the start of the trading day of the SGX-ST immediately after the day of cessation ofstabilising action.
PLAN OF DISTRIBUTION
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Share Lending
DBS Bank has entered into a share lending agreement (the “Share Lending Agreement”) with the Vendor,pursuant to which DBS Bank may borrow up to 16,800,000 Shares from the Vendor for the purpose ofeffecting the over-allotment in connection with this Invitation. Save for up to 16,800,000 Shares that maybe lent to DBS Bank pursuant to the over-allotment effected in connection with this Invitation, the Sharesof the Vendor are subject to moratorium undertaking. Please refer to the section entitled “GeneralInformation on Our Group - Moratorium” of this Prospectus for more details as to moratoriumundertaking. At the conclusion of the price stabilisation activities and in the event that the Over-allotmentOption is not exercised in full, the Shares which are returned to the Vendor will be subject to itsmoratorium undertaking.
None of our Directors or Executive Officers or employees intends to subscribe for more than 5.0% of theInvitation Shares.
We are not aware of any person who intends to subscribe for more than 5.0% of our Shares in thisInvitation. However, through a book-building process to assess market demand for our Shares, there maybe person(s) who may indicate his interest to subscribe for more than 5.0% of the Invitation Shares.
Further, no Shares shall be allocated or allotted on the basis of this Prospectus later than six monthsafter the date of registration of this Prospectus.
PLAN OF DISTRIBUTION
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SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected financial information should be read in conjunction with the full text of thisProspectus, including the “Independent Auditors’ Report and the Consolidated Financial Statements ofSin Heng Heavy Machinery Limited” as set out in Appendix A(i) of this Prospectus.
OPERATING RESULTS
S$’000 FY2007 FY2008 FY2009
Revenue 82,740 131,833 136,986
Cost of sales (65,444) (104,584) (105,525)
Gross profit 17,296 27,249 31,461
Other operating income 903 810 2,062
Selling expenses (1,662) (1,427) (1,168)
Administrative expenses (4,606) (4,878) (6,332)
Other operating expenses (793) (697) (150)
Finance costs (60) (198) (359)
Share of results of associate 220 258 424
Profit before income tax 11,298 21,117 25,938
Income tax expense (2,121) (3,954) (3,956)
Profit for the year 9,177 17,163 21,982
Earnings per share (Singapore cents)
Pre-Invitation EPS (1) 2.47 4.62 5.91
Post-Invitation EPS (2) 2.00 3.73 4.78
Notes:-
(1) For comparative purposes, the pre-Invitation EPS for the periods under review have been computed based on the profit forthe applicable year divided by the pre-Invitation share capital of 371,640,000 Shares.
(2) For comparative purposes, the post-Invitation EPS for the periods under review have been computed based on the profit forthe applicable year divided by the post-Invitation share capital of 459,640,000 Shares.
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SELECTED CONSOLIDATED FINANCIAL INFORMATION
FINANCIAL POSITION
As at 30 As at 30 As at 30S$’000 June 2007 June 2008 June 2009
ASSETS
Current assetsCash and bank balances 7,644 7,498 8,430Trade receivables 7,991 10,099 12,817Other receivables and prepaid expenses 3,646 2,342 1,564Derivative financial instruments – – 264Inventories 11,537 17,168 10,189
Total current assets 30,818 37,107 33,264
Non-current assetsProperty, plant and equipment 24,778 39,075 59,598Investment in associate 720 978 1,352Available-for-sale investments 287 1,092 794Other assets 10 10 10
Total non-current assets 25,795 41,155 61,754
Total assets 56,613 78,262 95,018
LIABILITIES AND EQUITY
Current liabilitiesBills payable 4,177 5,167 10,949Bank overdraft 1,294 – – Current portion of bank loan 244 254 304Trade payables 1,848 1,460 1,580Other payables 4,377 3,873 2,594Current portion of finance leases 2,218 4,649 3,934Derivative financial instruments 255 98 –Income tax payable 2,612 3,825 1,161
Total current liabilities 17,025 19,326 20,522
Non-current liabilitiesBank loan 1,041 831 683Finance leases 1,886 7,272 4,490Deferred tax liabilities 422 584 3,374
Total non-current liabilities 3,349 8,687 8,547
Capital and reservesShare capital 1,858 1,858 1,858Retained earnings 34,297 48,441 64,423Fair value reserve 84 (50) (332)
Total equity 36,239 50,249 65,949
Total liabilities and equity 56,613 78,262 95,018
NAV per Share (1) (cents) 9.75 13.52 17.75
Note:-
(1) For comparative purposes, the NAV per Share have been computed based on the NAV divided by the pre-Invitation sharecapital of 371,640,000 Shares.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
43
The following discussion of the results of our Group’s results of operations and financial position shouldbe read in conjunction with the Consolidated Financial Statements as set out in Appendix A(i) of thisProspectus. This discussion and analysis contains forward-looking statements that involve risks anduncertainties. Our Group’s actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause future results to differ significantly from those projected inthe forward-looking statements which include, but are not limited to, those discussed below andelsewhere in this Prospectus, particularly in the section entitled “Risk Factors”. Under no circumstancesshould the inclusion of such forward-looking statements herein be regarded as a representation, warrantyor prediction with respect to the accuracy of the underlying assumptions by our Company, the Vendor, theJoint Issue Managers, the Underwriter or the Placement Agent or any other person. Investors arecautioned not to place undue reliance on these forward-looking statements that speak only as of the datehereof. Please refer to the section entitled “Cautionary Note on Forward-Looking Statements” of thisProspectus.
OVERVIEW
Revenue
We are one of the leading heavy lifting service providers in Singapore. We focus on the mid-to-high liftingcapacity segment and serve mainly customers in the infrastructure and geotechnic, construction, offshoreand marine and oil and gas industries. Our core business activities are the equipment rental businessinvolving the rental of cranes and aerial lifts and the trading business involving the trading of cranes andaerial lifts. We also undertake sales and distribution of spare parts for cranes and aerial lifts.
For the period under review, the rental and trading of cranes accounted for, on average, approximately93.5% of our total annual revenue and the rental and trading of aerial lifts accounted for, on average,approximately 6.5% of our total annual revenue.
The breakdown of our Group’s total revenue by business activities for FY2007, FY2008 and FY2009 isset out as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Equipment rental business 19,360 23.4 25,955 19.7 33,351 24.3
Trading business 63,380 76.6 105,878 80.3 103,635 75.7
Total 82,740 100.0 131,833 100.0 136,986 100.0
The revenue from our equipment rental business comprises rental income receivable under operatingleases. Equipment rental revenue is recognised in the income statement on a straight-line basis over theterm of the operating lease and includes overtime rental if applicable. As our equipment rental customersare based mainly in Singapore, our equipment rental revenue is predominantly denominated in S$.
The revenue from our trading business is recognised upon delivery of the equipment to the customerwhich is taken to be the point in time when the significant risks and rewards of ownership have beentransferred to the customer. No revenue is recognised if there are significant uncertainties regarding therecovery of the consideration due, associated costs or the possible return of goods. Our trading revenuebusiness is mainly denominated in S$ with a small percentage denominated in US$ and other currencies.
The breakdown of our Group’s total revenue by geographical segments for FY2007, FY2008 and FY2009is set out as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Singapore (1) 49,384 59.7 82,647 62.7 89,665 65.5
Indonesia 8,055 9.7 23,847 18.1 27,296 19.9
Middle East 8,065 9.8 7,029 5.3 10,547 7.7
Malaysia 4,368 5.3 5,385 4.1 7,133 5.2
India 5,498 6.6 3,225 2.4 1,128 0.8
Others (2) 7,370 8.9 9,700 7.4 1,217 0.9
Total 82,740 100.0 131,833 100.0 136,986 100.0
Notes:-
(1) The percentage of our Group’s revenue from Singapore which is derived from our equipment rental business is approximately37.8%, 31.3% and 37.1% for FY2007, FY2008 and FY2009 respectively.
(2) For the period under review, others comprise Australia, Brunei, Hong Kong, Japan, Maldives, Mauritius, Myanmar, NewZealand, South Africa, South Korea, Taiwan, Thailand and Vietnam.
In the above table, segment revenue is based on the geographical location where the services arerendered to our equipment rental customers or where our trading customers are based.
Equipment rental business
We derive our equipment rental revenue from (i) the rental of our cranes (typically on wet hire basiswhich is the hire of our heavy lifting equipment with operator) and (ii) the rental of our aerial lifts (typicallyon dry hire basis which is the hire of our heavy lifting equipment without operator). The duration of ourequipment rental to our customers ranges from blocks of eight hours to monthly leases. We also chargeadditional overtime rental if our customers exceed their daily usage hours. Overtime rental is chargedbased on usage records as acknowledged by our customers.
Our crane rental fleet comprises crawler cranes, all terrain cranes, truck cranes and rough terrain craneswith lifting capacity ranging between 5 tons and 500 tons. Our crane rental fleet size and aggregate liftingcapacity as at 30 June 2007, 2008 and 2009 are set out as follows:
As at As at As at30 June 2007 30 June 2008 30 June 2009
Aggregate Aggregate Aggregate Lifting Lifting Lifting
Capacity Capacity Capacity Units (tons) Units (tons) Units (tons)
Crawler Cranes 33 2,855 36 3,870 36 4,040
All Terrain Cranes 3 645 3 1,000 6 1,900
Truck Cranes 7 730 6 630 7 920
Rough Terrain Cranes 15 473 9 357 18 802
Total 58 4,703 54 5,857 67 7,662
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Although the number of cranes decreased from 58 units as at 30 June 2007 to 54 units as at 30 June2008, our aggregate lifting capacity increased from 4,703 tons as at 30 June 2007 to 5,857 tons as at 30June 2008. This was due to a shift in our focus to the mid-to-high lifting capacity cranes as these cranesgenerally earn higher rental rates and are more profitable to operate, compared to cranes with relativelylower lifting capacities. We continue to build up our fleet of mid-to-high lifting capacity cranes in FY2009,and as at 30 June 2009, we have 67 units of cranes with an aggregate lifting capacity of 7,662 tons.
Our aerial lift rental fleet comprises boom lifts and scissor lifts with access heights ranging from 6 metresto 41 metres. Our aerial lift rental fleet size as at 30 June 2007, 2008 and 2009 is set out as follows:
As at As at As at30 June 2007 30 June 2008 30 June 2009
Boom Lifts 23 66 109
Scissor Lifts 49 108 78
Total 72 174 187
Our aerial lifts increased from 72 units as at 30 June 2007 to 174 units as at 30 June 2008. This was dueto our expansion of our aerial lift fleet and the availability of used aerial lifts in the market. In FY2009, weshifted our focus to building up our fleet of boom lifts which generally earn higher rental rates ascompared to scissor lifts. As a result, our boom lifts increased from 66 units as at 30 June 2008 to 109units as at 30 June 2009, and our scissor lifts decreased from 108 units as at 30 June 2008 to 78 unitsas at 30 June 2009.
The breakdown of our Group’s equipment rental revenue derived from the respective industries ourcustomers operate in for FY2007, FY2008 and FY2009 is set out as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Infrastructure and Geotechnic 3,853 19.9 8,067 31.1 12,409 37.2
Construction 5,007 25.9 4,672 18.0 7,930 23.8
Offshore and Marine 5,097 26.3 5,772 22.2 4,876 14.6
Oil and Gas 3,022 15.6 3,638 14.0 4,456 13.4
Others (1) 2,381 12.3 3,806 14.7 3,680 11.0
Total 19,360 100.0 25,955 100.0 33,351 100.0
Note:-
(1) Others comprise mainly equipment rental companies.
Our customers in the infrastructure and geotechnic industry generally deploy our cranes in infrastructureprojects (such as highways, bridges, tunnels and MRT tracks) as well as ground engineering works (suchas piling, diaphragm walls, excavation and ground stabilisation). Our customers in this industry includeSato Kogyo (S) Pte Ltd and Tuksu Engineering & Construction Ltd.
Our customers in the construction industry generally deploy our equipment in the construction ofresidential, commercial and industrial buildings. Our customers in this industry include YongnamEngineering and Construction (Pte) Ltd and M + W Zander (S) Pte Ltd.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Our customers in the offshore and marine industry include the Keppel Group and Technics OffshoreEngineering Pte Ltd. They generally deploy our equipment in the construction and maintenance ofoffshore and marine vessels in shipyards.
Our customers in the oil and gas industry include Sampyung Singapore Pte Ltd and UTOC EngineeringPte Ltd. They generally deploy our equipment in the construction and maintenance of oil and gasfacilities, such as oil refineries, petrochemical plants, tank terminals and storage facilities.
The percentage of our Group’s equipment rental revenue derived from Singapore is approximately96.4%, 99.6% and 99.7% for FY2007, FY2008 and FY2009 respectively. Accordingly, a discussion on thebreakdown of our equipment rental revenue by geographical markets would not be meaningful.
For more information on our equipment rental business, please refer to the section entitled “Business –Business Overview” of this Prospectus.
Trading business
We derive our trading revenue from the trading of new and used cranes and aerial lifts. We source forequipment from countries and regions such as Japan, Europe and USA and sell them directly tocustomers from around the world. In addition, we also sell used cranes and aerial lifts from ourequipment rental fleet.
The breakdown of our trading revenue by geographical markets for FY2007, FY2008 and FY2009 is setout as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Singapore 30,727 48.5 56,792 53.6 56,399 54.4
Indonesia 8,055 12.7 23,847 22.5 27,296 26.3
Middle East 8,065 12.7 7,029 6.6 10,547 10.2
Malaysia 4,368 6.9 5,385 5.1 7,048 6.8
India 5,498 8.7 3,225 3.1 1,128 1.1
Others (1) 6,667 10.5 9,600 9.1 1,217 1.2
Total 63,380 100.0 105,878 100.0 103,635 100.0
Note:-
(1) For the period under review, others comprise Australia, Brunei, Hong Kong, Japan, Maldives, Mauritius, Myanmar, NewZealand, South Africa, South Korea, Taiwan, Thailand and Vietnam.
For our trading business, our marketing efforts are typically targeted at customers in countriesexperiencing strong construction and civil engineering activities. Our customers in these countriesoperate in a wide range of industries and we do not target customers in any specific industries. Inaddition, we also sell to other used equipment distributors and trading houses. As such, a breakdown ofour trading revenue by the respective industries of our trading customers would not be meaningful.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Factors affecting our revenue
The main factors affecting our revenue are:
(a) The performance of the infrastructure and geotechnic, construction, offshore and marine and oiland gas industries
The customers of our equipment rental business are mainly from the infrastructure and geotechnic,construction, offshore and marine and oil and gas industries in Singapore. A slowdown in theSingapore economy may have an impact on these industries, which in turn may have an impact onour business and revenue. The demand for our cranes and aerial lifts are therefore dependent onthe growth of these industries which are cyclical in nature and might fluctuate in accordance withfactors such as changing economic conditions and government regulations.
(b) Our ability to maintain our competitive strengths
The crane and aerial lifts rental industry in Singapore from which revenue from our equipmentrental business is derived is highly competitive. Our competitors may have longer operatinghistories, larger customer bases, wider ranges of services as well as greater financial, technical,marketing and other resources as compared to our Group. The actions of our competitors and newentrants into the industry could increase the intensity of competition. Our revenue thereforedepends on our ability to compete effectively with our competitors and adapt quickly to changingmarket conditions.
(c) Our ability to retain existing major customers and secure new customers
Our equipment rental business is dependent on our major customers who contribute a significantportion of our revenue. We will continue to be dependent on these customers for the foreseeablefuture and the loss of or a significant reduction in business from these customers may have amaterial adverse impact on our revenue. Please refer to the section entitled “Business - MajorCustomers” of this Prospectus for further details on our major customers.
(d) Rental rates for our equipment
Our equipment rental rates are dependent on the requirements of upcoming and on-going projectsand the availability of suitable equipment in the market. For example, if there are a number of largescale infrastructure projects in Singapore, there will be increased demand for cranes of mid-to-highlifting capacity, which are generally limited in supply as a result of the comparatively high levels ofcapital required to finance the purchase of such cranes, the lower production volumes of suchcranes and their long production times. This will result in an increase in the rental rates for suchequipment.
(e) Our ability to retain and employ sufficient trained operators for our cranes
Our equipment rental services include the skilled manpower needed in the operation of our cranes.In the event that we are unable to employ or retain sufficient trained operators for the operation ofour cranes, we may not be able to provide sufficient manpower to operate our cranes and ourrevenue may be adversely affected.
(f) Global economic conditions and the ability of our trading customers to obtain affordable financing
Under our trading business, we sell cranes and aerial lifts to customers from around the world.Should the demand for cranes and aerial lifts slow down due to poor global economic conditionsand/or our trading customers face difficulties in obtaining affordable financing from banks andfinancial institutions, revenue from our trading business may be adversely affected.
(g) Availability of cranes and aerial lifts
Our trading business is dependent on the availability and supply of cranes and aerial lifts. In theevent that we are unable to secure the supply of equipment that are in demand, our tradingoperations and hence, our trading revenue may be adversely affected.
The above should be read in conjunction with the section entitled “Risk Factors” of this Prospectus.
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Cost of sales
The breakdown of our cost of sales by business activities for FY2007, FY2008 and FY2009 is set out asfollows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Equipment rental business 14,385 22.0 17,025 16.3 20,693 19.6
Trading business 51,059 78.0 87,559 83.7 84,832 80.4
Total 65,444 100.0 104,584 100.0 105,525 100.0
Equipment rental business
The cost of sales in relation to our equipment rental business mainly comprises depreciation charges ofour rental equipment, direct labour costs, third party rental costs, maintenance costs and other directoverheads.
The breakdown of the cost of sales of our equipment rental business for FY2007, FY2008 and FY2009 isset out as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Depreciation charges 3,364 23.4 5,551 32.6 6,561 31.7
Direct labour costs 2,400 16.7 3,267 19.2 4,777 23.1
Third party rental costs 6,115 42.5 4,971 29.2 4,683 22.6
Maintenance costs 2,248 15.6 2,797 16.4 4,028 19.5
Other direct overheads 258 1.8 439 2.6 644 3.1
Total 14,385 100.0 17,025 100.0 20,693 100.0
The depreciation charges relate to depreciation charges for our cranes and aerial lifts held as fixedassets. Depreciation charges accounted for approximately 23.4%, 32.6% and 31.7% of the cost of salesof our equipment rental business for FY2007, FY2008 and FY2009 respectively.
The direct labour costs relate mainly to salaries, bonuses and CPF contributions for our crane operators.Direct labour costs accounted for approximately 16.7%, 19.2% and 23.1% of the cost of sales for ourequipment rental business for FY2007, FY2008 and FY2009 respectively.
The third party rental costs relate to the cost of ad-hoc rental of cranes and aerial lifts from the third partysuppliers. Third party rental costs accounted for approximately 42.5%, 29.2% and 22.6% of the cost ofsales of our equipment rental business for FY2007, FY2008 and FY2009 respectively.
The maintenance costs relate mainly to the repair costs, cost of spare parts, tyres and tubesreplacements, as well as diesel and lubrication. Maintenance costs accounted for approximately 15.6%,16.4% and 19.5% of the cost of sales of our equipment rental business in FY2007, FY2008 and FY2009respectively.
Other direct overheads relate mainly to the cost of insurance and road tax. Other direct overheadsaccounted for approximately 1.8%, 2.6% and 3.1% of the cost of sales of our equipment rental businessfor FY2007, FY2008 and FY2009 respectively.
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Trading business
The cost of sales for our trading business mainly comprises the purchase costs of cranes and aerial liftssold to customers and the net book values of cranes and aerial lifts that are sold to customers from ourequipment rental fleet. The purchase costs and net book values of cranes and aerial lifts accounted forapproximately 99.3%, 99.2% and 99.4% of the cost of sales of our trading business in FY2007, FY2008and FY2009 respectively.
Other costs include bank charges for issuance of letter of credits as well as transportation and handlingcosts for cranes and aerial lifts purchased.
Factors affecting our cost of sales
The main factors affecting our cost of sales include, inter alia:
a) Market prices of cranes and aerial lifts
We are exposed to fluctuations in the prices of cranes and aerial lifts which have a direct impact onour cost of sales. Market prices of cranes and aerial lifts may fluctuate due to changes in the levelof global demand and supply. In the event of any significant increase in the purchase cost of theseequipment, our cost of sales will increase.
b) Fluctuations in foreign currency exchange rates
Our purchase cost of cranes and aerial lifts is mainly denominated in JPY and US$. Any significantappreciation of the JPY and US$ against S$ will increase our cost of sales. Please refer to thesection entitled “Foreign Exchange Exposure” of this Prospectus for more details.
c) Expansion of our equipment rental fleet
We are in a capital-intensive business and an expansion in our equipment rental fleet will result inhigher depreciation charges as well as increases in direct labour costs, maintenance costs andother direct overhead costs. These will increase our cost of sales.
d) Direct labour costs
Qualified crane operators are an integral part of our equipment rental business as we aredependent on them to operate and maintain our cranes. As there is a limited number of suchqualified personnel, competition for these personnel is intense. Should we be required to raise thesalaries to retain and attract these personnel, our cost of sales will increase.
The above should be read in conjunction with the section entitled “Risk Factors” of this Prospectus.
Gross profit and gross profit margin
Our gross profit margin is an indication of our ability to sustain our pricing to our customers and controlour cost of sales. The gross profits for our equipment rental and trading businesses may vary accordingto market conditions, and accordingly, our overall gross profit margin may fluctuate should there be anychange in the revenue-mix in respect of our businesses.
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Our gross profit (“GP”) and gross profit margin (“GM”) by business activities for FY2007, FY2008 andFY2009 is set out as follows:
FY2007 FY2008 FY2009GP GM GP GM GP GM
S$’000 % S$’000 % S$’000 %
Equipment rental business 4,975 25.7 8,930 34.4 12,658 38.0
Trading business 12,321 19.4 18,319 17.3 18,803 18.1
Total 17,296 20.9 27,249 20.7 31,461 23.0
Our overall gross profit margin for FY2007, FY2008 and FY2009 was approximately 20.9%, 20.7% and23.0% respectively.
Equipment rental business
The gross profit margin of our equipment rental business was approximately 25.7%, 34.4% and 38.0% forFY2007, FY2008 and FY2009 respectively.
Trading business
The gross profit margin of our trading business was approximately 19.4%, 17.3% and 18.1% for FY2007,FY2008 and FY2009 respectively.
Other income
Other income comprises gain on foreign exchange, servicing income from the provision of repairs andspare parts replacement services, sundry income (including dividend income), rental income arising fromsubletting of our unused office premises, provision for doubtful debts written back, insurance claimsreceived, gains on disposal of available-for-sale investments and property, plant and equipment.
The breakdown of our other income for FY2007, FY2008 and FY2009 is as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Gain on foreign exchange – – 11 1.4 1,004 48.7
Servicing income 403 44.6 256 31.6 605 29.4
Sundry income 8 0.9 94 11.6 225 10.9
Rental income 304 33.7 154 19.0 116 5.6
Provision for doubtful debts written back – – 1 0.1 60 2.9
Insurance claims received 9 1.0 95 11.7 44 2.1
Gains on disposal of available-for-sale 116 12.8 12 1.5 9 0.4investments
Gains on disposal of property, plant and 63 7.0 187 23.1 (1) (0.0)equipment
Total 903 100.0 810 100.0 2,062 100.0
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The increase in our sundry income from approximately S$0.1 million in FY2008 to approximately S$0.2million in FY2009 was due mainly to compensation of approximately S$0.1 million received from ourtrading customers for their cancellation of orders.
The decrease in our rental income from approximately S$0.3 million in FY2007 to approximately S$0.2million in FY2008 and approximately S$0.1 million in FY2009 was due mainly to sub-tenants notextending their subletting leases upon expiration.
The gain on disposal of available-for-sale investments of approximately S$0.1 million in FY2007 relate tothe disposal of our quoted shares at values exceeding the purchase costs. Such gain was non-recurringin nature.
The gain on disposal of property, plant and equipment of approximately S$0.2 million in FY2008 relate tothe disposal of four motor vehicles at market value, which exceeded the carrying value of these assets, tothird parties. Such gain was non-recurring in nature.
Selling expenses
Selling expenses comprise freight, entertainment, commission and travelling expenses. Selling expensesrepresent approximately 2.0%, 1.1% and 0.9% of our total revenue for FY2007, FY2008 and FY2009respectively.
The breakdown of our selling expenses for FY2007, FY2008 and FY2009 is as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Freight 652 39.2 494 34.6 415 35.5
Entertainment 445 26.8 490 34.4 387 33.2
Commission 442 26.6 350 24.5 265 22.7
Travelling 123 7.4 93 6.5 101 8.6
Total 1,662 100.0 1,427 100.0 1,168 100.0
Administrative expenses
Administrative expenses comprise staff cost, depreciation charges for administrative assets, professionalfees (such as audit, secretarial and professional engineer certification fees) as well as miscellaneousexpenses incurred in the course of normal operations of our Group (such as utilities, telecommunications,postage and stationery). Administrative expenses represent approximately 5.6%, 3.7% and 4.6% of ourtotal revenue for FY2007, FY2008 and FY2009 respectively.
The breakdown of our administrative expenses for FY2007, FY2008 and FY2009 is as follows:
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Staff cost 2,841 61.7 3,030 62.1 4,304 68.0
Depreciation charges 432 9.4 534 10.9 539 8.5
Professional fees 242 5.3 260 5.3 377 6.0
Miscellaneous 1,091 23.6 1,054 21.7 1,112 17.5
Total 4,606 100.0 4,878 100.0 6,332 100.0
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Other operating expenses
Other operating expenses comprise inventory, fixed assets and bad debt written off, loss on foreignexchange and impairment loss on available-for-sale investments. Other operating expenses representapproximately 1.0%, 0.5% and 0.1% of our total revenue for FY2007, FY2008 and FY2009 respectively.
FY2007 FY2008 FY2009S$’000 % S$’000 % S$’000 %
Inventory written off – – – – 54 36.0
Fixed assets written off – – 1 0.1 20 13.3
Bad debt written off – – 18 2.6 65 43.3
Loss on foreign exchange 366 46.2 – – – –
Impairment loss on available-for-sale 427 53.8 678 97.3 11 7.4investments
Total 793 100.0 697 100.0 150 100.0
Finance costs
Finance costs comprise interest expenses on bank borrowings, finance leases, trust receipts and bankoverdrafts, net of interest income on bank deposits. Finance costs represent approximately 0.1%, 0.2%and 0.3% of our total revenue for FY2007, FY2008 and FY2009 respectively.
Share of results of associate
Share of results of associate represents our share of results arising from our interest in SEPL.
Income tax expense
For the periods under review, our Group operated predominantly in Singapore. We were only taxed inaccordance with Singapore’s corporate tax law and the applicable corporate tax rates for FY2007,FY2008 and FY2009 were 18.0%, 18.0% and 17.0% respectively.
SEASONALITY
Our business is generally not affected by any seasonality factor. However, we generally experience lowerdemand for our equipment rental services during the Chinese New Year holiday period.
REVIEW OF PAST OPERATING PERFORMANCE
The following discussion and analysis should be read in conjunction with the “Independent Auditors’Report and the Consolidated Financial Statements of Sin Heng Heavy Machinery Limited” as set out inAppendix A(i) of this Prospectus.
FY2008 compared to FY2007
Revenue
Our revenue increased by approximately S$49.1 million or 59.4% from approximately S$82.7 million inFY2007 to approximately S$131.8 million in FY2008. This increase was mainly attributed to the increasein our trading revenue which was driven by the increase in demand for equipment that we trade in. Thedemand for those equipment increased due to the economic growth in Singapore, Indonesia and otheroverseas markets. Our equipment rental revenue also increased as we secured additional equipmentrentals, particularly from customers in the infrastructure and geotechnic industry.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Equipment rental business
Our equipment rental revenue increased by approximately S$6.6 million or 34.0% from approximatelyS$19.4 million in FY2007 to approximately S$26.0 million in FY2008. The strong performance was due tothe increase in demand by our equipment rental customers and the expansion of our equipment rentalfleet.
The increase in demand by our equipment rental customers was due to an increase in construction andcivil engineering activities, particularly in the infrastructure and geotechnic industry. The major projectsthat we were involved in FY2008 included the Braddell/Thomson/Lornie Road Interchange, tunnellingworks for the MRT Circle Line as well as the Samsung wafer fabrication facilities in Tampines.
We increased the aggregate lifting capacity of our crane rental fleet from 4,703 tons as at 30 June 2007to 5,857 tons as at 30 June 2008. We also increased our aerial lifts rental fleet size from 72 units as at 30June 2007 to 174 units as at 30 June 2008.
Trading business
Our trading revenue increased by approximately S$42.5 million or 67.0% from approximately S$63.4million in FY2007 to approximately S$105.9 million in FY2008.
This increase was attributed to an increase in demand for cranes as a result of economic growth inSingapore, Indonesia and other overseas markets. We sold an aggregate of 150 cranes and 135 aeriallifts in FY2008 as compared to 131 cranes and 44 aerial lifts in FY2007. In addition we also soldproportionately more cranes of higher lifting capacities in FY2008.
Cost of sales, gross profit and gross profit margin
Our cost of sales increased in tandem with the growth in our revenue by approximately S$39.2 million or59.9% from approximately S$65.4 million in FY2007 to approximately S$104.6 million in FY2008. Ourgross profit increased by approximately S$9.9 million or 57.2% from approximately S$17.3 million inFY2007 to approximately S$27.2 million in FY2008. Our gross profit margin decreased slightly to 20.7%in FY2008, compared to 20.9% in FY2007. This was due to a decrease in the gross profit margin of ourtrading business which was partially offset by an increase in the gross profit margin of our equipmentrental business.
Equipment rental business
Cost of sales of our equipment rental business increased by approximately S$2.6 million or 18.1% fromapproximately S$14.4 million in FY2007 to approximately S$17.0 million in FY2008. This increase wasdue mainly to the higher depreciation charges and maintenance costs as we expanded our equipmentrental fleet. In addition, direct labour costs also increased as we hired more crane operators and incurredmore overtime charges due to higher crane utilisation by our customers. These were offset by decreasesin third party equipment rental costs as we expanded our fleet of rental equipment and reduced our rentalof cranes and aerial lifts from third party equipment suppliers.
Gross profit from our equipment rental business increased by approximately S$3.9 million or 78.0% fromapproximately S$5.0 million in FY2007 to approximately S$8.9 million in FY2008.
Gross profit margin of our equipment rental business increased from approximately 25.7% in FY2007 to34.4% in FY2008. This increase was due mainly to:
(a) higher rental rates on our cranes and aerial lifts;
(b) direct operating overheads, such as operators salaries and maintenance costs, increasing at aproportionately slower rate as compared to revenue attributed to our shift in focus to mid-to-highlifting capacity cranes; and
(c) reduced rental of cranes and aerial lifts from third party equipment suppliers.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Trading business
Cost of sales of our trading business increased by approximately S$36.5 million or 71.4% fromapproximately S$51.1 million in FY2007 to approximately S$87.6 million in FY2008 due mainly to theincrease in our trading revenue.
Gross profit from our trading business increased by approximately S$6.0 million or 48.8% fromapproximately S$12.3 million in FY2007 to approximately S$18.3 million in FY2008.
Gross profit margin of our trading business decreased from 19.4% in FY2007 to 17.3% in FY2008. Ourtrading business gross profit margin depends, to a significant extent, on the demand for and theavailability of the equipment being traded. Such demand and supply conditions generally vary from time-to-time, hence resulting in variances in the selling prices of our equipment and accordingly the grossprofit margins of our trading business.
Other income
Other income decreased by approximately S$0.1 million or approximately 11.1% from approximatelyS$0.9 million in FY2007 to approximately S$0.8 million in FY2008. This was due to lower servicingincome, subletting rental income and sundry income of approximately S$0.2 million in aggregate, offsetby an increase in gain on disposal of property, plant and equipment of approximately S$0.1 million.
Selling expenses
Selling expenses decreased by approximately S$0.3 million or 17.6% from approximately S$1.7 million inFY2007 to approximately S$1.4 million in FY2008. The decrease was due to lower freight in FY2008 aswe sold fewer equipment on cost, insurance and freight (CIF) terms. Under CIF terms, we, as seller ofthe equipment, bear the related freight and insurance expenses to the port of destination.
Administrative expenses
Administrative expenses increased by approximately S$0.3 million or approximately 6.5%, fromapproximately S$4.6 million in FY2007 to approximately S$4.9 million in FY2008 due mainly to anincrease in staff costs as we hired more administrative employees with the increase in business activities.
Other operating expenses
Other operating expenses decreased by approximately S$0.1 million or 12.5% from approximately S$0.8million in FY2007 to approximately S$0.7 million in FY2008. The decrease was due to loss on foreignexchange of approximately S$0.4 million in FY2007, offset by an increase in impairment loss onavailable-for-sale investments of S$0.3 million in FY2008. Trade receivables of approximately S$18,000were written off as they were no longer recoverable. The foreign exchange loss in FY2007 arose duemainly to the marking-to-market of open forward currency contracts as at the financial year-end,corresponding to those equipment that were scheduled for shipment by Japanese suppliers subsequentto the financial year-end. Our Company had entered into JPY/SGD forward currency contracts topurchase JPY. However, JPY subsequently depreciated against SGD at year end.
Finance costs
Finance costs increased by approximately S$0.1 million from approximately S$60,000 in FY2007 toapproximately S$0.2 million in FY2008 due mainly to higher hire purchase interest expenses.
Share of results of associate
Our share of results of associate increased by approximately S$0.1 million or 50.0% from approximatelyS$0.2 million in FY2007 to approximately S$0.3 million in FY2008, due to higher profits reported bySEPL.
Profit before income tax
Profit before income tax for FY2008 increased by approximately S$9.8 million or 86.7% fromapproximately S$11.3 million in FY2007 to approximately S$21.1 million in FY2008. The improvement inprofit before income tax in FY2008 was due mainly to the increases in our revenue and gross profit.
Income tax expense
Income tax expense for FY2008 increased by approximately S$1.9 million or 90.5% from approximatelyS$2.1 million in FY2007 to approximately S$4.0 million in FY2008. This was due to the increase in ourprofit before income tax.
Profit for the year
Profit for the year increased by approximately S$8.0 million or 87.0% from approximately S$9.2 million inFY2007 to approximately S$17.2 million in FY2008 due mainly to the increase in our profit before incometax.
FY2009 compared to FY2008
Revenue
Our revenue increased by approximately S$5.2 million or 3.9% from approximately S$131.8 million inFY2008 to approximately S$137.0 million in FY2009. The increase was due mainly to an increase in ourequipment rental revenue, which was driven by the increase in demand for cranes as a result of theincreased construction and civil engineering activities in Singapore. This was offset by a decrease intrading revenue by approximately S$2.3 million or 2.2% from approximately S$105.9 million in FY2008 toapproximately S$103.6 million in FY2009.
Equipment rental business
Our equipment rental revenue increased by approximately S$7.4 million or 28.5% from approximatelyS$26.0 million in FY2008 to approximately S$33.4 million in FY2009.
The increase in our equipment rental revenue was due to an increase in demand for equipment rental byour rental customers. In FY2009, our equipment rental customers deployed our cranes at major projectssuch as Jurong Rock Cavern Underground Oil Storage, Marina Bay Financial Centre, Marina BayIntegrated Resort as well as Resort World at Sentosa.
In addition, the expansion of our equipment rental fleet and the increase in our aggregate lifting capacityalso contributed to the increase in equipment rental revenue from FY2008 to FY2009. We increased theaggregate lifting capacity of our crane rental fleet from 5,857 tons as at 30 June 2008 to 7,662 tons as at30 June 2009 and increased our aerial lifts rental fleet size from 174 units as at 30 June 2008 to 187units as at 30 June 2009.
Trading business
Our trading revenue decreased slightly by approximately S$2.3 million or 2.2% from approximatelyS$105.9 million in FY2008 to approximately S$103.6 million in FY2009.
The global financial crisis which started in the second half of 2008 limited the availability of financingworldwide. This, in turn, led to the reduction or postponement of expenditure on capital equipment, suchas cranes and aerial lifts, which resulted in the decrease in our trading revenue. We sold an aggregate of108 cranes and 89 aerial lifts in FY2009 as compared to 150 cranes and 135 aerial lifts in FY2008.Although we sold less cranes and aerial lifts in FY2009, we had sold more mid-to-high lifting capacitycranes which generally commanded higher selling prices.
Cost of sales, gross profit and gross profit margin
Our cost of sales increased in line with the increase in our revenue by approximately S$0.9 million or0.9% from approximately S$104.6 million in FY2008 to approximately S$105.5 million in FY2009. Ourgross profit increased by approximately S$4.3 million or 15.8% from approximately S$27.2 million inFY2008 to approximately S$31.5 million in FY2009. Our gross profit margin increased from approximately20.7% in FY2008 to approximately 23.0% in FY2009 due to higher revenue contribution from ourequipment rental business.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Equipment rental business
The cost of sales of our equipment rental business increased by approximately S$3.7 million or 21.8%from approximately S$17.0 million in FY2008 to approximately S$20.7 million in FY2009. This increasewas due mainly to the higher depreciation charges and maintenance costs as we expanded ourequipment rental fleet. In addition, direct labour costs also increased as we hired more crane operatorsand incurred more overtime charges due to higher crane utilisation by our customers. These were offsetby decreases in third party rental costs as we expanded our fleet of rental equipment which resulted in areduced need for rental of cranes and aerial lifts from third party equipment suppliers.
Gross profit from our equipment rental business increased by approximately S$3.8 million or 42.7% fromapproximately S$8.9 million in FY2008 to approximately S$12.7 million in FY2009.
Gross profit margin of our equipment rental business increased from approximately 34.4% in FY2008 to38.0% in FY2009. This increase was due mainly to:
(a) higher rental rates on our cranes and aerial lifts;
(b) direct operating overheads, such as operators salaries and maintenance costs, increasing at aproportionately slower rate as compared to revenue attributed to our shift in focus to mid-to-highlifting capacity cranes; and
(c) reduced rental of cranes and aerial lifts from third party equipment suppliers.
Trading business
Cost of sales of our trading business decreased slightly by approximately S$2.8 million or 3.2% fromapproximately S$87.6 million in FY2008 to approximately S$84.8 million in FY2009 due mainly to thedecrease in our trading revenue.
Gross profit from our trading business increased slightly by approximately S$0.5 million or 2.7% fromapproximately S$18.3 million in FY2008 to approximately S$18.8 million in FY2009.
Gross profit margin of our trading business increased from approximately 17.3% in FY2008 toapproximately 18.1% in FY2009.
Other income
Other income increased by approximately S$1.3 million from approximately S$0.8 million in FY2008 toapproximately S$2.1 million in FY2009. The increase was due mainly to a gain on foreign exchange ofapproximately S$1.0 million and an increase in servicing income of approximately S$0.3 million. Theforeign exchange gain in FY2009 arose due mainly to the marking-to-market of open forward currencycontracts as at the financial year-end, corresponding to those equipment that were scheduled forshipment by Japanese suppliers subsequent to the financial year-end. Our Company had entered intoJPY/SGD forward currency contracts to purchase JPY. JPY subsequently appreciated against SGD atyear end.
Selling expenses
Selling expenses decreased by approximately S$0.2 million, or 14.3% from approximately S$1.4 millionin FY2008 to approximately S$1.2 million in FY2009. This was due mainly to reduced freight,entertainment and commission expenses as a result of lower trading activities.
Administrative expenses
Administrative expenses increased by approximately S$1.4 million or 28.6%, from approximately S$4.9million in FY2008 to approximately S$6.3 million in FY2009 due mainly to an increase in staff costs aswe had hired more employees with the expansion of our equipment rental business.
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Other operating expenses
Other operating expenses decreased by S$0.5 million or 71.4% from approximately S$0.7 million inFY2008 to approximately S$0.2 million in FY2009. This was due mainly to the decrease in impairmentloss on available-for-sale investments by approximately S$0.7 million. Trade receivables of approximatelyS$65,000 were written off as they were no longer recoverable.
Finance costs
Finance costs increased by approximately S$0.1 million or 50.0% from approximately S$0.2 million inFY2008 to approximately S$0.3 million in FY2009 due mainly to increased hire purchase interestexpenses arising from higher finance lease liabilities during FY2009.
Share of results of associate
Our share of results of associate increased by S$0.1 million or 33.3% from approximately S$0.3 million inFY2008 to approximately S$0.4 million in FY2009, due to higher profits reported by SEPL less our shareof provision for doubtful debt of approximately S$0.9 million.
Profit before income tax
Profit before income tax for FY2009 increased by approximately S$4.8 million or 22.7% fromapproximately S$21.1 million in FY2008 to approximately S$25.9 million in FY2009. The improvement inprofit before income tax in FY2009 was due mainly to increases in equipment rental revenue and grossprofit based on the reasons stated above.
Income tax expense
Income tax expense remained relatively consistent at S$4.0 million in FY2008 and FY2009. This was duemainly to the increase in profit before income tax, offset by a decrease in the Singapore corporate taxrate from 18.0% in FY2008 to 17.0% in FY2009.
Profit for the year
Profit for the year increased by approximately S$4.8 million or 27.9% from approximately S$17.2 millionin FY2008 to approximately S$22.0 million in FY2009 due mainly to the increase in our profit beforeincome tax.
REVIEW OF FINANCIAL POSITION
Non-current Assets
As at 30 June 2009, our non-current assets amounted to approximately S$61.8 million or 65.0% of ourtotal assets of approximately S$95.0 million and comprised the following:
a) Property, plant and equipment of approximately S$59.6 million or 96.4% of our total non-currentassets, comprising mainly our existing premises at 26 Gul Road, cranes and aerial lifts rental fleet;
b) Investment in Associated Company, SEPL, of approximately S$1.4 million or 2.3% of our total non-current assets;
c) Available-for-sale investments comprising quoted shares of approximately S$0.8 million or 1.3% ofour total non-current assets; and
d) Other assets comprising club membership of approximately S$10,000.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
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Current Assets
As at 30 June 2009, our current assets amounted to approximately S$33.3 million or 35.0% of our totalassets of approximately S$95.0 million and comprised the following:
a) Cash and bank balances of approximately S$8.4 million or 25.2% of our total current assets;
b) Trade receivables of approximately S$12.8 million or 38.4% of our total current assets;
c) Other receivables and prepaid expenses of approximately S$1.6 million or 4.8% of our total currentassets;
d) Derivative financial instruments of approximately S$0.3 million or 0.9% of our total current assets,arising from marking to market on our forward foreign currencies contracts; and
e) Inventories comprising cranes and aerial lifts held for our trading business of approximately S$10.2million or 30.6% of our total current assets.
Non-current Liabilities
As at 30 June 2009, our non-current liabilities amounted to approximately S$8.5 million or 29.2% of ourtotal liabilities of approximately S$29.1 million and comprised the following:
a) Non-current portion of bank loan of approximately S$0.7 million or 8.2% of our total non-currentliabilities;
b) Non-current portion of finance leases to finance our purchases of cranes for our rental fleet andmotor vehicles of approximately S$4.4 million or 51.8% of our total non-current liabilities; and
c) Deferred tax liabilities of approximately S$3.4 million or 40.0% of our total non-current liabilities.
Current Liabilities
As at 30 June 2009, our current liabilities amounted to approximately S$20.5 million or 70.4% of our totalliabilities of approximately S$29.1 million and comprised the following:
a) Bills payable of approximately S$10.9 million or 53.2% of our total current liabilities;
b) Current portion of bank loan of approximately S$0.3 million or 1.5% of our total current liabilities;
c) Trade payables of approximately S$1.6 million or 7.8% of our total current liabilities;
d) Other payables of approximately S$2.6 million or 12.7% of our total current liabilities;
e) Current portion of finance leases of approximately S$3.9 million or 19.0% of our total currentliabilities; and
f) Income tax payable of approximately S$1.2 million or 5.9% of our total current liabilities.
The increase in bills payable of approximately S$5.7 million or 109.6% from approximately S$5.2 millionas at 30 June 2008 to approximately S$10.9 million as at 30 June 2009 arose due to the higher value ofoutstanding letters of credit as at 30 June 2009. These letters of credit were issued by banks on behalf ofour Group in relation to our Group’s purchase of equipment from suppliers. As at 30 June 2009, theseequipment had been shipped by the suppliers to our Group and were in transit.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
59
Shareholders’ Equity
As at 30 June 2009, our shareholders’ equity amounted to approximately S$65.9 million and comprisedthe following:
a) Share capital of approximately S$1.8 million;
b) Retained earnings of approximately S$64.4 million; and
c) Negative fair value reserve of approximately S$0.3 million.
The negative fair value reserve arose from marking to market available-for-sale investments comprisingquoted shares.
LIQUIDITY AND CAPITAL RESOURCES
Our operations have been funded through a combination of shareholders’ equity, cash generated fromour operations, long term finance lease liabilities and bank borrowings. The principal uses of these fundsare for working capital requirements and capital expenditures.
As at the Latest Practicable Date, our Shareholders’ equity is approximately S$76.2 million and our totalindebtedness is approximately S$34.7 million. Please refer to the section entitled “Capitalisation andIndebtedness” for more information on our indebtedness.
As at the Latest Practicable Date, our unused sources of liquidity are our cash and bank balances ofS$14.3 million and our unutilised banking facilities of approximately S$34.6 million. Our unutilised bankingfacilities comprise bank overdrafts of approximately S$6.5 million, letter of credit/trust receipt facilities ofapproximately S$13.0 million, hire purchase facilities of approximately S$13.0 million, banker guaranteeof approximately S$0.1 million and term loans of approximately S$2.0 million.
To the best of our Directors’ knowledge, we are not in breach of any of the terms and conditions orcovenants associated with any credit management or bank loan which could materially affect our financialposition and results, business operations or the investments of our Shareholders.
Our Directors are of the opinion that as at the date of lodgement of this Prospectus, after taking intoconsideration our present cash position, cash generated from our operations and available bankingfacilities, we have sufficient working capital to meet our present requirements.
We set out below a summary of our cash flows for FY2007, FY2008 and FY2009.
FY2007 FY2008 FY2009S$’000 S$’000 S$’000
Cash flows from operating activities 3,829 16,787 20,718
Cash flows from (used in) investing activities 108 (7,279) (4,210)
Cash flows used in financing activities (3,732) (9,004) (12,564)
Net increase in cash and cash equivalents 205 504 3,944
Cash and cash equivalents at beginning of year 3,686 3,891 4,395
Cash and cash equivalents at end of year 3,891 4,395 8,339
Cash and bank balances 7,644 7,498 8,430Less: Fixed deposits pledged to bank (2,459) (3,103) (91)Less: Bank overdraft (1,294) – –
3,891 4,395 8,339
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
60
FY2007
Cash flow from operating activities
In FY2007, we generated net cash from operating activities before working capital changes ofapproximately S$15.4 million. This was offset against the net increase in working capital of approximatelyS$10.1 million. The net increase in working capital was due to an increase in inventories of approximatelyS$10.5 million (due to purchases of equipment for our trading business), an increase in trade as well asother receivables and prepaid expenses of approximately S$5.4 million (due to increased businessactivities) and a decrease in trade payables of approximately S$0.1 million, offset by an increase in billspayable of approximately S$4.2 million and an increase in other payables of approximately S$1.7 million.
After the payment of income tax of approximately S$1.5 million, the net cash generated from operatingactivities was approximately S$3.8 million.
Cash flow from investing activities
We generated net cash of approximately S$0.1 million from investing activities. This was due to adecrease in fixed deposits pledged to the bank of approximately S$1.6 million, net proceeds from thesale and purchase of quoted investments of approximately S$1.1 million, proceeds from disposal ofproperty, plant and equipment of approximately S$0.3 million (due to the disposal of our rentalequipment) and interest received of approximately S$0.1 million, offset by the purchase of property, plantand equipment amounting to approximately S$2.5 million and the investment in our Associated Company,SEPL, of approximately S$0.5 million.
Cash flow used in financing activities
We utilised cash of approximately S$3.7 million in financing activities. This was due to the repayment ofobligations under finance leases of approximately S$2.6 million, the payment of dividends ofapproximately S$0.7 million, the repayment of bank loans of approximately S$0.2 million and thepayment of interest expenses of approximately S$0.2 million.
FY2008
Cash flow from operating activities
In FY2008, we generated net cash from operating activities before working capital changes ofapproximately S$27.5 million. This was offset against the net increase in working capital of approximatelyS$8.1 million. The working capital change was due to an increase in inventories of approximately S$7.4million (due to purchases of equipment for trading business), an increase in trade receivables ofapproximately S$2.1 million (due to increased business activities), a decrease in trade payables ofapproximately S$0.4 million and a decrease in other payables of approximately S$0.5 million, offset by adecrease in other receivables and prepaid expenses of approximately S$1.3 million and increase in billspayable of approximately S$1.0 million.
After the payment of income tax of approximately S$2.6 million, the net cash generated from operatingactivities was approximately S$16.8 million.
Cash flow used in investing activities
In FY2008, we used net cash of approximately S$7.3 million in investing activities. This was due topurchase of property, plant and equipment of approximately S$5.6 million, net purchase of investments ofapproximately S$1.6 million and an increase in fixed deposits pledged to the bank of approximately S$0.7million, offset by interest received of approximately S$0.2 million and proceeds from disposal of property,plant and equipment of approximately S$0.4 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
61
Cash flow used in financing activities
In FY2008, we utilised cash of approximately S$9.0 million in financing activities. This was due to therepayment of obligations under finance leases of approximately S$5.4 million, the payment of dividendsof approximately S$3.0 million, the payment of interest expenses of approximately S$0.4 million and therepayment of bank loans of approximately S$0.2 million.
FY2009
Cash flow from operating activities
In FY2009, we generated net cash from operating activities before working capital changes ofapproximately S$32.6 million. This was offset against the net increase in working capital of approximatelyS$8.1 million. The working capital change was due to an increase in inventories of approximately S$11.6million (due to purchases of equipment for trading business), an increase in trade receivables ofapproximately S$2.7 million (due to increase in business activities) and a decrease in other payables ofapproximately S$1.3 million, offset by an increase in bills payable of approximately S$5.8 million, adecrease in other receivables and prepaid expenses of approximately S$1.6 million and an increase intrade payables of approximately S$0.1 million.
After the payment of income tax of approximately S$3.8 million, the net cash generated from operatingactivities was approximately S$20.7 million.
Cash flow used in investing activities
In FY2009, we used net cash of approximately S$4.2 million in investing activities. This was due mainly topurchase of property, plant and equipment of approximately S$7.4 million, offset by a decrease in fixeddeposits pledged to the bank of approximately S$3.0 million, dividends received of approximately S$0.1million and interest received of approximately S$0.1 million.
Cash flow used in financing activities
In FY2009, we utilised net cash of approximately S$12.6 million in financing activities. This was due tothe repayment of obligations under finance leases of approximately S$6.1 million, the payment ofdividends of approximately S$6.0 million, the payment of interest expenses of approximately S$0.4million and the repayment of bank loans of approximately S$0.1 million.
CAPITAL EXPENDITURES AND DIVESTMENT
Capital expenditures in FY2007, FY2008, FY2009 and from 1 July 2009 to the Latest Practicable Dateare as follows:
1 July 2009to the Latest
FY2007 FY2008 FY2009 Practicable DateS$’000 S$’000 S$’000 S$’000
Capital Expenditures
Cranes and aerial lifts 17,300 25,381 35,973 18,212
Motor vehicles 327 1,136 213 71
Plant and equipment 94 77 190 20
Total 17,721 26,594 36,376 18,303
There has been no material divestment in FY2007, FY2008, FY2009 and from 1 July 2009 to the LatestPracticable Date.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
62
COMMITMENTS AND CONTINGENT LIABILITIES
Capital and Purchase Commitments
As at 30 June 2009 and the Latest Practicable Date, capital and purchase commitments contracted forbut not recognised in the financial statements are as follows:
As at As at Latest 30 June 2009 Practicable Date
S$’000 S$’000
Capital commitment relating to our equipment rental business 5,996 8,539
Purchase commitment relating to our trading business 3,273 15,907
9,269 24,446
As at the Latest Practicable Date, we have capital commitments relating to our equipment rental businessof approximately S$8.5 million (comprising six cranes) and purchase commitments relating to our tradingbusiness of approximately S$15.9 million (comprising 12 cranes and five aerial lifts). Capitalcommitments relating to our equipment rental business will be funded from our internal cash flows andunutilised hire purchase facilities. Purchase commitments relating to our trading business will be fundedfrom our internal cash flows. For more information on our purchase of equipment, please refer to thesection entitled “Business – Business Strategies and Future Plans” of this Prospectus.
Operating Lease Commitments
As at 30 June 2009, our Group has operating lease commitments as follows:
S$’000
Payable within one year 134
Payable in the second to fifth years inclusive 535
After five years 1,511
Total 2,180
Contingent Liabilities
As at the Latest Practicable Date, we do not have any material contingent liabilities.
FOREIGN EXCHANGE EXPOSURE
Accounting Treatment of Foreign Currencies
Our Group’s functional currency and reporting currency is in S$, but the accounting records of thecompanies in our Group are maintained in their respective functional currencies. Transactions incurrencies other than the functional currency during the period are translated into the functional currencyat exchange rates in effect at the time of the transactions. Assets and liabilities denominated incurrencies other than the functional currency at the balance sheet date are translated into the functionalcurrency in effect at the balance sheet date. Exchange gains and losses are dealt with in the incomestatement of our Group.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
63
Transaction
Our Group is subjected to foreign currency exposure on sales and purchases that are denominated in acurrency other than S$. The currencies giving rise to this exposure are JPY, US$, Euro and A$. OurGroup’s exposure to various currencies for FY2007, FY2008 and FY2009 is as follows:
FY2007 FY2008 FY2009% % %
Percentage of revenue denominated in
S$ 85.7 91.5 83.2
US$ 6.4 6.5 16.8
Euro 4.7 0.0 0.0
JPY 3.2 1.8 0.0
A$ 0.0 0.2 0.0
Total 100.0 100.0 100.0
Percentage of equipment purchases denominated in
S$ 3.3 9.0 5.3
JPY 96.7 84.9 79.2
US$ 0.0 1.3 7.7
Euro 0.0 4.8 5.4
A$ 0.0 0.0 2.4
Total 100.0 100.0 100.0
Our operating expenses are principally denominated in S$.
To the extent that our revenue and equipment purchases are not matched in the same currency and tothe extent that there are timing differences between invoicing and collections and/or payments, we will beexposed to adverse fluctuations of the various currencies against S$, which could adversely affect ourearnings.
We manage our foreign currency exposures through entering into short-term plain vanilla forwardcontracts as and when payments and receipts become due. Where necessary, the forward exchangecontracts are rolled over at maturity at market rates. When considering whether to enter into short-termforward contracts, we will consider our payment and receipt schedules as a whole.
Our net foreign exchange gain/(loss) for FY2007, FY2008 and FY2009 are as follows:
FY2007 FY2008 FY2009
Foreign exchange (loss) gain (S$’000) (366) 11 1,004
As a percentage of profit before tax (%) 3.2 0.1 3.9
As a percentage of sales (%) 0.4 – (1) 0.7
Note:-
(1) The percentage is not meaningful.
Our foreign exchange loss of approximately S$0.4 million in FY2007 and our foreign exchange gains ofapproximately S$11,000 in FY2008 and approximately S$1.0 million in FY2009 arose due to marking tomarket on our forward foreign currencies contracts.
Management of Foreign Currency Exposures
We constantly monitor our foreign currency exposures to ensure that the net exposure is at anacceptable level as well as to mitigate the adverse impact of the foreign exchange rate fluctuations on ourfinancial performance.
To manage our foreign currency exposure, we closely monitor the exchange rates between our majorforeign currencies against S$ on a daily basis. We also arrange for trade financing in foreign currenciesfor equipment purchases and may adjust the selling price of our equipment to take into account theprevailing rates of the exchange rates.
In accordance with our Group’s hedging policy, we only enter into plain vanilla forward currency contractsto hedge our foreign currency exposure. Forward currency contracts of value up to S$3 million must beapproved jointly by at least one Executive Director and the Group Financial Controller. Forward currencycontracts of value S$3 million and above must be approved by our Board.
We do not enter into forward currency contracts for speculative purpose. We adhere to guidelines set byour Board and our Audit Committee will review all hedging policies and guidelines established andimplemented by our Board.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL CONDITION
64
CAPITALISATION AND INDEBTEDNESS
65
The following table shows our capitalisation and indebtedness, and cash and cash equivalents:
(i) Based on the audited accounts of our Group as at 30 June 2009;
(ii) Based on the unaudited management accounts of our Group as at 15 December 2009; and
(iii) Based on the unaudited management accounts of our Group as at 15 December 2009, asadjusted to give effect to the FY2009 Final Dividend, which is the tax exempt (one-tier) finaldividend of S$3.0 million paid on 18 December 2009 in respect of FY2009, the FY2010 InterimDividend, which is the interim dividend of S$12.0 million declared on 21 December 2009 and paidprior to the registration of this Prospectus with the MAS in respect of FY2010, and the issue of88,000,000 New Shares pursuant to this Invitation and the application of the net proceeds from theissue of the New Shares.
You should read this in conjunction with the Consolidated Financial Statements set out in Appendix A(i)of this Prospectus and the section entitled “Management’s Discussion and Analysis of Results ofOperations and Financial Condition” of this Prospectus.
As adjustedfor the FY2009Final Dividend,
the FY2010 Interim Dividend
and the netproceeds from
the issue ofNew Shares
Audited as at Unaudited as at pursuant to(S$’000) 30 June 2009 15 December 2009 this Invitation
Cash and bank balances 8,430 14,336 20,890
Short-term indebtedness:
Bills payable 10,949 15,774 15,774Current portion of Bank Loan (secured) 304 304 304Finance Lease Liabilities (secured, guaranteed) 3,934 2,763 2,763Finance Lease Liabilities (secured, not guaranteed) – 5,347 5,347
15,187 24,188 24,188
Long-term indebtedness:
Non-current portion of Bank Loan (secured) 683 531 531Finance Lease Liabilities (secured, guaranteed) 4,490 2,214 2,214Finance Lease Liabilities (secured, not guaranteed) – 7,784 7,784
5,173 10,529 10,529
Total indebtedness 20,360 34,717 34,717
Total shareholders’ equity 65,949 76,171 82,725
Total capitalisation and indebtedness 86,309 110,888 117,442
Cash and bank balances
As at 30 June 2009 and 15 December 2009, our cash and bank balances amounted to approximatelyS$8.4 million and S$14.3 million respectively.
Indebtedness
As at 30 June 2009, we have total indebtedness of approximately S$20.4 million comprisingapproximately S$10.9 million of bills payable, approximately S$1.0 million of bank loan and approximatelyS$8.5 million of finance lease liabilities.
As at 15 December 2009, we have total indebtedness of approximately S$34.7 million comprisingapproximately S$15.8 million of bills payable, approximately S$0.8 million of bank loan and approximatelyS$18.1 million of finance lease liabilities.
Bills Payable
Bills payables, comprising letters of credit and trust receipts, are short-term financing offered to us bycertain financial institutions for the purchase of cranes for our trading business. Bills payables bearinterest of 1.3% per annum over the banks’ prevailing cost of funds or such other relevant rates asdetermined by the banks.
Bank Loan
The bank loan is a term loan granted by DBS Bank and is secured against our property at 26 Gul Road,Singapore 629346. The loan is denominated in S$ and bears interest at 2.3% per annum over theprevailing S$ SWAP Offer Rate and is repayable over 16 equal quarterly instalments commencing fromMay 2009.
Finance Lease Liabilities
Finance lease liabilities arise from the hire purchase financing we obtain from banks and financialinstitutions to finance the purchases of our cranes and aerial lifts for our equipment rental business. Thefinance lease liabilities bear interest rates ranging from 2.0% to 2.6% per annum. The scheduledpayments from the hire purchase agreements are typically payable monthly and upon the payment of allmonies under the hire purchase agreement, the ownership of the asset will be transferred to us. The hirepurchase agreements do not have renewal clauses and are secured against the underlying assets. Incertain instances, the hire purchase agreements are secured by personal guarantees from certainpersons including some of our Directors. Please refer to the section entitled “Interested PersonTransactions” of this Prospectus for more details of these personal guarantees.
CAPITALISATION AND INDEBTEDNESS
66
Dilution is defined herein as the amount by which the Invitation Price paid by subscribers of our Sharespursuant to this Invitation exceeds our NAV per Share after this Invitation.
The NAV of our Group as at 30 June 2009 was 13.71 cents per Share, after adjusting for the FY2009Final Dividend and the FY2010 Interim Dividend in respect of FY2010, and based on the pre-Invitationissued share capital of 371,640,000 Shares (“Adjusted NAV per share”).
Pursuant to this Invitation in respect of 88,000,000 New Shares at the Invitation Price, our Adjusted NAVper Share, after further adjusting for the estimated net proceeds from the issue of New Shares andbased on the post-Invitation issued and paid-up share capital of 459,640,000 Shares, would have been15.77 cents. This represents an immediate increase in Adjusted NAV per Share of 2.06 cents to ourexisting Shareholders and an immediate dilution in Adjusted NAV per Share of 10.23 cents orapproximately 39.3% to new investors.
The following table illustrates the dilution per Share:
Cents
Invitation Price 26.00
Adjusted NAV per Share as at 30 June 2009, based on the pre-Invitation issued share
capital of 371,640,000 Shares 13.71
Increase in Adjusted NAV per Share attributable to existing shareholders 2.06
Adjusted NAV per Share after this Invitation 15.77
Dilution in Adjusted NAV per Share to new public investors 10.23
As the Over-allotment Option is granted by the Vendor, the exercise of the Over-allotment Option will notaffect our Adjusted NAV per Share.
The following table summarises the total number of Shares acquired by our existing Shareholder duringthe period of three years prior to the date of lodgement of this Prospectus, the total consideration and theaverage effective cash cost per Share to our existing Shareholder and to our new public investorspursuant to this Invitation:
Number of Total Average effective Shares consideration cost per Share
(S$) (cents)
SHH(1) 371,640,000 73,980,000 19.9
New public investors 88,000,000(2) 22,880,000 26.0
Notes:-
(1) The sole shareholder of SHH is TFSA. The shareholders of TFSA are SEAVI and TALH, which hold 70.0% and 30.0%respectively of its total issued share capital. Accordingly, the effective cash cost per Share to SEAVI, TALH and TFSA inconnection with the acquisition of Shares by SHH was 19.9 cents. Please refer to footnotes (3), (4) and (5) in the sectionentitled “General Information on Our Group – Shareholders” of this Prospectus for more information on TFSA, SEAVI andTALH.
(2) Excludes purchase of Vendor Shares.
DILUTION
67
The dividends paid by our Company in respect of the last three financial years are as follows:
FY2007 FY2008 FY2009Total Per Share Total Per Share Total Per Share
S$’000 S$ S$’000 S$ S$’000 S$
Our Company
SHHM 743 0.40(1) 3,019 1.63(1) 9,000(2) 4.84(1)
Notes:-
(1) The dividend per share is calculated based on the issued share capital of 1,858,200 Shares, before the Sub-Division and thisInvitation.
(2) Includes the FY2009 Final Dividend of S$3.0 million which was paid on 18 December 2009.
Save as disclosed above, no other dividends have been paid or proposed by our Company or oursubsidiaries in respect of the last three financial years.
Our Company had on 21 December 2009 declared the FY2010 Interim Dividend and intends to pay thesame prior to the registration of this Prospectus with the MAS.
The Vendor intends to use the FY2009 Final Dividend, which is the tax exempt (one-tier) final dividend ofS$3.0 million paid on 18 December 2009 in respect of FY2009, and the FY2010 Interim Dividend, whichis the interim dividend of S$12.0 million declared on 21 December 2009 and paid prior to the registrationof this Prospectus with the MAS in respect of FY2010, to partially repay the Leverage Loan. Please referto the section entitled “Interested Person Transactions” of this Prospectus for more information about theLeverage Loan.
The dividends that our Directors may recommend or declare in respect of any particular financial year orperiod will be subject to the factors outlined below as well as any other factors deemed relevant by ourBoard of Directors (collectively referred to as “Dividend Factors”):
� the level of our cash and retained earnings;
� our actual and projected financial performance;
� our projected levels of capital expenditure and other investment plans;
� the dividend yield of similar companies; and
� restrictions on payment of dividends imposed on us by our financing arrangements (if any).
We currently do not have a formal dividend policy. Any final dividends paid by us must be approved by anordinary resolution of our Shareholders at a general meeting and must not exceed the amountrecommended by our Directors. Our Directors may, without the approval of our Shareholders, alsodeclare an interim dividend. We must pay all dividends out of profits or pursuant to the Companies Act.
Dividends payable by our Company on our Shares will be declared in Singapore dollars and paid toshareholders in Singapore dollars.
For information relating to taxes payable on dividends, please see Appendix B of this Prospectus on“Taxation”.
Our foreign subsidiaries will declare and pay cash dividends to our Company, if any, in the currencies oftheir respective countries of incorporation, which will be converted into S$ or US$.
For FY2010 and FY2011, subject to the Dividend Factors outlined above, our Directors intend torecommend and distribute at least 20% of our net profit attributable to Shareholders as dividends.
DIVIDEND POLICY
68
Investors should note that the foregoing is merely a statement of our present intention and shall notconstitute a legally binding obligation on our Company or legally binding statement in respect of ourprofitability or ability to pay dividends. There can be no assurance that dividends will be paid in the futureor of the amount or timing of any dividends that will be paid in the future. The form, frequency andamount of future dividends on our Shares will depend on the Dividend Factors and any other factorswhich our Directors may deem appropriate.
DIVIDEND POLICY
69
SHARE CAPITAL
Our Company was incorporated in Singapore on 30 March 1981 under the Companies Act as a privatecompany limited by shares, under the name of “Sin Heng Heavy Machinery Pte. Ltd.”. On 21 December2009 our Company changed its name to “Sin Heng Heavy Machinery Limited” in connection with itsconversion to a public company limited by shares.
As at the date of incorporation, the issued and paid-up share capital of our Company was S$2comprising two Shares.
As at the Latest Practicable Date, the issued and paid-up capital of our Company was S$1,858,200comprising 371,640,000 Shares.
At the extraordinary general meetings held on 21 December 2009, our sole Shareholder approved, interalia, the following:-
(a) the conversion of our Company into a public company limited by shares and the consequentialchange of name to “Sin Heng Heavy Machinery Limited”;
(b) the adoption of a new set of Articles of Association;
(c) the Sub-Division;
(d) the issue of the New Shares pursuant to this Invitation, which when allotted, issued and fully paid,will rank pari passu in all respects with the existing issued Shares;
(e) the adoption of the SHHM ESOS;
(f) that authority be given to our Directors, pursuant to Section 161 of the Companies Act, to:
(i) (aa) issue Shares whether by way of rights, bonus or otherwise; and/or
(bb) make or grant offers, agreements or options (collectively, “Instruments”) that might orwould require Shares to be issued during the continuance of this authority orthereafter, including but not limited to the creation and issue of (as well asadjustments to) warrants, debentures or other instruments convertible into Shares,
at any time and upon such terms and conditions and for such purposes and to such personsas our Directors may, in their absolute discretion, deem fit; and
(ii) issue Shares in pursuance of any Instruments made or granted by our Directors while suchauthority was in force (notwithstanding that such issue of Shares pursuant to theInstruments may occur after the expiration of the authority contained in this resolution),
Provided that:-
(iii) the aggregate number of Shares issued pursuant to such authority (including the Shares tobe issued in pursuance of Instruments made or granted pursuant to such authority), doesnot exceed 50.0% of the Post-Invitation Issued Share Capital, and provided further thatwhere Shareholders with registered addresses in Singapore are not given the opportunity toparticipate in the same on a pro-rata basis (“non pro-rata basis”), then the Shares to beissued under such circumstances (including the Shares to be issued in pursuance ofInstruments made or granted pursuant to such authority) shall not exceed 20.0% of the Post-Invitation Issued Share Capital;
(iv) the 50.0% limit in paragraph (iii) above may be increased to 100.0% for issues of Sharespursuant to this resolution by way of a renounceable rights issue where Shareholders withregistered addresses in Singapore are given the opportunity to participate in the same on apro-rata basis (“Renounceable Rights Issue”); and
GENERAL INFORMATION ON OUR GROUP
70
(v) (unless revoked or varied by our Company in general meeting) the authority so conferredshall continue in force until the conclusion of the next annual general meeting of ourCompany or the date by which the next annual general meeting of our Company is requiredby law to be held, whichever is the earlier.
For the purposes of this resolution, the “Post-Invitation Issued Share Capital” shall mean the totalnumber of issued Shares of our Company (excluding treasury shares) immediately after thisInvitation, after adjusting for: (i) new Shares arising from the conversion or exercise of anyconvertible securities; (ii) new Shares arising from exercising share options or vesting of shareawards outstanding or subsisting at the time such authority is given, provided the options orawards were granted in compliance with the Listing Manual; and (iii) any subsequent bonus issue,consolidation or sub-division of Shares; and
(g) that:-
(i) subject to and conditional upon the passing of the resolution referred to in paragraph (f)above, approval be given to our Directors at any time to issue Shares (other than on a pro-rata basis to Shareholders) at an issue price for each Share which shall be determined byour Directors in their absolute discretion provided that such price shall not represent adiscount of more than 20.0% to the weighted average price of a Share for trades done onthe SGX-ST (as determined in accordance with the requirements of the SGX-ST); and
(ii) (unless revoked or varied by our Company in general meeting) the authority so conferredshall continue in force until the conclusion of the next annual general meeting of ourCompany or the date by which the next annual general meeting of our Company is requiredby law to be held, whichever is the earlier.
As at the date of this Prospectus, our Company has only one class of shares, being ordinary shares. Therights and privileges of our Shares are stated in our Articles of Association. Save for the ESOS Shares,there is no founder, management or deferred shares reserved for issuance for any purpose. Save for theSHHM ESOS, no person has been, or is entitled to be, given an option to subscribe for or purchase anysecurities of our Company or any of our subsidiaries. There are no Shares that are held by or on behalfof our Company or by any of our subsidiaries.
As at the date of this Prospectus, the issued and paid-up share capital of our Company is S$1,858,200comprising 371,640,000 Shares. Upon the allotment and issue of the New Shares pursuant to thisInvitation, the resultant issued and paid-up share capital of our Company will be S$23,939,951comprising 459,640,000 Shares.
Details of the changes in the issued and paid-up share capital of our Company in the last three yearsbefore the Latest Practicable Date and immediately after this Invitation are as follows:-
Resultant issuedand paid-up
Number of Shares share capital(S$)
Issued and paid-up Shares as at 30 June 2009 1,858,200 1,858,200
Sub-Division 371,640,000 1,858,200
Pre-Invitation issued and paid-up share capital 371,640,000 1,858,200
Issue of New Shares pursuant to this Invitation 88,000,000 22,081,751
Post-Invitation issued and paid-up share capital 459,640,000 23,939,951(1)
Note:-
(1) The share capital is net of estimated expenses payable by our Company in connection with this Invitation, such treatmentbeing in accordance with applicable accounting standards.
GENERAL INFORMATION ON OUR GROUP
71
The shareholders’ equity of our Company as at 30 June 2009, and after adjustments to reflect thisInvitation are set forth below.
As at After this30 June 2009 Invitation
(S$) (S$) Shareholders’ equity
Share capital 1,858,200 23,939,951(1)
Retained earnings 64,423,138 48,895,219(2)
Fair value reserve (331,692) (331,692)
Total shareholders’ equity 65,949,646 72,503,478
Notes:-
(1) The share capital is net of estimated expenses payable by our Company in connection with this Invitation, such treatmentbeing in accordance with applicable accounting standards.
(2) After adjustment for the FY2009 Final Dividend, the FY2010 Interim Dividend and the estimated expenses payable by ourCompany in connection with this Invitation, such treatment being in accordance with applicable accounting standards.
GENERAL INFORMATION ON OUR GROUP
72
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SUBSIDIARIES AND ASSOCIATED COMPANY
The details of our subsidiaries and associated company as at the date of this Prospectus are as follows:-
Issued and EffectivePrincipal paid-up interest
Date / place of place of Principal capital/ held by ourName incorporation business activities charter capital Company
Subsidiaries
SHAL 23 July 1979 / Singapore Singapore Rental of aerial lifts S$100,000 100.0%
SHMSB 3 April 2009 / Malaysia Malaysia Rental of cranes RM50,000 100.0%and aerial lifts
SHV(1) 5 January 2009 / Vietnam Vietnam Rental of cranes US$60,000 100.0%and aerial lifts
Associated Company
SEPL(2) 28 June 2006 / Singapore Singapore Provision of S$1,000,000 50.0%geotechnicengineering
services
Notes:-
(1) SHV has been issued with an Investment Certificate which sets the operation term of the company to be 30 years from 5January 2009.
(2) We do not have management control over SEPL. The remaining 50.0% interest in SEPL is held by Mr Kim Jong Seok, a thirdparty who is not related to our Directors or Substantial Shareholders. Mr Kim manages and oversees the operations of SEPL.
None of our subsidiaries or Associated Company is listed on any stock exchange.
GENERAL INFORMATION ON OUR GROUP
74
SHAREHOLDERS
Our Directors and Shareholders and their respective shareholdings immediately before and after thisInvitation are set out below:-
Before this Invitation After this InvitationDirect Interest Deemed Interest Direct Interest Deemed Interest
Number Number Number Numberof Shares % of Shares % of Shares % of Shares %
Directors
Derrick Lee Meow Chan(4) – – 371,640,000 100.0 – – 291,640,000 63.4
Tan Cheng Soon Don(1) – – – – – – – –
Tan Cheng Guan(1) – – – – – – – –
Tan Cheng Kwong(1) – – – – – – – –
Leong Wing Kong – – – – – – – –
Teo Yi-Dar – – – – – – – –
Yeo Yun Seng – – – – – – – –
Tan Keh Yan, Peter – – – – – – – –
Renny Yeo Ah Kiang – – – – – – – –
Shareholders
SHH(2) 371,640,000 100.0 – – 291,640,000 63.4 – –
TFSA(3) – – 371,640,000 100.0 – – 291,640,000 63.4
SEAVI(3),(4) – – 371,640,000 100.0 – – 291,640,000 63.4
TALH(3),(5) – – 371,640,000 100.0 – – 291,640,000 63.4
Public – – 168,000,000 36.6
371,640,000 100.0 459,640,000 100.0
Notes:-
(1) Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong are brothers.
(2) SHH is our Vendor and its sole shareholder is TFSA. The Directors of SHH are Mr Hoe Boon Kwee, our non-executiveChairman Mr Derrick Lee Meow Chan and our Non-Executive Director Mr Teo Yi-Dar.
(3) TFSA is an investment holding company incorporated under the laws of the BVI and owns the entire issued share capital inSHH which comprises one ordinary share of par value S$1.00. TFSA’s authorised share capital comprises 50,000 ordinaryshares with par value of S$1.00 for each ordinary share and its paid-up share capital is 10,000 ordinary shares with par valueof S$1.00 each. The shareholders of TFSA are SEAVI and TALH, which hold 70.0% and 30.0% respectively of its total issuedshare capital. On 18 July 2008, SEAVI and TALH entered into a shareholders agreement to govern their relationship inrespect of TFSA. The shareholders agreement, inter alia, provides that voting rights and board representation of SEAVI andTALH are in proportion to their respective shareholdings in TFSA. The Directors of TFSA are Mr Tan Keng Boon, our non-executive Chairman Mr Derrick Lee Meow Chan, our Non-Executive Director Mr Teo Yi-Dar and our Managing Director MrTan Cheng Soon Don. For the purposes of Section 4 of the SFA, TFSA is deemed to be interested in the Shares held bySHH.
(4) SEAVI is an investment holding company incorporated in the BVI on 29 August 2007. The Directors of SEAVI are Mr DerrickLee Meow Chan and Mr Hoe Boon Kwee. It is a collective investment holding company with the beneficial interests held bySEAVI Advent Equity IV Fund Limited Partnership, SEAVI Advent Asia Fund GmbH & Co. Parallel-KG, Fortis Private EquityAsia Fund N.V., SEAVI Advent Equity V Trust, SEAVI Advent Equity V (Cayman) L.P. and Ocean Private Equity Fund II Ltd(collectively known as the “SEAVI Advent Funds”). The SEAVI Advent Funds are private equity funds managed by SEAVIAdvent Corporation Limited (“SEAVI Advent”). SEAVI Advent is an Asian based private equity investor. SEAVI Advent is thegeneral partner of the SEAVI Advent Funds and exercises management and control over SEAVI Advent Funds.
GENERAL INFORMATION ON OUR GROUP
75
Consequently, SEAVI Advent exercises sole voting and investment power with respect to all shares held by the SEAVI AdventFunds in SEAVI. The Directors of SEAVI Advent are Tan Keng Boon and Derrick Lee Meow Chan. The shareholders of SEAVIAdvent comprise senior staff of SEAVI Advent, including Mr Tan Keng Boon and Mr Derrick Lee Meow Chan who each ownindirectly, through an investment holding company more than 25% of the issued and paid up capital of SEAVI Advent. Theremaining shareholders of SEAVI Advent hold not more than 10% each. The shareholders of SEAVI Advent are not related toeach other. For the purposes of Section 4 of the SFA, SEAVI Advent, Mr Tan Keng Boon and Mr Derrick Lee Meow Chan aredeemed to be interested in the Shares held by SHH.
(5) TALH is an investment holding company incorporated in Singapore. TALH has an issued and paid-up share capitalcomprising 12,000,000 ordinary shares. The shareholders of TALH are Mr Tan Ah Lye, Mr Tan Cheng Soon Don, Mr TanCheng Guan, Mr Tan Cheng Kwong (together with Mr Tan Cheng Soon Don and Mr Tan Cheng Guan, the “ExecutiveDirectors”), Mdm Tan Hwee Keow, Mdm Tan Bee Choo, Mr Tan Ah Huat, Mr Tan Seng Chong and Mr Tan Seng Kiat, eachholding 2,000,000 shares (16.7%), 2,000,000 shares (16.7%), 2,000,000 shares (16.7%), 2,000,000 shares (16.7%),1,600,000 shares (13.3%), 1,200,000 shares (10.0%), 400,000 shares (3.3%), 400,000 shares (3.3%) and 400,000 shares(3.3%) of the issued share capital of TALH respectively. Mr Tan Ah Lye and Mdm Tan Hwee Keow are the parents of ourExecutive Directors. Mdm Tan Bee Choo is the sister of our Executive Directors. Mr Tan Ah Huat, Mr Tan Seng Chong and MrTan Seng Kiat are relatives of our Executive Directors. The Directors of TALH are Mr Tan Ah Lye, our Managing Director MrTan Cheng Soon Don, our Executive Directors Mr Tan Cheng Guan and Mr Tan Cheng Kwong. Save for the ExecutiveDirectors, none of the shareholders of TALH are currently employed by our Group. For the purposes of Section 4 of the SFA,TALH is deemed to be interested in the Shares held by SHH.
GENERAL INFORMATION ON OUR GROUP
76
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VENDOR
SHH is a company incorporated under the laws of Bermuda and having its registered office at ClarendonHouse, 2 Church Street, Hamilton HM 11, Bermuda, with an authorised share capital of S$12,000 dividedinto 12,000 ordinary shares of S$1.00 each. It has an issued and paid-up share capital of S$1.00 dividedinto one ordinary share of S$1.00 each. It currently has one shareholder, TFSA. Please see footnote (3)in the section entitled “General Information on Our Group – Shareholders” of this Prospectus for moreinformation on TFSA.
The number of Vendor Shares that the Vendor will offer pursuant to this Invitation is set out below:-
Shares held No. of SharesShares held immediately before Vendor Shares held after this
immediately before this Invitation, after offered pursuant Invitation, beforethis Invitation the Sub-division to this Invitation Over-allotment
% of % of % of % ofpre pre pre post
-Invitation -Invitation -Invitation -InvitationNo. of share No. of share No. of share No. of share
Name of Vendor Shares capital Shares capital Shares capital Shares capital
SHH 1,858,200 100.0 371,640,000 100.0 80,000,000 21.5 291,640,000 63.4
As a security interest charged to DBS Bank to secure the Leverage Loan, SHH had, on 18 July 2008,charged its entire shareholding interest in 1,858,200 Shares (the “Charged Shares”) in favour of DBSBank. The Vendor Shares form part of the Charged Shares.
On 22 December 2009, DBS Bank agreed to discharge the Security Interests to the extent that suchSecurity Interests secure the indebtedness of SHH under the Leverage Loan, subject, inter alia, to theconditions as follows:-
(a) SHH shall provide a letter of undertaking that it will re-charge the securities in our Companyprovided by it back to DBS Bank should the listing of our Company not take place within fivemonths from the date of the eligibility-to-list letter issued by SGX-ST;
(b) SHH shall provide a letter to DBS Bank as the Receiving Banker instructing DBS Bank to apply theproceeds received from the sale of the Vendor Shares first towards the settlement of the LeverageLoan, prior to remittance of funds to other designated accounts of SHH for any other applicationsincluding but not limited to any fees or expenses payable with respect to the listing of ourCompany; and
(c) SHH shall raise no less than outstanding amount owing on the Leverage Loan from the sale of theVendor Shares.
Please refer to the section entitled “Interested Person Transactions – Past Transactions” of thisProspectus for more details.
On the same date as the execution of the Management Agreement, the Placement Agreement and theUnderwriting Agreement (please see the section entitled “Management, Underwriting and PlacementArrangements” of this Prospectus on the description of the Management Agreement, PlacementAgreement and the Underwriting Agreement), DBS Bank will discharge the Security Interests to theextent that such Security Interests secure the indebtedness of SHH under the Leverage Loan pursuant toseveral Deeds of Discharge to be executed by DBS Bank.
SHH and DBS Bank agreed that the proceeds from the sale of the Vendor Shares shall be utilisedtowards the full settlement of all outstanding amounts of the Leverage Loan, the interests accrued on theLeverage Loan, and such other fees and expenses payable to DBS Bank related to the Leverage Loan.Any balance of the proceeds arising from the sale of the Vendor Shares shall be remitted to the Vendor.
GENERAL INFORMATION ON OUR GROUP
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DBS Bank is also the Joint Issue Manager, Underwriter, Placement Agent and Receiving Banker for thisInvitation. Through its private equity arm, DBS Bank has invested in two of the SEAVI Advent Fundswhich have beneficial interest in SEAVI. DBS Bank is a passive investor in these funds which are entirelymanaged by SEAVI Advent. Please see the section entitled “Shareholders” of this Prospectus for furtherdetails.
Save as disclosed above and in this Prospectus, there are no other relationships among our Directorsand Substantial Shareholders.
The Shares held by our existing Shareholder does not carry different voting rights from the New Shares.
Save as disclosed above and to the extent known to us, our Company is not directly or indirectly ownedor controlled by another corporation, any government or other natural or legal person whether severallyor jointly.
There is no known arrangement, the operation of which may, at a subsequent date, result in a change inthe control of our Company.
Significant Changes in the Percentage of Ownership
Save as disclosed below, there are no significant changes in the percentage of ownership of ourCompany held by our Directors and Substantial Shareholders in the last three years prior to the LatestPracticable Date:-
Change in %Number of shareholding
Date/Event Shares in our Company(3)
Directors
Tan Cheng Soon Don(1) 18 July 2008/Sale of Shares 180,000 9.7%
Tan Cheng Guan(1) 18 July 2008/Sale of Shares 187,500 10.1%
Tan Cheng Kwong(1) 18 July 2008/Sale of Shares 180,000 9.7%
Substantial Shareholders
SHH(2) 18 July 2008/Acquisition of Shares 1,858,200 100.0%
TFSA 18 July 2008/Acquisition of Shares 1,858,200 100.0%
SEAVI(1) 18 July 2008/Acquistion of Shares 1,858,200 100.0%
TALH(1) 18 July 2008/Acquistion of Shares 1,858,200 100.0%
Notes:-
(1) Please refer to footnotes (3), (4) and (5) under the section entitled “Shareholders” of this Prospectus for further details.
(2) SHH is the Vendor. Please see the write up on the Vendor in the section entitled “General Information on Our Group –Vendor” of this Prospectus for further information.
(3) The percentages are calculated based on the issued and paid capital of 1,858,200 Shares as at 18 July 2008.
GENERAL INFORMATION ON OUR GROUP
79
MORATORIUM
To demonstrate their commitment to our Group, our Controlling Shareholder, SHH, which holds291,640,000 Shares, representing approximately 63.4% of our enlarged issued and paid-up share capitalafter this Invitation (assuming that the Over-allotment Option is not exercised), has undertaken that, for aperiod of six months commencing from the date of admission of our Company to the Official List of SGX-ST, it will not, without the prior written consent of the Joint Issue Managers, offer, pledge, sell, contract tosell, sell any option or contract to purchase, grant any option, right or warrant to purchase, lend, enterinto any contract that will directly or indirectly constitute or will be deemed as a disposal of, hypothecateor encumber or otherwise transfer or dispose of, directly or indirectly, any part of its interests in ourCompany. In connection with the Over-allotment Option, SHH will lend up to 16,800,000 Shares to DBSBank. The restrictions above do not apply to the Shares lent to DBS Bank pursuant to the grant of theOver-allotment Option by SHH to DBS Bank in connection with this Invitation and the transfer of Sharesfrom SHH to DBS Bank pursuant to the Securities Lending Agreement, provided that these restrictionsshall apply to the Shares returned to SHH pursuant to the Securities Lending Agreement. Please refer tothe section entitled “Plan of Distribution” of this Prospectus for further details.
TFSA, which owns the entire issued and paid-up share capital of SHH, has undertaken that for a periodof six months commencing from the date of admission of our Company to the Official List of SGX-ST, itwill not, without the prior written consent of the Joint Issue Managers, offer, pledge, sell, contract to sell,sell any option or contract to purchase, grant any option, right or warrant to purchase, lend, enter into anycontract that will directly or indirectly constitute or will be deemed as a disposal of, hypothecate orencumber or otherwise transfer or dispose of, directly or indirectly, any part of its interests in SHH.
Each of SEAVI and TALH, which holds 70.0% and 30.0% of the issued and paid-up share capital of TFSArespectively, has undertaken that for a period of six months commencing from the date of admission ofour Company to the Official List of SGX-ST, it will not, without the prior written consent of the Joint IssueManagers, offer, pledge, sell, contract to sell, sell any option or contract to purchase, grant any option,right or warrant to purchase, lend, enter into any contract that will directly or indirectly constitute or will bedeemed as a disposal of, hypothecate or encumber or otherwise transfer or dispose of, directly orindirectly, any part of its interests in TFSA.
SEAVI Advent, the general partner of the SEAVI Advent Funds which collectively hold the entirebeneficial interests in the share capital of SEAVI, has undertaken that for a period of six monthscommencing from the date of admission of our Company to the Official List of SGX-ST, it will not, withoutthe prior written consent of the Joint Issue Managers, offer, pledge, sell, contract to sell, sell any option orcontract to purchase, grant any option, right or warrant to purchase, lend, enter into any contract that willdirectly or indirectly constitute or will be deemed as a disposal of, hypothecate or encumber or otherwisetransfer or dispose of, directly or indirectly, any part of SEAVI Advent Funds’ interests in SEAVI. Pleasesee footnote (4) in the section entitled “General Information on Our Group - Shareholders” of thisProspectus for further details.
Each of Mr Tan Ah Lye, Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr Tan Cheng Kwong, Mdm TanHwee Keow, Mdm Tan Bee Choo, Mr Tan Ah Huat, Mr Tan Seng Chong and Mr Tan Seng Kiat who holds16.7%, 16.7%, 16.7%, 16.7%, 13.3%, 10.0%, 3.3%, 3.3% and 3.3% respectively of the issued and paid-up capital of TALH respectively, has undertaken that for a period of six months commencing from thedate of admission of our Company to the Official List of SGX-ST, he or she will not, without the priorwritten consent of the Joint Issue Managers, offer, pledge, sell, contract to sell, sell any option or contractto purchase, grant any option, right or warrant to purchase, lend, enter into any contract that will directlyor indirectly constitute or will be deemed as a disposal of, hypothecate or encumber or otherwise transferor dispose of, directly or indirectly, any part of his or her interests in TALH.
The period of moratorium as set out above complies with Rule 229 of the Listing Manual.
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HISTORY
81
HISTORY
Our history can be traced back to 1969 when our founder Mr Tan Ah Lye started his crane servicebusiness as a sole proprietor. He commenced business as a crane operator and owner with only onecrane. Over the next 12 years, Mr Tan Ah Lye built up his contacts within Singapore’s constructionindustry and was able to grow his business and his fleet of cranes which were primarily used for theequipment rental business. During those times, Mr Tan Ah Lye commenced working on infrastructureprojects, including the Newton Circle flyover in 1980, which is one of the first dual carriage flyovers inSingapore. Mr Tan Ah Lye also carried out the trading of our used cranes to local customers as part ofhis fleet renewal efforts.
On 30 March 1981, Mr Tan Ah Lye and an associate decided to incorporate our Company and hetransferred his crane business to our Company. At that time, our Company’s principal business was toprovide heavy lifting services to construction companies in Singapore. We operated out of a premise atSyed Alwi Road, while our yard which housed our cranes was at Kwong Min Road. Mr Tan Ah Lye’sassociate sold his interest in our Company to Mr Tan Ah Lye in June 1986, in order to pursue his owninterest.
In the 1980s, we started to build our reputation in the infrastructure sector by being involved in majorexpressway projects in Singapore. Some of the prominent projects that we were involved in the 1980sinclude the Ayer Rajah Expressway and Central Expressway. More details of the major projects that wehad been involved in during the 1981 to 1989 period are set out in the section entitled “Our EquipmentRental Business” of this Prospectus.
In December 1985, as our business grew, we decided to acquire a 50.0% stake in SHAL, a companywhich had a lease over our current 26 Gul Road premises. This enabled us to establish a larger yard tohouse our cranes. Upon the establishment of the yard at the Gul Road premises, we were able togradually shift our cranes from our Kwong Min Road premises to the Gul Road premises, while the restof our operations continued to operate from our original location in Syed Alwi Road. We acquired theremaining 50.0% stake in SHAL in November 1994.
In 1987, we were one of the first to register all terrain cranes, with the then Registry of Vehicles for useon Singapore roads. Previously all terrain cranes could not be driven on Singapore roads and thereforetheir usage was restricted. Unlike other cranes that use the lattice boom and hence require significanttime and manpower to assemble before it could be used, all terrain cranes require less assembly workbefore use and hence customers are able to benefit from quicker turnaround service. Being able to offerall terrain cranes that could be driven on public roads gave us an advantage as it allowed us to avail ourcustomers with an additional lifting equipment option. Being one of the first to do so also enabled us toestablish a foothold as one of the main equipment rental suppliers of all terrain cranes in Singapore. Theall terrain crane is now a commonly used lifting equipment in Singapore.
In 1989, our Managing Director Mr Tan Cheng Soon Don joined our Group. He started in various juniorpositions and worked his way up from a crane operator to a supervisor and eventually to being ourManaging Director.
In the early 1990s, we carried out our first overseas crane trade, selling used cranes to customers inIndonesia and Malaysia. It was another important milestone for us as it signalled our entry into theinternational crane trading market. Since then we have built up a network of trading customers spanningUSA, Europe, the Middle East, Asia, Australia and Africa. These customers in Indonesia and Malaysiahave continued to purchase cranes from us.
Our Executive Directors Mr Tan Cheng Guan and Mr Tan Cheng Kwong joined our Group in 1993 and1995 respectively. They also started off in junior positions and worked their way up to their currentpositions as Executive Directors of our Company.
HISTORY
82
In the 1990s, we continued to be involved in large scale infrastructure projects as well as governmentand private sector projects. During this period, we also started to make some initial in-roads into the oiland gas sector. Some of the more prominent projects that we were involved in during the 1990s, includedthe reclamation of Jurong Island, Petrochemical Corporation of Singapore’s petrochemical complex, thePan Island Expressway and the Hewlett Packard factory. More details of the major projects that we hadbeen involved in from 1990 to 1999 are set out in the section entitled “Our Equipment Rental Business” ofthis Prospectus.
In 1996, our Group made its foray into the aerial lifts business when we purchased our first boom-liftsand scissor lifts, which allowed us to commence our aerial lifts business. This business is currentlyundertaken by our subsidiary, SHAL. As at the Latest Practicable Date, we have 213 aerial lifts.
Through the prudent management of our finances, we were able to successfully weather the Asianfinancial crisis during the period between 1997 to 1998 and continued to steadily expand our equipmentrental fleet. This was also possible because we were involved mainly in the infrastructure sector inSingapore which was largely unaffected by the economic downturn during this crisis.
In 2001, we completed construction of our new headquarters at 26 Gul Road and consolidated ouroperations at the Gul Road premises. We then moved out from the premises at Syed Alwi and KwongMing Road. Mr Tan Ah Lye started his succession planning and proceeded to allocate moreresponsibilities to each of Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong inthe running of our business.
By 2004, Mr Tan Cheng Soon Don took over the management of our Group from Mr Tan Ah Lye and wasappointed the Managing Director of our Company in 2008. Our Group’s business was also restructuredinto three business segments, namely the crane rental business, the crane trading business and theaerial lift business which are currently run by our Executive Directors, Mr Tan Cheng Soon Don, Mr TanCheng Guan and Mr Tan Cheng Kwong respectively. Mr Tan Ah Lye stepped down from our Board in July2008.
In the last decade, we continued to be involved in large scale infrastructure projects, oil and gas projectsas well as government and private sector projects. Some of the more prominent projects we were or arestill involved in during the last decade include the Kallang – Paya Lebar Expressway, the Marina BayIntegrated Resort, the Singapore Flyer and the Marina Coastal Expressway. More details of our majorprojects we have been involved in during 2000 to current are set out in the section entitled “OurEquipment Rental Business” of this Prospectus.
In September 2006, we invested in our Associated Company. Please refer to the section entitled“Business - Our Associated Company’s Business” of this Prospectus for more information about ourAssociated Company’s business.
In July 2008, all the then shareholders of our Company, comprising Mr Tan Ah Lye (40.5%), Mdm TanHwee Keow (9.7%), Mr Tan Cheng Soon Don (9.7%), Mr Tan Cheng Guan (10.1%), Mr Tan ChengKwong (9.7%), Mr Tan Ah Huat (5.3%), Mr Tan Seng Kiat (5.3%) and Mdm Tan Bee Choo (9.7%), sold allof their shares in our Company to the Vendor. The Vendor is wholly owned by TFSA, a special purposecompany owned by SEAVI (70.0%) and TALH (30.0%). For more information on the sale and purchaseagreement between our then shareholders of our Company and the Vendor, please refer to the sectionentitled “Interested Person Transactions” of this Prospectus for more information. Please also refer tofootnotes (3), (4) and (5) in the section entitled “General Information on Our Group – Shareholders” ofthis Prospectus for more information on SEAVI and TALH.
After the divestment, SEAVI worked closely with the management of our Company to enhance ourbusiness strategy and growth.
HISTORY
In January 2009, we decided to take further steps towards our regional expansion plans and set up SHV,our first overseas subsidiary, in Vietnam and we subsequently incorporated SHMSB, our subsidiary inMalaysia in April 2009. On 8 October 2009, SHV entered into an agreement to acquire five cranes andtwo boom lifts from Tan Cranes & Equipment Co., Ltd., which was then owned by our Managing Director,Mr Tan Cheng Soon Don. This acquisition was completed on 15 December 2009. Please refer to thesection entitled “Interested Person Transactions” of this Prospectus for more details on this acquisition.We had set up these regional subsidiaries as our spring boards to enter into the Vietnam and Malaysiamarkets.
Today, our Company is one of the leading heavy lifting service providers in Singapore. We have a widetrading customer base comprising more than 100 customers and spanning USA, Europe, the MiddleEast, Asia, Australia and Africa. As at the Latest Practicable Date, we have a fleet of 88 cranes with atotal lifting capacity exceeding 9,500 tons, comprising all terrain cranes, truck cranes, rough terraincranes and crawler cranes as well as 213 aerial lifts.
On 21 December 2009, our Company was converted into a public company and the name of ourCompany was changed to Sin Heng Heavy Machinery Limited in connection with our proposed listing onSGX-ST.
83
BUSINESS
84
BUSINESS OVERVIEW
We are one of the leading heavy lifting service providers in Singapore as we have been carrying on theheavy lifting business for more than 28 years since 1981. We were and are involved in some of thelandmark infrastructure and construction projects in Singapore, such as Benjamin Sheares Bridge,Central Expressway, Pan-Island Expressway, Ayer Rajah Expressway, Kallang-Paya Lebar Expressway,Marine Coastal Expressway, the Marina Bay Integrated Resort, Singapore Flyer and Boon Lay MRTextension. Further, our customers include many international and established corporations, such as SatoKogyo (S) Pte. Ltd., Sambo Group, Tuksu Engineering & Construction Ltd., Keppel Shipyard Ltd., KeppelFels Ltd., Yongnam Engineering and Construction Pte. Ltd., UTOC Engineering Pte. Ltd. and SamsungC&T Corporation. In addition, we have more than 200 equipment rental customers of which repeatcustomers accounted for approximately between 69.1% and 84.5% of our Group’s annual equipmentrental revenue from FY2007 to FY2009. We also have more than 100 trading customers worldwide whobuy both new and used lifting equipment from us. We focus on the mid-to-high lifting capacity segmentwhich is deployed for larger projects and serve mainly customers in the infrastructure and geotechnic,construction, offshore and marine, oil and gas industries. Our core business activities are the equipmentrental business involving the rental of cranes and aerial lifts and the trading business involving the tradingof cranes and aerial lifts. We also undertake sales and distribution of spare parts for cranes and aeriallifts.
As part of our equipment rental business, we also undertake turnkey project engineering services whichare currently being carried out mainly in Singapore. For FY2009 our equipment rental business andtrading business contributed approximately 24.3% and 75.7% of our total revenue respectively.
As at the Latest Practicable Date, we have a fleet of 88 cranes and 213 aerial lifts. Our fleet of cranesand aerial lifts consists of:
Cranes/Aerial Lifts Lifting Capacity/ Access Heights Number of units in our fleet
Crawler Cranes 5 tons to 450 tons 47
All Terrain Cranes 100 tons to 500 tons 6
Truck Cranes 50 tons to 160 tons 5
Rough Terrain Cranes 7 tons to 80 tons 30
Boom Lifts 12 to 45.7 metres 127
Scissor Lifts 6 to 12 metres 86
Cranes are indispensable equipment used in modern day construction and engineering projects. They areheavy lifting equipment that can be used to lift and lower heavy loads. A description of our fleet ofequipment is set out below:
Crawler Crane
The crawler crane comprises a lattice boommounted on an undercarriage with tracks. Theheavy tracks provide the crane stability andmobility over undulating terrains. As such, it canmove within jobsites easily and perform lifting withvery minimal set-up. In addition, a crawler crane iscapable of travelling while lifting a load at thesame time.
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Boom Lifts
The boom lift is an aerial work platform providingtemporary access for personnel or equipment toinaccessible areas, usually at height. It comprisesa lift (or bucket) at the end of a hydraulic liftingsystem mounted on a self-moving platform. Theboom lift is fitted with either a straight or anarticulated boom, consisting jointed sections,which can be controlled to extend the lift in anumber of different directions. The boom lift isusually designed to be fully operated (includingsetup) by a single person.
Rough Terrain Crane
The rough terrain crane comprises a telescopicboom mounted on an undercarriage fitted withrubber tyres. This single cabin crane is generallydesigned for pick-and-carry operations as well asoff-road or rough terrain applications. Outriggersare also used to stabilise the crane during lifting.The crane is compactly designed and possessesmulti-axle steering capability, making it highlysuitable for shipyards and petrochemical plantswhere lifting areas may be tight.
Truck Crane
The truck crane comprises a telescopic boommounted on an undercarriage with rubber tyres.The dual-cabin crane is also capable of travellingon roads and uses outriggers and counterweightsfor increased stability during lifting.
All Terrain Crane
The all terrain crane comprises a telescopic boommounted on an undercarriage with rubber tyres.The dual-cabin crane is capable of travelling onroads thus eliminating the need for specialequipment to transport the crane. When workingon jobsites, outriggers are extended from thechassis of the crane to increase stability duringlifting. The crane also has moving counterweightsfor additional stabilisation.
All terrain cranes have more even weightdistribution, thereby rendering enhanced road-going performance and enabling lifting frommultiple positions. In addition, all terrain cranes arefitted with versatile steering capability to allowmanoeuvring of their extended chassis with ease.
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Our Equipment Rental Business
Our equipment rental business comprises the rental of cranes and aerial lifts. Our Managing Director, Mr Tan Cheng Soon Don, manages and oversees our crane rental business, while our Executive Director,Mr Tan Cheng Kwong manages and oversees our aerial lift rental business.
Our crane rentals are typically on wet hire, while rentals of our aerial lifts are typically on dry hire.
Our customers deploy our cranes for a wide range of uses. For example in the infrastructure andgeotechnic industry, our cranes are used in the launching of heavy precast columns, slabs and beams; inthe construction industry, our cranes are utilised in construction of buildings and upgrading works; in theoffshore and marine industry, our cranes are used in the fabrication of oil rigs and deep sea-goingvessels; and in the oil and gas industry, our cranes are deployed for the construction and maintenance ofpetrochemical plants and refineries. The crane rental contracts that we enter into with our customers areof varied durations from daily to monthly leases or such other periods as required by our customers.
Our Group also provides turnkey project engineering services to our customers, to complement ourprovision of crane rental service. We are proficient in launching precast beams and segments as ourcranes are regularly involved for such use in the construction of bridges and flyovers. For example, weparticipated in the construction of the Benjamin Sheares Bridge and the Braddell/Thomson/Lornie RoadInterchange. More details of our major projects are set out below. Our services include advising ourcustomers on the planning and the execution, where the crane is transported and installed at the job site.Typically, the main elements of a turnkey project engineering are as follows:
(a) obtain information on the equipment to be lifted and/or transported including equipmentdimensions, weight and orientation;
(b) conduct site survey to assess the ground conditions and observe any likely obstructions;
(c) plan the lifting and/or transportation configuration including procedures, precautionary measuresand manpower requirements. The drawings and calculations are endorsed by a professionalengineer, if necessary;
(d) ensure that the equipment is certified, and conduct visual inspection and load test, if necessary;
(e) apply for official transportation permits, if necessary; and
(f) execute lifting and/or transportation task in accordance with the customer’s requirement.
Our customers rent our aerial lifts for a wide range of uses. For example, our aerial lifts were used inconstruction projects on Jurong Island for the oil and gas industry, various works for the integratedresorts at Marina Bay and Sentosa, construction of shopping malls, factories, condominiums and waferfabrication plants. Our aerial lifts are also rented for special events. For example, our aerial lifts wererented for use by the media at major golf competitions in Singapore and at the Formula 1 SingaporeSingtel Grand Prix. Often our aerial lifts are offered together with our cranes as a package to customerswho require both lifting equipments as part of their project needs.
Scissor Lifts
The scissor lift is another type of aerial workplatform. It comprises a lift at the end of a set oflinked, folding supports in a criss-cross ‘X’ patternmounted on a self-moving platform. The lift iscapable of vertical movements and can beextended horizontally to allow closer access towork areas. The scissor lift is also designed to befully operated by a single person.
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We have a comprehensive fleet of cranes to support our customers who need to comply with regulationssuch as those stipulated by the MOM, BCA, HDB and the LTA. For example, our cranes are deployed onLTA worksites which require that such cranes must not exceed 15 years from the date of manufacture.
The regulatory requirements imposed by the MOM in respect of the years of service of cranes, are setout as follows:
Design safe working load Maximum allowable years of(maximum capacity) service from the year of manufacture
50 tons and below 20
Above 50 tons but not more than 100 tons 25
100 tons and above 30
Notwithstanding the above limitation, the maximum service life of our cranes, may be extended subject tothe prior approval of the Commissioner for Workplace Safety and Health at the MOM.
There are no regulatory requirements governing the years of services of aerial lifts.
Some of the major projects which we have provided our heavy lifting services to from 1981 are asfollows:
Period Projects
1981 to 1989 - Changi Airport Flyover- Central Expressway- Benjamin Sheares Bridge- Ayer Rajah Expressway- Toa Payoh Flyover
1990 to 1999 - Pan-Island Expressway - Reclamation of Jurong Island- Cuppage Centre- Hewlett Packard Factory- Raffles Hospital- SIA Complex- Woodsville Interchange- Fusionpolis- Changi Airport Terminal 2 extension- Petrochemical Corporation of Singapore’s petrochemical complex
2000 to current - Extension of Queensway to Aye Rajah Expressway- Changi Water Reclamation Plant- Changi Airport Terminal 3- Marina Bay Financial Centre- Marina Bay Integrated Resort- Sentosa Light Rail System- Braddell/Thomson/Lornie Road Interchange- Resort World at Sentosa- Singapore Flyer- Kallang – Paya Lebar Expressway- Boon Lay MRT extension- Jurong Rock Cavern Underground Oil Storage
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Our Trading Business
Our trading business, which complements our equipment rental business, involves the trading of bothnew and used cranes and aerial lifts. We also undertake sale and distribution of spare parts for cranesand aerial lifts.
Our Executive Director, Mr Tan Cheng Guan, is primarily responsible for our crane trading business. Heand his team are in charge of sourcing for new and used cranes from countries or regions such asJapan, Europe and the United States of America. Some of the cranes that we purchase are reserved forour crane rental business and the rest are sold to customers in Singapore and around the world.
We have a wide trading customer base comprising more than 100 customers and spanning USA,Europe, the Middle East, Asia, Australia and Africa.
For our used crane trading business, we have a reliable group of suppliers, whom we have long standingrelationships with. From these suppliers, we source good quality and competitively priced used cranes.Depending on the intended usage and regulatory requirements that our customers have to comply with,we recondition and refurbish our fleet of used cranes prior to reselling them to our customers. Thereconditioning and refurbishment of these used cranes are carried out at our premises by our qualifiedmaintenance service team and also in collaboration with certain third parties. Our reputation andexperience in providing high quality reconditioning and refurbishment engineering services provides ourcustomers with the confidence that the used cranes that they procure from us would be in good workingcondition. We believe that we have an established reputation amongst our customers for ourreconditioned and refurbished cranes and this allows us to expand our trading business over the years.
In addition to the trading of used cranes, we also carry out trading of new cranes. We purchase newcranes from original equipment manufacturers such as the Kobelco Group.
We are also engaged in the trading of aerial lifts. Our Executive Director, Mr Tan Cheng Kwong overseesthe trading of our new and used aerial lifts. We typically purchase aerial lifts from suppliers (includingoriginal equipment manufacturers) based in the United States of America, Australia, Japan and Europe.We sell aerial lifts to customers in Singapore as well as to overseas markets like India, Taiwan and theMiddle East.
It is our business practice not to take speculative positions in our trading business. Most of the time, wewould purchase cranes or aerial lifts if there is an existing purchase commitment or serious indication ofpurchase interest from our customers. However, to maintain our position as one of the leading suppliersof new and used cranes and aerial lifts, we do maintain an inventory of cranes and aerial lifts which aremore popular with our customers and which, in our view, are more tradable.
Our Associated Company’s Business
Established in June 2006, SEPL is in the business of rental of diaphragm wall excavation rigs andprovision of geotechnic engineering services. SEPL leases equipment to contractors or provideengineering services to construct diaphragm walls. Diaphragm walls can be used as a retaining wall for amultitude of applications, for example underground car parks, road tunnels, underground MRT tunnels.
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Process Flow
Equipment Rental business
The process flow pertaining to our equipment rental business activities can be illustrateddiagrammatically as follows:
Customer Enquiries/Marketing to Customers for Equipment Rental
Our comprehensive equipment fleet and responsive service are recognised by our customers. As aresult, our customers, both existing and prospective, approach us with enquiries whenever they need torent equipment for their lifting assignments. In addition, our equipment rental team actively interacts withour customers and offers our services to them according to their requirements. This enables us to obtainfirsthand information on the equipment rental demand situation in the market.
Submission of Quotations and Confirmation of Rental Orders
Based on our customer requirements, our equipment rental team submits quotations and presents ourservice solutions to our customers for their consideration. Thereafter, our customers sign and return thequotations or issue purchase orders to confirm their equipment rental orders.
Functionality Inspection and Maintenance
To ensure minimal disruptions due to mechanical faults or breakdown, our experienced maintenanceservice team inspects and services the equipment thoroughly at our yard prior to each mobilisation to thecustomers’ jobsites.
After our inspection and servicing of the equipment, independent professional engineers are engaged tocertify the functionality of our equipment before commencement of work.
Services Rendered to Rental Customers
Our equipment rental team plans and co-ordinates the mobilisation of our equipment to our equipmentrental customers’ jobsites. Leveraging on our accumulated expertise and experience, our equipmentrental team provides on-site consultation on the appropriate lifting techniques, placement of equipmentas well as job safety assessments and recommendations.
We rent our cranes typically on a wet hire basis and our crane operators are thoroughly briefed on thecustomers’ lifting requirements before each assignment. Furthermore, our crane operators adhere strictlyto the stipulated work safety requirements and ensure that there is no excessive wear and tear to theequipment.
In the event of any equipment breakdown, our round-the-clock standby maintenance service team isdespatched as soon as possible to rectify the situation.
Customer Enquiries/Marketing to Customers for Equipment Rental
Functionality Inspection and Maintenance
Services Rendered to Rental Customers
Submission of Quotations and Confirmation of Rental Orders
BUSINESS
Trading business
The process flow pertaining to our trading business activities can be illustrated diagrammatically asfollows:
Purchase of Equipment from Suppliers
Our track record as a volume purchaser backed by prompt payment has allowed us to build up a goodreputation and rapport with a network of trusted suppliers from all over the world. These suppliersconstantly update us with information on equipment availability in the market. Subject to satisfactoryassessment of the quality (including on-site inspections, if necessary) and the expected demand for theequipment, our trading team further negotiates trading terms with our suppliers before committing topurchases.
Customer Enquiries for Equipment Purchases
Through our commitment to deliver quality equipment, we have firmly established ourselves as apreferred equipment supplier to our trading customers. These customers, together with their referrals,approach us with enquiries whenever they need to purchase equipment for their lifting assignments.
Subject to the equipment availability and acceptable trading terms, our trading customers enter into salesagreement confirming their equipment purchases.
Functionality Inspection and Reconditioning of Equipment
Upon the arrival of the equipment at our yard, our experienced maintenance service team conductsthorough inspections on every aspect of equipment functionality. For used equipment, our maintenanceservice team services the equipment and replaces worn parts.
After the inspection and/or reconditioning of the equipment, independent professional engineers areengaged to certify the functionality of our equipment before delivery to our trading customers.
Equipment Delivery to Trading Customers
Our trading team arranges shipment in accordance to the delivery schedule as required by our tradingcustomers. Typically, our trading and maintenance service team personnel will travel to our customerlocations to supervise the installation of equipment to ensure that the equipment is installed properly foruse.
Warranty for new equipment is covered by the manufacturers. For used equipment, whilst we do notprovide any warranty, we are dedicated to deliver equipment to the satisfaction of our trading customers.
Purchase of Equipment from Suppliers Customer Enquiries for Equipment Purchases
Functionality Inspection andReconditioning of Equipment
Delivery to Trading Customers
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MAINTENANCE AND SAFETY STANDARDS
Maintenance
We need to ensure that the standard safety requirements of our cranes are met. To do so, our fleet ofcranes are inspected and maintained regularly at our premises and at jobsites by our maintenanceservice team. We may also work with third party maintenance providers at times. Depending on the typeof cranes and level of utilisations we will ensure that our cranes are inspected and maintained regularly,whether they are on-site or off-site. Maintenance is carried out according to the requirements of ourmaintenance checklist.
Our aerial lifts are also inspected and maintained regularly at our premises by our maintenance serviceteam. Our standard practice is for our aerial lifts that are in our yard to be inspected and maintainedbefore the next rental assignment. The aerial lifts that are on rental will be maintained by our mobilemaintenance service team regularly in accordance with the requirements of the service manual.
We also provide our customers with round-the-clock maintenance service support by our mobilemaintenance service team.
Our Executive Director, Mr Tan Cheng Guan, is in charge of our crane maintenance service team and ourExecutive Director, Mr Tan Cheng Kwong is in charge of our aerial lifts maintenance service team.
Safety
All our crane operators have to be licensed by the BCA, and are required to undergo training by the BCAbefore they are issued such licences to operate the cranes in Singapore. The training program coverssafety procedures and basic knowledge on the key parts of a crane. In addition our crane operators haveto attend the safety orientation course conducted by the MOM. Our crane operators are required tothoroughly inspect the cranes before and after use and to keep us informed of any potential risk that theyhave spotted. They are required to stop work immediately upon spotting any risk or damage to the crane,and report to their respective supervisor as soon as possible.
We also conduct periodic safety checks on our cranes, which include checking on the standard safetyrequirements as well as a physical inspection of the cranes. In addition, all our cranes are subject toannual certification by independent professional engineers to ensure that the cranes are in good and safeworking condition. A physical load-lifting test, whereby the crane is subjected to a more stringent loadstress test of 125.0% of the stated maximum capacity, is also conducted on the cranes by independentprofessional engineers every three years. These engineers will then issue a certificate of test andexamination for our cranes.
PRODUCTION CAPACITY AND UTILISATION
Our Group does not own any production facility as our business mainly involves the rental and trading ofcranes and aerial lifts. We have a workshop that carries out maintenance and reconditioning works forour equipment rental fleet.
Our equipment rental fleet comprises crawler cranes, all terrain cranes, truck cranes and rough terraincranes of various lifting capacities, as well as boom lifts and scissor lifts of various access heights.These lifting equipment are deployed by our customers from various industries, such as the constructionand the oil and gas industries, to undertake a multitude of lifting jobs. For example, customers from theconstruction industry may deploy our cranes for the construction of buildings and customers from the oiland gas industry may deploy our equipment in the construction and maintenance of oil and gas facilities.
The rental rates for our lifting equipment will vary, depending on factors such as the nature of the job, theusage time and the lifting capacities or access heights of the equipment being deployed. For example, acrane with high lifting capacity may be deployed by a customer for the launching of flyover precastsegments and the job may be undertaken at night due to road closure requirements. The jobspecifications may also require the deployment of an experienced crane operator and supervisor. Hence,the rental rate for this crane will be different from the rental rate for a similar crane that is deployed at abuilding construction site and operated during normal working hours.
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For the reasons discussed above, utilisation rates for our equipment rental fleet, for example, utilisationrates calculated based on hours of deployment, do not provide meaningful measurements of theproductivity of these assets.
MARKETING AND BUSINESS DEVELOPMENT
Equipment Rental
Our Managing Director, Mr Tan Cheng Soon Don, and our Executive Director, Mr Tan Cheng Kwong areresponsible for our Group’s marketing efforts for our crane rental business and our aerial lifts rentalbusiness respectively. Our Group’s equipment rental business is focused on the Singapore market, andMr Tan Cheng Soon Don and Mr Tan Cheng Kwong are supported by a team of sales executives. Themanagement reviews and monitors the sales performance of our Group’s equipment rental business on amonthly basis.
Our Group will continue to focus on our equipment rental business in the infrastructure and geotechnic,construction, offshore and marine, oil and gas industries in Singapore. We will also continue to leverageon our turnkey project engineering services in Singapore and with the setting up of our operations inMalaysia and Vietnam, we will seek to expand our business in these markets.
For our equipment rental business, we market directly to our customers who are the main contractors orsub-contractors in the infrastructure and geotechnic, construction, offshore and marine, oil and gasindustries. In order for us to win repeat business from our customers, we provide responsive service andmaintain good working relationships with them. This is achieved through our provision of prompt supportand maintenance services. With our comprehensive range of cranes and aerial lifts and strong technicalexpertise, we are able to meet most of our customers’ needs.
Over the years, our Group has continually expanded our customer base and today we have more than200 customers of which, repeat customers accounted for approximately between 69.1% and 84.5% ofour Group’s annual equipment rental revenue from FY2007 to FY2009:
FY2007 FY 2008 FY 2009
Equipment rental revenue from repeat customers 69.1 84.5 71.9as a % of our Group’s equipment rental revenue (%)
From time to time, we also participate in tenders for both public and private projects. Our reputation,experience and track record also allows us to be regularly kept informed and invited to tender forprojects.
Trading
The marketing initiatives for our trading business in cranes and aerial lifts are carried out by ourExecutive Directors, Mr Tan Cheng Guan and Mr Tan Cheng Kwong respectively. Our track record as avolume purchaser backed by prompt payment has allowed us to build up a good reputation and rapportwith a network of trusted suppliers from all over the world. These suppliers constantly update us withinformation on equipment availability in the market. We are able to obtain a steady supply of good qualitynew and used cranes and aerial lifts from overseas equipment suppliers and trading houses due to ourlongstanding and good business relationships with each of them. This ability to obtain a steady supply ofgood quality new and used cranes and aerial lifts has been very beneficial to our trading business.Customers come to us as we are able to source and sell to them a comprehensive fleet of good qualitycranes and aerial lifts, both used as well as new, which meet their requirements.
Our business development activities are carried out by the Executive Directors, who will formulatemarketing and growth strategies for our business and determine new geographic regions in which ourCompany’s business should make in-roads into.
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MAJOR CUSTOMERS
The following customers of our Group account for 5.0% or more of our total revenue in FY2007, FY2008and FY2009:
Percentage of revenue (%)Name of Customer FY2007 FY2008 FY2009
1 Kim Heng Marine & Oilfield Pte Ltd 0.0 0.0 6.1
2 PT. Saipem Indonesia 0.0 0.0 5.8
3 Beng Soon Machinery Services (S) P/L 5.0 0.4 4.3
4 Keppel Group (1) 7.8 7.1 3.9
5 PT. Meindo Elang Indah 0.0 5.7 3.0
6 JP Nelson Equipment Pte Ltd 0.0 5.4 0.0
Note:-
(1) Our customers in the Keppel Group comprise Keppel Fels Ltd., Keppel Shipyard Ltd., Keppel Sea Scan Pte Ltd. and KeppelFMO Pte Ltd..
All the customers in the table above are our trading customers whom we have sold equipment to fromtime to time. In addition, the Keppel Group and Beng Soon Machinery Services (S) P/L, are also ourequipment rental customers. Generally, sales to our trading customers are driven by their respectivedemand for equipment. These demands usually coincide with new projects that they have been awardedwith, increases in their end-customer requirements and strengthening of their financing capacities. Suchevents typically do not occur on a consistent basis and this resulted in the percentage of revenuefluctuations as presented in the above table.
Our equipment rental customers comprise predominantly of internationally-renowned constructioncompanies, multi-national corporations, as well as public-listed companies.
The following customers of our Group account for 5.0% or more of our revenue from our equipment rentalbusiness in FY2007, FY2008 and FY2009:
Percentage of revenue fromequipment rental business (%)
Name of Customer FY2007 FY2008 FY2009
1 Sato Kogyo (S) Pte Ltd 3.0 8.3 15.6
2 Keppel Group (1) 20.2 16.6 10.8
3 Sambo Group (2) 9.9 12.9 10.2
4 Sampyung Singapore Pte Ltd 0.0 0.0 6.3
5 Tuksu Engineering & Construction Ltd 0.1 3.3 5.0
6 UTOC Engineering Pte Ltd 8.2 5.8 3.1
7 Eastern Pretech Pte Ltd 8.3 0.0 1.7
8 BT Engineering Pte Ltd 5.1 4.8 0.7
9 Samsung C&T Corporation 5.7 1.3 0.1
Notes:-
(1) Our customers in the Keppel Group comprise Keppel Fels Ltd., Keppel Shipyard Ltd., Keppel Sea Scan Pte Ltd. and KeppelFMO Pte Ltd..
(2) Our customers in the Sambo Group comprise Sambo E&C Pte Ltd, Sambo E&C Co. Ltd, and Sambo Tosfoc Pte Ltd.
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The significant increase in the percentage of revenue attributable to Sato Kogyo (S) Pte Ltd from FY2007to FY2008 was due mainly to the Jurong Rock Cavern Underground Oil Storage project where it rented anumber of cranes with a wide range of lifting capacities from us. Sato Kogyo (S) Pte Ltd commenced theconstruction project for the new 3M plant in 2008 and rented from us a number of cranes. This resulted inthe increase in the percentage of revenue from Sato Kogyo (S) Pte Ltd for FY2009.
The lower demand for lifting equipment from third party rental companies by the Keppel Groupcontributed mainly to the decreases in the percentage of revenue from the Keppel Group in FY2008 andFY2009.
The increase in the percentage of revenue from Sambo Group from FY2007 to FY2008 was due mainlyto the Marina Integrated Resort Project secured by them for foundation works. The main factor fordecreasing percentage of revenue from Sambo Group from FY2008 to FY2009 was due to theprogressive completion of the aforesaid project.
As at the date of this Prospectus, save for immaterial investment in shares in listed entities within theKeppel Group, none of our Directors, Substantial Shareholder or their respective Associates has anyinterest, direct or indirect, in any of the customers in our Group.
Our Directors are of the view that our business or profitability is not materially dependent on anycommercial or financial contract with any customer.
MAJOR SUPPLIERS
Since we commenced our operations, we have maintained long standing relationships with a reliablegroup of suppliers, from whom we source good quality and competitively priced cranes. In addition, weare regularly approached by other equipment suppliers who want to establish business relationships withus. We are also engaged in the trading of aerial lifts.
We source for our new cranes directly from manufacturers such as the Kobelco Group through AM.Trading. As for used cranes, we source them from various end-users, equipment rental companies,manufacturers and trading houses, such as AM. Trading, Chubu Kogyo Co., Ltd, the Kobelco Group, theLiebherr Group, Tokyo Owl Co., Ltd, and the Manitowoc Crane Group.
For our aerial lifts, we typically purchase them from suppliers (including original equipmentmanufacturers) based in the United States of America, Australia, Japan and Europe. We sell aerial lifts tocustomers in Singapore as well as to overseas markets like India, Taiwan and the Middle East.
The key considerations in selecting our suppliers include the quality of their products, pricing, servicesand timeliness of delivery.
The following suppliers of cranes to our Group accounted for 5.0% or more of our purchases in FY2007,FY2008 and FY2009:
As a percentage of purchases (%)Name of supplier FY2007 FY2008 FY2009
AM. Trading 41.4 38.4 50.0
Chubu Kogyo Co., Ltd 9.7 7.7 6.4
Kobelco Group 2.9 5.2 6.2
Takakoh Industrial Co., Ltd 18.6 6.3 4.1
Tokyo Owl Co., Ltd 9.2 5.4 6.8
Gabriel O’Brien Crane Hire 0.0 0.0 5.0
Manitowoc Crane Group 0.0 0.0 6.3
Top Master Services Ltd 0.0 5.5 0.0
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The increase in percentage of purchases from AM. Trading from FY2007 to FY2009 was due mainly tothe sale of more cranes to our trading customers and due partly to our fleet renewal efforts.Nevertheless, we have also purchased cranes from our other major suppliers like Chubu Kogyo Co., Ltd,Takakoh Industrial Co., Ltd, and Tokyo Owl Co., Ltd to ensure that we enjoy competitive pricing from adiversified supplier base. The year-to-year fluctuations in our purchases from each of our major supplierswere due mainly to the availability and pricing of the equipment that they supplied.
Our Directors are of the view that our business or profitability is not materially dependent on anycommercial or financial contract with any supplier.
As at the date of this Prospectus, none of our Directors, Substantial Shareholders or their respectiveAssociates has any interest, direct or indirect, in any of the above major suppliers.
INVENTORY MANAGEMENT
For our trading business, we maintain an inventory of cranes and aerial lifts which are in demand with ourcustomers and which are hence more tradable. We also maintain an inventory of spare parts for cranesand aerial lifts.
Our average inventory turnover days for the period under review are as follows:
(Days) FY2007 FY2008 FY2009
Average inventory turnover(1) 65 60 59
Note:-
(1) Average inventory turnover is calculated based on the average inventories divided by total cost of sales for the year of ourtrading business and multiplied by 365 days.
Average inventory turnover was relatively stable at approximately 65 days in FY2007, approximately 60days in FY2008 and approximately 59 days in FY2009.
CREDIT MANAGEMENT
Credit terms to our customers
For our equipment rental business, we typically grant our customers credit terms of between 60 days and90 days from the date of our invoice. For projects that are less than a month in duration, we typicallyinvoice our customers at the end of the project a lump sum fee for services rendered. For longer termprojects, we will invoice our customers on a monthly basis in advance plus any overtime fees payablebased on the amount of work done for the immediately preceding month. We may require certain newcustomers to make payments upfront before the commencement of the projects.
For our trading business, full payment must be received for the equipment ordered before we ship theequipment to the customer. Such payment is typically made by way of cash, letter of credit or telegraphictransfers. We may require certain new customers to furnish a 10.0% to 20.0% deposit upon placing theirorders.
Our average trade receivables turnover days for the period under review are as follows:-
(Days) FY2007 FY2008 FY2009
Average trade receivables turnover(1) 30 25 31
Note:-
(1) Average trade receivables turnover is calculated based on the average trade receivables divided by total revenue for the yearand multiplied by 365 days.
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Average trade receivables turnover increased from approximately 25 days in FY2008 to approximately 31days in FY2009. This was due mainly to a slowdown in collections from our equipment rental customers.These customers generally faced difficult operating conditions as a result of the economic slowdown inSingapore.
Specific provision or write-off would be made when we are of the view that the collectibility of anoutstanding debt is impaired or the debt is uncollectible. We have not provided for any doubtful debts forthe periods under review.
Our Group’s ageing schedule of our trade receivables as at 30 June 2009 is as follows:
Total trade receivables Age of trade receivables as at 30 June 2009
$’000 (%)
0-30 days 5,847 45.6%
31-60 days 2,281 17.8%
61-90 days 2,361 18.4%
91-120 days 1,156 9.0%
More than 120 days 1,172 9.2%
Total 12,817 100.0%
Our trade receivables as at 30 June 2009 amounted to approximately S$12.8 million and the ageing ofthe majority of these debts is less than 30 days. As at the Latest Practicable Date, approximately 96.0%of these trade receivables has been collected.
Credit terms from our suppliers
The credit terms from our suppliers vary from supplier to supplier.
For our equipment rental business, we occasionally rent cranes and aerial lifts from third parties when weencounter periods of peak demand for rental of our equipment. For projects that last less than a month,these suppliers, whom we rent equipment from, will typically invoice us a lump sum fee for servicesrendered at the end of the project. For longer term projects, they will invoice us on a monthly basis inadvance plus any overtime fees payable based on the amount of work done for the immediatelypreceding month. Our suppliers grant us credit terms ranging from 30 days to 60 days from the date ofinvoice. The payment terms granted by our suppliers vary and are also dependent on, inter alia, the sizeof the transaction and our relationship with the supplier.
For suppliers whom we purchase cranes and aerial lifts from, full payment must be received from us forthe equipment ordered before the suppliers deliver the equipment to us. Such payment is typically madeby way of letter of credit or telegraphic transfers.
Our average trade payables turnover days for the period under review are as follows:-
(Days) FY2007 FY2008 FY2009
Average trade payables turnover(1) 12 6 5
Note:-
(1) The average trade payables turnover is calculated based on the average trade payables divided by cost of sales andmultiplied by 365 days.
Our average trade payables turnover ranged from 5 days to 12 days for the period under review as wetypically settle our purchases of cranes and aerial lifts prior to the shipment of these equipment from oursuppliers.
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RESEARCH AND DEVELOPMENT
The nature of our business does not require us to carry out any research and development activities.However, we do keep abreast with the latest developments in the heavy lifting services industry andcontinually try to improve our work processes and upgrade our heavy lifting equipment.
STAFF TRAINING
Our employees have been a major contributing factor to the success of our Group. We believe thatsufficient training must be provided to them, to ensure that they are equipped with the right set of skills toperform their duties.
We provide on-the-job training to our new crane operators to familiarise them with our various cranes sothat they understand the work requirements and service quality expected of them when they are dealingwith our customers.
Our maintenance service team are required to undergo regular training courses on-site organised by oursuppliers to update their knowledge on new equipment that we acquire.
Our staff training expenses are insignificant during the period under review.
AWARDS AND CERTIFICATION
Our Group has received the following awards:
Award Organisation Year
Singapore 1000 Company DP Information Group 2009
The Enterprise 50 (E50) Award The Business Times and KPMG 2009(3rd place)
INTELLECTUAL PROPERTY
We have applied for the registration of the following trade marks in Singapore which we use for ourbusiness:
Country of Trade Mark Trade Mark Registration Class Status Number Date of Application
Singapore 35(1) Pending T0911905F 16 October 200937(2)
39(3)
Notes:-
(1) The following services are claimed in Class 35: “Distribution of goods (not being transport services) (agent, wholesale,representative services, by any means); information, advisory and consultancy services relating to the aforesaid”.
(2) The following services are claimed in Class 37: “Machinery repair; servicing of apparatus and machinery; maintenance,installation, servicing and repair of construction apparatus and machines; rental of cranes (construction equipment); rental oflifting apparatus (construction equipment); information, advisory and consultancy services relating to the aforesaid”.
(3) The following services are claimed in Class 39: “Rental of cranes and lifting apparatus; lifting and cranage services;information, advisory and consultancy services relating to the aforesaid”.
We believe that our business is not materially dependent on the above marks.
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Save as disclosed above and in the section entitled “Risk Factors” of this Prospectus, neither ourbusiness or profitability is dependent on, nor do we have, any registered trade mark, registered patent orregistered licence or any other registered intellectual property rights.
PROPERTIES AND FIXED ASSETS
Our Group currently leases the following properties:-
No Location Lease term Approximate Annual(years) built-in area Usage Lessor rent Encumbrances
1. 26 Gul Road 26 years 14,200 sqm Office Jurong S$266,227.16(1) Mortgaged(2)
Singapore commencing Town629346 16 October 1999 Corporation
and expiring on15 October 2025
2. No. 8-1, Jalan Two years 1,400 sqft Office Lim Yai Yin RM12,000 NilRemia 5/KS6, commencingBandar Botanic, 15 May 200941200 Klang, and expiring onSelangor Darul 14 May 2011Ehsan,Malaysia
Currently, we do not own any property in Vietnam. The cranes and fixed assets owned by SHV and itsoperators and mechanics are currently stationed at the customers’ worksites. We are in the process of settingup our operations in Vietnam and we target to rent an office space in Vietnam by mid February 2010.
Notes:-
(1) Subject to yearly revision on the 16th of October of each of the years following the year 2004.
(2) DBS Bank had granted to our Company a term loan facility on 24 October 2008. One of the securities for the said facility isour Jurong Town Corporation lease of the premises at 26 Gul Road, Singapore 629346 which was mortgaged to the bank.
We also sub-lease certain areas of our premises, details of which are set out below:-
Lease Approximateterm built-in area Monthly
No Location Sub-Lessee (years) (sqft/sqm) Usage rent (S$)
1. 26 Gul Road Hong Soon Huat Two years 2,400 sqft Office 2,700.00Singapore commencing629346(1) 1 April 2009
and expiring on31 March 2011
2. 26 Gul Road Fong Leong Two years 3,800 sqft Office 2,688.30Singapore Engineering commencing629346(1) Works 1 September 2009
and expiring on31 August 2011
3. 26 Gul Road Trans-Euro One year 300 sqm Office 2,500.00Singapore Pte Ltd commencing629346(1) 1 January 2010
and expiring on31 December 2010
4. 26 Gul Road SEPL Two years 540 sqft Office 1,000.00Singapore commencing629346(1) 1 December 2009
and expiring on30 November 2011
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Note:-
(1) These sub-leases are renewable annually subject to the approval of Jurong Town Corporation.
To the best of our Directors’ knowledge, there are no regulatory requirements or environmental issuesthat may materially affect our utilisation of the above properties and fixed assets.
INSURANCE COVERAGE
As at the Latest Practicable Date, we had taken up insurance policies in respect of the following:-
(a) equipment all-risks in relation to cranes and machineries;
(b) fire insurances in relation to our properties including cranes, machineries, offices, workshops andfurniture;
(c) public liabilities in respect of personal injury, the accidental loss or damages caused to thirdparties’ properties by the execution of the works by our Company and its subsidiaries;
(d) work injury compensation;
(e) employees’ pre-hospital diagnose and treatment and hospital and surgical insurance coverage;
(f) travel insurances for our Executive Directors; and
(g) term insurances for our Executive Directors.
Our Directors are of the view that the above insurance policies are adequate for our existing operations.However, significant damage to our operations, whether as a result of fire or other causes, may still havea material adverse effect on our results of operations or financial condition. We are not insured againstloss of key personnel and business interruption. If such events were to occur, our business may bematerially or adversely affected. Please refer to the section entitled “Risk Factors” of this Prospectus for adiscussion on the risk that our insurance policies may be inadequate to cover our assets, operations andany loss arising from business interruptions. We also take up marine cargo insurance for our equipmentin transit as and when required. Our Directors will review the adequacy of our insurance coverage inrelation to our business annually.
COMPETITION
Equipment Rental
We operate in the crane and aerial lifts rental business, which is highly competitive in Singapore. To thebest of our knowledge, we have identified the following as our main competitors to our equipment rentalbusiness in Singapore:-
(1) Tat Hong Holdings Ltd;
(2) Asia Group Leasing Pte Ltd; and
(3) Huationg (Asia) Pte Ltd.
Trading
We believe that Tat Hong Holdings Ltd, is our main competitor in the trading business.
To the best of our knowledge, there are no published statistics or official sources of information withrespect to industry statistics and the market share of our Group and our competitors.
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Please refer to the section entitled “Risk Factors” of this Prospectus for a discussion on the risk faced byour Group from increased competition in the cranes and aerial lifts business.
COMPETITIVE STRENGTHS
We believe our competitive strengths are as follows:-
We are an established heavy lifting specialist for infrastructure and geotechnic projects
Since 1981, we participated as a heavy lifting service provider in many of the major infrastructure andgeotechnic projects in Singapore. Some of the completed and on-going projects include the BenjaminSheares Bridge, the reclamation of Jurong Island and the construction of the Jurong Rock CavernUnderground Oil Storage. For the construction of bridges and flyovers for expressways, our cranes areused in the launching of heavy precast columns, slabs and beams. Some of these projects that we wereinvolved in include the Central Expressway, Ayer Rajah Expressway, Pan-Island Expressway and theKallang-Paya Lebar Expressway. Please refer to the section entitled “Business – Our Equipment RentalBusiness” of this Prospectus for examples of the major infrastructure and geotechnic projects that wehave participated in.
Through our participation in these major infrastructure and geotechnic projects in Singapore, we haveestablished a proven track record as a heavy lifting specialist. We believe that this track record positionsus well to compete for future infrastructure and geotechnic projects in Singapore and the region.
Our crane fleet is focused on the mid-to-high lifting capacity segment and is complemented byour aerial lift fleet
We operate a fleet of cranes which is focused on the mid-to-high lifting capacity market segment andwhich is complemented by our aerial lift fleet. As at the Latest Practicable Date, our crane fleet comprised88 cranes with an aggregate lifting capacity in excess of 9,500 tons and our aerial lift fleet comprised 213aerial lifts with access heights of up to 45.7 metres. Our comprehensive fleet of cranes and aerial liftsenable us to offer a more complete and integrated range of lifting solutions and hence, cater to therequirements of a wider customer base. For example, in the early stages of a project, our customersgenerally deploy our cranes to carry out heavy lifting for foundation works, launch of heavy precastcolumns, fabrication of oil rigs and construction of petrochemical plants. Our aerial lifts will subsequentlybe deployed to carry out work such as interior finishing and maintenance for commercial buildings andfacade installation.
Our growing fleet of cranes and aerial lifts provides us with a competitive advantage when we bid forprojects as different stages of a project will require different lifting equipment. Our growing fleet alsoprovides assurance to our customers that we have the necessary lifting resources on hand to perform ourwork efficiently without delay. Besides using part of the net proceeds from the issue of the New Sharesfor our equipment rental fleet renewal and expansion, we also intend to use part of the net proceeds toacquire specialised equipment that have greater lifting performance and height access, which will enableus to provide more complementary solutions to our customers.
Please refer to section entitled “Business Strategies and Future Plans” of this Prospectus for our plan torenew and expand our equipment rental fleet.
We have an established track record in the maintenance, reconditioning and refurbishment ofcranes and aerial lifts
We deliver our rental equipment to our customers only after it has been inspected, reconditioned by ourmaintenance service team and the equipment functionality has been certified by independentprofessional engineers. In addition, we also have a maintenance service team on round-the-clock standbyfor our equipment rental customers. This team is committed to respond readily and efficiently to resolveany difficulties encountered by our customers. With our existing fleet size, we can also respondimmediately and cater for impromptu or ad-hoc assignments such as an un-planned petrochemical plantshutdown.
BUSINESS
For equipment that we sell to our trading customers, our experienced maintenance service team alsoconducts thorough inspections on every aspect of equipment functionality. As and when required, theteam will also service the equipment and replace worn parts. This provides our customers with theconfidence that the equipment that they purchase from us will be in good working condition.
Our reputation as a reliable heavy lifting service provider and seller of lifting equipment has enabled us towin repeat business from our existing customers. We believe that this recognition of our capabilitiesprovides us with a competitive edge which we can leverage on to further grow our business.
We have a strong management team with in-depth knowledge and expertise
Our Executive Directors, Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong havecollectively more than 50 years of experience in the rental and trading of cranes and aerial lifts. Theyalso enjoy close working relationships with our suppliers and customers.
Our Executive Directors and project managers also provide turnkey project engineering solutions to ourcustomers, including advising on the planning of the lifting services, to the execution where the crane istransported and installed at the jobsite.
We have an extensive network of suppliers and a wide customer base across various industriesworldwide
We have a long operating history spanning over 28 years and have built up strong relationships with anextensive network of suppliers globally. This has ensured that we are able to purchase at competitiveprices, used cranes and aerial lifts in good working conditions, as well as new equipment. We source forour new cranes directly from manufacturers such as the Kobelco Group. As for used cranes, we sourcethem from various end-users, equipment rental companies, manufacturers and trading houses, such asAM. Trading, Chubu Kogyo Co., Ltd, the Kobelco Group, the Liebherr Group, Tokyo Owl Co., Ltd, and theManitowoc Crane Group. We typically purchase our aerial lifts from suppliers (including originalequipment manufacturers) based in the United States of America, Australia, Japan and Europe.
Our equipment rental and trading customers regularly return to us for repeat business and from time totime, they also refer other prospective customers to us. We also have a wide trading customer basecomprising more than 100 customers spanning USA, Europe, the Middle East, Asia, Australia and Africaand some of our major customers include Beng Soon Machinery Services (S) P/L and the Keppel Group.Please refer to the section entitled “Business - Major Customers” of this Prospectus for more informationon our major customers.
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PROSPECTS
As our equipment rental business serves mainly customers from the infrastructure and geotechnic,construction, offshore and marine, oil and gas industries in Singapore, the prospects of our equipmentrental business is dependent on the rental demand for cranes and aerial lifts from the aforesaid industriesand the health of the Singapore economy. As our trading business serves mainly customers from USA,Europe, the Middle East, Asia, Australia and Africa, the prospects of our trading business is thereforedependent on the demand for cranes and aerial lifts from our customers globally, which in turn isdependent on the economic and development activities, such as construction activities, in the aforesaidcountries.
Global Economic Outlook
The severity of the global economic downturn since the fourth quarter of 2008 had prompted a number ofgovernments to implement fiscal measures to stimulate domestic demand and bring about economicrecovery. These fiscal measures generally include the increase of government expenditure oninfrastructure projects. For example, the government of the United States of America approved a US$787billion package, which included spending on infrastructure, energy and social sectors. In Europe, theGerman government introduced an €82 billion package comprising, amongst others, infrastructureinvestment. The government of the People’s Republic of China announced a Renminbi four trillion fiscalpackage, which included spending on infrastructure and housing, as well as for social development suchas health care.(1)
According to the World Economic Outlook report released by the International Monetary Fund in October2009, the global economy appears to be expanding again, pulled up by the strong performance of Asianeconomies and stabilisation or modest recovery elsewhere. However, the pace of recovery is slow, andactivity remains far below pre-crisis levels. The pickup is being led by a rebound in manufacturing and aturn in the inventory cycle, and there are some signs of gradually stabilising retail sales, returningconsumer confidence and firmer housing markets. As prospects have improved, commodity prices havestaged a comeback from lows reached earlier this year, and world trade is beginning to pick up. Theglobal economy is forecast to contract by about 1.0% in 2009 and expand by about 3.0% in 2010.(2)
Notes:-
(1) Source: Publication titled “Asian Development Outlook 2009, Rebalancing Asia’s Growth” from the website of the AsianDevelopment Bank at www.adb.org. Please see Note 1 on page 107 of this Prospectus.
(2) Source: Publication titled “Sustaining the Recovery”, the World Economic Outlook October 2009 from the website of theInternational Monetary Fund at www.imf.org. Please see Note 2 on page 107 of this Prospectus.
Southeast Asia Economic Outlook
The following table shows the growth rate of GDP in 2008 and the estimated growth rate for 2009 and2010 for selected Southeast Asian countries, including Singapore, Malaysia and Vietnam where wecurrently operate in:
2008 2009 2010
Singapore 1.1 -2.0 4.5
Malaysia 4.6 -2.5 4.5
Vietnam 6.2 5.0 6.5
Indonesia 6.1 4.3 5.4
Southeast Asia 4.2 0.6 4.5
Source: Publication titled “Asia Economic Monitor” from the website of the Asian Development Bank at www.adb.org. Please seeNote 1 on page 107 of this Prospectus.
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According to the Asian Development Bank, Southeast Asia’s GDP is projected to grow by 0.6% in 2009.With expectations of a stronger recovery in 2010 from the global economic downturn, the AsianDevelopment Bank projects Southeast Asia’s GDP to grow by 4.5% in 2010. (1)
Note:-
(1) Source: Publication titled “Asia Economic Monitor” and Asian Development Bank’s Special Note December 2009 publicationentitled “Is Recovery Taking Hold in Developing Asia?” from the website of the Asian Development Bank at www.adb.org.Please see Note 1 on page 107 of this Prospectus.
Singapore
In 2008, the Singapore economy grew by 1.1% compared with 7.8% in 2007(1). The worsening of theglobal economic crisis since November 2008 resulted in sharp declines in global demand, trade andinvestments. This had negatively affected the Singapore economy, resulting in a 6.5% contraction in thefirst half of 2009(2). According to the Ministry of Trade and Industry, the Singapore economy grew by 0.6%on a year-on-year basis in the third quarter of 2009, compared to a contraction of 3.3% in the secondquarter. For the year 2009, Singapore economy’s GDP growth is forecast to be between -2.5% to -2.0%.The Ministry of Trade and Industry forecasts the Singapore economy to grow by 3.0% to 5.0% in 2010.(3)
In response to the economic downturn, the Singapore government unveiled a S$20.5 billion fiscalstimulus package in January 2009 to avoid a sharper downturn in Singapore’s economy. Of the S$20.5billion, the Singapore government will spend S$4.4 billion on public works by bringing forwardinfrastructure projects, rejuvenating public housing estates and upgrading education and healthinfrastructure.(4)
Notes:-
(1) Source: Press release titled “Singapore Economy Grew by 1.1 Per Cent in 2008” dated 26 February 2009 and the EconomicSurvey of Singapore 2008 from the website of the Ministry of Trade and Industry of Singapore at www.mti.gov.sg. Please seeNote 3 on page 107 of this Prospectus.
(2) Source: Press release titled “2009 GDP Growth Forecast Maintained at -6.0 to -4.0 Per Cent” dated 11 August 2009 from thewebsite of the Ministry of Trade and Industry of Singapore at www.mti.gov.sg. Please see Note 3 on page 107 of thisProspectus.
(3) Source: Press release titled “MTI Forecasts Growth of 3.0 to 5.0 per cent in 2010” dated 19 November 2009 from the websiteof the Ministry of Trade and Industry of Singapore at www.mti.gov.sg. Please see Note 3 on page 107 of this Prospectus.
(4) Source: Speech of Mr. Tharman Shanmugaratnam, Minister for Finance titled “Budget Speech 2009, Keeping Jobs, Buildingfor the Future” dated 22 January 2009 from the website of the Ministry for Finance of Singapore at ww.mof.gov.sg. Pleasesee Note 4 on page 107 of this Prospectus.
Malaysia
According to the Asian Development Bank, Malaysia’s GDP is expected to contract by 2.5% in 2009 andrecover to grow by 4.5% in 2010. The contraction in Malaysia’s output had slowed in the second and thirdquarters of 2009 such that the drop in economic activities for 2009 will be less severe than what hadbeen anticipated earlier by the Asian Development Bank.(1)
In November 2008, Malaysia rolled out two stimulus packages totalling RM67 billion, of which RM7 billionis committed to projects under public–private partnerships and other off-budget projects such as the low-cost carrier terminal at the Kuala Lumpur International Airport and expansion of Pulau Pinang airport.(2)
Notes:-
(1) Source: Asian Development Bank’s Special Note December 2009 publication entitled “Is Recovery Taking Hold in DevelopingAsia?”. Please see Note 1 on page 107 of this Prospectus.
(2) Source: Publication titled “Asian Development Outlook 2009, Rebalancing Asia’s Growth” from the website of the AsianDevelopment Bank at www.adb.org. Please see Note 1 on page 107 of this Prospectus.
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Vietnam
According to the Asian Development Bank, Vietnam’s GDP growth is expected to slow to 5.0% in 2009,compared to 6.2% in 2008. For 2010, the Vietnamese economy is expected to report GDP growth of6.5%. While tightened monetary policy implemented by the Vietnamese government might restrain theVietnamese economy in 2010, the Asian Development Bank expects the strong momentum to allow theeconomy to achieve the rates of output expansion that it has projected.(1)
In response to the global economic downturn, the Vietnamese government had announced in December2008 that it would adopt a fiscal stimulus package of about US$1 billion, which is mainly for corporateand value-added tax cuts.(2)
Notes:-
(1) Source: Asian Development Bank’s Special Note December 2009 publication entitled “Is Recovery Taking Hold in DevelopingAsia?”. Please see Note 1 on page 107 of this Prospectus.
(2) Source: Publication titled “Asian Development Outlook 2009, Rebalancing Asia’s Growth” from the website of the AsianDevelopment Bank at www.adb.org. Please see Note 1 on page 107 of this Prospectus.
Indonesia
According to the Asian Development Bank, the Indonesian economy has grown steadily in 2009,supported by robust domestic demand and limited dependency on external demand. The AsianDevelopment Bank expects the Indonesian economy to grow by 4.3% in 2009 and 5.4% in 2010.(1)
In February 2009, the Indonesian parliament approved a Indonesian Rupiah 73.3 trillion fiscal stimuluspackage of which about 13% of the package will be focused on labour-intensive infrastructure worksinvolving water supply projects, low-cost housing, roads and ports, 35% of it to support privateconsumption through waivers of income and value-added taxes, and around 50% of it for support of tradefinance, tax breaks, waived import duties and subsidies. (2)
With the projected recovery of the global and regional economies over the next few years, our Directorsbelieve that construction and civil engineering activities are expected to pick up and result in increasingdemand for cranes and aerial lifts. In the short term, construction and civil engineering activities incountries where the governments have initiated infrastructure projects (as part of their fiscal stimuluspackages) are expected to provide support for the demand for cranes and aerial lifts. In addition, ourDirectors also believe that the expected increase in demand for cranes and aerial lifts may also benefitour trading business as potentially more cranes and aerial lifts are required to cope with the increase inconstruction and civil engineering activities.
Notes:-
(1) Source: Asian Development Bank’s Special Note December 2009 publication entitled “Is Recovery Taking Hold in DevelopingAsia?”. Please see Note 1 on page 107 of this Prospectus.
(2) Source: Publication titled “Asian Development Outlook 2009, Rebalancing Asia’s Growth” from the website of the AsianDevelopment Bank at www.adb.org. Please see Note 1 on page 107 of this Prospectus.
Outlook for the Singapore Construction Industry
According to the BCA, strong demand for private residential and commercial developments, as well aspublic residential and civil engineering works, had driven construction demand in 2008 to a high ofS$34.6 billion. In 2009, with public sector projects leading new construction works, the total constructiondemand in Singapore is projected to reach between S$22 billion and S$29 billion.(1)
Note:-
(1) Source: Media release titled “Government to advance small and medium-sized public sector projects; good career prospectsfor construction sector” dated 6 February 2009 from the website of the BCA at www.bca.gov.sg. Please see Note 5 on page107 of this Prospectus.
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
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Infrastructure and Public Sector Construction
Public sector construction demand in 2009 is anticipated to reach between S$18 billion and S$20 billion.This demand will be largely fuelled by infrastructure projects such as the MRT projects (Downtown Line,the North-South Line Extension and Jurong East Connection) and major road projects. Other major publicsector projects include new HDB flats to meet the ongoing demand for public housing, redevelopment ofthe Singapore General Hospital Pathology Education Research Building and National Heart Centre, aswell as the new International Cruise Terminal.(1)
According to the BCA, the average annual construction demand for the next two years, 2010 and 2011 isprojected to range between S$20 billion and S$27 billion. Compared to the average annual constructiondemand of S$13 billion from 1998 to 2006, the projection of at least S$20 billion annually for 2009, 2010and 2011 is at least 54% higher. The number of large projects which are already underway and thecontinued strong public sector construction demand are expected to continue to generate a sustainedlevel of construction activity over the next two to three years.(1)
Note:-
(1) Source: News releases titled “Construction Sector Continues to Woo New Entrants with Sustained Workload” dated 14January 2009 and “Government to Advance Small and Medium-sized Public Sector Projects; Good Career Prospects forConstruction Sector” dated 6 February 2009 from the website of the BCA at www.bca.gov.sg. Please see Note 5 on page 107of this Prospectus.
Private Sector Construction
Due to the weak economic outlook, private sector construction demand is projected to moderatesignificantly to between S$5 billion and S$9 billion in 2009. This is compared to private constructiondemand of S$20.1 billion in 2008. Nevertheless, the BCA expects higher demand for private institutionaland other buildings to provide support to the overall private sector construction demand.(1)
According to the Ministry of Trade and Industry of Singapore, the construction sector grew by 13% in thethird quarter of 2009, compared to a 19% growth in the previous quarter. Growth in certified paymentsmoderated to 7.6%, with private sector projects registering a sharper slow down, particularly in theresidential and industrial building segments. Contracts awarded had declined at a slower rate of 29%(compared to 39% in the previous quarter) and construction demand was supported by continued growthin public sector projects. Major projects awarded in this quarter included various MRT Downtown Lineprojects and the International Cruise Terminal at Marina South.(2)
Our Directors believe that despite the current weak economic outlook, construction activities in Singaporeare expected to be sustained by construction demand from the public sector, especially for publicinfrastructure projects. With our track record in infrastructure projects such as Kallang-Paya LebarExpressway and the Boon Lay MRT extension in recent years, we expect our equipment rental businessto benefit from the increased demand for cranes and aerial lifts to support infrastructure projects. Forexample, our cranes are currently deployed for the Jurong Rock Cavern Underground Oil Storage and theMarina Coastal Expressway projects.
Notes:-
(1) Source: News release titled “Construction Sector Continues to Woo New Entrants with Sustained Workload” dated 14 January2009 from the website of the BCA at www.bca.gov.sg. Please see Note 5 on page 107 of this Prospectus.
(2) Source: Economic Survey of Singapore Third Quarter 2009 from the website of the Ministry of Trade and Industry ofSingapore at www.mti.gov.sg. Please see Note 3 on page 107 of this Prospectus.
Offshore and Marine and Oil and Gas Industries
In general, the rental and purchase of cranes and aerial lifts are required during the construction ofoffshore and marine vessels in shipyards, and the construction of oil refineries, petrochemical facilities,tank terminals and storage facilities for the oil and gas sector.
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The prospects of the offshore and marine and oil and gas industries will depend on the capitalexpenditures and increased activities of the major industry players such as BP P.L.C., Royal Dutch ShellP.L.C. and ExxonMobil Corporation. Capital expenditure by these companies on the offshore exploration,development and production of oil and gas is directly affected by oil and gas prices. Increasing oil andgas prices justify higher capital expenditure by the offshore and marine and the oil and gas companieson offshore exploration, development and production activities.
Some of the major completed and pipeline activities are:
� In February 2009, Vietnam opened its first oil refinery with a construction cost of US$3 billion,which is able to produce 148,000 barrels per day.(1)
� ExxonMobil announced in November 2007 that the project start-up of the second world-scalepetrochemical complex on Jurong Island, is expected to be scheduled for 2011.(2)
� In April 2009, Singapore awarded a S$890 million contract to South Korea’s Hyundai to build a 9.5million barrels rock cavern oil storage facility. The first phase of the 1.48 million cubic metresterminal, which includes five caverns on offshore Jurong Island, will hold crude, naphtha,condensate and gas oil. The first two caverns are expected to become operational in early 2013.(3)
� Shell Chemicals Limited announced in November 2009 the successful start-up of its new world-scale monoethylene glycol unit at the Shell Eastern Petrochemicals Complex in Singapore. TheShell Eastern Petrochemicals Complex also includes a new 800,000 tonnes per annum ethylenecracker, a butadiene plant and modifications to Shell’s Bukom refinery, which are planned to startup in early 2010. (4)
� Based on the economic surveys of Singapore published by the Ministry of Trade and Industry ofSingapore for the first three quarters of 2009, the chemical industry cluster (which includes thepetrochemicals sector) in Singapore attracted aggregate fixed asset investment commitments ofapproximately S$2.6 billion in the first nine months of 2009. (5)
Our Directors believe that the expected recovery in the global economy may lead to increased demandfor petrochemical products. This may in turn lead to increased investments and capital expenditures inthe offshore and marine and oil and gas industries, for example construction of new oil refineries orpetrochemical facilities and construction of offshore vessels. Our equipment rental business is likely tobenefit from increased demand for cranes and aerial lifts arising from these activities.
Notes:-
(1) Source: News release titled “Vietnam Opens Refinery, Overcoming Foreign Criticism (Update1)” dated 22 February 2009 fromthe website of Bloomberg L.P. at www.bloomberg.com. Please see Note 6 on page 107 of this Prospectus.
(2) Source: News release titled “ExxonMobil breaks ground on second world-scale petrochemical project in Singapore” dated 6November 2007 from the website of ExxonMobil Corporation, Singapore at www.exxonmobil.com.sg. Please see Note 7 onpage 107 of this Prospectus.
(3) Source: News release titled “Work to start on oil cavern” dated 17 April 2009 from the website of the Straits Times(Singapore) at www.straitstimes.com. Please see Note 8 on page 107 of this Prospectus.
(4) Source: News release titled “Shell starts-up world-scale monoethylene glycol plant in Singapore” dated 17 November 2009from the website of Shell Chemicals Limited at www.shell.com. Please see Note 9 on page 107 of this Prospectus.
(5) Source: Economic Survey of Singapore Third Quarter 2009, Economic Survey of Singapore Second Quarter 2009 andEconomic Survey of Singapore First Quarter 2009 from the website of the Ministry of Trade and Industry of Singapore atwww.mti.gov.sg. Please see Note 3 on page 107 of this Prospectus.
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
Notes:
(1) The Asian Development Bank has not consented to the inclusion of the information extracted from the above source for thepurposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 of theSecurities and Futures Act. While we have taken reasonable actions to ensure that the information are reproduced in itsproper form and context, and that the information is extracted accurately and fairly from the above source, neither we, theVendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independent review of theinformation extracted or verified the accuracy of such data.
(2) The International Monetary Fund has not consented to the inclusion of the information extracted from the above source forthe purposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 of theSecurities and Futures Act. While we have taken reasonable actions to ensure that the information are reproduced in itsproper form and context, and that the information is extracted accurately and fairly from the above source, neither we, theVendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independent review of theinformation extracted or verified the accuracy of such data.
(3) The Ministry of Trade and Industry of Singapore has not consented to the inclusion of the information extracted from theabove source for the purposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253and 254 of the Securities and Futures Act. While we have taken reasonable actions to ensure that the information arereproduced in its proper form and context, and that the information is extracted accurately and fairly from the above source,neither we, the Vendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independentreview of the information extracted or verified the accuracy of such data.
(4) The Ministry for Finance of Singapore has not consented to the inclusion of the information extracted from the above sourcefor the purposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 ofthe Securities and Futures Act. While we have taken reasonable actions to ensure that the information are reproduced in itsproper form and context, and that the information is extracted accurately and fairly from the above source, neither we, theVendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independent review of theinformation extracted or verified the accuracy of such data.
(5) The Building and Construction Authority of Singapore has not consented to the inclusion of the information extracted from theabove source for the purposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253and 254 of the Securities and Futures Act. While we have taken reasonable actions to ensure that the information arereproduced in its proper form and context, and that the information is extracted accurately and fairly from the above source,neither we, the Vendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independentreview of the information extracted or verified the accuracy of such data.
(6) Bloomberg L.P. has not consented to the inclusion of the information extracted from the above source for the purposes ofSection 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 of the Securities andFutures Act. While we have taken reasonable actions to ensure that the information are reproduced in its proper form andcontext, and that the information is extracted accurately and fairly from the above source, neither we, the Vendor nor the JointIssue Managers, Underwriter and Placement Agent have conducted an independent review of the information extracted orverified the accuracy of such data.
(7) ExxonMobil Corporation, Singapore has not consented to the inclusion of the information extracted from the above source forthe purposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 of theSecurities and Futures Act. While we have taken reasonable actions to ensure that the information are reproduced in itsproper form and context, and that the information is extracted accurately and fairly from the above source, neither we, theVendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independent review of theinformation extracted or verified the accuracy of such data.
(8) Singapore Press Holdings Limited has not consented to the inclusion of the information extracted from the above source forthe purposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 of theSecurities and Futures Act. While we have taken reasonable actions to ensure that the information are reproduced in itsproper form and context, and that the information is extracted accurately and fairly from the above source, neither we, theVendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independent review of theinformation extracted or verified the accuracy of such data.
(9) Shell Chemicals Limited has not consented to the inclusion of the information extracted from the above source for thepurposes of Section 249 of the Securities and Futures Act, and thereby is not liable under Sections 253 and 254 of theSecurities and Futures Act. While we have taken reasonable actions to ensure that the information are reproduced in itsproper form and context, and that the information is extracted accurately and fairly from the above source, neither we, theVendor nor the Joint Issue Managers, Underwriter and Placement Agent have conducted an independent review of theinformation extracted or verified the accuracy of such data.
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TREND INFORMATION
For the current financial year and barring unforeseen circumstances, our Directors have observed thefollowing trends:-
(a) Rental rates for mid-to-high lifting capacity cranes are expected to stay stable in view of a shortageof such cranes available for use in the infrastructure and geotechnic industry.
(b) Rental rates for aerial lifts are expected to stay stable in view of the sustained demand as a resultof several major construction projects in Singapore entering their renovation and fitting stages, forexample the integrated resorts at Marina Bay and Sentosa.
(c) Due to the global economic slowdown and the credit crunch, trading of equipment has experienceda slow down in the second half of FY2009. However, we have seen a recovery in demand andbuying interest towards the end of FY2009. Both crane and aerial lift prices have also increasedslightly in the first quarter of FY2010.
(d) Due to the global economic slowdown, costs including our labour costs have remained stable forthe first quarter of FY2010. We expect our costs to remain stable for the rest of the financial year.
ORDER BOOK
As our cranes and aerial lifts rental contracts are mainly on short-term basis and driven by the projectwork requirements of our customers, our order book for equipment rental contracts (in respect of projectworks) as at any particular date is subject to changes in our customers’ project schedules orcancellations of projects and may not be indicative of revenue for any succeeding period. In relation toour cranes and aerial lifts trading contracts, our trading customers place orders for equipment inaccordance with their operational requirements which vary from time to time. In this connection, we donot have a meaningful order book.
Save as disclosed in this Prospectus and barring any unforeseen circumstances, our Directors are notaware of any other significant recent known trends in production, sales, inventory, the costs and sellingprices of our products and services, or any other known trends, uncertainties, demands, commitments orevents that are reasonably likely to have a material and adverse effect on our sales or revenues,profitability, liquidity or capital resources, or that would cause financial information disclosed in thisProspectus to be not necessarily indicative of our future operating results or financial condition. Pleasealso refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements” of thisProspectus.
BUSINESS STRATEGIES AND FUTURE PLANS
We intend to focus on the following business strategies for the future growth and expansion of ourbusiness:
Renewal and expansion of our equipment rental fleet in Singapore to target a larger customerbase and provide more complementary product offerings
We will continue to acquire both new and used lifting equipment to renew and expand our equipmentrental fleet. With an advanced and larger equipment rental fleet, we believe that we will be able to targeta larger pool of customers and further expand our customer base.
Through the renewal of our equipment rental fleet, we intend to lower the average age of our cranes. Witha fleet of newer cranes, we believe equipment downtime caused by wear and tear would be reduced,thereby resulting in an equipment rental fleet that is more reliable.
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In the renewal and expansion of our crane rental fleet, we will focus on building up our fleet of cranes inthe mid-to-high lifting capacity segment which are deployed for larger projects. We also intend to offermore niche services through the acquisition of specialised equipment that have greater liftingperformance and height access. Through broadening our product offerings, we will be better able to offera more complete set of lifting services to our customers.
We intend to set aside approximately S$10.0 million of the net proceeds from the issue of New Shares tofund the renewal and expansion of our equipment rental fleet in Singapore.
Expansion of our business and operations through acquisitions, joint ventures and/or strategicalliances
While we intend to focus on our principal businesses in the rental and trading of heavy lifting equipment,we plan to explore opportunities to collaborate with suitable partners in related industries throughstrategic alliances, joint-ventures, acquisition of, and investments. For example, we may collaborate withpartners in the infrastructure and geotechnic, offshore and marine, oil and gas industries if these effortsprovide us with more business opportunities, in particular higher margin projects with requirements forturnkey project engineering services. If the right opportunity arises, we may also use our listing proceedsto acquire equipment rental companies.
We intend to set aside approximately S$2.0 million of the net proceeds from the issue of New Shares tofund the above expansion of our business and operations. At present, we have not identified any specificacquisition targets or opportunities.
Expansion of our equipment rental fleets in Malaysia and Vietnam
We intend to explore and develop new business opportunities in countries where we currently have apresence. In these countries, we also plan to locate our equipment rental fleet nearer to our customers soas to reduce transportation costs and enable us to respond more effectively to our customers’requirements.
We had on 3 April 2009 incorporated SHMSB, our subsidiary in Malaysia. As at the Latest PracticableDate, our equipment rental fleet in Malaysia comprises of two cranes and we serve mainly customers inthe offshore and marine industry. We believe that with the recovery of the global and Malaysianeconomies, there will be increased offshore and marine activities in Malaysia. This will in turn give rise toincreased demand for our heavy lifting services. To meet the expected increase in demand for our heavylifting services, we plan to increase our equipment rental fleet in Malaysia through the acquisition ofcranes and aerial lifts.
On 5 January 2009, we incorporated SHV, our subsidiary in Vietnam. On 8 October 2009, SHV enteredinto an agreement to acquire five cranes and two boom lifts from Tan Cranes & Equipment Co., Ltd. Thisacquisition was completed on 15 December 2009. Please refer to the section entitled “Interested PersonTransactions” of this Prospectus for more details regarding the acquisition.
We believe that the recovery of the global and Vietnamese economies will give rise to increased demandfor our lifting services, in particular from the infrastructure and geotechnic and oil and gas industries. Weplan to increase our equipment rental fleet in Vietnam through the acquisition of cranes and aerial lifts.
We intend to set aside approximately S$5.0 million of the net proceeds from the issue of New Shares tofund the expansion of our equipment rental fleet in Malaysia and Vietnam. The number and type ofcranes and aerial lifts that we will acquire will depend on our customer’s requirements as well as theavailability and pricing of such equipment.
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MANAGEMENT REPORTING STRUCTURE
Our management reporting structure as at the Latest Practicable Date is set out below:-
DIRECTORS
Our Directors are entrusted with the responsibility for the overall management of our Group. Theparticulars of our Directors as at the date of this Prospectus are set out below:-
Name Age Address Occupation
Derrick Lee Meow Chan 57 18 Grove Drive, Investment Director Singapore 279058
Tan Cheng Soon Don 42 71 Cavenagh Road, #11-330, Managing Director Cavenagh Gardens, Singapore 229623
Tan Cheng Guan 39 200 Upper Thomson Road, #04-10, Executive Director Singapore 574424
Tan Cheng Kwong 36 3 King’s Walk, King’s Garden, Executive Director Singapore 268017
Leong Wing Kong 39 137 Sunset Way, #09-21, Investment ManagerSingapore 597159
Teo Yi-Dar 38 451 Ang Mo Kio Ave 2, Investment Director Singapore 567881
Managing Director/ Head, Crane Rental Tan Cheng Soon Don
Board of Directors
Head, Crane Trading
Tan Cheng Guan
Sales Manager, Crane Trading
Melda Lee Tze Yeen
Head, Aerial Lifts Tan Cheng Kwong
Sales Manager, Aerial Lifts
Gui Tze Tsing
Group Financial Controller
Andrew William Khine
Name Age Address Occupation
Yeo Yun Seng 59 25A Jalan Tua Kong, Business Consultant Singapore 457227
Tan Keh Yan, Peter 62 732 Upper Changi Road East, #08-05, Independent Director Singapore 486860
Renny Yeo Ah Kiang 59 160 Watten Estate Road, Senior Advisor Singapore 287610
Note:-
(1) Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong are brothers.
Save as disclosed, none of our Directors are related to each other or to our Executive Officers or to ourSubstantial Shareholders.
Information on the business and working experience, education and professional qualifications, if any,and areas of responsibilities of our Directors are set out below:-
Mr Derrick Lee Meow Chan joined us as our Non-executive Director on 18 July 2008 and was appointedNon-executive Chairman of our Company on 21 December 2009. Mr Lee has a wide range of experiencein the financial industry. He is currently the managing partner of SEAVI Advent which provides fundmanagement services to SEAVI Advent Funds. Prior to joining SEAVI Advent in 1984, he was the directorof finance and administration at Scollay Trading Pte. Ltd., a food and trading company where he was incharge of finance and administration. Between August 1976 and April 1983, he was the group secretaryand financial controller of New Zealand Milk Products (Pte) Ltd, a wholesaler, manufacturer anddistributor of dairy products, where he headed the financial operation and administration of the company.In June 1975, Mr Lee joined Coopers & Lybrand, Singapore as a senior auditor. Mr Lee studied in SouthWest London College in the United Kingdom in 1974 and graduated with a professional degree from theAssociation of Chartered Certified Accountants, UK. He is a Chartered Accountant with the Associationof Chartered Certified Accountants, UK and a Non-practising Member of the Institute of Certified PublicAccountants of Singapore.
Mr Tan Cheng Soon Don joined us in 1989 where he started in various junior positions and worked hisway up from a crane operator to a supervisor and eventually to being our Managing Director. He joinedour Board in 1994 and was promoted to the position of Managing Director of our Group in August 2008.Mr Tan Cheng Soon Don is responsible for our overall strategy, management and operations.Concurrently, as the head of our crane rental business, Mr Tan Cheng Soon Don is in charge ofidentifying and developing new customers and maintaining relationships with our existing customers. MrTan Cheng Soon Don has more than 20 years of experience in the business of rental and trading ofcranes and other heavy equipment. Under his leadership, our Group has grown into one of the leadingheavy lifting services providers in Singapore. Mr Tan Cheng Soon Don obtained a Primary EducationCertificate and he attended Seh Chuan High School for his secondary level education.
Mr Tan Cheng Guan joined us in 1993 where he started off in junior positions and worked his way up tohis current position as an Executive Director of our Company. He joined our Board in 1996. Currently, MrTan Cheng Guan is the head of our crane trading business. He is responsible for developing newprocurement channels, promoting our sales, identifying new business opportunities and customers andmanaging relationships with our existing customers in relevant areas. Mr Tan Cheng Guan has more than16 years of experience in the business of rental, trading of cranes and other heavy lifting equipment.Through the efforts of Mr Tan Cheng Guan, our Group has been able to expand the scope and revenuesof our crane trading business. Mr Tan Cheng Guan is also in charge of our maintenance service team. Hegraduated from Singapore Polytechnic with a Diploma in Mechanical Engineering in 1990.
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Mr Tan Cheng Kwong joined us in 1995 where he started off in junior positions and worked his way upto his current position as an Executive Director of our Company. He joined our Board in 1996 and wassubsequently appointed to head the aerial lift business in 1999. Since then, he has been in charge of themanagement and operation of SHAL. Mr Tan Cheng Kwong has more than 14 years of experience in theequipment rental and trading business. Under the management of Mr Tan Cheng Kwong, our aerial liftsbusiness has grown significantly and SHAL is now one of the leading aerial lifts rental companies inSingapore. Mr Tan Cheng Kwong attained the Singapore-Cambridge General Certificate of EducationOrdinary Level Examination Pass in 1989.
Mr Leong Wing Kong joined us as a Non-executive Director and Non-independent Director in July 2008.He is a member of our Audit Committee. Mr Leong has over nine years of experience in the areas ofprivate equity, venture capital and direct investment. Currently, he is an investment manager with SEAVIAdvent where his responsibilities include supporting SEAVI Advent’s investment business in ASEAN andChina. Between November 1995 and March 2000, Mr Leong was an associate at the Capital MarketsDepartment of DBS Bank Limited where he was involved in corporate advisory services and providedmerger and acquisition advisory services to clients in various industries. Before joining DBS BankLimited, he was an auditor at Deloitte Touche Tohmatsu, Kuala Lumpur between July 1992 andDecember 1993, and he later became an audit supervisor at Price Waterhouse, Singapore from January1994 and November 1995. Mr Leong began his career as an audit assistant at Azman, Wong Salleh &Co., Kuala Lumpur in March 1992. Mr Leong graduated with a degree of Bachelor of Business inAccounting in 1991 from Swinburne University of Technology in Australia. Mr Leong is also a CertifiedPracticing Accountant registered with the Australian Society of Certified Practising Accountants.
Mr Teo Yi-Dar joined us as a Non-executive Director and Non-independent Director in July 2008. He is amember of our Remuneration Committee and Nominating Committee. Mr Teo Yi-Dar is currently aninvestment director of SEAVI Advent. Mr Teo Yi-Dar has more than 10 years of experience in the areas ofprivate equity, venture capital and direct investment. His responsibilities include managing investments inASEAN and China and fundraising from potential investors. Under his management, SEAVI Advent hasinvested in a number of companies in the electronics, chemical, engineering and manufacturing sectors.Prior to joining SEAVI Advent in October 1999, he was an executive at the business development divisionof Keppel Corporation Limited, where his role primarily focused on investments in the engineering andmarine sectors. Between June 1996 and June 1997, Mr Teo was a manufacturing engineer at SGS-Thomson Microelectronics Pte. Ltd. Mr Teo graduated with a degree of Bachelor of Electrical Engineeringwith Honours in 1996 from the National University of Singapore. He obtained a Master of Science Degreein Industrial Systems Engineering in 1998 and a Masters of Science Degree in Applied Finance in 2000both from the National University of Singapore. Mr Teo was awarded the Chartered Financial Analyst bythe CFA Institute in 2001.
Mr Yeo Yun Seng joined us as our Independent Director with effect from 21 December 2009. He is theChairman of our Audit Committee. He joined Turquands Ernst and Whinney in January 1973 as an auditclerk and promoted to audit assistant. He left the firm in January 1977 and joined France Scott Pte Ltd (aSime Darby Group Company in Singapore) in February 1977 as its financial controller, where he wasresponsible for finance, administration, and human resources. Mr Yeo joined Nemic-Lambda (S) Pte Ltd(a Japanese company) in December 1980 as its finance and personnel manager. His mainresponsibilities were in the areas of finance, cost, internal control and human resources. In March 1983,Mr Yeo joined Airpax Components Far East Pte Ltd (a US company) as a finance and administrationmanager. In October 1986, he left to join Compaq Asia Pte Ltd as financial controller. During his time inCompaq, Mr Yeo started its Asia Pacific headquarters with the incorporation of Compaq Computer AsiaPacific Limited in February 1991 and became its chief financial officer and head of strategic investment.His responsibilities include strategic business planning and execution, information management, finance,human resources, and operations. He was also a pioneer member involved in Compaq’s start-upoperations of its Singapore and China factories. He was also involved in setting up its Asia Pacificheadquarters and sales operations offices in China, Hong Kong, Taiwan, Korea, India and various otherASEAN countries. He left Compaq in September 1996 and started Plan-B Technologies Pte Ltd and
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became its shareholder, executive director and chief financial officer. He was responsible for driving itsbusiness development in the information technology sector. In September 1997, Mr Yeo divested hisshareholding in the company. Thereafter, he started his consulting business under the entity of HT & BYFinancial Management Consultants. Since 1997, Mr Yeo has been a business consultant providingservices to small and medium enterprises and listed companies in the areas of developing its vision andstrategies, driving execution, turning around and growing business units and grooming key executivesincluding chief executive officers in preparation for listing and or overseas business expansion. InNovember 2000, Mr Yeo also incorporated Channel Consulting Group Pte Ltd which offers similar typeservices. Mr Yeo graduated with The Chartered Association of Certified Accountants in 1978 and wasawarded a fellow (FCCA) in 1985. In addition, he was awarded a Fellow of the Singapore HumanResources Institute. He is the honorary treasurer of the Singapore Human Resources Institutes and hasbeen in the council for over 20 years.
Mr Tan Keh Yan, Peter joined us as our Independent Director with effect from 21 December 2009. Hejoined DBS Bank in 1972 as a project analyst. During the period between 1972 and 2003, he heldvarious positions based in Singapore, the United States of America, South Korea and Thailand with DBSBank including general manager and subsequently executive director of DBS Finance Ltd. He last heldthe position of managing director, Enterprise Banking, where he was responsible for businessdevelopment of banking solutions to small and medium enterprises. In early 2004, he joined RedwoodCapital Pte Ltd, a wealth management and financial advisory firm as its managing director until 2005when he left the company. Currently, Mr Tan sits as an independent director of two companies listed onthe SGX-ST, namely Asia Enterprises Holding Ltd and CHT (Holdings) Ltd. He graduated with a Bachelorof Science (Hons) from the University of Singapore in 1972 and a Master of Business Administration fromthe University of California, Los Angeles in 1985.
Mr Renny Yeo Ah Kiang joined us as our Independent Director with effect from 21 December 2009. Heis the Chairman of the Remuneration Committee and a member of the Nominating Committee. He is alsoa non-executive director of Oakwell Engineering Limited, a company listed on the Catalist of the SGX-ST.
Mr Yeo is currently a director of Singapore Cables Manufacturers Pte Ltd and a senior advisor to the chiefexecutive officer of Draka Holding N.V., a provider of cable solutions. He has more than 30 years ofworking experience in the field of electrical engineering and cable industries. He started his career in1972 as a production designer in Vosper Thornycroft (U.K.) Shipyard. He rose to become the chiefelectrical engineering design and estimating manager, and eventually deputy divisional manager of theSupport Services Division of Vosper Thornycroft (Singapore), before joining Singapore CablesManufacturers Pte Ltd, a wholly owned subsidiary of Draka Holding N.V. in 1983. He was responsible forbuilding the business footprint and growth of the Draka Group in Asia-Pacific throughout the last 26years.
Mr Yeo is a full member of the Singapore Institute of Directors. He currently sits on several governmentcommittees, including as the chairman of Singapore Accreditation Council (SAC), a council member ofthe Standard Council (SPRING), the deputy chairman of The Singapore National Committee of TheInternational Electrotechnical Commission, the chairman of Electrical & Electronic Product StandardsCommittee (SPRING), patron of the Singapore Productivity Association, member of Water Network 3rdPanel, member of the Economic Strategies Committee (ESC) Subcommittee on Fostering InclusiveGrowth, member of the Customs Advisory Committee. He is also the president of the SingaporeManufacturers’ Federation (SMa), member of the Singapore Green Building Council (SGBC) FoundingBoard and the council member of Singapore Business Federation. He served as a board member of theBuilding Construction Authority (BCA) from March 2005 to March 2007.
Mr Yeo was conferred the Pingat Bakti Masyarakat (Public Service Medal) by the President of Singaporein 2000. He holds a Higher National Diploma (HND) in Electrical & Electronic Engineering fromSouthampton College of Technology UK and a Master in Management (with High Distinction) from AsiaInstitute of Management, Philippines.
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Mr Derrick Lee Meow Chan, Mr Teo Yi-Dar and Mr Leong Wing Kong are nominated as directors by ourControlling Shareholder, SEAVI.
Save as disclosed, there was no agreement or arrangement with our Substantial Shareholders,customers or suppliers pursuant to which any of our Directors was appointed.
Save as disclosed below, our Directors currently holds or has held the following directorships (other thanin our Company) in the past five years preceding the date of this Prospectus:-
Name Present Directorships Past Directorships
Derrick Lee Meow Chan Group companies Group companiesNil Nil
Other companies Other companiesAccord Investments Inc Aceplus Investments LimitedDemark Holdings Pte Ltd Chic Holdings LimitedOcean Private Equity II Fund Limited Dynamic Colours Pte LtdSAP Investments Limited Leckhampton Holdings LtdSEAVI Advent Asia Investments (II) Ltd Li & Fung (Distribution) LimitedSEAVI Advent Asia Investments (IV) Ltd MBf Cards (Malaysia) Sdn BhdSEAVI Advent CHL Investments Ltd S L Packaging Industries Pte LtdSeavi Advent Corporation Limited Speedy-Tech Holdings LtdSeavi Advent Equity Pte Ltd Stellar Woods LimitedSeavi Advent Equity V (A) LtdSeavi Advent Equity V (B) LtdSeavi Advent Equity V (C) LtdSeavi Advent Holdings LimitedSEAVI Advent Management LimitedSeavi Advent Partners LimitedSeavi Advent Partners II LimitedSEAVI Advent SSC Investment LtdSeavi Advent Venture Management Pte. Ltd.Seavi International Fund Management Pte LtdSeavi Management (S) Pte LtdSeavi Venture Management (Bermuda) Ltd.Seavi Venture Management Pte. Ltd.Seavi Venture Services Pte LtdSHHTFSAThe Seavi III Fund (A) Ltd.The Seavi III Fund (B) Ltd.The Seavi III Fund (C) Ltd.The Seavi III Fund (D) Ltd.The Seavi III Fund (E) Ltd.
Tan Cheng Soon Don Group companies Group companiesSHAL NilSHV
Other companies Other companiesDBPS Capital Pte Ltd Lye Holdings Pte LtdSEPL L & A Crane Sdn BhdTAL Capital Pte Ltd Tan Cranes & Equipment Pte LtdTALH Tiong Pte LtdTFSA Usaha Karun Sdn Bhd
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Name Present Directorships Past Directorships
Tan Cheng Guan Group companies Group companiesSHAL NilSHMSB
Other companies Other companiesTAL Capital Pte Ltd Lye Holdings Pte LtdTALH Pretasi Tropika Sdn Bhd
Sin Heng Heavy Machinery Sdn BhdTiong Pte Ltd
Tan Cheng Kwong Group companies Group companiesSHAL Nil
Other companies Other companiesTAL Capital Pte Ltd NilTALH
Leong Wing Kong Group companies Group companiesSHAL NilSHMSB
Other companies Other companiesNil L.K.W Enterprise Sdn Berhad
S.L. Packaging Industries Pte. Ltd.
Teo Yi-Dar Group companies Group companiesSHAL Nil
Other companies Other companiesBaoling Investments Pte Ltd China Petro Equipment Holdings China Yuanbang Property Holdings Limited Pte. Ltd.Kenyon Group Limited DC (Suzhou) Polymer Co., LtdPleasant Way Analyse Development Limited Dynamic Colours LimitedSAP Investments Limited EPT Environmental Pte Ltd SEAVI Advent Asia Investments (III) Ltd I’M Technologies LtdShengli Oil & Gas Pipe Holdings Ltd Jiangsu New Yangzi Shipbuilding SHH Co. Ltd.TFSA Leader Environmental TechnologiesYangzijiang Shipbuilding (Holdings) Ltd. Pte. Ltd.Yitian Investments Pte. Ltd. S.L. Packaging Industries Pte. Ltd.
Sunvic Chemical Holdings LtdSuzhou S.L. Packaging Co., Ltd.Teng Long Enterprise Pte. Ltd.V-Zone Technologies Pte. Ltd.
Yeo Yun Seng Group companies Group companiesNil Nil
Other companies Other companiesPWC Pte Ltd Agva Corporation LimitedShri Corporation Pte. Ltd. Channel Consulting Group Pte LtdTri-M Technologies (S) Limited
Tan Keh Yan, Peter Group companies Group companiesNil Nil
Other companies Other companiesAsia Enterprises Holding Limited Redwood Capital Pte LtdCHT (Holdings) Ltd
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Name Present Directorships Past Directorships
Renny Yeo Ah Kiang Group companies Group companiesNil Nil
Other companies Other companiesAssociated Cables Pvt Ltd Building Construction AuthorityBonanza Venture Holdings Sdn Bhd Cable Supply And ConsultingEnterprise Development Centre @ Company Private LimitedSingapore Manufacturers’ Federation CSC Cable Sdn Bhd
GS1 Singapore Limited Draka Cableteq Asia Pacific HoldingKay Lim Holdings Sdn Bhd Pte. Ltd.KayLim Philanthropic Resources Berhad Draka Cableteq Australia Pty LtdKinta Properties Holdings Sdn Bhd Draka Cableteq (Hong Kong) LtdMasquad Pte Ltd Draka Comteq Singapore Pte. Ltd.Oakwell Engineering Limited Draka Hong Kong Holding LtdSingapore Cables Manufacturers Pte Ltd Draka (Malaysia) Sdn BhdSMA Services Pte Ltd Draka Shanghai Optical Fibre Cable
Co., Ltd.MCI-Draka Cable Co., Ltd.PSB Corporation Pte LtdRevox Asia Pte LtdSindutch Cable Manufacture Sdn BhdSuzhou Draka Cable Co., Ltd.
EXECUTIVE OFFICERS
Our day-to-day operations are entrusted to our Executive Directors who are assisted by a managementteam of experienced Executive Officers. The particulars of our Executive Officers are set out below:-
Name Age Address Designation
Andrew William Khine 35 Blk 909, Hougang St 91, Group Financial Controller #03-98, Singapore 530909
Melda Lee Tze Yeen 30 Blk 652A Jurong West St 61, Sales Manager, Crane Trading#08-382, Singapore 641652
Gui Tze Tsing 32 Blk 645 Jurong West St 61, Sales Manager, Aerial Lifts #10-116, Singapore 640645
Information on the business and working experience, education and professional qualifications, if any,and areas of responsibilities of our Executive Officers are set out below:-
Mr Andrew William Khine joined us as our Group Financial Controller in May 2009. In this role, he isresponsible for our accounting and financial control matters. Mr Khine has more than 10 years ofaccounting and finance experience in businesses such as equipment rental, manufacturing, propertydevelopment and construction. Mr Khine also has extensive knowledge of the rental and trading ofequipment and inventory management. Prior to joining us, he spent approximately three years as thehead of the group finance department of Aver Asia (S) Pte. Ltd. in Singapore where he was responsiblefor the accounting, finance, treasury and taxation functions. Aver Asia (S) Pte. Ltd. is primarily involved inthe rental and trading of equipment such as aerial lifts and other construction equipment. From April 2005to March 2006, Mr Khine was the financial controller of Singapore Casket Co Pte. Ltd.. Between April1998 and March 2005, Mr Khine was the chief accountant of Serge Pun & Associates Holding Ltd andwas later promoted to the position of chief financial controller of the company with oversight of thecompany’s accounting and financial matters. Before joining Serge Pun & Associates Holding Ltd, MrKhine was an accountant and an administration executive at AWT World Transport Ltd from January 1995to October 1996 and an account manager at Mechmar (Thailand) Co., Ltd. from December 1996 toFebruary 1998. After his graduation, prior to his employment with AWT World Transport Ltd, he worked in
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various part-time audit positions in the United Kingdom and Myanmar. He graduated with a degree ofBachelor of Arts with major in Accounting from University of California (UC-Berkeley) in 1991. He alsoreceived a degree of Master of Business Administration from the University of Hull, UK, in 2008. Mr Khineis a member of the Institute of Management Accountants (United States of America) and a CertifiedPublic Accountant registered with the Institute of Certified Public Accountants (Sri Lanka).
Ms Melda Lee Tze Yeen joined us in August 2001 as a Sales Secretary and left our Group in July 2005.She rejoined us in February 2006 as our Sales Manager. Under the supervision of our ExecutiveDirectors, she is primarily in charge of the day-to-day operations of our crane trading business. BetweenJuly 2005 and January 2006, Ms Lee was employed by LMS Associates Pte Ltd as a corporatesecretarial and accounting executive. She has more than seven years of experience in the trading ofcranes and other equipment. Ms Lee graduated with a degree of Bachelor of Commerce andManagement from Lincoln University (New Zealand) in April 2002. In November 2003, she was awardeda Graduate Diploma in Human Resource Management from the Management Development Institute ofSingapore.
Mr Gui Tze Tsing joined us in September 2008 as our Sales Manager for SHAL. He is currentlyresponsible for the day-to-day operations of our aerial lifts business. Mr Gui has more than five years ofexperience in the trading and rental of aerial lifts business. Before he joined our Company, he was abusiness development manager at Barnsburry Industries Pte Ltd where he was in charge of the salesand leasing of aerial lifts. Between January 2000 and April 2004, he was a senior account executive atTeckwah Value Chain Pte. Ltd. where he provided packaging solutions sales and customer services toclients. Mr Gui received his Diploma in Computer Studies (Information Technology) in 1997 from NgeeAnn Polytechnic.
There was no agreement or arrangement with our Substantial Shareholders, customers or supplierspursuant to which any of our Executive Officers was appointed.
Save as disclosed below, none of our Executive Officers currently holds or has held any directorships inthe past five years preceding the date of this Prospectus:-
Name Present Directorships Past Directorships
Andrew William Khine Group companies Group companiesNil Nil
Other companies Other companiesNil Nil
Melda Lee Tze Yeen Group companies Group companiesNil Nil
Other companies Other companiesNil Nil
Gui Tze Tsing Group companies Group companiesNil Nil
Other companies Other companiesNil Nil
None of our Executive Officers is related to each other or to our Substantial Shareholders.
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STAFF
As at the Latest Practicable Date, we have 167 full-time employees of which 141 are located inSingapore, seven are located in Malaysia and 19 are located in Vietnam. We do not employ any part-timestaff. We do not experience any significant seasonal fluctuations in our number of employees.
Our employees are not unionised. There has not been any incidence of work stoppages or labourdisputes that affected our business. Accordingly, we consider our relationship with our employees to begood.
The functional distribution of our employees as at 30 June 2007, 30 June 2008 and 30 June 2009 are asfollows:-
As atFunction 30 June 2007 30 June 2008 30 June 2009
Crane operators 55 60 71
Mechanics, attendants and general workers 32 40 46
Sales and operations and administrative staff 23 27 30
Total 110 127 147
Save for CPF contributions, we have not set aside or accrued any amounts to provide for pension,retirement or similar benefits for any of our employees.
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES
Directors and Executive Officers
The compensation paid (which includes benefits-in-kind and bonuses) for services rendered to us andour subsidiaries on an aggregate basis and in remuneration bands of S$250,000 during FY2008 andFY2009 (being the last two most recent completed financial years) and estimated compensation forFY2010 (excluding bonuses which have not been paid), are as follows:-
FY2008 FY2009 FY2010(estimated)
DirectorsDerrick Lee Meow Chan –(3) Band A Band ATan Cheng Soon Don Band A Band B Band BTan Cheng Guan Band A Band B Band BTan Cheng Kwong Band A Band B Band BLeong Wing Kong –(3) Band A Band ATeo Yi-Dar –(3) Band A Band AYeo Yun Seng –(3) –(3) Band ATan Keh Yan, Peter –(3) –(3) Band ARenny Yeo Ah Kiang –(3) –(3) Band A
Executive OfficersAndrew William Khine –(2) Band A Band AMelda Lee Tze Yeen Band A Band A Band AGui Tze Tsing –(2) Band A Band A
Notes:-
(1) Band A: Compensation from S$0 to S$250,000 per annum.Band B: Compensation from S$250,001 to S$499,999 per annum.
(2) Not in our employment during the relevant financial year.
(3) Not appointed as our director during the relevant financial year.
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Employees who are related to our Directors and Substantial Shareholders
The basis of determining the remuneration of a related employee is the same as the basis fordetermining the remuneration of other unrelated employees. The total remuneration of employees whoare immediate family members of our Directors and Substantial Shareholders shall be subject to thereview and approval of our Remuneration Committee to ensure that their remuneration packages are inline with our Group’s staff remuneration guidelines and commensurate with the respective job scopes andlevels of responsibility.
The total remuneration paid to our Directors, Executive Officers and any employees who are immediatefamily members of our Directors and Substantial Shareholders will be disclosed in our annual reports.
Our Group currently employs an uncle of our Executive Directors as a mechanic. The said individualdoes not exercise any management powers. Our Directors are of the view that the monthly salarypayable to this related employee is not material for disclosure in this Prospectus.
SERVICE AGREEMENTS
Our Company has entered into separate Service Agreements with our Managing Director, Mr Tan ChengSoon Don and our Executive Directors, Mr Tan Cheng Guan and Mr Tan Cheng Kwong (collectively, the“Appointees”). Each Service Agreement is valid for an initial period of three years with effect from thedate of admission of our Company to the Official List of the SGX-ST. Upon the expiry of the initial periodof three years, the employment of each Appointee shall be automatically renewed on a year-to-year basison such terms and conditions as the parties may agree. During the initial period of three years, eitherparty may terminate the Service Agreement by giving to the other party not less than three months’notice in writing, or in lieu of notice, payment of an amount equivalent to three months’ salary based onthe Appointees’ last drawn monthly salary. Our Group may also terminate the employment of theAppointee without notice or payment in lieu of notice under, inter alia, the following circumstances:-
(i) if the Appointee is guilty of any gross default or grave misconduct in connection with or affectingthe business of our Company;
(ii) in the event of any serious or repeated breach or non-observance by the Appointee of any of thestipulations contained in the Service Agreement;
(iii) if the Appointee becomes bankrupt or makes any composition or enters into any deed ofarrangement with his creditors; or
(iv) if the Appointee shall become of unsound mind.
Pursuant to the terms of the respective Service Agreements, Mr Tan Cheng Soon Don, Mr Tan ChengGuan and Mr Tan Cheng Kwong are entitled to receive monthly salaries of S$28,500, S$27,000 andS$27,000, respectively. Each of them is entitled to receive a fixed bonus of one month’s salary per annumand a variable bonus to be determined by the Board. The Remuneration Committee shall recommend theamount of variable bonus to be paid and the Board shall vote on the recommendations; without thepresence of the Appointee and/or his associates. The variable bonus shall be based on a multiple of eachAppointee’s monthly salary and will vary depending on our Group’s performance.
Under the Service Agreements, each Appointee has covenanted that in the event that he is terminatedfor breach of the terms of his Service Agreement, except with the written consent of our Company, heshall not, inter alia, carry on or be engaged, concerned or interested directly or indirectly in any businesscarried on by our Group, entice away any of our customers or entice away any of our employees forthirty-six (36) months after ceasing his employment under his Service Agreement. While in the event thatan Appointee terminates the Service Agreement by giving to our Company not less than three months’notice in writing, he shall observe the said restraints and restrictions for a period of eighteen (18) monthsafter the date of his notice of resignation.
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Had the Service Agreements been in place with effect from 1 July 2008, the aggregate remuneration paidto the Appointees for FY2009 would have been approximately S$1.4 million instead of approximatelyS$1.2 million and our profit before income tax for FY2009 would have decreased from approximatelyS$25.9 million to approximately S$25.7 million.
There is no existing or proposed service contract entered or to be entered into by our Directors with ourCompany or any of our subsidiaries which provide for benefits upon termination of employment.
Save as disclosed above, there are no other existing or proposed service agreements or servicecontracts between our Company or our subsidiaries and any of our Directors.
CORPORATE GOVERNANCE
Our Directors recognise the importance of corporate governance and the offering of high standards ofaccountability to our Shareholders. Our Board of Directors has formed three committees: (i) the AuditCommittee, (ii) the Remuneration Committee and (iii) the Nominating Committee.
Audit Committee
Our Audit Committee comprises Mr Yeo Yun Seng, Mr Tan Keh Yan, Peter and Mr Leong Wing Kong. TheChairman of the Audit Committee is Mr Yeo Yun Seng.
Our Audit Committee will assist our Board in discharging its responsibility to safeguard our assets,maintain adequate accounting records, and develop and maintain effective systems of internal control,with the overall objective of ensuring that our management creates and maintains an effective controlenvironment in our Group. Our Audit Committee will provide a channel of communication between ourBoard, our management and our external auditors on matters relating to audit.
Our Audit Committee will meet periodically to perform the following functions:-
(a) review with the external auditors the audit plan, their evaluation of the system of internalaccounting controls, their letter to management and the management’s response;
(b) review the half yearly and annual, and quarterly if applicable, financial statements and resultsannouncements before submission to our Board for approval, focusing in particular on changes inaccounting policies and practices, major risk areas, significant adjustments resulting from the audit,compliance with accounting standards and compliance with the Listing Manual and any otherrelevant statutory or regulatory requirements;
(c) review the effectiveness and adequacy of the internal control procedures relating to accountingand financial reporting functions;
(d) ensure co-ordination between the external auditors and our management, and review theassistance given by our management to the auditors, and discuss problems and concerns, if any,arising from audits, and any matters which the auditors may wish to discuss (in the absence of ourmanagement, where necessary);
(e) review and discuss with the external auditors any suspected fraud or irregularity, or suspectedinfringement of any relevant laws, rules or regulations, which has or is likely to have a materialimpact on our Group’s operating results or financial position, and our management’s response;
(f) consider and recommend the appointment or re-appointment of the external auditors and mattersrelating to the resignation or dismissal of the auditors;
(g) review the guidelines and review procedures set out under the sections entitled “Interested PersonTransactions” of this Prospectus and future interested person transactions, if any;
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(h) monitor the undertakings described under the section entitled “Potential Conflict of Interests” of thisProspectus and review potential conflict of interest, if any;
(i) review the suitability of the Group Financial Controller and the adequacy of the finance team on anon-going basis;
(j) review the key financial risk areas, with a view to providing independent oversight on our Group’sfinancial reporting, the outcome of such review to be disclosed in the annual reports or, where thefindings are material, announced immediately via SGXNET;
(k) review the appointments of persons occupying managerial positions who are related to a directoror a substantial shareholder of our Company;
(l) review all hedging policies and guidelines established and implemented by our Board;
(m) review our Group’s hedging policy and practice on an on-going basis;
(n) undertake such other reviews and projects as may be requested by our Board, and report to ourBoard its findings from time to time on matters arising and requiring the attention of our AuditCommittee; and
(o) generally undertake such other functions and duties as may be required by statute or the ListingManual, or by such amendments as may be made thereto from time to time.
Our Audit Committee will meet, as a minimum, on a quarterly basis. Apart from the duties listed above,our Audit Committee shall commission and review the findings of internal investigations into matterswhere there is any suspected fraud or irregularity, or failure of internal controls or infringement of anySingapore law, rule or regulation which has or is likely to have a material impact on our operating resultsand/or financial position. In the event that a member of our Audit Committee is interested in any matterbeing considered by our Audit Committee, he will abstain from reviewing that particular transaction orvoting on that particular resolution.
Our Audit Committee shall engage a third party professional firm to carry out our internal audit functionsafter our Company is listed on the Official List of the SGX-ST.
Our Audit Committee has considered the qualifications and past working experience of Mr AndrewWilliam Khine (as described in the section entitled “Directors, Executive Officers and Staff – ExecutiveOfficers” of this Prospectus), as the basis for the view that Mr Andrew William Khine is suitable for theposition of Group Financial Controller of our Group. In addition, Mr Khine has more than 10 years ofexperience in finance and accounting, and in particular, prior to joining our Group, Mr Khine was thehead of the group finance department of a company that is involved in the rental and trading ofequipment such as aerial lifts and other construction equipment. Based on interactions that our AuditCommittee has had with Mr Andrew William Khine in his capacity as our Group Financial Controllerduring the course of our preparation for this Invitation, our Audit Committee noted that Mr Khine hasdemonstrated his understanding of our Group’s business and has the technical knowledge required toperform his role as Group Financial Controller. Mr Khine has led our finance team in working with ourGroup’s Singapore auditors on the audit of our consolidated financial statements for inclusion in thisProspectus. Based on interactions with other members of our Group’s finance team, discussions with ourGroup’s Singapore auditors and the views of and feedback from the Executive Directors of our Group, ourAudit Committee has not been made aware of any matter that would question Mr Andrew William Khine’ssuitability for the position of Group Financial Controller.
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Remuneration Committee
Our Remuneration Committee comprises Mr Renny Yeo Ah Kiang, Mr Teo Yi-Dar, and Mr Yeo Yun Seng.The Chairman of the Remuneration Committee is Mr Renny Yeo Ah Kiang.
Our Remuneration Committee will recommend to our Board a framework of remuneration for theDirectors and Executive Officers, and determine specific remuneration packages for each ExecutiveDirector. The recommendations of our Remuneration Committee shall be submitted for endorsement bythe entire Board. All aspects of remuneration, including but not limited to directors’ fees, salaries,allowances, bonuses, options and benefits-in-kind shall be covered by our Remuneration Committee. Inaddition, our Remuneration Committee will perform an annual review of the remuneration of employeesrelated to our Directors and Substantial Shareholders to ensure that their remuneration packages are inline with our staff remuneration guidelines and commensurate with their respective job scopes and levelof responsibilities. They will also review and approve any bonuses, pay increases and/or promotions forthese employees. Each member of the Remuneration Committee shall abstain from voting on anyresolutions in respect of his remuneration package or that of employees related to him.
Nominating Committee
Our Nominating Committee comprises Mr Tan Keh Yan, Peter, Mr Renny Yeo Ah Kiang, Mr Teo Yi-Dar andMr Tan Cheng Soon Don. The Chairman of the Nominating Committee is Mr Tan Keh Yan, Peter.
Our Nominating Committee will be responsible for:-
(a) reviewing and recommending the nomination or re-nomination of our Directors having regard to theDirector’s contribution and performance;
(b) determining on an annual basis whether or not a Director is independent;
(c) assessing the performance of the Board and contribution of each Director to the effectiveness ofthe Board; and
(d) reviewing and approving any new employment of related persons and the proposed terms of theiremployment.
Our Nominating Committee will recommend a framework for the evaluation of the Board’s and individualDirector’s performance for the approval of the Board. Each member of our Nominating Committee shallabstain from voting on any resolutions in respect of the assessment of his performance or re-nominationas director.
Term of office
Our articles of association provide that the quorum necessary for transaction of business of our Directorsmay be fixed by them, and unless so fixed shall be two. Save for our Executive Directors, who haveservice agreements with us (please refer to the section entitled “Directors, Executive Officers and Staff -Service Agreements” of this Prospectus for more details) and our Independent Directors, who areappointed for a period of two years from 21 December 2009, none of our Directors are appointed for anyfixed terms. The tenure of our Executive Directors and Independent Directors are subject to the terms ofthe respective service agreements and appointment letters and to being re-elected as directors of ourCompany at general meetings of our Company.
Our Directors are appointed by our Shareholders at general meeting, and an election of Directors takesplace annually. One-third (or the nearest number larger than one-third) of our Directors, are required toretire from office at each annual general meeting. Every Director must retire from office at least onceevery three years. However, a retiring Director is eligible for re-election at the meeting at which he retires.
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We have obtained the necessary business licences for our day-to-day operations. Save as disclosedunder the section entitled “Risk Factors” of this Prospectus and below, we are not subject to any speciallegislation or regulatory controls in the countries in which we operate which has a material effect on ourbusiness operations, other than those generally applicable to companies and businesses in suchcountries.
Singapore
Workplace Safety and Health Act (Cap 354A) (the “WSH Act”)
The WSH Act relates to the safety, health and welfare of persons at work in workplaces. Workplacessubject to the WSH Act include any premises where crane services are carried out by way of trade or forpurposes of gain or incidentally to another business so carried out.
Our Directors are of the view that we are in compliance with the requirements of the WSH Act.
Workplace Safety and Health (Construction) Regulations 2007 (the “WSHC Regulations”)
Part XV of the WSHC Regulations provide, among others, for the duty of the owner of a crane, anemployee’s lift or a material handling machinery being used in a worksite to ensure that the crane,employee’s lift or material handling machine is of good construction, sound material and adequatestrength, free from patent defects and properly maintained. The owner of any crane used in a worksitemust also provide a capacity chart in the manner specified in the WSHC Regulations.
Our Directors are of the view that we are in compliance with the requirements of the WSHC Regulations.
Workplace Safety and Health (General Provisions) Regulations (the “WSHGP Regulations”)
The WSHGP Regulations provide, among others, for the safety requirements applicable to hoists andlifts. Pursuant to the WSHGP Regulations, no hoist, lift, lifting gear, lifting appliance or lifting machine canbe used in a factory unless an authorised examiner has (a) tested and examined the relevant equipmentafter its installation; and (b) issued and signed a certificate of test and examination, specifying the safeworking load of such equipment. Every hoist, lift, lifting gear, lifting appliance or lifting machine used in afactory shall be thoroughly examined by an authorised examiner periodically at intervals as specified inthe WSHGP Regulations or at such intervals as the Commissioner for Workplace Safety and Health maydetermine.
As at the Latest Practicable Date, the Certificate of Test/Thorough Visual Examination of LiftingEquipment for each of our lifting equipment are valid.
Factories (Operation of Cranes) Regulations (“Factories Regulations”)
Pursuant to the Factories Regulations, only crane contractors approved by the Chief Inspector areallowed to carry out installation, repair, alteration and dismantling of mobile cranes or tower cranes (the“Operations”). Crane contractors must first obtain approval from the Chief Inspector before they canundertake the jobs mentioned above. In addition, the owner of any mobile cranes or tower cranes mustensure that all of its cranes are tested and certified safe by an approved person for the operations forwhich they are intended. The said cranes cannot be used unless they have been tested and certifiedaccordingly.
Further, operators of mobile and tower cranes must be registered with the Chief Inspector. Onceregistered, these operators are issued with certificates, which are typically valid for 2 years, indicating thetypes of cranes they are allowed to operate. Only operators who possess the appropriate certificates ofregistration can operate these cranes. Before they may be registered, these operators must first possessthe necessary qualifications required under the Regulations. These qualifications include successfulcompletion by the applicant of the course in crane operation conducted by an institute or organisationacceptable to the Chief Inspector.
As at the Latest Practicable Date, we have a Certificate of Approval as an Approved Crane Contractor,issued under this regulation, which is valid until 31 May 2011.
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Malaysia
Ministry of Human Resources
Pursuant to the Factories and Machinery Act 1967 and the Factories and Machinery (Notification,Certificate of Fitness and Inspection) Regulations 1970, the owner of every hoisting machine (includingcranes) is required to hold a valid certificate of fitness issued by the Inspector of Factories andMachinery, Department of Occupational Safety and Health (“DOSH”), in respect thereof, so long as suchmachinery remains in service and no person shall operate or cause or permit to be operated any suchmachinery without such certificate. SHMSB has obtained all requisite certificates of fitness.
Further, by virtue of the Factories and Machinery (Person-In-Charge) Regulation 1970, operators ofcrane must undergo a course of instruction in the working of the machinery and must be certified to bequalified to operate the particular type of crane by DOSH. Only operators who possess such certificateare allowed to operate these cranes. All crane operators employed by SHMSB have obtained the requiredcertification.
Foreign Participation in Distributive Trade in Malaysia
Pursuant to the Guidelines on Foreign Participation in the Distributive Trade Services in Malaysia (“theCDT Guidelines”), with effect from 1 December 2004, all proposals for foreign involvement in thedistributive trade in Malaysia must obtain the approval of the CDT, MDTCC. Distributive traders includemanufacturers and suppliers who distribute their products and services in the domestic market.Accordingly, the activities of SHMSB’s rental and sale of cranes may fall within the ambit of the guidelinesand as at the date of this Prospectus, we have not obtained the approval of CDT in respect of SHMSB.The following conditions may be imposed on a company incorporated in Malaysia if the CDT Guidelinesare enforced (a) the company shall have at least 30% Bumiputera shareholding in the company; (b) thecompany shall appoint Bumiputera director/directors (c) the company shall have at least RM1 million ofpaid-up capital and reserves for each specialty outlet; and (d) the company is required to submit annualfinancial report to the MDTCC.
Consequences of Non-Compliance of the CDT Guidelines
The CDT Guidelines do not have the force of law (as it is not legislation passed by Malaysian parliamentor regulations under any existing laws) and does not impose any legal sanction for non-compliance.However, there are indirect sanctions that the CDT can impose, for example, the CDT could persuadelocal authorities (such as the immigration department or the local town council) not to grant to companieswho are not in compliance with the CDT Guidelines, licences or permits that may be required underMalaysian law relating to the operations of the company. Please refer to the section entitled “Risk Factors- We require various licences and permits to operate our business in other jurisdictions” of thisProspectus for risks associated with non-compliance with the CDT Guidelines. Notwithstanding theabovesaid, our Malaysian counsels are of the opinion that enforcement against SHMSB is unlikely as inpractice, CDT’s enforcement of the CDT Guidelines is targeted at hypermarkets or supermarkets withforeign interests.
Vietnam
Provincial People’s Committee
It is required under the Law on Investment of Vietnam that when a foreign investor establishes acompany in Vietnam, the establishment of the company must be attached to a specific investmentproject. The foreign invested company is granted with an investment certificate which is also its businessregistration certificate. The licensing authority is the provincial People’s Committee through itsDepartment of Planning and Investment. The provincial People’s Committee also regulates limitation ontransportation of heavy vehicles. SHV has been granted the required investment certificate.
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Ministry of Construction and Provincial Department of Construction
The law on construction requires the enterprises which provide construction services for civil, industrialand traffic works to satisfy the requirements on experience, qualified staff, equipment and machinery.Such requirements are subject to the specific construction work that the company will carry out during itscourse of business. The Ministry of Construction is the regulatory authority for construction business. Theprovincial Department of Construction is authorized to issue professional certificate for qualifiedindividuals who practice in construction field. SHV is in the process of preparing for the commencementof its commercial operation. Once it commences commercial operation, it will comply with all applicablelaws and obtain the registered professional certificates for its operation.
Authority for check and registration of crane
Pursuant to the provisions under Vietnamese construction regulation and transportation regulations,crane and bridge crane must be checked for technical safety conditions by Vietnamese Register or alicensed organisation in Vietnam before use. After such checks by a Vietnamese Register or a licensedorganization, the owner of the cranes or bridge cranes must register with Inspector of the Department ofLabour, Invalids and Social Affairs for work safety. SHV is in the process of preparing for thecommencement of its commercial operation. Once it commences commercial operation, it will registerwith or obtain from the competent authorities all licences, permits or certificates required for its operation.
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Singapore
Currently, there are no exchange control restrictions on the repatriation of capital and the remittance ofprofits into or out of Singapore by or to our Group companies in Singapore.
Malaysia
Under the current Exchange Control Notices of Malaysia issued by Bank Negara Malaysia (“BankNegara”), foreign direct investors are freely allowed to repatriate their investment including capital, profitand dividends. There are also no restrictions on the repatriation of interest and equipment rental incomes.Therefore, there is no impact on the availability of cash and cash equivalents for use by SHMSB and theremittance of dividends, interest or other payments to its shareholder.
With effect from 1 April 2007, as part of Bank Negara’s continuous effort to enhance the businessenvironment, the foreign exchange administration rules were further relaxed with some of the changesbelow:
(a) resident corporations without domestic ringgit credit facilities are free to invest in foreign currencyassets, to be funded from their own foreign currency or conversion of RM funds;
(b) resident corporations are free to open foreign currency account onshore or offshore. No specificprior permission or registration is required; and
(c) there is no limit on the amount of foreign currency funds a resident is able to retain onshore oroffshore.
However, for statistical reasons, with effect from 1 October 2007, Bank Negara requires residents makingpayment or remittances exceeding RM200,000.00 or its equivalent in foreign currency to a non-residentto provide certain information together with supporting documents in respect of such payments.
In addition, Bank Negara announced on 28 May 2008 further liberalisation of rules on borrowing byresidents wherein:
(a) a resident company is free to borrow any amount in foreign currency from its non-resident non-bank parent company;
(b) a resident company is free to obtain any amount of foreign currency supplier’s credit for capitalgoods from non-resident suppliers.
The threshold for foreign currency borrowing of RM100 million in aggregate by a resident company on agroup corporate basis shall no longer be applicable to the above financing activities.
A non-resident non-bank parent company refers to:
(a) a non-resident company with more than 50.0% shareholding in a resident company; or
(b) the ultimate non-resident parent company of the resident company, which is not a bank, aninvestment holding company owned by a bank or a stockbroking company.
Since 21 July 2005, the exchange rate of the RM has been operated in a managed float, with its valuebeing determined by economic fundamentals. Bank Negara will monitor the exchange rate against abasket of currencies to ensure that the exchange rate remains close to its fair value.
Prior permission from the Controller of Foreign Exchange is required for dealings with the currency andentity from Israel.
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Vietnam
Under the investment laws and foreign exchange regulations currently in force in Vietnam, foreigninvestors are entitled to repatriate or remit profits, invested capital (upon the dissolution of the company,an approved capital reduction or termination of business cooperation contracts), and offshore loanprincipal repayments as well as interest payments (subject to applicable withholding tax being paid on theinterest payments). Such repatriation or remittance must be conducted through capital accounts of theforeign investors opened with the licensed banks located in Vietnam. For the purpose of remittance ofprofits, the foreign investors are required to provide certain supporting documents to the remitting banksfor verification. In case of invested capital remittance, an approval of the licensing authority is compulsorywhere the amount of repatriated capital exceeds the original amount of the registered capital.
A foreign invested entity is entitled to buy foreign currency for its transactions in accordance with theVietnamese foreign exchange regulations. Although, it is not required to obtain approval for conversion ofcurrency, the foreign invested entity may need to purchase foreign currency from the licensed commercialbanks on an availability basis to settle offshore payments, including remittance of profits, capital, interest,when it does not have enough foreign currency in reserve.
The State Bank of Vietnam announces daily in the mass media an average exchange rate in the ForeignCurrency Interbank Market of VND against US$. Commercial banks (including foreign bank branches)shall determine and announce their buying/selling rates of VND against US$ within the range permittedby the State Bank of Vietnam (which is currently 2.0% above or under the published average exchangerate in the Foreign Currency Interbank Market).
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In general, transactions between our Group and any of its interested persons (namely, our Directors orControlling Shareholders of our Company or the associates of our Directors or Controlling Shareholders)would constitute interested person transactions. The following discussions sets out our material interestedperson transactions during the last three financial years ended 30 June 2009 and for the period from 1July 2009 up to the Latest Practicable Date, with the term “interested persons” construed accordingly.
Save as disclosed below, no Director, Controlling Shareholder or their respective associates was or isinterested in any material transaction undertaken by our Group for the last three financial years ended 30June 2009 and the period from 1 July 2009 up to the Latest Practicable Date.
PAST TRANSACTIONS
Transactions with Lye Holdings Pte Ltd (“Lye Holdings”)
Lye Holdings is a property investment holding company in which Mr Tan Ah Lye has a 50.0%shareholding interest while our Executive Directors, Mr Tan Cheng Soon Don, Mr Tan Cheng Guan andMr Tan Cheng Kwong each has a 10.0% shareholding interest. The remaining 20.0% shareholdinginterest in Lye Holdings is owned by Mdm Tan Hwee Keow (10.0% shareholding interest) and Mdm TanBee Choo (10.0% shareholding interest). Mr Tan Ah Lye is the father of our Executive Directors. Mdm TanHwee Keow and Mdm Tan Bee Choo are the mother and sister of our Executive Directors respectively.
(a) Between September 2006 and September 2007, our Company extended an interest bearing loanof S$1,807,250.37 to Lye Holdings. This loan was fully repaid in September 2007 and LyeHoldings paid our Company a sum of S$60,938 as interest on the loan amount for the one-yearloan period.
(b) On 6 December 2007, Lye Holdings paid on behalf of our Company certain miscellaneousexpenses, which mainly comprised travel and entertainment expenses, which amounted to thesum of S$5,084. On 7 January 2008, our Company reimbursed the said sum to Lye Holdings.
Our Directors are of the view that the above transactions with Lye Holdings were carried out on an arm’slength basis and were not prejudicial to our Group. Our Group does not expect to enter into any suchfuture arrangements with Lye Holdings following our admission to the Official List of the SGX-ST.
Transactions with Tiong Pte Ltd (“Tiong”)
Tiong is a property investment holding company in which Mr Tan Ah Lye has a 50.0% shareholdinginterest while our Executive Directors, Mr Tan Cheng Soon, Don, Mr Tan Cheng Guan and Mr Tan ChengKwong each has a 10.0% shareholding interest. The remaining 20.0% shareholding interest in Tiong isowned by Mdm Tan Hwee Keow (10.0% shareholding interest) and Mdm Tan Bee Choo (10.0%shareholding interest).
On 2 February 2008, Tiong paid on behalf of our Company certain miscellaneous expenses, whichmainly comprised travel and entertainment expenses, which amounted to the sum of S$12,485. On 4March 2008, our Company reimbursed the said sum to Tiong.
Our Directors are of the view that the above transaction with Tiong was carried out on an arm’s lengthbasis and was not prejudicial to our Group. Our Group does not expect to enter into any such futurearrangement with Tiong following our admission to the Official List of the SGX-ST.
Remuneration and benefits paid to Mr Tan Ah Lye
Mr Tan Ah Lye stepped down from our Board on 18 July 2008. However, he continued as a businessadvisor to our Group and accordingly was paid by us a monthly allowance amounting to S$12,000. Thetotal allowance paid in FY2009 amounted to S$156,000. He was also entitled to the use of a car, whichwas paid for by our Company.
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On 1 November 2009, we ceased payment of the said monthly amount to Mr Tan Ah Lye. He had alsopurchased the said car which he has been using from us at a market value of S$173,913 on 3 November2009.
Our Directors are of the view that the above transactions with Mr Tan Ah Lye were carried out on anarm’s length basis and were not prejudicial to our Group. Our Group does not expect to enter into anysuch future arrangement with Mr Tan Ah Lye following our admission to the Official List of the SGX-ST.
Corporate Guarantee given by our Company and SHAL
On 10 July 2008, the then shareholders of our Company, comprising Mr Tan Ah Lye (40.5%), Mdm TanHwee Keow (9.7%), Mr Tan Cheng Soon Don (9.7%), Mr Tan Cheng Guan (10.1%), Mr Tan ChengKwong (9.7%), Mr Tan Ah Huat (5.3%), Mr Tan Seng Kiat (5.3%) and Mdm Tan Bee Choo (9.7%),entered into a sale and purchase agreement with the Vendor (the “Sale and Purchase Agreement”) inwhich, inter alia, they agreed to sell all of their shares, comprising 1,858,200 ordinary shares in ourCompany, to the Vendor (the “Acquisition”) for the sum of S$73,980,000.
In connection with the Acquisition, DBS Bank had advanced the Leverage Loan of S$37.0 million to theVendor to finance in part the Acquisition, with a loan maturity of four years.
The Leverage Loan was secured in favour of DBS Bank, by way of:-
(a) a charge of all securities in the Vendor;
(b) a fixed and floating charge over the Vendor’s assets and an assignment of the Sale and PurchaseAgreement; and
(c) a charge of all securities in our Company and a corporate guarantee given by each of ourCompany and SHAL (individually, a “Security Interest” and collectively, the “Security Interests”).
As at the Latest Practicable Date, an amount of S$33.3 million is outstanding on the Leverage Loan.
The granting of the corporate guarantee by each of our Company and SHAL constituted the provision offinancial assistance which would be prohibited under section 76 of the Act unless the procedures set outin section 76(9B) of the Act are complied with. Our Company and SHAL have complied with theprocedures set out in section 76(9B) of the Act prior to the grant of the corporate guarantee to secure theLeverage Loan of S$37.0 million as follows:
(a) Each of the Board of Directors and the board of directors of SHAL had, on 18 September 2008,passed a resolution containing the information prescribed in sections 76(9B)(a), (b) and (c) of theAct approving the giving of the financial assistance by our Company and SHAL, as the case maybe;
(b) In accordance with section 76(9B)(d) of the Act, the respective notices of meeting of shareholdersof our Company and SHAL containing the prescribed information were issued by our Companyand SHAL on 19 September 2008;
(c) In accordance with section 76(9B)(e) of the Act, a resolution was deemed to be passed by each ofthe sole shareholder of our Company and the sole shareholder of SHAL on 22 September 2008,approving the giving of financial assistance by our Company and SHAL, as the case may be;
(d) In accordance with section 76(9B)(f) of the Act, each of our Company and SHAL had, on 22September 2008, lodged with the Accounting and Corporate Regulatory Authority of Singapore acopy of the relevant resolution of its sole shareholder and a copy of the solvency statement by itsdirectors; and
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(e) In accordance with section 76(9B)(g) of the Act, the financial assistance, being the corporateguarantee given by each of our Company and SHAL, were given by our Company and SHAL on24 October 2008, within 12 months from the date of the relevant shareholder’s resolution referredto in paragraph (c) above.
As required under Rule 210(4)(b) of the SGX-ST Listing Manual, all debts owing to our Group by ourDirectors, Substantial Shareholders and companies controlled by our Directors and SubstantialShareholders have to be settled prior to the Listing Date. This includes third party indebtedness (includingcontingent liabilities for guarantee and indemnities) incurred by our Group for the benefit of our Directors,Substantial Shareholders and companies controlled by our Directors and Substantial Shareholders.Accordingly, the corporate guarantee given by each of our Company and SHAL have to be dischargedprior to the Listing Date. After Listing, our Group will not provide any corporate guarantee or indemnity forthe benefit of our Directors, Substantial Shareholders and companies controlled by our Directors andSubstantial Shareholders.
On 22 December 2009, DBS Bank agreed to discharge the Security Interests to the extent that suchSecurity Interests secure the indebtedness under the Leverage Loan, subject, inter alia, to the conditionsas follows:-
(a) SHH shall provide a letter of undertaking that it will re-charge the securities in our Companyprovided by it back to DBS Bank should the listing of our Company not take place within fivemonths from the date of eligibility letter issued by SGX-ST;
(b) SHH shall provide a letter to DBS Bank as the Receiving Banker instructing DBS Bank to apply theproceeds received from the sale of the Vendor Shares first towards the settlement of the LeverageLoan, prior to remittance of funds to other designated accounts of SHH for any other applicationsincluding but not limited to any fees or expenses payable with respect to the listing of ourCompany; and
(c) SHH shall raise no less than outstanding amount owing on the Leverage Loan from the sale of theVendor Shares.
On the same date as the execution of the Management Agreement, Placement Agreement andUnderwriting Agreement, DBS Bank will discharge the Security Interests to the extent that such SecurityInterests secure the indebtedness of SHH under the Leverage Loan pursuant to several Deeds ofDischarge to be executed by DBS Bank.
The Vendor will fully repay the Leverage Loan using the net proceeds from the sale of the Vendor Shares,the FY2009 Final Dividend and the FY2010 Interim Dividend. Please refer to the section entitled“Dividend Policy” of this Prospectus for more details on such dividends.
SHH and DBS Bank agreed that the proceeds from the sale of the Vendor Shares shall be utilisedtowards the full settlement of all outstanding amounts of the Leverage Loan, the interests accrued on theLeverage Loan, and such other fees and expenses payable to DBS Bank related to the Leverage Loan.Any balance of the proceeds arising from the sale of the Vendor Shares shall be remitted to the Vendor.DBS Bank is the Joint Issue Manager, Underwriter, Placement Agent and Receiving Banker for thisInvitation. DBS Bank, through its private equity arm, invested US$27.8 million in two of the funds whichhave beneficial interest in SEAVI and are actively managed by SEAVI Advent. Please see the sectionentitled “Shareholders” of this Prospectus for further details.
Our Directors are of the view that the above transaction was not carried out on an arm’s length basis butwas not prejudicial to our Group. Our Group does not expect to enter into any such transaction followingour admission to the Official List of the SGX-ST.
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Transactions with Tan Cranes & Equipment Pte Ltd
(a) Tan Cranes & Equipment Pte Ltd, a Singapore incorporated company which was then 90.0%owned by our Managing Director, Mr Tan Cheng Soon Don had purchased two units of boom liftsand six units of cranes from SHAL and our Company respectively over the period between 25 July2007 and 23 April 2009. In addition, Tan Cranes & Equipment Pte Ltd also purchased from uscertain crane spare parts over the same period. The equipment were purchased for an aggregateconsideration sum of approximately S$1.4 million based on the estimated market value. Theremaining 10.0% interest in Tan Cranes & Equipment Pte Ltd was held by Mr Tan Kim Teck, whosubsequently sold his entire stake to Mr Tan Cheng Soon Don after the said transactions hadtaken place.
(b) On 21 September 2007, our Company carried out certain minor repair works for one of Tan Cranes& Equipment Pte Ltd’s cranes. The fee for the repair works amounted to S$1,031. Tan Cranes &Equipment Pte Ltd paid our Company the said sum on 11 October 2007.
(c) On 14 February 2008, Tan Cranes & Equipment Pte Ltd acted as an agent of our Company for thesale of two units of cranes to one of Tan Cranes & Equipment Pte Ltd’s clients. The saleconsiderations for the cranes were approximately S$1.1 million and US$2.0 million respectively.Our Company paid Tan Cranes & Equipment Pte Ltd a sum of approximately S$162,000 ascommission for acting as an agent for the sales.
Our Directors are of the view that the transactions with Tan Cranes & Equipment Pte Ltd were carried outon an arm’s length basis and will not recur in the future.
Mr Tan Cheng Soon Don has since resigned from the board of Tan Cranes & Equipment Pte Ltd and on14 October 2009 divested his entire shareholdings in the company to an unrelated party.
Purchase of cranes from Tan Cranes & Equipment Co., Ltd
Our subsidiary in Vietnam, SHV, was incorporated in 5 January 2009 as part of our plan to expand ouroperations in Vietnam. On 8 October 2009, we entered into an agreement to purchase five cranes, twoboom lifts and some fixed assets (comprising a lorry and a container office) from Tan Cranes &Equipment Co., Ltd, a Vietnamese incorporated company which Mr Tan Cheng Soon Don had the entirebeneficial interest in. The assets were purchased for an aggregate consideration sum of approximatelyS$1.4 million based on the estimated fair value of the assets as at 31 August 2009. The estimated fairvalue of the cranes and the boom lifts were determined by an independent valuer. The said acquisitionwas completed on 15 December 2009.
Our Directors are of the view that the transactions with Tan Cranes & Equipment Co., Ltd were carriedout on an arm’s length basis and will not recur in the future.
Mr Tan Cheng Soon Don has since divested his entire beneficial shareholding interest in Tan Cranes &Equipment Co., Ltd to an unrelated party on 30 October 2009.
INTERESTED PERSON TRANSACTIONS
131
Provision of guarantees by our Managing Director, Mr Tan Cheng Soon Don and our ExecutiveDirectors, Mr Tan Cheng Guan, Mr Tan Cheng Kwong and their Associates
Mr Tan Cheng Soon Don, our Managing Director, Mr Tan Cheng Guan and Mr Tan Cheng Kwong, ourExecutive Directors and their Associates, Mr Tan Ah Lye and Mdm Tan Hwee Keow had providedguarantees for the credit facilities granted to our Group as set out below, which have since beenterminated:-
Date whenfacilities /
Personal guarantees wasFinancial guarantees/ terminated / Interest RateInstitution Security Facilities discharged per annum
Tokyo Leasing Please refer Hire purchase for:(Singapore) to Note (1)
Pte Ltd below (1) 1 used Kato NK 1600-V 3 May 2007 2.86% Hydraulic Truck Crane, s/no. 832145
(2) 1 used Tadano TG1000R 6 November 2006 2.75% Hydraulic Truck Crane, s/no. 440224
(3) 1 used Hitachi KH300-3 22 January 2007 2.75% Crawler Crane, s/no. 250-0340
(4) 1 used Hitachi KH300-3 13 March 2007 2.65% Crawler Crane, s/no. 250-0330
(5) 1 used Hitachi KH500 25 April 2007 2.75% Crawler Crane, s/no. 254-0228
(6) 1 used Demag HC810 13 September 2006 3.30%Truck Crane, s/no. 35007
(7) 1 used Liebherr HS853HD 21 May 2008 2.92% Crawler Crane, s/no. 184331
(8) 1 used Liebherr LTM 16 April 2008 3.20% 1450N All Terrain Crane, s/no. 0014371
(9) 1 used Hitachi KH850-3 18 December 2008 3.00% Crawler Crane, s/no. 255-0389
(10) 1 used IHI CCH1000 3 March 2009 3.00% Crawler Crane, s/no. 9084
(11) 1 used Sumitomo 3 March 2009 3.00% LS468HD Crawler Crane, s/no. LS468-0541
(12) 1 used Liebherr LTM 10 April 2009 3.00% 1200N All Terrain Crane, s/no. 0016522
INTERESTED PERSON TRANSACTIONS
132
Date whenfacilities /
Personal guarantees wasFinancial guarantees/ terminated / Interest RateInstitution Security Facilities discharged per annum
Tokyo Leasing (13) 1 used Sumitomo 16 April 2009 2.92% (Singapore) LS368RH-5 Crawler Crane,
Pte Ltd s/no. LS368-0026
(14) 1 used Hitachi KH850-3 10 October 2008 2.50%Crawler Crane, s/no. 255-0336
(15) 36 new scissor lifts, 25 February 2008 3.20%Genie GS-2032
(16) 9 new scissor lifts, 25 February 2008 3.20% Genie GS-2646
(17) 1 used Hitachi KH850-3 8 October 2009 2.50% Crawler Crane,s/no. 255-0318
Tokyo Leasing Please refer Hire purchase for:(Singapore) to Note (2)
Pte Ltd below (1) 1 used boom lift, JLG 27 May 2009 3.00% 800AJ, s/no. 0300064053
(2) 1 used boom lift, JLG 27 May 2009 3.00% 800AJ, s/no. 0300069415
(3) 1 used boom lift, JLG 27 May 2009 3.00% 800AJ, s/no. 0300064677
(4) 1 used boom lift, JLG 27 May 2009 3.00% 1350SJP, s/no. 0300067565
ORIX Leasing Please refer Hire purchase for:Singapore to Note (3)
Limited below (1) 1 used Sumitomo LS218 28 February 2007 2.75% RH-V Crawler Crane, s/no. LS218-0297
OCBC Bank Please refer (1) Overdraft facility (“OD”) 15 October 2008 OD-Primeto Note (4) rate
below (2) Shipping Guarantee /Airway Bills TR-Prime
rate for S$(3) Letter of Credit and for
foreign(4) Trust Receipt (“TR”) currencies
it is 1.00% (5) Term Loan (“TL”) above SIBOR
(6) Foreign Exchange TL-0.50% below
prime rate
INTERESTED PERSON TRANSACTIONS
133
Date whenfacilities /
Personal guarantees wasFinancial guarantees/ terminated / Interest RateInstitution Security Facilities discharged per annum
OCBC Bank Hire purchase for:
(1) 1 Kobelco CKE1800-1F 15 October 2008 2.50% crawler crane, s/no. JC04-02067
(2) 1 Kobelco CKE1800-1F 7 October 2008 2.15% crawler crane, s/no. JC04-02043
United Please refer (1) Overdraft facility (“OD”) 18 May 2009 OD-Prime Overseas to Note (5) rate Bank Ltd below (2) Money Market Loan
(“MML”) MML- 2.00%above bank’s
(3) Letter of Credit cost of fund
(4) Trust Receipt (“TR”) TR-Prime rate for S$ and
(5) Forward Foreign for foreign Exchange Contracts currencies it
is 1.50% above SIBOR
Notes:-
(1) Personal guarantee (“Guarantee A”) from Mr Tan Ah Lye. The amount recoverable from Mr Tan Ah Lye under Guarantee Acomprises all sums which may become due to Tokyo Leasing (Singapore) Pte Ltd under each relevant hire purchaseagreement stated above.
(2) Joint and Several personal guarantee (“Guarantee B”) from Mr Tan Ah Lye and Mr Tan Cheng Kwong. The amountrecoverable from Mr Tan Ah Lye and Mr Tan Cheng Kwong under Guarantee B comprises all sums which may become due toTokyo Leasing (Singapore) Pte Ltd under each relevant hire purchase agreement stated above.
(3) Joint and Several personal guarantee (“Guarantee C”) from Mr Tan Ah Lye and Mr Tan Cheng Soon Don. The amountrecoverable from Mr Tan Ah Lye and Mr Tan Cheng Soon Don under Guarantee C comprises all sums which may becomedue to Orix Leasing Singapore Ltd under the relevant hire purchase agreement stated above.
(4) Joint and Several personal guarantee (“Guarantee D”) from Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr Tan ChengKwong and Mr Tan Ah Lye. The amount recoverable from Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr Tan ChengKwong and Mr Tan Ah Lye under Guarantee D is subject to a maximum limit of S$9,743,000.00.
(5) All monies Joint and Several personal guarantee (“Guarantee E”) from Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr TanCheng Kwong, Mr Tan Ah Lye and Mdm Tan Hwee Keow. The amount recoverable from Mr Tan Cheng Soon Don, Mr TanCheng Guan, Mr Tan Cheng Kwong, Mr Tan Ah Lye and Mdm Tan Hwee Keow under Guarantee E is subject to a maximumlimit of S$9,900,000.00.
As no fee was charged by the interested persons for the provision of the guarantees and mortgagesecurity, our Directors are of the view that the above arrangements were not carried out on an arm’slength basis but were not prejudicial to our Group and minority Shareholders.
INTERESTED PERSON TRANSACTIONS
134
PR
ES
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CT
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xecu
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No
tes:
-
(1)
All
mon
ies
first
Leg
al m
ortg
age
over
the
pro
pert
y si
tuat
ed a
t 3
Kin
g’s
Wal
k, S
inga
pore
268
017
by M
r Ta
n C
heng
Soo
n D
on,
Mr
Tan
Che
ng G
uan,
Mr
Tan
Che
ng K
won
g an
d M
r Ta
n A
h Ly
e.
(2)
All
mon
ies
Join
t an
d S
ever
al p
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nal
guar
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e (“
Gua
rant
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”) f
rom
Mr
Tan
Che
ng S
oon
Don
, M
r Ta
n C
heng
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n, M
r Ta
n C
heng
Kw
ong,
Mr
Tan
Ah
Lye
and
Mdm
Tan
Hw
ee K
eow
.The
am
ount
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vera
ble
from
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Tan
Che
ng S
oon
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, M
r Ta
n C
heng
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n, M
r Ta
n C
heng
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ong,
Mr
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er G
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axim
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mit
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$12,
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Che
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oon
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r Ta
n C
heng
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n, M
r Ta
n C
heng
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ong,
Mr
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Lye
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Hw
ee K
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.The
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ount
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able
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Tan
Che
ng S
oon
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, M
r Ta
n C
heng
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n, M
r Ta
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ong,
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er G
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ank
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d S
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al p
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Mr
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Che
ng S
oon
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r Ta
n C
heng
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n, M
r Ta
n C
heng
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ong,
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Tan
Ah
Lye
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Tan
Hw
ee K
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.The
am
ount
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able
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Che
ng S
oon
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r Ta
n C
heng
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n, M
r Ta
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heng
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rant
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Tan
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oon
Don
, M
r Ta
n C
heng
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n, M
r Ta
n C
heng
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ong,
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Lye
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.The
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ount
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able
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oon
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r Ta
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r Ta
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heng
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ntee
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axim
um li
mit
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$4,2
00,0
00.
INT
ER
ES
TE
D P
ER
SO
N T
RA
NS
AC
TIO
NS
136
Mr Tan Ah Lye is the father and Mdm Tan Hwee Keow is the mother of our Managing Director, Mr TanCheng Soon Don and our Executive Directors, Mr Tan Cheng Guan and Mr Tan Cheng Kwong.
The largest aggregate outstanding amount guaranteed during the last three financial years and theperiod commencing 1 July 2009 to the Latest Practicable Date, based on year-end balances, wasapproximately S$51.2 million. As at the Latest Practicable Date, the aggregate outstanding amountguaranteed was approximately S$8.4 million.
As no fee was charged by the interested persons for the provision of the guarantees and mortgagesecurity, our Directors believe the above arrangements were not carried out on an arm’s length basis butwere not prejudicial to our Group and minority Shareholders.
Subsequent to this Invitation, Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr Tan Cheng Kwong, MrTan Ah Lye and Mdm Tan Hwee Keow intend to procure the discharge of the above guarantees. Shouldthe terms and conditions of our existing facilities be affected by the withdrawals of the above guarantees,our Directors are of the view that with our status as a listed company and strengthened financial position,we should be able to secure alternative credit facilities on terms similar to those applicable to the existingfacilities. In the event that the banks do not agree to release the above guarantees, and we are unable tosecure alternative credit facilities on similar terms, Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr TanCheng Kwong, Mr Tan Ah Lye and Mdm Tan Hwee Keow will continue to provide the guarantees andmortgage security until such time when we are able to secure alternative facilities from other financialinstitutions.
INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES
Save as disclosed in the section entitled “Interested Person Transactions” of this Prospectus, as at theLatest Practicable Date:-
(a) none of our Directors, Controlling Shareholders or any of their Associates has any interest, director indirect, in any material transactions to which our Company or any of our subsidiaries was or isa party;
(b) save for immaterial investment in shares in listed entities, none of our Directors, ControllingShareholders or any of their Associates has any interest, direct or indirect, in any entity carrying onthe same business or dealing in similar products which competes materially and directly with theexisting business of our Group; and
(c) save for immaterial investment in shares in listed entities within the Keppel Group, none of ourDirectors, Controlling Shareholders or any of their Associates has any interest, direct or indirect, inany enterprise or company that is our customer or supplier of goods or services.
INTERESTS OF EXPERTS
None of the experts named in this Prospectus:-
(i) is employed on a contingent basis by our Company or our subsidiaries;
(ii) has a material interest, whether direct or indirect, in our Shares or in the shares of oursubsidiaries; or
(iii) has a material economic interest, whether direct or indirect, in our Company, including an interestin the success of this Invitation.
INTERESTED PERSON TRANSACTIONS
137
GUIDELINES FOR FUTURE INTERESTED PERSON TRANSACTIONS
We may in the ordinary course of business, enter into certain transactions with interested persons. It islikely that such transactions will occur with some degree of frequency and could arise at any time andfrom time to time. Such transactions include, but are not limited to, the transactions described above.
Our internal control procedures will ensure that all interested person transactions, including theaforementioned interested person transactions involving companies related to us are conducted on anarm’s length basis and on normal commercial terms. Such internal controls include the following:
(a) when purchasing from or procuring services from interested persons, our Directors shall take intoaccount the prices and terms of at least two other comparative offers from third parties (wherepossible), contemporaneous in time. The purchase price or procurement price, as the case may be,shall not be higher than the most competitive price of the two comparative offers from third parties;
(b) in determining the most competitive purchase price or procurement price, as the case may be, ourDirectors shall take into consideration the nature of the project, the cost and the experience andexpertise of the supplier;
(c) when selling products or providing services to interested persons, our Directors shall take intoaccount the prices and terms of at least two other successful sales to third parties (wherepossible), contemporaneous in time. The sale price shall not be lower than the lowest sale price ofthe other two successful sales to third parties;
(d) when renting from interested persons, our Directors shall take into account the rental and terms oftwo other comparative premises (where possible), contemporaneous in time. The rental paid shallnot be higher than the most competitive rental of the two comparative premises; and
(e) should any future interested person transaction be on less preferred terms than as determined insteps (a) to (d) above, the prior approval of our Board must be obtained before such transactionscan be entered into.
The considerations in paragraphs (a) to (e) above will allow for variation from prices and terms of thecomparative offers or sales so long as the volume of trade, credit-worthiness of the buyer, differences inservice, reliability or other relevant factors justify the variation and so long as the contemporaneouscomparative offer or sale incorporates modifications that account for volatility of the market for the goodsand services in question.
For (a), (c) and (d) above, in the event that it is not possible for appropriate information (for comparativepurposes) to be obtained, the matter will be referred to our Audit Committee and our Audit Committee willdetermine whether the purchase or sale price/fees or rental fees to be paid or received are fair andreasonable and consistent with our Group’s usual business practice.
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS
Our Audit Committee will review and approve all interested person transactions to ensure that they are onnormal commercial terms and arm’s length basis, that is, the transactions are transacted on terms andprices not more favourable to the interested persons than if they were transacted with a third party, andare not prejudicial to the interests of our Shareholders in any way.
INTERESTED PERSON TRANSACTIONS
138
During its periodic review or such other review deemed necessary by it, our Audit Committee will carryout a review of records of all interested person transactions to ensure that they are carried out inaccordance with the following internal control procedures:
(a) All interested person transactions above S$100,000 are to be approved by a Director who shall notbe an interested person in respect of that particular transaction. Interested person transactionsbelow S$100,000 do not require such approval. Any sale or purchase contracts to be made with aninterested person shall not be approved unless the pricing is:
(i) determined in accordance with our usual business practices and policies;
(ii) consistent with the usual margin given or price received by us for the same or substantiallysimilar type of transactions between us and unrelated third parties; and
(iii) the terms are no more favourable to the interested person than those extended to orreceived from unrelated third parties.
For the purpose of the above, contracts for the same or substantially similar type of transactionsentered into between us and unrelated third parties, if any, will be used as a basis for comparisonto determine whether the price and terms offered to or received from the interested person are nomore favourable than those extended to unrelated third parties.
(b) In addition, we shall monitor all interested person transactions entered into by us and categorisethese transactions as follows:
(i) a Category 1 interested person transaction is one where the value thereof is in excess ofand equal to 5.0 per cent of the NTA of our Group; and
(ii) a Category 2 interested person transaction is one where the value thereof is below 5.0 percent of the NTA of our Group.
All Category 1 interested person transactions must be approved by our Audit Committee prior toentry whereas Category 2 interested person transactions need not be approved by our AuditCommittee prior to entry but shall be reviewed on a quarterly basis by our Audit Committee. AllCategory 1 interested person transactions shall also be subject to shareholders’ approval at ageneral meeting in accordance with the Listing Manual.
We will prepare relevant information to assist our Audit Committee in its review.
Before any agreement or arrangement that is not in the ordinary course of business of our Group istransacted, prior approval must be obtained from our Audit Committee. In the event that a member of ourAudit Committee is interested in any of the interested person transactions, he will abstain from reviewingthat particular transaction.
Our Audit Committee will also review all interested person transactions to ensure that the prevailing rulesand regulations of the SGX-ST (in particular Chapter 9 of the Listing Manual) are complied with. We willalso comply with the provisions in Chapter 9 of the Listing Manual in respect of all future interestedperson transactions, and if required under the Listing Manual or the Companies Act, we will seek ourShareholders’ approval (where necessary) for such transactions. We will also endeavour to comply withCode of Corporate Governance 2005 and Chapter 12 of the Listing Manual. We will disclose in ourannual report the aggregate value of interested person transactions conducted during the financial year.
Our Audit Committee is of the view that the review procedures and systematic monitoring mechanism ofall interested person transactions as mentioned above, are adequate in ensuring that such transactionswill be on normal commercial terms and will not be prejudicial to the interests of our Shareholders in anyway.
INTERESTED PERSON TRANSACTIONS
139
SEAVI Advent
SEAVI is an investment holding company incorporated in the BVI on 29 August 2007. It is a collectiveinvestment holding company with the beneficial interests held by SEAVI Advent Equity IV Fund LimitedPartnership, SEAVI Advent Asia Fund GmbH & Co. Parallel-KG, Fortis Private Equity Asia Fund N.V.,SEAVI Advent Equity V Trust, SEAVI Advent Equity V (Cayman) L.P. and Ocean Private Equity Fund II Ltd(collectively known as the “SEAVI Advent Funds”).
The SEAVI Advent Funds are private equity funds managed by SEAVI Advent Corporation Limited(“SEAVI Advent”). SEAVI Advent is the general partner of the SEAVI Advent Funds and exercisesmanagement and control over SEAVI Advent Funds. Consequently, SEAVI Advent exercises sole votingand investment power with respect to all shares held by the SEAVI Advent Funds in SEAVI. The Directorsof SEAVI Advent are Mr Tan Keng Boon and Mr Derrick Lee Meow Chan. The Shareholders of SEAVIAdvent comprise senior staff of SEAVI Advent, including Mr Tan Keng Boon and Mr Derrick Lee MeowChan who each own more than 25% of the issued and paid up capital of SEAVI Advent. The remainingshareholders of SEAVI Advent hold not more than 10% each.
SEAVI Advent manages private equity funds that are involved in investments in companies worldwide.Some of these investee companies may be engaged in similar businesses, dealing with similar productsor providing similar services as our Group. Where possible conflicts of interest arise, Mr Derrick LeeMeow Chan, Mr Teo Yi-Dar, Mr Leong Wing Kong, our Non-Executive Directors and SEAVI (as aControlling Shareholder) will disclose the situations of conflict to our Board and/or in shareholders’meetings, and each of Mr Derrick Lee Meow Chan, Mr Teo Yi-Dar, Mr Leong Wing Kong, our Non-Executive Directors and SEAVI will abstain from voting and participating in the decision making processin board and/or shareholders’ meetings in relation to any matters relating to such conflicts of interest.
On 21 December 2009, each of Mr Derrick Lee Meow Chan, Mr Teo Yi-Dar and Mr Leong Wing Kongprovided an undertaking to our Company that as long as he is Director of our Company:-
(a) he will not be appointed as a director on the board of any investee company, which private equityfunds managed by SEAVI Advent invest in, that is involved in similar businesses, dealing withsimilar products or providing similar services as our Group; and
(b) he will not provide any advisory services to any investee company, which private equity fundsmanaged by SEAVI Advent invest in, that is involved in similar businesses, dealing with similarproducts or providing similar services as our Group.
On 21 December 2009, SEAVI Advent and our Company entered into a right of first refusal agreementwhereby for so long as SEAVI Advent or any private equity fund managed by SEAVI Advent has aninterest, direct or indirect, in our Company, in the event that SEAVI Advent and/or any private equity fundmanaged by SEAVI Advent plans to invest in or acquire a company that is involved in similar business,dealing with similar products or providing similar services as our Group (the “Competing ProspectiveInvestee”), and upon the consent being given by the Competing Prospective Investee, SEAVI Advent willprovide, or will procure the relevant private equity fund that is managed by SEAVI Advent to provide ourCompany with the right of first refusal to invest in or acquire the Competing Prospective Investee.
In the event that:-
(i) our Company does not, within ten (10) days from the date of the written notice given by SEAVIAdvent, indicate its interest in writing to invest in or acquire the Competing Prospective Investee, or
(ii) our Company expresses interest in investing in or acquiring the Competing Prospective Investeebut does not enter into a binding commitment (in the form of a sale and purchase agreement or aput and call option agreement, whether conditional or unconditional) for the investment in oracquisition of the Competing Prospective Investee within 30 days (or such longer period as may bemutually agreed) from the date of our Company’s receipt of the written notice from SEAVI Adventtogether with the relevant transaction documents (the “Offer Period”), or
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(iii) our Company delivers notice in writing to SEAVI Advent within the Offer Period that it shall not beinvesting in or acquiring the Competing Prospective Investee; or
(iv) the proposed investment in or acquisition of the Competing Prospective Investee is aborted by ourCompany,
SEAVI Advent and/or the relevant private equity fund shall be entitled to proceed to invest in theCompeting Prospective Investee and Mr Derrick Lee Meow Chan, Mr Teo Yi-Dar and/or Mr Leong WingKong shall be able to be appointed to the board of directors of such Competing Prospective Investee bySEAVI Advent or the relevant private equity fund that invests in the Competing Prospective Investee, andparticipate in any decision-making in relation to SEAVI Advent’s or the relevant private equity fund’sinvestment in that Competing Prospective Investee.
However, if the Competing Prospective Investee does not consent to the right of first refusal beinggranted by SEAVI Advent and/or the relevant private equity fund to our Company, SEAVI Advent will not,and where appropriate will procure the relevant private equity fund not to proceed with the investment inthe Competing Prospective Investee.
TALH
TALH is an investment holding company incorporated in Singapore. TALH has an issued and paid-upshare capital comprising 12,000,000 ordinary shares. The shareholders of TALH are Mr Tan Ah Lye, MrTan Cheng Soon Don, Mr Tan Cheng Guan, Mr Tan Cheng Kwong (together with Mr Tan Cheng SoonDon and Mr Tan Cheng Guan, the “Executive Directors”), Mdm Tan Hwee Keow, Mdm Tan Bee Choo, MrTan Ah Huat, Mr Tan Seng Chong and Mr Tan Seng Kiat, each holding 2,000,000 shares (16.7%),2,000,000 shares (16.7%), 2,000,000 shares (16.7%), 2,000,000 shares (16.7%), 1,600,000 shares(13.3%), 1,200,000 shares (10.0%), 400,000 shares (3.3%), 400,000 shares (3.3%) and 400,000 shares(3.3%) of the issued share capital of TALH respectively. Mr Tan Ah Lye and Mdm Tan Hwee Keow are theparents of the Executive Directors. Mdm Tan Bee Choo is the sister of our Executive Directors. Mr Tan AhHuat, Mr Tan Seng Chong and Mr Tan Seng Kiat are relatives of our Executive Directors. The Directors ofTALH are Mr Tan Ah Lye, our Managing Director Mr Tan Cheng Soon Don, our Executive Directors MrTan Cheng Guan and Mr Tan Cheng Kwong.
On 21 December 2009, TALH provided a non-competition undertaking to our Company whereby TALHundertakes that for so long as TALH is a Controlling Shareholder, either directly or indirectly, of ourCompany, TALH will not, and will procure its subsidiaries and associates not to either on its own accountor in conjunction with or on behalf of or through any other person, firm or company:-
(i) be engaged in or assist in carrying on any business which competes with the business of any ofour Company and/or our subsidiaries or otherwise be interested or concerned either directly orindirectly whether as a consultant, appointee, partner, adviser, agent, shareholder or in any othercapacity with any person, firm or company whose business competes with any business carried onby our Company and/or our subsidiaries;
(ii) do business with, deal with, solicit or entice away or attempt to solicit or entice away from ourCompany and/or our subsidiaries any person, firm, company or organisation, who shall at any timehave been a customer, client, agent or correspondent of any of our Company and/or oursubsidiaries; and
(iii) solicit or entice away, or attempt to solicit or entice away, from our Company and/or oursubsidiaries any person who shall at any time have been an officer, manager or employee of ourCompany and/or our subsidiaries, whether or not such person would commit a breach of hiscontract of employment by reason of leaving such employment.
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Tan Ah Lye
On 21 December 2009, Mr Tan Ah Lye provided a non-competition undertaking to our Company wherebyMr Tan Ah Lye undertakes that for so long as both of the following conditions are satisfied: (i) TALH is aControlling Shareholder, either directly or indirectly, of our Company; and (ii) Mr Tan Ah Lye holds shares,either directly or indirectly, in TALH and/or is a director of TALH, Mr Tan Ah Lye will not, either on his ownaccount or in conjunction with or on behalf of or through any other person, firm or company:-
(i) be engaged in or assist in carrying on any business which competes with the business of any ofour Company and/or our subsidiaries or otherwise be interested or concerned either directly orindirectly whether as a consultant, appointee, partner, adviser, agent, shareholder or in any othercapacity with any person, firm or company whose business competes with any business carried onby our Company and/or our subsidiaries;
(ii) do business with, deal with, solicit or entice away or attempt to solicit or entice away from ourCompany and/or our subsidiaries any person, firm, company or organisation, who shall at any timehave been a customer, client, agent or correspondent of any of our Company and/or oursubsidiaries; and
(iii) solicit or entice away, or attempt to solicit or entice away, from our Company and/or oursubsidiaries any person who shall at any time have been an officer, manager or employee of ourCompany and/or our subsidiaries, whether or not such person would commit a breach of hiscontract of employment by reason of leaving such employment.
Tan Cheng Soon Don, Tan Cheng Guan and Tan Cheng Kwong
On 21 December 2009, each of our Managing Director, Mr Tan Cheng Soon Don and our two ExecutiveDirectors, Mr Tan Cheng Guan and Mr Tan Cheng Kwong provided a non-competition undertaking to ourCompany whereby each of them undertakes that for so long as both of the following conditions aresatisfied: (i) TALH is a Controlling Shareholder, either directly or indirectly, of our Company; and (ii) heholds shares, either directly or indirectly, in TALH and/or is a director of TALH, he will not, either on hisown account or in conjunction with or on behalf of or through any other person, firm or company:-
(i) be engaged in or assist in carrying on any business which competes with the business of any ofour Company and/or our subsidiaries or otherwise be interested or concerned either directly orindirectly whether as a consultant, appointee, partner, adviser, agent, shareholder or in any othercapacity with any person, firm or company whose business competes with any business carried onby our Company and/or our subsidiaries;
(ii) do business with, deal with, solicit or entice away or attempt to solicit or entice away from ourCompany and/or our subsidiaries any person, firm, company or organisation, who shall at any timehave been a customer, client, agent or correspondent of any of our Company and/or oursubsidiaries; and
(iii) solicit or entice away, or attempt to solicit or entice away, from our Company and/or oursubsidiaries any person who shall at any time have been an officer, manager or employee of ourCompany and/or our subsidiaries, whether or not such person would commit a breach of hiscontract of employment by reason of leaving such employment.
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Save for the undertakings provided by each of Mr Tan Ah Lye, Mr Tan Cheng Soon Don, Mr Tan ChengGuan and Mr Tan Cheng Kwong as set out above, the remaining shareholders of TALH, namely, MdmTan Hwee Keow, Mdm Tan Bee Choo, Mr Tan Ah Huat, Mr Tan Seng Chong and Mr Tan Seng Kiat(collectively, the “TALH Minority Shareholders”) have not provided similar undertakings as: (i) they are notinvolved in and have not been involved in any business that competes against our business, (ii) they arenot and have not been involved in the day to day operations of our business, (iii) they do not and havenot held any executive or managerial position in our Group, (iv) they are not directors of TALH and theyare passive shareholders in TALH, (v) they do not instruct, direct or advise Mr Tan Ah Lye, Mr Tan ChengSoon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong in relation to the affairs of TALH and (vi) theydo not instruct, direct or advise Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwongin relation to the affairs of our Group.
The TALH Minority Shareholders collectively hold in aggregate approximately 33.2% of the issued sharecapital of TALH and none of them individually has an interest in excess of 15.0% in TALH. Mdm TanHwee Keow and Mdm Tan Bee Choo are homemakers. Mr Tan Ah Huat is retired and Mr Tan SengChong and Mr Tan Seng Kiat are in the business of selling radio controlled toys.
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On 21 December 2009, our Shareholders approved an employee share option scheme known as theSHHM Employee Share Option Scheme (the “ESOS”), the rules of which are set out in Appendix D ofthis Prospectus. The ESOS complies with the relevant rules of Chapter 8 of the Listing Manual. TheESOS will provide eligible participants with an opportunity to participate in the equity of our Companyand to motivate them towards better performance through increased dedication and loyalty. The ESOS,which forms an integral and important component of our employee compensation plan, is designed toprimarily reward and retain executive directors, non-executive directors (including independent directors)and employees of our Company and/or our subsidiaries whose services are vital to our well being andsuccess.
As at the Latest Practicable Date, no Options have been granted under the ESOS.
Objectives of the ESOS
The objectives of the ESOS are as follows:
(a) To motivate each participant to optimise his performance standards and efficiency and to maintaina high level of contribution to our Company and/or our subsidiaries;
(b) To retain key employees and executive directors of our Company and/or our subsidiaries whosecontributions are essential to the long-term growth and profitability of our Group;
(c) To instill loyalty to, and a stronger identification by the participants with the long-term prosperity ofour Company and/or our subsidiaries;
(d) To attract potential employees with relevant skill to contribute to our Company and/or oursubsidiaries and to create value for our Shareholders; and
(e) To align the interests of the participants with the interests of our Shareholders.
Summary of the ESOS
A summary of the rules of the ESOS is set out as follows:
(1) Participants
Under the rules of the ESOS, employees of our Company and our subsidiaries (including executivedirectors), non-executive directors (including independent directors) and Controlling Shareholdersor their associates who meet the eligibility criteria set out in the rules of the ESOS, are eligible toparticipate in the ESOS at the absolute discretion of the Remuneration Committee.
The participation by and actual number and terms of any Options to be granted to each suchControlling Shareholder or his associate and each grant of Options to any one of them may beeffected only with a specific prior approval of independent Shareholders at a general meeting inseparate resolutions. Our Company will at such time provide the rationale and justification for anyproposal to grant the Controlling Shareholders and/or their associates any Options.
(2) Scheme administration
The ESOS shall be administered by the Remuneration Committee with powers to determine, interalia, the following:
(a) persons to be granted Options;
(b) number of Options to be granted; and
(c) recommendations for modifications to the ESOS.
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As at the date of this Prospectus, our Remuneration Committee comprises of Mr Renny Yeo AhKiang, Mr Teo Yi-Dar, and Mr Yeo Yun Seng.
The Remuneration Committee will consist of Directors (including Directors or persons who may beparticipants of the ESOS). A member of the Remuneration Committee who is also a participant ofthe ESOS must not be involved in its deliberation in respect of Options to be granted to him.
(3) Size of the ESOS
The aggregate number of Shares over which our Remuneration Committee may grant Options onany date, when added to the number of Shares issued and issuable in respect of (i) all Optionsgranted under the ESOS, and (ii) all awards granted under any other share option, share incentive,performance share or restricted share plan implemented by our Company and for the time being inforce, shall not exceed 15.0% of the issued Shares of our Company (excluding treasury shares) onthe day immediately preceding the Offer Date.
The aggregate number of Shares issued and issuable in respect of all Options granted under theESOS available to all Controlling Shareholders and their associates must not exceed 25.0% of theShares available under the ESOS. Separately, the number of Shares issued and issuable inrespect of all Options granted under the ESOS available to each of the Controlling Shareholders orhis associate must not exceed 10.0% of the Shares available under the ESOS.
We believe that the 15.0% limit set by the SGX-ST gives our Company sufficient flexibility to decidethe number of ESOS Shares to offer to our existing and new employees. 15.0% of the post-Invitation issued shares of our Company constitutes 68,946,000 Shares. As it is intended that theESOS shall last for 10 years, assuming that there is no change in the total issued shares of ourCompany, the number of Options that may be granted in a year will average approximately6,894,600 Shares. The number of eligible participants is expected to grow over the years. OurCompany, in line with its goal of ensuring sustainable growth, is constantly reviewing our positionand considering the expansion of its talent pool which may involve employing new employees. Theemployee base, and thus the number of eligible participants will increase as a result. If the numberof Options available under the ESOS is limited, our Company may only be able to grant a smallnumber of Options to each eligible participant which may not be a sufficiently attractive incentive.Our Company is of the opinion that it should have sufficient number of Options to offer to existingemployees as well as to new employees. The number of Options offered must also be significant toserve as a meaningful reward for contributions to our Company and/or our subsidiaries. However, itdoes not necessarily mean that our Remuneration Committee will grant Options up to theprescribed limit. The Remuneration Committee shall exercise its discretion in deciding the numberof ESOS Shares to be granted to each employee which will depend on, inter alia, the performanceof our Company, our Subsidiaries, the years of service and individual performance of theemployee, the contribution of the employee to the success and development of our Companyand/or our subsidiaries and the prevailing market conditions.
(4) Maximum entitlements
The aggregate number of Shares comprised in any Option to be offered to a participant under theESOS shall be determined at the absolute discretion of our Remuneration Committee, which shalltake into account in respect of an employee of our Company or our subsidiaries criteria such asrank, performance, years of service and potential for future development of that participant and inrespect of a non-executive director (including an independent director), his contribution to thesuccess and development of the our Company and/or our subsidiaries.
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(5) Options, exercise period and exercise price
The Options that are granted under the ESOS may have exercise prices that are, at ourRemuneration Committee’s discretion, set at a price (the “Market Price”) equal to the average ofthe last dealt prices for the Shares on the Official List of the SGX-ST over the five consecutiveMarket Days immediately preceding the date of grant of the relevant Option; or at a discount to theMarket Price (subject to a maximum discount of 20.0%). Options which are fixed at the MarketPrice (“Market Price Option”) may be exercised after the first anniversary of the Offer Date of thatOption while Options exercisable at a discount to the Market Price (“Discounted Option”) may onlybe exercised after the second anniversary from the Offer Date of that Option. Options grantedunder the ESOS will have a life span of 10 years except for Options granted under the ESOS toour non-executive Directors and independent directors, which will have a life span of five years.
(6) Grant of options
Under the rules of the ESOS, there are no fixed periods for the grant of Options. As such, offers forthe grant of Options may be made at any time from time to time at the discretion of ourRemuneration Committee. However, no Option shall be granted during the period of 30 daysimmediately preceding the date of announcement of our Company’s interim or final results(whichever the case may be).
In addition, in the event that an announcement on any matter of an exceptional nature involvingunpublished price sensitive information is made, offers to grant Options may only be made on orafter the second Market Day on which such announcement is released.
(7) Acceptance of Options
The grant of Options shall be accepted within 30 days from the Offer Date. Offers of Options madeto grantees, if not accepted before the closing date, will lapse. Upon acceptance of the offer, thegrantee must pay our Company a consideration of S$1.00.
(8) Termination of Options
Special provisions in the rules of the ESOS deal with the lapse or earlier exercise of Options incircumstances which include the termination of the participant’s employment in our Companyand/or our subsidiaries, the bankruptcy of the participant, the death of the participant, a take-overof our Company and the winding-up of our Company.
(9) Shares issued under the ESOS
Shares arising from the exercise of Options are subject to the provisions of the Memorandum andArticles of our Company. The Shares so allotted will upon issue rank pari passu in all respects withthe then existing issued Shares, save for any dividend, rights, allotments or distributions, the recorddate (“Record Date”) for which is prior to the relevant exercise date of the Option. “Record Date”means the date as at the close of business on which Shareholders must be registered in order toparticipate in any dividends, rights, allotments or other distributions (as the case may be).
(10) Duration of the ESOS
The ESOS shall continue in operation for a maximum duration of 10 years and may be continuedfor any further period thereafter with the approval of our Shareholders by ordinary resolution ingeneral meeting and of any relevant authorities which may then be required.
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(11) Abstention from voting
Shareholders who are eligible to participate in the ESOS are to abstain from voting on anyresolution of Shareholders relating to the ESOS.
In particular, all Shareholders who are eligible to participate in the ESOS shall abstain from votingon resolutions of the Shareholders relating to (a) the implementation of the ESOS; (b) the quantumof discount to be determined and (c) the participation and Option grant to Controlling Shareholdersand their associates. Notwithstanding the foregoing, participants of the ESOS may act as proxies,but such participants who are appointed as proxies will not vote on the aforementioned resolutionsunless specific instructions have been given in the proxy instrument on how the Shareholders wishtheir votes to be cast for the said resolutions.
Grant of Discounted Options
The ability to offer Options to participants of the ESOS with exercise prices set at a discount to theprevailing market prices of the Shares is intended, inter alia, to operate as a means to recognise theperformance of participants as well as to motivate them to continue to excel while encouraging them tofocus more on improving the profitability and return of our Company and/or our subsidiaries above acertain level which will benefit all Shareholders when these are eventually reflected through share priceappreciation. The ESOS will also serve to recruit new employees whose contributions are important tothe long-term growth and profitability of our Company and/or our subsidiaries. Discounted Options wouldbe perceived in a more positive light by the participants, inspiring them to work hard and produce resultsin order to be offered Discounted Options as only employees who have made significant contributions tothe success and development of our Company and/or our subsidiaries would be granted DiscountedOptions.
The flexibility to grant Discounted Options is also intended to cater to situations where the marketconditions are bullish and market prices of our Shares are traded at high premiums. In such events, ourRemuneration Committee will have absolute discretion to:
(a) Grant Options set at a discount to the Market Price of a Share (subject to a maximum limit of20.0%); and
(b) Determine the participants to whom, and the Options to which, such reduction in exercise priceswill apply.
In determining whether to give a discount and the quantum of the discount, our Remuneration Committeeshall be at liberty to take into consideration factors including but not limited to the performance of ourCompany and/or our subsidiaries, length of service and individual performance of the participantconcerned, the contribution of the participant to the success and development of our Company and/orour subsidiaries and the prevailing market conditions.
At present, our Company foresees that Discounted Options may be granted principally in the followingcircumstances:
(a) Where it is considered more effective to reward and retain talented employees by way of aDiscounted Option rather than a Market Price Option. This is to reward the outstanding performerswho have contributed significantly to our Company’s and/or our subsidiaries’ performance and theDiscounted Option serves as additional incentives to such employees. Options granted by ourCompany on the basis of market price may not be attractive and realistic in the event of an overlybuoyant market and inflated share prices. Hence during such period the ability to offer DiscountedOptions would allow our Company to grant Options on a more realistic and economically feasiblebasis. Furthermore, Discounted Options will give an opportunity to our Company’s and/or oursubsidiaries’ employees to realise some tangible benefits even if external events cause the Shareprice to remain largely static;
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(b) Where it is more meaningful and attractive to acknowledge a participant’s achievements through aDiscounted Option rather than paying him a cash bonus. For example, Discounted Options may beused to compensate employees and to motivate them during economic downturns when wages(including cash bonuses and annual wage supplements) are frozen or cut, or they could be used tosupplement cash in lieu of larger cash bonuses or annual wage supplements. Furthermore, adiscretion to grant Discounted Option provides our Company and/or our subsidiaries with a meansto maintain the competitiveness of our remuneration and compensation strategy. The ESOS willprovide our Company’s and/or our subsidiaries’ employees with an incentive to focus more onimproving the profitability of our Company and/or our Subsidiaries thereby enhancing shareholdervalue when these are eventually reflected through the price appreciation of our Shares after thevesting period; and
(c) Where due to speculative forces and having regard to the historical performance of the Shareprice, the Market Price of the Shares at the time of the grant of the Options may not be reflective offinancial performance indicators such as return on equity and/or earnings growth.
Our Remuneration Committee will have the absolute discretion to grant Discounted Options, to determinethe level of discount (subject to a maximum discount of 20.0% of the Market Price) and the grantees towhom, and the Options to which, such discount in the exercise price will apply provided that ourShareholders in general meeting shall have authorised, in a separate resolution, the making of offers andgrants of Options under the ESOS at a discount not exceeding the maximum discount as aforesaid.
We may also grant Options without any discount to the Market Price. Additionally, we may, if we deem fit,impose conditions on the exercise of the Options (whether Market Price Options or Discount Options),such as restricting the number of Shares for which the Option may be exercised during the initial yearsfollowing its vesting.
Rationale for participation of Controlling Shareholders and their associates
A confirmed employee or non-executive director (including an independent director) of our Group who isa Controlling Shareholder of our Company or an associate of a Controlling Shareholder shall be eligibleto participate in the ESOS if (a) his participation in the ESOS and (b) the actual number and terms of theOptions to be granted to him have been approved by independent Shareholders of our Company inseparate resolutions for each such person. The relevant employee is required to abstain from voting on,and (in the case of employees who are Directors) refrain from making any recommendation on, theresolutions in relation to the ESOS.
One of the objectives of the ESOS is to motivate participants to optimise their performance standardsand efficiency. The objectives of the ESOS apply equally to our employees who are ControllingShareholders or associates of Controlling Shareholders. Our view is that all deserving and eligibleparticipants should be motivated, regardless of whether they are Controlling Shareholders or associatesof Controlling Shareholders. We believe that our employees should not be excluded from benefiting underthe ESOS solely for the reason that they are Controlling Shareholders or associates of ControllingShareholders. It is in our interest to ensure that our employees who are actively contributing to ourprogress are given the incentive to continue to remain with us and contribute towards our future progressand development.
Although our Controlling Shareholders and their associates have or may already have shareholdinginterests in our Company, the extension of the ESOS to allow the Controlling Shareholders and theirassociates who meet the eligibility criteria set out in the rules of the ESOS to participate in the Scheme,will ensure that they are equally entitled, with the other employees who are not Controlling Shareholdersor their associates, to take part and benefit from this system of remuneration. The ESOS is intended tobe part of our Company’s system of employee remuneration and our Company is of the view thatemployees who are Controlling Shareholders or associates of Controlling Shareholders should not beunduly discriminated against by virtue only of their shareholding in our Company.
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It is proposed that Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong who aredirectors of TALH, our indirect Controlling Shareholder, and who are also employees of our Companyand/or our subsidiaries, be entitled to participate in the ESOS. Please refer to the section entitled“General Information on Our Group - Shareholders” of this Prospectus for further details.
Rationale for participation of Mr Tan Cheng Soon Don
Mr Tan Cheng Soon Don is the Managing Director of our Company, responsible for the overall strategy,management and operations of our Group.
Mr Tan Cheng Soon Don has been with our Group for almost 20 years. As our Managing Director, Mr TanCheng Soon Don plays a pivotal role in providing strategic leadership, business and managementdirection, business networks and market contacts to our Group. Our Directors believe that the potentialcontribution that may be made by Mr Tan Cheng Soon Don to our Group’s future development will besubstantial towards steering our Group to be one of the leading heavy lifting services company inSingapore.
Our Directors are of the view that the remuneration package of Mr Tan Cheng Soon Don is fair given hiscontributions to our Group. The extension of the ESOS to Mr Tan Cheng Soon Don is consistent with ourCompany’s objectives to motivate our employees to achieve and maintain a high level of performanceand contribution which is vital to the success of our Company and our Group at large. Although Mr TanCheng Soon Don is the sibling of our Executive Directors, Mr Tan Cheng Guan and Mr Tan Cheng Kwongand has a shareholding interest in our Company, the extension of the ESOS to him will ensure that he isequally entitled, with the other employees who are not Controlling Shareholders, to take part in andbenefit from this system of remuneration, thereby enhancing his long-term commitment to our Company.
It is therefore proposed that Mr Tan Cheng Soon Don be allowed to participate in the ESOS to rewardhim for his past and present contributions and to provide additional incentive for him to contribute to thefuture performance of our Group.
Rationale for participation of Mr Tan Cheng Guan
Mr Tan Cheng Guan is our Executive Director, who heads our trading business, of which the primaryfunctions are to develop new procurement channels, promote our sales, identify new businessopportunities and customers, and further to manage relationships with our existing customer in relevantareas.
Mr Tan Cheng Guan has more than 16 years of experience in the business of rental, trading of cranesand other heavy lifting equipment. With the expertise from Mr Tan Cheng Guan, our Group was able toexpand its scope of business and strengthen our sales force. Since then, our Group’s sales division hasgrown into a large-scale operation and generates significant profits for our Group every year. Mr TanCheng Guan’s expertise and contribution to our Group has been invaluable since his joining our Group in1993 and his continuing contribution is an important factor for the further growth and success of ourGroup.
Our Directors are of the view that the remuneration package of Mr Tan Cheng Guan is fair given hiscontributions to our Company. The extension of the ESOS to Mr Tan Cheng Guan is consistent with ourCompany’s objectives to motivate our employees to achieve and maintain a high level of performanceand contribution which is vital to the success of our Company and our Group at large. Although Mr TanCheng Guan is the sibling of our Executive Directors, Mr Tan Cheng Soon Don and Mr Tan Cheng Kwongand has a shareholding interest in our Company, the extension of the ESOS to him will ensure that he isequally entitled, with the other employees who are not Controlling Shareholders, to take part in andbenefit from this system of remuneration, thereby enhancing his long-term commitment to our Company.
It is therefore proposed that Mr Tan Cheng Guan be allowed to participate in the ESOS to reward him forhis past and present contributions and to provide additional incentive for him to contribute to the futureperformance of our Group.
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Rationale for participation of Mr Tan Cheng Kwong
Mr Tan Cheng Kwong is our Executive Director since 1996. He was subsequently appointed as theExecutive Director of SHAL in 1999 and has since then, been in charge of the management andoperation of SHAL.
Mr Tan Cheng Kwong has more than 14 years of experience in the business of rental and trading ofaerial work platforms and cranes. Under the management of Mr Tan Cheng Kwong, our aerial liftsbusiness has grown significantly over the years. He successfully led our aerial lifts business team andcreated optimal business model for our Group, which has contributed to our rapid growth in recent years.
Our Directors are of the view that the remuneration package of Mr Tan Cheng Kwong is fair given hiscontributions to our Company. The extension of the ESOS to Mr Tan Cheng Kwong is consistent with ourCompany’s objectives to motivate our employees to achieve and maintain a high level of performanceand contribution which is vital to the success of our Company and our Group at large. Although Mr TanCheng Kwong is the sibling of our Executive Directors, Mr Tan Cheng Soon Don and Mr Tan Cheng Guanand has a shareholding interest in our Company, the extension of the ESOS to him will ensure that he isequally entitled, with other employees who are not Controlling Shareholders or associates of ControllingShareholders, to take part in and benefit from this system of remuneration, thereby enhancing his long-term commitment to our Company.
It is therefore proposed that Mr Tan Cheng Kwong be allowed to participate in the ESOS to reward himfor his past and present contributions and to provide additional incentive for him to contribute to the futureperformance of our Group.
The participation in the ESOS by Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan ChengKwong will take place only after the listing of our Company on the SGX-ST. By subscribing for theInvitation Shares, investors shall be deemed to have acknowledged and approved the participation byeach of Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan Cheng Kwong in the ESOS.Nonetheless, under the Listing Manual, the specific grant of Options to each of Mr Tan Cheng Soon Don,Mr Tan Cheng Guan and Mr Tan Cheng Kwong and any other Controlling Shareholders or theirassociates will have to be approved by independent Shareholders in general meeting.
Rationale for participation of directors and employees of our Group
The extension of the ESOS to the executive, non-executive and independent directors (including ourControlling Shareholders or their associates who are employees of our Company) and employees of ourCompany and/or our subsidiaries allows our Company and/or our subsidiaries to have a fair andequitable system to reward directors and employees who have made and who continue to makesignificant contributions to the long-term growth of our Company and/or our subsidiaries.
Non-executive directors (including independent directors) bring to our Company and/or our subsidiariestheir wealth of knowledge, business expertise and contacts in the business community. It is desirable thatnon-executive directors (including independent directors) of our Group be allowed to participate in theESOS to instill in them a greater sense of involvement and belonging to our Company and/or oursubsidiaries thereby enhancing our working relationship with them. We are of the view that including thenon-executive directors (including independent directors) of our Company and/or our subsidiaries in theESOS will show our appreciation for, and further motivate them in their contribution towards our success.
Our Remuneration Committee, when deciding on the selection of the non-executive directors (includingindependent directors) of our Group to participate in the ESOS and the number of Options to be offered,will take into consideration the nature and extent of their input, the assistance and expertise rendered bythem to the Board and the impact thereof on the growth, success and development of our Companyand/or our subsidiaries, as well as their involvement and commitment to the committees of directors onwhich they sit. Our Remuneration Committee may, where it considers relevant, take into account otherfactors such as the economic conditions and our Company’s performance.
SHHM EMPLOYEE SHARE OPTION SCHEME
150
Although the non-executive directors (including independent directors) of our Company and/or oursubsidiaries may be appointed as members of our Remuneration Committee, the rules of the ESOSprovide that a member is not to be involved in its deliberations in respect of the grant of Options to him.We will ensure that the number of Options granted to the non-executive directors (including independentdirectors) of our Company and/or our subsidiaries will be such that any conflict of interests that maypotentially arise is kept minimal and that the independence of the non-executive directors (includingindependent directors) of our Company and/or our subsidiaries are not compromised.
It is our intention that all our employees whether key employees or not, should be treated equally for thepurposes of the ESOS. The main purpose of the ESOS is to align the interests of our Company’s and/orour subsidiaries’ directors and all employees who are involved in our business and prosperity with thoseof our own. The extension of the ESOS to all employees of our Company and/or our subsidiaries allowsus a fair and equitable system to reward all employees who have made and will continue to makeimportant contributions to our long-term growth.
We believe that the ESOS will be an essential part of our strategy for recruiting and retaining capableemployees. The ESOS will provide an incentive to our employees to achieve and maintain a high level ofperformance as well as to encourage greater dedication and loyalty by enabling our Company and/or oursubsidiaries to give recognition to past contributions and services as well as to further encourageparticipants generally to contribute towards our long-term prosperity. We will determine the number ofOptions to be granted to an employee by taking into account the appointment, responsibilities, length ofservice, potential and performance. The level of performance of each employee will be assessed on thebasis of an annual appraisal process for all employees.
Disclosures in Annual Reports
Details of, inter alia, the number of Options granted, the number of Options exercised and the exerciseprice (as well as the discounts involved, if any) will be disclosed in our annual reports.
Cost of Options granted under the ESOS to our Company
Any Option granted under the ESOS will have a fair value. Where such Options are granted at aconsideration which is less than their fair value, there will be a cost to our Company, the amount of whichwill depend on whether the Options are granted at market price or at a discount.
The cost to our Company of granting Options under the ESOS would be as follows:
(a) The exercise of an Option at a discounted exercise price would translate into a reduction of theproceeds from the exercise of such Option, as compared to the proceeds that our Company wouldhave received from such exercise had the exercise been made at the prevailing market price of theShares. Such reduction of the exercise proceeds would represent the monetary costs to ourCompany;
(b) As the monetary cost of granting Options with a discounted exercise price is borne by ourCompany, our earnings would effectively be reduced by an amount corresponding to the reducedinterest earnings that we would have received from the difference in proceeds from exercise pricewith no discount versus the discounted exercise price. Such reduction would, accordingly, result inthe dilution of our earnings per Share;
(c) The effect of the issue of new Shares upon the exercise of Options, is that our Company’s NTA perShare will increase if the exercise price is above the NTA per Share and decrease, if the exerciseprice is below the NTA per Share; and
(d) The grant of Options under the ESOS will have an impact on our Company’s reported profitbecause under the Singapore Financial Reporting Standards (“SFRS”), share-based paymentrequires the recognition of an exercise in respect of Options granted under the ESOS. Theexpense will be based on the fair value of the Options at the date of grant (as determined by anoption-pricing model) and will be recognised over the vesting period. The requirement to recognisean expense in respect of options granted to employees is set out in SFRS 102.
SHHM EMPLOYEE SHARE OPTION SCHEME
151
It should be noted that the financial effects discussed in (a), (b) and (c) above would materialise onlyupon the exercise of the relevant Options. The cost of granting Options discussed in (d) would only berecognised in the financial statements even if the Options are not exercised in (d). Measured againstthese costs would be the desirable effect of the Scheme in attracting, recruiting, retaining and motivatingdirectors and employees which could, in the long term, yield greater returns for us and our Shareholders.
Under the ESOS, each participant to whom an Option is offered pays a nominal consideration of S$1.00to our Company on his acceptance of the offer of the Option. Insofar as such Options are granted at aconsideration that is less than their fair value at the time of grant, there will be a cost to our Company (inthat we will receive from the participant upon the grant of the Option to him, a consideration that is lessthan the fair value of the Option).
The cost to our Company in granting an Option would vary depending on the number of Options grantedpursuant to the ESOS, whether these Options are granted at Market Price or at a discount and thevalidity period of the Options. Generally, a greater discount and a longer validity period for an Option willresult in a higher potential cost to our Company. If such costs were to be recognised in accordance withSFRS 102, it would have to be charged to our Company’s profit and loss account over the vesting period.
The issuance of new Shares under the ESOS will have a dilutive impact on our consolidated EPS.However, the impact is not expected to be material in any given financial year as the Options are likely tobe exercised over several years in accordance with the pre-determined vesting schedules.
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152
Upon listing and quotation on SGX-ST, our Shares will be traded under the book-entry settlement systemof CDP, and all dealings in and transactions of our Shares through SGX-ST will be effected inaccordance with the terms and conditions for the operation of Securities Accounts with CDP, as amendedfrom time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf ofpersons who maintain, either directly or through Depository Agents, Securities Accounts with CDP.Persons named as direct securities account holders and depository agents in the depository registermaintained by CDP, rather than CDP itself, will be treated under our Articles and the Companies Act asmembers of our Company in respect of the number of Shares credited to their respective SecuritiesAccounts.
Persons holding our Shares in Securities Account with CDP may withdraw the number of Shares theyown from the book-entry settlement system in the form of physical share certificates. Such sharecertificates will, however, not be valid for delivery pursuant to trades transacted on SGX-ST, althoughthey will be prima facie evidence of title and may be transferred in accordance with our Articles. A fee ofS$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal of morethan 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement system andobtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as our Directorsmay decide, is payable to the share registrar for each share certificate issued and a stamp duty ofS$10.00 is also payable where our Shares are withdrawn in the name of the person withdrawing ourShares or S$0.20 per S$100.00 or part thereof of the last-transacted price where it is withdrawn in thename of a third party. Persons holding physical share certificates who wish to trade on SGX-ST mustdeposit with CDP their share certificates together with the duly executed and stamped instruments oftransfer in favour of CDP, and have their respective Securities Accounts credited with the number ofShares deposited before they can effect the desired trades. A fee of S$10.00 is payable upon the depositof each instrument of transfer with CDP. The above fee may be subject to such changes as may be inaccordance with CDP’s prevailing policies or the current tax policies that may be in force in Singaporefrom time to time.
Transactions in our Shares under the book-entry settlement system will be reflected by the seller’sSecurities Account being debited with the number of Shares sold and the buyer’s Securities Accountbeing credited with the number of Shares acquired. No transfer of stamp duty is currently payable for theShares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.04% of thetransaction value subject to a maximum of S$600.00 per transaction. The clearing fee, instrument oftransfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax of7.0% (or such other rate prevailing from time to time).
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on CDPon a scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generally takes placeon the third Market Day following the transaction date, and payment for the securities is generally settledon the following business day. CDP holds securities on behalf of investors in Securities Accounts. Aninvestor may open a direct account with CDP or a sub-account with a Depository Agent. The DepositoryAgent may be a member company of the SGX-ST, bank, merchant bank or trust company.
CLEARANCE AND SETTLEMENT
153
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1. Save as disclosed below, none of our Directors, Executive Officers or Controlling Shareholder is orwas involved in any of the following events:-
(a) had at any time during the last ten years, an application or a petition under any bankruptcylaws of any jurisdiction filed against him or against a partnership of which he was a partnerat the time when he was a partner or at any time within two years from the date he ceasedto be a partner;
(b) had at any time during the last ten years, an application or a petition under any law of anyjurisdiction filed against an entity (not being a partnership) of which he was a director or anequivalent person or a key executive, at the time when he was a director or an equivalentperson or a key executive of that entity or at any time within two years from the date heceased to be a director or an equivalent person or a key executive of that entity, for thewinding up or dissolution of that entity or, where that entity is the trustee of a business trust,that business trust, on the ground of insolvency;
(c) has any unsatisfied judgment against him;
(d) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud ordishonesty, which is punishable with imprisonment, or has been the subject of any criminalproceedings (including any pending criminal proceedings of which he is aware) for suchpurpose;
(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a breach ofany law or regulatory requirement that relates to the securities or futures industry inSingapore or elsewhere, or been the subject of any criminal proceedings (including anypending criminal proceedings of which he is aware) for such breach;
(f) had at any time during the last ten years, judgment entered against him in any civilproceedings in Singapore or elsewhere involving a breach of any law or regulatoryrequirement that relates to the securities or futures industry in Singapore or elsewhere, or afinding of fraud, misrepresentation or dishonesty on his part, or been the subject of any civilproceedings (including any pending civil proceedings of which he is aware) involving anallegation of fraud, misrepresentation or dishonesty on his part;
(g) has ever been convicted in Singapore or elsewhere of any offence in connection with theformation or management of any entity or business trust;
(h) has ever been disqualified from acting as a director or an equivalent person of any entity(including the trustee of a business trust), or from taking part directly or indirectly in themanagement of any entity or business trust;
(i) has ever been the subject of any order, judgment or ruling of any court, tribunal orgovernmental body, permanently or temporarily enjoining him from engaging in any type ofbusiness practice or activity;
(j) has ever, to his knowledge, been concerned with the management or conduct, in Singaporeor elsewhere, of the affairs of:-
(i) any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere;
(ii) any entity (not being a corporation) which has been investigated for a breach of anylaw or regulatory requirement governing such entities in Singapore or elsewhere;
GENERAL AND STATUTORY INFORMATION
154
(iii) any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere,
in connection with any matter occurring or arising during the period when he was soconcerned with the entity or business trust; or
(k) has been the subject of any current or past investigation or disciplinary proceedings, or hasbeen reprimanded or issued any warning, by the Authority or any other regulatory authority,exchange, professional body or governmental agency, whether in Singapore or elsewhere.
Derrick Lee Meow Chan
In October 1996, the Inland Revenue Authority of Singapore (“IRAS”) informed Mr Derrick LeeMeow Chan that he had incorrectly filed his income tax return as certain benefits-in-kind were notincluded in his IR8A forms issued by his employer. In view of the explanations given relating to MrLee’s inadvertence, IRAS offered to compound his omission for a sum of S$13,600, which Mr Leeaccepted and had paid the said amount in full.
In May 1991, Mr Derrick Lee Meow Chan assisted with an investigation by the MalaysianCommercial Affair Department relating to a senior management of QCD Sdn Bhd (“QCD”), aMalaysian company, in his capacity as a former non-executive director of QCD. The principalactivity of QCD was in the subcontracting of plastic injection mouldings and production of videocassette housings. SEAVI Advent had invested in QCD in 1989 and Mr Lee was nominated bySEAVI Advent as a non-executive director of QCD then. Mr Lee was not the subject of theinvestigation and has not since been asked to assist further.
Tan Ah Lye, Tan Cheng Soon Don, Tan Cheng Guan and Tan Cheng Kwong
Pursuant to a written request made by a former employee, our Company did not make CPFcontributions in respect of the said former employee for the period between February 2002 andDecember 2006. Mr Tan Cheng Soon Don, Mr Tan Cheng Guan, Mr Tan Cheng Kwong and Mr TanAh Lye were then under the impression that the written confirmation from the former employeewould absolve our Company of its statutory requirement to make CPF contributions for the formeremployee. In July 2007, CPF Board notified our Company to make the necessary contributionswhich amounted to S$43,433. Our Company was also required to make late payment interestamounting to S$25,768. The above amounts have been fully paid, and this matter has been fullyresolved with the CPF Board. Mr Tan Cheng Soon Don, Mr Tan Cheng Guan and Mr Tan ChengKwong are directors of our Company and Mr Tan Ah Lye was a director of our Company during therelevant period.
GENERAL AND STATUTORY INFORMATION
155
SHARE CAPITAL
2. Save as disclosed below, there were no changes in the issued and paid-up capital of our Companyand our subsidiaries within the three years preceding the Latest Practicable Date.
ResultantDate of allotment/ issued share issue/capital Number of Consideration capital/charter contribution shares issued Purpose per share capital
SHMSB
3 April 2009 4 Incorporation RM1 RM4
20 May 2009 49,996 Increase in RM1 RM50,000share capital
SHV
9 November 2009 Not Incorporation Not US$60,000Applicable(1) Applicable(1)
Note:-
(1) SHV is a limited liability company under applicable Vietnamese laws. Under Vietnamese Laws, a companyincorporated with limited liability does not issue shares.
3. Save as disclosed above, no shares in our Company or our subsidiaries have been issued for aconsideration other than cash during the three years preceding the date of lodgement of thisProspectus.
MATERIAL CONTRACTS
4. The following contracts, not being contracts entered into in the ordinary course of business, havebeen entered into by our Company and our subsidiaries within the two years preceding the date oflodgement of this Prospectus and are or may be material:-
(a) Management Agreement between our Company, the Vendor and the Joint Issue Managersdated 25 January 2010 relating to the management of this Invitation (see the “Management,Underwriting and Placement Arrangements” section of this Prospectus);
(b) Underwriting Agreement between our Company, the Vendor and DBS Bank dated 25January 2010 relating to the underwriting of the Offer Shares (see the “Management,Underwriting and Placement Arrangements” section of this Prospectus);
(c) Placement Agreement between our Company, the Vendor and DBS Bank dated 25 January2010 relating to the placement of the Placement Shares (see the “Management,Underwriting and Placement Arrangements” section of this Prospectus);
(d) Right of first refusal granted by SEAVI Advent to our Company dated 21 December 2009;and
(e) Non-competition undertakings provided by TALH, Mr Tan Ah Lye, Mr Tan Cheng Soon Don,Mr Tan Cheng Guan and Mr Tan Cheng Kwong to our Company dated 21 December 2009.
GENERAL AND STATUTORY INFORMATION
156
LITIGATION
5. Save as disclosed below, there are no legal or arbitration proceedings, including those which arepending or known to be contemplated, which may have or have had during the last 12 monthsimmediately preceding the date of lodgement of this Prospectus a material effect on our Group’sfinancial position or profitability.
Songcheon Engineering Pte Ltd v K-Inc Konstruct Pte Ltd (Suit 752 of 2009/W)
On 3 September 2009, our Associated Company, SEPL, commenced a suit in the High Court ofthe Republic of Singapore, against K-Inc Konstruct Pte Ltd, in relation to a claim in contract forunpaid progress payments for work completed amounting to the sum of approximately S$1.8million. The matter is currently pending before the High Court.
SEPL has made full provisions for the full amount being claimed.
MISCELLANEOUS
6. Save as disclosed under the “Events After the Balance Sheet Date” section in Appendix A(i) of thisProspectus, our Directors are not aware of any event which has occurred since 30 June 2009,which may have a material effect on the financial information provided in the “IndependentAuditors’ Report and the Consolidated Financial Statements of Sin Heng Heavy MachineryLimited” in Appendix A(i) of this Prospectus.
7. For FY2007, FY2008 and FY2009, Messrs TS Choo & Co (Member of Institute of Certified PublicAccountants of Singapore) of 10 Jalan Besar, #10-01, Sim Lim Tower, Singapore 208787, were ourauditors. Currently our auditors are Messrs Deloitte & Touche LLP (Member of Institute of CertifiedPublic Accountants of Singapore) of 6 Shenton Way #32-00, DBS Building Tower Two, Singapore068809. We currently have no intention of changing the auditors of our Company and oursubsidiaries after the admission of our Company to the Official List of the SGX-ST.
8. DBS Bank engages in transactions with and performs financial services for our Group in theordinary course of business and has engaged, and may in the future engage, in commercialbanking and/or investment banking transactions with our Group, for which it has received, and mayin future, receive customary fees. DBS Bank is also our Receiving Banker.
9. DBS Bank, through its private equity desk, has invested in two of the SEAVI Advent Funds withbeneficial interests in SEAVI. The Leverage Loan was secured in favour of DBS Bank, by way ofthe Security Interests. Please refer to section entitled “Interested Person Transactions” of thisProspectus for more details. DBS Bank is the principal banker of our Company and has extendedcredit facilities secured against the assets of our Company and its subsidiaries. Saved as disclosedin this Prospectus, DBS Bank does not have any material relationship with our Group or anyinterest in this Invitation.
10. Mr Renny Yeo Ah Kiang is a passive investor in SEAVI Advent Equity V Trust, which is one of theSEAVI Advent Funds which is managed by SEAVI Advent and has beneficial interest in SEAVI. MrYeo has an investment commitment of up to US$500,000 in SEAVI Advent Equity V Trust whichwas made in August 2007 and to-date, he has invested US$175,000 in the said fund. The fund sizeof SEAVI Advent Equity V Trust is approximately US$70 million and the aggregate fund size ofSEAVI Advent Funds is approximately US$250 million. In addition, Mr Yeo has been appointed bySEAVI Venture Services Pte. Ltd (“SEAVI Venture”), an affiliate of SEAVI Advent, on 24 August2009 as a venture advisor. Under this appointment, his scope of work covers sourcing forinvestment opportunities, providing networking contacts and providing specific advice on duediligence issues. Notwithstanding the above, the Board of Directors (excluding Mr Renny Yeo AhKiang) considers Mr Renny Yeo Ah Kiang to be independent under the guidelines as set out inPrinciple 2 of the Code of Corporate Governance 2005.
GENERAL AND STATUTORY INFORMATION
157
CONSENTS
11. The Auditors and Reporting Accountants have given and have not withdrawn their written consentto the issue of this Prospectus with the inclusion herein of the “Independent Auditors’ Report on theConsolidated Financial Statements of Sin Heng Heavy Machinery Limited” and the “IndependentAuditors’ Report on the Unaudited Group Proforma Financial Information” in the form and contextin which they are included and references to their name in the form and context in which it appearsin this Prospectus and to act in such capacity in relation to this Prospectus.
12. DBS Bank has given and has not withdrawn its written consent to being named in this Prospectusas the Joint Issue Manager, the Underwriter and the Placement Agent.
13. Stirling Coleman has given and has not withdrawn its written consent to being named in thisProspectus as the Joint Issue Manager.
14. The legal advisers to our Company as to Malaysia law have given and have not withdrawn theirwritten consent to the issue of this Prospectus, with the inclusion herein of their opinion in thesection entitled “Government Regulations – Consequences of Non-compliance of the CDTGuidelines” of this Prospectus, and references to their name in the form and context in which itappears in this Prospectus and to act in such capacity in relation to this Prospectus.
15. Each of the Solicitors to our Company, the Solicitors to the Joint Issue Managers, Underwriter andPlacement Agent, the Legal Advisers to our Company on Vietnam law, the Share Registrar, thePrincipal Banker and the Receiving Banker do not make or purport to make any statement in thisProspectus or any statement upon which a statement in this Prospectus is based and each ofthem makes no representation regarding any statement in this Prospectus and to the maximumextent permitted by law, expressly disclaim and takes no responsibility for any liability to anyperson which is based on, or arises out of, any statement, information or opinions in, or omissionfrom, this Prospectus.
DOCUMENTS AVAILABLE FOR INSPECTION
16. Copies of the following documents may be inspected at 26 Gul Road, Singapore 629346 duringnormal business hours for a period of six months from the date of registration by the Authority ofthis Prospectus:-
(a) the Memorandum and Articles of Association of our Company;
(b) the “Independent Auditors’ Report and the Consolidated Financial Statements of Sin HengHeavy Machinery Limited” and the “Independent Auditors’ Report on the Unaudited GroupProforma Financial Information” as set out in Appendix A(i) and Appendix A(ii) of thisProspectus respectively;
(c) the material contracts referred to in paragraph 4 above;
(d) the letters of consent referred to in paragraphs 11, 12, 13 and 14 above; and
(e) the Service Agreements for our Executive Directors.
STATEMENT BY DIRECTORS OF OUR COMPANY AND THE VENDOR
17. This Prospectus has been seen and approved by our Directors and the Vendor and theycollectively and individually accept the full responsibility for the accuracy of the information given inthis Prospectus and confirm, having made all reasonable enquiries, that to the best of theirknowledge and belief, that the facts stated and the opinions expressed herein are fair and accuratein all material respects as of the date hereof and there are no other facts the omission of whichwould make any statements herein misleading, and that this Prospectus constitutes full and truedisclosure of all material facts about this Invitation and our Group.
GENERAL AND STATUTORY INFORMATION
158
APPENDIX A
A(i)-1
CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEARS ENDED 30 JUNE 2007, 2008 AND 2009
25 January 2010
The Board of DirectorsSin Heng Heavy Machinery Limited26 Gul RoadSingapore 629346
Dear Sirs
We have audited the accompanying consolidated financial statements of Sin Heng Heavy MachineryLimited Theconsolidated financial statements comprise the consolidated balance sheets as at 30 June 2007, 2008and 2009, and the consolidated profit and loss statements, statements of changes in equity and cash flow statements of the Group for the years ended 30 June 2007, 2008 and 2009 (the
pages A(i)-3 to A(i)-45.
These consolidated financial statements have been prepared solely in connection with the proposedlisting of Sin Heng Heavy Machinery Limited on the Singapore Exchange Securities TradingLimited. This report is made solely to you, as a body for this purpose and for no other purpose. Wedo not assume responsibility towards or accept liability to any other person for the contents of this report.
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Singapore Financial Reporting Standards. This responsibilityincludes: 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 thepreparation of true and fair profit and loss accounts and balance sheets and to maintain accountabilityof assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
A(i) – INDEPENDENT AUDITORS’ REPORT AND THE CONSOLIDATED FINANCIALSTATEMENTS OF SIN HENG HEAVY MACHINERY LIMITED
APPENDIX A
A(i)-2
Our responsibility is to express an opinion on these consolidated financial statements based on ouraudit. We conducted our audit in accordance with the Singapore Standards on Auditing. Thosestandards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance on whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
Opinion
In our opinion, the consolidated financial statements of the Group are properly drawn up inaccordance with the Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group as at 30 June 2007, 2008 and 2009 and of the results, changes in equity and cash flows of the Group for the Relevant Periods.
Deloitte & Touche LLP Public Accountants andCertified Public AccountantsSingapore
Jeremy Toh Yew KuanPartner
APPENDIX A
A(i)-3
SIN HENG HEAVY MACHINERY LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETSAs at 30 June 2007, 2008 and 2009
Note 2007 2008 2009
ASSETS
Current assets Cash and bank balances 6 7,644 7,498 8,430 Trade receivables 7 7,991 10,099 12,817 Other receivables and prepaid expenses 8 3,646 2,342 1,564 Derivative financial instruments 9 - - 264 Inventories 10 11,537 17,168 10,189Total current assets 30,818 37,107 33,264
Non-current assets Property, plant and equipment 11 24,778 39,075 59,598 Investment in associate 12 720 978 1,352 Available-for-sale investments 13 287 1,092 794 Other assets 14 10 10 10Total non-current assets 25,795 41,155 61,754
Total assets 56,613 78,262 95,018
LIABILITIES AND EQUITY
Current liabilitiesBills payable 15 4,177 5,167 10,949 Bank overdraft 16 1,294 - -Current portion of bank loan 16 244 254 304 Trade payables 17 1,848 1,460 1,580 Other payables 18 4,377 3,873 2,594 Current portion of finance leases 19 2,218 4,649 3,934 Derivative financial instruments 9 255 98 -Income tax payable 2,612 3,825 1,161Total current liabilities 17,025 19,326 20,522
Non-current liabilitiesBank loan 16 1,041 831 683 Finance leases 19 1,886 7,272 4,490 Deferred tax liabilities 20 422 584 3,374Total non-current liabilities 3,349 8,687 8,547
Capital and reservesShare capital 21 1,858 1,858 1,858 Retained earnings 34,297 48,441 64,423 Fair value reserve 84 (50) (332) Total equity 36,239 50,249 65,949
Total liabilities and equity 56,613 78,262 95,018
See accompanying notes to consolidated financial statements.
APPENDIX A
A(i)-4
SIN HENG HEAVY MACHINERY LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED PROFIT AND LOSS STATEMENTSYears ended 30 June 2007, 2008 and 2009
Note 2007 2008 2009
Revenue 22 82,740 131,833 136,986
Cost of sales (65,444) (104,584) (105,525)
Gross profit 17,296 27,249 31,461
Other operating income 23 903 810 2,062
Selling expenses (1,662) (1,427) (1,168)
Administrative expenses (4,606) (4,878) (6,332)
Other operating expenses (793) (697) (150)
Finance costs 24 (60) (198) (359)
Share of results of associate 12 220 258 424
Profit before income tax 11,298 21,117 25,938
Income tax expense 25 (2,121) (3,954) (3,956)
Profit for the year 26 9,177 17,163 21,982
Basic and diluted earningsper share (cents) 27 2.47 4.62 5.91
See accompanying notes to consolidated financial statements.
APPENDIX A
A(i)-5
SIN HENG HEAVY MACHINERY LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYYears ended 30 June 2007, 2008 and 2009
FairShare value Retained
Note capital reserve earnings Total
Balance at 1 July 2006 1,858 (438) 25,863 27,283
Fair value gain on available-for-saleinvestments, representing netincome recognised directly in equity - 95 - 95
Transfer to profit or loss on impairment ofavailable-for-sale investments - 427 - 427
Profit for the year - - 9,177 9,177Total recognised income for the year - 522 9,177 9,699
Dividends paid 28 - - (743) (743) Balance at 30 June 2007 1,858 84 34,297 36,239
Fair value loss on available-for-saleinvestments, representing net
expense recognised directly in equity - (145) - (145)Transfer to profit or loss on impairment of available-for-sale investments - 11 - 11Profit for the year - - 17,163 17,163Total recognised income and expenses for the year - (134) 17,163 17,029
Dividends paid 28 - - (3,019) (3,019) Balance at 30 June 2008 1,858 (50) 48,441 50,249
Fair value loss on available-for-saleinvestments, representing net
expense recognised directly in equity - (293) - (293)Transfer to profit or loss on impairment of
available-for-sale investments - 11 - 11Profit for the year - - 21,982 21,982Total recognised income and expense for the year - (282) 21,982 21,700
Dividends paid 28 - - (6,000) (6,000) Balance at 30 June 2009 1,858 (332) 64,423 65,949
See accompanying notes to consolidated financial statements.
APPENDIX A
A(i)-6
SIN HENG HEAVY MACHINERY LIMITED AND ITS SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTSYears ended 30 June 2007, 2008 and 2009
2007 2008 2009
Operating activitiesProfit before income tax 11,298 21,117 25,938
Adjustments for:Property, plant and equipment written off - 1 20 Unrealised exchange loss (gain) from derivativefinancial instruments 255 (157) (362)
Share of associate (220) (258) (424)Depreciation of property, plant and equipment 3,796 6,085 7,100Dividend income - (24) (14) Impairment of available-for-sale investments 427 678 11 Interest expense 195 362 421 Interest income (135) (164) (62)Gain on disposal of available for sale investments (116) (12) (9)(Gain) Loss on disposal of property, plant and equipment (63) (187) 1
Operating cash flows before movements inworking capital 15,437 27,441 32,620
Trade receivables (2,417) (2,108) (2,718)Other receivables and prepaid expenses (2,962) 1,304 1,591Inventories (10,521) (7,369) (11,569)Bills payable 4,177 990 5,782Trade payables (117) (388) 120 Other payables 1,694 (504) (1,279)
Cash generated from operations 5,291 19,366 24,547
Income tax paid (1,462) (2,579) (3,829) Net cash from operating activities 3,829 16,787 20,718
Investing activitiesDividend received from an associate - - 50 Dividend received from other investments - 24 14
Proceeds from sale of investments 1,158 46 14 Purchase of investments (94) (1,651) -
Interest received 135 164 62 Purchase of property, plant and equipment (Note a) (2,477) (5,620) (7,454)Investment in associate (500) - -
Proceeds from disposal of property, plant and equipment 331 402 92
Fixed deposits pledged to bank 1,555 (644) 3,012Net cash from (used in) investing activities 108 (7,279) (4,210)
APPENDIX A
A(i)-7
2007 2008 2009
Financing activitiesDividends paid (743) (3,019) (6,000)
Interest paid (195) (362) (421)Repayment of obligations under finance leases (2,593) (5,423) (6,045)Repayment of bank loans (201) (200) (98)
Net cash used in financing activities (3,732) (9,004) (12,564)
Net increase in cash and cash equivalents 205 504 3,944Cash and cash equivalents at beginning of year 3,686 3,891 4,395Cash and cash equivalents at end of year 3,891 4,395 8,339
Cash and cash equivalents at end of the financial year comprised:
Cash and bank balances (Note 6) 7,644 7,498 8,430Less: Fixed deposits pledged to bank (2,459) (3,103) (91)Less: Bank overdraft (1,294) - -
3,891 4,395 8,339
Note (a):
During the financial year ended 30 June 2009, the Group acquired property, plant and equipment with an aggregate cost of $10,002,000 (2008 : $18,860,000, 2007 : $7,431,000) for which $2,548,000 (2008 : $13,240,000, 2007 : $4,954,000) were acquired under finance leases.
See accompanying notes to consolidated financial statements.
APPENDIX A
A(i)-8
SIN HENG HEAVY MACHINERY LIMITED AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS30 June 2007, 2008 and 2009
1 GENERAL
The Company (Registration No. 198101305R) is incorporated in Singapore with its registered office and principal place of business at 26 Gul Road, Singapore 629346. The consolidatedfinancial statements are expressed in Singapore dollars.
The consolidated financial statements have been prepared solely in connection with theproposed listing of Sin Heng Heavy Machinery Limited on the Singapore Exchange SecuritiesTrading Limited.
The principal activities of the Company are those of hiring and dealing in cranes and heavy machinery and provision of facilities and custody services. The principal activities of the subsidiaries are disclosed in Note 29 to the financial statements.
The consolidated financial statements of the Group for the years ended 30 June 2007, 2008 and 2009 were authorised for issue by the Board of Directors of the Company on 25 January 2010.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The consolidated financial statements are prepared in accordance with the historical cost basis, except as disclosed in the accounting policies below, and aredrawn up in accordance with the Singapore F
ADOPTION OF NEW AND REVISED STANDARDS - The Group has adopted all the new andrevised FRSs and Interpretations that are relevant to its operations andeffective for the latest reporting periods.
The new and revised FRSs and INT FRSs were retrospectively applied from the beginning of theearliest period presented.
Early adoption of FRS 108 Operating Segments
The Group has early adopted FRS 108 Operating Segments in advance of its effective date which is for annual periods beginning on or after 1 January 2009. FRS 108 requires operatingsegments (see Note 30) to be identified on the basis of internal reports about components of theGroup that are regularly reviewed by the chief operating decision makers in order to allocateresources to segments and to assess their performance. In contrast, the predecessor Standard (FRS 14 Segment Reporting) required an entity to determine two sets of segments (primary and
financial reporting to key management personnel serving only as the starting point for theidentification of such segments.
APPENDIX A
A(i)-9
At the date of authorisation of these consolidated financial statements, the following FRS thatare relevant to the Group were issued but not effective:
FRS 1 - Presentation of Financial Statements (Revised)
FRS 1 (Revised) will be effective for annual periods beginning on or after 1 January 2009, andwill change the basis for presentation and structure of the financial statements. It does not change the recognition, measurement or disclosure of specific transactions and other eventsrequired by other FRSs.
FRS 27 (Revised) Consolidated and Separate Financial Statements; and FRS 103(Revised) Business Combinations.
FRS 27 (Revised) is effective for annual periods beginning on or after 1 July 2009. Apart from matters of presentation, the principal amendments to FRS 27 that will impact the Group concernthe accounting treatmentsubsidiary. It is likely that these amendments will significantly affect the accounting for suchtransactions in future accounting periods, but the extent of such impact will depend on the detailof the transactions, which cannot be anticipated. The changes will be adopted prospectively for transactions after the date of adoption of the revised Standard and, therefore, no restatementswill be required in respect of transactions prior to the date of adoption.
FRS 103 (Revised) is effective for business combinations for which the acquisition date is onor after beginning of the first annual reporting period beginning on or after 1 July 2009. FRS103 is concerned with accounting for business transactions. The changes to the Standard aresignificant, but their impact can only be determined once the detail of future businesscombinations transactions is known. The amendments to FRS 103 will be adoptedprospectively for transactions after the date of adoption of the revised Standard and, therefore,no restatements will be required in respect of transactions prior to the date of adoption.
The management anticipates that the adoption of the other FRSs, INT FRSs and amendmentsto the FRSs that were issued but effective only in future periods will not have a material impacton the consolidated financial statements of the Group in the period of their initial adoption.
BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the financialstatements of the Company and entities controlled by the Company (its subsidiaries). Controlis achieved where the Company has the power to govern the financial and operating policiesof an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in theconsolidated profit and loss statement from the effective date of acquisition or up to theeffective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
APPENDIX A
A(i)-10
BUSINESS COMBINATIONS - The acquisition of subsidiaries is accounted for using thepurchase method. The cost of the acquisition is measured at the aggregate of the fair values,at the date of exchange, of assets given, liabilities incurred or assumed, and equityinstruments issued by the Group in exchange for control of the acquiree, plus any costsdirectly attributable to the business combinatioand contingent liabilities that meet the conditions for recognition under FRS 103 arerecognised at their fair values at the acquisition date, except for non-current assets (ordisposal Groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fairvalue less costs to sell.
FINANCIAL INSTRUMENTS - Financial assets and financial liabilities are recognised on the
instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument, or where appropriate, a shorter period.
Financial assets
Available-for-sale financial assets
Certain shares and debt securities held by the Group are classified as being available for saleand are stated at fair value. Fair value is determined in the manner described in Note 4. Gainsand losses arising from changes in fair value are recognised directly in the revaluation reserve with the exception of impairment losses, interest calculated using the effective interest methodand foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, thecumulative gain or loss previously recognised in the revaluation reserve is included in profit orloss for the period. Dividends on available-for-sale equity instruments are recognised in profitor loss when the G -for-sale monetary assets denominated in a foreign currency is determined in that foreigncurrency and translated at the spot rate at reporting date. The change in fair value attributableto translation differences that result from a change in amortised cost of the asset is recognisedin profit or loss, and other changes are recognised in equity.
APPENDIX A
A(i)-11
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits and bank overdrafts andare subject to an insignificant risk of changes in value.
Loans and receivables
Trade and other receivables are measured at amortised cost using the effective interest methodless impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each balance sheet date.Financial assets are impaired where there is objective evidence that, as a result of one or moreevents that occurred after the initial recognition of the financial asset, the estimated future cashflows of the financial assets have been impacted. The amount of the impairment is the
flows, discounted at the original effective interest rate.
The carrying amount of the receivables is reduced through the use of an allowanceaccount. When a receivable is uncollectible, it is written off against the allowance. Subsequent recoveries of amounts previously written off are credited to profit and loss statement. Changesin the carrying amount of the allowances account are recognised in profit and loss statement.
With the exception of available-for-sale equity instruments, if, in a subsequent period, theamount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairmentloss is reversed through profit and loss statement to the extent the carrying amount of the receivables at the date the impairment is reversed does not exceed what the amortised costwould have been had the impairment not been recognised.
In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss, is recognised directly in equity.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flowsfrom the asset expire, or it transfers the financial asset and substantially all the risks andrewards of ownership of the asset to another entity. If the Group neither transfers nor retainssubstantially all the risks and rewards of ownership and continues to control the transferredasset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards ofownership of a transferred financial asset, the Group continues to recognise the financial assetand also recognises a collateralised borrowing for the proceeds received.
APPENDIX A
A(i)-12
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to thesubstance of the contractual arrangements entered into and the definitions of a financial liabilityand an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of the liabilities. Equity instruments are recorded at the proceeds received,net of direct issue costs.
Other financial liabilities
Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, except for short-term payables where the recognition of interest would be immaterial.
Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any differencebetween the proceeds (net of transaction costs) and the settlement or redemption of borrowings
for borrowing costs (see below).
Derivative financial instruments
rates and interest rates.
The Group uses derivative financial instruments (primarily foreign exchange forward contracts) to hedge significant future transactions and cash flows in the management of its exchange rateexposures. The Group does not use any financial derivative instrument to manage its interest rates exposure. The Group does not use derivative financial instruments for speculativepurposes.
Derivative financial instruments are initially measured at fair value on the trade date, and areremeasured to fair value at subsequent reporting dates. All changes in fair value are taken to theprofit and loss statement.
Derecognition of financial liabilities
discharged, cancelled or they expire.
APPENDIX A
A(i)-13
LEASES - Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classifiedas operating leases.
The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the term of therelevant lease unless another systematic basis is more representative of the time pattern inwhich use benefit derived from the leased asset is diminished. Initial direct costs incurred innegotiating and arranging an operating lease are added to the carrying amount of the leasedasset and recognised on a straight-line basis over the lease term.
The Group as lessee
Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. Thecorresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of thelease obligation so as to achieve a constant rate of interest on the remaining balance of theliability. Finance charges are charged directly to profit and loss statement, unless they aredirectly attributable to qualifying assets, in which case they are capitalised in accordance with
expenses in the periods in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction ofrental expense on a straight-line basis, except where another systematic basis is morerepresentative of the time pattern in which economic benefits from the leased asset are consumed.
INVENTORIES - Inventories, comprising mainly cranes and aerial lifts, are stated at the lowerof cost and net realisable value. Cost of cranes and aerial lifts is determined on a specificidentification cost basis and comprises the costs of purchase and other costs incurred inbringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses.
APPENDIX A
A(i)-14
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost, lessaccumulated depreciation and any accumulated impairment loss.
Depreciation is charged so as to write off the cost of property, plant and equipment over theirestimated useful lives on the following bases:
Workshop building - over remaining lease periodCranes - 12.5%
Aerial lifts - 10% Motor vehicles - 20%
Plant and equipment - 10 to 20%
The estimated useful lives, residual values and depreciation method are reviewed at each yearend, with the effect of any changes in estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the samebasis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease termand its useful life.
The gain or loss arising on the disposal or retirement of an asset is determined as thedifference between the sales proceeds and the carrying amount of the asset and is recognised in the profit and loss statement.
Fully depreciated property, plant and equipment still in use are retained in the financial statements.
IMPAIRMENT OF ASSETS - At each balance sheet date, the Group reviews the carryingamounts of its tangible and intangible assets to determine whether there is any indication thatthose assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, theGroup estimates the recoverable amount of the cash-generating unit to which the assetbelongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. Inassessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessments of the time value ofmoney and the risks specific to the asset.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than itscarrying amount, the carrying amount of the asset (cash-generating unit) is reduced to itsrecoverable amount. An impairment loss is recognised immediately in the profit and lossstatement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that theincreased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) inprior years. A reversal of an impairment loss is recognised immediately in the profit and lossstatement.
APPENDIX A
A(i)-15
ASSOCIATES - An associate is an entity over which the Group has significant influence andthat is neither a subsidiary nor an interest in a joint venture. Significant influence is the powerto participate in the financial and operating policy decisions of the investee but is not control orjoint control over those policies.
The results and assets and liabilities of associates are incorporated in these financialstatements using the equity method of accounting, except when the investment is classified asheld for sale, in which case it is accounted for under FRS 105 Non-current Assets Held forSale and Discontinued Operations. Under the equity method, investments in associates arecarried in the consolidated balance sheet at cost as adjusted for post-acquisition changes inthe Gr
erest in thatassociate (which includes any long-net investment in the associate) are not recognised, unless the Group has incurred legal orconstructive obligations or made payments on behalf of the associate.
identifiable assets, liabilities and contingent liabilities of the associate recognised at the date ofacquisition is recognised as goodwill. The goodwill is included within the carrying amount ofthe investment and is assessed for impairment as part of the investment. Any excess of the
over the cost of acquisition, after reassessment, is recognised immediately in profit and lossstatement.
Where a Group entity transacts with an associate of the Group, profits and losses are.
PROVISIONS - Provisions are recognised when the Group has a present obligation (legal orconstructive) as a result of a past event, it is probable that the Group will be required to settlethe obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required tosettle the present obligation at the balance sheet date, taking into account the risks anduncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of thosecash flows.
When some or all of the economic benefits required to settle a provision are expected to berecovered from a third party, the receivable is recognised as an asset if it is virtually certainthat reimbursement will be received and the amount of the receivable can be measuredreliably.
REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normalcourse of business, net of discounts and sales related taxes.
APPENDIX A
A(i)-16
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usuallyassociated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to theentity; and
the costs incurred or to be incurred in respect of the transaction can be measuredreliably.
Rendering of services
Revenue from the rendering of services that are of a short duration is recognised when theservices are completed.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.
Dividend income
payment have been established.
Rental income
Rental income is recognised on a straight-line basis over the term of the relevant lease.
BORROWING COSTS - Borrowing costs are recognised in the profit and loss statement in theperiod in which they are incurred.
RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plansare charged as an expense as they fall due. Payments made to state-managed retirementbenefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments
alent tothose arising in a defined contribution retirement benefit plan.
APPENDIX A
A(i)-17
EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognisedwhen they accrue to employees. A provision is made for the estimated liability for annualleave as a result of services rendered by employees up to the balance sheet date.
INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profitas reported in the profit and loss statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. y for current tax is calculated using tax rates (and tax laws) thathave been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxableprofit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets arerecognised to the extent that it is probable that taxable profits will be available against whichdeductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither thetaxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investment insubsidiaries, except where the Group is able to control the reversal of the temporary differenceand it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow allor part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or creditedto profit and loss statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set offcurrent tax assets against current tax liabilities and when they relate to income taxes levied bythe same taxation authority and the Group intends to settle its current tax assets and liabilitieson a net basis.
Current and deferred tax are recognised as an expense or income in profit and loss statement,except when they relate to items credited or debited directly to equity, in which case the tax isalso recognised directly in equity, or where they arise from the initial accounting for a businesscombination. In the case of a business combination, the tax effect is taken into account in
cost.
APPENDIX A
A(i)-18
FOREIGN CURRENCY TRANSACTIONS - The individual financial statements of each Groupentity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of theGroup are presented in Singapore dollars, which is the functional currency of the Company andpresentation currency of the Group.
In preparing the financial statements of the individual entities, transactions in currencies other
of the transaction. At each balance sheet date, monetary items denominated in foreigncurrencies are retranslated at the rates prevailing on the balance sheet date. Non-monetaryitems carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation ofmonetary items are included in profit or loss for the period. Exchange differences arising on theretranslation of non-monetary items carried at fair value are included in profit or loss for theperiod except for differences arising on the retranslation of non-monetary items in respect ofwhich gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and liabilities of theG re dollars using exchange rates prevailing on the balance sheet date. Income and expense items (includingcomparatives) are translated at the average exchange rates for the period, unless exchangerates fluctuated significantly during that period, in which case the exchange rates at the dates ofthe transactions are used. Exchange differences arising, if any, are classified as equity andtransferred to the Gprofit and loss statement in the period in which the foreign operation is disposed of.
On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment inforeign entities), and of borrowings and other currency instruments designated as hedges ofsuch investments, are taken to the foreign currency translation reserve.
3 CRITICAL ACCOUNTING JUDGEMENTS ANDKEY SOURCES OF ESTIMATION UNCERTAINTY
In the applmanagement is required to make judgements, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimatesand associated assumptions are based on historical experience and other factors that areconsidered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimate is revised if the revisionaffects only that period, or in the period of the revision and future periods if the revision affectsboth current and future periods.
APPENDIX A
A(i)-19
(i) Critical ju
Management is of the opinion that there are no critical judgements involved that have asignificant effect on the amounts recognised in the financial statements, except for thoseinvolving estimation uncertainties as disclosed below.
(ii) Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, 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.
Depreciation of property, plant and equipment
The cost of property, plant and equipment is depreciated on a straight line basis over the Changes
in future usage and technological development can impact the economic useful lives andthe residual values of these assets with consequential impact on the future depreciationcharge.
The net carrying amounts of classes of property, plant and equipment are stated in Note11 to the financial statements.
Allowance for trade and other receivables
When there is objective evidence of impairment loss, the Group takes into considerationthe estimation of future cash flows. The amount of impairment loss is measured as the
the present value of estimated
the effective interest rate computed at the initial recognition). The carrying amounts oftrade and other receivables are stated in Notes 7 and 8 to the financial statements respectively.
4 FINANCIAL RISKS AND MANAGEMENT
(a) Categories of financial instruments
The following table sets out the financial instruments as at the balance sheet date:
2007 2008 2009
Financial assets
Derivative financial instruments at fair value - - 264 Available-for-sale investments 287 1,092 794
Loans and receivables at amortised cost: Cash and cash equivalents 7,644 7,498 8,430
Trade receivables 7,991 10,099 12,817 Other receivables 3,238 1,039 756
19,160 19,728 23,061
APPENDIX A
A(i)-20
2007 2008 2009
Financial liabilities
Derivative financial instruments at fair value 255 98 - Amortised cost:
Bills payable 4,177 5,167 10,949 Bank overdraft 1,294 - - Bank loan 1,285 1,085 987
Trade payables 1,848 1,460 1,580 Other payables 4,377 3,873 2,594
Finance leases 4,104 11,921 8,42417,340 23,604 24,534
(b) Financial risk management policies and objectives
The financial risk management of the Group is handled by management of the Companyas part of the operations of the Group. Management seeks to mitigate risk throughmonitoring of exposures to financial risks arising in the normal course of operations. TheGroup may enter into foreign exchange forward contracts to mitigate its foreign exchange exposure from time to time.
(i) Credit risk management
As at 30 June 2007, 2008 and 2009 to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is represented by the carrying amounts of the respectiverecognised financial assets as stated in the consolidated balance sheets.
At balance sheet date, there is no significant concentration of credit risk except for the trade balances due from two major customers amounting to $3.0 million(2008 : $2.5 million; 2007 : $1.6 million).
Cash and fixed deposits are placed with creditworthy banks and financial institutions which are regulated.
(ii) Interest rate risk management
-bearing bills payable, bank overdrafts, bank loans and finance leases as disclosed in Notes 15, 16 and 19 for which interest rates are subject to fluctuation.
The impact of fluctuations in short-term interest rates on cash balances is relativelyinsignificant.
APPENDIX A
A(i)-21
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure tointerest rates for both derivatives and non-derivative instruments at the balancesheet date and the stipulated change taking place at the beginning of the financialyear and held constant throughout the reporting period in the case of instrumentsthat have floating rates. A 100 basis point increase or decrease is used whenreporting interest rate risk internally to key management personnel and represents
rest rates.
If interest rates had been 100 basis points higher or lower and all other variables
decrease/increase by $119,000 (2008 : decrease/increase by $63,000,2007 : decrease/increase by $168,000).exposure to interest rates on its variable rate borrowings.
(iii) Foreign currency risk management
The Group transacts business in various foreign currencies, giving rise to market riskfrom changes in foreign exchange risks. As far as possible the Group relies onnatural hedge of matching foreign currency denominated assets and liabilities of thesame currency.
The carrying amounts of monetary assets and monetary liabilities denominated in
follows:
Liabilities Assets2007 2008 2009 2007 2008 2009
USD 81 2,422 48 768 368 74 EURO - - 1,405 - - - AUD 11 10 913 - - -
JPY 4,235 2,745 8,829 4,087 1,881 2,690
Foreign Currency Sensitivity
The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of each Groupentity. 10% is the sensitivity rate used when reporting foreign currency risk internally
possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
APPENDIX A
A(i)-22
If the relevant foreign currency weakens by 10% against the functional currency ofeach Group entity, profit for the year will increase (decrease) by:
USD impact EURO Impact AUD Impact JPY Impact2007 2008 2009 2007 2008 2009 2007 2008 2009 2007 2008 2009
000
Effect onprofit for
the year 69 (205) 3 - - (141) (1) (1) (91) (15) (86) (614)
If the relevant foreign currency strengthens by 10% against the functional currency ofeach Group entity, profit for the year and equity will increase (decrease) by the sameamounts.
The changes in foreign currencies above have no material impact on the equity ofthe Group.
(iv) Liquidity risk management
Liquidity risk refers to the risk in which the Group may not be able to meet its short-term obligations. The Group maintains sufficient cash and cash equivalents andinternally generated cash flows to finance their activities. The Group has adequatecredit facilities to meet all its operational requirements.
Liquidity and interest risk analyses for non-derivative financial liabilities
for non-derivative financial liabilities. The table below have been drawn up based on theundiscounted cash flows of financial liabilities based on the earliest date on whichthe Group can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents the possible future cash flows attributable to the instrument included in the maturity analysis which is not includedin the carrying amount at the financial liability on the balance sheet date.
Weighted Repayable average on demand Withineffective or within 2 to 5 After
interest rate 1 year years 5 years Adjustment Total%
At 30 June 2007
Non-interest bearing 6,225 - - - 6,225 Finance leases (fixed rate) 8.39 2,372 2,033 - (301) 4,104
Variable interest rate instruments 3.12 5,875 1,075 - (194) 6,756
14,472 3,108 - (495) 17,085
At 30 June 2008
Non-interest bearing 5,333 - - - 5,333 Finance leases (fixed rate) 6.60 4,976 7,822 - (877) 11,921
Variable interest rate instruments 3.25 5,521 909 - (178) 6,252
15,830 8,731 - (1,055) 23,506
APPENDIX A
A(i)-23
Weighted Repayable average on demand Withineffective or within 2 to 5 After
interest rate 1 year years 5 years Adjustment Total%
At 30 June 2009
Non-interest bearing 4,174 - - - 4,174 Finance leases (fixed rate) 3.01 4,219 4,821 - (616) 8,424
Variable interest rate instruments 2.35 11,451 714 - (229) 11,936
19,844 5,535 - (845) 24,534
Derivative financial instruments
The Groupcontracts amounting to $264,000 asset (2008 : $98,000 liability, 2007 : $255,000liability) with contracted cash flows due within one year (2008: due within one year,2007: due within one year).
(v) Fair value of financial assets and financial liabilities
The carrying amounts of financial assets and financial liabilities approximate theirrespective fair values due to the relatively short-term maturity of these financialinstruments. The fair values of other classes of financial assets and liabilities aredisclosed in the respective notes to the consolidated financial statements.
(c) Capital risk management policies and objectives
The Group manages capital to ensure that entities in the Group will be able to continueas a going concern while maximising the return to stakeholders through the optimisationof the debt and equity balance.
The capital structure of the Group consisted of debts (which include the bank overdrafts, bank borrowings and finance leases as disclosed in Notes 16 and 19 respectively), cash and cash equivalents and equity attributable to equity holders of the Company, comprising issued share capital and reserves.
As a part of the review of capital structure, management considers the cost of capital andthe risks associated with each source of financing. The management of capital structureincludes making decisions relating to payment of dividends and the redemption ofexisting loans.
The Group is in compliance with externally imposed capital requirements for the financialyears ended 30 June 2007, 2008 and 2009.
gy remains unchanged during the period covered by this set ofconsolidated financial statements.
APPENDIX A
A(i)-24
5 RELATED PARTY TRANSACTIONS
Related parties are entities with common direct or indirect shareholders and/or directors. Partiesare considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions.
and the effect of these on the basis determined between the parties is reflected in thesefinancial statements. The related party balances are unsecured, interest-free and repayable on demand unless otherwise stated.
During the year, other than those disclosed elsewhere in the financial statements, the Groupentities entered into the following transactions with related parties:
2007 2008 2009
AssociateSales of cranes (1,832) - - Rental of cranes (4) (247) (205)
Rental income (7) (8) (8) Servicing income (3) (4) (12)
Interest income - (12) -
Companies in which certain directors have interestsSales of cranes - (1,287) (130)Interest income (61) - - Servicing income - (1) -Commission paid - 162 -Other expenses - 18 -
Immediate family member of certain directorsAdvisory fee paid - - 156
Compensation of directors and key management personnel
The remuneration of directors and other members of key management are as follows:
2007 2008 2009
Short-term benefits 1,161 820 1,125 Post-employment benefits 38 60 72
1,199 880 1,197
APPENDIX A
A(i)-25
6 CASH AND BANK BALANCES2007 2008 2009
Fixed deposits 2,459 3,103 91 Cash at bank 5,180 4,391 8,332 Cash on hand 5 4 7
7,644 7,498 8,430
Cash and bank balances comprise cash held by the Group and short-term deposits with anoriginal maturity of one year or less. The fixed deposits bear interest at a range of 1.90% to4.80%, 1.90% to 8.00% and 1.20% per annum and with tenures of approximately 3 to 365 days,7 to 365 days and 365 days for the years ended 30 June 2007, 2008 and 2009 respectively.
The fixed deposits were pledged to the bankers to secure banking facilities.
The cash and bank balances that are not denominated in the functional currencies ofthe respective entities are as follows:
2007 2008 2009
Denominated in:
United States dollars 26 368 74 Japanese Yen 4,087 1,881 2,690
7 TRADE RECEIVABLES2007 2008 2009
Outside parties 7,899 9,406 12,752 Allowance for doubtful debts (60) (60) -
7,839 9,346 12,752 Associates (Note 12) 152 3 65
Related parties (Note 5) - 750 - 7,991 10,099 12,817
The credit period ranges from 60 to 90 days for the years ended 30 June 2007, 2008 and 2009.
APPENDIX A
A(i)-26
The table below is an analysis of trade receivables as at balance sheet date:
2007 2008 2009
Not past due and not impaired 4,540 4,846 5,847 Past due but not impaired: Less than 3 months 1,987 3,111 4,642 More than 3 months 1,464 2,142 2,328
7,991 10,099 12,817
Impaired receivables collectively assessed:- Past due more than 3 months 60 60 -Less: Allowance of impairment (60) (60) -
- - -
Total trade receivables, net 7,991 10,099 12,817
The movements in the allowance for impairment of trade receivables are as follows:
2007 2008 2009
Balance at beginning of year - 60 60 Allowance (write back) recognised in profit and loss 60 - (60) Balance at end of year 60 60 -
In determining the recoverability of a trade receivable, the Group considers any change in thecredit quality of the trade receivable from the date credit was initially granted up to the balancesheet date. The concentration of credit risk is limited due to the customer base being diverse and unrelated except for the trade balances due from two major customers amounting to$3.0 million (2008 : $2.5 million; 2007 : $1.6 million). Management believes that there is no further allowance required in excess of the allowance for doubtful debts as there has been nosignificant change in credit quality and the carrying amounts of receivables (net of allowances) are still considered recoverable. The Group does not hold any collateral over these balances.
The trade receivables that are not denominated in the functional currencies of therespective entities are as follows:
2007 2008 2009
Denominated in:
United States dollars 742 - -
8 OTHER RECEIVABLES AND PREPAID EXPENSES2007 2008 2009
Associates (Note 12) 280 280 280 Related parties (Note 5) 1,269 - 168
Interest receivables 17 9 1 Deposits paid 1,455 567 153 Prepayments 408 1,303 808
Sundry debtors 217 183 1543,646 2,342 1,564
9 DERIVATIVE FINANCIAL INSTRUMENTS
The Group utilises foreign currency forward contracts to purchase United States dollar and Japanese Yen in the management of its exchange rate exposures.
At the balance sheet date, the total notional amount of outstanding forward foreign exchange contracts to which the Group is committed are as follows:
2007 2008 2009 $ $ $ 000
Buy JPY 790,000 2,150,000 914,250Buy AUD - 250 830 Buy USD - 1,000 - Sell SGD 10,091 29,220 14,507
The changes in fair value of the forward foreign exchange contracts amounting to $362,000 gain (2008 : $157,000 gain, 2007 : $255,000 loss) have been taken up in the profit and loss statement.
The fair values are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturity of the contracts, comprising $264,000 asset (2008 : $98,000 liability, 2007 : $255,000 liability).
10 INVENTORIES 2007 2008 2009
Cranes and aerial lifts 11,537 17,168 10,189
APPENDIX A
A(i)-27
A(i)
-28
11
PRO
PER
TY, P
LAN
T AN
D E
QU
IPM
ENT
Wor
ksho
p Ae
rial
Mot
orPl
ant a
ndbu
ildin
g C
rane
s lif
ts
vehi
cles
eq
uipm
ent
Tota
l
Cos
t:At
1 J
uly
2006
3,95
117
,991
1,68
01,
668
908
26,1
98Ad
ditio
ns-
5,81
11,
199
327
947,
431
Tr
ansf
er fr
om in
vent
orie
s-
8,63
81,
652
--
10,2
90
Tran
sfer
toin
vent
orie
s-
(5,4
41)
(363
)-
-(5
,804
)D
ispo
sals
-
-
(28)
(
293)
(
220)
(541
) At
30
June
200
7 3
,951
26,9
994,
140
1,70
278
237
,574
Addi
tions
-17
,647
-1,
136
7718
,860
Tran
sfer
from
inve
ntor
ies
-
5,3
762,
358
-
-
7,7
34Tr
ansf
er to
inve
ntor
ies
-(9
,361
)(5
99)
--
(9,9
60)
D
ispo
sals
-
(30)
-
(671
)
(24)
(7
25)
At 3
0Ju
ne 2
008
3,95
140
,631
5,
899
2,16
783
553
,483
Addi
tions
-9,
599
-21
319
010
,002
Tr
ansf
er fr
om in
vent
orie
s -
23,6
89
2,68
5 -
-26
,374
Tran
sfer
toin
vent
orie
s-
(12,
256)
(651
)-
-(1
2,90
7)D
ispo
sals
-
-
(34)
(
186)
-
(220
) At
30
June
200
93,
951
61,6
63
7,89
9 2,
194
1,02
5 76
,732
Accu
mul
ated
depr
ecia
tion:
At
1 J
uly
2006
948
7,78
336
81,
001
794
10,8
94
Dep
reci
atio
n fo
rthe
year
15
8 2,
959
405
2
38
36
3,
796
Tr
ansf
er to
inve
ntor
ies
-(1
,599
)(2
2)-
-(1
,621
)D
ispo
sals
-
-
(2
8)
(59)
(
186)
(273
) At
30
June
200
71,
106
9,14
3 7
231,
180
644
12,7
96
Dep
reci
atio
n fo
rthe
yea
r15
84,
902
649
330
466,
085
Tr
ansf
er to
inve
ntor
ies
-(3
,846
)(1
18)
--
(3,9
64)
Dis
posa
ls
- (3
0)
-(4
56)
(2
3)
(5
09)
At 3
0Ju
ne 2
008
1,26
410
,169
1,
254
1,05
466
714
,408
D
epre
ciat
ion
fort
he y
ear
158
5,84
871
332
061
7,10
0
Tran
sfer
toin
vent
orie
s-
(4,1
51)
(116
)-
-(4
,267
)
Dis
posa
ls
- -
(1
3)
(94)
-
(1
07)
At 3
0Ju
ne 2
009
1,42
2 11
,866
1,
838
1,28
0
728
17,1
34
AP
PE
ND
IX A
A(i)
-29
Wor
ksho
p Ae
r ial
Mot
orPl
ant a
ndbu
il din
g C
rane
s lif
ts
vehi
cles
eq
uipm
ent
Tota
l
C
arry
ing
amou
nt:
At 3
0Ju
ne 2
007
2,84
5 17
,856
3,
417
52
2
138
24,7
78
At 3
0Ju
ne 2
008
2,68
7 30
,462
4,
645
1,11
3
168
39,0
75
At 3
0Ju
ne 2
009
2,52
9 49
,797
6,
061
91
4
297
59,5
98
The
carry
ing
amou
nt o
f th
e G
prop
erty
, pl
ant
and
equi
pmen
t in
clud
es a
n am
ount
of
$6,2
54,0
00,
$18,
398,
000
and
$14,
661,
000
secu
red
in re
spec
t of a
sset
s he
ld u
nder
the
finan
ce le
ases
fort
he y
ear e
nded
30
June
200
7, 2
008
and
2009
resp
ectiv
ely.
The
Gro
up h
as p
ledg
ed w
orks
hop
build
ings
with
a ca
rryin
g am
ount
of a
ppro
xim
atel
y$2
,529
,000
(200
8 : $
2,68
7,00
0; 2
007
:$2,
845,
000)
tose
cure
ban
king
faci
litie
s di
sclo
sed
in th
e co
nsol
idat
ed fi
nanc
ial s
tate
men
ts.
AP
PE
ND
IX A
APPENDIX A
A(i)-30
12 INVESTMENT IN ASSOCIATE 2007 2008 2009
Unquoted shares, at cost 500 500 500 Share of post-acquisition profits and 220 478 852 reserves net of dividend received 720 978 1,352
Country ofincorporation/ Proportion of
Name of associate operations ownership interest Principal activities2007 2008 2009
Songcheon Engineering Singapore 50% 50% 50% Provision of geotechnicPte. Ltd. engineering services
Summarised financial information in re
2007 2008 2009
Total assets 3,472 3,825 5,946 Total liabilities (2,032) (1,870) (3,243) Net assets 1,440 1,955 2,703
720 978 1,352
Revenue 1,337 2,884 7,633
Profit for the year 440 516 848
profit for the year 220 258 424
13 AVAILABLE-FOR-SALE INVESTMENTS 2007 2008 2009
Quoted equity shares, at fair value 287 1,092 794
The investments above include investments in quoted equity shares that offer the Group theopportunity for return through dividend income and fair value gains. The fair values of these shares are based on the quoted closing market prices on the last market day of the financialyear.
APPENDIX A
A(i)-31
14 OTHER ASSETS 2007 2008 2009
Golf club memberships 69 69 69 Provision for diminution in value (59) (59) (59) Golf club memberships, at fair value 10 10 10
15 BILLS PAYABLE
Bills payables are repayable between 7 to 120 days and with interest rates range from 1.25% to2.79% (2008 : 1.00% ; 2007 : 1.25%) per annum.
Bills payable have been secured by legal mortgage over a property belonging to certaindirectors and personal guarantees of certain directors.
The Gentities are as follows:
2007 2008 2009
Denominated in:
Japanese Yen 4,177 2,745 8,633 Euro - - 1,405 United States dollars - 2,422 -Australian dollars - - 911
16 BANK OVERDRAFT AND BANK LOAN2007 2008 2009
Bank loan 1,285 1,085 987 Bank overdraft 1,294 - -
2,579 1,085 987 Less: Amount due for settlement within
12 months (shown under current liabilities) Bank loan (244) (254) (304) Bank overdraft (1,294) - -
Amount due for settlement after 12 months 1,041 831 683
The effective interest rates for the are as follows:
2007 2008 2009% % %
Bank loan 2.87 5.49 2.67 Bank overdraft 5.25 - -
APPENDIX A
A(i)-32
The carrying amounts of the Group 30 June 2007, 2008 and 2009 approximate their fair values.
The bank loan is secured by the followings:
(i) Property, plant and equipment (Note 11)
(ii) Pledge over fixed deposits (Note 6)
(iii) Personal guarantees from certain directors
17 TRADE PAYABLES2007 2008 2009
Outside parties 1,848 1,460 1,580
The credit period on purchases of goods ranges from 30 to 60 days for the years ended 30 June 2007, 2008 and 2009.
The trade payables that are not denominated in the functional currencies of the respective entities are as follows:
2007 2008 2009
Denominated in:
Japanese Yen - - 187 United States dollars 31 - 48 Australian dollars 11 10 2
18 OTHER PAYABLES2007 2008 2009
Accrued expenses 774 415 1,514 Amount due to directors 930 450 -
Deposits received 2,673 3,008 1,0804,377 3,873 2,594
The amount due to directors is unsecured, interest-free and repayable on demand.
APPENDIX A
A(i)-33
The other payables that are not denominated in the functional currencies of the respective entities are as follows:
2007 2008 2009
Denominated in:
United States dollars 50 - -Japanese Yen 58 - 9
19 FINANCE LEASESPresent value of
Minimum lease payments minimum lease payments2007 2008 2009 2007 2008 2009
Amounts payable under finance leases:Within one year 2,372 4,976 4,219 2,218 4,649 3,934
In the second to fifth years inclusive 2,033 7,822 4,821 1,886 7,272 4,4904,405 12,798 9,040 4,104 11,921 8,424
Less: Future finance charges (301) (877) (616) NA NA NA Present value of lease obligations 4,104 11,921 8,424 4,104 11,921 8,424
Less: Amounts due for settlement (2,218) (4,649) (3,934) within 12 months (shown under current liabilities)Amount due for settlement after 12 months 1,886 7,272 4,490
It is the policy to lease certain of its plant and equipment under finance leases. Theaverage lease term is 4 years. For the year ended 30 June 2009, the average effective borrowing rate was 3.01% (2008 : 6.60%, 2007 : 8.39%). Interest rates are fixed at thecontract date, and thus expose the Group to fair value interest rate risk. All leases are on afixed repayment basis and no arrangements have been entered into for contingent rentalpayments.
All lease obligations are denominated in Singapore dollars.
2008 and 2009approximate its fair value.
The obligations under finance leases are secured by the followings:
(i) Property, plant and equipment (Note 11)
(ii) Legal mortgage over a property belonging to certain directors
(iii) Personal guarantees from certain directors
APPENDIX A
A(i)-34
20 DEFERRED TAX LIABILITIES
Movements of the net deferred tax (assets) liabilities recognised by the Group is as follows:
Accelerated Other tax Tax temporary depreciation losses differences, net Total
Balance at 1 July 2006 324 - 4 328 Charge (Credit) to profit or loss (Note 25) 153 - (59) 94Balance at 30 June 2007 477 - (55) 422 Charge (Credit) to profit or loss (Note 25) 172 - (10) 162Balance at 30 June 2008 649 - (65) 584 Charge (Credit) to profit or loss (Note 25) 2,789 (20) 21 2,790Balance at 30 June 2009 3,438 (20) (44) 3,374
accounting policy. The following is the analysis of the deferred tax balances (after offset) for balance sheet purposes:
2007 2008 2009
Deferred tax liabilities 422 584 3,394 Deferred tax assets - - (20)
422 584 3,374
21 SHARE CAPITAL2007 2008 2009 2007 2008 2009
Number of ordinary shares Issued and paid-up:
At the beginning and end of the year 1,858 1,858 1,858 1,858 1,858 1,858
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends as and when declared by the Company.
22 REVENUE2007 2008 2009
Rental of cranes and aerial lifts 19,360 25,955 33,351 Trading of cranes and aerial lifts 63,380 105,878 103,635
82,740 131,833 136,986
APPENDIX A
A(i)-35
23 OTHER OPERATING INCOME2007 2008 2009
Dividend income - 24 14 Rental income 304 154 116
Bad debts recovered - 1 60 Net foreign exchange gain - 11 1,004 Insurance claim received 9 95 44 Gain on disposal of available-for-sale investment 116 12 9 Gain (Loss) on disposal of property, plant and equipment 63 187 (1)
Servicing income 403 256 605 Others 8 70 211
903 810 2,062
24 FINANCE COSTS 2007 2008 2009
Interest income (135) (164) (62)Interest expense on: Bank loan 49 91 63 Finance leases 146 271 358
60 198 359
25 INCOME TAX EXPENSE2007 2008 2009
Current year tax expense 2,027 3,791 1,162 Underprovision in prior years - 1 4 Deferred tax expense (Note 20) 94 162 2,790
2,121 3,954 3,956
Income tax is calculated at 17% (2008 : 18%, 2007 : 18%) of the estimated assessable profit forthe year.
APPENDIX A
A(i)-36
The total charge for the year can be reconciled to the accounting profit as follows:
2007 2008 2009
Profit before income tax 11,298 21,117 25,938
Income tax expense at the income tax rate of 17% (2008 : 18%, 2007 : 18%) 2,034 3,801 4,409 Tax effect of expenses (income) not deductible
(taxable) for tax purpose 142 207 (431)Underprovision in prior years - 1 4 Singapore statutory stepped income exemption (55) (55) (26) Total income tax expense 2,121 3,954 3,956
26 PROFIT FOR THE YEAR
Profit for the year has been arrived at after charging (crediting):
2007 2008 2009
Bad debts written off - 18 65 1,152 827 1,067
5,241 6,297 9,081 Cost of defined contribution plans included in staff costs 390 457 595 Depreciation of property, plant and equipment 3,796 6,085 7,100 (Gain) Loss on disposal of property, plant and equipment (63) (187) 1 Net foreign exchange loss (gain) 366 (11) (1,004)Impairment of available-for-sale investments 427 678 11 Cost of inventories recognised as expense 49,955 82,433 82,942 Property, plant and equipment written off - 1 20 Gain on disposal of available-for-sale investments (116) (12) (9)
27 EARNINGS PER SHARE
Earnings per share for the years ended 30 June 2007, 2008 and 2009 have been calculatedbased on the profit attributable to the equity holders of the Company for each of the financialyears and pre-invitational share capital of 371,640,000 shares (Note 34).
APPENDIX A
A(i)-37
28 DIVIDENDS PAID
On 21 July 2006, an interim dividend of $743,000 ($0.40 per share) in respect of financial year2007 is declared to be payable on 16 August 2006 to the then shareholders.
On 4 September 2007, an interim dividend of $1,219,000 ($0.66 per share) in respect offinancial year 2008 is declared to be payable on 10 September 2007 to the then shareholders. On 11 June 2008, a second interim dividend of $1,800,000 ($0.97 per share) in respect offinancial year 2008 is declared to be payable on 12 June 2008 to the then shareholders.
On 30 April 2009, an interim dividend of $6,000,000 ($3.23 per share) in respect of financial year2009 is declared to be payable on 30 April 2009 to the shareholder.
29 SUBSIDIARIES
The details of the C subsidiaries are as follows:
EffectiveCountry percentage of
of of equity andincorporation voting power held
Name of subsidiary and operation Principal activities 2007 2008 2009% % %
Sin Heng Aerial Lifts Singapore Rental of aerial 100 100 100 Pte. Ltd. (1) lifts
SH Heavy Machinery Malaysia Rental of cranes - - 100 Sdn. Bhd. (2) and aerial lifts
Sin Heng Vietnam Company Vietnam Rental of cranes - - 100 Limited (2) and aerial lifts
(Dormant)
(1) Audited by TS Choo & Co, Singapore, for statutory filing purposes and Deloitte & Touche LLP,Singapore, for consolidation purposes.
(2) Not audited as the Company is incorporated during the year.
APPENDIX A
A(i)-38
30 SEGMENT INFORMATION
Services from which reportable segments derive their revenue
For the purpose of the resource allocation and assessment of segment performance, theich
in turn, are segregated based on their services. This forms the basis of identifying theoperating segments of the Group under FRS 108.
Operating segments are aggregated into a single reportable operating segment if they havesimilar economic characteristics, such as long-term average gross margins, and are similar inrespect of nature of services and processes, type of customers, methods of distribution, and/ortheir reported revenue, absolute amount of profit and loss and assets are not material to theconsolidated totals of all operating segments.
FRS 108 are as follows:
Segment Principal activities
Equipment rental Rental of cranes and aerial lifts Trading Trading of cranes and aerial lifts
The accounting policies of the reportable segments are as described in Note 2. Segmentrevenue represents revenue generated from external and internal customers. Segment profitsrepresents the profit earned by each segment after allocating central administrative costs andfinance costs. This is the measure reported to the chief operating decision makers for thepurpose of resource allocation and assessment of segment performance.
For the purpose of monitoring segment performance and allocating resources, the chiefoperating decision makers monitor the tangible, intangible and financial assets attributable toeach segment. All assets are allocated to reportable segments. Assets, if any, used jointly byreportable segments are allocated on the basis of the revenue earned by individual reportable segments.
APPENDIX A
A(i)-39
Equipment Rental Trading Total
2007
Revenue Segment revenue 19,360 63,380 82,740
Results Segment results 4,975 12,321 17,296
Selling expense - (1,662) (1,662) Other operating income 903Administrative expenses (4,605) Other operating expenses (793) Finance costs (60) Share of results of associate 219Profit before tax 11,298 Income tax expense (2,121) Profit for the year 9,177
Other information Capital expenditure 17,510 211 17,721 Depreciation expense 3,580 216 3,796
Gain on disposal of property, plant and equipment (63) - (63)Gain on disposal of available-for-sale investments (116)
Impairment of available-for-sale investments 427
Assets and liabilities Segment assets 27,110 13,691 40,801
Unallocated corporate assets 15,812Total assets 56,613
Segment liabilities 4,104 - 4,104 Unallocated corporate liabilities 16,270Total liabilities 20,374
APPENDIX A
A(i)-40
Equipment Rental Trading Total
2008
Revenue Segment revenue 25,955 105,878 131,833
ResultsSegment results 8,930 18,319 27,249 Selling expenses - (1,427) (1,427) Other operating income 810 Administrative expenses (4,878) Other operating expenses (697) Finance costs (198) Share of results of associate 258Profit before tax 21,117 Income tax expense (3,954) Profit for the year 17,163
Other information Capital expenditure 25,987 607 26,594 Depreciation expense 5,818 267 6,085
Gain on disposal of property, plant and equipment (187) - (187) Property, plant and equipment written off 1 - 1Gain on disposal of available-for-sale investments (12)
Impairment of available-for-sale investments 678
Assets and liabilities Segment assets 42,687 18,874 61,561
Unallocated corporate assets 16,701Total assets 78,262
Segment liabilities 11,921 - 11,921 Unallocated corporate liabilities 16,092Total liabilities 28,013
APPENDIX A
A(i)-41
Equipment Rental Trading Total
2009
Revenue Segment revenue 33,351 103,635 136,986
Results Segment results 12,658 18,803 31,461
Selling expenses - (1,168) (1,168) Other operating income 2,062
Administrative expenses (6,332)Other operating expenses (150) Finance costs (359) Share of results of associate 424Profit before tax 25,938 Income tax expense (3,956) Profit for the year 21,982
Other information Capital expenditure 36,174 202 36,376
Depreciation expense 6,831 269 7,100 Loss on disposal of property, plant and equipment 1 - 1 Property, plant and equipment written off 20 - 20Gain on disposal of available-for-sale investments (9)Impairment of available-for-sale investments 11
Assets and liabilities Segment assets 64,342 14,522 78,864
Unallocated corporate assets 16,154Total assets 95,018
Segment liabilities 8,424 - 8,424 Unallocated corporate liabilities 20,645Total liabilities 29,069
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IX A
APPENDIX A
A(i)-43
31 OPERATING LEASE COMMITMENTS
The Group as lessee2007 2008 2009
Minimum lease payments under operating leases recognised as an expense in the year 164 167 163
At the balance sheet date, the Group has outstanding commitments under non-cancellableoperating leases, which fall due as follows:
2007 2008 2009
Within one year 147 154 134 In the second to fifth years inclusive 566 597 535
After five years 1,881 1,835 1,5112,594 2,586 2,180
Operating lease payments represent rentals payable by the Group for certain of its leasehold land and staff accommodations. Leases are negotiated for an average terms of 1 to 26 years and rentals are fixed for an average of 1 to 26 years.
The Group as lessor
At the balance sheet date, the Group has contracted with tenants for the following futureminimum lease payments:
2007 2008 2009
Within one year 131 122 80 In the second to fifth years inclusive - - 24
131 122 104
32 COMMITMENTS 2007 2008 2009
Capital expenditure in respect of acquisition of property, plant and equipment contracted but not provided in the financial statements 52,166 22,389 9,269
33 CONTINGENT LIABILITIES2007 2008 2009
Guarantee given to bank in respect of bankingfacilities utilised by a related party - 50 -
APPENDIX A
A(i)-44
34 SUBSEQUENT EVENTS
Subsequent to the financial year, a final dividend of $3,000,000 ($1.61 per share) in respect offinancial year ended 30 June 2009 is declared at the Annual General Meeting held on 8 December 2009 and payable on 18 December 2009 to the shareholder.
A tax exempt (one-tier) interim dividend of $12,000,000 (3.23 cents per share) in respect offinancial year ended 30 June 2010 is declared and to be paid prior to the registration of theProspectus with the Monetary Authority of Singapore.
At an Extraordinary General Meeting held on 21 December 2009, the shareholders approved,inter alia, the following:-
(a) the conversion of the Company into a public company limited by shares and theSin Heng Heavy Machinery Limited
(b) the adoption of a new set of Articles of Association;
(c) the Sub-Division, Invitationordinary share in the issued share capital of the Company be divided into 200 shares,resulting in an issued share capital of 1,858,200 divided into 371,640,000 shares;
(d) the issue of the new shares pursuant to this Invitation, which when allotted, issued andfully paid, will rank pari passu in all respects with the existing issued shares;
(e) the adoption of the Sin Heng Heavy Machinery Employee Share Option Scheme;
(f) that authority be given to the Directors, pursuant to Section 161 of the Companies Act,to:
(i) (aa) issue shares whether by way of rights, bonus or otherwise; and/or
(bb)might or would require shares to be issued during the continuance of thisauthority or thereafter, including but not limited to the creation and issue of(as well as adjustments to) warrants, debentures or other instrumentsconvertible into shares,
at any time and upon such terms and conditions and for such purposes and to suchpersons as the Directors may, in their absolute discretion, deem fit; and
(ii) issue shares in pursuance of any Instruments made or granted by the Directorswhile such authority was in force (notwithstanding that such issue of sharespursuant to the Instruments may occur after the expiration of the authoritycontained in this resolution),
APPENDIX A
A(i)-45
Provided that:-
(iii) the aggregate number of shares issued pursuant to such authority (including theshares to be issued in pursuance of Instruments made or granted pursuant to suchauthority), does not exceed 50.0% of the Post-Invitation Issued Share Capital, andprovided further that where Shareholders with registered addresses in Singaporeare not given the opportunity to participate in the same on a pro-pro- hen the shares to be issued under such circumstances (including the shares to be issued in pursuance of Instruments made or granted pursuant tosuch authority) shall not exceed 20.0% of the Post-Invitation Issued Share Capital;
(iv) the 50.0% limit in paragraph (iii) above may be increased to 100.0% for issues ofshares pursuant to this resolution by way of a renounceable rights issue whereShareholders with registered addresses in Singapore are given the opportunity toparticipate in the same on a pro-rat
(v) (unless revoked or varied by the Company in general meeting) the authority soconferred shall continue in force until the conclusion of the next annual generalmeeting of our Company or the date by which the next annual general meeting ofour Company is required by law to be held, whichever is the earlier.
-mean the total number of issued shares of the Company (excluding treasury shares)immediately after this Invitation, after adjusting for: (i) new shares arising from theconversion or exercise of any convertible securities; (ii) new shares arising fromexercising share options or vesting of share awards outstanding or subsisting at thetime such authority is given, provided the options or awards were granted in compliance with the Listing Manual; and (iii) any subsequent bonus issue, consolidation or sub-division of Shares; and
(g) that:-
(i) subject to and conditional upon the passing of the resolution referred to inparagraph (f) above, approval be given to the Directors at any time to issue shares(other than on a pro-rata basis to Shareholders) at an issue price for each sharewhich shall be determined by the Directors in their absolute discretion provided that such price shall not represent a discount of more than 20.0% to the weightedaverage price of a share for trades done on the SGX-ST (as determined inaccordance with the requirements of the SGX-ST); and
(ii) (unless revoked or varied by the Company in general meeting) the authority soconferred shall continue in force until the conclusion of the next annual generalmeeting of the Company or the date by which the next annual general meeting ofthe Company is required by law to be held, whichever is the earlier.
APPENDIX A
A(i)-46
SIN HENG HEAVY MACHINERY LIMITED AND ITS SUBSIDIARIES
STATEMENT OF DIRECTORS
In the opinion of the directors, the accompanying consolidated financial statements are drawn up so
as to give a true and fair view of the state of affairs of the Group as at 30 June 2007, 2008 and 2009,
and of the results, changes in equity and cash flows of the Group for the financial years ended 30
June 2007, 2008 and 2009 and at the date of this statement there are reasonable grounds to believe
that the Group will be able to pay its debts when they fall due.
ON BEHALF OF THE DIRECTORS
Tan Cheng Soon Don
Teo Yi-Dar
25 January 2010
APPENDIX A
A(ii)-1
25 January 2010
The Board of DirectorsSin Heng Heavy Machinery Limited26 Gul RoadSingapore 629346
Dear Sirs
REPORT ON THE UNAUDITEDGROUP PROFORMA FINANCIAL INFORMATION
This report has been prepared for inclusion in the Prospectus dated 25 January 2010 (thef Sin Heng Heavy Machinery Limited
ompany Group Proforma financial information comprises the unauditedproforma consolidated balance sheet as at 30 June 2009 and the unaudited proforma consolidatedcash flow statement for the financial year ended 30 June 2009.
We report on the unaudited Group Proforma financial information set out on pages A(ii)-3 to A(ii)-7which have been prepared for illustrative purposes only and based on certain assumptions aftermaking certain adjustments to show what:
(i)2009 would have been if the Significant Events stated in the Explanatory Note (a) of the unaudited Group Proforma financial information had occurred on 30 June 2009; and
(ii) the cash flows of the Group for the for the year ended 30 June 2009 would have been ifthe aforesaid significant events took place on 1 July 2008.
The Proforma adjustments do not have any material effect on the consolidated profit and lossstatement of the Group. Accordingly, unaudited proforma consolidated profit and loss statementhas not been presented.
The unaudited Group Proforma financial information, because of their nature, may not give a trueposition and cash flows.
The unaudited Group Proforma financial information is the responsibility of the management of theCompany. Our responsibility is to express an opinion on the unaudited Group Proforma financialinformation based on our work.
A(ii) – INDEPENDENT AUDITORS’ REPORT ON THE UNAUDITED GROUPPROFORMA FINANCIAL INFORMATION
APPENDIX A
A(ii)-2
We carried out procedures in accordance with Singapore Statement of Auditing Practice 24: Auditors and Public Offering Documents. Our work, which involved no independent examination ofthe unaudited Group Proforma financial information, consisted primarily of comparing theunaudited Group Proforma financial information to the audited consolidated financial statements ofthe Group for the financial year ended 30 June 2009, considering the evidence supporting theadjustments and discussing the unaudited Proforma Group financial information with the management of the Company.
In our opinion:
(a) the unaudited Group Proforma financial information has been properly prepared:
(i) on the basis stated in the Explanatory Note (b) of the unaudited Group Proformafinancial information;
(ii) such basis is consistent with the accounting policies of the Company; and
(b) each material adjustment made to the information used in the preparation of the unaudited Group Proforma financial information is appropriate for the purpose of preparing suchfinancial information.
Yours faithfully
Deloitte & Touche LLPPublic Accountants andCertified Public Accountants Singapore
Jeremy Toh Yew KuanPartner
APPENDIX A
A(ii)-3
UNAUDITED PROFORMA CONSOLIDATED BALANCE SHEETAs at 30 June 2009
Unaudited Audited Proforma consolidated consolidated balance Proforma balance
sheet adjustments sheet
ASSETS
Current assets Cash and bank balances 8,430 (8,339) 91 Trade receivables 12,817 12,817 Other receivables and prepaid expenses 1,564 1,564 Derivative financial instruments 264 264 Inventories 10,189 10,189Total current assets 33,264 24,925
Non-current assets Property, plant and equipment 59,598 59,598 Investment in associate 1,352 1,352 Available-for-sale investments 794 794 Other assets 10 10Total non-current assets 61,754 61,754
Total assets 95,018 86,679
LIABILITIES AND EQUITY
Current liabilitiesBills payable 10,949 10,949 Bank overdraft - 6,661 6,661 Current portion of bank loan 304 304 Trade payables 1,580 1,580 Other payables 2,594 2,594 Current portion of finance leases 3,934 3,934 Income tax payable 1,161 1,161Total current liabilities 20,522 27,183
Non-current liabilitiesBank loan 683 683 Finance leases 4,490 4,490 Deferred tax liabilities 3,374 3,374Total non-current liabilities 8,547 8,547
Capital and reservesShare capital 1,858 1,858 Retained earnings 64,423 (15,000) 49,423 Fair value reserve (332) (332) Total equity 65,949 50,949
Total liabilities and equity 95,018 86,679
APPENDIX A
A(ii)-4
UNAUDITED PROFORMA CONSOLIDATED CASH FLOW STATEMENTYear ended 30 June 2009
Unaudited Audited Proforma consolidated consolidated
cash flow Proforma cash flow statement adjustments statement
Operating activities Profit before income tax 25,938 25,938 Adjustments for:
Property, plant and equipment written off 20 20 Unrealised exchange gain from derivative
financial instruments (362) (362) (424) (424)
Depreciation of property, plant and equipment 7,100 7,100Dividend income (14) (14) Impairment of available-for-sale investments 11 11 Interest expense 421 421 Interest income (62) (62)Gain on disposal of available-for-sale investments (9) (9)Loss on disposal of property, plant and equipment 1 1
Operating cash flows before movements inworking capital 32,620 32,620
Trade receivables (2,718) (2,718)Other receivables and prepaid expenses 1,591 1,591Inventories (11,569) (11,569)Bills payable 5,782 5,782Trade payables 120 120 Other payables (1,279) (1,279)
Cash generated from operations 24,547 24,547
Income tax paid (3,829) (3,829) Net cash from operating activities 20,718 20,718
Investing activitiesDividend received from an associate 50 50 Dividend received from other investments 14 14 Proceeds from sale of investments (net) 14 14
Interest received 62 62 Purchase of property, plant and equipment (7,454) (7,454)Proceeds from disposal of property, plant and equipment 92 92
Fixed deposits pledged to bank 3,012 3,012Net cash used in investing activities (4,210) (4,210)
APPENDIX A
A(ii)-5
Unaudited Audited Proforma consolidated consolidated
cash flow Proforma cash flow statement adjustments statement
Financing activitiesDividends paid (6,000) (15,000) (21,000)
Interest paid (421) (421)Repayment of obligations under finance leases (6,045) (6,045)Repayment of bank loans (98) (98)
Net cash used in financing activities (12,564) (27,564)
Net increase in cash and cash equivalents 3,944 (11,056)Cash and cash equivalents at beginning of year 4,395 4,395Cash and cash equivalents (overdrawn) at end of year 8,339 (6,661)
Cash and cash equivalents (overdrawn) at end of the financial year comprised:
Cash and bank balances 8,430 (8,339) 91 Less: Fixed deposits pledged to bank (91) (91)Less: Bank overdraft - (6,661) (6,661)
8,339 (6,661)
APPENDIX A
A(ii)-6
Explanatory Notes:
(a) Significant events affecting capital structure
Save for the following significant events relating to payment of dividends discussed below, the directors, as at the date of this report, are not aware of other
significant changes made to the capital structure of the Company after 30 June 2009:
- A final dividend of $3 million in respect of financial year ended 30 June 2009 wasdeclared on 8 December 2009 and paid on 18 December 2009.
- An interim dividend of $12 million in respect of financial year ended 30 June 2010was declared on 21 December 2009 and to be paid prior to the registration of the Prospectus with the Monetary Authority of Singapore.
(b) Basis of preparation of the unaudited Group Proforma financial information
The unaudited Group Proforma financial information has been prepared based on the auditedconsolidated financial statements of Sin Heng Heavy Machinery Limited for the financial year ended 30 June 2009 which were prepared by management in accordance with the Singapore
LLP, Singapore, in
statements was not qualified.
The unaudited Group Proforma financial information for the financial year ended30 June 2009 is prepared for illustrative purposes only. These are prepared based oncertain assumptions after making certain adjustments to show what:
(i) the financial position of the Company and its subsidia30 June 2009 would have been if the Significant Events stated in the Explanatory Note (a) above had occurred on 30 June 2009; and
(ii) the cash flows of the Group for the for the year ended 30 June 2009 would havebeen if the aforesaid Significant Events took place on 1 July 2008.
Based on the assumptions discussed above, the following material adjustments have beenmade to the audited consolidated financial statements of Sin Heng Heavy Machinery Pte. Ltd.for the year ended 30 June 2009 in arriving at the unaudited Group Proforma financialinformation included herein:
Effect of payment of dividends subsequent to 30 June 2009 amounting to$15 million and adjusted as appropriate for the following balances:
$ (Decrease) Increase
Cash and bank balances (8,339)Bank overdraft 6,661Retained earnings (15,000)
APPENDIX A
A(ii)-7
As the recognition of the proforma effect of the results of payment of dividends has no material impact on the consolidated profit and loss statement, no unaudited proformaconsolidated profit and loss statement was prepared.
The unaudited Group Proforma financial information, because of their nature, are notnecessarily indicative of the financial position and cash flows of the Group would have been attained had the Significant Events actually occurred earlier. Save as disclosed in theExplanatory Notes, the management, for the purpose of preparing this set of unauditedGroup Proforma financial information, have not considered the effects of other events.
TAXATION
The following is a discussion of certain tax matters relating to Singapore income tax, capital gains tax,stamp duty and estate duty consequences in relation to the purchase, ownership and disposal of ourShares. The discussion is limited to a general description of certain tax consequences in Singapore withrespect to the ownership of shares and is based on laws, regulations and interpretations now in effectand available as of the date of this Prospectus. The laws, regulations and interpretations, however, maychange at any time, and any change could be retroactive to the date of issuance of our Shares. Theselaws and regulations are also subject to various interpretations and the relevant tax authorities or thecourts of Singapore could later disagree with the explanations or conclusions set out below.
Prospective purchasers of our Shares should consult their tax advisors concerning the taxconsequences of owning and disposing of our Shares. Neither our Company, our Directors norany other persons involved in this Invitation accepts responsibility for any tax effects or liabilitiesresulting from the subscription, purchase, holding or disposal of our Shares.
SINGAPORE TAXATION
INDIVIDUAL INCOME TAX
Individuals whether resident or non-resident in Singapore are subject to tax on income which is accruedin or derived from Singapore, subject to certain specific exemptions (including Singapore dividends whichare specifically exempt from tax).
For individuals regardless of whether they are tax resident or non-tax resident in Singapore, all foreign-sourced personal income received in Singapore will be exempt from Singapore tax unless the saidincome is received through a partnership in Singapore.
An individual is regarded as resident in Singapore in a year of assessment if, in the preceding calendaryear preceding the year of assessment, the individual is physically present in Singapore or exercises anemployment in Singapore (other than as a director of a company) for 183 days or more, or if theindividual resides in Singapore.
For a Singapore tax resident individual, the rate of tax will vary according to the individual’s chargeableincome but is subject to a maximum marginal tax rate of 20.0%. A non-resident individual is normallytaxed at the non-resident rate of 20.0% except for certain specific income which may be taxed at a lowerrate.
CORPORATE INCOME TAX
Subject to certain exemptions, both resident and non-resident Singapore corporate taxpayers are subjectto Singapore income tax on:-
� income accruing in or derived from Singapore; and
� foreign income received or deemed received in Singapore.
However, foreign-sourced dividends, branch profits and services income received, or deemed received bya corporate resident taxpayer will be tax-exempt in Singapore if the following conditions are met:-
(i) such income is subject to tax of a similar character to income tax under the law of the jurisdictionfrom which such income is received unless granted exemption or reduction in tax arising from taxincentives granted for substantive activities undertaken in that country;
(ii) all the time the income is received in Singapore, the highest rate of tax of a similar character toincome tax in the jurisdiction from which the income is received is at least 15.0%; and
APPENDIX B
B-1
(iii) the Inland Revenue Authority of Singapore (“IRAS”) is satisfied that the tax exemption would bebeneficial to the recipient of the foreign income.
In addition, Singapore dividends received by a resident company are also exempt from Singapore incometax.
A corporate taxpayer is generally regarded as tax resident in Singapore if the company’s business iscontrolled and managed in Singapore. Generally, the Board of Directors will control and manage thecompany; therefore, if the Board of Directors meets and conducts the company’s business in Singapore,the company will be regarded as tax resident in Singapore.
The corporate tax rate in Singapore is currently 17.0% for the year of assessment 2010 (i.e. for income ofthe financial year or other basis period ended 2009). In addition, three quarters of up to the firstS$10,000, and one-half of up to the next S$290,000, of a company’s chargeable income otherwisesubject to normal taxation (other than Singapore dividends received by the company) are exempt fromcorporate tax.
A new tax exemption scheme will be applicable to qualifying newly incorporated Singapore companies.The newly incorporated qualifying companies will, subject to certain conditions, be eligible for full taxexemption on their normal chargeable income (other than Singapore dividends) of up to S$100,000 ayear for each of the company’s first three years of assessment. The first year of assessment refers to theyear of assessment relating to the basis period during which the company was incorporated. Theconditions that a new company must satisfy in order to claim this S$100,000 full exemption for a year ofassessment are:-
(a) it must be incorporated in Singapore (other than a company limited by guarantee);
(b) it must be a tax resident in Singapore for that year of assessment of claim; and
(c) it must have no more than 20 shareholders throughout the basis period relating to that year ofassessment where:-
(i) all the shareholders are individuals beneficially holding the shares in their own names; or
(ii) at least one shareholder is an individual beneficially holding at least 10.0% of the issuedordinary shares of the company.
DIVIDEND DISTRIBUTIONS
Singapore adopts a one-tier system of corporate taxation. Under this one-tier system, the tax levied oncorporate profits is final and the after tax profits distributed as dividend are exempt from tax in the handsof the shareholder, regardless of whether the shareholder is a corporate or individual shareholder orwhether or not the shareholder is a Singapore tax resident.
As all companies are under the one-tier corporate tax system, any dividends paid by our Company wouldbe tax-exempt dividends.
WITHHOLDING TAX
Certain payments deemed sourced in Singapore under Sections 12(6) and 12(7) Singapore Income TaxAct made to non-Singapore tax residents are subject to Singapore withholding tax. Such payments wouldinclude interest, royalties, technical assistance fees, management fees and directors’ fees.
APPENDIX B
B-2
Depending on the nature of the payments and the circumstances under which they were paid, the rate ofwithholding will generally be the prevailing corporate tax rate currently 17.0% (other than payment madeto non-resident directors for which the applicable withholding tax rate is 20.0%). However, in respect ofinterest and rental of movable assets, the rate of withholding is 15.0%. The applicable withholding tax rateof 10% applies to royalties. The rates may be reduced by a relevant double tax treaty. Ministerialconcession may also apply under certain circumstances.
GAINS ON DISPOSAL OF OUR SHARES
Singapore does not currently impose tax on capital gains. There are no specific laws or regulations whichdeal with the characterisation of gains as capital or revenue. However, certain gains may be construed tobe revenue in nature and subject to income tax where they are derived from activities which the IRASregards as constituting a trade or business carried on in Singapore.
Any profits from the disposal of our Shares are not taxable in Singapore unless the seller is regarded ascarrying on a trade or business of dealing in shares in Singapore. In such a case, such gains would betaxable as trading profits.
STAMP DUTY
No stamp duty is payable on the allotment or holding of our Shares.
Stamp duty is payable on an instrument of transfer of shares at the rate of $0.20 for every $100 or anypart thereof of the consideration for the shares. The purchaser is liable for stamp duty, unless otherwiseagreed.
No stamp duty is payable if no instrument of transfer is executed (such as in the case of scripless shares,the transfer of which does not require instruments of transfer to be executed) or if the instrument oftransfer is executed outside Singapore. As our Shares are scripless shares, no stamp duty will beimposed on their sale or transfer. However, stamp duty may be payable if the instrument of transfer whichis executed outside Singapore is subsequently received in Singapore.
ESTATE DUTY
Singapore estate duty has been abolished with effect from 15 February 2008.
GOODS AND SERVICES TAX (“GST”)
The sale of the share by an investor belonging in Singapore through a SGX-ST member or to anotherperson belonging in Singapore is an exempt supply not subject to GST.
Where the shares are sold by the investor to a person belonging outside Singapore, the sale is generallya taxable supply subject to GST at zero-rate. Any GST incurred by a GST-registered investor in themaking of taxable purchases in the course of furtherance of its business may be recoverable from theComptroller of GST.
Services such as brokerage, handling and clearing services rendered by a GST-registered person to anyinvestor belonging in Singapore in connection with the investor’s purchase, sale or holding of the shareswill be subject to GST at the current rate of 7.0%. Similar services rendered to an investor belongingoutside Singapore would generally be zero-rated, i.e. subject to GST at 0.0%.
APPENDIX B
B-3
APPENDIX C
C-1
DESCRIPTION OF OUR SHARES
The following statements are brief summaries of the rights and privileges of our Shareholders conferredby the laws of Singapore, the Listing Manual and our Articles of Association (“Articles”). Thesestatements summarise the material provisions of our Articles but are qualified in entirety by reference toour Articles, a copy of which is available for inspection at our registered office during normal businesshours for a period of six months from the date of this Prospectus.
Ordinary Shares
All of our Shares are in registered form. We may, subject to the provisions of the Act and the rules of theSGX-ST, purchase our Shares. However, we may not, except in circumstances permitted by the Act,grant any financial assistance for the acquisition or proposed acquisition of our Shares.
New Shares
New Shares may only be issued with the prior approval of our Shareholders in a general meeting. Theaggregate number of Shares to be issued pursuant to such approval may not exceed 50.0% (or suchother limit as may be prescribed by the SGX-ST) of our issued share capital, of which the aggregatenumber of Shares to be issued other than on a pro rata basis to our Shareholders may not exceed 20.0%(or such other limit as may be prescribed by the SGX-ST) of our issued share capital (the percentage ofissued share capital being based on our Company’s issued share capital at the time such authority isgiven after adjusting for new shares arising from the conversion of convertible securities or employeeshare options on issue at the time such authority is given and any subsequent consolidation orsubdivision of Shares). The approval, if granted, will lapse at the conclusion of the annual generalmeeting following the date on which the approval was granted or the date by which the annual generalmeeting is required by law to be held, whichever is the earlier. Subject to the foregoing, the provisions ofthe Act and any special rights attached to any class of shares currently issued, all new Shares are underthe control of our Board of Directors who may allot and issue the same with such rights and restrictionsas it may think fit.
Shareholders
Only persons who are registered in our Register of Shareholders and, in cases in which the person soregistered is CDP, the persons named as the Depositors in the Depository Register maintained by CDPfor the Shares, are recognised as our Shareholders. We will not, except as required by law, recognise anyequitable, contingent, future or partial interest in any Share or other rights for any Share other than theabsolute right thereto of the registered holder of that Share or of the person whose name is entered inthe Depository Register for that Share. We may close our Register of Shareholders for any time or timesif we provide the Registrar of Companies and Businesses with at least 14 days’ notice and the SGX-STat least ten clear Market Days’ notice. However, the Register of Shareholders may not be closed for morethan 30 days in aggregate in any calendar year. We typically close our Register of Shareholders todetermine Shareholders’ entitlement to receive dividends and other distributions.
Transfer of Shares
There is no restriction on the transfer of fully paid Shares except where required by law or the ListingManual or the rules or by-laws of any stock exchange on which our Company is listed. Our Board ofDirectors may decline to register any transfer of Shares which are not fully paid Shares or Shares onwhich we have a lien. Our Shares may be transferred by a duly signed instrument of transfer in a formapproved by the SGX-ST. Our Board of Directors may also decline to register any instrument of transferunless, among other things, it has been duly stamped and is presented for registration together with theshare certificate and such other evidence of title as they may require. We will replace lost or destroyedcertificates for Shares if it is properly notified and if the applicant pays a fee which will not exceed S$2.00and furnishes any evidence and indemnity that our Board of Directors may require.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Board of Directors may convene anExtraordinary General Meeting whenever it thinks fit and must do so if Shareholders representing notless than 10.0% of the total voting rights of all Shareholders request in writing that such a meeting beheld. In addition, two or more shareholders holding not less than 10.0% of our issued share capital maycall a meeting. Unless otherwise required by law or by our Articles, voting at general meetings is byordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at the meeting. Anordinary resolution suffices, for example, for the appointment of directors. A special resolution, requiringthe affirmative vote of at least 75.0% of the votes cast at the meeting, is necessary for certain mattersunder Singapore law, including voluntary winding up, amendments to the Memorandum of Associationand our Articles, a change of our corporate name and a reduction in our share capital, share premiumaccount or capital redemption reserve fund. We must give at least 21 days’ notice in writing for everygeneral meeting convened for the purpose of passing a special resolution. Ordinary resolutions generallyrequire at least 14 days’ notice in writing. The notice must be given to each of our Shareholders and mustset forth the place, the day and the hour of the meeting and, in the case of special business, the generalnature of that business.
Voting Rights
A holder of our Shares is entitled to attend, speak and vote at any general meeting, in person or byproxy. Proxies need not be Shareholders. A person who holds Shares through the SGX-ST book- entrysettlement system will only be entitled to vote at a general meeting as a Shareholder if his name appearson the Depository Register maintained by CDP 48 hours before the general meeting. Except as otherwiseprovided in our Articles, two or more Shareholders must be present in person or by proxy to constitute aquorum at any general meeting. Under our Articles, on a show of hands, every Shareholder present inperson and by proxy shall have one vote (provided that in the case of a Shareholder who is representedby two proxies, the chairman of the meeting shall be entitled to treat the first named proxy as theauthorised representative to vote on a show of hands), and on a poll, every Shareholder present inperson or by proxy shall have one vote for each Share which he holds or represents. A poll may bedemanded in certain circumstances, including by the chairman of the meeting or by any Shareholderpresent in person or by proxy and representing not less than 10.0% of the total voting rights of allShareholders having the right to attend and vote at the meeting or by any two Shareholders present inperson or by proxy and entitled to vote. In the case of an equality of votes, whether on a show of handsor a poll, the chairman of the meeting shall be entitled to a casting vote.
Dividends
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we maynot pay dividends in excess of the amount recommended by our Board of Directors. We must pay alldividends out of our profits. However, we may capitalise our share premium account and apply it to paydividends, if such dividends are satisfied by the issue of Shares to our Shareholders. See “Bonus andRights Issue” below. All dividends are paid pro rata among our Shareholders in proportion to the amountpaid-up on each Shareholder’s Shares, unless the rights attaching to an issue of any Share providesotherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the post toeach Shareholder at his registered address. Notwithstanding the foregoing, the payment by us to CDP ofany dividend payable to a Shareholder whose name is entered in the Depository Register shall, to theextent of payment made to CDP, discharge us from any liability to that Shareholder in respect of thatpayment.
Bonus and Rights Issue
Our Board of Directors may, with approval of our Shareholders at a general meeting, capitalise any sumstanding to the credit of any of our reserve accounts (including any undistributable reserve) or any sumstanding to the credit of our profit and loss account and distribute the same as bonus Shares credited aspaid-up to our Shareholders in proportion to their shareholdings. Our Board of Directors may also issuerights to take up additional Shares to Shareholders in proportion to their Shareholdings. Such rights aresubject to any conditions attached to such issue and the regulations of any stock exchange on which weare listed.
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APPENDIX C
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Takeovers
Under the Singapore Code on Take-overs and Mergers (“Singapore Take-over Code”), issued by theAuthority pursuant to section 321 of the SFA, any person acquiring an interest, either on his own ortogether with parties acting in concert with him, in 30.0% or more of the voting Shares must extend atakeover offer for the remaining voting Shares in accordance with the provisions of the Singapore Take-over Code. In addition, a mandatory takeover offer is also required to be made if a person holding, eitheron his own or together with parties acting in concert with him, between 30.0% and 50.0% of the votingShares acquires additional voting Shares representing more than 1.0% of the voting Shares in any 6month period. Under the Singapore Take-over Code, the following individuals and companies will bepresumed to be persons acting in concert with each other unless the contrary is established:-
(a) the following companies:-
(i) a company
(ii) the parent company of (i);
(iii) the subsidiaries of (i);
(iv) the fellow subsidiaries of (i);
(v) the associated companies of (i), (ii), (iii) or (iv); and
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v);
(b) a company with any of its directors (together with their close relatives, related trusts as well ascompanies controlled by any of the directors, their close relatives and related trusts);
(c) a company with any of its pension funds and employee share schemes;
(d) a person with any investment company, unit trust or other fund whose investment such personmanages on a discretionary basis, but only in respect of the investment account which suchperson manages;
(e) a financial or other professional adviser, including a stockbroker, with its customer in respect of theshareholdings of:-
(i) the adviser and persons controlling, controlled by or under the same control as the adviser;and
(ii) all the funds which the adviser manages on a discretionary basis, where the shareholdingsof the adviser and any of those funds in the customer total 10.0% or more of the customer’sequity share capital;
(f) directors of a company (together with their close relatives, related trusts and companies controlledby any of such directors, their close relatives and related trusts) which is subject to an offer orwhere the directors have reason to believe a bona fide offer for their company may be imminent;
(g) partners; and
(h) the following persons and entities:-
(i) an individual;
(ii) the close relatives of (i);
(iii) the related trusts of (i);
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(iv) any person who is accustomed to act in accordance with the instructions of (i); and
(v) companies controlled by any of (i), (ii), (iii) or (iv).
Under the Singapore Take-over Code, a mandatory offer made with consideration other than cash mustbe accompanied by a cash alternative at not less than the highest price paid by the offeror or any personacting in concert within the preceding 6 months.
Liquidation or Other Return of Capital
If we liquidate or in the event of any other return of capital, holders of our Shares will be entitled toparticipate in any surplus assets in proportion to their shareholdings, subject to any special rightsattaching to any other class of shares.
Indemnity
As permitted by Singapore law, our Articles provide that, subject to the Act, our Board of Directors andofficers shall be entitled to be indemnified by us against any liability incurred in defending anyproceedings, whether civil or criminal, which relate to anything done or omitted to have been done as anofficer, director or employee and in which judgement is given in their favour or in which they are acquittedor in connection with any application under any statute for relief from liability in respect thereof in whichrelief is granted by the court. We may not indemnify our Directors and officers against any liability whichby law would otherwise attach to them in respect of any negligence, default, breach of duty or breach oftrust of which they may be guilty in relation to us.
Limitations on Rights to Hold or Vote Shares
Except as described in “Voting Rights” and “Takeovers” above, there are no limitations imposed bySingapore law or by our Articles on the rights of non-resident shareholders to hold or vote in respect ofour Shares.
Minority Rights
The rights of minority Shareholders of Singapore-incorporated companies are protected under Section216 of the Act, which gives the Singapore courts a general power to make any order, upon application byany of our shareholders, as they think fit to remedy any of the following situations where:-
(a) our affairs are being conducted or the powers of our Board of Directors are being exercised in amanner oppressive to, or in disregard of the interests of, one or more of our Shareholders; or
(b) we take an action, or threaten to take an action, or our Shareholders pass a resolution, or proposeto pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or moreof our Shareholders, including the applicant.
Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are in no waylimited to those listed in the Act itself. Without prejudice to the foregoing, the Singapore courts may:-
(a) direct or prohibit any act or cancel or vary any transaction or resolution;
(b) regulate the conduct of our affairs in the future;
(c) authorise civil proceedings to be brought in our name of, or on behalf of, by a person or personsand on such terms as the court may direct;
(d) provide for the purchase of a minority Shareholder’s Shares by our other Shareholders or by usand, in the case of a purchase of Shares by us, a corresponding reduction of our share capital; or
(e) provide that we be wound up.
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RULES OF THE SHHM EMPLOYEE SHARE OPTION SCHEME
1. NAME OF THE ESOS
The ESOS shall be called the “SHHM Employee Share Option Scheme’’.
2. DEFINITIONS
2.1 In the ESOS, unless the context otherwise requires, the following words and expressions shallhave the following meanings:
“Act” The Companies Act, Chapter 50 of Singapore as amended,modified or supplemented from time to time;
“Articles” The Articles of Association of the Company, as amended from timeto time;
“Auditors” The auditors of the Company for the time being;
“Board” The board of directors of the Company;
“CDP” The Central Depository (Pte) Limited;
“CPF” Central Provident Fund;
“Committee” The remuneration committee of the Company, or such othercommittee comprising directors of the Company duly authorisedand appointed by the Board to administer this ESOS;
“Company” Sin Heng Heavy Machinery Limited
“control” The capacity to dominate decision making, directly or indirectly, inrelation to the financial and operating policies of the Company;
“Controlling Shareholder” A shareholder exercising control or in fact exercising control overthe Company and unless rebutted, a person who controls directlyor indirectly 15.0% or more of the Company’s issued shares(excluding treasury shares) shall be presumed to be a ControllingShareholder of the Company;
“Date of Grant” In relation to an Option, the date on which the Option is granted toa Participant pursuant to Rule 7;
“Director” A person holding office as a director for the time being of theCompany and/or its Subsidiaries, as the case may be;
“ESOS” The SHHM Employee Share Option Scheme, as the same may bemodified or altered from time to time;
“Executive Director” A director of the Company and/or its Subsidiaries, as the case maybe, who performs an executive function within the Company or therelevant Subsidiary, as the case may be;
“Exercise Price” The price at which a Participant shall subscribe for each Shareupon the exercise of an Option which shall be the price asdetermined in accordance with Rule 9, as adjusted in accordancewith Rule 10;
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“Grantee” A person to whom an offer of an Option is made;
“Group” The Company and its Subsidiaries;
“Group Employee” Any confirmed employee of the Group (including any ExecutiveDirector) selected by the Committee to participate in the ESOS inaccordance with Rule 4;
“Market Day” A day on which the SGX-ST is open for trading in securities;
“Market Price” A price equal to the average of the last dealt prices for the Shareson the SGX-ST over the five consecutive Trading Days immediatelypreceding the Date of Grant of that Option, as determined by theCommittee by reference to the daily official list or any otherpublication published by the SGX-ST, rounded to the nearest wholecent in the event of fractional prices;
“Non-Executive Director” A director (including an independent director) of the Companyand/or its Subsidiaries, as the case may be, other than anExecutive Director of the Company;
“Offer Date” The date on which an offer to grant an Option is made pursuant tothe ESOS;
“Offeree” The person to whom an offer of an Option is made;
“Option” The right to subscribe for Shares granted or to be granted to aGroup Employee and Non-Executive Director pursuant to theESOS and for the time being subsisting;
“Option Period” The period for the exercise of an Option as determined pursuant toRule 11;
“Participant” The holder of an Option who has satisfied the eligibility criteria ofthese Rules;
“Record Date” The date as at the close of business on which the Shareholdersmust be registered in order to participate in any dividends, rights,allotments or other distributions;
“Rules” Rules of the SHHM Employee Share Option Scheme;
“S$” Singapore Dollars;
“Securities Account” The securities account maintained by a Depositor with CDP;
“Shareholders” Registered holders of Shares, except where the registered holderis CDP, the term “Shareholders” shall, in relation to such Shares,mean the Depositors whose Securities Accounts are credited withShares;
“Shares” Ordinary shares in the capital of the Company;
“Subsidiaries” Companies which are for the time being subsidiaries of theCompany as defined by Section 5 of the Act; and “Subsidiary”means each of them;
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“SGX-ST” Singapore Exchange Securities Trading Limited; and
“Trading Day” A day on which the Shares are traded on the SGX-ST.
2.2 The terms “Depositor”, “Depository Register” and “Depository Agent” shall have the meaningsascribed to it by Section 130A of the Act and the term “associate” shall have the meaning ascribedto it by the Listing Manual or any other publication prescribing rules or regulations for corporationsadmitted to the Official List of the SGX-ST (as modified, supplemented or amended from time totime).
2.3 Words importing the singular number shall, where applicable, include the plural number and viceversa. Words importing the masculine gender shall, where applicable, include the feminine andneuter gender.
2.4 Any reference to a time of a day in the ESOS is a reference to Singapore time.
2.5 Any reference in the ESOS to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word defined under the Act or any statutory modification thereof andused in the ESOS shall have the meaning assigned to it under the Act.
3. OBJECTIVES OF THE ESOS
The ESOS will provide an opportunity for Participants who have contributed significantly to thegrowth and performance of the Group and who satisfy the eligibility criteria as set out in Rule 4 ofthe ESOS, to participate in the equity of the Company.
The ESOS is primarily a share incentive scheme. It recognises the fact that the services of suchParticipants are important to the success and continued well-being of the Group. Implementation ofthe ESOS will enable the Company to give recognition to the contributions made by suchParticipants. At the same time, it will give such Participants an opportunity to have a direct interestin the Company at no direct cost to its profitability and will also help to achieve the followingpositive objectives:
(a) to motivate Participants to optimise their performance standards and efficiency and tomaintain a high level of contribution to the Group;
(b) to retain key employees and Executive Directors of the Group whose contributions areessential to the long-term growth and profitability of the Group;
(c) to instil loyalty to, and a stronger identification by the Participants with the long-termprosperity of the Group;
(d) to attract potential employees with relevant skills to contribute to the Group and to createvalue for the Shareholders; and
(e) to align the interests of the Participants with the interests of the Shareholders.
4. ELIGIBILITY OF PARTICIPANTS
4.1 Confirmed Group Employees and Non-Executive Directors who have attained the age of twenty-one (21) years on or prior to the relevant Offer Date and are not undischarged bankrupts and havenot entered into a composition with their respective creditors, shall be eligible to participate in theESOS at the absolute discretion of the Committee.
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4.2 Controlling Shareholders and their associates who are confirmed Group Employees or are Non-Executive Directors and meet the eligibility criteria in Rule 4.1 and who have contributed to thesuccess and development of the Group are, subject to the absolute discretion of the Committee,eligible to participate in the ESOS provided that the participation by and actual number and termsof any Options to be granted to each such Controlling Shareholder or his associate and each grantof Options to any one of them may be effected only with a specific prior approval of independentShareholders at a general meeting in separate resolutions. The Company will at such time providethe rationale and justification for any proposal to grant the Controlling Shareholders and/or theirassociates any Options.
4.3 There will be no restriction on the eligibility of any Participant to participate in any other shareoption or share incentive schemes implemented by the Company or any other companies withinthe Group.
4.4 Subject to the Act and any requirement of the SGX-ST, the terms of eligibility for participation inthe ESOS may be amended from time to time at the absolute discretion of the Committee, whichwould be exercised judiciously.
5. MAXIMUM ENTITLEMENT
Subject to Rule 4 and Rule 10, the aggregate number of Shares in respect of which Options maybe offered to a Grantee for subscription in accordance with the ESOS shall be determined at theabsolute discretion of the Committee who shall take into account in respect of a Group Employee,criteria such as rank, past performance, years of service and potential development of theParticipant and in respect of a Non-Executive Director, his contribution to the success anddevelopment of the Group.
6. LIMITATION ON SIZE OF THE ESOS
6.1 The aggregate number of Shares over which the Committee may grant Options on any date, whenadded to the number of Shares issued and issuable in respect of (i) all Options granted under theESOS and (ii) all awards granted under any other share option, share incentive, performance shareor restricted share plan implemented by the Company and for the time being in force shall notexceed 15.0% of the issued shares of the Company (excluding treasury shares) on the dayimmediately preceding the Offer Date of the Option.
6.2 The aggregate number of Shares issued and issuable in respect of all Options granted under theESOS available to all Controlling Shareholders and their associates must not exceed 25.0% of theShares available under the ESOS.
6.3 The number of shares issued and issuable in respect of all Options granted under the ESOSavailable to each of the Controlling Shareholders or their associates must not exceed 10.0% of theShares available under the ESOS.
7. OFFER DATE
7.1 The Committee may, save as provided in Rule 4, Rule 5 and Rule 6, offer to grant Options to suchGrantees as it may select in its absolute discretion at any time during the period when the ESOS isin force, except that no Option shall be granted during the period of thirty (30) days immediatelypreceding the date of announcement of the Company’s interim and/or final results (whichever thecase may be). In addition, in the event that an announcement on any matter of an exceptionalnature involving unpublished price sensitive information is made, offers to grant Options may onlybe made on or after the second Market Day on which such announcement is released.
7.2 An offer to grant the Option to a Grantee shall be made by way of a letter (the “Letter of Offer’’) inthe form or substantially in the form set out in Schedule A, subject to such amendments as theCommittee may determine from time to time.
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8. ACCEPTANCE OF OPTION
8.1 An Option offered to a Grantee pursuant to Rule 7 may only be accepted by the Grantee withinthirty (30) days after the relevant Offer Date and not later than 5.00 p.m. on the thirtieth (30th) dayfrom such Offer Date (a) by completing, signing and returning to the Company the AcceptanceForm in or substantially in the form set out in Schedule B, subject to such modification as theCommittee may from time to time determine, accompanied by payment of S$1.00 as considerationand (b) if, at the date on which the Company receives from the Grantee the Acceptance Form inrespect of the Option as aforesaid, the Grantee remains eligible to participate in the ESOS inaccordance with these Rules.
8.2 If a grant of an Option is not accepted strictly in the manner as provided in this Rule 8, such offershall, upon the expiry of the thirty (30) day period, automatically lapse and shall forthwith bedeemed to be null and void and be of no effect.
8.3 The Company shall be entitled to reject any purported acceptance of a grant of an Option madepursuant to this Rule 8 or Exercise Notice given pursuant to Rule 12 which does not strictly complywith the terms of the ESOS.
8.4 Options are personal to the Grantees to whom they are granted and shall not be sold, mortgaged,transferred, charged, assigned, pledged or otherwise disposed of or encumbered in whole or inpart or in any way whatsoever without the Committee’s prior written approval, but may be exercisedby the Grantee’s duly appointed personal representative as provided in Rule 11.6 in the event ofthe death of such Grantee.
8.5 The Grantee may accept or refuse the whole or part of the offer. If only part of the offer isaccepted, the Grantee shall accept the offer in multiples of 1,000 Shares.
8.6 In the event that a grant of an Option results in a contravention of any applicable law or regulation,such grant shall be null and void and be of no effect and the relevant Participant shall have noclaim whatsoever against the Company.
8.7 Unless the Committee determines otherwise, an Option shall automatically lapse and become null,void and of no effect and shall not be capable of acceptance if:
(a) it is not accepted in the manner as provided in Rule 8.1 within the thirty (30) days period; or
(b) the Grantee dies prior to his acceptance of the Option; or
(c) the Grantee is adjudicated a bankrupt or enters into composition with his creditors prior tohis acceptance of the Option; or
(d) the Grantee, being a Group Employee, ceases to be in the employment of the Group, orbeing a Non-Executive Director, ceases to be a Director of the Company and/or itsSubsidiaries, or being an Executive Director, ceases to be a Group Employee and Directorof the Company and/or its Subsidiaries, in each case, for any reason whatsoever prior to hisacceptance of the Option; or
(e) the Company is liquidated or wound-up prior to the Grantee’s acceptance of the Option.
9. EXERCISE PRICE
9.1 Subject to any adjustment pursuant to Rule 10, the Exercise Price for each Share in respect ofwhich an Option is exercisable shall be determined by the Committee, in its absolute discretion, onthe Date of Grant, at:
(a) a price equal to the Market Price; or
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(b) a price which is set at a discount to the Market Price, provided that:
(i) the maximum discount shall not exceed 20.0% of the Market Price (or such otherpercentage or amount as may be determined by the Committee and permitted by theSGX-ST); and
(ii) the Shareholders in general meeting shall have authorised, in a separate resolution,the making of offers and grants of Options under the ESOS at a discount notexceeding the maximum discount as aforesaid.
9.2 In making any determination under Rule 9.1(b) on whether to give a discount and the quantum ofsuch discount, the Committee shall be at liberty to take into consideration such criteria as theCommittee may, at its absolute discretion, deem appropriate, including but not limited to:
(a) the performance of the Company, the Group and/or its Subsidiaries, as the case may be;
(b) the years of service and individual performance of the eligible Group Employee or Non-Executive Director;
(c) the contribution of the eligible Group Employee or Non-Executive Director to the successand development of the Company and/or the Group; and
(d) the prevailing market conditions.
10. ALTERATION OF CAPITAL
10.1 If a variation in the issued share capital of the Company (whether by way of a capitalisation ofprofits or reserves or rights issue or reduction (including any reduction arising by reason of theCompany purchasing or acquiring its issued Shares), subdivision, consolidation or distribution, orotherwise howsoever) should take place, then:
(a) the Exercise Price in respect of the Shares, class and/or number of Shares comprised in theOptions to the extent unexercised and the rights attached thereto; and/or
(b) the class and/or number of Shares in respect of which additional Options may be granted toParticipants,
may be adjusted in such manner as the Committee may determine to be appropriate includingretrospective adjustments where such variation occurs after the date of exercise of an Option butthe Record Date relating to such variation precedes such date of exercise and, except in relation toa capitalisation issue, upon the written confirmation of the Auditors (acting only as experts and notas arbitrators), that in their opinion, such adjustment is fair and reasonable.
10.2 Notwithstanding the provisions of Rule 10.1 above, no such adjustment shall be made (a) if as aresult, the Participant receives a benefit that a Shareholder does not receive; and (b) unless theCommittee after considering all relevant circumstances considers it equitable to do so.
10.3 Unless the Committee considers adjustment to be appropriate:
(a) the issue of securities as consideration for an acquisition or a private placement of securitiesby the Company; or
(b) the cancellation of issued Shares purchased or acquired by the Company by way of amarket purchase of such Shares undertaken by the Company on the SGX-ST during theperiod when a share purchase mandate granted by the Shareholders (including any renewalof such mandate) is in force,
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shall not normally be regarded as a circumstance requiring adjustment under the provisions of thisRule 10.
10.4 The restriction on the number of Shares to be offered to any Grantee under Rule 5 above, shall notapply to the number of additional Shares or Options over additional Shares issued by virtue of anyadjustment to the number of Shares and/or Options pursuant to this Rule 10.
10.5 Upon any adjustment required to be made, the Company shall notify each Participant (or his dulyappointed personal representative(s)) in writing and deliver to him (or, where applicable, his dulyappointed personal representative(s)) a statement setting forth the new Exercise Price thereafter ineffect, class and/or number of Shares thereafter comprised in the Option so far as unexercised.Any adjustment shall take effect upon such written notification being given.
11. OPTION PERIOD
11.1 Options granted with the Exercise Price set at Market Price shall only be exercisable, in whole or inpart (provided that an Option may be exercised in part only in respect of 1,000 Shares or anymultiple thereof), at any time, by a Participant after the first anniversary of the Offer Date of thatOption, Provided Always that the Options shall be exercised before the tenth anniversary of therelevant Offer Date for all other Participants except for our non-executive directors and independentdirectors whose Options shall be exercised before the fifth anniversary of the relevant Offer Date,or such earlier date as may be determined by the Committee, failing which all unexercised Optionsshall immediately lapse and become null and void and a Participant shall have no claim against theCompany.
11.2 Options granted with the Exercise Price set at a discount to Market Price shall only be exercisable,in whole or in part (provided that an Option may be exercised in part only in respect of 1,000Shares or any multiple thereof), at any time, by a Participant after the second anniversary from theOffer Date of that Option, Provided always that the Options shall be exercised before the tenthanniversary of the relevant Offer Datefor all other Participants except for our non-executivedirectors and independent directors whose Options shall be exercised before the fifth anniversaryof the relevant Offer Date, or such earlier date as may be determined by the Committee, failingwhich all unexercised Options shall immediately lapse and become null and void and a Participantshall have no claim against the Company.
11.3 An Option shall, to the extent unexercised, immediately lapse and become null and void and aParticipant shall have no claim against the Company:
(a) subject to Rules 11.4, 11.5 and 11.6, upon the Participant ceasing to be in the employmentof the Company or any of the companies within the Group for any reason whatsoever; or
(b) upon a Participant, being a Non-Executive Director, ceasing to be a Director of the Companyand/or the relevant Subsidiary as the case may be, for any reason whatsoever; or
(c) upon the bankruptcy of the Participant or the happening of any other event which result inhis being deprived of the legal or beneficial ownership of such Option; or
(d) in the event of misconduct on the part of the Participant, as determined by the Committee inits absolute discretion.
For the purpose of Rule 11.4(a), a Participant shall be deemed to have ceased to be so employedwith the Group and/or the Company as at the date the notice of termination of employment istendered by or is given to him, unless such notice shall be withdrawn prior to its effective date.
11.4 If a Participant ceases to be employed by the Group by reason of his:
(a) ill health, injury or disability, in each case, as certified by a medical practitioner approved bythe Committee;
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(b) redundancy;
(c) retirement at or after a normal retirement age; or
(d) retirement before that age with the consent of the Committee,
or for any other reason approved in writing by the Committee, he may, at the absolute discretion ofthe Committee exercise any unexercised Option within the relevant Option Period and upon theexpiry of such period, the Option shall immediately lapse and become null and void.
11.5 If a Participant ceases to be employed by a Subsidiary:
(a) by reason of the Subsidiary, by which he is principally employed ceasing to be a companywithin the Group or the undertaking or part of the undertaking of such Subsidiary, beingtransferred otherwise than to another company within the Group; or
(b) for any other reason, provided the Committee gives its consent in writing, he may, at theabsolute discretion of the Committee, exercise any unexercised Options within the relevantOption Period and upon the expiry of such period, the Option shall immediately lapse andbecome null and void.
11.6 If a Participant dies and at the date of his death holds any unexercised Option, such Option may, atthe absolute discretion of the Committee, be exercised by the duly appointed legal personalrepresentatives of the Participant within the relevant Option Period and upon the expiry of suchperiod, the Option shall immediately lapse and become null and void.
11.7 If a Participant, who is also an Executive Director, ceases to be a Director for any reasonwhatsoever, he may, at the absolute discretion of the Committee, exercise any unexercised Optionwithin the relevant Option Period and upon the expiry of such period, the Option shall immediatelylapse and become null and void.
12. EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES
12.1 An Option may be exercised, in whole or in part (provided that an Option may be exercised in partonly in respect of 1,000 Shares or any multiple thereof), by a Participant giving notice in writing tothe Company in or substantially in the form set out in Schedule C (the “Exercise Notice”), subjectto such amendments as the Committee may from time to time determine. Every Exercise Noticemust be accompanied by a remittance for the full amount of the aggregate Exercise Price inrespect of the Shares which have been exercised under the Option, the relevant CDP charges (ifany) and any other documentation the Committee may require. All payments shall be made bycheque, cashier’s order, bank draft or postal order made out in favour of the Company or suchother mode of payment as may be acceptable to the Company. An Option shall be deemed to beexercised upon the receipt by the Company of the abovementioned Notice duly completed and thereceipt by the Company of the full amount of the aggregate Exercise Price in respect of the Shareswhich have been exercised under the Option.
12.2 Subject to:
(a) such consents or other actions required by any competent authority under any regulations orenactments for the time being in force as may be necessary (including any approvalsrequired from the SGX-ST); and
(b) compliance with the Rules, the Memorandum and Articles of Association of the Company,the Company shall, as soon as practicable after the exercise of an Option by a Participantbut in any event within ten (10) Market Days after the date of the exercise of the Option inaccordance with Rule 12.1, allot the Shares in respect of which such Option has been
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exercised by the Participant and within five (5) Market Days from the date of such allotment,despatch the relevant share certificates to CDP for the credit of the Securities Account ofthat Participant by ordinary post or such other mode of delivery as the Committee may deemfit.
12.3 The Company shall, if necessary, as soon as practicable after the exercise of an Option, apply tothe SGX-ST or any other stock exchange on which the Shares are quoted or listed for permissionto deal in and for quotation of the Shares which may be issued upon exercise of the Option andthe Shares (if any) which may be issued to the Participant pursuant to any adjustments made inaccordance with Rule 10.
12.4 Shares which are all allotted on the exercise of an Option by a Participant shall be issued, as theParticipant may elect, in the name of CDP to the credit of the Securities Account of the Participantmaintained with CDP or the Participant’s securities sub-account with a CDP Depository Agent.
12.5 Shares allotted and issued upon the exercise of an Option shall be subject to all provisions of theMemorandum and Articles of Association of the Company and shall rank pari passu in all respectswith the then existing issued Shares in the capital of the Company except for any dividends, rights,allotments or other distributions, the Record Date for which is prior to the date such Option isexercised.
12.6 The Company shall keep available sufficient unissued Shares to satisfy the full exercise of allOptions for the time being remaining capable of being exercised.
13. MODIFICATIONS TO THE ESOS
13.1 Any or all the provisions of the ESOS may be modified and/or altered at any time and from time totime by resolution of the Committee, except that:
(a) any modification or alteration which shall alter adversely the rights attaching to any Optiongranted prior to such modification or alteration and which in the opinion of the Committee,materially alters the rights attaching to any Option granted prior to such modification oralteration may only be made with the consent in writing of such number of Participants who,if they exercised their Options in full, would thereby become entitled to not less than three-quarters (3/4) of the aggregate number of all the Shares which would fall to be allotted uponexercise in full of all outstanding Options;
(b) any modification or alteration which would be to the advantage of Participants under theESOS shall be subject to the prior approval of the Shareholders in general meeting; and
(c) no modification or alteration shall be made without the prior approval of the SGX-ST or (ifrequired) any other stock exchange on which the Shares are quoted and listed, and suchother regulatory authorities as may be necessary.
For the purposes of Rule 13.1(a), the opinion of the Committee as to whether any modification oralteration would alter adversely the rights attaching to any Option shall be final and conclusive.
13.2 Notwithstanding anything to the contrary contained in Rule 13.1, the Committee may at any timeby resolution (and without other formality, save for the prior approval of the SGX-ST) amend oralter the ESOS in any way to the extent necessary to cause the ESOS to comply with anystatutory provision or the provision or the regulations of any regulatory or other relevant authorityor body (including the SGX-ST).
13.3 Written notice of any modification or alteration made in accordance with this Rule 13 shall be givento all Participants.
14. DURATION OF THE ESOS
14.1 The ESOS shall continue to be in force at the discretion of the Committee, subject to a maximumperiod of ten (10) years, commencing on the date on which the ESOS is adopted by Shareholders.Subject to compliance with any applicable laws and regulations in Singapore, the ESOS may becontinued beyond the above stipulated period with the approval of the Shareholders by ordinaryresolution at a general meeting and of any relevant authorities which may then be required.
14.2 The ESOS may be terminated at any time by the Committee or by resolution of the Shareholdersat a general meeting subject to all other relevant approvals which may be required and if the ESOSis so terminated, no further Options shall be offered by the Company hereunder.
14.3 The termination, discontinuance or expiry of the ESOS shall be without prejudice to the rightsaccrued to Options which have been granted and accepted as provided in Rule 8, whether suchOptions have been exercised (whether fully or partially) or not.
15. TAKE-OVER AND WINDING UP OF THE COMPANY
15.1 In the event of a take-over offer being made for the Company, Participants (including Participantsholding Options which are then not exercisable pursuant to the provisions of Rules 11.1 and 11.2)holding Options as yet unexercised shall, notwithstanding Rules 11 and 12 but subject to Rule15.5, be entitled to exercise such Options in full or in part in the period commencing on the date onwhich such offer is made or, if such offer is conditional, the date on which the offer becomes or isdeclared unconditional, as the case may be, and ending on the earlier of:
(a) the expiry of six (6) months thereafter, unless prior to the expiry of such six (6) monthperiod, at the recommendation of the offeror and with the approvals of the Committee andthe SGX-ST, such expiry date is extended to a later date (being a date falling not later thanthe date of expiry of the Option Period relating thereto); or
(b) the date of the expiry of the Option Period relating thereto,
whereupon any Option then remaining unexercised shall immediately lapse and become null andvoid.
Provided Always that if during such period the offeror becomes entitled or bound to exercise therights of compulsory acquisition of the Shares under the provisions of the Act and, being entitled todo so, gives notice to the Participants that it intends to exercise such rights on a specified date, theOption shall remain exercisable by the Participants until such specified date or the expiry of theOption Period relating thereto, whichever is earlier. Any Option not so exercised by the saidspecified date shall lapse and become null and void.
Provided that the rights of acquisition or obligation to acquire stated in the notice shall have beenexercised or performed, as the case may be. If such rights of acquisition or obligations have notbeen exercised or performed, all Options shall, subject to Rule 11.3, remain exercisable until theexpiry of the Option Period.
15.2 If, under any applicable laws, the court sanctions a compromise or arrangement proposed for thepurposes of, or in connection with, a scheme for the reconstruction of the Company or itsamalgamation with another company or companies, Participants (including Participants holdingOptions which are then not exercisable pursuant to the provisions of Rule 11.1 and 11.2) shallnotwithstanding Rules 11 and 12 but subject to Rule 15.5, be entitled to exercise any Option thenheld by them during the period commencing on the date upon which the compromise orarrangement is sanctioned by the court and ending either on the expiry of sixty (60) days thereafteror the date upon which the compromise or arrangement becomes effective, whichever is later (butnot after the expiry of the Option Period relating thereto), whereupon any unexercised Option shalllapse and become null and void, Provided always that the date of exercise of any Option shall bebefore the tenth anniversary of the Offer Date.
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15.3 If an order or an effective resolution is passed for the winding up of the Company on the basis ofits insolvency, all Options, to the extent unexercised, shall lapse and become null and void.
15.4 In the event a notice is given by the Company to its members to convene a general meeting for thepurposes of considering and, if thought fit, approving a resolution to voluntarily wind-up theCompany, the Company shall on the same date as or soon after it dispatches such notice to eachmember of the Company give notice thereof to all Grantees (together with a notice of the existenceof the provision of this Rule 15.4) and thereupon, each Grantee (or his personal representative)shall be entitled to exercise all or any of his Options at any time not later than two business daysprior to the proposed general meeting of the Company by giving notice in writing to the Company,accompanied by a remittance for the aggregate Exercise Price whereupon the Company shall assoon as possible and in any event, no later than the business day immediately prior to the date ofthe proposed general meeting referred to above, allot the relevant Shares to the Grantee creditedas fully paid.
15.5 If in connection with the making of a general offer referred to in Rule 15.1 above or the schemereferred to in Rule 15.2 above or the winding up referred to in Rule 15.4 above, arrangements aremade (which are confirmed in writing by the Auditors, acting only as experts and not as arbitrators,to be fair and reasonable) for the compensation of Participants, whether by the continuation of theirOptions or the payment of cash or the grant of other options or otherwise, a Participant holding anOption, which is not then exercisable, may not, at the discretion of the Committee, be permitted toexercise that Option as provided for in this Rule 15.
15.6 To the extent that an Option is not exercised within the periods referred to in this Rule 15, it shalllapse and become null and void.
16. ADMINISTRATION OF THE ESOS
16.1 The ESOS shall be administered by the Committee in its absolute discretion with such powers andduties as are conferred on it by the Board.
16.2 The Committee shall have the power, from time to time, to make or vary such regulations (notbeing inconsistent with the ESOS) for the implementation and administration of the ESOS as itthinks fit.
16.3 Any decision of the Committee, made pursuant to any provision of the ESOS (other than a matterto be certified by the Auditors), shall be final and binding (including any decisions pertaining todisputes as to the interpretation of the ESOS or any rule, regulation, or procedure thereunder or asto any rights under the ESOS).
16.4 A Director, Controlling Shareholder or his associate who is a member of the Committee shall notbe involved in its deliberation in respect of Options to be granted to him.
17. NOTICES
17.1 Any notice given by a Participant to the Company shall be sent by post or delivered to theregistered office of the Company or such other address as may be notified by the Company to theParticipant in writing.
17.2 Any notice or documents given by the Company to a Participant shall be sent to the Participant byhand or sent to him at his home address stated in the records of the Company or the last knownaddress of the Participant, and if sent by post shall be deemed to have been given on the dayimmediately following the date of posting.
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18. TERMS OF EMPLOYMENT UNAFFECTED
18.1 The ESOS or any Option shall not form part of any contract of employment between the Companyor any Subsidiary (as the case may be) and any Participant and the rights and obligations of anyindividual under the terms of the office or employment with such company within the Group shallnot be affected by his participation in the ESOS or any right which he may have to participate in itor any Option which he may hold and the ESOS or any Option shall afford such an individual noadditional rights to compensation or damages in consequence of the termination of such office oremployment for any reason whatsoever.
18.2 The ESOS shall not confer on any person any legal or equitable rights (other than thoseconstituting the Options themselves) against the Company and/or any Subsidiary directly orindirectly or give rise to any cause of action at law or in equity against the Company or anySubsidiary.
19. TAXES
All taxes (including income tax) arising from the exercise of any Option granted to any Participantunder the ESOS shall be borne by that Participant.
20. COSTS AND EXPENSES OF THE ESOS
20.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issueand allotment of any Shares pursuant to the exercise of any Option in CDP’s name, the deposit ofshare certificate(s) with CDP, the Participant’s Securities Account with CDP, or the Participant’ssecurities sub-account with a Depository Agent or CPF investment account with a CPF agent bankand all taxes referred to in Rule 19 which shall be payable by the relevant Participant.
20.2 Save for such costs and expenses expressly provided in the ESOS to be payable by theParticipants, all fees, costs and expenses incurred by the Company in relation to the ESOSincluding but not limited to the fees, costs and expenses relating to the allotment and issue ofShares pursuant to the exercise of any Option shall be borne by the Company.
21. CONDITION OF OPTION
Every Option shall be subject to the condition that no Shares shall be issued pursuant to theexercise of an Option if such issue would be contrary to any law or enactment, or any rules orregulations of any legislative or non-legislative governing body for the time being in force inSingapore or any other relevant country having jurisdiction in relation to the issue of Shares hereto.
22. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained and subject to the Act, the Board, the Committeeand the Company shall not under any circumstances be held liable for any costs, losses, expensesand damages whatsoever and howsoever arising in respect of any matter under or in connectionwith the ESOS, including but not limited to the Company’s delay in allotting and issuing the Sharesor in applying for or procuring the listing of the Shares on the SGX-ST.
23. DISCLOSURE IN ANNUAL REPORT
The Company shall make the following disclosure in its annual report:
(a) The names of the members of the Committee;
(b) The information required in the table below for the following Participants (which for theavoidance of doubt, shall include Participants who have exercised all their Options in anyparticular financial year):
(i) participants who are Directors of the Company;
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(ii) participants who are Controlling Shareholders and their associates; and
(iii) participants, other than those in (i) and (ii) above who receive 5.0% or more of thetotal number of Options available under the ESOS.
Name of Options Aggregate Aggregate AggregateParticipant granted during Options Options Options
financial year granted since exercised since outstanding under review commencement commencement as at end of
(including of the ESOS to of the ESOS to financial year terms) end of financial end of financial under
year under year under reviewreview review
(c) (i) The names of and number and terms of Options granted to each director or employeeof the parent company and its subsidiaries who receives 5% or more of the totalnumber of Options available to all directors and employees of the parent company andits subsidiaries under the scheme, during the financial year under review; and
(ii) The aggregate number of Options granted to the directors and employees of theparent company and its subsidiaries for the financial year under review, and since thecommencement of the scheme to the end of the financial year under review.
(d) The number and proportion of Options granted at the following discounts to average marketvalue of the Shares in the financial year under review:
(i) Options granted at up to 10.0% discount; and
(ii) Options granted at between 10.0% but not more than 20.0% discount.
24. ABSTENTION FROM VOTING
Shareholders who are eligible to participate in the ESOS are to abstain from voting on anyresolution relating to the ESOS.
25. DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the Committee andits decision shall be final and binding in all respects.
26. GOVERNING LAW
The ESOS shall be governed by, and construed in accordance with, the laws of the Republic ofSingapore. The Participants, by accepting Options in accordance with the ESOS, and theCompany submit to the exclusive jurisdiction of the courts of the Republic of Singapore.
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Schedule A
SHHM EMPLOYEE SHARE OPTION SCHEME
LETTER OF OFFER
Serial No:
Date:
To: [Name][Designation][Address]
Private and Confidential
Dear Sir/Madam,
1. We have the pleasure of informing you that, pursuant to the SHHM Employee Share OptionScheme (“ESOS”), you have been nominated to participate in the ESOS by the Committee (the“Committee”) appointed by the Board of Directors of Sin Heng Heavy Machinery Limited (the“Company”) to administer the ESOS. Terms as defined in the ESOS shall have the same meaningwhen used in this letter.
2. Accordingly, in consideration of the payment of a sum of S$1.00, an offer is hereby made to grantyou an option (the “Option”), to subscribe for and be allotted Shares at theprice of S$ for each Share.
3. The Option is personal to you and shall not be transferred, charged, pledged, assigned orotherwise disposed of by you, in whole or in part, except with the prior approval of the Committee.
4. The Option shall be subject to the terms of the ESOS, a copy of which is available for inspection atthe business address of the Company.
5. If you wish to accept the offer of the Option on the terms of this letter, please sign and return theenclosed Acceptance Form with a sum of S$1.00 not later than 5.00 p.m. onfailing which this offer will lapse.
Yours faithfully,For and on behalf ofThe CommitteeSHHM Employee Share Option SchemeSin Heng Heavy Machinery Limited
Name:
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Schedule B
SHHM EMPLOYEE SHARE OPTION SCHEME
ACCEPTANCE FORM
Serial No:
Date:
To: The CommitteeSHHM Employee Share Option SchemeSin Heng Heavy Machinery Limited
Closing Date for Acceptance of Offer :
Number of Shares Offered :
Exercise Price for each Share : S$
Total Amount Payable : S$
I have read your Letter of Offer dated and agree to be bound by the terms of the Letterof Offer and ESOS referred to therein. Terms defined in your Letter of Offer shall have the samemeanings when used in this Acceptance Form.
I hereby accept the Option to subscribe for Shares at S$ for each Share.I enclose cash for S$1.00 in payment for the purchase of the Option/I authorise my employer to deductthe sum of S$1.00 from my salary in payment for the purchase of the Option.
I understand that I am not obliged to exercise the Option.
I confirm that my acceptance of the Option will not result in the contravention of any applicable law orregulation in relation to the ownership of shares in the Company or options to subscribe for such shares.
I agree to keep all information pertaining to the grant of the Option to me confidential.
I further acknowledge that you have not made any representation to induce me to accept the offer andthat the terms of the Letter of Offer and this Acceptance Form constitute the entire agreement betweenus relating to the offer.
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Please print in block letters
Name in full :
Designation :
Address :
Nationality :
*NRIC/Passport No. :
Signature :
Date :
Note:
* Delete accordingly
Schedule C
SHHM EMPLOYEE SHARE OPTION SCHEME
FORM OF EXERCISE OF OPTION
Total number of ordinary shares (the “Shares”) offeredat S$ for each Share (the “ExercisePrice”) under the ESOS on (Date ofGrant)
Number of Shares previously allotted thereunder
Outstanding balance of Shares to be allottedthereunder
Number of Shares now to be subscribed
To: The CommitteeSHHM Employee Share Option SchemeSin Heng Heavy Machinery Limited
1. Pursuant to your Letter of Offer dated and my acceptance thereof, I hereby exercisethe Option to subscribe for Shares in Sin Heng Heavy Machinery Limited (the“Company”) at S$ for each Share.
2. I enclose a *cheque/cashiers order/banker’s draft/postal order no. for S$by way of subscription for the total number of the said Shares.
3. I agree to subscribe for the said Shares subject to the terms of the Letter of Offer, the ESOS andthe Memorandum and Articles of Association of the Company.
4. I declare that I am subscribing for the said Shares for myself and not as a nominee for any otherperson.
5. I request the Company to allot and issue the Shares in the name of The Central Depository (Pte)Limited (“CDP”) for credit of my *Securities Account with CDP/Sub-Account with the DepositoryAgent/CPF investment account with my Agent Bank specified below and I hereby agree to bearsuch fees or other charges as may be imposed by CDP in respect thereof.
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:
:
:
:
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Please print in block letters
Name in full :
Designation :
Address :
Nationality :
*NRIC/Passport No. :
*Direct Securities Account No. :
OR
*Sub Account No. :
Name of Depository Agent :
OR
*CPF Investment Account No. :
Name of Agent Bank :
Signature :
Date :
Note:
* Delete accordingly
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SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR COMPANY
The discussion below provides a summary of the principal objects of our Company as set out in ourMemorandum of Association and certain provisions of our Articles of Association and the laws ofSingapore. This discussion is only a summary and is qualified by reference to Singapore law and ourMemorandum and Articles of Association.
Memorandum of Association and Registration Number
We are registered in Singapore with the Registrar of Companies and Businesses. Our Companyregistration number is 198101305R. Our Memorandum of Association sets out the objects for which ourCompany was formed, including carrying on business as, inter alia, an investment holding company.
Summary of our Articles of Association
1. Directors
(a) Ability of interested directors to vote
Article 87(2) A Director shall not vote in respect of any contract or proposed contract orarrangement in which he has directly or indirectly a personal materialinterest and if he shall do so his vote shall not be counted. Notwithstandinghis interest, a Director may be counted in the quorum present at anymeeting of the Directors.
(b) Remuneration
Article 84 The remuneration of the Directors shall from time to time be determined bythe Company in general meeting. Such remuneration shall not be increasedexcept pursuant to an ordinary resolution passed at a general meetingwhere notice of the proposed increase shall have been given in the noticeconvening the meeting. Such remuneration shall be divided amongst theDirectors in such proportions and in such manner as they may agree and indefault of agreement, equally, except that in the latter event any Director whoshall hold office for part only of the period in respect of which suchremuneration is payable shall be entitled to rank in such division for theproportion of the remuneration related to the period during which he hasheld office.
Article 86 Any Director who is appointed to any executive office or serves on anycommittee or who otherwise performs or renders services which, in theopinion of the Directors, are outside his ordinary duties as a Director, maybe paid such remuneration as the Directors may determine but suchremuneration shall not include a commission on or a percentage of turnover.Fees payable to a non-executive Director shall be by a fixed sum and not bya commission on or percentage of profits or turnover. No Director shall beremunerated by a commission on or percentage of turnover.
(c) Borrowing
Article 101 The Directors may exercise all the powers of the Company to borrow moneyand to mortgage or charge its undertaking, property and uncalled capital, orany part thereof, and to issue debentures and other securities whetheroutright or as security for any debt, liability, or obligation of the Company orof any third party.
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2. Share rights and restrictions
We currently have one class of shares namely, ordinary shares.
Article 5(3) Without prejudice to any special rights or privileges attached to any thenexisting shares in the capital of the Company, any shares may be issuedupon such terms and conditions, and with such rights and privilegesattached thereto, as the Company by special resolution may direct or, if nosuch direction be given, as the Directors shall determine, and in particularsuch shares may be issued with preferential, qualified or deferred right todividends and in the distribution of assets of the Company, and with aspecial or restricted right of voting, and any preference share may be issuedon the terms that it is, or at the option of the Company, liable to beredeemed.
Article 8 Subject to Article 7 and such limitation thereof as may be prescribed by theStock Exchange, further preference shares ranking equally with, or in priorityto preference shares already issued may be issued by the Company.Preference shareholders shall have the same rights as ordinaryshareholders as regards receiving notices, reports and balance sheets, andattending general meetings of the Company. The repayment of preferencecapital other than redeemable preference capital, or alteration of preferenceshareholders’ rights, may only be made pursuant to a special resolution ofthe preference shareholders concerned, provided always that where thenecessary majority for such a special resolution is not obtainable at themeeting, consent in writing if obtained from the holders of three-fourths ofthe issued shares of the class concerned within two months of the meetingshall be as valid and effectual as a special resolution carried at the meeting.Preference shareholders shall also have the right to vote at any meetingconvened for the purpose of reducing the capital, or winding up, orsanctioning a sale of the undertaking of the Company, or where theproposition to be submitted to the meeting directly affects their rights andprivileges, or when the dividend on the preference shares is in arrears formore than six months.
Article 26 No member shall be entitled to receive any dividend or to be present or voteat any meeting or upon a poll, or to exercise any privilege as a member untilhe shall have paid all calls for the time being due and payable on everyshare held by him, whether alone or jointly with any other person, togetherwith interest and expenses (if any).
Transferability of Our Shares
Article 29 Subject to these Articles, any member may transfer all or any of his shares.Every transfer must be in writing and in the usual form or in any formapproved by the Directors and by the Stock Exchange. The instrument oftransfer of a share shall be signed by or on behalf of both the transferor andthe transferee, and by the witness or witnesses thereto, provided that aninstrument of transfer in respect of which the transferee is the Depositoryshall be effective although not signed or witnessed by or on behalf of theDepository. The transferor shall be deemed to remain the holder of the shareuntil the name of the transferee is entered in the Register of Members inrespect thereof. Shares of different classes shall not be comprised in thesame instrument of transfer.
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Article 31 The Directors may decline to register any transfer of shares not being fullypaid shares to a person not approved by them and may also decline toregister any transfer of shares on which the Company has a lien. Save asaforesaid or where required by law or by the rules, bye-laws or listing rulesof the Stock Exchange, there shall be no restriction on the transfer of fullypaid-up shares.
Article 32 The Directors may decline to accept any instrument of transfer unless:-
(a) such fee not exceeding S$2.00 as the Directors may from time to timedetermine is paid to the Company in respect thereof;
(b) the instrument of transfer is duly stamped in accordance with any lawfor the time being in force relating to stamp duty;
(c) the instrument of transfer is deposited at the office or at such otherplace (if any) as the Directors may appoint accompanied by acertificate of payment of stamp duty (if any), the certificates of theshares to which the transfer relates and such other evidence as theDirectors may reasonably require to show the right of the transferor tomake the transfer and, if the instrument of transfer is executed bysome other person on his behalf, the authority of the person so to do;and
(d) such fee not exceeding S$2.00 as the Directors may from time to timedetermine is paid to the Company in respect of the registration of anyprobate, letters of administration, certificate of marriage or death,power of attorney or any document relating to or affecting the title tothe shares.
Article 34 The Directors shall refuse to register the transfer of any share:-
(a) if the share has not been fully paid or is subject to a lien; or
(b) if the provisions of these Articles relating to the transfer of shareshave not been complied with.
Voting Rights
Article 72 Every member (other than a holder of treasury shares) shall be entitled tobe present and to vote at any general meeting either personally or by proxyin respect of any shares upon which all calls due to the Company have beenpaid.
Article 73 Subject to any rights or restrictions for the time being attached to any classor classes of shares, at a meeting of members or classes of members eachmember entitled to vote may vote in person or by proxy or by attorney. On ashow of hands every member present in person or by proxy shall have onevote. Subject to any rights or restrictions for the time being attached to anyclass or classes of shares, on a poll every member present in person or byproxy shall have one vote for each share he holds.
For the purpose of determining the number of votes which a member, beinga Depositor, or his proxy may cast at any general meeting on a poll, thereference to shares held or represented shall, in relation to shares of thatDepositor, be the number of shares entered against his name in theDepository Register as at 48 hours before the time of the relevant generalmeeting as supplied by the Depository to the Company.
Article 75 In the case of joint holders, any one of such persons may vote, but if morethan one of such persons shall be present at a meeting, the person whosename stands first on the Register of Members (as the case may be) theDepository Register shall alone be entitled to vote.
Variation of Rights of Existing Shares or Classes of Shares
Article 6 Subject to Article 8, if at any time the share capital is divided into differentclasses of shares, the rights attached to any class (unless otherwiseprovided by the terms of issue of the shares of that class) may, whether ornot the Company is being wound up, be varied with the consent in writing ofthe holders of three-fourths of the issued shares of that class, or with thesanction of a special resolution passed at a separate general meeting of theholders of the shares of the class. To every such separate general meetingthe provisions of these Articles relating to general meetings shall mutatismutandis apply, but so that the necessary quorum shall be two persons atleast holding or representing by proxy one-third of the issued shares of theclass and that any holder of shares of the class present in person or byproxy may demand a poll. Provided always that where the necessarymajority for such a special resolution is not obtained at the meeting, consentin writing if obtained from the holders of three-fourths of the issued shares ofthe class concerned within two months of the meeting shall be as valid andeffectual as a special resolution carried at the meeting.
Article 7 The rights conferred upon the holder of the shares of any class issued withpreferred or other rights shall, so far as they are not expressed in theseArticles, be expressed with necessary amendments to these Articles.Furthermore, unless otherwise expressly provided by the terms of issue ofthe shares of that class, those aforesaid rights shall be deemed to be variedby the creation or issue of further shares ranking equally with, or in priorityto such shares.
Limitations on the Right to Own Shares
Article 13 Except as required by law, no person shall be recognised by the Companyas holding any share upon any trust, and the Company shall not be boundby or be compelled in any way to recognise (even when having noticethereof) any equitable, contingent, future or partial interest in any share orunit of a share or (except only as by these Articles or by law otherwiseprovided) any other rights in respect of any share except an absolute right tothe entirety thereof in the registered holder thereof or (as the case may be)the person whose name is entered in the Depository Register in respect ofthat share.
(a) Dividends and distribution
Dividend Entitlements
Article 133 The Company in general meeting may declare dividends, but no dividendshall exceed the amount recommended by the Directors.
Article 134 The Directors may from time to time pay to the members such interimdividends as appear to the Directors to be justified by the profits of theCompany.
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Article 135(1) The dividends, interest and bonuses and any other benefits and advantagesin the nature of income receivable in respect of the Company’s investments,and any commissions, trusteeship, agency, transfer and other fees andcurrent receipts of the Company shall, subject to the payment thereout of theexpenses of management, interest upon borrowed money and otherexpenses which in the opinion of the Directors are of a revenue nature,constitute the profits of the Company available for dividend.
Article 135(2) Appreciations of capital assets, investments and realised profits resulting ina sale of capital assets or investments (except so far as representing interestor dividend accrued and unpaid) shall either be carried to the credit ofcapital reserve or shall be applied in providing for depreciation orcontingencies or for writing down the value of the assets. It is expresslydeclared that in ascertaining the profits of the Company available fordividend it shall not be necessary to make good any losses or depreciationin value of any of the Company’s investments or any other assets of theCompany except circulating capital.
Article 136 The Directors may, before recommending any dividend, set aside out of theprofits of the Company such sums as they think proper as reserves whichshall, at the discretion of the Directors, be applicable for any purpose towhich the profits of the Company may be properly applied. The Directorsmay divide the reserve into such special funds as they think fit and mayconsolidate into one fund any special funds or any part of any special fundsinto which the reserve may have been divided. The Directors may also,without placing the same to reserve, carry forward any profits. In carryingsums to reserve and in applying the same, the Directors shall comply withthe provisions of the Statutes.
Article 137 Subject to the rights or restrictions attached to any shares or class of sharesand except as otherwise permitted under the Act:
(a) all dividends in respect of shares shall be declared and paidaccording to the number of shares held by a member but whereshares are partly paid all dividends must be apportioned and paidproportionately to the amounts paid or credited as paid on the partlypaid shares; and
(b) all dividends shall be apportioned and paid proportionately to theamounts paid or credited as paid on the shares during any portion orportions of the period in respect of which the dividend is paid; but ifany share is issued on terms providing that it shall rank for dividendas from a particular date that share shall rank for dividend accordingly.
For the purposes of this Article, an amount paid or credited as paid on ashare in advance of a call is to be ignored.
Article 139 Any general meeting declaring a dividend or bonus may direct payment ofsuch dividend or bonus wholly or partly by the distribution of specific assetsand in particular of paid-up shares, debentures or debenture stock of anyother company or in any one or more of such ways and the Directors shallgive effect to such resolution, and where any difficulty arises in regard tosuch distribution, the Directors may settle the same as they think expedient,and fix the value for distribution of such specific assets or any part thereofand may determine that cash payments shall be made to any membersupon the footing of the value so fixed in order to adjust the rights of allparties, and may vest any such specific assets in trustees as may seemexpedient to the Directors.
APPENDIX E
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APPENDIX E
E-6
Article 141 A transfer of a share shall not pass the right to any dividend declared inrespect thereof before the transfer has been registered.
3. Change in capital
Article 53 The Company may from time to time by ordinary resolution do one or moreof the following:-
(a) increase the share capital by such sum to be divided into shares ofsuch amount as the resolution shall prescribe;
(b) consolidate and divide all or any of its share capital into shares oflarger amount than its existing shares;
(c) subdivide its shares or any of them into shares of a smaller amountthan is fixed by the Memorandum provided that the proportionbetween the amount paid and the amount (if any) unpaid on eachreduced share shall be the same as it was in the case of the sharefrom which the reduced share is derived;
(d) subject to the provisions of these Articles and the Act, convert anyclass of shares into any other class of shares; and
(e) cancel shares which at the date of the passing of the resolutions inthat behalf have not been taken or agreed to be taken by any personor which have been forfeited and diminish the amount of its sharecapital by the amount of the shares so cancelled.
Article 54 Subject to any direction to the contrary that may be given by the Company inthe general meeting or except as permitted under the listing rules of theStock Exchange, all new shares shall, before issue, be offered to suchpersons who as at the date of the offer are entitled to receive notices fromthe Company of general meetings in proportion, as far as the circumstancesadmit, to the amount of the existing shares to which they are entitled. Theoffer shall be made by notice specifying the number of shares offered, andlimiting a time within which the offer, if not accepted, will be deemed to bedeclined. After the expiration of the aforesaid time or on the receipt of anintimation from the person to whom the offer is made that he declines toaccept the shares offered, the Directors may dispose of those shares in amanner as they think most beneficial to the Company. The Directors maylikewise dispose of any new shares which (by reason of the ratio which thenew shares bear to shares held by persons entitled to an offer of newshares) cannot, in the opinion of the Directors, be conveniently offered inaccordance with this Article.
Article 55 Notwithstanding Article 54 above, the Company may by ordinary resolutionin a general meeting, give to the Directors a general mandate, eitherconditionally or unconditionally to issue:-
(a) shares in the capital of the Company (whether by way of bonus, rightsor otherwise); or
(b) convertible securities;
(c) additional convertible securities arising from adjustments made to thenumber of convertible securities previously issued in the event ofrights, bonus or capitalisation issues; or
(d) shares arising from the conversion of convertible securities,
at any time and upon such terms and conditions and for such purpose asthe Directors may in their absolute discretion deem fit provided that:-
(a) the aggregate number of shares and convertible securities that maybe issued shall not be more than 50.0% of the issued share capital ofthe Company as at the date the general mandate is passed or suchother limit as may be prescribed by the Stock Exchange;
(b) the aggregate number of shares and convertible securities to beissued other than on a pro-rata basis to existing shareholders shall benot more than 20.0% of the issued share capital of the Company as atthe date the general mandate is passed or such other limit as may beprescribed by the Stock Exchange;
(c) for the purpose of determining the aggregate number of shares thatmay be issued under sub-paragraphs (a) and (b) above, thepercentage of issued share capital shall be calculated based on theissued share capital of the Company as at the date the generalmandate is passed after adjusting for new shares arising from theconversion of any convertible securities or exercise of any employeeoptions in issue as at the date the general mandate is passed and anysubsequent consolidation or subdivision of the Company’s shares; and
(d) unless earlier revoked or varied by the Company in general meeting,such authority shall continue in force only until the next annual generalmeeting or the date by which the next annual general meeting isrequired by law to be held, whichever is earlier.
Article 9 Subject to and in accordance with the provisions of the Act, the Companymay purchase or otherwise acquire shares issued by it on such terms as theCompany may think fit and in the manner prescribed by the Act. Unless aspermitted under Article 10 hereof, all shares repurchased by the Companyshall be deemed to be cancelled on purchase or acquisition by theCompany. In the cancellation of any share as aforesaid, the rights andprivileges attached to that share shall expire. In any other instance, theCompany may hold or deal with any such share so purchased or acquiredby it in such manner as may be permitted by, and in accordance with, theAct.
Article 10 The Company may hold or deal with its treasury shares in the mannerauthorised by, or prescribed pursuant to, the Act. The treasury shares shallhave no voting rights and shall not be entitled to any dividend or otherdistribution (whether in cash or otherwise) of the Company’s assets(including any distribution of assets to members on a winding up) that maybe made by the Company.
Article 56 The Company may by special resolution reduce its share capital in anymanner and subject to, any incident authorised, and consent required bylaw.
There are no limitations imposed by Singapore law or by our Articles ofAssociation on the rights of our shareholders who are regarded as non-residents of Singapore, to hold or vote their shares.
APPENDIX E
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APPENDIX E
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There is no shareholding qualification for Directors in our Articles ofAssociation.
There is no retirement age limit for Directors under our Articles ofAssociation. Section 153(1) of the Act, however, provides that no person ofor over the age of 70 years shall be appointed or act as a director of a publiccompany, unless he is appointed or reappointed as a director or authorisedto continue in office as a director by way of an ordinary resolution passed atan annual general meeting.
There is no provision in our Articles of Association which provides for anytime limit after which a dividend entitlement will lapse.
APPENDIX F
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TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND ACCEPTANCE
Applications are invited for the subscription of the Invitation Shares at the Invitation Price, subject to thefollowing terms and conditions:
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 INVITATION SHARES OR INTEGRALMULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF SHARES WILLBE REJECTED.
2. Your application for the Offer Shares may be made by way of the printed WHITE Offer SharesApplication Forms or by way of Automated Teller Machine (“ATMs”) belonging to the ParticipatingBanks (“ATM Electronic Application”) or the Internet Banking (“IB”) websites of the relevantParticipating Banks (“Internet Electronic Application”).
Application for the Placement Shares (other than the Internet Placement Shares and the ReservedShares) may only be made by way of the printed BLUE Placement Shares Application Forms, orsuch other forms of application as the Joint Issue Managers deem appropriate. Application for theInternet Placement Shares (also referred to as “Internet Electronic Application”) may only be madeby way of an Internet Electronic Application through the website of DBS Vickers Securities(Singapore) Pte. Ltd. (“DBS Vickers”) at http://www.dbsvonline.com if you have an internet tradingaccount with DBS Vickers. Internet Electronic Applications, both through the IB websites of therelevant Participating Banks and the internet website of DBS Vickers, shall, together with ATMElectronic Applications, be referred to as “Electronic Applications”. Applications for the ReservedShares may only be made by way of the printed PINK Reserved Shares Application Forms, orsuch other forms of application as the Joint Issue Managers deem appropriate.
YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE INVITATION SHARES.
3. You (not being an approved nominee company) are allowed to submit ONLY one applicationin your own name for:
(a) the Offer Shares by any one of the following:
� Offer Shares Application Form;� ATM Electronic Application; or� Internet Electronic Application, or
(b) the Placement Shares (other than the Reserved Shares) by any one of the following:
� Placement Shares Application Form;� Internet Electronic Application; or� such other forms of application as the Joint Issue Managers deem appropriate.
If more than one application is submitted for either the Offer Shares or the PlacementShares (other than the Reserved Shares), such separate applications shall be deemed to bemultiple applications and shall be rejected.
If you have made an application for the Placement Shares (other than the Reserved Shares),you should not make any application for the Offer Shares and vice versa. Such separateapplications shall be deemed to be multiple applications and shall be rejected.
APPENDIX F
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Joint or multiple applications shall be rejected. Persons submitting or procuring submissions ofmultiple share applications (whether for the Offer Shares, the Placement Shares or both the OfferShares and the Placement Shares) may be deemed to have committed an offence under the PenalCode (Chapter 224) of Singapore and the Securities and Futures Act (Chapter 289) of Singaporeand such applications may be referred to the relevant authorities for investigation. Multipleapplications or those appearing to be or suspected of being multiple applications (other than asprovided herein) will be liable to be rejected at the discretion of our Company and the Vendor.
An applicant who has made an application for the Reserved Shares using a Reserved SharesApplication Form may:
(a) submit one separate application for the Offer Shares in his own name either by way of anOffer Shares Application Form, an ATM Electronic Application or an Internet ElectronicApplication through the IB website of a Participating Bank; or
(b) submit one separate application for the Placement Shares (other than the Reserved Shares)by way of a Placement Shares Application Form or by way of an Internet ElectronicApplication through the website of DBS Vickers or such other forms of application as theJoint Issue Managers deem appropriate,
provided he adheres to the terms and conditions of this Prospectus. Such separate applicationswill not be treated as multiple applications.
4. Our Company and the Vendor will not accept applications from any person under the age of 18years, undischarged bankrupts, sole-proprietorships, partnerships, non-corporate bodies, jointSecurities Account holders of CDP and applicants whose addresses (furnished in their printedApplication Forms or, in the case of Electronic Applications, contained in the records of therelevant Participating Banks or DBS Vickers, as the case may be) bear post office box numbers.No person acting or purporting to act on behalf of a deceased person is allowed to apply under theSecurities Account with CDP in the deceased’s name at the time of application.
In addition, applicants who wish to subscribe for the Placement Shares through the website ofDBS Vickers:
(a) must not be corporations, sole-proprietorships, partnerships, or any other business entities;
(b) must be over the age of 18 years;
(c) must not be undischarged bankrupts;
(d) must apply for the Placement Shares in Singapore;
(e) must have a mailing address in Singapore; and
(f) must be customers who maintain trading accounts with DBS Vickers.
5. Our Company and the Vendor will not recognise the existence of a trust. Any application by atrustee or trustees must be made in his/their own name(s) and without qualification or, where theapplication is made by way of a printed Application Form by a nominee, in the name(s) of anapproved nominee company or approved nominee companies, in each case, after complying withparagraph 6 below.
6. OUR COMPANY AND THE VENDOR WILL ONLY ACCEPT NOMINEE APPLICATIONS FROMAPPROVED NOMINEE COMPANIES. Approved nominee companies are defined as banks,merchant banks, finance companies, insurance companies, licensed securities dealers inSingapore and nominee companies controlled by them. Applications made by nominees other thanapproved nominee companies will be rejected.
APPENDIX F
F-3
7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIESACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you donot have an existing Securities Account with CDP in your own name at the time of application, yourapplication will be rejected (if you apply by way of an Application Form) or you will not be able tocomplete your Electronic Application (if you apply by way of an Electronic Application). If you havean existing Securities Account but fail to provide your Securities Account number or provide anincorrect Securities Account number in section B of the Application Form or in your ElectronicApplication, as the case may be, your application is liable to be rejected. Subject to paragraph 8below, your application shall be rejected if your particulars such as name, NRIC/passport number,nationality, permanent residence status and CDP Securities Account number, provided in yourApplication Form, or in the case of an Electronic Application, contained in the records of therelevant Participating Bank or DBS Vickers at the time of your Electronic Application, as the casemay be, differ from those particulars in your Securities Account as maintained by CDP. If you havemore than one individual direct Securities Account with CDP, your application shall be rejected.
8. If your address as stated in the Application Form or, in the case of an ElectronicApplication, contained in the records of the relevant Participating Bank or DBS Vickers, asthe case may be, is different from the address registered with CDP, you must inform CDP ofyour updated address promptly, failing which the notification letter on successful allocationwill be sent to your address last registered with CDP.
9. Our Company and the Vendor reserve the right to reject any application which does not conformstrictly to the instructions set out in the Application Forms and this Prospectus or which does notcomply with the instructions for Electronic Applications or with the terms and conditions of thisProspectus or, in the case of an application by way of an Application Form, which is illegible,incomplete, incorrectly completed or which is accompanied by an improperly drawn up or improperform of remittance. Our Company and the Vendor further reserve the right to treat as valid anyapplications not completed or submitted or effected in all respects in accordance with theinstructions set out in the Application Forms and this Prospectus (including the instructions set outin the Electronic Applications), and also to present for payment or other processes all remittancesat any time after receipt and to have full access to all information relating to, or deriving from, suchremittances or the processing thereof.
10. Our Company and the Vendor reserve the right to reject or to accept, in whole or in part, or toscale down or to ballot any application, without assigning any reason therefor, and our Companyand the Vendor will not entertain any enquiry and/or correspondence on our decision except inrespect of applications which have been balloted but subsequently rejected where the reasons forsuch rejection will be provided to the Applicant. This right applies to applications made by way ofApplication Forms or such other forms of application as the Joint Issue Managers deemappropriate and by way of Electronic Applications. In deciding the basis of allotment and/orallocation, our Company and the Vendor will give due consideration to the desirability of allottingand/or allocating the Invitation Shares to a reasonable number of applicants with a view toestablishing an adequate market for the Shares.
11. Share certificates will be registered in the name of CDP or its nominee and will be forwarded onlyto CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after theclose of the Application List, a statement of account stating that your Securities Account has beencredited with the number of Invitation Shares allotted and/or allocated to you. This will be the onlyacknowledgment of application monies received and is not an acknowledgment by our Company orthe Vendor. You irrevocably authorise CDP to complete and sign on your behalf as transferee orrenouncee any instrument of transfer and/or other documents required for the issue or transfer ofthe Invitation Shares allotted and/or allocated to you. This authorisation applies to applicationsmade by way of printed Application Forms, or such other forms of application as the Joint IssueManagers may deem appropriate and by way of Electronic Applications.
APPENDIX F
F-4
12. In the event that not all the Offer Shares are validly applied for as at the close of the ApplicationList, that number of Offer Shares not applied for shall be made available to satisfy excessapplications for the Placement Shares to the extent that there are excess applications for thePlacement Shares as at the close of the Application List.
In the event that not all the Placement Shares are validly applied for as at the close of theApplication List, that number of Placement Shares not applied for shall be made available to satisfyexcess applications for Offer Shares to the extent that there are excess applications for the OfferShares as at the close of the Application List.
In the event that not all the Internet Placement Shares to be applied through the website of DBSVickers are validly applied for as at the close of the Application List, that number of InternetPlacement Shares not applied for shall be made available to satisfy excess applications for thePlacement Shares made by way of Placement Shares Application Forms or such other forms ofapplication as the Joint Issue Managers deem appropriate to the extent that there are excessapplications for such Placement Shares (excluding the Internet Placement Shares) as at the closeof the Application List or to satisfy excess applications for the Offer Shares to the extent that thereare excess applications for the Offer Shares as at the close of the Application List.
In the event that not all the Reserved Shares are validly applied for as at the close of theApplication List, the number of Reserved Shares not applied for shall be made available to satisfyexcess applications for the Placement Shares to the extent that there are excess applications forthe Placement Shares as at the close of the Application List or, in the event that not all thePlacement Shares are validly applied for as at the close of the Application List, to satisfy excessapplications made by members of the public for Offer Shares to the extent that there are excessapplications for Offer Shares as at the close of the Application List.
In the event of excess applications for the Offer Shares as at the close of the Application List andfull or excess applications for the Placement Shares (including Internet Placement Shares andReserved Shares) as at the close of the Application List, the successful applications for the OfferShares will be determined by ballot or otherwise as determined by our Directors, in consultationwith the Joint Issue Managers, and approved by the SGX-ST.
13. You irrevocably authorise CDP to disclose the outcome of your application, including the number ofOffer Shares allotted and/or allocated to you pursuant to your application, to our Company, theVendor, the Joint Issue Managers, the Underwriter, the Placement Agent, DBS Vickers and anyother parties so authorised by CDP, our Company, the Vendor, the Joint Issue Managers, theUnderwriter and/or the Placement Agent.
14. By completing and delivering an Application Form and, in the case of an ATM ElectronicApplication, by pressing the “Enter” or “OK” or “Confirm” or “Yes” key or any other relevant key onthe ATM or in the case of an Internet Electronic Application, by clicking “Submit” or “Continue” or“Yes” or “Confirm” or any other button on the IB website of the relevant Participating Bank or thewebsite of DBS Vickers in accordance with the provisions herein, you:
(a) irrevocably offer, agree and undertake to subscribe for and/or purchase the number ofInvitation Shares specified in your application (or such smaller number for which theapplication is accepted) at the Invitation Price for each Offer Share and agree that you willaccept such Invitation Shares as may be allotted and/or allocated to you, in each case onthe terms of, and subject to the conditions set out in, this Prospectus and the Memorandumand Articles of Association of our Company;
(b) agree that in the event of any inconsistency between the terms and conditions for applicationset out in this Prospectus and those set out in the website of DBS Vickers, or the IBwebsites or ATMs of the Participating Banks, the terms and conditions set out in thisProspectus shall prevail;
(c) agree that the aggregate Invitation Price for the Invitation Shares applied for is due andpayable to our Company and the Vendor upon application;
(d) warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by our Company and the Vendor indetermining whether to accept your application and/or whether to allot and/or allocate anyInvitation Shares to you; and
(e) agree and warrant that if the laws of any jurisdictions outside Singapore are applicable toyour application, you have complied with all such laws and none of our Company, theVendor, the Joint Issue Managers, the Underwriter and the Placement Agent will infringe anysuch laws as a result of the acceptance of your application.
15. Our acceptance of applications will be conditional upon, inter alia, our Company and the Vendorbeing satisfied that:
(a) permission has been granted by the SGX-ST to deal in, and for quotation of, the NewShares, all our existing Shares (including the Vendor Shares) and the ESOS Shares on theOfficial List of the SGX-ST;
(b) the Management Agreement, the Underwriting Agreement and the Placement Agreementreferred to in the section entitled “Management, Underwriting and Placement Arrangements”of this Prospectus have become unconditional and have not been terminated; and
(c) the Monetary Authority of Singapore (the “Authority”) has not served a stop order whichdirects that no or no further shares to which this Prospectus relates be allotted or issued(“Stop Order”).
16. In the event that a Stop Order in respect of the Invitation Shares is served by the Authority or othercompetent authority, and:
(a) the Invitation Shares have not been issued, our Company and the Vendor will (as requiredby law) deem all applications to have been withdrawn and cancelled and our Company andthe Vendor shall refund the application monies (without interest or any share of revenue orother benefit arising therefrom and at your own risk) to you within 14 days of the date of theStop Order; or
(b) if the Invitation Shares have already been issued but trading has not commenced, the issuewill (as required by law) be deemed void and our Company and the Vendor will refund yourpayment for the Invitation Shares (without interest or any share of revenue or other benefitarising therefrom and at your own risk) to you within 14 days from the date of the StopOrder.
This shall not apply where only an interim Stop Order has been served.
17. In the event that an interim Stop Order in respect of the Invitation Shares is served by the Authorityor other competent authority, no Invitation Shares shall be issued to you until the Authority revokesthe interim Stop Order.
18. The Authority is not able to serve a Stop Order in respect of the Invitation Shares if this Invitationhave been issued and listed on the SGX-ST and trading in them has commenced.
19. Our Company and the Vendor will not hold any application in reserve.
20. Our Company and the Vendor will not allot or allocate any Shares on the basis of this Prospectuslater than six months after the date of registration of this Prospectus by the Authority.
APPENDIX F
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APPENDIX F
F-6
21. Additional terms and conditions for applications by way of Application Forms are set out in thesection entitled “Additional Terms and Conditions for Applications Using Printed Application Forms”on pages F-6 to F-10 of this Prospectus.
22. Additional terms and conditions for applications by way of Electronic Applications are set out in thesection entitled “Additional Terms and Conditions for Electronic Applications” on pages F-10 to F-20 of this Prospectus.
23. Any reference to “you” or the “Applicant” in this section shall include an individual, a corporation, anapproved nominee company and trustee applying for the Offer Shares by way of an Offer SharesApplication Form or by way of an Electronic Application, a person applying for the PlacementShares by way of a Placement Shares Application Form or by way of an Electronic Application orsuch other forms of application as the Joint Issue Managers deem appropriate and a personapplying for the Reserved Shares by way of a Reserved Shares Application Form.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATIONFORMS
Applications by way of Application Forms shall be made on and subject to the terms andconditions of this Prospectus, including but not limited to the terms and conditions appearingbelow as well as those set out under the section entitled “TERMS, CONDITIONS ANDPROCEDURES FOR APPLICATION AND ACCEPTANCE” on pages F-1 to F-20 of this Prospectus,as well as the Memorandum and Articles of Association of our Company.
1. Your application for the Offer Shares must be made using the WHITE Offer Shares ApplicationForms and WHITE official envelopes “A” and “B”, accompanying and forming part of thisProspectus.
Applications for the Placement Shares (other than the Internet Placement Shares and theReserved Shares) by way of Application Forms must be made using the BLUE Placement SharesApplication Forms accompanying and forming part of this Prospectus or such other forms ofapplication as the Joint Issue Managers may deem appropriate. Applications for the ReservedShares must be made using the PINK Reserved Shares Application Forms, or any other form ofapplication as may be deemed appropriate by the Joint Issue Managers.
Without prejudice to the rights of our Company and the Vendor, the Joint Issue Managers havebeen authorised to accept, for and on behalf of our Company and the Vendor, such other forms ofapplications as the Joint Issue Managers deem appropriate.
We draw your attention to the detailed instructions contained in the respective Application Formsand this Prospectus for the completion of the Application Forms which must be carefully followed.Our Company and the Vendor reserve the right to reject applications which do not conformstrictly to the instructions set out in the Application Forms and this Prospectus or to theterms and conditions of this Prospectus or which are illegible, incomplete, incorrectlycompleted or which are accompanied by improperly drawn remittances.
2. You must complete your Application Forms in English. Please type or write clearly in ink usingBLOCK LETTERS.
3. You must complete all spaces in your Application Forms except those under the heading “FOROFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.” in any spacethat is not applicable.
APPENDIX F
F-7
4. Individuals, corporations, approved nominee companies and trustees must give their names in full.If you are an individual, you must make your application using your full name as it appears in youridentity card (if you have such an identification document) or in your passport and, in the case ofcorporations, in your full names as registered with a competent authority. If you are not anindividual, you must complete the Application Form under the hand of an official who must statethe name and capacity in which he signs the Application Form. If you are a corporation completingthe Application Form, you are required to affix your Common Seal (if any) in accordance with yourmemorandum and articles of association or equivalent constitutive documents. If you are acorporate Applicant and your application is successful, a copy of your memorandum and articles ofassociation or equivalent constitutive documents must be lodged with our Company’s ShareRegistrar and Share Transfer Office. Our Company and the Vendor reserve the right to require youto produce documentary proof of identification for verification purposes.
5. (a) You must complete Sections A and B and sign page 1 of the Application Form.
(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formwith particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, onpage 1 of the Application Form, your application is liable to be rejected.
6. You (whether an individual or corporate Applicant, whether incorporated or unincorporated andwherever incorporated or constituted) will be required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore having an interest inthe aggregate of more than 50.0% of the issued share capital of or interests in such corporations.If you are an approved nominee company, you are required to declare whether the beneficialowner of the Invitation Shares is a citizen or permanent resident of Singapore or a corporation,whether incorporated or unincorporated and wherever incorporated or constituted, in which citizensor permanent residents of Singapore or any body corporate incorporated or constituted under anystatute of Singapore have an interest in the aggregate of more than 50.0% of the issued sharecapital of or interests in such corporation.
7. You may apply for the Invitation Shares using only cash. Each application must be accompanied bya cash remittance in Singapore currency for the full amount payable, in respect of the number ofInvitation Shares applied for, in the form of a BANKER’S DRAFT or CASHIER’S ORDER drawn ona bank in Singapore, made out in favour of “SIN HENG SHARE ISSUE ACCOUNT” crossed “A/CPAYEE ONLY” with your name and address written clearly on the reverse side. Applications notaccompanied by any payment or accompanied by any other form of payment will not be accepted.Remittances bearing “Not Transferable” or “Non Transferable” crossings will be rejected.
No acknowledgement of receipt will be issued by our Company, the Vendor or the Joint IssueManagers for applications or application monies received.
8. Monies paid in respect of unsuccessful applications are expected to be returned (without interestor any share of revenue or other benefit arising therefrom) to you within 24 hours of the balloting atyour own risk. Where your application is rejected or accepted in part only, the full amount or thebalance of the application monies, as the case may be, will be refunded (without interest or anyshare of revenue or other benefit arising therefrom) to you by ordinary post at your own risk within14 Market Days after the close of the Application List, provided that the remittance accompanyingsuch application which has been presented for payment or other processes has been honouredand the application monies have been received in the designated share issue account.
9. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear themeanings assigned to them in this Prospectus.
APPENDIX F
F-8
10. By completing and delivering the Application Form, you agree that:
(a) in consideration of our Company and the Vendor having distributed the Application Form toyou and agreeing to close the Application List at 12.00 noon on 1 February 2010 or suchother time or date as our Company and the Vendor may, in consultation with the Joint IssueManagers, decide and by completing and delivering this Application Form:
(i) your application is irrevocable; and
(ii) your remittance will be honoured on first presentation and that any monies returnablemay be held pending clearance of your payment without interest or any share ofrevenue or other benefit arising therefrom;
(b) all applications, acceptances or contracts resulting therefrom under this Invitation shall begoverned by and construed in accordance with the laws of Singapore and that youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(c) in respect of the Invitation Shares for which your application has been received and notrejected, acceptance of your application shall be constituted by written notification by or onbehalf of our Company and not otherwise, notwithstanding any remittance being presentedfor payment by or on behalf of our Company and the Vendor;
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;
(e) reliance is placed solely on information contained in this Prospectus and that none of ourCompany, the Vendor, the Joint Issue Managers, the Underwriter and the Placement Agentor any other person involved in this Invitation shall have any liability for any information notso contained;
(f) you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent residence status, CDP Securities Account number, and share application amountto our Share Registrar, SGX-ST, CDP, SCCS, our Company, the Vendor, the Joint IssueManagers, the Underwriter and the Placement Agent;
(g) you irrevocably agree and undertake to subscribe for and/or purchase the number ofInvitation Shares applied for as stated in the Application Form or any smaller number ofsuch Invitation Shares that may be allotted and/or allocated to you in respect of yourapplication. In the event that our Company and the Vendor decide to allot and/or allocate anysmaller number of Invitation Shares or not to allot and/or allocate any Invitation Shares toyou, you agree to accept such decision as final; and
(h) you irrevocably authorise CDP to complete and sign on your behalf as transferee orrenouncee any instrument of transfer and/or other documents required for the issue ortransfer of the Invitation Shares that may be allotted and/or allocated to you.
Applications for the Offer Shares
1. Your application for the Offer Shares MUST be made using the WHITE Offer Shares ApplicationForms and WHITE official envelopes “A” and “B”.
2. You must:
(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, togetherwith your correct remittance in accordance with the terms and conditions of this Prospectus,in the WHITE official envelope “A” provided;
APPENDIX F
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(b) in appropriate spaces on the WHITE official envelope “A”:
(i) write your name and address;
(ii) state the number of Offer Shares applied for;
(iii) tick the relevant box to indicate the form of payment; and
(iv) affix adequate Singapore postage if despatching by ordinary post;
(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;
(d) write, in the special box provided on the larger WHITE official envelope “B” addressed toDBS Bank Ltd, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore 068809, thenumber of Offer Shares you have applied for; and
(e) insert WHITE official envelope “A” into WHITE official envelope “B”, seal WHITE officialenvelope “B”, affix adequate Singapore postage on WHITE official envelope “B” (ifdespatching by ordinary post) and thereafter DESPATCH BY ORDINARY POST ORDELIVER BY HAND the documents at your own risk to DBS Bank Ltd, 6 Shenton Way,#36-01 DBS Building Tower One, Singapore 068809, so as to arrive by 12.00 noon on 1February 2010 or such other time or date as our Company and the Vendor may, inconsultation with the Joint Issue Managers, decide. Local Urgent Mail or Registered Postmust NOT be used. No acknowledgement of receipt will be issued for any application orremittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.
4. ONLY ONE APPLICATION should be enclosed in each envelope.
Applications for the Placement Shares (other than the Internet Placement Shares and theReserved Shares)
1. Your application for the Placement Shares (other than the Internet Placement Shares and theReserved Shares) must be made using the BLUE Placement Shares Application Forms or suchother forms of application as the Joint Issue Managers deem appropriate.
2. The completed and signed BLUE Placement Shares Application Form and your remittance, inaccordance with the terms and conditions of this Prospectus, for the full amount payable in respectof the number of Placement Shares applied for with your name, CDP Securities Account numberand address written clearly on the reverse side, must be enclosed and sealed in an envelope to beprovided by you. You must affix adequate Singapore postage on the envelope (if despatching byordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POSTOR DELIVERED BY HAND at your own risk to DBS Bank Ltd, 6 Shenton Way, #36-01 DBSBuilding Tower One, Singapore 068809 to arrive by 12.00 noon on 1 February 2010 or suchother time or date as our Company and the Vendor, in consultation with the Joint Issue Managers,decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement ofreceipt will be issued for any application or remittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation may be rejected.
4. ONLY ONE APPLICATION should be enclosed in each envelope.
5. Alternatively, you may remit your application monies by electronic transfer to the account of DBSBank Ltd, Shenton Way Branch, Current Account No. 003-710399-3 in favour of “SIN HENGSHARE ISSUE ACCOUNT” for the number of Placement Shares applied for by 12.00 noon on 1February 2010. Applicants who remit their application monies via electronic transfer should send acopy of the telegraphic transfer advice slip to DBS Bank Ltd, 6 Shenton Way #36- 01, DBSBuilding Tower One, Singapore 068809 to arrive by 12.00 noon on 1 February 2010, or suchother time or date as our Company and the Vendor may, in consultation with the Joint IssueManagers, decide.
Applications for the Reserved Shares
1. Your application for the Reserved Shares must be made using the PINK Reserved SharesApplication Forms.
2. The completed and signed PINK Reserved Shares Application Form and your remittance, inaccordance with the terms and conditions of this Prospectus, for the full amount payable in respectof the number of Reserved Shares applied for with your name, CDP Securities Account numberand address written clearly on the reverse side, must be enclosed and sealed in an envelope to beprovided by you. You must affix adequate Singapore postage on the envelope (if despatching byordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POSTOR DELIVERED BY HAND at your own risk to 26 Gul Road Singapore 629346, to arrive by12.00 noon on 1 February 2010 or such other time or date as our Company and the Vendor may,in consultation with the Joint Issue Managers, decide. Local Urgent Mail or Registered Postmust NOT be used. No acknowledgement of receipt will be issued for any application orremittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation may be rejected.
4. ONLY ONE APPLICATION should be enclosed in each envelope.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM ElectronicApplications) and in the case of Internet Electronic Applications on the IB website screens of the relevantParticipating Banks and the website screen of DBS Vickers (the “Steps”). Currently, DBS Bank and UOBGroup are the only Participating Banks through which the Internet Electronic Applications may be made.
For illustration purposes, the procedures for Electronic Applications for Offer Shares through ATMs, the IBwebsite of DBS Bank are set out in the sections entitled “Steps for ATM Electronic Applications forthe Offer Shares through ATMs of DBS Bank (including POSB ATMs)”, “Steps for InternetElectronic Applications for the Offer Shares through the IB website of DBS Bank” and the “Stepsfor Internet Electronic Applications for the Placement Shares through the website of DBS Vickers”appearing on pages F-16 to F-20 of this Prospectus.
Please read carefully the terms of this Prospectus, the Steps and the terms and conditions for ElectronicApplications set out below before making an Electronic Application. Any reference to “you” or the“Applicant” in the “Additional Terms and Conditions for Electronic Applications”, and the Steps shall referto you making an application for the Offer Shares through an ATM or the IB website of a relevantParticipating Bank, or an application for the Placement Shares through the website of DBS Vickers.
The Steps set out the actions that you must take at ATMs or the IB website of DBS Bank or the websiteof DBS Vickers to complete an Electronic Application. The actions that you must take at the ATMs or theIB websites of the other Participating Banks are set out on the ATM screens or the IB website screens ofthe relevant Participating Banks.
APPENDIX F
F-10
APPENDIX F
F-11
If you are making an ATM Electronic Application, you must have an existing bank account with and be anATM cardholder of the relevant Participating Banks before you can make an Electronic Application at theATMs of the relevant Participating Banks. An ATM card issued by one Participating Bank cannot be usedto apply for the Offer Shares at an ATM belonging to other Participating Banks. Upon the completion ofyour ATM Electronic Application transaction, you will receive an ATM transaction slip (“TransactionRecord”), confirming the details of your ATM Electronic Application. The Transaction Record is for yourretention and should not be submitted with any printed Application Form.
You must ensure that you enter your own CDP Securities Account Number when using the ATMcard issued to you in your own name. If you fail to use your own ATM card or do not key in yourown CDP Securities Account number, your application will be rejected. If you operate a joint bankaccount with any of the Participating Banks, you must ensure that you enter your own CDPSecurities Account number when using the ATM card issued to you in your own name. Using yourown CDP Securities Account number with an ATM card which is not issued to you in your ownname will render your Electronic Application liable to be rejected.
If you are making an Internet Electronic Application, you must have a bank account with and/or a UserIdentification (“User ID”) and a Personal Identification Number (“PIN”) given by the relevant participatingBanks or DBS Vickers, in the case of you applying for the Placement Shares through the website of DBSVickers.
If you are making an Internet Electronic Application, you must ensure that the mailing address of youraccount selected for the application is in Singapore and you must declare that the application is beingmade in Singapore. Otherwise, your application is liable to be rejected. In this connection, you will beasked to declare that you are in Singapore at the time when you make the application. Upon completionof your Internet Electronic Application through the IB website of DBS Bank, there will be an on-screenconfirmation (“Confirmation Screen”) of the application which can be printed out by you for your record.This printed record of the Confirmation Screen is for your retention and should not be submitted with anyprinted Application Form.
Your Electronic Application shall be made on the terms and subject to the conditions of this Prospectus,including but not limited to, the terms and conditions appearing below and those set out under the sectionentitled “TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE” onpages F-1 to F-20 of this Prospectus, as well as the Memorandum and Articles of Association of ourCompany.
1. In connection with your Electronic Application for the Offer Shares or the Placement Shares in thecase of you applying for the Placement Shares through the website of DBS Vickers, you arerequired to confirm statements to the following effect in the course of activating the ElectronicApplication:
(a) that you have received a copy of this Prospectus (in the case of ATM Electronic Applicationsonly) and have read, understood and agreed to all the terms and conditions of application forthe Offer Shares or the Placement Shares and this Prospectus prior to effecting theElectronic Application and agree to be bound by the same;
(b) that you consent to the disclosure of your name, NRIC/passport number, address,nationality, permanent residence status, CDP Securities Account number, and shareapplication amount (the “Relevant Particulars”) from your account with the relevantParticipating Bank or DBS Vickers, as the case may be, to our Share Registrar, SGX-ST,CDP, SCCS, our Company, the Vendor, the Joint Issue Managers, the Underwriter and thePlacement Agent (the “Relevant Parties”); and
(c) that this is your only application for the Offer Shares or the Placement Shares (other thanthe Reserved Shares), as the case may be, and it is made in your name and at your ownrisk.
APPENDIX F
F-12
Your application will not be successfully completed and cannot be recorded as a completedtransaction unless you press the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key inthe ATM or click “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button onthe Internet screen. By doing so, you shall be treated as signifying your confirmation of each of theabove three statements. In respect of statement 1(b) above, your confirmation, by pressing the“Enter” or “OK” or “Confirm” or “Yes” or any other relevant key or by clicking “Confirm” or “OK” or“Submit” or “Continue” or “Yes” or any other relevant button, shall signify and shall be treated asyour written permission, given in accordance with the relevant laws of Singapore, including Section47(2) of the Banking Act (Chapter 19) of Singapore, to the disclosure by that Participating Bank orDBS Vickers, as the case may be, of the Relevant Particulars of your account(s) with thatParticipating Bank or DBS Vickers to the Relevant Parties.
2. By making an Electronic Application you confirm that you are not applying for the OfferShares or the Placement Shares as a nominee of any other person and that any ElectronicApplication that you make is the only application made by you as the beneficial owner. Youshall make only one Electronic Application and shall not make any other application for theOffer Shares or the Placement Shares (other than the Reserved Shares) whether at theATMs of any Participating Bank or the IB websites of the relevant Participating Banks or thewebsite of DBS Vickers, as the case may be, or on the Application Forms. Where you havemade an application for Offer Shares or Placement Shares on an Application Form, youshall not make an Electronic Application for Offer Shares and vice versa.
3. You must have sufficient funds in your bank account with your Participating Bank at the time youmake your Electronic Application at the ATM or IB website of the relevant Participating Bank, failingwhich such Electronic Application will not be completed. Any Electronic Application made at theATM or IB website of the relevant Participating Bank which does not conform strictly to theinstructions set out in this Prospectus or on the screens of the ATM or IB website of the relevantParticipating Bank through which your Electronic Application is being made shall be rejected.
For the Offer Shares, you may make an ATM Electronic Application at the ATM of anyParticipating Bank or an Internet Electronic Application at the IB websites of the relevantParticipating Banks, using only cash by authorising such Participating Bank to deduct thefull amount payable from your account with such Participating Bank. If you make anapplication to subscribe for the Placement Shares through the website of DBS Vickers, youmust have sufficient funds in your nominated automatic payment account with an automaticpayment facility (direct debit/credit authorisation or “GIRO”) with DBS Vickers. Yourapplication will be rejected if there are insufficient funds in your account for DBS Vickers todeduct the full amount payable from your account for your application.
4. You irrevocably agree and undertake to subscribe for and/or purchase and to accept the number ofOffer Shares or Placement Shares, as the case may be, applied for as stated on the TransactionRecord or the Confirmation Screen or any lesser number of such Offer Shares or PlacementShares that may be allotted to you in respect of your Electronic Application. In the event that ourCompany and the Vendor decide to allot and/or allocate any lesser number of such Offer Shares orPlacement Shares or not to allot and/or allocate any Offer Shares or Placement Shares to you, youagree to accept such decision as final. If your Electronic Application is successful, yourconfirmation (by your action of pressing the “Enter” or “OK” or “Confirm” or “Yes” or any otherrelevant key on the ATM or clicking “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any otherrelevant button on the Internet screen) of the number of Offer Shares or Placement Shares appliedfor shall signify and shall be treated as your acceptance of the number of Offer Shares orPlacement Shares that may be allotted and/or allocated to you and your agreement to be bound bythe Memorandum and Articles of Association of our Company. You also irrevocably authorise CDPto complete and sign on your behalf as transferee or renouncee any instrument of transfer and/orother documents required for the issue or transfer of the Offer Shares that may be allotted and/orallocated to you.
APPENDIX F
F-13
5. Our Company and the Vendor will not keep any application in reserve. Where your ElectronicApplication is unsuccessful, the full amount of the application monies will be refunded (withoutinterest or any share of revenue or other benefit arising therefrom) to you by being automaticallycredited to your account with your Participating Bank or if you have applied for the PlacementShares through DBS Vickers, by ordinary post or such other means as DBS Vickers may agreewith you, at your own risk within 24 hours of the balloting provided that the remittance in respect ofsuch application which has been presented for payment or other processes has been honouredand the application monies have been received in the designated share issue account.
Where your Electronic Application is rejected or accepted in part only, the full amount orthe balance of the application monies, as the case may be, will be refunded (without interestor any share of revenue or other benefit arising therefrom) to you by being automaticallycredited to your account with your Participating Bank or if you have applied for thePlacement Shares through DBS Vickers, by ordinary post or such other means as DBSVickers may agree with you, at your own risk, within 14 Market Days after the close of theApplication List provided that the remittance in respect of such application which has beenpresented for payment or other processes has been honoured and the application monieshave been received in the designated share issue account.
Responsibility for timely refund of application monies from unsuccessful or partially successfulElectronic Applications lies solely with the respective Participating Banks and with DBS Vickers (asthe case may be). Therefore, you are strongly advised to consult your Participating Bank or DBSVickers as to the status of your Electronic Application and/or the refund of any money to you fromunsuccessful or partially successful Electronic Application, to determine the exact number ofShares allotted to you before trading the Shares on the SGX-ST. None of the SGX-ST, the CDP,the SCCS, the Participating Banks, DBS Vickers, our Company, the Vendor, the Joint IssueManagers, the Underwriter and the Placement Agent assume any responsibility for any loss thatmay be incurred as a result of you having to cover any net sell positions or from buy-in proceduresactivated by the SGX-ST.
If your Electronic Application is unsuccessful, no notification will be sent by the relevantParticipating Bank or DBS Vickers.
It is expected that successful applicants who applied for the Internet Placement Shares through thewebsite of DBS Vickers will be notified of the results of their application through the website ofDBS Vickers no later than the evening of the day immediately prior to the commencement oftrading of the Shares on the SGX-ST.
6. Applicants who make ATM Electronic Applications for the Offer Shares through the ATMs of thefollowing banks may check the provisional results of their ATM Electronic Applications as follows:
Operating Service Bank Telephone Other Channels Hours expected from
DBS Bank 1800-339 6666 Internet Banking 24 hours Evening of the (for POSB http://www.dbs.com(1) balloting dayaccount holders)
1800-111 1111(for DBS Bank account holders)
OCBC 1800-363 3333 ATM/Internet Banking/ 24 hours Evening of the Bank Phonebanking(2) balloting day
UOB 1800-222 2121 ATM (Other Transactions – 24 hours Evening of the Group “IPO Enquiry”) balloting day
http://www.uobgroup.com (1), (3)
APPENDIX F
F-14
Notes:
(1) If you have made your Internet Electronic Application through the IB websites of DBS Bank or UOB Group, you maycheck the results of your application through the same channels listed in the table above in relation to ATM ElectronicApplication made at the ATMs of DBS Bank or UOB Group.
(2) If you have made your Electronic Application through the ATM of OCBC Bank, you may check the results of yourapplication through OCBC ATMs, OCBC Personal Internet Banking or OCBC Phone Banking services.
(3) If you have made your Electronic Application through the ATM or the IB website of the UOB Group, you may checkthe results of your application through UOB Personal Internet Banking, UOB Group ATMs or UOB Phone Bankingservices.
7. Electronic Applications shall close at 12.00 noon on 1 February 2010, or such other timeand date as our Company and the Vendor may, in consultation with the Joint IssueManagers, decide. Subject to paragraph 9 below, all Internet Electronic Applications are deemedto be received when they enter the designated information system of the relevant ParticipatingBank or DBS Vickers, as the case may be.
8. You are deemed to have irrevocably requested and authorised our Company and the Vendor to:
(a) register the Offer Shares or the Placement Shares, as the case may be, allotted and/orallocated to you in the name of CDP for deposit into your Securities Account;
(b) send the relevant Share certificate(s) to CDP;
(c) return or refund (without interest or any share of revenue or other benefit arising therefrom)the application monies, should your Electronic Application be unsuccessful, by automaticallycrediting your bank account with your Participating Bank or if you have applied for thePlacement Shares through DBS Vickers, by ordinary post or such other means as DBSVickers may agree with you, at your risk, within 24 hours of the balloting PROVIDED THATthe remittance in respect of such application which has been presented for payment or suchother processes has been honoured and application monies received in the designatedshares issue account; and
(d) return or refund (without interest or any share of revenue or other benefit arising therefrom)the balance of the application monies, should your Electronic Application be accepted in partonly, by automatically crediting your bank account with your Participating Bank or if you haveapplied for the Placement Shares through DBS Vickers, by ordinary post or such othermeans as DBS Vickers may agree with you, at your risk, within 14 Market Days after theclose of the Application List PROVIDED THAT the remittance in respect of such applicationwhich has been presented for payment or such other processes have been honoured andapplication monies received in the designated shares issue account.
9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdown, fires, acts of God andother events beyond the control of the Participating Banks, DBS Vickers, our Company, the Vendor,the Joint Issue Managers, the Underwriter, the Placement Agent and CDP, and in any such eventour Company, the Vendor, the Joint Issue Managers, DBS Vickers, the relevant Participating Bankand/or CDP do not receive your Electronic Application, or data relating to your ElectronicApplication or the tape or any other devices containing such data is lost, corrupted or not otherwiseaccessible, whether wholly or partially for whatever reason, you shall be deemed not to have madean Electronic Application and you shall have no claim whatsoever against our Company, theVendor, the Joint Issue Managers, the Underwriter, the Placement Agent, DBS Vickers, therelevant Participating Bank and/or CDP for the Offer Shares or the Placement Shares, as the casemay be, applied for or for any compensation, loss or damage.
APPENDIX F
F-15
10. Our Company and the Vendor do not recognise the existence of a trust. Any Electronic Applicationby a trustee must be made in his own name and without qualification. Our Company and theVendor will reject any application by any person acting as nominee (other than approved nomineecompanies).
11. All your particulars in the records of your Participating Bank or DBS Vickers at the time you makeyour Electronic Application shall be deemed to be true and correct and your Participating Bank,DBS Vickers and any other Relevant Parties shall be entitled to rely on the accuracy thereof. Ifthere has been any change in your particulars after making your Electronic Application, you shallpromptly notify your Participating Bank or DBS Vickers (as the case may be).
12. You should ensure that your personal particulars as recorded by both CDP and the relevantParticipating Bank or DBS Vickers (as the case may be) are correct and identical, otherwise, yourElectronic Application is liable to be rejected. You should promptly inform CDP of any change inaddress, failing which the notification letter on successful allotment will be sent to your address lastregistered with CDP.
13. By making and completing an Electronic Application, you are deemed to have agreed that:
(a) in consideration of our Company and the Vendor making available the Electronic Applicationfacility, through the Participating Banks and DBS Vickers acting as agents of our Companyand the Vendor, at the ATMs and the IB websites of the relevant Participating Banks (if any)and at the website of DBS Vickers:
(i) your Electronic Application is irrevocable; and
(ii) your Electronic Application, the acceptance by our Company and the Vendor, and thecontract resulting therefrom under this Invitation shall be governed by and construedin accordance with the laws of Singapore and you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(b) none of our Company, the Vendor, the Joint Issue Managers, the Underwriter, the PlacementAgent, the Participating Banks, DBS Vickers or CDP shall be liable for any delays, failures orinaccuracies in the recording, storage or in the transmission or delivery of data relating toyour Electronic Application to our Company or CDP due to breakdowns or failure oftransmission, delivery or communication facilities or any risks referred to in paragraph 9above or to any cause beyond their respective controls;
(c) in respect of the Offer Shares or the Placement Shares, as the case may be, for which yourElectronic Application has been successfully completed and not rejected, acceptance of yourElectronic Application shall be constituted by written notification by or on behalf of ourCompany and the Vendor and not otherwise, notwithstanding any payment received by or onbehalf of our Company;
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application; and
(e) reliance is placed solely on information contained in this Prospectus and that none of ourCompany, the Vendor, the Joint Issue Managers, the Underwriter, the Placement Agent norany other person involved in this Invitation shall have any liability for any information not socontained.
APPENDIX F
F-16
Steps for ATM Electronic Applications for the Offer Shares through ATMs of DBS Bank (IncludingPOSB ATMs)
Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Banks.For illustration purposes, the steps for making an ATM Electronic Application through a DBS Bank ATM(including POSB ATM) are shown below. Certain words appearing on the screen are in abbreviated form(“A/c”, “amt”, “appln”, “&”, “I/C”, “SGX” and “No.” refer to “Account”, “amount”, “application”, “and”, “NRIC”,“SGX-ST” and “Number” respectively). Instructions for ATM Electronic Applications on the ATM screens ofParticipating Banks (other than DBS Bank (including POSB ATMs)), may differ slightly from thoserepresented below.
Steps
1. Insert your personal DBS Bank or POSB ATM Card
2. Enter your Personal Identification Number
3. Select “MORE SERVICES”
4. Select “LANGUAGE” (FOR CUSTOMERS USING MULTI-LANGUAGE CARD)
5. Select “ESA-IPO SHARE/SGS/INVESTMENTS”
6. Select “ELECTRONIC SECURITY APPLN (IPOS/BOND/ST-NOTES/SECURITIES)”
7. Read and understand the following statements which will appear on the screen:
� (IN THE CASE OF SECURITIES OFFERING THAT IS SUBJECT TO A PROSPECTUSREGISTERED WITH THE MONETARY AUTHORITY OF SINGAPORE) THE OFFER OFSECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR ACCOMPANIED BY ACOPY OF THE PROSPECTUS DOCUMENT OR PROFILE STATEMENT (AND IFAPPLICABLE, A COPY OF THE REPLACEMENT OR SUPPLEMENTARYPROSPECTUS/DOCUMENT OR PROFILE STATEMENT) WHICH CAN BE OBTAINEDFROM ANY DBS/POSB BRANCH IN SINGAPORE AND, WHERE APPLICABLE, THEVARIOUS PARTICIPATING BANKS DURING BANKING HOURS, SUBJECT TOAVAILABILITY.
� (IN THE CASE OF SECURITIES OFFERING THAT IS SUBJECT TO A PROSPECTUSREGISTERED WITH THE MONETARY AUTHORITY OF SINGAPORE) ANYONE WISHINGTO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES) SHOULD READ THEPROSPECTUS/DOCUMENT OR PROFILE STATEMENT (AS SUPPLEMENTED ORREPLACED, IF APPLICABLE) BEFORE SUBMITTING HIS APPLICATION WHICH WILLNEED TO BE MADE IN THE MANNER SET OUT IN THE PROSPECTUS/DOCUMENT ORPROFILE STATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE). A COPYOF THE PROSPECTUS/ DOCUMENT OR PROFILE STATEMENT, AND IF APPLICABLE, ACOPY OF THE REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT ORPROFILE STATEMENT HAS BEEN LODGED WITH AND REGISTERED BY THEMONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY FORITS OR THEIR CONTENTS.
� (IN THE CASE OF A SECURITIES OFFERING THAT DOES NOT REQUIRE APROSPECTUS TO BE REGISTERED WITH THE MONETARY AUTHORITY OFSINGAPORE) THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) MAY BE MADEIN A NOTICE PUBLISHED IN A NEWSPAPER AND/OR A CIRCULAR/ DOCUMENTDISTRIBUTED TO SECURITY HOLDERS. ANYONE WISHING TO ACQUIRE SUCHSECURITIES (OR UNITS OF SECURITIES) SHOULD READ THE NOTICE/ CIRCULAR/DOCUMENTS BEFORE SUBMITTING HIS APPLICATION, WHICH WILL NEED TO BEMADE IN THE MANNER SET OUT IN THE NOTICE/CIRUCLAR/DOCUMENT.
APPENDIX F
F-17
� Press the “ENTER” key to confirm that you have read and understood.
8. Select “SIN HENG” to display details.
9. Press the “ENTER” key to acknowledge:
� YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF THE APPLICATIONAND (WHERE APPLICABLE) PROSPECTUS, DOCUMENT OR PROFILE STATEMENT,AND IF APPLICABLE, THE REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT/ PROFILE STATEMENT, NOTICE AND/OR CIRCULAR.
� YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NO., ADDRESS,NATIONALITY, CDP SECURITIES A/C NO., CPF INVESTMENT A/C NO. AND SECURITYAPPLN AMOUNT FROM YOUR BANK A/C(S) TO SHARE AND SHARE APPLN AMOUNTFROM YOUR BANK A/C(S) TO SHARE REGISTRARS, SGX, SCCS, CDP, CPF,ISSUER/VENDOR(S).
� FOR FIXED AND MAX PRICE SECURITIES APPLICATION, THIS IS YOUR ONLYAPPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWN RISK.
� THE MAXIMUM PRICE FOR EACH SHARE IS PAYABLE IN FULL ON APPLICATION ANDSUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.
� FOR TENDER SECURITIES APPLICATION, THIS IS YOUR ONLY APPLICATION AT THESELECTED TENDER PRICE AND IS MADE IN YOUR OWN NAME AND AT YOUR OWNRISK.
� YOU ARE NOT A U.S. PERSON AS REFERRED TO IN (WHERE APPLICABLE) THEPROSPECTUS, DOCUMENT, PROFILE STATEMENT, REPLACEMENT ORSUPPLEMENTARY PROSPECTUS/DOCUMENT, PROFILE STATEMENT, NOTICE AND/ORCIRCULAR.
� THERE MAY BE A LIMIT ON THE MAXIMUM NUMBER OF SECURITIES THAT YOU CANAPPLY FOR SUBJECT TO AVAILABILITY, YOU MAY BE ALLOCATED A SMALLERNUMBER OF SECURITIES THAN YOU APPLIED FOR OR (IN THE CASE OF AN EARLIERCLOSURE UPON FULL SUBSCRIPTION) YOUR APPLICATION MAY BE REJECTED IFALL THE AVAILABLE SECURITIES HAVE BEEN FULLY ALLOCATED TO EARLIERAPPLICANTS.
10. Select your nationality.
11. Select your payment method (i.e. by cash, CPF Funds, or a combination of cash and CPF Funds).
12. Select DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSB account(Current/Savings) from which to debit your application monies.
13. Enter the number of securities you wish to apply for using cash.
14. Enter the number of securities you wish to apply for using CPF Funds (if applicable).
15. Enter or confirm (if your CDP Securities Account number has already been stored in DBS Bank’srecords) your own 12-digit CDP Securities Account number (Note: This step will be omittedautomatically if your Securities Account number has already been stored in DBS Bank’s records).
16. Check the details of your securities application, your NRIC or passport number, CDP SecuritiesAccount number, number of securities and application amount on the screen and press the“ENTER” key to confirm your application.
APPENDIX F
F-18
17. Remove the Transaction Record for your reference and retention only.
Steps for Internet Electronic Applications for the Offer Shares through the IB website of DBSBank
For illustrative purposes, the steps for making an Internet Electronic Application through DBS Bank IBwebsite is shown below. Certain words appearing on the screen are in abbreviated form (“A/c”, “amt”, “&”,“I/C”, “SGX” and “No.” refer to “Account”, “amount”, “and”, “NRIC”, “SGX-ST” and “Number” respectively).
Steps
1. Click on to DBS Bank website at http://www.dbs.com.
2. Login to Internet banking.
3. Enter your User ID and PIN.
4. Select “Electronic Security Application (ESA)”.
5. Click “Yes” to proceed and to warrant, inter alia, that you are currently in Singapore, you haveobserved and complied with all applicable laws and regulations and that your mailing address forDBS Internet Banking is in Singapore and that you are not a U.S. person (as such term is definedin Regulation S under the United Securities Act of 1933 as amended).
6. Select your country of residence and click “I confirm”.
7. Click on “SIN HENG” and click the “Submit” button.
8. Click “I Confirm” to confirm, inter alia:
(a) You have read, understood and agreed to all terms of application and theProspectus/Document or Profile Statement and if applicable, the Supplementary orReplacement Prospectus/Document or Profile Statement.
(b) You consent to disclose your name, I/C or passport number, address, nationality, CDPSecurities Account number, CPF Investment Account number (if applicable) and securitiesapplication amount from your DBS/POSB Account(s) to registrars of securities, SGX, SCCS,CDP, CPF Board and issuer/vendor(s).
(c) You are not a U.S. Person (as such term is defined in Regulation S under the United StatesSecurities Act of 1933, as amended).
(d) You understand that the securities mentioned herein have not been and will not beregistered under the United States Securities Act of 1933 as amended (the “US SecuritiesAct”) or the securities laws of any state of the United States and may not be offered or soldin the United States or to, or for the account or benefit of any “U.S. person” (as defined inRegulation S under the US Securities Act) except pursuant to an exemption from or in atransaction subject to, the registration requirements of the US Securities Act and applicablestate securities laws. These will be no public offer of the securities mentioned herein in theUnited States. Any failure to comply with this restriction may constitute a violation of theUnited States securities laws.
(e) This application is made in your own name and at your own risk.
(f) For FIXED/MAX price securities application, this is your only application. For TENDER pricesecurities application, this is your only application at the selected tender price.
(g) FOR FOREIGN CURRENCY Securities, subject to the terms of the issue, please note thefollowing: the application monies will be debited from your bank account in S$, based on theBank’s prevailing board rates at the time of application. Any refund monies will be credited inS$ based on the Bank’s prevailing board rates at the time of refund. The different prevailingboard rates at the time of application and the time of refund of application monies may resultin either a foreign exchange profit or loss or application monies may be debited and refundcredited in S$ at the same exchange rate.
FOR 1ST-COME-1ST-SERVE securities, the number of securities applied for may bereduced, subject to availability at the point of application.
9. Fill in details for share application and click “I Confirm”.
10. Check the details of your share application, your I/C/Passport No. and click “OK” to confirm yourapplication.
11. Print Confirmation Screen (optional) for your reference & retention only.
Steps for Internet Electronic Applications for the Placement Shares through the website of DBSVickers
For illustrative purposes, the steps for making an application through the website of DBS Vickers areshown below:
Steps
1. Access the website at http://www.dbsvonline.com.
2. Login with user ID and password.
3. Select “Trading” and click on “IPO” hyperlink to go to the IPO Section.
4. Select “SIN HENG” and click on “Apply now”.
5. Click “Yes” to represent and warrant that, inter alia, that you are in Singapore, you have observedand complied with all applicable laws and regulations, you have a mailing address in Singapore,you have read, understood and agreed to the “APPLICATION TERMS AND CONDITIONS” and the“GENERAL TERMS AND DISCLAIMERS” and you are not a U.S. Person (as such term is definedin Regulation S under the United States Securities Act of 1933, as amended).
6. Confirm the IPO applying for and its details by clicking on the “Next” button.
7. Click “Yes, I have read the above terms and conditions and wish to subscribe” and click “Submit” toconfirm, inter alia:–
(a) You have read, understood and agreed to the terms and conditions set out in theProspectus/Document or Profile Statement including the notes and instructions for thecompletion of this Application Form and that this application has been made in accordancewith the Prospectus/Document or Profile Statement and such notes and instructions.Capitalised terms used in this Application Form shall bear the meanings assigned to them inthe Prospectus/Document or Profile Statement.
(b) You have read and understood the disclaimers.
(c) You have read, understood and agreed to the “APPLICATION TERMS AND CONDITIONS”and the “GENERAL TERMS AND DISCLAIMERS”.
APPENDIX F
F-19
(d) You consent to the disclosure of your name, NRIC or passport number, address, nationalityand permanent resident status, CDP Securities A/C No., CPF Investment A/C No. (ifapplicable) and securities application amount from your account with DBS Vickers to theIssuer and the Joint Issue Managers, registrars of securities, SGX, SCCS, CDP and CPF(as applicable).
(e) This application is made in your own name and at your own risk.
(f) You understand that these are not deposits or other obligations of or guaranteed or insuredby DBS Vickers and are subject to investment risks, including the possible loss of theprincipal amount invested.
(g) You declare that (a) you are not under 18 years of age, (b) you are not a corporation, soleproprietorship, partnership or any other business entity, (c) you are not an undisclosedbankrupt, (d) you are in Singapore, (e) you have a mailing address in Singapore and (f) youare not a U.S. person (within the meaning of Regulation S under the US Securities Act of1933, as amended).
8. Fill in amount of share applied for and preferred payment mode, then click “Submit”
9. Check and verify details of your share application and your Trading Account Number on thescreen.
10. Enter your password and click “Submit” to continue.
11. Click on “Application Status” to check your IPO application details.
12. Print page for your reference and retention only.
APPENDIX F
F-20
OUR CUSTOMER BASE
OUR MAJOR PROJECTS
EQUIPMENT RENTALFor our equipment rental business, we serve mainly customers in Singapore in the following industries:
Infrastructure and Geotechnic:Our cranes are used in the launching of heavy precast columns, slabs and beams
Construction:Our cranes are used in construction of buildings and upgrading works
Offshore and Marine:Our cranes are used in the fabrication of oil rigs and deep sea-going vessels
Oil and Gas:Our cranes are deployed for the construction and maintenance of petrochemical plants and refi neries
TRADINGOur wide trading customer base comprises more than 100 customers spanning USA, Europe, the Middle East, Asia, Australia and Africa.
19811989to • Changi Airport Flyover• Central Expressway• Benjamin Sheares
Bridge• Ayer Rajah Expressway• Toa Payoh Flyover
19901999to• Pan-Island Expressway • Reclamation of
Jurong Island• Cuppage Centre
• Hewlett Packard Factory• Raffl es Hospital• SIA Complex• Woodsville Interchange• Fusionpolis
• Changi Airport Terminal 2 extension
• Petrochemical Corporation of Singapore’s petrochemical complex
• Extension of Queensway to AYE
• Changi Water Reclamation Plant
• Changi Airport Terminal 3• Marina Bay
Financial Centre• Marina Bay
Integrated Resort
• Sentosa Light Rail System• Braddell / Thomson /
Lornie Road Interchange• Resort World at Sentosa• Singapore Flyer• Kallang – Paya Lebar
Expressway
2000CURRENTto
• Boon Lay MRT extension
• Jurong Rock Cavern Underground Oil Storage
OUR EQUIPMENT FLEET
Cranes/Aerial Lifts
Lifting Capacity/ Access Heights
Number of units in our fl eet
Crawler Cranes 5 – 450 tons 47
All Terrain Cranes
100 – 500 tons 6
Truck Cranes 50 – 160 tons 5
Rough Terrain Cranes
7 – 80 tons 30
Boom Lifts 12 – 45.7m 127
Scissor Lifts 6 – 12m 86
Boom Lifts
al Lifts
es
Our two core business divisions are complementary in nature. Our Equipment Rental Business involves the rental of cranes and aerial lifts while our Trading Business involves the trading of both new and used cranes and aerial lifts. We also undertake sales and distribution of spare parts for cranes and aerial lifts.
In addition, as part of our equipment rental business, we undertake turnkey project engineering services which are currently being carried out mainly in Singapore.
As at 15 December 2009, we have a fl eet of 88 cranes with total lifting capacity exceeding 9,500 tons, as well as 213 aerial lifts with access heights of up to 45.7 metres.
Invitation in respect of 168,000,000 Invitation Shares (comprising 88,000,000 New Shares and 80,000,000 Vendor Shares):-
(a) 9,600,000 Offer Shares at S$0.26 for each Offer Share by way of public offer; and
(b) 158,400,000 Placement Shares by way of placement, comprising:
(i) 141,300,000 Placement Shares at S$0.26 each for applications by way of Placement Shares Application Forms (or such other forms of applications as the Placement Agent deems appropriate);
(ii) 300,000 Internet Placement Shares at S$0.26 each for applications made through the internet website of DBS Vickers Securities (Singapore) Pte. Ltd.; and
(iii) 16,800,000 Reserved Shares at S$0.26 each reserved for our employees, business associates and those who have contributed to the success of our Group.
payable in full on application (subject to the Over-allotment Option).
HEIGHTS
LIFTING TO GREATER
CORPORATE PROFILE
FINANCIAL HIGHLIGHTS
Home-grown Sin Heng Heavy Machinery Limited is one of the leading heavy lifting service providers in Singapore, focusing on the mid-to-high lifting capacity segment.
Joint Issue Manager, Underwriter and Placement Agent
Joint Issue Manager
SIN HENG HEAVY MACHINERY LIMITED(Incorporated in the Republic of Singapore on 30 March 1981)(Company Registration Number 198101305R)
PROSPECTUS DATED 25 JANUARY 2010 (REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE ON 25 JANUARY 2010)
We have applied to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in, and for quotation of, all our ordinary shares (the “Shares”) in the capital of Sin Heng Heavy Machinery Limited (the “Company”) already issued (including the Vendor Shares), the new Shares (the “New Shares”) which are the subject of this Invitation (as defi ned herein) as well as the Shares which may be issued upon the exercise of the options to be granted under the SHHM Employee Share Option Scheme (the “ESOS Shares”). Such permission will be granted when we have been admitted to the Offi cial List of the SGX-ST. The dealing in, and quotation of, our Shares, the New Shares and the ESOS Shares will be in Singapore dollars.
Acceptance of applications for the Invitation Shares will be conditional upon, inter alia, the issue of the New Shares and permission being granted to deal in, and for quotation of, the New Shares, all of our existing issued Shares (including the Vendor Shares) and the ESOS Shares. If completion of this Invitation does not occur because permission is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk, without interest or any share of revenue or other benefi t arising therefrom, and you will not have any claims against us, the Vendor, the Joint Issue Managers, the Underwriter or the Placement Agent (as defi ned herein).
The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Offi cial List of the SGX-ST is not to be taken as an indication of the merits of this Invitation, our Company, our subsidiaries, our existing Shares (including the Vendor Shares), the New Shares or the ESOS Shares, as the case may be.
In connection with this Invitation, the Vendor has granted DBS Bank Ltd. (“DBS Bank”) an over-allotment option (the “Over-allotment Option”) exercisable by DBS Bank, as stabilising manager, in full or in part on one or more occasions from the date of commencement of trading of our Shares on the SGX-ST (the “Listing Date”) until the earlier of (i) the date falling 30 days from the Listing Date, or (ii) the date when DBS Bank or its appointed agent has bought, on the SGX-ST, an aggregate of 16,800,000 Shares, representing not more than 10.0% of the total Invitation Shares to undertake stabilising actions, to purchase up to an aggregate of 16,800,000 Additional Shares, representing not more than 10.0% of the total Invitation Shares at the Invitation Price, solely for the purpose of covering the over-allotment (if any) of the Invitation Shares subject to any applicable laws and regulations. The total number of issued Shares immediately after the completion of this Invitation regardless of whether the Over-allotment Option is exercised will be 16,800,000 Shares. The exercise of the Over-allotment Option will not increase the total number of issued Shares after this Invitation.
A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the “Authority”). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of our New Shares, our existing Shares (including the Vendor Shares) or the ESOS Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Prospectus in any other jurisdiction.
No Shares will be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority.
THIS DOCUMENT IS FOR DISTRIBUTION IN HONG KONG ONLY TO PERSONS WHO ARE “PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP 571) OF HONG KONG AND ANY RULES MADE UNDER THAT ORDINANCE. THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN HONG KONG. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER. IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE. BY ACCEPTING THIS DOCUMENT YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS. NO PART OF THIS MATERIAL MAY BE (1) COPIED, PHOTOCOPIED OR DUPLICATED IN ANY FORM BY ANY MEANS OR (2) REDISTRIBUTED OR PASSED ON, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON IN WHOLE OR IN PART, FOR ANY PURPOSE.
Investing in our shares involves risks including those described in the section entitled “RISK FACTORS” of this Prospectus.
19.4
FY2007
63.4
26.0
FY2008
105.9
33.4
FY2009
103.6
Revenue (S$’ million)
Trading
Equipment Rental
CAGR:28.7%
Total: 82.7 Total: 131.8 Total: 137.0
FY2007
9.2
FY2008
17.2
FY2009
22.0
Net Profi t (S$’ million)
Net Profi t Margin (%)
CAGR:54.8%
13.011.1
16.0
Equipment Rental Revenue(by customers’ industries)
FY 2009
FY 2009
(1) Others comprise mainly equipment rental companies
(2) For the period under review, others comprise
Australia, Brunei, Hong Kong, Japan, Maldives,
Mauritius, Myanmar, New Zealand, South Africa,
South Korea, Taiwan, Thailand and Vietnam
Infrastructure & Geotechnic 37.2%
Construction 23.8%
Offshore & Marine 14.6%
Oil & Gas 13.4%
Others(1) 11.0%
Trading Revenue(by geographical markets)
Singapore 54.4%
Indonesia 26.3%
Middle East 10.2%
Malaysia 6.8%
India 1.1%
Others(2) 1.2%Net Profi t
Net Profi t Margin
88,000,000
offer; and
s by way of ations as the
made through nd
ees, business up.
ained or opinions expressed inof this Invitation, our Company,the case may be.
ent option (the “Over-allotment the date of commencement of he Listing Date, or (ii) the date esenting not more than 10.0%
Additional Shares, representingg the over-allotment (if any) ofediately after the completion of exercise of the Over-allotment
ngapore (the “Authority”). Thee Authority does not imply thathave been complied with. Thee Vendor Shares) or the ESOShave not lodged or registered
the date of registration of this
AL INVESTORS” WITHIN THEDE UNDER THAT ORDINANCE.
ONG KONG. YOU ARE ADVISED NTS OF THIS DOCUMENT, YOU
BE BOUND BY THE FOREGOING FORM BY ANY MEANS OR (2)T, FOR ANY PURPOSE.
S” of this Prospectus.
SIN
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HIN
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SIN HENG HEAVY MACHINERY LIMITED26 Gul Road Singapore 629346
Tel : (65) 6861 6111 Fax : (65) 6863 8616
