Versalink Holdings Limited

Versalink Holdings Limited
(Company Registration No.: 201411394N)

(Incorporated in the Republic of Singapore on 21 April 2014)
Reception Furniture
Executive Series
Work Tools
Panel Systems
Architectural Wall Systems
Filing & Storage
Power Options
Desking Systems
Meeting and Conference Tables
Seating
Modular Systems
OUR PRODUCTS
Lot 6119 Jalan Haji Salleh,
Batu 5, Off Jalan Meru, 41050 Klang,
Selangor Darul Ehsan, Malaysia
T +6 03 3392 6888
F +6 03 3392 3377
W www.versalink.com
OFFER DOCUMENT DATED 16 SEPTEMBER 2014
(Registered by the Singapore Exchange Securities Trading Limited acting as
agent on behalf of the Monetary Authority of Singapore on 16 September 2014)
This document is important. If you are in any doubt as to the action you
should take, you should consult your legal, nancial, tax or other professional
adviser(s).
CIMB Bank Berhad, Singapore Branch (the Sponsor and Issue Manager) has
made an application to the Singapore Exchange Securities Trading Limited (the
SGX-ST) for permission to deal in, and for quotation of, all the ordinary shares
(the Shares) in the capital of Versalink Holdings Limited (the Company)
already issued (including the Vendor Shares (as dened herein)), the new
shares (the New Shares) which are the subject of the Invitation (as dened
herein), the new Shares which may be issued from time to time under the
Performance Share Plan (as dened herein) (the Performance Shares) and
the new Shares which may be issued upon the exercise of the options to be
granted under the ESOS (as dened herein) (the Option Shares) on Catalist
(as dened herein). Acceptance of applications for the Invitation Shares (as
dened herein) will be conditional upon issue of the New Shares and the
listing and quotation of all our existing issued Shares (including the Vendor
Shares), the New Shares, the Performance Shares and the Option Shares.
Monies paid in respect of any application accepted will be returned if the
admission and listing do not proceed. The dealing in and quotation of the
Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared
with larger or more established companies listed on the Main Board of the
SGX-ST. In particular, companies may list on Catalist without a track record
of protability and there is no assurance that there will be a liquid market
in the shares or units of shares traded on Catalist. You should be aware of
the risks of investing in such companies and should make the decision to
invest only after careful consideration and, if appropriate, consultation with
your professional adviser(s).
This offer of Invitation Shares is made in or accompanied by an offer
document that has been registered by the SGX-ST acting as agent on
behalf of the Monetary Authority of Singapore (the Authority).
Neither the Authority nor the SGX-ST has examined or approved the contents of this
Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility
for the contents of this Offer Document, including the correctness of any of the
statements or opinions made or reports contained in this Offer Document. The
SGX-ST does not normally review the application for admission but relies on the
Sponsor and Issue Manager conrming that our Company is suitable to be listed
and complies with the Listing Manual (as dened herein). Neither the Authority
nor the SGX-ST has in any way considered the merits of the Shares (including
the Vendor Shares), the New Shares, the Performance Shares and the Option
Shares being offered for investment. The registration of this Offer Document by
the SGX-ST does not imply that the Securities and Futures Act (Chapter 289) of
Singapore, or any other legal or regulatory requirements, or requirements under
the SGX-STs listing rules, have been complied with.
We have not lodged this Offer Document in any other jurisdiction.
Investing in our Shares involves risks which are described in the section entitled
RISK FACTORS of this Offer Document.
After the expiration of six (6) months from the date of registration of this Offer
Document, no person shall make an offer of our Shares, or allot, issue or sell any
of our Shares, on the basis of this Offer Document; and no ofcer or equivalent
person or promoter of our Company will authorise or permit the offer of any of
our Shares or the allotment, issue or sale of any of our Shares, on the basis of
this Offer Document.
Invitation in respect of 37,000,000 Invitation Shares comprising 25,000,000 New Shares and 12,000,000 Vendor Shares, as follows:
(a) 1,500,000 Offer Shares at S$0.30 each by way of public offer; and
(b) 35,500,000 Placement Shares at S$0.30 each by way of placement,
payable in full on application.
CIMB Bank Berhad (13491-P)
Singapore Branch
(Incorporated in Malaysia)
Sponsor and Issue Manager
CIMB Securities (Singapore) Pte. Ltd.
(Company Registration No.: 198701621D)
(Incorporated in the Republic of Singapore)
Underwriter and Placement Agent
CORPORATE PROFILE
Versalink Holdings Limited is an established Malaysia-based manufacturer of mid to high-end system
furniture and we provide products and services to more than 90 overseas dealers located in more than 40
countries in Africa, Asia, Australasia, Middle East and North America
BUSINESS OVERVIEW
Established in 1991
Principally engaged in the design, manufacture and supply of a wide range of system furniture and the provision of workspace planning
and consulting services
Our customers include contractors, corporate customers, dealers and original equipment manufacturer (OEM) customers, both
in Malaysia and overseas
We also supply ancillary products such as seating models and work tools that are sourced from third party manufacturers
Apart from our Versalink branded and OEM products, we also represent international brands such as ZCO Brositzmbel AG of
Switzerland, Dauphin Human Design of Germany and Sinetica Industries Srl of Italy
Presentation Products
Reception Furniture
Executive Series
Work Tools
Panel Systems
Filing & Storage
Power Options
Desking Systems
Seating
Modular Systems
OUR PRODUCTS
CORPORATE PROFILE
BUSINESS OVERVIEW
Established in 1991
COMPETITIVE STRENGTHS
PROSPECTS
Very comprehensive offering of products and
services and able to turn around products
quickly
Able to provide an effcient one-stop
service with a broad range of products and
services
Well-stocked warehouse allows us to take
on projects with short deadlines
Established track record and experienced
management team
Strong commercial identity built through
our Versalink brand, which holds a
track record of over 20 years in the offce
furniture industry
Strong design capabilities
Continued collaboration with overseas
designers
Strong research and development team
Strong relationships with our large and
diversied pool of customers
Provides products and services to more than
40 countries in Africa, Asia, Australasia,
Middle East and North America
We have serviced some of our customers
for more than ten (10) years
Demand growth from emerging countries
Growth in Asian nations has prompted an
increase of offce furniture imports from
Malaysia over the past fve (5) years
(1)
Recovery of major economies
For example, from 2009 to 2013, the North
American region has seen a compound
annual growth rate (CAGR) of 12.0% in
offce furniture imports from Malaysia
(1)
Growth of commercial property developments
in Malaysia
Total offce supply recorded a CAGR of
4.1% from 2009 to 2013
(1)
It is in the pipeline that an additional 0.7
million m
2
of new offce space is being
scheduled to be released in Malaysia in
2014
(1)
We have been ranked by Converging Knowledge Pte Ltd (an independent market researcher)
as one of the most proftable companies among the top comparable companies in Malaysia
Push towards high-value products
and services
Demand for products that are better
designed and made from sustainable
practices is on the rise
The industry is able to realise higher
proftability from sales of high-value,
internationally recognised products, and
provision of value-added services
(1)
Gradual shift into high-value products and
services may also alleviate pressure from
higher production costs and increased
competition from other exporting
countries like the Peoples Republic of
China and Vietnam
(1)
Use of research and technology
The furniture manufacturing industry
enjoys strong governmental support in
Malaysia, which comes in the form of
incentives and programmes to adopt the
use of technology
Use of high-tech procedures in
furniture manufacturing is expected
to push growth in the industry, by way
of driving productivity and mitigating
future increases in cost of labour and/or
materials
(1)

Based on the report titled The Offce Furniture
Industry in Malaysia prepared by the Independent
Market Researcher, Converging Knowledge Pte Ltd.
PROPOSED DIVIDEND
We intend to grow our core business by increasing domestic market
share in Malaysia and increasing our exports to overseas markets. Our
growth strategies are as follows:
We intend to recommend and distribute dividends of not less than 30% of our net prots after tax attributable
to our Shareholders in each of FY2015 and FY2016. Please refer to the section entitled Dividend Policy of this
Offer Document for further details.
Continue to reinforce and strengthen our
market position in Malaysia
Our Directors believe there are signifcant
growth prospects in the ofce furniture
market in Malaysia, and we intend to
increase our market share through the
following:
(i) Increase participation in the tendering
of ofce and commercial t-out projects
(ii) Increase our sales through our online
portal http://store.versalink.com
(iii) Explore setting up new showrooms
ourselves or in conjunction with
business partners to increase the
visibility of our brand and presence in
other parts of Malaysia
In June 2014, we have set up a new
showroom in Nusajaya, in the Iskandar
region of the state of Johor, Malaysia to
be close to customers in Johor Bahru and
Singapore
Increase the exports of our Versalink brand
of system furniture
Increase the exports of our products to
existing markets, and explore opportunities
to export to new markets in Europe
Participate in more overseas tradeshows,
exhibitions and advertising in overseas
magazines and publications
Increase our production capabilities by
investing in new machinery, upgrading to
better machinery and relocating Steeltema (M)
Sdn. Bhd.s production facilities and/or setting
up other new production facilities
Relocate Steeltema (M) Sdn. Bhd.s manufacturing
operations by the rst quarter of FY2016
Upgrade our machinery and equipment to
enhance our production efciency
BUSINESS STRATEGIES & FUTURE PLANS
FINANCIAL HIGHLIGHTS
Establish a regional presence and explore
investments, acquisitions and/or joint ventures
Replicate our project tendering success
in countries such as Singapore, Thailand,
Philippines, Vietnam and Indonesia
We will consider investing in or acquiring
other companies with businesses similar
or complementary to our business, and/or
joint ventures with suitable parties
TABLE OF CONTENTS
Page
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . 14
SELLING RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
DETAILS OF THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
INDICATIVE TIMETABLE FOR LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
OFFER DOCUMENT SUMMARY
OVERVIEW OF OUR GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SUMMARY OF OUR FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
INVITATION STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
USE OF PROCEEDS AND LISTING EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SHAREHOLDERS
OWNERSHIP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
VENDORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
MORATORIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
RESTRUCTURING EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
POST-RESTRUCTURING EXERCISE SHARE TRANSFERS . . . . . . . . . . . . . . . . . . . . . . 65
ACQUISITION OF STEELTEMA BY OUR COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SELECTED COMBINED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
INFLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SEASONALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
REVIEW OF THE RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
REVIEW OF FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS . . . . . . . . . . . . . . . . . . 87
ACCOUNTING TREATMENT OF FOREIGN CURRENCIES . . . . . . . . . . . . . . . . . . . . 88
i
FOREIGN EXCHANGE EXPOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SIGNIFICANT ACCOUNTING POLICY CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
GENERAL INFORMATION ON OUR GROUP
HISTORY AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
BUSINESS OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
OUR PRODUCTS AND RELATED SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
OUR BUSINESS PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
PROCUREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
MARKETING AND SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
QUALITY CONTROL AND ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
RESEARCH AND DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
WORKPLACE SAFETY AND HEALTH MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . 108
STAFF TRAINING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
AWARDS AND CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
MANUFACTURING FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
PROPERTIES AND FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
APPROVALS YET TO BE OBTAINED IN RESPECT OF OUR WAREHOUSE . . . . . 113
APPROVALS YET TO BE OBTAINED IN RESPECT OF CERTAIN OF OUR LEASE
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
CORPORATE SOCIAL RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
MAJOR CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
MAJOR SUPPLIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
CREDIT MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
INVENTORY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
COMPETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
COMPETITIVE STRENGTHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
TRENDS AND ORDER BOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
BUSINESS STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
GOVERNMENT REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
INTERESTED PERSON TRANSACTIONS
INTERESTED PERSONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
PAST INTERESTED PERSON TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS . . . . . . . . . . 135
OTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
GUIDELINES AND REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON
TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
POTENTIAL CONFLICTS OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
ii
DIRECTORS, MANAGEMENT AND STAFF
DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
MANAGEMENT REPORTING STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
SERVICE AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
VERSALINK PERFORMANCE SHARE PLAN AND VERSALINK EMPLOYEE
SHARE OPTION SCHEME
VERSALINK PERFORMANCE SHARE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
VERSALINK EMPLOYEE SHARE OPTION SCHEME . . . . . . . . . . . . . . . . . . . . . . . . 164
CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
GENERAL AND STATUTORY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
APPENDIX A
INDEPENDENT AUDITORS REPORT ON THE COMBINED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARS ENDED 29 FEBRUARY 2012, 28 FEBRUARY 2013 AND
28 FEBRUARY 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B
INDUSTRY REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C
DESCRIPTION OF ORDINARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
APPENDIX D
SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF OUR COMPANY . . . . . . D-1
APPENDIX E
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
APPENDIX F
RULES OF THE VERSALINK PERFORMANCE SHARE PLAN . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX G
RULES OF THE VERSALINK EMPLOYEE SHARE OPTION SCHEME . . . . . . . . . . . . . . G-1
APPENDIX H
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE . H-1
iii
CORPORATE INFORMATION
BOARD OF DIRECTORS : Dr Tay Chuan Hui (Independent Non-Executive
Chairman)
Law Kian Siong (Executive Director and Chief
Executive Officer)
Law Pei Ling (Executive Director and Chief Operating
Officer)
Law Kian Guan (Executive Director (Singapore and
Johor Operations))
Chin Chee Choon (Independent Director)
Chow Wen Kwan (Independent Director)
COMPANY SECRETARY : Seah Kim Swee, CPA (Australia)
REGISTERED OFFICE : 8 Wilkie Road
#03-01 Wilkie Edge
Singapore 228095
SHARE REGISTRAR AND
SHARE TRANSFER OFFICE
: Boardroom Corporate & Advisory Services Pte.
Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
SPONSOR AND ISSUE
MANAGER
: CIMB Bank Berhad, Singapore Branch
50 Raffles Place
Singapore 048623
UNDERWRITER AND
PLACEMENT AGENT
: CIMB Securities (Singapore) Pte. Ltd.
50 Raffles Place
Singapore 048623
INDEPENDENT AUDITOR AND
REPORTING ACCOUNTANT
: RSM Chio Lim LLP
8 Wilkie Road
#04-08 Wilkie Edge
Singapore 228095
Partner-in-charge: Chan Sek Wai (a member of the
Institute of Singapore Chartered Accountants)
SOLICITORS TO THE
INVITATION AND LEGAL
ADVISER TO OUR COMPANY
ON SINGAPORE LAW
: Rodyk & Davidson LLP
80 Raffles Place
#33-00 UOB Plaza 1
Singapore 048624
LEGAL ADVISER TO OUR
COMPANY ON MALAYSIA LAW
: Teh & Lee Advocates & Solicitors
A-3-3 & A-3-4, Northpoint Offices,
Mid Valley City
No. 1, Medan Syed Putra Utara,
59200 Kuala Lumpur, Malaysia
INDEPENDENT MARKET
RESEARCHER
: Converging Knowledge Pte Ltd
43 B&C Tras Street
Singapore 078982
1
MALAYSIAN FINANCIAL
ADVISER TO JEMARAMAS
JAYA SDN BHD
: cfSolutions Sdn. Bhd.
1st Floor Wisma LTC
333-1, Jalan Pahang
PRINCIPAL BANKERS : Malayan Banking Berhad
Suite 2.01 (Level 2)
Intan Millennium Square
68 Jalan Batai Laut 4
Taman Intan, 41300 Klang, Selangor Darul Ehsan,
Malaysia
United Overseas Bank (Malaysia) Berhad
(Kuala Lumpur Main Branch)
Level 9, Menara UOB,
Jalan Raja Laut,
RECEIVING BANK : CIMB Bank Berhad, Singapore Branch
50 Raffles Place
Singapore 048623
VENDORS : BSL Holdings Inc.
Level 2, Lot 19, Lazenda Commercial Centre,
Phase 3, 87007 Federal Territory of Labuan, Malaysia
Law Kian Siong
Lot 6119 Jalan Haji Salleh, Batu 5 , Off Jalan Meru,
41050 Klang, Selangor Darul Ehsan, Malaysia
Law Pei Ling
Law Kian Guan
Lee Yuet Chin
Law Kian Hong
2
DEFINITIONS
In this Offer Document and the accompanying Application Forms, the following definitions
apply where the context so admits:
Group Companies
Company : Versalink Holdings Limited. The terms we, our,
our Company or us have correlative meanings
Group : Our Company and our subsidiaries, comprising
Jemaramas Jaya, Steeltema, Versalink Marketing,
Versalink (S) and Versalink Technology
Jemaramas Jaya : Jemaramas Jaya Sdn. Bhd.
Steeltema : Steeltema (M) Sdn. Bhd.
Versalink (S) : Versalink (S) Pte. Ltd.
Versalink Marketing : Versalink Marketing Sdn. Bhd.
Versalink Technology : Versalink Technology Sdn. Bhd.
Other Corporations and Agencies
Aldo Furniture : Aldo Furniture Sdn. Bhd.
Aldo Furniture (PJ) : Aldo Furniture (PJ) Sdn. Bhd.
AmBank : AmBank (M) Berhad
Authority : The Monetary Authority of Singapore
BSL Holdings : BSL Holdings Inc.
BSL Venture : BSL Venture Sdn. Bhd.
CDP : The Central Depository (Pte) Limited
cfSolutions or Malaysian
Financial Adviser to Jemaramas
Jaya
: cfSolutions Sdn. Bhd.
CIMB Bank, Sponsor or
: CIMB Bank Berhad, Singapore Branch
CPF : The Central Provident Fund
FFCL : Frezen Furniture Co., Ltd.
Independent Auditor and
Reporting Accountant
: RSM Chio Lim LLP
Independent Market
Researcher or Converging
Knowledge
: Converging Knowledge Pte Ltd
ISO : International Organization for Standardization
3
MBB : Malayan Banking Berhad
MITI : Ministry of International Trade and Industry of
Malaysia
MPK : Majlis Perbandaran Klang, the local municipal council
of the district of Klang, in the State of Selangor, in
Malaysia
PAM : Pertubuhan Akitek Malaysia, the Malaysian Institute
of Architects
Participating Banks : United Overseas Bank Limited (UOB) and its
subsidiary, Far Eastern Bank Limited (collectively,
the UOB Group), DBS Bank Ltd (including POSB)
(DBS Bank) and Oversea-Chinese Banking
Corporation Limited (OCBC)
Placement Agent or
Underwriter or CIMB
Securities
: CIMB Securities (Singapore) Pte. Ltd.
Receiving Bank : CIMB Bank Berhad, Singapore Branch
SCCS : Securities Clearing and Computer Services (Pte)
Limited
SGX-ST : Singapore Exchange Securities Trading Limited
Solicitors to the Invitation : Rodyk & Davidson LLP
UKAS : United Kingdom Accreditation Service
UOB KL : United Overseas Bank (Malaysia) Berhad (Kuala
Lumpur Main Branch)
Locations
Lot 6118 : Lot 6118, Jalan Haji Salleh, Batu 5 , Off Jalan Meru,
41050 Klang, Selangor Darul Ehsan, Malaysia held
under the freehold title of HS(D) 146806, PT 71257,
Mukim Kapar, Daerah Klang, Negeri Selangor,
Malaysia
Lot 6119 : Lot 6119, Jalan Haji Salleh, Batu 5 , Off Jalan Meru,
41050 Klang, Selangor Darul Ehsan, Malaysia held
under the freehold title of HS(D) 96971, PT 47871,
Mukim Kapar, Daerah Klang, Negeri Selangor,
Malaysia
Lot AL 121 : Lot AL 121,13th Miles, Jalan Subang, 47000 Sungai
Buloh, Selangor Darul Ehsan, Malaysia
Lots 20, 22, 24 and 26 : Lots 20, 22, 24 and 26, Jalan Meru, 41050 Klang,
Selangor, Malaysia
4
No. 19, Jalan SiLC 1/6 : No. 19, Jalan SiLC 1/6, i-Park, Kawasan
Perindustrian SiLC Nusajaya, 79200 Nusajaya, Johor
Darul Takzim, Malaysia
General
Acquisition of Steeltema : The acquisition of Steeltema undertaken in
connection with the Invitation as described in the
section entitled Acquisition of Steeltema by our
Company of this Offer Document
Adam Law : Law Kian Guan
Application Forms : The printed application forms to be used for the
purpose of the Invitation and which form part of this
Offer Document
Application List : The list of applications for subscription and/or
purchase, as the case may be, of the Invitation
Shares
Arica Walters : Law Pei Ling
Articles or Articles of
Association
: The articles of association of our Company
Associate : (a) in relation to any director, chief executive officer,
substantial shareholder or controlling
shareholder (being an individual) means:
(i) his immediate family;
(ii) the trustees of any trust of which he or his
immediate family is a beneficiary or, in the
case of a discretionary trust, is a
discretionary object; or
(iii) any company in which he and his
immediate family together (directly or
indirectly) have an interest of 30.0% or
more;
(b) in relation to a substantial shareholder or a
controlling shareholder (being a company)
means any other company which is its
subsidiary or holding company or is a subsidiary
of such holding company or one in the equity of
which it and/or such other company or
companies taken together (directly or indirectly)
have an interest of 30.0% or more
associated company : In relation to a corporation, means:
(a) any corporation in which the corporation or its
subsidiary has, or the corporation and its
subsidiary together have, a direct interest of not
less than 20.0% but not more than 50.0% of the
aggregate of the nominal amount of all the
voting shares; or
5
(b) any corporation, other than a subsidiary of the
corporation or a corporation which is an
associated company by virtue of paragraph (a),
the policies of which the corporation or its
subsidiary, or the corporation together with its
subsidiary, is able to control or influence
materially
ATM : Automated teller machine of a Participating Bank
Audit Committee : The audit committee of our Company as at the date of
this Offer Document, unless otherwise stated
Australasia : A region of Oceania which comprises Australia, New
Zealand, the island of New Guinea, and neighbouring
islands in the Pacific Ocean
Australia : Commonwealth of Australia
Award : An award of Shares granted under the Performance
Share Plan
Bangladesh : Peoples Republic of Bangladesh
Bevan Walters : Bevan Grant Walters
Board or Board of Directors : The board of Directors of our Company as at the date
of this Offer Document, unless otherwise stated
CAGR : Compound annual growth rate
Catalist : The sponsor-supervised listing platform of the
SGX-ST
CEO : Chief Executive Officer
Companies Act : The Companies Act (Chapter 50) of Singapore, as
amended, modified or supplemented from time to
time
Controlling Shareholder : In relation to a corporation,
(a) a person who has an interest in the voting
shares of a corporation and who exercises
control over the corporation; or
(b) a person who has an interest of 15.0% or more
of the aggregate of the nominal amount of all the
voting shares in a corporation, unless he does
not exercise control over the corporation
COO : Chief Operating Officer
Directors : The directors of our Company as at the date of this
Offer Document, unless otherwise stated
Domestic Sales : Domestic Malaysia Sales
6
Dr Wilson Tay : Dr Tay Chuan Hui
Dubai : Emirate of Dubai
EA : Employment Act 1955 (Act 265) of Malaysia, as
time
Electronic Applications : Applications for the Offer Shares made through an
ATM or through the IB website of one of the
Participating Banks in accordance with the terms and
conditions of this Offer Document
EPF : Employees Provident Fund
EPS : Earnings per Share
ESOS : Versalink Employee Share Option Scheme
Eurozone : The euro area
Executive Director : The executive director of our Company as at the date
of this Offer Document, unless otherwise stated
Executive Officers : The executive officers of our Group as at the date of
this Offer Document, unless otherwise stated
FY : Financial year ended or, as the case may be, ending
on the last day of February
Germany : Federal Republic of Germany
GST : Goods and services tax
Henry Lim : Lim Kok Hean
HY : Half year ended or, as the case may be, ending
31 August
IB : Internet Banking
Independent Auditors Report : Independent Auditors Report and the Combined
Financial Statements for the Financial Years ended
29 February 2012, 28 February 2013 and 28 February
2014 as set out in Appendix A of this Offer Document
Independent Directors : The independent directors of our Company as at the
date of this Offer Document, unless otherwise stated
Indonesia : Republic of Indonesia
Industry Report : The report titled The Office Furniture Industry In
Malaysia prepared by Converging Knowledge set out
in Appendix B of this Offer Document
7
Invitation : The invitation by our Company and the Vendors to the
public in Singapore to subscribe for and/or purchase
the Invitation Shares at the Invitation Price, subject to
and on the terms and conditions of this Offer
Document
Invitation Price : S$0.30 for each Invitation Share
Invitation Shares : The 37,000,000 Shares comprising 25,000,000 New
Shares and 12,000,000 Vendor Shares which are the
subject of this Invitation
IRA : Industrial Relations Act 1967 (Act 177) of Malaysia,
as amended, modified or supplemented from time to
time
Italy : Italian Republic
Jay Law : Law Kian Hong
Labuan : Federal Territory of Labuan
Land Administrator : The land administrator who governs the areas where
our Warehouse is situated
Latest Practicable Date or
LPD
: 12 August 2014, being the latest practicable date
prior to the lodgement of this Offer Document with the
SGX-ST
Law Siblings : Matthew Law, Arica Walters, Adam Law and Jay Law
Listing Manual : Section B of the Listing Manual of the SGX-ST, as
time
Malaysia : Federation of Malaysia
Management and Sponsorship
Agreement
: The management and sponsorship agreement dated
16 September 2014 entered into between our
Company, the Vendors and CIMB Bank pursuant to
which CIMB Bank agreed to manage and sponsor the
Invitation, details as described in the sections
entitled Plan of Distribution and General and
Statutory Information Management, Underwriting
and Placement Arrangements of this Offer Document
Market Day : A day on which the SGX-ST is open for trading in
securities
Matthew Law : Law Kian Siong
Myanmar : Republic of the Union of Myanmar
n.m. : not meaningful
NAV : Net asset value
Nepal : Federal Democratic Republic of Nepal
8
New Shares : The 25,000,000 new Shares which are the subject of
this Invitation
NLC : National Land Code 1965 of Malaysia, as may be
time
Nominating Committee : The nominating committee of our Company as at the
date of this Offer Document, unless otherwise stated
NTA : Net tangible assets
Oceania : A region centred on the islands of the tropical Pacific
Ocean
Offer : The offer by our Company and the Vendors of the
Offer Shares to the public in Singapore for
subscription and/or purchase at the Invitation Price,
subject to and on the terms and conditions of this
Offer Document
Offer Document : This offer document dated 16 September 2014 issued
by our Company in respect of the Invitation
Offer Shares : The 1,500,000 Invitation Shares which are the
subject of the Offer
Option Shares : The new Shares which may be issued upon the
exercise of the options to be granted under the ESOS
Options : The share options which may be granted pursuant to
the ESOS
OSHA : Occupational Safety and Health Act 1994 of
Malaysia, as amended, modified or supplemented
from time to time
Peggy Lee : Lee Yuet Chin
PER : Price earnings ratio
Performance Share Plan : The share plan of our Company known as the
Versalink Performance Share Plan which was
approved on 18 August 2014, particulars of which are
set out in the section entitled Versalink Performance
Share Plan of this Offer Document
Performance Shares : The new Shares which may be issued from time to
time pursuant to the vesting of awards under the
Performance Share Plan
Period under Review : The period which comprises FY2012, FY2013 and
FY2014
9
Placement : The placement of the Placement Shares by the
Placement Agent on behalf of our Company and the
Vendors for subscription and/or purchase at the
Invitation Price, subject to and on the terms and
Placement Shares : The 35,500,000 Invitation Shares which are the
subject of the Placement
PRC : The Peoples Republic of China
QA : Quality assurance
Qatar : State of Qatar
QC : Quality control
Remuneration Committee : The remuneration committee of our Company as at
the date of this Offer Document, unless otherwise
stated
Restructuring Exercise : The corporate restructuring exercise undertaken in
connection with the Invitation as described in the
section entitled Restructuring Exercise of this Offer
Document
Roland Law : Law Boon Seng
Ryonn Leong : Leong Yap Siong
SDBA : Street, Drainage and Building Act 1974 of Malaysia,
as amended, modified or supplemented from time to
time
Securities Account : The securities account maintained by a depositor
with CDP but does not include a securities
sub-account
Service Agreements : The service agreements entered into between our
Company and our Executive Directors, namely
Matthew Law (our Executive Director and CEO),
Arica Walters (our Executive Director and COO) and
Adam Law (our Executive Director (Singapore and
Johor Operations)), as set out in the section entitled
Directors, Management and Staff Service
Agreements of this Offer Document
SFA : The Securities and Futures Act (Chapter 289) of
Singapore, as amended or modified from time to time
Share(s) : Ordinary share(s) in the capital of our Company
Shareholder(s) : Registered holder(s) of Share(s), except where the
registered holder is CDP, the term Shareholders
shall, in relation to such Shares mean the Depositors
whose Securities Accounts are credited with Shares
Singapore : Republic of Singapore
10
SOCSO : Employees Social Security Act 1969 (Act 4) of
from time to time
Substantial Shareholder(s) : Person(s) who has or have an interest in the
Share(s), the nominal amount of which is not less
than five per cent. (5.0%) of the aggregate of the
nominal amount of all the voting shares excluding
treasury shares of our Company
Sungai Buloh : A sub-district of the Petaling district in the state of
Selangor, Malaysia
Sungai Buloh Showroom : The showroom occupied by Versalink Marketing at
Lot AL 121
TCPA : Town and Country Planning Act 1976 (Act 172) of
from time to time
Title : Freehold title under which our Warehouse is held
UAE : United Arab Emirates
UK : The United Kingdom of Great Britain and Northern
Ireland
Underwriting and Placement
Agreement
: The underwriting and placement agreement dated 16
September 2014 entered into between our Company,
the Vendors and CIMB Securities pursuant to which
CIMB Securities agreed to (i) underwrite the Offer;
and (ii) subscribe for and/or purchase, or procure
subscribers and/or purchasers for the Placement
Shares, details as described in the sections entitled
Plan of Distribution and General and Statutory
Information Management, Underwriting and
Placement Arrangements of this Offer Document
USA : United States of America
Vendor Shares : The 12,000,000 existing Shares for which the
Vendors invite applications to purchase at the
Invitation Price, subject to and on the terms and
Vendors : BSL Holdings, Matthew Law, Arica Walters, Adam
Law, Peggy Lee and Jay Law
Vietnam : Socialist Republic of Vietnam
Warehouse : Our warehouse and spray paint line
WCA : Workmens Compensation Act 1952 (Act 273) of
from time to time
11
Currencies, Units and Others
% or per cent. : Per centum
EUR : Euro
m : Metre
mm : Millimetre
m
2
: Square metre
m
3
: Cubic metre
RM and sen : Malaysia Ringgit and sen respectively
RMB : Chinese Renminbi
S$ and cents : Singapore Dollars and cents respectively
USD : United States Dollar
The expressions Depositor, Depository Agent and Depository Register shall have the
meanings ascribed to them respectively in Section 130A of the Companies Act.
Words importing the singular shall, where applicable, include the plural and vice versa and
words importing the masculine gender shall, where applicable, include the feminine and neuter
genders and vice versa. References to persons shall include corporations.
Any reference in this Offer Document, the Application Forms and Electronic Applications to any
statute or enactment is a reference to that statute or enactment as for the time being amended
or re-enacted. Any word defined under the Companies Act, the SFA or any statutory
modification thereof and used in this Offer Document, the Application Forms and Electronic
Applications shall, where applicable, have the meaning assigned to it under the Companies
Act, the SFA or any statutory modification thereof, as the case may be.
Any reference in this Offer Document, the Application Forms and Electronic Applications to
Shares being allotted to an applicant includes allotment to CDP for the account of that
Applicant.
Any reference to a time of day in this Offer Document, the Application Forms and Electronic
Applications shall be a reference to Singapore time unless otherwise stated.
References in this Offer Document to our Group, we, our, and us or any other
grammatical variations thereof shall unless otherwise stated, mean our Company, our Group
or any member of our Group as the context requires.
Any discrepancies in the tables included herein between the listed amounts and the totals
thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be
an arithmetic aggregation of the figures that precede them.
12
GLOSSARY OF TECHNICAL TERMS
The glossary contains explanations of certain technical terms and abbreviations used in this
Offer Document in connection with our Group and our business. The terms and abbreviations
and their assigned meanings may not correspond to standard industry meanings or common
meanings, as the case may be, or usage of these terms.
AutoCAD : A software application for two (2) dimensional and three
(3) dimensional CAD and drafting
CAD : Computer-Aided Design
CNC : Computer Numeric Control or control of equipment
through the use of computer-controlled programming
CPU : Central Processing Unit
ISO 9001:2008 Quality
Standards;
Standards; and
Standards
: Constituent parts of the internationally recognised ISO
9000 series certifications by Lloyds, United Kingdom
Accreditation Service (UKAS) which specify the
requirements for a quality management system
LAD : Liquidated and ascertained damages designated by
agreement between parties in a contract
LCD : Liquid-crystal display
Medium Density
Fibreboard
: An engineered wood product made by breaking down
hardwood or softwood residuals into wood fibres,
combining it with wax and a resin binder, and forming
panels by applying high temperature and pressure
ODM : Original design manufacturer
OEM : Original equipment manufacturer
veneer : Thin slices of wood, which are usually thinner than 3 mm,
that typically are glued onto core panels (such as Medium
Density Fibreboard) to produce flat panels such as doors,
tops and panels for cabinets, parquet floors and parts of
furniture
13
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
All statements contained in this Offer Document, statements made in press releases and oral
statements that may be made by us or our Directors, Executive Officers or employees acting
on our behalf or the Vendors behalf, that are not statements of historical fact, constitute
forward-looking statements. You can identify some of these forward-looking statements by
terms such as expects, believes, plans, intends, estimates, anticipates, may, will,
would and could or similar words. However, you should note that these words are not the
exclusive means of identifying forward-looking statements. All statements regarding our
expected financial position, trend information, business strategies, plans and prospects are
forward-looking statements.
These forward-looking statements, including without limitation, statements as to:
(a) our revenue and profitability;
(b) expected growth in demand;
(c) expected industry trends and development;
(d) anticipated expansion plans; and
(e) other matters discussed in this Offer Document regarding matters that are not historical
facts,
are only predictions. These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements
expected, expressed or implied by these forward-looking statements. These risks,
uncertainties and other factors include, among others:
(a) changes in political, social and economic conditions and the regulatory environment in
Singapore, Malaysia and other countries in which we conduct business or expect to
conduct business;
(b) changes in currency exchange rates;
(c) our inability to implement our business strategies and future plans;
(d) our inability to realise our anticipated growth strategies and expected internal growth;
(e) changes in the availability and prices of ancillary products, raw materials, components
and parts which we require to operate our business;
(f) changes in customer preferences;
(g) changes in competitive conditions and our ability to compete under such conditions;
(h) changes in our future capital needs and the availability of financing and capital to fund
such needs;
(i) other factors beyond our control; and
(j) other factors that are described under the section entitled Risk Factors of this Offer
Document.
14
Some of these risk factors are discussed in more detail in this Offer Document, in particular,
the discussions under the sections entitled Risk Factors and Managements Discussion and
Analysis of Financial Position and Results of Operations of this Offer Document. These
forward-looking statements are applicable only as at the date of this Offer Document.
Given the risks and uncertainties that may cause our actual future results, performance or
achievements to be materially different from that expected, expressed or implied by the
forward-looking statements in this Offer Document, undue reliance must not be placed on
these statements which apply only as at the date of this Offer Document. Neither our Company,
the Vendors, the Sponsor and Issue Manager, the Underwriter, the Placement Agent nor any
other person represents or warrants that our Groups actual future results, performance or
achievements will be as discussed in those statements.
All forward-looking statements by or attributable to us, or persons acting on our behalf,
contained in this Offer Document are expressly qualified in their entirety by such factors. Our
actual results may differ materially from those anticipated in these forward-looking statements
as a result of the risks faced by us. We, the Vendors, the Sponsor and Issue Manager, and the
Underwriter and Placement Agent disclaim any responsibility to update any of those
forward-looking statements or publicly announce any revisions to those forward-looking
statements to reflect future developments, events or circumstances. We are, however, subject
to the provisions of the SFA and the Listing Manual regarding corporate disclosure. In
particular, pursuant to Section 241 of the SFA, if after the registration of this Offer Document
but before the close of the Invitation, our Company becomes aware of (a) a false or misleading
statement or matter in this Offer Document; (b) an omission from this Offer Document of any
information that should have been included in it under Section 243 of the SFA; or (c) a new
circumstance that has arisen since this Offer Document was lodged which would have been
required by Section 243 of the SFA to be included in this Offer Document if it had arisen before
this Offer Document was lodged and that is materially adverse from the point of view of an
investor, our Company may in consultation with the Sponsor and Issue Manager, and the
Underwriter and Placement Agent, lodge a supplementary or replacement offer document with
the SGX-ST acting as agent on behalf of the Authority.
15
SELLING RESTRICTIONS
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for
and/or purchase the Invitation Shares in any jurisdiction in which such offer, solicitation or
invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such
offer, solicitation or invitation. No action has been or will be taken under the requirements of
the legislation or regulations of, or of the legal or regulatory requirements of any jurisdiction,
except for the lodgement and/or registration of this Offer Document in Singapore in order to
permit a public offering of the Invitation Shares and the public distribution of this Offer
Document in Singapore. The distribution of this Offer Document and the offering of the
Invitation Shares in certain jurisdictions may be restricted by the relevant laws in such
jurisdictions. Persons who may come into possession of this Offer Document are required by
our Company, the Vendors, the Sponsor and Issue Manager, and the Underwriter and
Placement Agent to inform themselves about, and to observe and comply with, any such
restrictions at their own expense and without liability to our Company, the Vendors, the
Sponsor and Issue Manager, and the Underwriter and Placement Agent.
16
DETAILS OF THE INVITATION
LISTING ON CATALIST
CIMB Bank has on our behalf applied to the SGX-ST for permission to deal in, and for
quotation of, all our Shares already issued (including the Vendor Shares), the New Shares, the
Performance Shares and the Option Shares. Such permission will be granted when our
Company has been admitted to Catalist. Our acceptance of applications for the Invitation
Shares will be conditional upon, inter alia, the issue of the New Shares and permission being
granted by the SGX-ST to deal in, and for quotation of, all our existing issued Shares (including
the Vendor Shares), the New Shares, the Performance Shares and the Option Shares. Monies
paid in respect of any application accepted will be returned to you, without interest or any
share of revenue or other benefit arising therefrom and at your own risk, if the said permission
is not granted and you will not have any claims whatsoever against us, the Vendors, the
Sponsor and Issue Manager, and the Underwriter and Placement Agent.
Companies listed on Catalist may carry higher investment risk when compared with larger or
more established companies listed on the SGX-ST Main Board. In particular, companies may
list on Catalist without a track record of profitability and there is no assurance that there will
be a liquid market in the shares or units of shares traded on Catalist. You should be aware of
the risks of investing in such companies and should make the decision to invest only after
careful consideration and, if appropriate, consultation with your professional adviser(s).
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer
Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents
of this Offer Document, including the correctness of any of the statements or opinions made
or reports contained in this Offer Document. The SGX-ST does not normally review the
application for admission but relies on the Sponsor and Issue Manager confirming that our
Company is suitable to be listed and complies with the Listing Manual.
Admission to Catalist is not to be taken as an indication of the merits of the Invitation, our
Company, our subsidiaries, our existing issued Shares (including the Vendor Shares), the New
Shares, the Performance Shares and the Option Shares.
A copy of this Offer Document has been lodged with and registered by the SGX-ST, acting as
agent on behalf of the Authority. Registration of the Offer Document by the SGX-ST, acting as
agent on behalf of the Authority, does not imply that the SFA or any other legal or regulatory
requirements, have been complied with. The SGX-ST has not, in any way, considered the
merits of our existing issued Shares (including the Vendor Shares), the New Shares, the
Performance Shares or the Option 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 Offer
Document in any other jurisdiction.
We and the Vendors are subject to the provisions of the SFA and the Listing Manual regarding
corporate disclosure. In particular, if after the registration of this Offer Document but before the
close of the Invitation, we and the Vendors become aware of:
(a) a false or misleading statement or matter in this Offer Document;
(b) an omission from this Offer Document of any information that should have been included
in it under Section 243 of the SFA; or
(c) a new circumstance that has arisen since this Offer Document was lodged with the
SGX-ST, acting as agent on behalf of the Authority and which would have been required
by Section 243 of the SFA to be included in this Offer Document if it had arisen before this
Offer Document was lodged,
17
that is materially adverse from the point of view of an investor, we and the Vendors may lodge
a supplementary or replacement offer document pursuant to Section 241 of the SFA.
In the event that a supplementary or replacement offer document is lodged with the SGX-ST
acting as agent on behalf of the Authority, the Invitation shall be kept open for at least 14 days
after the lodgement of such supplementary or replacement offer document.
Where prior to the lodgement of the supplementary or replacement offer document,
applications have been made under this Offer Document to subscribe for and/or purchase the
Invitation Shares and:
(a) where the Invitation Shares have not been issued and/or transferred to the applicants, we
(as well as on behalf of the Vendors) shall either:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date
of lodgement of the supplementary or replacement offer document, give the
applicants notice in writing of how to obtain, or arrange to receive, a copy of the
supplementary or replacement offer document, as the case may be, and provide the
applicants with an option to withdraw their applications, and take all reasonable
steps to make available within a reasonable period the supplementary or
replacement offer document, as the case may be, to the applicants who have
indicated they wish to obtain, or who have arranged to receive, a copy of the
supplementary or replacement offer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or
replacement offer document, give the applicants the supplementary or replacement
offer document, as the case may be, and provide the applicants with an option to
withdraw their applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications
shall be deemed to have been withdrawn and cancelled, and we (as well as on behalf
of the Vendors) shall, within seven (7) days from the date of lodgement of the
supplementary or replacement offer document, pay the applicants all monies the
applicants have paid on account of their applications for the Invitation Shares
without interest or any share of revenue or other benefit arising therefrom and at the
applicants own risk and the applicants will not have any claim against us, the
Vendors, the Sponsor and Issue Manager, and the Underwriter and Placement
Agent; or
(b) where the Invitation Shares have been issued to and/or transferred to the applicants, we
(as well as on behalf of the Vendors) shall either:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date
of lodgement of the supplementary or replacement offer document, give the
applicants notice in writing of how to obtain, or arrange to receive, a copy of the
same and provide the applicants with an option to return to us the Invitation Shares
which they do not wish to retain title in, and take all reasonable steps to make
available within a reasonable period the supplementary or replacement offer
document, as the case may be, to the applicants who have indicated they wish to
obtain, or who have arranged to receive, a copy of the supplementary or replacement
offer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or
replacement offer document, give the applicants the supplementary or replacement
offer document, as the case may be, and provide the applicants with an option to
return to us (for our Company as well as on behalf of the Vendors) the Invitation
Shares which they do not wish to retain title in; or
18
(iii) treat the issue and/or transfer of the Invitation Shares as void, in which case the
issue and/or transfer shall be deemed void and we (for our Company as well as on
behalf of the Vendors) shall within seven (7) days from the date of lodgement of the
supplementary or replacement offer document, pay the applicants all monies the
applicants have paid on account of their applications for the Invitation Shares
without interest or any share of revenue or other benefit arising therefrom and at the
applicants own risk and the applicants will not have any claim against us, the
Agent.
An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) to withdraw his
application shall, within 14 days from the date of lodgement of the supplementary or
replacement offer document, notify us of this, whereupon we (as well as on behalf of the
Vendors) shall, within seven (7) days from the receipt of such notification, pay to him all
monies paid by him on account of his application for the Invitation Shares without interest or
any share of revenue or other benefit arising therefrom and at the applicants own risk and the
applicants will not have any claim against us, the Vendors, the Sponsor and Issue Manager,
and the Underwriter and Placement Agent.
An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the
Invitation Shares issued and/or transferred to him shall, within 14 days from the date of
lodgement of the supplementary or replacement offer document, notify us of this and return all
documents, if any, purporting to be evidence of title to those Invitation Shares, to us,
whereupon we (as well as on behalf of the Vendors) shall, within seven (7) days from the
receipt of such notification and documents, if any, pay to him all monies paid by him for those
Invitation Shares without interest or any share of revenue or other benefit arising therefrom
and at his own risk, and the issue and/or transfer of those Invitation Shares shall be deemed
to be void, and he will not have any claim against us, the Vendors, the Sponsor and Issue
Manager, and the Underwriter and Placement Agent.
Pursuant to Section 242 of the SFA, the Authority may, in certain circumstances issue a stop
order (the Stop Order) to our Company, directing that no Shares or no further Shares to
which this Offer Document relates, be allotted or issued. Such circumstances will include a
situation where this Offer Document (i) contains any statement or matter which, in the
Authoritys opinion, is false or misleading (ii) omits any information that should have been
included in it under the SFA, (iii) does not, in the Authoritys opinion, comply with the
requirements of the SFA, or (iv) the Authority is of the opinion that it is in the public interest
to do so.
In the event that the Authority issues a Stop Order and applications to subscribe for and/or
purchase the Invitation Shares have been made prior to the Stop Order, then:
(a) where the Invitation Shares have not been issued and/or transferred to the applicants, the
applications of the Invitation Shares pursuant to the Invitation shall be deemed to have
been withdrawn and cancelled and we (as well as on behalf of the Vendors) shall, within
14 days from the date of the Stop Order, pay to the applicants all monies the applicants
have paid on account of their applications for the Invitation Shares; or
(b) where the Invitation Shares have been issued and/or transferred to the applicants, the
issue and/or transfer of the Invitation Shares pursuant to the Invitation shall be deemed
to be void and we (as well as on behalf of the Vendors) shall, within 14 days from the date
of the Stop Order pay to the applicants all monies paid by them for the Invitation Shares.
Such monies paid in respect of an application will be returned to the applicants at their own
risk, without interest or any share of revenue or other benefit arising therefrom, and they will
not have any claim against us, the Vendors, the Sponsor and Issue Manager, and the
Underwriter and Placement Agent.
19
This Offer Document has been seen and approved by our Directors and the Vendors and they
collectively and individually accept full responsibility for the accuracy of the information given
in this Offer Document and confirm after making all reasonable enquiries, that to the best of
their knowledge and belief, this Offer Document constitutes full and true disclosure of all
material facts about the Invitation and our Group, and our Directors and the Vendors are not
aware of any facts the omission of which would make any statement in this Offer Document
misleading. Where information in this Offer Document has been extracted from published or
otherwise publicly available sources or obtained from a named source, the sole responsibility
of our Directors and the Vendors has been to ensure that such information has been accurately
and correctly extracted from those sources and/or reproduced in this Offer Document in its
proper form and context.
Neither our Company, the Vendors, the Sponsor and Issue Manager, and the Underwriter and
Placement Agent, nor any other parties involved in the Invitation is making any representation
to any person regarding the legality of an investment by such person under any investment or
other laws or regulations. No information in this Offer Document should be considered as being
business, legal or tax advice regarding an investment in our Shares. Each prospective investor
should consult his own professional or other advisers for business, legal or tax advice
regarding an investment in our Shares.
No person has been or is authorised to give any information or to make any representation not
contained in this Offer Document in connection with the Invitation and, if given or made, such
information or representation must not be relied upon as having been authorised by us, the
Vendors, the Sponsor and Issue Manager, and the Underwriter and Placement Agent. Neither
the delivery of this Offer Document and the Application Forms nor any documents relating to
the Invitation, nor the Invitation shall, under any circumstances, constitute a continuing
representation or create any suggestion or implication that there has been no change in the
affairs of our Company or our subsidiaries or in any statements of fact or information contained
in this Offer Document since the date of this Offer Document. Where such changes occur and
are material or required to be disclosed by law, the SGX-ST and/or any other regulatory or
supervisory body or agency, we may make an announcement of the same to the SGX-ST and
if required, we and the Vendors may lodge a supplementary or replacement offer document
with the SGX-ST and will comply with the requirements of the SFA and/or any other
requirements of the SGX-ST. All applicants should take note of any such announcements and,
upon the release of such an announcement, shall be deemed to have notice of such changes.
Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as,
a promise or representation as to our future performance or policies. The Invitation Shares are
offered for subscription and/or purchase solely on the basis of the instructions contained and
representations made in the Offer Document.
This Offer Document has been prepared solely for the purpose of the Invitation and may not
be relied upon by any persons other than the applicants in connection with their application for
the Invitation Shares or for any other purpose.
This Offer Document does not constitute an offer, solicitation or invitation to subscribe
for and/or purchase the Invitation Shares in any jurisdiction in which such offer,
solicitation or invitation is unlawful or unauthorised nor does it constitute an offer,
solicitation or invitation to any person to whom it is unlawful to make such offer,
solicitation or invitation.
20
Copies of this Offer Document and the Application Forms may be obtained on request, subject
to availability during office hours, from:
CIMB Investment Centre
50 Raffles Place
Singapore 048623
A copy of this Offer Document is also available on the SGX-ST website http://www.sgx.com.
The Application List will open immediately upon the registration of this Offer Document
by the SGX-ST acting as agent on behalf of the Authority and will remain open until 12.00
noon on 22 September 2014 or for such further period or periods as our Directors and
the Vendors may, in consultation with the Sponsor and Issue Manager, and the
Underwriter and Placement Agent, in their absolute discretion decide, subject to any
limitation under all applicable laws and regulations. In the event a supplementary offer
document or replacement offer document is lodged with the SGX-ST acting as agent on
behalf of the Authority, the Application List will remain open for at least 14 days after the
lodgement of the supplementary or replacement offer document.
Details of the procedures to subscribe for and/or purchase the Invitation Shares are set
out in Appendix H of this Offer Document.
21
INDICATIVE TIMETABLE FOR LISTING
An indicative timetable for the Invitation and trading in our Shares is set out below:
Indicative date / time Event
22 September 2014 at 12.00 noon Close of Application List
23 September 2014 Balloting of applications, if necessary (in the event
of over-subscription for and/or purchase of the Offer
Shares)
24 September 2014 at 9.00 a.m. Commence trading on a ready basis
29 September 2014 Settlement date for all trades done on a ready
basis
The above timetable is only indicative as it assumes that the date of closing of the Application
List is 22 September 2014, the date of admission of our Company to Catalist is 24 September
2014, the SGX-STs shareholding spread requirement will be complied with and the Invitation
Shares will be issued and fully paid-up prior to 24 September 2014.
The above timetable and procedures may be subject to such modification as the SGX-ST may,
in its absolute discretion, decide, including the decision to permit commencement of trading on
a ready basis and the commencement date of such trading.
In the event of any changes in the closure of the Application List or the time period during
which the Invitation is open, we will publicly announce the same:
(a) through an SGXNET announcement to be posted on the internet at the SGX-ST website
http://www.sgx.com; and
(b) in a major local English newspaper(s).
We will publicly announce the level of subscription for and/or purchase of the Invitation Shares
and the basis of allotment and/or allocation of the Invitation Shares as soon as it is practicable
after the close of the Application List through the channels described in (a) and (b) above.
We and the Vendors reserve the right to reject or accept, in whole or in part, or to scale down
or ballot any application for the Invitation Shares, without assigning any reason therefor, and
no enquiry and/or correspondence on our decision will be entertained. In deciding the basis of
allotment and/or allocation, due consideration will be given to the desirability of allotting and/or
allocating the Invitation Shares to a reasonable number of applicants with a view to establish
an adequate market for our Shares.
Investors should consult the SGX-STs announcement of the ready trading date on the
internet (at the SGX-ST website http://www.sgx.com), or the newspapers or check with
their brokers on the date on which trading on a ready basis will commence.
22
PLAN OF DISTRIBUTION
The Invitation
The Invitation is for 37,000,000 Invitation Shares comprising 1,500,000 Offer Shares and
35,500,000 Placement Shares under the Offer and the Placement respectively, at the Invitation
Price. The Invitation is managed by CIMB Bank and underwritten by CIMB Securities.
Prior to the Invitation, there has been no public market for our Shares. The Invitation Price is
determined by our Company and the Vendors in consultation with the Sponsor and Issue
Manager, and the Underwriter and Placement Agent, taking into consideration, inter alia, the
prevailing market conditions and estimated market demand for our Shares (including the New
Shares and the Vendor Shares) determined through a book-building process. The Invitation
Price is the same for all Invitation Shares and is payable in full on application.
Subject to the terms and conditions of the Management and Sponsorship Agreement as set out
in the section entitled General and Statutory Information Management, Underwriting and
Placement Arrangements of this Offer Document, we and the Vendors have appointed CIMB
Bank and CIMB Bank has agreed to manage and sponsor the Invitation.
Offer Shares
The Offer Shares are made available to the members of the public in Singapore for
subscription and/or purchase at the Invitation Price. The terms, conditions and procedures for
application and acceptance are set out in Appendix H of this Offer Document.
An applicant who has made an application for Offer Shares by way of an Application Form may
not make another separate application for Offer Shares by way of an Electronic Application and
vice versa. Such separate applications shall be deemed to be multiple applications and shall
be rejected.
Pursuant to, and subject to the terms and conditions of, the Underwriting and Placement
Agreement, CIMB Securities has agreed to underwrite our offer of the Offer Shares for a
commission of 3.0% of the Invitation Price for each Offer Share (Underwriting
Commission), payable by our Company and the Vendors (in the proportion in which the Offer
Shares are offered by our Company and the Vendors) pursuant to the Invitation. CIMB
Securities may at its own expense make sub-underwriting arrangements in respect of its
underwriting obligations.
Brokerage will be paid by our Company and the Vendors to members of the SGX-ST, merchant
banks and members of the Association of Banks in Singapore in respect of successful
applications made on Application Forms bearing their respective stamps, or to Participating
Banks in respect of successful applications made through Electronic Applications at their
respective ATMs or IB websites at the rate of 0.25% of the Invitation Price for each Offer Share
or in the case of DBS Bank, 0.75% of the Invitation Price for each Offer Share. This brokerage
has already been included in the Underwriting Commission stated above. In addition, DBS
Bank will levy a minimum brokerage fee of S$10,000.
In the event of an under-subscription for and/or purchase of the Offer Shares as at the close
of the Application List, that number of Offer Shares subscribed for and/or purchased shall be
made available to satisfy excess applications for the Placement Shares to the extent there is
an over-subscription for the Placement Shares as at the close of the Application List.
In the event of an over-subscription for and/or purchase of the Offer Shares as at the close of
the Application List and/or the Placement Shares are fully subscribed or over-subscribed
and/or purchased as at the close of the Application List, the successful applications for the
23
Offer Shares will be determined by ballot or otherwise as determined by our Directors and the
Vendors after consultation with the Sponsor and Issue Manager, and the Underwriter and
Placement Agent and approved by the SGX-ST.
Placement Shares
The Placement Shares are made available to members of the public and institutional investors
in Singapore.
Application for the Placement Shares may only be made by way of the Application Forms. The
terms, conditions and procedures for application and acceptance are set out in Appendix H of
Pursuant to, and subject to the terms and conditions of, the Underwriting and Placement
Agreement, CIMB Securities has agreed to subscribe for and/or purchase or procure
subscribers and/or purchasers for the Placement Shares for a placement commission of 3.0%
of the Invitation Price for each Placement Share, payable by our Company and the Vendors (in
the proportion in which the Placement Shares are offered by our Company and the Vendors).
The Placement Agent may at its own expense make sub-placement arrangements in respect
of its placement obligations.
Subscribers of the Placement Shares may be required to pay a brokerage fee of up to one per
cent. (1.0%) of the Invitation Price for each Placement Share to the Placement Agent.
The Underwriting and Placement Agreement is conditional upon among other things the
Management and Sponsorship Agreement not having been terminated or rescinded pursuant
to the provisions of the Management and Sponsorship Agreement.
In the event of an under-subscription and/or purchase for the Placement Shares as at the close
of the Application List, that number of Placement Shares not subscribed for and/or purchased
shall be made available to satisfy excess applications for the Offer Shares to the extent that
there is an over-subscription for and/or purchase of the Offer Shares as at the close of the
Application List.
Subscription for Invitation Shares
As at the date of this Offer Document, Dr Wilson Tay, our Independent Director, has indicated
his interest to subscribe for 100,000 Placement Shares, representing approximately 0.1% of
our post-Invitation share capital. Please refer to the section entitled Shareholders
Ownership Structure of this Offer Document for more details.
Save as disclosed, to the best of our knowledge and belief as at the date of this Offer
Document, none of our Directors (including our Independent Directors) or Substantial
Shareholders intends to subscribe for and/or purchase the Invitation Shares in the Invitation.
If such person(s) were to make an application for Invitation Shares and are subsequently
allotted such number of Invitation Shares, we will make the necessary announcements at an
appropriate time.
To the best of our knowledge and belief, as at the date of this Offer Document, we are not
aware of any person who intends to subscribe for and/or purchase more than five per cent.
(5.0%) of the Invitation Shares. However, through a book building process to assess market
demand for our Shares, there may be person(s) who may indicate an interest to subscribe for
and/or purchase Shares amounting to more than five per cent. (5.0%) of the Invitation Shares.
If such person(s) were to make an application for more than five per cent. (5.0%) of the
Invitation Shares and are subsequently allotted and/or allocated such number of Shares, we
will make the necessary announcements at an appropriate time. The final allotment and/or
allocation of Shares will be made in accordance with the shareholding spread and distribution
guidelines as set out in the Listing Manual.
24
No Shares shall be issued and allotted and/or allocated on the basis of this Offer Document
later than six (6) months after the date of registration of this Offer Document by the SGX-ST,
acting as agent on behalf of the Authority.
25
OFFER DOCUMENT SUMMARY
The information contained in this summary is derived from, and should be read in conjunction
with, the full text of this Offer Document. Because it is a summary, it does not contain all of the
information that prospective investors should consider before investing in our Shares.
Prospective investors should read this entire Offer Document carefully, especially the matters
set out in the section entitled Risk Factors of this Offer Document and our financial
statements and related notes before deciding on whether or not to invest in our Shares.
OVERVIEW OF OUR GROUP
Our Company was incorporated in Singapore on 21 April 2014 under the name Versalink
Holdings Pte. Ltd. as a private limited company under the Companies Act. Pursuant to the
completion of the Restructuring Exercise, the Acquisition of Steeltema and the incorporation
of Versalink (S), our Company became the holding company of our subsidiaries, comprising
Jemaramas Jaya, Versalink Marketing, Versalink Technology, Steeltema and Versalink (S).
Please refer to the sections entitled Restructuring Exercise and Acquisition of Steeltema by
our Company of this Offer Document for further details. On 20 August 2014, our name was
changed to Versalink Holdings Limited in connection with our Companys conversion to a
public company limited by shares.
Our Business
We are an established Malaysia-based manufacturer of mid to high-end system furniture. We
are principally engaged in the design, manufacture and supply of a wide range of system
furniture under our Versalink brand or on an OEM basis that can be tailored to our customers
specifications.
We also supply ancillary products such as seating models and work tools that we source from
third party manufacturers. In addition, we are the reseller for various established international
third party brands of premium office furniture.
As part of our value-added service to our customers, we also provide workspace planning and
consulting services to customers who require advice on optimising their usage of space and/or
customisation of system furniture solutions to meet their individual requirements.
We have a wide customer base which spans more than 40 countries in Africa, Australasia,
Asia, Middle East and North America. Our customers include contractors, corporate
customers, dealers and OEM customers, both in domestic Malaysia as well as overseas.
Please refer to the section entitled General Information on our Group Business Overview
of this Offer Document for further details.
Our Competitive Strengths
We have been ranked by Converging Knowledge as one of the most profitable companies
among the top comparable companies in Malaysia and we believe that we have achieved this
due to the following:
We have a very comprehensive offering of products and services and are able to turn
around products quickly
We have an established track record and experienced management team
We have strong design capabilities as a result of our continued collaboration with
overseas designers
We have developed strong relationships with our large and diversified pool of customers
Please refer to the section entitled General Information on our Group Competitive
Strengths of this Offer Document for further details.
26
Our Business Strategies and Future Plans
Our business strategies and future plans are as follows:
To continue to reinforce and strengthen our market position in Malaysia
To focus on increasing the exports of our Versalink brand of system furniture
To increase our production capabilities by investing in new machinery, upgrading to better
machinery and relocating Steeltemas production facilities and/or setting up other new
production facilities
To establish a regional presence and explore investments, acquisitions and/or joint
ventures
Please refer to the section entitled General Information on our Group Business Strategies
And Future Plans of this Offer Document for further details.
SUMMARY OF OUR FINANCIAL INFORMATION
The following table represents a summary of the financial highlights of our Group. The data
presented in this table is derived from the Independent Auditors Report, the section entitled
Selected Combined Financial Information and the financial statements and notes thereto
which are included elsewhere in this Offer Document. You should read those sections and the
section entitled Managements Discussion and Analysis of Financial Position and Results of
Operations of this Offer Document for a further explanation of the financial data summarised
here.
Selected items from the combined statements of profit or loss and other comprehensive
income of our Group
(1)
< Audited >
FY2012 FY2013 FY2014
RM000 RM000 RM000
Revenue 49,279 59,694 78,839
Gross profit 15,906 22,704 32,400
Profit before tax 6,363 11,505 18,803
Profit, net of tax 4,376 8,718 14,544
EPS attributable to equity holders of the
Company (sen)
(2)(3)
3.98 7.93 13.22
Adjusted EPS attributable to equity holders of
the Company (sen)
(4)
3.24 6.46 10.77
Notes:
1. The combined statements of profit or loss and other comprehensive income have been prepared on the basis
that our Group has been in existence prior to the Restructuring Exercise. As the Acquisition of Steeltema is not
part of the Restructuring Exercise, Steeltemas financials were not included in the combined statements of profit
or loss and other comprehensive income. Please refer to the Combined Financial Statements as set out in
Appendix A of this Offer Document for the basis of preparation of the combined financial statements of our
Group.
2. Had the Service Agreements been in place on 1 March 2013, our profit, net of tax for FY2014 would have been
approximately RM13.9 million and the EPS based on the pre-Invitation share capital of 110,000,000 Shares
would have been approximately 12.6 sen.
3. For comparative purposes, EPS for the Period Under Review has been computed based on the profit, net of tax
for the relevant financial year and the pre-Invitation share capital of 110,000,000 Shares.
4. For comparative purposes, adjusted EPS for the Period Under Review has been computed based on the profit,
net of tax for the relevant financial year and the post-Invitation share capital of 135,000,000 Shares.
27
Selected items from the combined statement of financial position of our Group
(1)
Audited
as at
28 February 2014
RM000
Current assets 37,353
Non-current assets 25,363
Current liabilities 15,958
Non-current liabilities 2,401
Total equity 44,357
NTA per Share (sen)
(2)
40.32
Notes:
1. The combined statement of financial position as at 28 February 2014 has been prepared on the basis that our
Group has been in existence prior to the Restructuring Exercise. As the Acquisition of Steeltema is not part of
the Restructuring Exercise, Steeltemas financials were not included in the combined statement of financial
position.
2. NTA per Share as at 28 February 2014 had been computed based on the equity attributable to the Companys
equity holders as at 28 February 2014 and the pre-Invitation share capital of 110,000,000 Shares.
Where you can find us
Our principal place of business is located at Lot 6119, Jalan Haji Salleh, Batu 5
1
2, Off Jalan
Meru, 41050 Klang, Selangor Darul Ehsan, Malaysia and our registered office is located at 8
Wilkie Road, #03-01, Wilkie Edge, Singapore 228095. Our telephone number is +603 3392
6888 and our facsimile number is +603 3392 3377. Our website is www.versalink.com and our
online portal is http://store.versalink.com. Information contained on these websites do not
constitute part of this Offer Document.
28
THE INVITATION
Invitation size : Invitation in respect of 37,000,000 Invitation Shares,
comprising 25,000,000 New Shares and 12,000,000
Vendor Shares by way of Offer and Placement.
The New Shares, upon issue and allotment, will rank pari
passu in all respects with the existing issued Shares
(including the Vendor Shares).
Invitation Price : S$0.30 for each Invitation Share, payable in full on
application.
The Offer : The Offer comprises an offering by our Company and the
Vendors to the public in Singapore to subscribe for and/or
purchase 1,500,000 Offer Shares at the Invitation Price,
subject to and on the terms and conditions of this Offer
Document.
In the event of an under-subscription for and/or purchase
of the Offer Shares, that number of Offer Shares not
subscribed for and/or purchased shall be used to satisfy
excess applications for the Placement Shares to the
extent that there is an over-subscription for the Placement
Shares as at the close of the Application List.
The Placement : The Placement comprises a placement by the Placement
Agent on behalf of our Company and the Vendors of
35,500,000 Placement Shares at the Invitation Price,
subject to and on the terms and conditions of this Offer
Document.
In the event of an under-subscription for the Placement
Shares, that number of Placement Shares not subscribed
for shall be used to satisfy excess applications for the
Offer Shares to the extent that there is an
over-subscription and/or purchase for the Offer Shares as
at the close of the Application List.
Purpose of the Invitation : Our Directors believe that the listing of our Company and
the quotation of our Shares on Catalist will enhance the
public image of our Group in Malaysia and globally and
enable us to tap the capital markets for the expansion of
our operations. The Invitation will also provide members of
the public with an opportunity to participate in the equity of
our Company.
Listing status : Prior to the Invitation, there has been no public market for
our Shares. Our Shares will be quoted on Catalist, subject
to the admission of our Company to Catalist and
permission for dealing in, and for quotation of, our Shares
being granted by the SGX-ST.
Risk Factors : Investing in our Shares involves risks which are described
in the section Risk Factors of this Offer Document.
29
RISK FACTORS
Prospective investors should carefully consider and evaluate each of the following risk factors
and all other information contained in this Offer Document, before deciding to invest in our
Shares. The following does not state risks unknown to us now but which could occur in future,
and risks which we currently believe to be immaterial, which could turn out to be material. To
the best of our Directors knowledge and belief, all risk factors which are material to investors
in making an informed judgement of our Group have been set out below. If any of the following
risk factors and uncertainties develops into actual events, our business, financial position,
results of operations and/or prospects could be materially and adversely affected. In such
circumstances, the trading price of our Shares could decline and investors may lose all or part
of their investment in our Shares.
This Offer Document also contains forward-looking statements having direct and/or indirect
implications on our future performance. Our actual results may differ materially from those
anticipated by these forward-looking statements due to certain factors, including the risks and
uncertainties faced by us, as described below and elsewhere in this Offer Document.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We may be affected by certain approvals yet to be obtained in respect of our warehouse
and spray paint line (the Warehouse)
Our building at Lot 6118 on which our Warehouse is situated, is owned by our subsidiary,
Jemaramas Jaya, and is held under a freehold title (the Title). The directors of Jemaramas
Jaya are Adam Law (our Executive Director (Singapore and Johor Operations)), Peggy Lee
(our founding shareholder) and Wong Hon Mui (the wife of our Executive Director and CEO,
Matthew Law). As Jemaramas Jaya did not obtain planning permission prior to construction,
the building is deemed to be an unauthorised development. The category-of-use endorsed on
the land title has also yet to be categorised as industrial land, as required under the local land
code. As such, we have also not obtained the required building permission and a Certificate
of Completion and Compliance (CCC) in respect of our Warehouse. Jemaramas Jaya has, on
26 March 2014, submitted the requisite applications to the authorities for the planning
permission but we had yet to receive a response from the authorities as at the Latest
Practicable Date.
Jemaramas Jaya may be subject to civil and criminal penalties for the above non-compliance.
The authorities may also require Jemaramas Jaya to demolish our Warehouse and/or
repossess the land if Jemaramas Jaya fails to comply with any direction to rectify the breach.
If the foregoing penalties are not adequate and/or Jemaramas Jaya fails to comply with the
directions of the authorities or is otherwise unable to rectify the non-compliance or obtain the
requisite approvals from the authorities, Jemaramas Jaya may on conviction be subject to
fines up to a maximum aggregate of approximately RM980,000. The directors of Jemaramas
Jaya may also be exposed to imprisonment if convicted of an offence under the relevant
legislation, and in such event, our business operations and reputation may be affected.
BSL Holdings, Matthew Law, Arica Walters, Adam Law, Peggy Lee and Jay Law have jointly
and severally provided an indemnity to Jemaramas Jaya for accounting write-offs suffered by
Jemaramas Jaya (as reflected in the financial statements of Jemaramas Jaya) based upon,
resulting from or relating to any demolition of our Warehouse or permanent forfeiture or
temporary possession of Lot 6118 by the relevant authorities by reason of any approvals yet
to be obtained (Accounting Write-offs). Jemaramas Jaya has undertaken that in the event
that possession of Lot 6118 is returned to Jemaramas Jaya following temporary possession
not exceeding three (3) years by the relevant authorities, Jemaramas Jaya shall forthwith
return an amount equivalent to the Accounting Write-offs to BSL Holdings, Matthew Law, Arica
Walters, Adam Law, Peggy Lee and Jay Law. The liability of BSL Holdings, Matthew Law, Arica
Walters, Adam Law, Peggy Lee and Jay Law shall terminate on the date when the required
approvals have been obtained.
30
If Jemaramas Jaya is subject to significant penalties and/or fines or we are required to
demolish our Warehouse and/or the land is repossessed and we are unable to recover from
entire amount of the Accounting Write-offs arising from such demolition and/or repossession
of land under the aforesaid indemnity, our financial performance and position may be
adversely affected. In addition, the demolition of our Warehouse and/or repossession of land
may disrupt our business operations as we would have to find alternative premises to relocate
our Warehouse.
Please see the section entitled General Information on our Group Approvals Yet To Be
Obtained In Respect Of Our Warehouse of this Offer Document for further details.
We may be affected by certain approvals yet to be obtained in respect of our Sungai
Buloh Showroom
Our Groups subsidiary, Versalink Marketing, occupies the Sungai Buloh Showroom at Lot AL
121 which is owned by a third party. We understand that the land on which the Sungai Buloh
Showroom is situated is categorised by the NLC as agriculture land and does not possess a
CCC. Please refer to the section entitled General Information on our Group Properties And
Fixed Assets of this Offer Document for further details.
Although Versalink Marketing is only an occupier of the Sungai Buloh Showroom, in the
unlikely event that Versalink Marketing is convicted of a breach of the relevant legislation,
Versalink Marketing may on conviction be subject to a fine up to a maximum of approximately
RM250,000. The directors of Versalink Marketing may also be exposed to imprisonment under
the relevant legislation. The directors of Versalink Marketing are Peggy Lee and Wong Hon Mui
(the wife of our Executive Director and CEO, Matthew Law). In the event the directors of
Versalink Marketing are imprisoned, our business operations and reputation may be affected.
In the event of enforcement action by the authorities against the owner of the Sungai Buloh
Showroom, we would have to relocate our showroom to an alternative premise and our
business operations may be disrupted. In addition, if Versalink Marketing is subject to
significant penalties and/or fines for occupying the Sungai Buloh Showroom, our financial
position and profitability may be adversely affected.
Obtained In Respect Of Our Lease Properties Sungai Buloh Showroom of this Offer
Document for further details.
We are in the process of actively sourcing for an alternative location for our Sungai Buloh
Showroom and, in any case, we will vacate the premises on or before 28 February 2015.
and severally provided an indemnity to the Company and Versalink Marketing for all fines,
claims or losses incurred or suffered by Versalink Marketing resulting from or relating to any
non-compliance with the Street, Drainage and Building Act 1974 (SDBA) or other legal and
regulatory requirements for the period from the date on which Versalink Marketing first
occupied the Sungai Buloh Showroom up to the date on which Versalink Marketing vacates the
Sungai Buloh Showroom. The liability of BSL Holdings, Matthew Law, Arica Walters, Adam
Law, Peggy Lee and Jay Law shall terminate three (3) years from 28 February 2015.
We may be affected by certain approvals yet to be obtained in respect of certain
accommodation which we had previously provided to our workers
Our Groups subsidiary, Jemaramas Jaya, rents a 3,720 m
2
plot of land situated at Lots 20, 22,
24 and 26, Jalan Meru, 41050, Klang, Selangor (Lots 20, 22, 24 and 26), adjacent to our
manufacturing facility located at Lot 6119, where our workers had been previously housed in
container accommodation with separate toilet and kitchen facilities set up by us on the
premises (the Workers Accommodation).
31
No planning or building permission for the setting up of the accommodation or CCC was
obtained for the Workers Accommodation. Although we are not the owner of the land,
Jemaramas Jaya may nonetheless be subject to fine and/or the directors of Jemaramas Jaya
may be subject to imprisonment for breaches of the Town and Country Planning Act 1976 (Act
172) (the TCPA) and the SDBA respectively. Please refer to the section entitled General
Information on our Group Approvals Yet To Be Obtained In Respect Of Our Warehouse of
this Offer Document for the potential sanctions in the event of a conviction for such breaches.
In the event that the authorities take the view that the CCC is required for the Workers
Accommodation, the directors of Jemaramas Jaya may also be exposed to imprisonment
and/or Jemaramas Jaya may be fined for possible non-compliance with the SDBA. In view of
the foregoing, Jemaramas Jaya may on conviction be subject to fines up to a maximum
aggregate of RM800,000.
As at the Latest Practicable Date, all our workers had moved out of the Workers
Accommodation and we are taking steps to reinstate Lots 20, 22, 24 and 26 to its original form
by 31 December 2014.
Obtained In Respect Of Our Lease Properties Workers Accommodation of this Offer
and severally provided an indemnity to our Company and Jemaramas Jaya for all fines, claims
or losses incurred or suffered by Jemaramas Jaya resulting from or any non-compliance with
the SDBA and TCPA or other legal and regulatory requirements for the period from the date on
which Jemaramas Jaya first leased and occupied the premises situated at Lots 20, 22, 24 and
26 up to the date (the Reinstatement Date) on which Jemaramas Jaya dismantles and
demolishes the container accommodation with separate toilet and kitchen facilities and
reinstates Lots 20, 22, 24 and 26 to its original form. The liability of BSL Holdings, Matthew
Law, Arica Walters, Adam Law, Peggy Lee and Jay Law shall terminate three (3) years from the
later of 31 December 2014 and the Reinstatement Date.
We may be affected in the event that we are required to demolish our Warehouse and/or
Lot 6118 is repossessed by the authorities
The Warehouse located at Lot 6118 is our main warehouse. In order to shorten the lead time
required to meet the interior fit out deadlines for projects, immediate demands of our
customers and to provide quality after-sales services, we keep a ready inventory comprising
mainly ancillary products, raw materials, components and parts and finished goods in our
Warehouse.
As certain approvals have yet to be obtained in respect of our Warehouse, Jemaramas Jaya
and/or its directors may be subject to significant penalties and/or fines and we may be required
to demolish our Warehouse and/or the authorities may repossess Lot 6118. Please see the
section entitled General Information on our Group Approvals Yet To Be Obtained In Respect
Of Our Warehouse of this Offer Document for further details.
In the event that we are required to demolish our Warehouse and/or the authorities repossess
Lot 6118, we will be required to relocate the Warehouse to another location ideally situated
near Lot 6119 where our manufacturing facility is located in order to minimise disruptions to our
operations. Should we be unable to secure such a location, the operations of our Group may
be adversely affected as we may require a longer production lead time and may be unable to
commence the manufacturing process in a timely manner. This may affect our ability to fulfil
our customers orders and our operations, financial position, business and financial
performance may be adversely and materially affected.
32
Our business is dependent on the economic health of the countries that we carry out our
business
We carry out our business in Malaysia and countries in Africa, Australasia, Asia, the Middle
East and North America. If the economies of these countries are not doing well, business
entities in these countries are likely to set aside a smaller proportion of their funds for
investments such as the refurbishment of their offices and the expansion or construction of
new offices which may result in a decline in the demand for system furniture.
Since our revenue is generated predominantly from the office furniture industry, and the
demand for office furniture in a country is influenced by the economic health of the country, our
business and financial performance may be materially and adversely affected if the economies
of these countries are not doing well.
We are dependent on the office renovation and fit-out sector in Malaysia
The bulk of our Domestic Sales are derived from project sales by way of tender offers to, or
directly negotiated contracts with, contractors who operate in the office renovation and fit-out
sector, and corporate customers who require renovation and fit-out services for their corporate
offices.
As our Domestic Sales are derived mainly from projects and contracts in the office renovation
and fit-out sector which is dependent on the general health of the Malaysian economy, a
slowdown in the growth and development of the Malaysian economy may result in fewer new
commercial and industrial development projects and office renovation contracts which may
result in a decline in the demand for our products and in turn may have a material and adverse
impact on our business and financial performance.
We face competition from existing industry players and new entrants
We face competition from local and international players. Some of our competitors may
possess longer operating history, stronger relationships with suppliers and customers, greater
financial strength, and better technical and marketing know-how in the markets we sell to or
intend to venture into. In particular, we compete with other mid to high end office furniture
manufacturers in the geographical markets that we have presence in such as Malaysia, Africa,
Australasia, Asia, the Middle East and North America on a variety of factors. These factors
include brand recognition and reputation, innovative product designs and features, price,
production and delivery, lead times, service, product quality, strength of dealers, and
relationships with customers and key industry participants, such as architects, interior
designers and renovation contractors.
In the event that we are unable to provide competitive pricing and/or quality products and
services on a timely basis, we may lose market share to our competitors. In addition, in the
event our competitors are able to develop more innovative system furniture, provide
comparable or better system furniture at lower prices, respond to changes in market conditions
more swiftly or effectively than we do, our business and financial performance may be
materially and adversely affected.
Please refer to the section entitled General Information on our Group Competition of this
Offer Document for more details.
Our financial performance is dependent on our continued ability to secure new projects,
deliver and install our system furniture and the non-cancellation of secured projects
A substantial portion of our business is undertaken on a project basis and such projects are
non-recurring. Please refer to the section entitled General Information on our Group
Business Overview Our Customers of our Offer Document for further details. As such, our
revenue may fluctuate from year to year. For FY2012, FY2013 and FY2014, project sales
accounted for 26.3%, 35.9% and 42.4% respectively of our revenue.
33
There is no assurance that we will be able to secure such projects successfully in the future
and if we are not able to continually and consistently secure new projects of similar or higher
value, size and margins, this may have an adverse impact on our business and financial
performance.
In addition, there may be a lapse of time between the completion of our projects and the
commencement of subsequent projects which may affect our revenue recognition and
profitability.
Cancellation of secured projects due to factors such as lack of funds on the part of our
customers may adversely affect our profitability. Any cancellation of projects could lead to our
inability to recover our costs associated with the purchase of materials, idle or excess
capacity, and may adversely affect our operating cashflow, business and financial
performance.
We are dependent on our CEO, our COO and key management personnel for our
continued growth
The continued success and growth of our business depends to a significant extent on the
services and efforts of our Executive Director and CEO, Matthew Law, and our Executive
Director and COO, Arica Walters. They are instrumental to the development and growth of our
business and are expected to continue to play important roles in the continued development
and growth of our Group.
Matthew Law has been with our Group for approximately 20 years and is currently responsible
for our strategic direction and expansion plans, developing and maintaining relationships with
our customers and suppliers and overseeing our operations.
Arica Walters has been with us for approximately 20 years and is currently responsible for our
human resource and administration, finance and accounts, logistics and warehouse,
production, and information technology and business development departments as well as
overseeing our operations.
Notwithstanding that each of Matthew Law and Arica Walters has entered into respective
Service Agreements with our Company for a period of two (2) years, there can be no assurance
that we will be successful in retaining them or hiring qualified management personnel to
replace them should such a need arise.
Our growth and success is also dependent on our ability to retain our key management, in
particular Bevan Walters (our Head of Research and Development and Managing Director of
Steeltema), Ong Ying Ling (our Group Finance Director), Ryonn Leong (our Manager (Export
and Marketing)), Henry Lim (our Manager (Production)), and Yoon Hooi Eng (our Group
Accountant). Our continued success will depend on our ability to retain the services of our key
management and to train new employees. Moreover, the process of hiring employees with the
required combination of skills and attributes may be time consuming and competitive. If our
key management is unable or unwilling to continue in their present positions, our business and
results of operations may be materially and adversely affected.
Accordingly, the termination of the employment or the loss of the services of Matthew Law and
Arica Walters and/or of any of our key management without suitable and timely replacement
or the inability to attract and retain qualified personnel may have a material adverse effect on
our operations, business and financial performance.
Please refer to the section entitled Directors, Management and Staff of this Offer Document
for further details of our Directors and Executive Officers.
34
We may be affected by major or sustained disruptions to our operations
Our business requires the extensive use of flammable materials such as melamine face
chipboards, veneer and fabric. Our production facility is located at only one (1) main site,
which also houses chemicals such as industrial glue and solvent, as well as equipment such
as power tools and other electrical machinery. Our warehouse (which contains raw materials
and finished products) and our showroom are located within the same compound and are
susceptible to the risk of fire. Consequently, we are subject to a higher risk of fire as compared
to other businesses. Although we are insured against the risk of fire, a massive fire may
severely disrupt our business operations, resulting in an inability to manufacture our products
and meet our contractual commitments. This may have an adverse effect on our productivity
and competitiveness and may have a material adverse effect on our business and financial
performance.
In the event of any major or sustained disruptions in the supply of utilities such as electricity
and water, or any outbreak of fire or flood which results in significant damage to our premises,
our operations may be adversely affected. Further, the operation of our production facility is
especially susceptible to any prolonged significant equipment downtime, since timely delivery
of orders is a priority in our business. Should such events materialise, our business and results
of operations may be materially and adversely affected.
We are dependent on our major customers
We are dependent on certain major customers who are dealers and OEM customers, namely
Heartwood Distributors Ltd., Modern Emirates Furniture & Office Equipments, ABC-Advanced
Business Concept LLC and Regency Inc. for our revenues. For each of FY2012, FY2013 and
FY2014, sales to these four (4) customers in aggregate accounted for approximately 33.8%,
34.8% and 25.0% of our total sales respectively. If our sales to any of these customers are
reduced significantly and we are unable to increase sales made to other customers, our
business and financial performance may be materially and adversely affected.
There is no assurance that we will continue to retain our major customers and that they will
maintain or increase their current level of business with our Group. In the event of any
cancellation, delay or reduction in the scope of our existing business to any of these major
customers, our business and financial performance may be adversely affected.
We may be affected by fluctuations in the costs of ancillary products, raw materials,
components and parts sold to us and used in the manufacture of our products
We purchase our ancillary products, raw materials, components and parts from a pool of
overseas and local suppliers (some or all of whom may in turn import these from overseas
suppliers) who have an established track record and are able to provide a constant supply at
competitive prices promptly. The cost of ancillary products, raw materials, components and
parts may fluctuate due to factors such as changes in market supply and demand, fuel and
transportation costs, and taxes and duties. If we are unable to pass on any increase in the
price of ancillary products, raw materials, components and parts to our customers, or are
unable to find alternative sources of such ancillary products, raw materials, components and
parts at competitive prices, our operating cashflow, business and financial performance may
be adversely affected.
Our material costs as a percentage of our cost of sales for FY2012, FY2013 and FY2014 were
approximately 60.5%, 57.9% and 55.8% respectively. Please refer to the sections entitled
Managements Discussion and Analysis of Financial Position and Results of Operations
Overview: Cost of Sales and General Information on our Group Trends and Order Book
of this Offer Document for further details.
35
We may face foreign exchange transaction risks
Our revenue is mainly denominated in USD and RM. Revenue denominated in USD constituted
approximately 40.3% of our revenue in FY2014. Our purchases are mainly denominated in
USD and RM. Purchases in USD constituted approximately 30.9% respectively of our
purchases in FY2014.
To the extent that our purchases are not naturally matched in the same currency as our sales
and to the extent that there are timing differences between invoicing and the payment to our
suppliers, we are exposed to foreign exchange fluctuations which may adversely affect our
results of operations.
Please refer to the section entitled Managements Discussion and Analysis of Financial
Position and Results of Operations - Foreign Exchange Exposure of this Offer Document for
further details.
We require various licences, permits, approvals and certificates to operate our business
We are subject to various laws and regulations governing the furniture manufacturing industry
in Malaysia. Such laws and regulations include but are not limited to those relating to fire
safety, maintenance of our manufacturing facility and manufacturing licences.
Any failure by us to comply with the various laws and regulations could result in penalties such
as fines and/or not being able to continue or expand our business. In such event, our ability
to compete and expand into new regions may be adversely affected, which may adversely
impact the growth of our business.
Any change in existing regulation or introduction of new government legislation, regulations
and policies that require our compliance may increase our cost of operations and compliance
costs. Such changes may also require us to obtain additional licences and approvals. Any
difficulties or failure in obtaining such licences and approvals could require us to cease
manufacturing until such licences and approvals are obtained. This would affect our ability to
meet our contractual deadlines and maintain a good business relationship with our customers.
In addition, under these laws and regulations, we are also required to obtain various licences,
permits, approvals and certificates to operate our business. The licences and permits are
generally subject to conditions stipulated in the licences and permits and/or relevant laws or
regulations under which such licences and permits are issued, and such relevant laws or
regulations could be varied from time to time. Failure to comply with such conditions could
result in the revocation or non-renewal of the relevant licence or permit. As such, we have to
constantly monitor and ensure our compliance with such conditions. Should there be any
failure to comply with such conditions resulting in the revocation of any of the licences and
permits, we may not be able to carry out our operations. This may in turn have an adverse
effect on our financial position, operating cashflow, business and financial performance.
Please refer to the section entitled Government Regulations of this Offer Document for more
information on the list of regulations and licences that are required by our Group.
We may be affected by delay in the completion of projects
We have and will continuously endeavour to complete projects awarded within the time
stipulated. However, risk of delays in completion of projects is prevalent as the various
projects of which we are involved in are also dependent on various external factors, including
among others, the delay in implementation of projects by the end/principal customer(s), the
availability of adequate supply of labour and the timely supply of ancillary products, raw
materials, components and parts by our suppliers. Payment of LADs for late completion is
normally stipulated in the letter of award or contract. Any delays in the completion of a project
36
may cause claims for LADs to be made against us, and this may have a material adverse effect
on our business and financial performance. Any such delay in completion of projects may also
adversely affect our reputation which in turn may affect our ability to compete in this industry.
We are exposed to the credit risks of our customers
We generally grant credit limits of between 30 to 90 days to our OEM customers and project
sales corporate customers. Whilst we did not experience any material writing off of bad debts
for FY2012, FY2013 and FY2014, we may be exposed to credit risks which include payment
delays and/or default by our customers.
Our customers may not be able to meet their contractual payment obligations to us, either in
a timely manner or at all, or may otherwise default on these obligations. The reasons for
payment delays and/or cancellations may include, inter alia, our customers insolvency or
bankruptcy, or inability to raise sufficient financing.
In the event our customers extend the delivery date for the products they place orders for or
cancel their orders, we may incur significant inventory holding costs which we may not be able
to recover. In such an event, our cash flow and financial position may be materially affected.
In addition, our customers may even forgo their deposit and cancel their orders with us before
the stipulated date of delivery. While we have been able to enforce our contractual rights to
receive payment through legal proceedings previously, there is no assurance that we will be
able to continue to do so in the future. In such an event, our financial performance and
financial position may be adversely affected.
We may need to incur additional expenses in the event we receive any product liability
claims or claims for defects
The system furniture and seatings which we supply generally have a warranty period of five (5)
years and one (1) year respectively. The warranty covers any manufacturing defect in
workmanship, materials and construction. We do not charge our customers for the rectification
and repair works needed to be carried out by us that are covered under the respective
warranties. During the warranty period, as we will remain primarily responsible for any claims
to be made under the warranty, signicant warranty claims for manufacturing defects may have
an adverse effect on our financial performance. As we absorb the costs of repair work during
the warranty period, all such costs may reduce our profit margins which may adversely affect
our financial performance and financial position.
We are exposed to risks of infringement of our intellectual property rights and the
unauthorised use of our trademarks and we may face litigation suits for intellectual
property infringement
The success of our business is contributed by our trademarks Versalink and Versalink
International. We have currently applied for registration for and/or registered these
trademarks in Malaysia, the PRC, Singapore and the UAE. Please refer to the section entitled
General Information on our Group Intellectual Property of this Offer Document for further
details. We believe these brand names are well recognised by our customers and in the office
furniture industry to represent reliability and quality.
It is possible that our competitors may adopt product or trade names similar to ours
notwithstanding that our trademarks have been registered, and we may not be able to
completely prevent the sale of products which infringe our intellectual property rights. As a
result, the goodwill generated by our brand may be eroded and our business may be adversely
affected. Details of our trademarks are set out in the section entitled General Information on
our Group Intellectual Property of this Offer Document.
37
In the event there is a widespread case of infringement of our intellectual property rights or
should counterfeit or unauthorised products of inferior quality bearing our trademarks be sold,
our ability to maintain our competitive edge may be adversely affected.
Given our limited resources, we may not be able to effectively prevent such infringement of our
intellectual property rights. There is also no assurance that we will be able to obtain adequate
remedies in the event of an unauthorised replication of our system furniture or trademarks. If
we fail to protect our intellectual property rights adequately, there may be an adverse impact
on our business reputation, goodwill and financial performance.
There is also no assurance that we will not infringe any patents or other intellectual property
rights of third parties in the future. In the event of any claims or litigation involving infringement
of their intellectual property rights, whether with or without merit, we may be required to divert
a significant amount of our time and resources to defend or attend to any possible litigation or
legal proceedings. As a result, our reputation, business and financial performance may be
adversely affected.
Please refer to the section entitled General and Statutory Information Litigation of this
Offer Document for more details.
We are dependent on our Versalink brand and any adverse impact on this brand may
affect our performance and future prospects
Our business is dependent on the goodwill of our Versalink brand. Establishing and
preserving our reputation for quality products is important for maintaining the loyalty of our
existing customer base and also for attracting new customers. Our reputation will in turn be
dependent on the success of our continual efforts in producing quality products. Failure to
consistently deliver quality products necessary to develop and maintain our reputation and the
goodwill associated with our brand name may materially and adversely affect our ability to
retain our existing customers, or secure new customers or new markets. In such an event, our
business and financial performance may be materially affected.
Although we place emphasis on the quality of our products marketed under this brand, there
may be complaints from customers regarding our products from time to time in connection with
any defect in those products. Such negative publicity, even if they are unsubstantiated, may
lead to a loss or diminution in the goodwill and the commercial value of our Versalink brand
of products, which we have established with our customers since 1991.
We had not experienced any material claim against our Group for defects in product during the
Period under Review. However, any significant claim against us in the future may have a
material adverse effect on our reputation and goodwill which may affect future business growth
and prospects.
We may be affected by inventory holding costs and a downward adjustment in the net
realisable value of our inventory
In order to meet the interior fit out deadlines for project, which typically have short lead time,
immediate demands of our customers as well as to provide quality after-sales services, we
have been adopting a strategy of keeping a ready inventory of our completed products and
materials, metal components and parts. Our level of inventory is mainly based on the actual
and anticipated demand for specific products from our customers in the office furniture industry
as well as economic considerations.
Our inventory, comprising ancillary products, raw materials, components and parts as well as
finished goods, accounted for approximately 29.7% of our total current assets as at the end of
FY2014, and our inventory turnover days for each of FY2012, FY2013 and FY2014 were
90 days, 99 days and 84 days respectively.
38
As a result of holding and managing a significant level of inventory, we may incur high holding
costs such as financing costs, warehousing and logistics costs as well as insurance costs. A
significant increase in these costs may have a material and adverse impact on our business
and financial performance.
In addition, as our accounting policies require us to measure our inventories at the lower of
cost (first in first out method) or net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale. A write down on cost is made where the cost is
not recoverable or if the selling prices have declined. Any significant downward adjustment in
the carrying value of these inventories may require us to take a corresponding charge to our
income statement, which may have an adverse impact on our profitability, our business and
financial performance.
Please refer to the section entitled General Information on our Group Inventory
Management of this Offer Document for more information.
We may be adversely affected by disputes with our customers, suppliers and other
business partners
As with other businesses, we may from time to time be involved in disagreements or disputes
with our customers, suppliers or other business partners (such as our external furniture
designers).
In the event that we are unable to amicably resolve such disagreements and disputes, and
such disagreements and disputes lead to legal and/or other proceedings against us, our
manufacturing activities, operations and sales of our products could be disrupted or adversely
affected. This may have a negative impact on our financial position, business and financial
performance. Precious management time would need to be incurred to deal with such
disagreements, disputes and/or legal proceedings.
In addition, any such legal proceeding, regardless of whether we eventually succeed in
defending or counterclaiming against the other parties, may generate negative publicity for us
and may have an adverse effect on our financial position, business and financial performance.
We may be affected in the event that there are prolonged disruptions to the operations
of our sole manufacturing facility
We have only one (1) manufacturing facility located in Klang, Malaysia. Since we manufacture
a significant proportion of the office furniture we sell, we need to ensure that we have a
sufficient supply of products for sale such that we can fulfil our orders in a timely fashion.
As most of our system furniture is manufactured at our manufacturing facility, in the event that
we are unable to utilise or otherwise suffer major or sustained disruptions to our manufacturing
facility for any reason whatsoever (for instance, sustained disruptions in the supply of utilities
such as electricity or water, an outbreak of fire or flood or incidents of arson) which results in
significant damage to our manufacturing facility or failure to procure the necessary licences,
permits, approvals and certificates to operate our manufacturing facility, our operations,
financial position, business and financial performance may be adversely and materially
affected.
We may also be exposed to risks of strikes and work stoppages by our own workers at our
manufacturing facility. Whilst we had experienced short-lived strikes or work stoppages in the
past which were successfully resolved, there can be no assurance that we will not face
prolonged strikes or work stoppages at our manufacturing facility that can be resolved
smoothly. In such events of a prolonged disruption to the operations of our sole manufacturing
facility, our operations, financial position, business and financial performance may be
adversely and materially affected.
39
We may record an interim loss for HY2015
A significant portion of our revenue, particularly revenue from the domestic Malaysia market,
is derived from project sales. As the inherent nature of project sales is such that our invoices
in respect of a project are typically rendered only at major milestones of a project, our revenue
stream may not be evenly spread out throughout the year and may fluctuate based on such
invoicing milestones. In addition, as project sales from our customers are generally on a
one-off basis for each project, revenue from project sales is dependent on our ability to secure
new project sales orders.
For HY2015, taking into account the listing expenses incurred by us in connection with the
Invitation and increased costs (such as higher directors and staff remuneration expenses as
well as sales, marketing and other expenses in connection with our expansion plans), in the
event that revenue from our project sales together with our other revenue streams is
insufficient to offset our costs and expenses, we may record an interim loss for HY2015.
We may require additional funding for our future growth
Although we have identified our future growth plans as set out in the section entitled General
Information on our Group Business Strategies and Future Plans of this Offer Document, the
net proceeds from the issue of the New Shares may not be sufficient to fully cover the
estimated costs of implementing all these plans. We may also find future opportunities to grow
through acquisitions which we have yet to identify at this juncture. Under such circumstances,
we may need to obtain additional equity or debt financing to implement these growth
opportunities.
Additional equity fundraising may result in dilution to our Shareholders. If such additional
equity fundraising activities do not generate a commensurate increase in earnings, our EPS
may be diluted, and this could lead to a decline in our Share price.
Additional debt financing may, apart from increasing interest expense and gearing, result in all
or any of the following:
limit our ability to pay dividends;
increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flows from operations to payments
on our debt, thereby reducing the availability of our cash flows to fund capital
expenditure, working capital and other requirements; and/or
limit our flexibility in planning for, or reacting to, changes in our business and our industry.
There is no assurance that we will be able to obtain the additional equity and/or debt financing
on terms that are acceptable to us or at all because our ability to arrange such financing
depends on a number of factors that are beyond our control, including general economic, and
liquidity and political conditions, the terms on which financial institutions are willing to extend
credit to us and the availability of other sources of debt or equity financing. Any inability to
secure additional equity and/or debt financing may materially and adversely affect
implementation of our business strategies and future plans, financial position, business and
Failure to respond to changes in workplace trends and the competitive landscape may
adversely affect our business and financial performance
The workplace is evolving with the globalisation of business, changes in working environment,
work styles and work processes, advances in technology and changing workforce
demographics. Such changes in working processes may have a significant impact on the types
of workplace products and services purchased by our customers. For example, changing work
40
trends such as a reduction in the amount of office floor space allocated per employee, a
reduction in the number and size of workstations, off-site collaborative settings such as
teleconferencing, have influenced the design of office furniture. The confluence of these
factors could appeal to new competitors not from the traditional office furniture industry and
they might consequently offer products and services which compete with those offered by
ourselves. Further, the office furniture industry is highly competitive, with a number of
competitors offering similar categories of products. We compete on factors which include
brand recognition and reputation, product design and features, price, lead time, delivery and
service, product quality, strength of dealers and relationships with customers and key industry
participants, such as architects and designers. We cannot assure you that we will be able to,
or be successful in our attempts to, respond to changes in the workplace or that the new or
enhanced products that we develop will meet the market demands on a timely basis or are
superior to that of our competitors. Failure to achieve any of the foregoing in a timely and cost
effective manner may affect our competitiveness, and may materially and adversely affect our
business and financial performance.
Please refer to the section entitled General Information on our Group Research And
Development of this Offer Document for details.
Environmental concerns on sources of wood may lead to increasingly stringent
standards and requirements for the use or treatment of wood, thus increasing our costs
of production
Melamine face chipboard which is made from wood is the key raw material used in our system
furniture. Due to increasing concerns about the environmental damage caused by
deforestation, governments all around the world may increasingly impose more stringent
standards and requirements dealing with the use and treatment of wood, which may affect our
business and operations. Certain of our customers also require us to produce a certificate of
reforestation, which certifies that the wood harvested is replanted or from well-managed
forests, prior to confirming orders with us.
To the extent that our customers require us to produce certifications that the sources of wood
for our wood derived products are made from sustainable sources, we will have to obtain such
raw materials from suitably certified suppliers. This is likely to lead to an increase in our costs
of production. In the event that we are unable to pass on all or part of such cost increase to
our customers, or find alternative sources of such raw materials at competitive prices, our
business and financial performance may be adversely affected.
We may experience industry related accidents which may expose us to liability claims
We are a manufacturing group and many of our employees work in our manufacturing facility.
Due to the nature of their work, accidents may occur resulting in personal injury, death or
losses or damage to property. In the event we are found guilty of any lapses or inadequacy in
safety standards which result in such accidents, we may be subject to regulatory sanctions,
civil law suits or liability claims. In addition, our delivery and installation staff may encounter
traffic accidents during the course of transportation for the delivery of our products. The
occurrence of accidents may disrupt or delay our operations, result in liabilities incurred by us
and adversely affect our business and financial performance.
While we maintain insurance policies, we cannot assure you that our insurance coverage will
be sufficient to cover all our potential losses arising from accidents in our premises. In the
event that our insurance coverage is not sufficient to cover our liabilities from such accidents,
our cash flow and financial performance may be adversely affected.
41
Our insurance coverage may not be adequate
We have taken up insurance policies for risks such as fire insurance, group personal insurance
and public liability. However, in the event that any claims arise which are not covered by such
insurance policies or if our insurance coverage is insufficient, we may be exposed to losses
which may adversely affect our profitability.
We may face the risk of loss to our properties, equipment and inventories due to fire, theft and
natural disasters. In the event that such eventualities were to occur, our operations may be
interrupted and if our insurance policies are not sufficient to cover all potential losses, our
financial position, business and financial performance may be adversely affected.
We may face uncertainties associated with the growth and expansion of our business
Our growth strategies include, inter alia, the expansion of our operations into Singapore and
expanding and developing our businesses into new markets through acquisitions, joint
ventures and/or strategic alliances. These expansion plans will require substantial capital
expenditure, financial and management resources. The success of our expansion plans
depends on many factors, some of which are not within our control. In the event that we are
not able to achieve a sufficient level of revenue or manage our costs effectively or the
commencement of these planned expansions is delayed, our business and financial
performance may be materially and adversely affected.
In addition, we may explore acquisitions, joint ventures and/or strategic alliances that are
complementary to our businesses. Participation in suitable acquisitions, joint ventures and/or
strategic alliances involves numerous risks, including but not limited to difficulties in the
assimilation of our management, operations, services, products and personnel and the
possible diversion of management attention from other business concerns. The successful
implementation of our growth strategies depends on our ability to identify suitable partners and
the successful integration of their operations with ours. There can be no assurance that we will
be able to execute such growth strategies successfully and as such, the performance of any
acquisitions, joint ventures and/or strategic alliances could fall short of expectations.
and Future Plans of this Offer Document for more details.
We may face lack of design innovations
Marketability of system furniture depends to a certain extent on the design innovations and
changing styles. In the event that our research and development team and designers are
unable to produce unique and innovative designs, this may lead to loss of market share in our
domestic and overseas markets.
The success of our products depends also on the appeal of our designs to our customers. This
is, however, highly subjective because designs which appeal to some customers may not
appeal to others. It is therefore important that we are able to produce designs with sufficient
market appeal to our target customers. If we cannot maintain the necessary expertise and
trend identification capability or are unable to produce commercially viable products or lack
innovativeness in product design, there may be a lower demand for our office furniture, which
may adversely affect our prospects, business and financial performance.
Please refer to the section entitled General Information on our Group Research And
Development of this Offer Document for details.
42
We may be affected by an outbreak of Influenza A (H1N1 flu), avian influenza (H7N9
flu), severe acute respiratory syndrome (SARS), Middle East Respiratory Syndrome
(MERS), Ebola virus disease (EVD) or any other contagious disease or virulent
disease
An outbreak of various communicable diseases, such as the H1N1 flu, the H7N9 flu, SARS,
MERS, EVD and/or other communicable diseases in the region or around the world, could
materially and adversely affect our business. In the event that any of our employees or those
of our customers or suppliers are infected or suspected of being infected with any
communicable disease, we may be required by health authorities to temporarily shut down our
premises or our customers operations and quarantine employees to prevent the spread of the
disease. This may result in delays in delivering our products and services and may have an
adverse impact on our ability to meet our contractual obligations which may materially and
adversely affect our business and financial performance.
We may be affected by natural disasters, terrorist attacks and other events beyond our
control
Severe weather conditions, natural disasters such as earthquakes, floods and other incidents
such as outbreak of fire and other emergency risks could cause damage to or a temporary
shutdown of our suppliers or our production facility. For instance, a fire breakout may damage
or destroy our equipment and machinery whilst prolonged floods may disrupt our business
operations.
Any occurrence of terrorist attacks acts of violence and/or wars may lead to uncertainties in
the economies of the countries in which we, our customers or our suppliers operate. All these
may materially and adversely affect our financial position, business and financial performance.
RISKS RELATING TO MALAYSIA
We are dependent on foreign labour and may face labour shortages or increased costs
of labour for our Malaysian operations
Due to the shortage of local workers in our industry in Malaysia, we rely largely on workers
(including skilled workers) from Bangladesh, Indonesia, Myanmar, Nepal and Vietnam to meet
our labour needs and are vulnerable to changes in the availability and costs of employing
foreign workers. Any changes in the labour policies of these countries of origin may affect the
supply and/or cost of foreign workers and cause disruptions to our operations.
The supply of skilled workers is subject to demand and supply conditions in the labour market
and the local and foreign governments labour regulations and visa restrictions. As at
28 February 2014, approximately 74.0% of our employees were foreign workers.
With the increasing demand for foreign workers in Malaysia and other South East Asian
countries, there is no assurance that we will be able to continue attracting foreign workers at
the current level of wages or that our current foreign workers will continue to be employed by
us. Any increase in competition for foreign workers, especially skilled workers from other
countries, may increase labour wages. Consequently, if we are not able to pass on the
increase in labour costs to our customers, our business and financial performance may be
adversely affected.
Due to Malaysias strict immigration policy which limits the inflow of foreign labour into the
country, we may not be able to employ sufficient workers. In addition, we may be required to
bear a higher levy of employing foreign workers.
In the event that there is a shortage of local or foreign workers to meet our operational
requirements, we may be unable to fulfil customers orders in a timely manner or our costs of
labour may increase resulting in adverse impact on our financial position, business and
43
Please see the section entitled Government Regulations Malaysia of this Offer Document
for further details on the employment of foreign workers.
Unfavourable political, social, economic, legal and regulatory developments in Malaysia
may have an adverse effect on us
The substantial majority of our assets are located or registered in Malaysia and 46.3% of our
total revenue for FY2014 was derived from Domestic Sales. As a result, we are susceptible to
political, social, economic, legal and regulatory risks specific to Malaysia.
We may be affected by changes in the political leadership and/or government policies in
Malaysia, including any potential changes, which may result from the recent street protests in
Kuala Lumpur. Such political or regulatory changes include (but are not limited to) the
introduction of new laws and regulations which impose and/or increase restrictions on imports,
the conduct of business, the repatriation of profits, the imposition of capital controls, changes
in interest rates and the taxation of goods and services. For example, Malaysia is imposing
goods and services tax on the supply of goods and services and the import of goods and
services in Malaysia from 1 April 2015 (Malaysia GST). Any potential impact of the Malaysia
GST on our business, financial condition and results of operations is uncertain. Other political
uncertainties include the risks of wars, terrorism, nationalisation and expropriation. The office
furniture manufacturing industry in Malaysia is not a regulated industry and thus is not subject
to governmental regulations specific to the industry. It is however subject to general
governmental regulations in relation to the manufacturing industry. Please refer to the section
entitled Government Regulations for further details. We cannot assure you that any changes
in such regulations or politics imposed by the Malaysian government from time to time will not
have an adverse effect on our business, financial condition, results of operations and
prospects.
Also, general economic conditions in Asia may have an effect on our business, financial
condition and results of operations, as well as our future prospects. The recent global financial
crisis, the recent European sovereign debt crisis, recent developments in the Middle East,
higher oil prices, the general weakness of the global economy and the occurrence of avian flu
and swine flu in Asia and other parts of the world have increased the uncertainty of global
economic prospects and may continue to adversely affect the Malaysian economy. Any future
deterioration of the Malaysian and global economy could adversely affect our business,
financial condition, results of operations and prospects.
Terrorist attacks and other acts of violence or war may negatively affect the Malaysian
economy and may also adversely affect financial markets globally. These acts may also result
in a loss of consumer confidence, decrease the demand for our products and ultimately
adversely affect our business. In addition, any such activities in Malaysia or its neighbouring
countries in Southeast Asia might result in concern about the stability in the region, which
could adversely affect our business, financial condition, results of operations and prospects.
A majority of our operating subsidiaries are incorporated in Malaysia, a substantial
portion of our assets are located in Malaysia and a majority of our Executive Directors
and Executive Officers are non-residents of Singapore. It could be more difficult to
enforce a Singapore judgment against our Malaysian subsidiaries, our Executive
Directors and our Executive Officers.
A majority of our operating subsidiaries are incorporated in Malaysia. In addition, a substantial
portion of our assets are located in Malaysia. A majority of our operating subsidiaries and a
substantial portion of our assets are therefore subject to the laws of Malaysia. The Companies
Act may provide shareholders with certain rights and protection of which there may be no
corresponding or similar provisions under the Malaysian laws. In addition, a majority of our
Executive Directors and Executive Officers are non-residents of Singapore, and substantially
44
all the assets of these persons are located outside Singapore. As a result, it could be difficult
for our Shareholders to effect service of process in Singapore, or to enforce a judgment
obtained in Singapore against our Malaysian subsidiaries or any of these persons.
We are subject to foreign exchange controls in Malaysia
On 21 July 2005, the RM peg to the USD was removed and the RM switched to a managed float
system. Currently, there are no restrictions on the repatriation of capital, profits, dividends,
interest, fees or rental by foreign direct investors or portfolio investors, subject to withholding
tax, if any, and provided such remittance is effected through licensed remittance service
providers (including licenced banks). Accordingly, the repatriation of these items by our
subsidiaries in Malaysia to our Company is free of restrictions. However, if the Malaysian
government were to tighten or otherwise change relevant regulations, such exchange controls
may affect such repatriation from our subsidiaries in Malaysia.
Please refer to the section entitled Exchange Controls of this Offer Document for further
details.
RISKS RELATING TO OWNERSHIP OF OUR SHARES
Investments in securities quoted on Catalist involve a higher degree of risk and can be
less liquid than shares quoted on the Main Board of the SGX-ST
We have made an application for our Shares to be listed for quotation on Catalist, a listing
platform primarily designed for fast growing and emerging and/or smaller companies to which
a higher investment risk tends to be attached as compared to larger or more established
companies listed on the Main Board of the SGX-ST. An investment in shares quoted on Catalist
may carry a higher risk than an investment in shares quoted on the Main Board of the SGX-ST
and the future success and liquidity in the market of our Shares cannot be guaranteed.
Pursuant to the Listing Manual, we are required to, inter alia, retain a sponsor at all times after
our admission to Catalist. In particular, unless approved by the SGX-ST, CIMB Bank must act
as our continuing sponsor for at least three (3) years after the admission of our Company to
Catalist. In addition, we may be delisted in the event that we do not have a sponsor for more
than three (3) continuous months. There is no guarantee that following the expiration of the
three (3)-year period, the Sponsor and Issue Manager will continue to act as our sponsor or
that we are able to find a replacement sponsor within the three (3)-month period. Should such
risks materialise, we may be delisted.
Control by our Controlling Shareholders and Substantial Shareholders may limit your
ability to influence the outcome of decisions requiring the approval of Shareholders
Upon completion of the Invitation, our Controlling Shareholders (namely BSL Holdings,
Matthew Law and Peggy Lee) and our Substantial Shareholders (namely Arica Walters, Adam
Law and Jay Law) will exercise control of an aggregate of approximately 71.6% of our
post-Invitation share capital. Therefore, they will be able to exercise significant influence over
all matters requiring Shareholders approval, including the election of directors and the
approval of significant corporate transactions. Such concentration of ownership also may have
the effect of delaying, preventing or deterring a change in control of the Company even if such
change may be beneficial to our minority Shareholders.
Investors in our Shares will face immediate and substantial dilution in our NAV per
Share and may experience future dilution
Our Invitation Price of S$0.30 per Share is substantially higher than our NAV per Share after
adjusting for the estimated net proceeds from the issue of the New Shares. If we were
45
liquidated for NAV immediately following the Invitation, each Shareholder subscribing to the
Invitation would receive less than the price they paid for their Shares. Details of the immediate
dilution of our Shares incurred by new investors are described under the section entitled
Dilution of this Offer Document.
In addition, we intend to grant our employees Awards and/or Options pursuant to the
Performance Share Plan and/or the ESOS. To the extent that such Options are granted and
exercised and/or Awards granted, there will be further dilution to new investors pursuant to the
Invitation.
Additional funds raised through future issuances of new Shares will dilute
Shareholders equity interests
We may require additional equity funding for our future investments, capital expenditure and
working capital. An issue of Shares or other securities to raise funds will dilute Shareholders
equity interests and may require additional investments by Shareholders. If we were to raise
funds in the future by way of a placement of Shares or rights issue or other equity-linked
securities, and if any Shareholder is unable or unwilling to participate in such fundraising, such
Shareholder will suffer dilution to their shareholdings.
Future sales or issuance of our Shares could materially and adversely affect our Share
price
Any future sale or issuance or availability of a large number of our Shares in the public market
or perception thereof may have a downward pressure on our Share price. These factors also
affect our ability to sell additional equity securities in the future, at a time and price we deem
appropriate. Save as disclosed under the section entitled Shareholders Moratorium of this
Offer Document, there will be no restriction on the ability of our Shareholders to sell their
Shares either on Catalist or otherwise.
In addition, our Share price may be under downward pressure if certain of our Shareholders
sell their Shares upon the expiry of their moratorium periods.
There has been no prior market for our Shares and the Invitation may not result in an
active or liquid market
Prior to the Invitation, there has been no public market for our Shares. Although we have made
an application to the SGX-ST to list our Shares on Catalist, there is no assurance that an active
trading market for our Shares will develop, or if it develops, be sustained.
There is also no assurance that the market price for our Shares will not decline below the
Invitation Price. The market price of our Shares could be subject to significant fluctuations due
to various external factors and events including the liquidity of our Shares in the market,
difference between our actual financial or operating results and those expected by investors
and analysts, the general market conditions and broad market fluctuations.
Our Share price may be volatile in future which could result in substantial losses for
investors purchasing Shares pursuant to the Invitation
The trading price of our Shares may fluctuate significantly and rapidly after the Invitation as
a result of, among others, the following factors, some of which are beyond our control:
variations of our operating results;
changes in analysts estimates of our financial performance;
changes in market valuations and share prices of companies with business similar to that
of our Company that may be listed in Singapore;
46
announcements by us of significant acquisitions, strategic alliances or joint ventures;
fluctuations in stock market prices and volume;
our involvement in material litigation;
additions or departures of our key management personnel;
material changes or uncertainty in the political, economic and regulatory environment in
the markets that we operate;
success or failure of our efforts in implementing business and growth strategies; and
changes in conditions affecting the industry, the general economic conditions or stock
market sentiments or other events or factors.
For these reasons, among others, our Shares may trade at prices that are higher or lower than
the NAV per Share. To the extent that there is any retention of operating cash for investment
purposes, working capital requirements or other purposes, these retained funds, while
increasing the value of our underlying assets, may not correspondingly increase the market
price of our Shares. Any failure on our part to meet market expectations with regard to future
earnings and cash distributions may adversely affect the market price for our Shares.
In addition, our Shares are not capital-safe products and there is no guarantee that holders of
our Shares can realise a higher amount or even the principal amount of their investment.
In case of liquidation of our Company, it is possible that investors may lose all or a part of their
investment in our Shares.
Negative publicity which includes those relating to any of our Directors, Executive
Officers, Controlling Shareholders or Substantial Shareholders may materially and
adversely affect our Share price
Negative publicity or announcement relating to any of our Directors, Executive Officers,
Controlling Shareholders or Substantial Shareholders may materially and adversely affect the
market perception or the performance of our Shares, whether or not they are justified.
Examples of these include unsuccessful attempts in joint ventures, acquisitions or takeovers,
or involvement in insolvency proceedings.
The actual performance of our Company may differ materially from the forward-looking
statements in this Offer Document
This Offer Document contains forward-looking statements, which are based on a number of
assumptions which are subject to significant uncertainties and contingencies, many of which
are outside our control. Furthermore, our revenue and financial performance are dependent on
a number of external factors, including demand for our products which may decrease for
various reasons, including increased competition within the industry or changes in applicable
laws and regulations. We cannot assure you that these assumptions will be realised and our
actual performance will be as projected.
Investors may not be able to participate in future rights issues or certain equity issues
of our Shares
If we offer our Shareholders rights to subscribe for additional Shares or any rights of any other
nature, we will have discretion as to the procedure to be followed in making the rights available
to our Shareholders or in disposing of the rights for the benefit of our Shareholders and making
the net proceeds available to our Shareholders. We may choose not to offer the rights to our
47
Shareholders having an address outside Singapore. Accordingly, Shareholders who have a
registered address outside Singapore may be unable to participate in rights offerings and may
experience a dilution in their shareholdings as a result.
We may not be able to pay dividends to our Shareholders
The declaration and payment of future dividends will depend on our operating results, financial
position, other cash requirements including capital expenditure, the terms of borrowing
arrangements (if any) and other factors deemed relevant by our Directors. There is no
assurance that dividend distributions will be made by our Company in the future. For a
description of our dividend policy, please refer to the section entitled Dividend Policy of this
Offer Document.
48
INVITATION STATISTICS
Invitation Price 30.0 cents
NAV
(1)
NAV per Share based on the audited combined financial position of
our Group as at 28 February 2014 (NAV):
(a) before adjusting for the estimated net proceeds from the issue of
the New Shares and based on the pre-Invitation share capital of
110,000,000 Shares
15.6 cents
(b) after adjusting for the estimated net proceeds from the issue of
the New Shares and based on the post-Invitation share capital of
135,000,000 Shares
17.1 cents
Premium of Invitation Price over the NAV per Share as at 28 February
2014:
(a) before adjusting for the estimated net proceeds from the issue of
the New Shares and based on the pre-Invitation share capital of
110,000,000 Shares
92.3%
(b) after adjusting for the estimated net proceeds from the issue of
the New Shares and based on the post-Invitation share capital of
135,000,000 Shares
75.4%
Earnings
(2)
Historical EPS of our Group for FY2014 based on the pre-Invitation
share capital of 110,000,000 Shares
5.2 cents
Historical EPS of our Group for FY2014 based on the pre-Invitation
share capital of 110,000,000 Shares, assuming that the Service
Agreements had been in place from the beginning of FY2014
5.0 cents
PER
Historical PER based on the Invitation Price and the historical EPS of
our Group for FY2014
5.8 times
Historical PER based on the Invitation Price and the historical EPS of
our Group for FY2014, assuming that the Service Agreements had
been in place from the beginning of FY2014
6.0 times
Net operating cash flow
(2)(3)
Historical net operating cash flow per Share of our Group for FY2014
based on the pre-Invitation share capital of 110,000,000 Shares
6.0 cents
Historical net operating cash flow per Share of our Group for FY2014
based on the pre-Invitation share capital of 110,000,000 Shares,
assuming that the Service Agreements had been in place from the
beginning of FY2014
5.8 cents
49
Price to net operating cash flow ratio
Invitation Price to historical net operating cash flow per Share of our
Group for FY2014 based on the pre-Invitation share capital of
110,000,000 Shares
5.0 times
Invitation Price to historical net operating cash flow per Share of our
Group for FY2014 based on the pre-Invitation share capital of
110,000,000 Shares, assuming that the Service Agreements had
been in place from the beginning of FY2014
5.2 times
Market capitalisation
Market capitalisation based on the Invitation Price and the
post-Invitation share capital of 135,000,000 Shares
S$40.5 million
Notes:
1. Converted based on the exchange rate of S$1 to RM2.585 as at 28 February 2014.
2. Converted based on the exchange rate of S$1 to RM2.545, being the average exchange rate for FY2014.
3. Net operating cash flow is defined as net profit after tax with depreciation expenses added back.
50
USE OF PROCEEDS AND LISTING EXPENSES
The estimated expenses in relation to the Invitation, including professional fees and expenses,
underwriting and placement commission as well as other incidental expenses in relation to the
Invitation, are approximately S$1.7 million, of which S$1.6 million will be borne by our
Company and S$0.1 million (comprising the underwriting and placement commission and
brokerage in respect of the sale of the Vendor Shares) will be borne by the Vendors.
Net proceeds from the Invitation
The net proceeds from the Invitation (comprising both issuance of the New Shares and sale
of the Vendor Shares) after deducting estimated expenses in relation to the Invitation of
approximately S$1.7 million, is S$9.4 million.
Net proceeds from the issue of the New Shares
The net proceeds attributable to us from the issue of the New Shares (after deducting our
Companys share of the estimated expenses in relation to the Invitation of approximately S$1.6
million) will be S$5.9 million.
Each principal intended use of proceeds from the issue of the New Shares and major listing
expenses is set out below.
Use of proceeds from the issue of the New Shares
Amount in
aggregate
Estimated amount
for each dollar of
the gross
proceeds from
the issue of the
New Shares
S$000 cents
Acquisition of new machinery and setting up or
acquisition of new production facilities for
Jemaramas Jaya
3,388 45.2
Acquisition of new machinery and setting up of a new
facility for Steeltema
377 5.0
Marketing, advertising and promotional activities 750 10.0
Working capital and general corporate purposes 1,385 18.5
Net proceeds from the issue of the New Shares 5,900 78.7
Listing expenses
Professional fees 1,090 14.5
Underwriting and placement commission and
brokerage
(1)
235 3.1
Miscellaneous expenses (including listing fees) 275 3.7
Gross proceeds from the issue of the New Shares 7,500 100.0
Note:
1. Please refer to the section entitled General and Statutory Information Management, Underwriting and
Placement Arrangements of this Offer Document for further details.
In the reasonable opinion of our Directors, there is no minimum amount which must be raised
from the Invitation.
51
Pending the deployment of the net proceeds from the issue of the New Shares as aforesaid,
the funds will be placed in deposits with banks and financial institutions or invested in money
market instruments as our Directors may deem fit at their absolute discretion.
Save as disclosed above, none of the net proceeds from the issue of the New Shares will be
used, directly or indirectly, to acquire or re-finance the acquisition of an asset other than in the
ordinary course of business. None of the net proceeds from the issue of the New Shares will
be used to discharge, reduce or set off any of our indebtedness.
We will make periodic announcements on the use of the net proceeds from the issue of the
New Shares as and when the funds are materially disbursed, and provide a status report on
the use of the proceeds in our annual report.
The discussion above represents our best estimate of our allocation of the net proceeds from
the issue of the New Shares based upon our current plans and estimates regarding our
anticipated expenditures. Actual expenditures may vary from these estimates and we may find
it necessary or advisable to reallocate the net proceeds within the categories described above
or to use portions of the net proceeds for other purposes. In the event that we decide to
reallocate the net proceeds from the issue of the New Shares for other purposes, we will
publicly announce our intention to do so through an SGXNET announcement to be posted on
the internet at the SGX-ST website, http://www.sgx.com.
and Future Plans of this Offer Document for further details.
Net proceeds from sale of the Vendor Shares
The estimated net proceeds attributable to the Vendors from the sale of the Vendor Shares
(after deducting the Vendors share of the estimated expenses in relation to the Invitation
(comprising the underwriting and placement commission and brokerage in respect of the
Vendor Shares) of approximately S$0.1 million) will be approximately S$3.5 million.
52
DIVIDEND POLICY
Our Company was incorporated on 21 April 2014 and has not distributed any dividend on our
Shares since incorporation. Save as disclosed below, none of our subsidiaries had declared
or paid dividends in the last three (3) financial years ended 28 February 2014 to the Latest
Practicable Date:
(a) Jemaramas Jaya declared and paid interim dividends of RM5,500,000 to its then
shareholders in FY2014;
(b) Versalink Marketing declared a dividend of RM3,000,000 to its then shareholders in
FY2014 of which RM2,000,000 was paid in FY2014 and RM1,000,000 was paid before the
Latest Practicable Date; and
(c) Versalink Technology declared a dividend of RM2,000,000 to its then shareholders in
FY2014 which was paid before the Latest Practicable Date.
We currently do not have a fixed dividend policy. The form, frequency and amount of future
dividends on our Shares that our Directors may recommend or declare in respect of any
particular financial year or period will be subject to the factors outlined below as well as any
other factors deemed relevant by our Directors:
(a) the level of our cash and retained earnings;
(b) our actual and projected financial performance;
(c) our projected levels of capital expenditure and other investment plans;
(d) our working capital requirements and general financing condition;
(e) restrictions on payment of dividends imposed on us by our financing arrangements (if
any); and
(f) the general economic and business conditions in countries in which we operate.
We may declare dividends by way of an ordinary resolution of our Shareholders at a general
meeting, but may not pay dividends in excess of the amount recommended by our Board of
Directors. The declaration and payment of dividends will be determined at the sole discretion
of our Directors, subject to the approval of our Shareholders. Our Directors may also declare
an interim dividend without the approval of our Shareholders. Future dividends will be paid by
us as and when approved by our Shareholders (if necessary) and our Directors.
Subject to the above, our Directors intend to recommend and distribute dividends of not less
than 30% of our net profits after tax attributable to our Shareholders in each of FY2015 and
FY2016 (the Proposed Dividends). However, investors should note that all the foregoing
statements, including the statements on the Proposed Dividends, are merely statements of our
present intention and shall not constitute legally binding statements in respect of our future
dividends which may be subject to modification (including reduction or non-declaration
thereof) at our Directors sole and absolute discretion.
The amount of dividends declared and paid by us in the past should not be taken as an
indication of the dividends payable in the future. Investors should not make any inference from
the foregoing statements as to our actual future profitability or our ability to pay any future
dividends. There can be no assurance that dividends will be paid in the future or of the amount
or timing of any dividends that will be paid in the future.
For information relating to taxes payable on dividends, please refer to the section entitled
Taxation in Appendix E of this Offer Document.
53
SHARE CAPITAL
Our Company (company registration number 201411394N) was incorporated in Singapore on
21 April 2014 under the Companies Act as a private limited company under the name of
Versalink Holdings Pte. Ltd. On 20 August 2014, we converted into a public company limited
by shares and changed our name to Versalink Holdings Limited.
As at the date of incorporation, our issued and paid-up share capital was S$1.00 comprising
one (1) Share.
Pursuant to the completion of the Restructuring Exercise on 22 July 2014, the issued and
paid-up share capital of our Company was increased to S$17,335,942 comprising 110,000,000
Shares.
Pursuant to the resolutions of our Shareholders passed on 18 August 2014, our Shareholders
approved, inter alia, the following:
(a) the conversion of our Company into a public company limited by shares and the
consequential change of our name to Versalink Holdings Limited;
(b) the adoption of a new set of Articles;
(c) the allotment and issue of the New Shares which are the subject of the Invitation, on the
basis that the New Shares, when allotted, issued and fully paid-up, will rank pari passu
in all respects with the existing issued and fully paid-up Shares;
(d) the authorisation for our Directors, pursuant to Section 161 of the Companies Act and the
Listing Manual to (i) issue Shares whether by way of rights, bonus or otherwise; (ii) make
or grant offers, agreements or options (collectively, Instruments) that might or would
require Shares to be issued, including but not limited to the creation and issue of (as well
as adjustments to) warrants, debentures or other instruments convertible into Shares, at
any time and upon such terms and conditions and for such purposes and to such persons
as our Directors may in their absolute discretion deem fit; and (iii) (notwithstanding the
authority conferred by this resolution may have ceased to be in force) issue Shares in
pursuance of any Instruments made or granted by our Directors while this resolution was
in force, provided that:
(1) the aggregate number of Shares (including Shares to be issued in pursuance of the
Instruments, made or granted pursuant to this resolution) and Instruments to be
issued pursuant to this resolution shall not exceed 100.0% of the total number of
issued Shares (excluding treasury shares) in the capital of our Company (as
calculated in accordance with sub-paragraph (2) below), of which the aggregate
number of Shares to be issued (including Shares to be issued pursuant to the
Instruments) other than on a pro rata basis to existing Shareholders shall not exceed
50.0% of the total number of issued Shares (excluding treasury shares) in the capital
of our Company (as calculated in accordance with sub-paragraph (2) below);
(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose
of determining the aggregate number of Shares (including Shares to be issued
pursuant to the Instruments) that may be issued under sub-paragraph (1) above, the
percentage of Shares that may be issued shall be based on the total number of
issued Shares of our Company (excluding treasury shares) immediately after the
Invitation, after adjusting for (a) new Shares arising from the conversion or exercise
of the Instruments or any convertible securities; and (b) any subsequent bonus
issue, consolidation or sub-division of Shares;
54
(3) in exercising such authority, our Company shall comply with the provisions of the
Listing Manual for the time being in force (unless such compliance has been waived
by the SGX-ST) and the Articles of Association for the time being of our Company;
and
(4) unless revoked or varied by our Company in a general meeting, such authority shall
continue in force until (i) the conclusion of the next annual general meeting of our
Company or (ii) the date by which the next annual general meeting of our Company
is required by law to be held, whichever is the earlier;
(e) the adoption of the Performance Share Plan, the rules of which are set out in Appendix
F of this Offer Document and that our Directors be authorised to allot and issue
Performance Shares upon the release of Awards granted under the Performance Share
Plan; and
(f) the adoption of the ESOS, the rules of which are set out in Appendix G of this Offer
Document and that our Directors be authorised to allot and issue Option Shares upon the
exercise of Options granted under the ESOS and that authority be given to our Directors
to grant Options at a discount up to a maximum discount of 20.0% to the market price.
As at the Latest Practicable Date, there was only one (1) class of shares in the capital of our
Company, being ordinary shares. A summary of the Articles of Association of our Company
relating to, among others, the voting rights of our Shareholders is set out in the section entitled
Summary of Selected Articles of Association of our Company in Appendix D of this Offer
Document.
There are no founder, management, deferred or unissued Shares reserved for issuance for any
purpose. Save for the ESOS, no person has been, or is entitled to be, given an option to
subscribe for or purchase any securities of our Company or any of our subsidiaries. There are
no Shares that are held by or on behalf of our Company or by our subsidiaries.
As at the date of this Offer Document, no Award has been granted under the Performance
Share Plan and no Option has been granted under the ESOS.
As at the date of this Offer Document, the issued and paid-up share capital of our Company
is S$17,335,942 divided into 110,000,000 Shares. Upon the allotment and issue of the New
Shares which are the subject of the Invitation, the resultant issued and paid-up share capital
of our Company will be increased to S$24,567,942 comprising 135,000,000 Shares.
55
Details of changes in the issued and paid-up capital of our Company since our incorporation
and immediately after the Invitation are as follows:
Number of
Shares
Issued and
paid-up
share capital
S$
Issued and fully paid Shares as at our date of incorporation 1 1
Issue of new Shares pursuant to the Restructuring Exercise 109,999,999 17,335,941
(1)
Issued and fully paid Shares immediately after the
Restructuring Exercise
110,000,000 17,335,942
Pre-Invitation share capital 110,000,000 17,335,942
New Shares issued pursuant to the Invitation 25,000,000 7,232,000
(2)
Post-Invitation issued and paid-up share capital 135,000,000 24,567,942
Notes:
1. Converted based on an exchange rate of S$1:RM2.562 as at the date of the completion of the Restructuring
Exercise.
2. This takes into account set-off of our Companys share of the estimated expenses in relation to the Invitation
of approximately S$0.3 million which is capitalised against share capital (which excludes estimated expenses
of approximately S$1.3 million to be charged directly to the income statement).
The shareholders equity of our Company as at the date of incorporation, after adjustments to
reflect the Restructuring Exercise, and after the Invitation are set out below.
As at the
date of
incorporation
After adjusting
for the
Restructuring
Exercise
Immediately
after the
Invitation
S$ S$ S$
Share capital 1 17,335,942 24,567,942
(1)
Shareholders equity 1 17,335,942 23,235,942
(2)
Notes:
1. This takes into account set-off of our Companys share of the estimated issue expenses in relation to the
Invitation of approximately S$0.3 million which is capitalised against share capital (which excludes estimated
expenses in relation to the Invitation of approximately S$1.3 million to be charged directly to the income
statement).
2. This takes into account our Companys share of the estimated expenses in relation to the Invitation of
approximately S$1.3 million which is charged directly to the income statement.
56
SHAREHOLDERS
OWNERSHIP STRUCTURE
Our Directors and Shareholders and their respective shareholdings in our Company
immediately before and after the Invitation are set out below:
Before the Invitation After the Invitation
Direct interest Deemed interest Direct interest Deemed interest
Number of
Shares %
Number of
Shares %
Number of
Shares %
Number of
Shares %
Directors
Dr Wilson Tay
(1)
100,000 0.1
Matthew Law
(2)
17,464,000 15.9 27,129,000 24.7 15,464,000 11.5 25,129,000 18.6
Arica Walters
(2)
17,464,000 15.9 15,464,000 11.5
Adam Law
(2)
17,464,000 15.9 15,464,000 11.5
Chin Chee Choon
Chow Wen Kwan
Shareholders (other than
Directors)
BSL Holdings
(3)
27,129,000 24.7 25,129,000 18.6
Peggy Lee
(4)
14,564,500 13.2 27,129,000 24.7 12,564,500 9.3 25,129,000 18.6
Jay Law
(2)
14,564,500 13.2 12,564,500 9.3
Chun Kwong Pong
(5)
675,000 0.6 675,000 0.5
Kek Chin Wu
(5)(6)
675,000 0.6 1,075,000 0.7
Public 36,500,000 27.0
Total 110,000,000 100.0 135,000,000 100.0
Notes:
1. As at the date of this Offer Document, Dr Wilson Tay, our Independent Director, has indicated his interest to
subscribe for 100,000 Invitation Shares, representing approximately 0.1% of our post-Invitation share capital.
In the event that Dr Wilson Tay is alloted and/or allocated such number of Invitation Shares, he will have a direct
interest in the said Shares.
2. Matthew Law, Arica Walters, Adam Law and Jay Law are siblings who are the children of Roland Law (our
Technical Adviser).
3. Matthew Law and Peggy Lee are deemed to be interested in all the Shares held by BSL Holdings. BSL Holdings
is an investment holding company incorporated in Labuan, Malaysia on 14 July 2014. Each of Matthew Law and
Peggy Lee owns 50 ordinary shares representing 50% of the issued share capital of BSL Holdings.
4. Peggy Lee is the spouse of Roland Law.
5. Chun Kwong Pong and Kek Chin Wu are the Director and Associate Partner of cfSolutions respectively, the
Malaysian financial adviser to Jemaramas Jaya.
6. As at the date of this Offer Document, Kek Chin Wu has indicated his interest to subscribe for 400,000 Invitation
Shares, representing approximately 0.3% of our post-Invitation share capital. In the event that Kek Chin Wu is
allotted and/or allocated such number of Invitation Shares, he will have a direct interest in the said Shares.
Save as disclosed above, there are no other relationships among our Directors, Controlling
Shareholders and Substantial Shareholders.
The Shares held by our Directors, Controlling Shareholders and Substantial Shareholders do
not carry different voting rights from the Invitation Shares which are the subject of the
Invitation.
57
Save as disclosed above, our Company is not, directly or indirectly, owned or controlled by
another corporation, any government or other natural or legal person whether severally or
jointly. Our Directors are not aware of any arrangement the operation of which may, at a
subsequent date, result in a change in control of our Company.
There had not been any public take-over offer by a third party in respect of our Shares or by
our Company in respect of the shares of another corporation or units of a business trust which
has occurred between 1 March 2013 and the Latest Practicable Date.
VENDORS
The name of the Vendors and the number of Vendor Shares which the Vendors will offer
pursuant to the Invitation are set out below:
Shares held immediately
before the Invitation
Vendor Shares offered pursuant to the
Invitation
Shares held immediately after
the Invitation
Vendors
Number
of Shares
% of
pre-Invitation
share capital
Number
of Shares
% of
pre-Invitation
share capital
% of
post-Invitation
share capital
Number
of Shares
% of
post-Invitation
share capital
BSL Holdings
(1)
27,129,000 24.7 2,000,000 1.8 1.5 25,129,000 18.6
Matthew Law
(2)
17,464,000 15.9 2,000,000 1.8 1.5 15,464,000 11.5
Arica Walters
(2)
17,464,000 15.9 2,000,000 1.8 1.5 15,464,000 11.5
Adam Law
(2)
17,464,000 15.9 2,000,000 1.8 1.5 15,464,000 11.5
Peggy Lee
(3)
14,564,500 13.2 2,000,000 1.8 1.5 12,564,500 9.3
Jay Law
(2)
14,564,500 13.2 2,000,000 1.8 1.5 12,564,500 9.3
108,650,000 98.8 12,000,000 10.9
(4)
8.9
(4)
96,650,000 71.6
(4)
Notes:
1. BSL Holdings is an investment holding company incorporated in Labuan, Malaysia on 14 July 2014. Each of
Matthew Law and Peggy Lee owns 50 ordinary shares representing 50.0% of the issued share capital of BSL
Holdings.
2. Matthew Law, Arica Walters, Adam Law and Jay Law are siblings who are the children of Roland Law (our
Technical Adviser).
4. Percentages do not add up due to rounding.
Significant Changes in Percentage of Ownership
Save as disclosed above and under the sections entitled Restructuring Exercise,
Post-Restructuring Exercise Share Transfers and Share Capital of this Offer Document,
there had been no significant changes in the percentage of ownership of our Shares from the
incorporation of our Company until the Latest Practicable Date.
58
MORATORIUM
To demonstrate their commitment to our Group:
1. our Controlling Shareholders, BSL Holdings, Matthew Law and Peggy Lee and our
Substantial Shareholders, namely, Arica Walters, Adam Law and Jay Law who will hold an
aggregate of 96,650,000 Shares (representing approximately 71.6% of our Companys
post-Invitation share capital) have each agreed to a moratorium in relation to their
Shares. Each of them has undertaken not to, directly or indirectly, sell, contract to sell,
offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security
over, encumber or otherwise dispose of, any part of his interest in our Company for a
period of six (6) months commencing from the date of our Companys admission to the
Catalist, and for a period of six (6) months thereafter not to directly or indirectly, sell,
contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant
any security over, encumber or otherwise dispose of, any part of his interest in our
Company to below 50.0% of each of his original shareholdings in our Company;
2. Matthew Law and Peggy Lee, who collectively hold the entire share capital of BSL
Holdings, have each undertaken not to directly or indirectly, sell, contract to sell, offer,
realise, transfer, assign, pledge, grant any option to purchase, grant any security over,
encumber or otherwise dispose of, any part of his interest in BSL Holdings for a period
of 12 months commencing from the date of our Companys admission to the Catalist;
3. Chun Kwong Pong, who holds 675,000 Shares (representing approximately 0.5% of our
Companys post-Invitation share capital), has agreed to a moratorium in relation to his
Shares. He has undertaken not to, directly or indirectly, sell, contract to sell, offer, realise,
transfer, assign, pledge, grant any option to purchase, grant any security over, encumber
or otherwise dispose of, any part of his interest in our Company for a period of 12 months
commencing from the date of our Companys admission to the Catalist; and
4. Kek Chin Wu, who holds 675,000 Shares (representing approximately 0.5% of our
Companys post-Invitation share capital) as at the date of this Offer Document, has
agreed to a moratorium in relation to such number of Shares. He has undertaken not to,
directly or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any
option to purchase, grant any security over, encumber or otherwise dispose of, any part
of his interest in the said 675,000 Shares for a period of 12 months commencing from the
date of our Companys admission to the Catalist. Kek Chin Wu has indicated his interest
to subscribe for 400,000 Placement Shares. To the extent that he is allotted and/or
allocated any such Shares, these Shares will not be subject to any moratorium.
59
DILUTION
Dilution is the amount by which the Invitation Price paid by the subscribers and/or purchasers
of our Invitation Shares (New Investors) exceeds our NAV per Share immediately after the
Invitation. Our NAV per Share as at 28 February 2014, before adjusting for the estimated net
proceeds from the issue of the New Shares and based on our Companys pre-Invitation share
capital of 110,000,000 Shares, was 15.6 cents per Share.
Taking into account the issue of 25,000,000 New Shares at the Invitation Price in connection
with the Invitation, our NAV per Share after adjusting for the estimated net proceeds from the
issue of the New Shares and based on our Companys post-Invitation share capital of
135,000,000 Shares, would have been 17.1 cents. This represents an immediate increase in
the NAV per Share of 1.5 cents to our existing Shareholders and an immediate dilution in NAV
per Share of 12.9 cents to the New Investors.
The following table illustrates such dilution on a per Share basis as at 28 February 2014:
Cents
Invitation Price 30.0
NAV
(1)
per Share as at 28 February 2014 based on pre-Invitation
share capital of 110,000,000 Shares
15.6
Increase in NAV per Share attributable to existing Shareholders 1.5
NAV per Share after the Invitation
(2)
17.1
Dilution in NAV per Share to New Investors 12.9
Dilution in NAV per Share to New Investors as a percentage of
Invitation Price
43.0%
Notes:
1. NAV per Share as of 28 February 2014 had been converted based on the exchange rate of S$1:RM2.585.
2. The computed NAV did not take into account our actual financial performance from 28 February 2014 up to the
Latest Practicable Date. Depending on our actual results, our NAV per Share after the Invitation may be higher
or lower than the computed NAV.
60
The following table summarises the total number of Shares acquired by our Directors,
Controlling Shareholders, Substantial Shareholders and other shareholders (as adjusted for
the Restructuring Exercise and Post-Restructuring Exercise Share Transfers) during the
period of three (3) years prior to the date of lodgement of this Offer Document, the total
consideration paid by them and the average effective cash cost per Share paid by them and
paid by our New Investors pursuant to the Invitation:
Number of
Shares
acquired
Total
consideration
Average
effective cost
per Share
(S$) (Cents)
Directors
Dr Wilson Tay
Matthew Law
(1)(5)
17,464,000 2,476,679 14.18
Arica Walters
(1)(6)
17,464,000 2,727,828 15.62
Adam Law
(1)(7)
17,464,000 2,604,262 14.91
Chin Chee Choon
Chow Wen Kwan
Controlling, substantial and other shareholders
BSL Holdings
(2)(8)
27,129,000 1 n.m.
Peggy Lee
(3)(9)
14,564,500 2,274,934 15.62
Jay Law
(1)(10)
14,564,500 1 n.m.
Chun Kwong Pong
(4)(11)
675,000 162,000 24.00
Kek Chin Wu
(4)(11)
675,000 162,000 24.00
New Investors
(12)
37,000,000 11,100,000 30.0
Notes:
1. Matthew Law, Arica Walters, Adam Law and Jay Law are siblings who are the children of Roland Law.
2. BSL Holdings is an investment holding company incorporated in Labuan, Malaysia on 14 July 2014. Each of
Matthew Law and Peggy Lee owns 50 ordinary shares representing 50.0% of the issued share capital of BSL
Holdings.
4. Chun Kwong Pong and Kek Chin Wu are the Director and Associate Partner of cfSolutions respectively, the
Malaysian financial adviser to Jemaramas Jaya.
5. As part of the Restructuring Exercise, Matthew Law was allotted the following Shares:
(a) 15,512,759 Shares pursuant to the acquisition of Jemaramas Jaya by our Company. Please refer to the
section entitled Restructuring Exercise Acquisition of Jemaramas Jaya by our Company of this Offer
Document for further details; and
(b) 343,335 Shares pursuant to the acquisition of Versalink Technology by our Company. Please refer to the
section entitled Restructuring Exercise Acquisition of Versalink Technology by our Company of this
Following the Restructuring Exercise, Arica Walters transferred 1,607,906 Shares in our Company to Matthew
Law on 23 July 2014 for a nominal consideration. Please refer to the section entitled Post-Restructuring
Exercise Share Transfers of this Offer Document for further details.
6. As part of the Restructuring Exercise, Arica Walters was allotted the following Shares:
Document for further details; and
(b) 12,775,903 Shares pursuant to the acquisition of Versalink Marketing by our Company. Please refer to the
section entitled Restructuring Exercise Acquisition of Versalink Marketing by our Company of this
Following the Restructuring Exercise, Arica Walters transferred the following Shares:
(a) 7,075,658 Shares in our Company to BSL Holdings on 23 July 2014 for a nominal consideration;
(b) 791,098 Shares in our Company to Adam Law on 23 July 2014 for a nominal consideration; and
61
(c) 1,607,906 Shares in our Company to Matthew Law on 23 July 2014 for a nominal consideration.
Please refer to the section entitled Post-Restructuring Exercise Share Transfers of this Offer Document for
further details.
7. As part of the Restructuring Exercise, Adam Law was allotted 16,672,901 Shares pursuant to the acquisition of
Jemaramas Jaya by our Company. Please refer to the section entitled Restructuring Exercise Acquisition of
Jemaramas Jaya by our Company of this Offer Document for further details.
Following the Restructuring Exercise, Arica Walters transferred 791,098 Shares in our Company to Adam Law
on 23 July 2014 for a nominal consideration. Please refer to the section entitled Post-Restructuring Exercise
Share Transfers of this Offer Document for further details.
8. Following the Restructuring Exercise, BSL Holdings was transferred 7,075,658 and 20,053,342 Shares in our
Company by Arica Walters and Peggy Lee respectively on 23 July 2014 for a nominal consideration. Please refer
to the section entitled Post-Restructuring Exercise Share Transfers of this Offer Document for further details.
9. As part of the Restructuring Exercise, Peggy Lee was allotted the following Shares:
Document for further details;
(b) 17,034,537 Shares pursuant to the acquisition of Versalink Marketing by our Company. Please refer to the
section entitled Restructuring Exercise Acquisition of Versalink Marketing by our Company of this
Offer Document for further details; and
(c) 343,335 Shares pursuant to the acquisition of Versalink Technology by our Company. Please refer to the
section entitled Restructuring Exercise Acquisition of Versalink Technology by our Company of this
Following the Restructuring Exercise, Peggy Lee transferred the following Shares:
(a) 20,053,342 Shares in our Company to BSL Holdings on 23 July 2014 for a nominal consideration; and
(b) 14,564,500 Shares in our Company to her son, Jay Law on 23 July 2014 for a nominal consideration.
Please refer to the section entitled Post-Restructuring Exercise Share Transfers of this Offer Document for
further details.
10. Following the Restructuring Exercise, Jay Law was transferred 14,564,500 Shares in our Company by Peggy
Lee on 23 July 2014 for a nominal consideration. Please refer to the section entitled Post-Restructuring
Exercise Share Transfers of this Offer Document for further details.
11. Following the Restructuring Exercise, Chun Kwong Pong and Kek Chin Wu respectively acquired 675,000
Shares each from Arica Walters for a consideration of S$162,000 each.
12. As at the date of this Offer Document, Dr Wilson Tay and Kek Chin Wu have indicated their interests to subscribe
for 100,000 and 400,000 Placement Shares respectively, representing approximately 0.1% and 0.3%
respectively of our post-Invitation share capital. In the event that Dr Wilson Tay and Kek Chin Wu are allotted
and/or allocated such number of Placement Shares, they will have direct interests in the respective Shares.
Save as disclosed above and in the section entitled Post-Restructuring Exercise Share
Transfers of this Offer Document, none of our Directors or the Substantial Shareholders of our
Company or their respective Associates have acquired any Shares during the period of three
(3) years prior to the date of lodgement of this Offer Document.
62
RESTRUCTURING EXERCISE
Our Company was incorporated on 21 April 2014 in Singapore in accordance with the
Companies Act as a private limited company with an issued and paid-up share capital of
S$1.00 comprising one (1) Share, which was held by Adam Law.
To streamline and rationalise our corporate structure and shareholding structure in preparation
for the listing of our Company on Catalist, we implemented the following prior to the Invitation
(the Restructuring Exercise):
1. Acquisition of Jemaramas Jaya by our Company
On 22 July 2014, our Company entered into a sale and purchase agreement with Matthew
Law, Arica Walters, Adam Law and Peggy Lee pursuant to which our Company acquired
the entire issued and paid-up capital of Jemaramas Jaya at an aggregate consideration
of RM32,100,867 (the Jemaramas Jaya Purchase Consideration), which was
determined based on the audited net assets of Jemaramas Jaya as at 28 February 2014.
The Jemaramas Jaya Purchase Consideration was satisfied by the allotment and issue of
an aggregate 79,502,889 Shares, credited as fully paid in the following manner:
Name of allottee
Number of Shares
issued to such
allottee
Matthew Law 15,512,759
Arica Walters 15,512,759
Adam Law 16,672,901
Peggy Lee 31,804,470
Total 79,502,889
Upon completion of the aforesaid acquisition, Jemaramas Jaya became a wholly-owned
subsidiary of our Company.
2. Acquisition of Versalink Marketing by our Company
On 22 July 2014, our Company entered into a sale and purchase agreement with Arica
Walters and Peggy Lee pursuant to which our Company acquired from Arica Walters and
Peggy Lee, the entire issued and paid-up capital of Versalink Marketing at an aggregate
consideration of RM12,036,556 (the Versalink Marketing Purchase Consideration),
which was determined based on the audited net assets of Versalink Marketing as at
28 February 2014. The Versalink Marketing Purchase Consideration was satisfied by the
allotment and issue of an aggregate 29,810,440 Shares, credited as fully paid in the
following manner:
Name of allottee
Number of Shares
issued to such
allottee
Arica Walters 12,775,903
Peggy Lee 17,034,537
Total 29,810,440
Upon completion of the aforesaid acquisition, Versalink Marketing became a
wholly-owned subsidiary of our Company.
63
3. Acquisition of Versalink Technology by our Company
On 22 July 2014, our Company entered into a sale and purchase agreement with Matthew
Law and Peggy Lee pursuant to which our Company acquired from Matthew Law and
Peggy Lee, the entire issued and paid-up capital of Versalink Technology at an aggregate
consideration of RM277,257 (the Versalink Technology Purchase Consideration),
which was determined based on the audited net assets of Versalink Technology as at
28 February 2014. The Versalink Technology Purchase Consideration was satisfied by the
allotment and issue of an aggregate 686,670 Shares, credited as fully paid in the
following manner:
Name of allottee
Number of Shares
issued to such
allottee
Matthew Law 343,335
Peggy Lee 343,335
Total 686,670
Upon completion of the aforesaid acquisition, Versalink Technology became a
wholly-owned subsidiary of our Company.
64
POST-RESTRUCTURING EXERCISE SHARE TRANSFERS
Following the Restructuring Exercise, the following share transfers were carried out:
(a) On 23 July 2014, Arica Walters and Peggy Lee transferred 7,075,658 and 20,053,342
Shares respectively to BSL Holdings (an investment holding company incorporated in
Labuan, Malaysia on 14 July 2014) of which each of Matthew Law and Peggy Lee owns
50 ordinary shares representing 50.0% of the issued share capital of BSL Holdings, for
a nominal consideration;
(b) On 23 July 2014, Arica Walters transferred 791,098 Shares in our Company to Adam Law
for a nominal consideration;
(c) On 23 July 2014, Arica Walters transferred 1,607,906 Shares to Matthew Law for a
nominal consideration; and
(d) On 23 July 2014, Peggy Lee transferred 14,564,500 Shares to her son, Jay Law for a
nominal consideration.
Following the Restructuring Exercise, each of Chun Kwong Pong and Kek Chin Wu
respectively acquired 675,000 Shares from Arica Walters for a consideration of S$162,000
each.
Upon completion of the aforementioned transfers, the shareholding of our Company is as
follows:
Name of shareholder
Number of
Shares Percentage
%
BSL Holdings 27,129,000 24.7
Matthew Law 17,464,000 15.9
Arica Walters 17,464,000 15.9
Adam Law 17,464,000 15.9
Peggy Lee 14,564,500 13.2
Jay Law 14,564,500 13.2
Chun Kwong Pong 675,000 0.6
Kek Chin Wu 675,000 0.6
Total 110,000,000 100.0
65
ACQUISITION OF STEELTEMA BY OUR COMPANY
On 22 July 2014, our Company entered into a sale and purchase agreement with Arica Walters,
Bevan Walters and Tan Moon Chuan (an unrelated third party) pursuant to which our Company
acquired from Arica Walters, Bevan Walters and Tan Moon Chuan the entire issued and
paid-up capital of Steeltema at an aggregate consideration of RM500,000 (the Steeltema
Purchase Consideration), being equivalent to the issued and paid-up share capital of
Steeltema as at 28 February 2014.
The Steeltema Purchase Consideration was payable to Arica Walters, Bevan Walters and Tan
Moon Chuan in cash based on their respective shareholdings in Steeltema as follows:
Number of shares
Aggregate
consideration
in respect of
such shares
RM
Arica Walters 11 11
Bevan Walters 249,989 249,989
Tan Moon Chuan 250,000 250,000
Total 500,000 500,000
Upon completion of the aforesaid acquisition, Steeltema became a wholly-owned subsidiary of
our Company.
66
GROUP STRUCTURE
Our Group structure as at the date of this Offer Document is as follows:
Company
(Incorporated in Singapore)
Versalink
Marketing
(Incorporated in
Malaysia)
Versalink
Technology
(Incorporated in
Malaysia)
Jemaramas
Jaya
(1)
(Incorporated in
Malaysia)
100% 100%
100% 100%
Steeltema
(Incorporated in
Malaysia)
Versalink (S)
(Incorporated in
Singapore)
100%
Note:
1. Jemaramas Jaya has a branch office in Singapore with effect from 21 April 2014.
None of our subsidiaries is listed on any stock exchange. Save as disclosed above, there are
no other subsidiaries, associated companies and associated entities of our Group.
The details of each subsidiary of our Company as at the date of this Offer Document are as
follows:
Name
Date/
Country of
incorporation
Principal
place of
business Principal activities
Issued and
paid-up
share
capital
Effective
equity
interest
held by our
Group
Jemaramas Jaya 21 October
1991/Malaysia
Malaysia Manufacture, marketing and
sale of system furniture and
other furniture related
products
RM2,398,500 100%
Steeltema 15 December
2011/Malaysia
Malaysia Manufacture of metal parts
and components
RM500,000 100%
Versalink Marketing 2 October
1991/Malaysia
Malaysia Marketing and sale of
system furniture and other
furniture related products
RM980,000 100%
Versalink (S) 6 June
2014/Singapore
Singapore Investment holding S$1 100%
Versalink
Technology
17 June
1997/Malaysia
Malaysia Dormant RM100,000 100%
67
SELECTED COMBINED FINANCIAL INFORMATION
You should read the following selected combined financial information in conjunction with the
full text of this Offer Document, including the section entitled Managements Discussion and
Analysis of Financial Position and Results of Operations of this Offer Document and the
Independent Auditors Report as set out in Appendix A to this Offer Document.
COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
(1)
< Audited >
FY2012 FY2013 FY2014
RM000 RM000 RM000
Revenue 49,279 59,694 78,839
Cost of Sales (33,373) (36,990) (46,439)
Gross Profit 15,906 22,704 32,400
Other Items of Income
Interest Income 148 188 119
Other Credits 1,116 510 756
Other Items of Expenses
Marketing and Distribution Expenses (3,664) (4,402) (6,600)
Administrative Expenses (6,182) (6,739) (7,320)
Other Charges (137) (70) (33)
Finance Costs (824) (686) (519)
Profit Before Tax 6,363 11,505 18,803
Income Tax Expense (1,987) (2,787) (4,259)
Profit, Net of Tax 4,376 8,718 14,544
Total Comprehensive Income 4,376 8,718 14,544
EPS attributable to equity holders of the
Company (sen)
(2)(3)
3.98 7.93 13.22
Adjusted EPS attributable to equity holders of
the Company (sen)
(4)
3.24 6.46 10.77
Notes:
1. The combined statements of profit or loss and other comprehensive income have been prepared on the basis
that our Group has been in existence prior to the Restructuring Exercise. As the Acquisition of Steeltema is not
part of the Restructuring Exercise, Steeltemas financials have not been included in the combined statements
of profit or loss and other comprehensive income. Please refer to the Combined Financial Statements as set out
in Appendix A of this Offer Document for the basis of preparation of the combined financial statements of our
Group.
2. Had the Service Agreements been in place on 1 March 2013, our profit, net of tax for FY2014 would have been
approximately RM13.9 million and the EPS based on the pre-Invitation share capital of 110,000,000 Shares
would have been approximately 12.6 sen.
3. For comparative purposes, EPS for the Period Under Review has been computed based on the profit, net of tax
for the relevant financial year and the pre-Invitation share capital of 110,000,000 Shares.
4. For comparative purposes, adjusted EPS for the Period Under Review has been computed based on the profit,
net of tax for the relevant financial year and the post-Invitation share capital of 135,000,000 Shares.
68
COMBINED STATEMENT OF FINANCIAL POSITION
(1)
Audited
As at 28 February 2014
RM000
ASSETS
Non-Current Assets
Property, Plant and Equipment 25,363
Total Non-Current Assets 25,363
Current Assets
Inventories 11,076
Trade Receivables 10,315
Other Assets 2,828
Cash and Cash Equivalents 13,134
Total Current Assets 37,353
Total Assets 62,716
EQUITY AND LIABILITIES
Equity
Share Capital 3,479
Retained Earnings 40,878
Total Equity 44,357
Non-Current Liabilities
Deferred Tax Liabilities 911
Other Financial Liabilities, Non-Current 1,490
Total Non-Current Liabilities 2,401
Current Liabilities
Income Tax Payable 1,912
Trade and Other Payables 11,230
Other Financial Liabilities, Current 2,816
Total Current Liabilities 15,958
Total Liabilities 18,359
Total Equity and Liabilities 62,716
NTA per Share (sen)
(2)
40.32
Notes:
1. The combined statement of financial position as at 28 February 2014 had been prepared on the basis that our
Group has been in existence prior to the Restructuring Exercise. As the Acquisition of Steeltema is not part of
the Restructuring Exercise, Steeltemas financials were not included in the combined statement of financial
position.
2. NTA per Share as at 28 February 2014 had been computed based on the equity attributable to our Companys
equity holders as at 28 February 2014 and the pre-Invitation share capital of 110,000,000 Shares.
69
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION
AND RESULTS OF OPERATIONS
The following discussion of our Groups financial position and results of operations for the
Period Under Review should be read in conjunction with the Independent Auditors Report as
set out in Appendix A of this Offer Document.
This discussion and analysis contains forward-looking statements which involve risks and
uncertainties. Our actual results may differ significantly from those projected in the
forward-looking statements. Factors that might cause future results to differ significantly from
those projected in the forward-looking statements include, but are not limited to, those
discussed below and elsewhere in this Offer Document, particularly in the section entitled
Risk Factors of this Offer Document. Under no circumstances should the inclusion of such
forward-looking statements herein be regarded as a representation, warranty or prediction with
respect to the accuracy of the underlying assumption by our Company, the Vendors, the
Sponsor and Issue Manager, and the Underwriter and Placement Agent or any other person.
Investors are cautioned not to place undue reliance on these forward-looking statements that
speak only as at the date hereof. Please refer to the section entitled Cautionary Note on
Forward-Looking Statements of this Offer Document.
OVERVIEW
specifications.
third party brand of premium office furniture.
System furniture
We design and manufacture system furniture under our Versalink brand which caters to a
broad customer base. We also provide manufacturing services on an OEM basis for certain
overseas office furniture brands based on designs which they provide to us.
Workspace planning and consulting services
We also provide workspace planning and consulting services to our customers to help them
optimise usage of space which we believe increases work performance and productivity.
70
Revenue
Our revenue is derived from Domestic Sales as well as exports (Export Sales). Accordingly,
we have classified our customers as Domestic Sales customers and Export Sales customers,
for which we have provided more information as follows:-
(a) Domestic Sales customers
Our Domestic Sales are derived mainly from project sales by way of tenders to, and
directly negotiated contracts with, contractors who operate in the office renovation and
fit-out sector, corporate customers who require renovation and fit-out services for their
corporate offices as well as walk in customers who place orders at our showrooms. Other
Domestic Sales are derived from sales made to distributors, resellers, retailers and OEM
customers.
(b) Export Sales customers
Our Export Sales are primarily to overseas dealers such as furniture importers,
distributors and furniture retailers who generally resell our products to end-users through
their respective retail networks outside Malaysia, and furniture brand owners who
purchase from us on an OEM basis.
With regard to our project sales business, smaller scale projects with contract values of less
than RM2.0 million will usually take less than two (2) months to complete whereas bigger scale
projects with contract values of more than RM2.0 million may take two (2) to six (6) months or
more to complete. The duration of our projects is dependent on the project schedule and site
condition.
Revenue contribution from our customers varies from year to year as a significant portion of
our business is conducted on project basis. We may not generate similar projects in terms of
size and scope with the same customer in subsequent years.
The following table sets out a breakdown of our revenue for the Period under Review.
FY2012 FY2013 FY2014
Revenue RM000 % RM000 % RM000 %
Domestic Sales 16,388 33.3 25,515 42.7 36,500 46.3
Export Sales 32,891 66.7 34,179 57.3 42,339 53.7
Total 49,279 100.0 59,694 100.0 78,839 100.0
Revenue from our Domestic Sales segment accounted for 33.3%, 42.7% and 46.3% of our total
revenue in FY2012, FY2013 and FY2014 respectively. Revenue from our Export Sales
segment accounted for 66.7%, 57.3% and 53.7% of our total revenue in FY2012, FY2013 and
FY2014 respectively.
As at the Latest Practicable Date, we had more than 90 overseas dealers who market our
products to end-users in more than 40 countries. As at the Latest Practicable Date, our order
books based on confirmed sales orders was approximately RM6.3 million.
71
Our revenue may be affected by, inter alia, the following key factors:
(a) our ability to secure new projects, and the size and scope of projects secured. A
significant portion of our sales is derived from project sales, which are non-recurring in
nature. As such, it is important that new projects of similar or larger value are secured on
a continuous basis. In addition, as we recognise revenue from our project sales based on
project invoicing milestones, the timing of project completion will have a significant impact
on our revenue;
(b) our network of dealers and OEM customers as they contribute a significant portion of our
revenue;
(c) our ability to remain competitive through product innovation and improvement in our
product quality;
(d) our ability to maintain good relationships with our major customers; and
(e) economies and government regulation of the markets that we carry out our businesses.
Customers are likely to set aside more funds for corporate investments such as the
refurbishment of their offices and the expansion or construction of new offices if the
economies in which they are operating in are performing well.
Please refer to the section entitled Risk Factors of this Offer Document for a more
comprehensive discussion of other factors which may affect our business operations and
Revenue by geographical area
Our revenue by geographical area is prepared based on the countries where our customers
are located. The following table sets out a breakdown of revenue received from each of the
geographical areas:
FY2012 FY2013 FY2014
RM000 % RM000 % RM000 %
Malaysia 16,388 33.2 25,515 42.7 36,500 46.3
Middle East
(1)
11,823 24.0 17,818 29.8 22,986 29.2
North America
(2)
12,229 24.8 10,209 17.1 10,163 12.9
Asia (others)
(3)
5,646 11.5 3,552 6.0 5,873 7.4
Others
(4)
3,193 6.5 2,600 4.4 3,317 4.2
Total 49,279 100.00 59,694 100.0 78,839 100.0
Notes:
1. Middle East refers mainly to UAE, Saudi Arabia, Qatar, Oman, Bahrain and Kuwait.
2. North America refers mainly to USA and Canada.
3. Asia (others) refers mainly to Singapore, India, Mongolia, Philippines, Indonesia, Brunei and Thailand.
4. Others refer to countries in Africa, Central America, Europe and Oceania.
Cost of Sales
Our cost of sales comprises material costs, labour costs, manufacturing overheads and
purchases of ancillary products.
72
The following table sets forth our cost of sales for the Period under Review:
FY2012 FY2013 FY2014
RM000 % RM000 % RM000 %
Material costs 20,203 60.5 21,414 57.9 25,936 55.8
Labour costs 4,924 14.8 5,112 13.8 7,062 15.2
Manufacturing overheads 3,178 9.5 3,846 10.4 3,973 8.6
Purchases of ancillary
products
5,068 15.2 6,618 17.9 9,468 20.4
Total 33,373 100.0 36,990 100.0 46,439 100.0
Our material costs account for the biggest part of our costs of sales and these costs include
costs of raw materials, components and parts such as melamine face chipboards, metal legs,
metal components, PVC edge banding, hardware, packaging materials and high pressure
laminate. We purchase our raw materials, components and parts from a pool of overseas and
local suppliers. Our material costs accounted for approximately 60.5%, 57.9% and 55.8% of
our costs of sales in FY2012, FY2013 and FY2014 respectively.
Labour costs comprise mainly salaries, wages, contributions to defined contribution plans and
other staff-related expenses of our employees involved in our manufacturing activities. Our
labour costs accounted for approximately 14.8%, 13.8% and 15.2% of our costs of sales in
FY2012, FY2013 and FY2014 respectively.
Manufacturing overheads comprise mainly depreciation expenses of our plant and machinery,
manufacturing facility and warehouse, utilities charges, foreign workers levies and
maintenance costs of property, plant and equipment for our manufacturing facility and
warehouse.
Purchases of ancillary products made for trading purposes include seatings, CPU holders,
keyboard trays, monitor arms, wire trays, stationery trays, stationery holders, cable channels,
cable boxes and other accessories.
Our cost of sales may be affected by, inter alia, the following key factors:
(a) changes in supply of raw materials and prices. The costs of raw materials may fluctuate
due to changes in market supply and demand, which are driven by factors such as global
economic conditions;
(b) our ability to source for and purchase raw materials at competitive prices that meet our
customers demands and requirements;
(c) fluctuation in the purchase costs of ancillary products for trading purposes;
(d) changes in labour costs. Our labour costs comprise our workers salaries, bonuses and
overtime pay. Labour costs are generally affected by the general demand and supply
conditions in the labour market as well as labour regulations of local and foreign
governments; and
(e) fluctuations in exchange rate between USD, RMB, EUR and S$ versus RM, which is our
reporting currency. Any appreciation or depreciation of these currencies against RM will
result in an increase or decrease in our cost of sales.
73
Gross Profit and Gross Profit Margin
Our gross profit is determined after deducting cost of sales from our revenue. Accordingly, our
gross profit margin was approximately 32.3%, 38.0% and 41.1% in FY2012, FY2013 and
Gross Profit FY2012 FY2013 FY2014
RM000 % RM000 % RM000 %
Domestic Sales 4,868 30.6 9,352 41.2 13,297 41.0
Export Sales 11,038 69.4 13,352 58.8 19,103 59.0
Total 15,906 100.0 22,704 100.0 32,400 100.0
Gross Profit Margin FY2012 FY2013 FY2014
% % %
Domestic Sales 29.7 36.7 36.4
Export Sales 33.6 39.1 45.1
Overall gross profit margin 32.3 38.0 41.1
Interest Income
Our interest income comprises mainly interest income received from short-term deposits and
fixed deposits. Our interest income amounted to approximately RM148,000, RM188,000 and
RM119,000 and accounted approximately 0.3%, 0.3% and 0.2% of our revenue for FY2012,
FY2013 and FY2014 respectively.
Other Credits
FY2012 FY2013 FY2014
RM000 % RM000 % RM000 %
Litigation Compensation 627 56.2 71 13.9 155 20.5
Foreign exchange
adjustment gains
171 15.3 420 82.4 448 59.3
Gains on disposal of plant
and equipment
87 7.8 4 0.5
Insurance claims 188 16.8 5 1.0 115 15.2
Miscellaneous credits 43 3.9 14 2.7 34 4.5
Total 1,116 100.0 510 100.0 756 100.0
Other credits comprise mainly net payment received pursuant to a court judgment (the
Litigation Compensation), foreign exchange adjustment gains, gains on disposal of plant
and equipment and insurance claims.
Litigation Compensation refers to the litigation related compensation and credits being mainly
net amount plus interest received from a supplier pursuant to a court order in favour of
Jemaramas Jaya in connection with a litigation case relating to the delivery of products which
were not in accordance with specification and the subsequent write-back of trade payable due
to such supplier.
74
Foreign exchange adjustment gains arise due to fluctuations in foreign currencies relating to
our purchases and sales.
Gains on disposal of plant and equipment comprise mainly disposal of machinery and office
equipment that were no longer in use.
Insurance claims relate to claims made in relation to fidelity and burglary.
Miscellaneous credits comprise mainly bad debt recovered and sundry income.
Other credits amounted to approximately RM1.1 million, RM0.5 million and RM0.8 million and
accounted for approximately 2.3%, 0.9% and 1.0% of our revenue in FY2012, FY2013 and
Marketing and Distribution Expenses
The following table sets forth a breakdown of our marketing and distribution expenses in
FY2012, FY2013 and FY2014:
FY2012 FY2013 FY2014
RM000 % RM000 % RM000 %
Advertisement and
promotions
513 14.0 444 10.1 484 7.3
Sales commissions 74 2.0 321 7.3 1,473 22.3
Depreciation expenses 245 6.7 223 5.1 237 3.6
Employee benefits
expenses
1,356 37.0 1,364 31.0 1,459 22.1
Rental expenses 333 9.1 333 7.5 338 5.1
Logistics expenses 639 17.4 957 21.7 708 10.7
Installation charges 1,027 15.7
Other marketing and
distribution expenses
504 13.8 760 17.3 874 13.2
Total 3,664 100.0 4,402 100.0 6,600 100.0
Advertisement and promotions comprise mainly (i) expenses incurred on the advertisements
made on newspapers, trade magazines and billboards; (ii) the rental expenses incurred in
relation to the trade exhibitions that we had participated in; and (iii) expenses incurred in
relation to certain of our Groups marketing activities. Advertisement and promotions
accounted for approximately 14.0%, 10.1% and 7.3% of our marketing and distribution
expenses in FY2012, FY2013 and FY2014 respectively.
Sales commissions comprise commission expenses incurred for certain projects. Sales
commission accounted for approximately 2.0%, 7.3% and 22.3% of our marketing and
distribution expenses in FY2012, FY2013 and FY2014 respectively.
Depreciation expenses comprise mainly depreciation of motor vehicles used for our marketing
and distribution activities. Depreciation expenses accounted for approximately 6.7%, 5.1%
and 3.6% of our marketing and distribution expenses in FY2012, FY2013 and FY2014
respectively.
Employee benefits expenses comprise mainly salaries and commission for staff who are
involved in the marketing functions of our Group. Employee benefits expenses accounted for
approximately 37.0%, 31.0% and 22.1% of our marketing and distribution expenses in FY2012,
FY2013 and FY2014 respectively.
75
Rental expenses refer to the rental of the Sungai Buloh Showroom. Rental expenses
accounted for approximately 9.1%, 7.5% and 5.1% of our marketing and distribution expenses
in FY2012, FY2013 and FY2014 respectively.
Logistics expenses comprise mainly transportation expenses incurred for (i) the deliveries of
products within Malaysia; and (ii) forwarding charges relating to our Export Sales. Logistics
expenses accounted for approximately 17.4%, 21.7% and 10.7% of our marketing and
distribution expenses in FY2012, FY2013 and FY2014 respectively.
Installation charges refer to charges incurred for the installation services provided by our
overseas dealers. Installation charges accounted for approximately 15.7% of our marketing
and distribution expenses in FY2014. There were no installation charges recorded in FY2012
and FY2013 respectively.
Other marketing and distribution expenses comprise mainly (i) maintenance expenses
incurred in relation to motor vehicles used for our marketing and distribution activities; (ii)
entertainment expenses; (iii) phone and fax charges; (iv) royalties paid to third party
designers; (v) allowances for slow moving inventories; and (vi) other sales related expenses.
Other marketing and distribution expenses accounted for approximately 13.8%, 17.3% and
13.2% of our marketing and distribution expenses in FY2012, FY2013 and FY2014
respectively.
Total marketing and distribution expenses amounted to approximately RM3.7 million, RM4.4
million and RM6.6 million and accounted for approximately 7.4%, 7.4% and 8.4% of our
revenue in FY2012, FY2013 and FY2014 respectively.
Administrative Expenses
The following table sets forth the breakdown of our administrative expenses in FY2012,
FY2013 and FY2014:
FY2012 FY2013 FY2014
RM000 % RM000 % RM000 %
Depreciation expense 629 10.2 490 7.3 929 12.7
Employee benefits
expense
3,416 55.2 4,032 59.8 3,918 53.5
Other administrative
expenses
2,137 34.6 2,217 32.9 2,473 33.8
Total 6,182 100.0 6,739 100.0 7,320 100.0
Depreciation expenses comprise mainly depreciation charges for (i) the building that houses
the administrative functions of our Group; (ii) motor vehicles used for administrative purposes;
and (iii) office equipment. Depreciation expenses accounted for approximately 10.2%, 7.3%
and 12.7% of our administrative expenses in FY2012, FY2013 and FY2014 respectively.
Employee benefits expenses comprise mainly (i) salaries, bonuses and other staff-related
expenses for staff involved in administrative functions; (ii) directors fees and remuneration;
and (iii) contributions to defined contribution plans for our employees involved in our
administrative activities. Employee benefits expenses accounted for approximately 55.2%,
59.8% and 53.5% of our administrative expenses in FY2012, FY2013 and FY2014 respectively.
76
Other administrative expenses comprise mainly maintenance expenses relating to motor
vehicles, factory, office premises and office equipment, utilities expenses, general staff
welfare and other administrative related expenses. Other administrative expenses accounted
for approximately 34.6%, 32.9% and 33.8% of our administrative expenses in FY2012, FY2013
and FY2014 respectively.
Total administrative expenses amounted to approximately RM6.2 million, RM6.7 million and
RM7.3 million and accounted for approximately 12.5%, 11.3% and 9.3% of our revenue in
FY2012, FY2013 and FY2014 respectively.
Other Charges
Other charges relate mainly to write-offs of plant and equipment comprising machinery and
office equipment that were no longer in use.
Other charges amounted to approximately RM137,000, RM70,000 and RM33,000 and
accounted for approximately 0.3%, 0.1% and 0.04% of our revenue in FY2012, FY2013 and
Finance Costs
Our finance costs comprise mainly charges and interests incurred on bank loans, bank
overdrafts, hire purchases, letters of credit and banker acceptances. Our finance costs
amounted to approximately RM0.8 million, RM0.7 million and RM0.5 million in FY2012,
FY2013 and FY2014 respectively and accounted for approximately 1.7%, 1.1% and 0.7% of
our revenue for FY2012, FY2013 and FY2014 respectively.
Income Tax Expenses
Our Company, which was incorporated on 21 April 2014, is subject to the applicable tax rate
in Singapore. The statutory tax rate for Singapore for the Period under Review is 17.0%. Our
subsidiaries in Malaysia were subjected to the Malaysian corporate income tax rates of 25.0%
for the Period under Review.
Our income tax expenses was approximately RM2.0 million, RM2.8 million and RM4.3 million
in FY2012, FY2013 and FY2014 respectively. Our effective tax rate was approximately 31.2%,
24.2% and 22.7% in FY2012, FY2013 and FY2014 respectively.
INFLATION
During the Period under Review, inflation did not have a material impact on our Group.
SEASONALITY
While we generally do not experience any significant seasonal patterns in our operations and
business, our revenue may not be uniformly spread throughout the year due to a significant
portion of our revenue being derived from project sales.
77
REVIEW OF THE RESULTS OF OPERATIONS
FY2013 vs FY2012
Revenue
Our revenue increased by approximately RM10.4 million or 21.1%, from approximately RM49.3
million in FY2012 to approximately RM59.7 million in FY2013. This was mainly due to the
increase in sales of (i) our Export Sales segment of approximately RM1.3 million; and (ii)
Domestic Sales segment of approximately RM9.1 million.
The increase in sales of our Export Sales segment was mainly due to the increase in sales of
our Versalink brand products of approximately RM7.0 million from approximately RM17.9
million in FY2012 to approximately RM24.9 million in FY2013. The increase was mainly due to
an increase in orders from our dealers in the Middle East. However, the increase in sales of
our Export Sales segment was partially offset by the decrease in sales of OEM products of
approximately RM5.7 million from approximately RM15.0 million in FY2012 to approximately
RM9.3 million in FY2013. The decrease in the sales of OEM products to overseas OEM
customers was mainly due to the decrease in demand from North America and Asia (excluding
Malaysia).
The increase in sales of our Domestic Sales segment was mainly due to the increase in project
sales of approximately RM8.4 million, from approximately RM13.0 million in FY2012 to
approximately RM21.4 million in FY2013. The increase in project sales was due to the
aggregate increase in revenue contribution from (i) bigger scale project of approximately
RM5.6 million; and (ii) smaller scale projects of approximately RM2.8 million in FY2013.
Cost of Sales
Our cost of sales increased by approximately RM3.6 million or 10.8% from approximately
RM33.4 million in FY2012 to approximately RM37.0 million in FY2013. The increase was
mainly due to the increase in (i) purchases of ancillary products of approximately RM1.6
million; (ii) manufacturing overheads of approximately RM0.7 million; (iii) material costs of
approximately RM1.2 million; and (iv) labour costs of approximately RM0.2 million. The
increase in cost of sales was mainly due to (i) a higher business volume in FY2013; and (ii)
higher manufacturing overheads as a result of higher depreciation expenses during the year,
increase in foreign workers levies, staff welfare expenses and maintenance and repair
expenses.
Our gross profit increased by approximately RM6.8 million or 42.7%, from approximately
RM15.9 million in FY2012 to approximately RM22.7 million in FY2013.
Our gross profit margin increased from approximately 32.3% in FY2012 to approximately
38.0% in FY2013. This was mainly attributable to a proportionately higher increase in revenue
as compared to the increase in cost of sales in FY2013. This was mainly due to (i) better
purchase prices of our raw materials and ancillary products as the volume ordered from our
suppliers increased; and (ii) an improvement in production efficiency.
The increase in gross profit margin was mainly due to better margins achieved by our Export
Sales and Domestic Sales segments. Our Export Sales segments gross profit margin
increased from approximately 33.6% in FY2012 to approximately 39.1% in FY2013 mainly as
a result of the increase in sales of our Versalink brand products to our overseas dealers. Our
Domestic Sales segments gross profit margin increased from approximately 29.7% in FY2012
to approximately 36.7% in FY2013 mainly as a result of the increase in revenue from our
project sales.
78
Interest Income
Our interest income increased by approximately RM40,000 or approximately 27.0%, from
approximately RM148,000 in FY2012 to approximately RM188,000 in FY2013 mainly due to
the longer tenure for a higher amount of funds placed in fixed deposits in FY2013.
Other Credits
Our other credits decreased by approximately RM0.6 million or approximately 54.3%, from
approximately RM1.1 million in FY2012 to approximately RM0.5 million in FY2013. The
decrease in other credits was mainly due to the decrease in (i) insurance claims of
approximately RM0.2 million; and (ii) Litigation Compensation of approximately RM0.6 million
(after deducting legal expenses), partially offset by the increase in foreign exchange gain of
approximately RM0.2 million. The Litigation Compensation in FY2012 refers to the net amount
plus interest received from a supplier pursuant to a court order in favour of Jemaramas Jaya
in connection with a litigation case relating to the delivery of products by the supplier which
were not in accordance with specification and the subsequent write-back of trade payable due
to such supplier.
Our marketing and distribution expenses increased by approximately RM0.7 million or
approximately 20.1%, from approximately RM3.7 million in FY2012 to approximately RM4.4
million in FY2013. This was mainly due to the increase in (i) sales commissions of
approximately RM0.2 million; (ii) logistics expenses of approximately RM0.3 million; and (iii)
royalty expenses of approximately RM0.1 million, as a result of higher sales volume recorded
in FY2013.
Our administrative expenses increased by approximately RM0.6 million or approximately
9.0%, from approximately RM6.2 million in FY2012 to approximately RM6.7 million in FY2013.
This was mainly due to the increase in (i) employee benefits expenses of approximately RM0.6
million as a result of the increase in the number of administrative staff; and (ii) utilities charges
of approximately RM0.2 million as a result of the reclassification of utilities charges to better
reflect consumption by our Groups respective departments. The increase was partially offset
by lower depreciation of RM0.1 million due to the redistribution of building cost to land cost to
better reflect the actual cost of the land.
Other Charges
Our other charges decreased by approximately RM67,000 or approximately 48.9%, from
approximately RM137,000 in FY2012 to approximately RM70,000 in FY2013. The decrease in
other charges was mainly due to the decrease in plant and equipment written off of
approximately RM68,000.
Finance Costs
Our finance costs decreased by approximately RM0.1 million or approximately 16.7%, from
approximately RM0.8 million in FY2012 to approximately RM0.7 million in FY2013. This was
mainly due to the repayment of certain hire purchase payables and term loans in FY2013.
Income Tax Expenses
Our income tax expenses increased by approximately RM0.8 million or approximately 40.3%,
from approximately RM2.0 million in FY2012 to approximately RM2.8 million in FY2013. This
was mainly due to the increase in profit before tax in FY2013. Our income tax expense did not
increase proportionately with the profit before tax due to a lower effective tax rate as discussed
below.
79
The effective tax rate decreased from approximately 31.2% in FY2012 to approximately 24.2%
in FY2013. The higher effective tax rate in FY2012 was mainly due to the recognition of under
provision of tax (including deferred tax expense) in respect of FY2011 of approximately RM1.1
million. A lower effective tax rate was recorded in FY2013 mainly due to the non-recurrence of
the under provision of income tax in FY2012.
Profit, Net of Tax
As a result of the above, our profit after tax increased by approximately RM4.3 million or
99.2%, from approximately RM4.4 million in FY2012 to approximately RM8.7 million in
FY2013.
FY2014 vs FY2013
Revenue
Our revenue increased by approximately RM19.1 million or approximately 32.1%, from
mainly due to the increase in sales of (i) our Export Sales segment of approximately RM8.2
million; and (ii) Domestic Sales segment of approximately RM10.9 million.
The increase in sales of our Export Sales segment was mainly due to (i) the increase in sales
of our Versalink brand products of approximately RM5.6 million, from approximately RM24.9
million in FY2013 to approximately RM30.5 million in FY2014, which was mainly attributable
to an increase in the number of dealers, whom we work with, in Africa, Asia and the Middle East
as well as the increase in sales to our existing dealers in Middle East; and (ii) the increase in
sales of OEM products to overseas OEM customers of approximately RM2.5 million from
approximately RM9.3 million in FY2013 to approximately RM11.8 million in FY2014 as a result
of the recovery in the North America market.
The increase in sales of our Domestic Sales segment was mainly due to the increase in project
sales of approximately RM12.0 million as revenue contribution from project sales increased
from approximately RM21.4 million in FY2013 to approximately RM33.4 million in FY2014. The
increase in project sales was due to the aggregate increase in revenue contribution from (i)
bigger scale projects of approximately RM11.0 million; and (ii) smaller scale projects of
approximately RM1.0 million in FY2013. The increase in sales of our Domestic Sales segment
was partially offset by the decrease in the sales of OEM products to local OEM customers of
approximately RM1.0 million as the Group decided to focus more resources on project sales.
Cost of sales
Our cost of sales increased by approximately RM9.4 million or approximately 25.5%, from
mainly due to the increase in (i) material costs of approximately RM4.5 million as a result of
the higher sales volume; (ii) labour costs of approximately RM1.9 million mainly due to the full
financial years impact in FY2014 of the minimum wage policy of approximately RM1.1 million
and increased overtime cost of approximately RM0.8 million; (iii) purchases of ancillary
products of approximately RM2.8 million from third party manufacturers as a result of the
higher sales volume; and (iv) manufacturing overhead of approximately RM0.1 million.
Our gross profit increased by approximately RM9.7 million or approximately 42.7%, from
approximately RM22.7 million in FY2013 to approximately RM32.4 million.
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Our gross profit margin increased from approximately 38.0% in FY2013 to approximately
41.1% in FY2014. This was mainly attributable to a proportionately higher increase in revenue
as compared to the increase in cost of sales in FY2014. This was mainly due to (i) better
purchase prices of our raw materials and ancillary products as the volume ordered from our
suppliers increased and (ii) an improvement in production efficiency.
The increase in gross profit margin was mainly due to better margins achieved by our Export
Sales segment. Our Export Sales segments gross margin increased from approximately
39.1% in FY2013 to approximately 45.1% in FY2014 as a result of the increase in sales of our
Versalink brand products to our overseas dealers. In FY2014, we derived higher gross profit
margins from our Export Sales segment to take into account higher installation charges and
certain sales commissions. Our Domestic Sales segments gross profit margin was
approximately 36.7% and 36.4% in FY2013 and FY2014 respectively.
Interest Income
Our interest income decreased by approximately RM69,000 or approximately 36.7%, from
approximately RM188,000 in FY2013 to approximately RM119,000 in FY2014 mainly due to
the decrease in funds placed in short-term deposits.
Other Credits
Our other credits increased by approximately RM0.2 million or approximately 48.2%, from
mainly due to (i) the interest on the net amount received in respect of the Litigation
Compensation of approximately RM0.1 million; and (ii) the increase in insurance claim of
approximately RM0.1 million.
Our marketing and distribution expenses increased by approximately RM2.2 million or
million in FY2014. This was mainly due to the increase in (i) sales commissions of
approximately RM1.2 million; and (ii) installation charges of approximately RM1.0 million
charged by our overseas dealers.
Our administrative expenses increased by approximately RM0.6 million or approximately
8.6%, from approximately RM6.8 million in FY2013 to approximately RM7.3 million in FY2014.
This was mainly due to higher depreciation expense of approximately RM0.4 million arising
from a change in depreciation rates for certain property, plant and equipment categories.
Other Charges
Our other charges decreased by approximately RM37,000 or approximately 52.9%, from
approximately RM70,000 in FY2013 to approximately RM33,000 in FY2014. This was mainly
due to the decrease in plant and equipment written off of approximately RM49,000 as well as
losses on disposal of plant and equipment of approximately RM4,000 which was partially offset
by the increase in allowance for impairment on trade receivables of approximately RM16,000.
Finance Costs
Our finance costs decreased by approximately RM0.2 million or approximately 24.3%, from
approximately RM0.7 million in FY2013 to approximately RM0.5 million in FY2014 mainly due
to lower outstanding bank facilities.
81
Income Tax Expenses
Our income tax expenses increased by approximately RM1.5 million or approximately 52.8%,
from approximately RM2.8 million in FY2013 to approximately RM4.3 million in FY2014 mainly
due to higher profits before taxation. However, our effective tax rate decreased from
approximately 24.2% in FY2013 to approximately 22.7% in FY2014 mainly due to deferred tax
income of approximately RM0.5 million in FY2014.
Profit, Net of Tax
As a result of the above, our profit after tax increased by approximately RM5.8 million or
million in FY2014.
REVIEW OF FINANCIAL POSITION
A review of the financial position of our Group as at 28 February 2014 is set out below.
Non-current assets
As at 28 February 2014, our non-current assets amounted to approximately RM25.4 million or
approximately 40.4% of our total assets and comprised property, plant and equipment, which
included the following:
(i) freehold land of approximately RM6.3 million or approximately 24.6% of our non-current
assets. Our factory and warehouse are situated on this freehold land;
(ii) buildings of approximately RM12.5 million or approximately 49.4% of our non-current
assets, which comprised mainly the factory and warehouse of our Group;
(iii) plant and machinery of approximately RM3.7 million or approximately 14.6% of our
non-current assets, which comprised mainly machinery used in the production of our
products; and
(iv) motor vehicles and other property, plant and equipment such as furniture and fittings of
approximately RM2.9 million or approximately 11.3% of our non-current assets.
Current assets
As at 28 February 2014, our current assets amounted to approximately RM37.4 million or
approximately 59.6% of our total assets and comprised the following:
(i) inventories of approximately RM11.1 million or 29.7% of our current assets, which
comprised raw materials, work-in-progress and finished goods;
(ii) trade receivables of approximately RM10.3 million or 27.5% of our current assets, which
were mainly attributable to our project sales;
(iii) other assets of approximately RM2.8 million or approximately 7.6% of our current assets,
which consisted of (a) deposits of approximately RM0.2 million; (b) prepayment of
approximately RM1.2 million relating mainly to advance payments for software licenses of
RM0.5 million, listing expenses of approximately RM0.4 million, deposit for the rental of
exhibition booths of approximately RM0.1 million and foreign workers levies of
approximately RM0.1 million; and (c) advance payments on purchase of inventories of
approximately RM1.4 million; and
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(iv) cash and cash equivalents of approximately RM13.1 million or 35.2% of our current
assets, which consisted of (a) cash deposited with banks amounting to approximately
RM11.7 million; and (b) cash pledged to banks as securities to secure banking facilities
amounting to approximately RM1.4 million.
Non-current liabilities
As at 28 February 2014, our non-current liabilities amounted to approximately RM2.4 million
or approximately 13.1% of our total liabilities and comprised the following:
(i) deferred tax liabilities of approximately RM0.9 million or 37.9% of our non-current
liabilities; and
(ii) other financial liabilities of approximately RM1.5 million or 62.1% of our non-current
liabilities, which comprised mainly bank loans.
Current liabilities
As at 28 February 2014, our current liabilities amounted to approximately RM16.0 million or
approximately 86.9% of our total liabilities and comprised the following:
(i) income tax payable of approximately RM1.9 million or approximately 12.0% of our current
liabilities;
(ii) trade and other payables of approximately RM11.2 million or approximately 70.4% of our
current liabilities, which consisted mainly of (a) trade payables of approximately RM5.9
million relating to amounts payable to our suppliers; and (b) other payables of
approximately RM5.3 million mainly relating to dividends payable amounting to RM3.0
million declared in FY2014, deposits paid by our customers for orders and accruals for
payroll, staff cost and sales tax; and
(iii) other financial liabilities of approximately RM2.8 million or 17.6% of our current liabilities,
which consisted mainly of (a) term loans of approximately RM1.5 million relating to our
Groups factory, land and building; (b) bankers acceptances of approximately RM1.0
million relating to the financing of purchases of raw materials and ancillary products; (c)
bank overdrafts of approximately RM0.2 million; and (d) finance lease of approximately
RM0.1 million.
Shareholders equity
As at 28 February 2014, our shareholders equity of approximately RM44.4 million comprised
share capital of approximately RM3.5 million and retained earnings of approximately RM40.9
million.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our working capital, capital expenditure and other capital requirements
through a combination of funds generated from operating activities, shareholders equity and
bank borrowings.
With regard to our liquidity and capital resources, we would like to highlight the following:
(i) in FY2014, our Group generated net cash from operating activities of approximately
RM12.6 million;
(ii) as at 28 February 2014, we had net current assets of approximately RM21.4 million with
cash and cash equivalents of approximately RM13.1 million; and
83
(iii) as at 28 February 2014, we had total working capital financing facilities of RM18.6 million
(including bank overdrafts and trade finance facilities), of which approximately RM4.2
million had been utilised.
Please refer to the section entitled Capitalisation and Indebtedness of this Offer Document
for further details of our cash and credit facilities as at the Latest Practicable Date.
Our Directors are of the reasonable opinion that, after taking into account the cash flows
generated from our operations, our available banking facilities and our existing cash and cash
equivalents, the working capital available to our Group as at the date of lodgement of this Offer
Document is sufficient for our present requirements and for at least 12 months after the listing
of our Company on Catalist.
The Sponsor is of the reasonable opinion that, having regard to the above, after having made
due and careful enquiry and after taking into account the cash flows generated from our
Groups operations, our Groups available banking facilities and our Groups existing cash and
cash equivalents, the working capital available to our Group as at the date of lodgement of this
Offer Document is sufficient for our present requirements and for at least 12 months after the
listing of our Company on Catalist.
We set out below a summary of our Groups combined statements of cash flows for FY2012,
FY2013 and FY2014. The following summary of combined statements of cash flows should be
read in connection with the full text of this Offer Document, including the Independent Auditors
Report as set out in Appendix A to this Offer Document.
< Audited >
FY2012 FY2013 FY2014
RM000 RM000 RM000
Net cash flows from operating activities 7,727 7,757 12,588
Net cash flows used in investing activities (2,182) (2,589) (545)
Net cash flows used in financing activities (1,874) (5,157) (11,001)
Net change in cash and cash equivalents 3,671 11 1,042
Cash and cash equivalents at the beginning of
financial year
6,770 10,441 10,452
Cash and cash equivalents at the end of
financial year
10,441 10,452 11,494
FY2012
Net cash from operating activities
In FY2012, we generated net cash flows of approximately RM9.0 million from operating
activities before changes in working capital.
Our net working capital outflow amounted to approximately RM0.6 million. The net working
capital outflow was mainly due to:
(i) the increase in inventories of approximately RM2.9 million in anticipation of higher sales
volume in FY2013; and
(ii) the increase in trade receivables of approximately RM1.0 million,
84
partially offset by (a) the increase in trade and other payables of approximately RM3.2 million
mainly due to the purchase of raw materials and ancillary products, accrued staff cost and
amounts owing to current and former directors of RM0.1 million for Jemaramas Jaya, Versalink
Marketing and Versalink Technology; and (b) decrease in other assets of RM0.2 million mainly
due to the utilisation of the deposit paid for plant and machinery in FY2011.
In FY2012, we paid income tax of approximately RM0.7 million.
Overall, our net cash flows from operating activities in FY2012 amounted to approximately
RM7.7 million.
Net cash from investing activities
Net cash used in investing activities amounted to approximately RM2.2 million. This was
mainly due to cash used in the purchase of property, plant and equipment amounting to
approximately RM2.4 million relating to additions to furniture and fittings of approximately
RM0.4 million, motor vehicles of approximately RM0.8 million, plant and machinery of
approximately RM0.7 million, approximately RM0.3 million on the construction of our
warehouse and purchase of a freehold land of approximately RM0.2 million. This was partially
offset by the proceeds from the disposal of motor vehicles amounting to approximately RM0.1
million and interest received of approximately RM0.1 million from fixed deposits.
Net cash from financing activities
Net cash used in financing activities amounted to approximately RM1.9 million. This was
mainly due to the repayment of banking facilities of approximately RM1.1 million and interest
paid of approximately RM0.8 million.
As at 28 February 2012, our cash and cash equivalents were approximately RM10.4 million.
FY2013
(i) the increase in inventories of approximately RM0.6 million;
(ii) the increase in trade receivables of approximately RM0.5 million;
(iii) the increase in other assets of approximately RM0.3 million; and
(iv) the decrease in trade and other payables of approximately RM3.4 million mainly due to
the streamlining of our payment processes, which allowed us to settle payment to our
suppliers more promptly.
In FY2013, we paid income tax of approximately RM1.4 million.
Overall, our net cash from operating activities in FY2013 amounted to approximately RM7.8
million.
85
mainly due to the purchase of property, plant and equipment amounting to approximately
RM3.0 million, which was in relation to (i) purchases of furniture and fittings of approximately
RM0.9 million, motor vehicles of approximately RM0.3 million and plant and machinery of
approximately RM0.6 million; and (ii) the additional cost incurred for the construction of the
warehouse of approximately RM1.3 million. This was partially offset by (i) the proceeds from
the disposal of motor vehicles and office equipment of approximately RM0.3 million; and (ii)
interest received of approximately RM0.2 million from fixed deposits.
mainly due to (i) the repayment of banking facilities and hire purchase liabilities of
approximately RM3.4 million; (ii) the repayment of amount of approximately RM1.1 million due
to current and former directors of Jemaramas Jaya, Versalink Marketing and Versalink
Technology; and (iii) interest paid of approximately RM0.7 million.
FY2014
(i) the increase in inventories of approximately RM0.8 million as a result of the increase in
business volume;
(ii) the increase in trade receivables of approximately RM5.1 million mainly as a result of the
increase in project sales; and
(iii) the increase in other assets of approximately RM1.5 million was mainly due to deposits
paid for purchases of approximately RM1.0 million, expenses relating to the flotation
exercise of approximately RM0.4 million and advance payments for software and software
licenses of approximately RM0.5 million. This was partly offset by the lower amount of
deposits for hire purchase deposits of approximately RM0.5 million as a large proportion
of the hire purchase had been fully settled.
Net working capital outflow was partially offset by the increase in trade and other payables of
approximately RM1.5 million as a result of higher purchases in connection with the increase
in project sales.
In FY2014, we paid income taxes of approximately RM3.0 million.
Overall, our net cash flows from operating activities in FY2014 amounted to approximately
RM12.6 million.
86
mainly due to the purchase of property, plant and equipment amounting to approximately
RM0.7 million, which was mainly in relation to (i) the remaining cost incurred for the
construction of the warehouse of approximately RM0.1 million; (ii) purchase of furniture and
fittings of approximately RM0.4 million; and (iii) purchase of plant and equipment of
approximately RM0.1 million. Net cash used in investing activities was partially offset by the
interest received of approximately RM0.1 million from a short term deposit.
mainly due to (i) dividends payment of approximately RM7.5 million; (ii) repayment of term
loans and hire purchase liabilities of approximately RM2.4 million; (iii) repayment of amounts
of approximately RM0.5 million due to current and former directors of Jemaramas Jaya and
Versalink Marketing; and (iv) interest paid of approximately RM0.5 million.
MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS
Capital expenditures and divestments made by our Group during the Period Under Review and
for the period from 1 March 2014 to the Latest Practicable Date were as follows:
FY2012 FY2013 FY2014
1 March 2014
to the Latest
Practicable
Date
RM000 RM000 RM000 RM000
Capital Expenditures
Land, buildings and
work-in-progress
(1)
561 1,267 128 22
Plant and machinery
(2)
718 625 135 117
Furniture and fittings
(3)
359 880 362 298
Motor vehicles
(4)
1,189 271 63 107
Renovations
(5)
210
Total expenditures 2,827 3,043 688 754
Divestments
Land and buildings
Plant and machinery
Furniture and fittings 55 21
Motor vehicles
(6)
327 1,618
Total divestments 327 1,673 21
Notes:
1. This refers to (i) freehold land acquired by our Group on which our current warehouse is situated; and (ii) costs
incurred for the construction of our warehouse.
2. This refers to plant, machinery and mould used for the production of our products as well as forklifts used in our
warehouse.
87
3. This refers to the furniture and fittings, office equipment, electrical installation, signboard and tools and parts
purchased by our Group used in the ordinary course of business.
4. This refers to the purchase of motor vehicles such as pickup trucks, off-road vehicles and multi-purpose vehicles
for administrative, marketing and distribution activities.
5. This refers to the costs for renovations for our showroom in Nusajaya, in the Iskandar region of the state of
Johor, Malaysia.
6. This refers to the disposal of motor vehicles to third parties, certain of our directors and our Technical Adviser,
Roland Law.
The above capital expenditures were financed by internally generated funds and finance
leases.
Capital Commitment
As at the Latest Practicable Date, our Group had a capital commitment of approximately
RM0.2 million for the renovation of our showroom in Johor Bahru, Malaysia.
Operating Lease Commitments
As at the Latest Practicable Date, the total amounts of future minimum lease payment
commitments under operating leases were as follows:
RM000
Not later than one (1) year 313
Later than one (1) year and not later than five (5) years 442
Later than five (5) years
Total lease payment commitments as at the Latest Practicable Date 755
The Group intends to finance its operating lease commitments by internally generated funds.
ACCOUNTING TREATMENT OF FOREIGN CURRENCIES
Our functional currency is the RM as it reflects the primary economic environment in which our
Group operates. Transactions in foreign currencies are recorded in the functional currency at
the rates ruling at the dates of the transactions. At the end of each reporting year, recorded
monetary balances and balances measured at fair value that are denominated in
non-functional currencies are reported at the rates ruling at the end of the reporting year and
fair value dates respectively. All realised and unrealised exchange adjustment gains and
losses are dealt with in profit or loss except when recognised in other comprehensive income
and if applicable deferred in equity such as for qualifying cash flow hedges. The presentation
is in the functional currency.
Each entity in our Group determines the appropriate functional currency as it reflects the
primary economic environment in which the relevant reporting entity operates. In translating
the financial statements of such an entity for incorporation in the consolidated financial
statements in the presentation currency the assets and liabilities denominated in other
currencies are translated at end of the reporting year rates of exchange and the income and
expense items for each statement presenting profit or loss and other comprehensive income
are translated at average rates of exchange for the reporting year. The resulting translation
adjustments (if any) are recognised in other comprehensive income and accumulated in a
separate component of equity until the disposal of that relevant reporting entity.
88
FOREIGN EXCHANGE EXPOSURE
Our reporting currency is in RM and our operations are primarily carried out in Malaysia. Other
than the respective functional currency of the companies in our Group (being RM), we also
transact in USD, S$, RMB and EUR. Our sales are largely denominated and transacted in RM,
USD, S$ and EUR while our purchases are largely denominated and transacted in RM, USD
RMB, S$ and EUR. For FY2012, FY2013 and FY2014, the percentage of revenue and
purchases denominated in the various currencies are set out below:
% of revenue denominated in FY2012 FY2013 FY2014
% % %
RM 35.7 42.0 58.7
USD 63.1 56.7 40.3
S$ 1.0 1.2 1.0
EUR 0.2 0.1 0.0
100.0 100.0 100.0
% of purchases denominated in FY2012 FY2013 FY2014
% % %
RM 45.0 50.3 51.0
USD 45.3 27.6 30.9
RMB 7.4 21.0 17.1
S$ 0.0 0.0 0.2
EUR 2.3 1.1 0.8
100.0 100.0 100.0
To the extent that our purchases are not naturally matched in the same currency as our sales
and to the extent that there are timing differences between invoicing and the payment to our
suppliers, we are exposed to foreign exchange fluctuations which may adversely affect our
financial results. Please refer to the section entitled Risk Factors We may face foreign
exchange transaction risks of this Offer Document for more details.
At present, we do not have any formal policy for hedging against foreign exchange exposure.
We have in the past used financial hedging instruments to manage our foreign exchange risks
from time to time. We will continue to monitor our foreign exchange exposure and may employ
hedging instruments to manage our foreign exchange exposure should the need arise. Prior to
implementing any formal hedging policies, we will seek the approval of our Board on the policy
and put in place adequate procedures which shall be reviewed and approved by our Audit
Committee. Thereafter, all hedging transactions entered into by our Group will be in
accordance with the set policies and procedures.
Our net foreign exchange gains in FY2012, FY2013 and FY2014 were as follows:
FY2012 FY2013 FY2014
Net foreign exchange gain (RM000) 171 420 448
As a percentage of revenue (%) 0.4 0.7 0.6
As a percentage of profit before tax (%) 2.7 3.7 2.4
89
SIGNIFICANT ACCOUNTING POLICY CHANGES
There have been no significant changes in the accounting policies of our Group from FY2012
to FY2014.
Please refer to the section entitled Summary of Significant Accounting Policies of the
Independent Auditors Report as set out in Appendix A of this Offer Document for details of our
Groups accounting policies.
90
CAPITALISATION AND INDEBTEDNESS
The following information should be read in connection with the Independent Auditors Report
as set out in Appendix A to this Offer Document and the section entitled Managements
Discussion and Analysis of Financial Position and Results of Operations of this Offer
Document.
The following table shows the cash and cash equivalents as well as capitalisation and
indebtedness of our Group as at 28 February 2014:
(i) based on our audited combined financial statements as at 28 February 2014;
(ii) based on our unaudited management accounts as at 30 June 2014; and
(iii) based on our unaudited management accounts as at 30 June 2014 as adjusted for the net
proceeds from the issue of New Shares (As Adjusted).
As at
28 February
2014 As at 30 June 2014
Audited
RM000
Unaudited
RM000
As Adjusted
RM000
Cash and cash equivalents 13,134 13,662 28,731
(1)
Pledged bank deposits 1,417 1,430 1,430
Indebtedness
Current
- secured and guaranteed 2,407 2,430 2,430
- unsecured and guaranteed 296 260 260
- unsecured and non-guaranteed 113 60 60
Total current indebtedness 2,816 2,750 2,750
Non-current
- secured and guaranteed 1,490 1,034 1,034
Total indebtedness 4,306 3,784 3,784
Total shareholders equity 44,357 46,660 61,729
Total capitalisation and indebtedness 48,663 50,444 65,513
Note:
1. The cash and cash equivalents had been adjusted to include the net proceeds from the issue of the New Shares
of approximately S$5.9 million (or the equivalent of RM15.1 million converted based on the exchange rate of
S$1 to RM2.554 as at the Latest Practicable Date).
91
Cash and credit facilities
As at the Latest Practicable Date, our total credit facilities for working capital purposes
(utilised and unutilised) were as follows:
Facilities
granted Utilised Unutilised
Interest
rates Maturity profile
RM000 RM000 RM000 %
Term loans
(1)
3,926 2,189 1,737 4.69 July 2017
Trade finance
(2)
11,600 5,209 6,391 1.58 - 4.95 Up to 120 days
Overdrafts
(3)
2,300 2,300 7.85 Revolving
Foreign exchange
(4)
2,700 2,700 Market rate
20,526 7,398 13,128
Notes:
1. The term loans facilities were granted to our Group by UOB KL. The term loans facilities are secured by, inter
alia, legal charges over Lot 6119 and Lot 6118, charge over fixed deposit and joint and several personal
guarantees by Matthew Law, Arica Walters and Peggy Lee.
2. The trade finance facilities granted to our Group comprised the following amounts: RM9.0 million from UOB KL,
RM0.6 million from MBB and RM2.0 million from AmBank. The facilities granted by UOB KL are secured by, inter
guarantees by Matthew Law, Arica Walters and Peggy Lee. The facilities granted by MBB and AmBank are both
secured by, inter alia, charge over fixed deposit as well as joint and several personal guarantees by Matthew
Law, Arica Walters and Peggy Lee.
3. The overdrafts facilities granted to our Group comprised the following amounts: RM1.8 million from UOB KL,
RM0.2 million from MBB and RM0.3 million from AmBank. The facilities granted by UOB KL are secured by, inter
guarantees by Matthew Law, Arica Walters and Peggy Lee. The facilities granted by MBB and AmBank are both
secured by, inter alia, charge over fixed deposit as well as joint and several personal guarantees by Matthew
4. The foreign exchange facilities were granted to our Group comprised the following amounts: RM2.4 million from
UOB KL and RM0.3 million from AmBank, both secured by joint and several personal guarantees by Matthew
Please refer to the sections entitled General Information on our Group Properties and Fixed
Assets and Interested Person Transactions Present and On-going Interested Person
Transactions of this Offer Document for further details on the respective charges over our
properties as well as the guarantees provided by the interested persons.
As at the Latest Practicable Date, we had cash and cash equivalents of approximately RM13.0
million.
As at the Latest Practicable Date, to the best of our Directors knowledge, we were not in
breach of any of the terms and conditions or covenants associated with any credit arrangement
or bank loan which could materially affect our financial position or financial results or business
operations.
Certain of our credit facilities as described in this section contain provisions which make
reference to the shareholding interests of our Controlling Shareholders and Substantial
Shareholders. As at the date of this Offer Document, our Group has, in anticipation of the
Invitation, obtained letters of waivers in relation to such provisions from the financial
institutions which have provided such facilities.
92
Contingent liabilities
As at the Latest Practicable Date, we did not have any contingent liabilities.
Save as disclosed in this Offer Document, our Group had no other borrowings or indebtedness
(direct and indirect) or liabilities (including contingent liabilities) as at the Latest Practicable
Date.
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GENERAL INFORMATION ON OUR GROUP
HISTORY AND DEVELOPMENT
Our Company was incorporated in Singapore on 21 April 2014 under the name Versalink
Holdings Pte. Ltd. as a private limited company under the Companies Act. On 20 August 2014,
our Company was converted into a public company limited by shares and our name was
changed to Versalink Holdings Limited.
In conjunction with the listing of our shares on Catalist, the Restructuring Exercise was
undertaken by our Company. Pursuant to the completion of the Restructuring Exercise, the
Acquisition of Steeltema and the incorporation of Versalink (S), our Company became the
ultimate holding company of our subsidiaries, namely, Jemaramas Jaya, Versalink Marketing,
Versalink Technology, Steeltema and Versalink (S). Please refer to the section entitled
Restructuring Exercise and Acquisition of Steeltema by our Company of this Offer
We attribute our success to Roland Law, who is our Technical Adviser and father of our CEO,
COO and Executive Director (Singapore and Johor Operations), who first went into the
furniture business in 1979 when he started a business specialising in the manufacture of
kitchen cabinets and bedroom furniture. His business grew over the years, but was
unfortunately adversely impacted by the economic downturn in the 1980s and had to cease
operations. While Roland Law subsequently declared bankruptcy due to this foray into the
furniture business, it was through this venture that he honed his technical skill and business
acumen.
In 1991, Jemaramas Jaya was set up by our founding shareholder, Peggy Lee, to venture into
the business of manufacturing of kitchen cabinets and office furniture. Versalink Marketing was
also incorporated in 1991 to carry on local retail sales of such office furniture. As Roland Law
was only discharged from his bankruptcy in 1998, he was not involved in the management of
Jemaramas Jaya and Versalink Marketing. However, we received technical guidance and
advice from Roland Law. We were also able to tap on the wide pool of business contacts that
Roland Law had built up over the years. Roland Law was appointed as our Technical Adviser
in 1998 to recognise his contribution to our Group.
Our initial business focused on manufacturing of kitchen cabinets and OEM manufacturing for
third party furniture suppliers as well as domestic retail sales of office furniture under our
Versalink brand and third party brands. Our manufacturing facilities and our first showroom
were then located at rented premises situated at Sungai Buloh.
The 1990s saw the evolution of our business from a Malaysia-based manufacturer of kitchen
cabinets and OEM manufacturer to one that exports low to mid-priced office furniture. Also, we
built our domestic business in Malaysia through direct marketing, advertising and promotion
activities and establishing showrooms and participating in trade fairs and exhibitions in
Singapore and Malaysia. Our participation in such trade fairs and exhibitions enabled us to
secure and establish business relationships with more local and overseas customers.
In the late 1990s, we identified growth potential in the mid to high end office furniture market
and seized the opportunity to switch our focus to cater to this market. In 1997, one of our
customers from Dubai provided us with an order to manufacture several designs from our
premium range of executive desks. Following the success of this maiden order, we
successfully secured more orders for our premium and executive range of furniture from other
customers.
In 1998, with the acquisition of AutoCAD software, we began to provide workspace planning
and consulting services as a value added service to our customers.
94
From 2000 onwards, we made significant progress in developing our expertise and know-how
to design innovative furniture products.
In 2005, the significant expansion of our business operations enabled us to purchase a plot of
land covering approximately 17,800 m
2
and relocate our manufacturing activities to larger
premises with a built-up area of approximately 10,800 m
2
in Klang, Malaysia to house all our
departments under one roof.
In 2006, we moved to a new three (3) storey corporate office building with a total built-up area
of approximately 1,560 m
2
adjacent to our production plant and warehouse in Klang, Malaysia.
The new premise provided for more office space for our increasing number of employees and
housed a two (2) storey showroom.
In 2007, we expanded our premises further by purchasing the land adjacent to our production
plant and constructed the Warehouse with a built up area of approximately 4,000 m
2
.
In 2008, we started to collaborate with design houses in Italy to start producing European
designed system series products.
In 2009, we received the Forest Stewardship Council (FSC)s accreditation from SGS South
Africa (Pty) Ltd. as an acknowledgement of our support of sustainable forestry and in 2014, we
received the Green Guard and Green Guard Gold awards from the Greenguard Environmental
Institute for our low emitting products and materials.
In 2010, we started our in-house project team so that we could directly tender for projects and
ease our reliance on our dealers to increase our sales. We also set up our in-house research
and development team to focus on design innovation.
In 2012, we further expanded our warehouse further with a built up area of approximately
1,300 m
2
by purchasing the land adjacent to our warehouse. In the same year, we secured a
major high profile project from Tenaga Nasional Berhad, one of the largest utility companies
in Malaysia, worth approximately RM7.0 million to supply system furniture and office seatings
for 29 storeys of offices in their headquarters in Kuala Lumpur, Malaysia.
In 2013, we secured another high profile project from Ahmad Zaki Sdn. Bhd. in the Kompleks
Kerja Raja 2 Tower in Malaysia to supply system furniture and office seatings for 34 storeys
of office space which was also worth approximately RM7.0 million.
These two (2) projects have further enhanced our reputation and credentials in the Malaysian
office furniture industry and provided us with the opportunity to attract more corporate
customers.
On 21 April 2014, we expanded our presence to Singapore by registering a Singapore branch
of Jemaramas Jaya.
In June 2014, we set up a new showroom in Nusajaya, in the Iskandar region of the state of
Johor, Malaysia to be close to customers in Johor Bahru and Singapore.
On 6 June 2014, we incorporated our wholly-owned Singapore subsidiary, Versalink (S).
95
INDUSTRY OVERVIEW
We have commissioned the Independent Market Researcher, Converging Knowledge to
provide an industry report, titled The Office Furniture Industry in Malaysia (Industry
Report). The Industry Report is set out in Appendix B of this Offer Document, a summary of
which is set out below. Converging Knowledge had drawn its analysis from the furniture
industry, and has based the Industry Report on a combination of primary and desktop
(published resources) research. Primary research involves discreet interviews tapping on the
knowledge, experience and opinions of relevant companies, industry associations, technical
institutions, government bodies and academic institutions. Desktop research includes, but is
not limited to, a review of local newspapers and news wires/agencies, leading industry and
trade publications, websites of regulatory authority as well as relevant government agencies
and websites of companies. Converging Knowledge has advised that it has prepared the
Industry Report in an independent and objective manner and has taken adequate care to
ensure the accuracy and completeness of the Industry Report. Converging Knowledge has
also advised us that the Industry Report represents a true and fair view of the industry within
the boundaries and limitations of secondary statistics, primary research and continued
industry movements. It has noted that the opinions expressed are opinions of human sources
and cautions as to the subjective nature of such information. Converging Knowledges
methodologies for identifying and collecting information and data, and therefore the
information discussed in this section and the Industry Report, may differ from those of other
sources, including that of our Group.
The Industry Report contains certain statements that are forward-looking and are based on
underlying assumptions containing variables that may have changed since the date of issue.
By their nature, forward-looking statements are subject to risks and uncertainties because they
relate to events and depend on circumstances that will occur in the future. No forward-looking
statements contained herein should be relied upon as predictions of future events. No
assurance can be given that the expectations expressed in these forward-looking statements
will prove to be correct. The information in the Industry Report have not been independently
verified by us, the Vendors, the Sponsor and Issue Manager, the Underwriter and Placement
Agent or any of our and their respective affiliates or advisors. The information may not be
consistent with other information compiled within or outside Singapore. Please see the section
entitled Cautionary Note on Forward-looking Statements of this Offer Document for further
details. You should be aware that since the date of the Industry Report, there may have been
changes in the industry and the various sectors therein which could affect the accuracy or
completeness of the information in this section.
The furniture industry encompasses the production and distribution of furniture made from
wood, metal or plastic material. The industry may be divided based on three (3) broad furniture
categories household furniture, outdoor furniture and office furniture.
Players in the furniture industry may specialise in a specific furniture segment or deal in more
than one (1) segment as a generalist. Some players in the market are mainly engaged in
trading, functioning as wholesalers/dealers and retailers. Others are involved in upstream
operations, functioning as furniture designers and/or manufacturers. More established players
may be full-fledged operators, and are engaged in the entire value chain.
The Industry Report focuses on the production and distribution in the office furniture category,
which includes the manufacturing of desks, partitions and components for a complete
functional workstation. Malaysia is well positioned internationally, being ranked second in Asia
and seventh globally based on office furniture exports. While most of the office furniture
produced is exported, the domestic market is estimated to be between 30.0% and 40.0%.
In order to serve the domestic market, some of the local office furniture manufacturers have
positioned themselves to engage in project sales. Through project sales, these industry
96
players are able to acquire bulk orders either directly from corporate end-users, or from
intermediaries serving these corporate customers, to furnish their offices with complete and
integrated office furniture systems. In Malaysia, project sales constitute as much as 70.0% to
80.0% of overall Domestic Sales.
Research indicates that there are over 500 furniture manufacturers registered as members of
the Malaysia Furniture Promotion Council (MFPC), of which 119 are office furniture
manufacturers. Further research indicates that 43 out of the 119 are registered as office
furniture manufacturers exclusively. We are one of the largest office furniture manufacturers in
Malaysia, with the capability to undertake project sales.
Some of the key market trends of the Malaysian furniture industry are summarised as follows:
increasing demand for furniture from emerging markets such as those in Asia and the
Middle East, due to economic growth and demography;
consumers and businesses have become more discerning in their choices of furniture,
requesting for products that have less negative impacts on the environment and are
green-certified;
as cities become denser and space becomes limited, there is a growing demand for
compact, space efficient and multi-use furniture, with office space reduction being one of
the most popular options to save a companys production cost;
businesses are turning to office furniture manufacturers that can provide value-added
services such as consultation services on design layout, modification, fixing and
installation services; and
increasing property development activities in Asia and Malaysia, as large corporations
expand their operations and set up regional and country offices.
Prospects of the office furniture industry in Malaysia are positive, with contributing factors
such as demand growth from emerging countries and growth of commercial property
development in Malaysia. Sales of Malaysian office furniture are expected to grow by five per
cent. (5.0%) to ten per cent. (10.0%) annually from 2013 to 2018, driven mainly by export
sales. The factors driving industry developments are:
Demand Growth From Emerging Countries
Growth in Asian nations has prompted an increase of office furniture imports from
Malaysia over the past five (5) years. From 2009 to 2013, the collective imports of
Malaysian office furniture from Asian nations have grown by a CAGR of four per cent.
(4.0%). Malaysia exports more than half of their office furniture to Asian countries. It is
expected that the furniture manufacturing industry will see stable global demand growth,
with an increasing trend in imports of consumer goods in emerging countries.
Recovery Of Major Economies
After Asia, North America represented the second largest export market for Malaysian
made office furniture. The recovery of the USA economy since the 2008 financial crisis
has seen an increase in consumption of office furniture. From 2009 to 2013, the region
has seen a CAGR of 12.0% in office furniture imports from Malaysia, and is expected to
continue to grow, as the economy recovers in the North American region.
Growth Of Commercial Property Developments In Malaysia
Through the efforts of the Malaysian Investment Development Authority and Investing in
Greater Kuala Lumpur, Malaysia is able maintain its efforts in attracting foreign
companies into the country. Property development activities in Malaysia, in commercial
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districts such as Klang Valley, have increased over the years. Total office supply recorded
a CAGR of 4.1% from 2009 to 2013. An additional 0.7 million m
2
of new office space is
in the pipeline to be released in Malaysia in 2014.
Push Towards High-value Products And Services
The cumulative knowledge in the industry has led to the rise of solutions-based services
such as those of project sales. As a result, the industry is able to realise higher
profitability from sales of high-value, internationally recognised products, and provision of
value-added services. The gradual shift towards high-value products and services may
also alleviate pressure from higher production costs and increased competition from other
exporting countries like the PRC and Vietnam.
Use Of Research And Technology
Throughout the years, Malaysias office furniture manufacturing industry has accumulated
considerable experience, and built up expertise in modern manufacturing processes. With
growing investments into high-tech production processes, the domestic industry is
expected to be able to keep up with increased future demands and challenges.
BUSINESS OVERVIEW
specifications.
third party brand of premium office furniture.
System furniture
We design and manufacture system furniture under our Versalink brand which caters to a
broad customer base. We also provide manufacturing services on an OEM basis for certain
overseas furniture brands based on the designs which they provide to us.
Apart from manufacturing our own Versalink branded and OEM products, we also represent
international brands such as ZU
CO Brositzmo bel AG of Switzerland (Zco), Dauphin

Human Design of Germany (Dauphin) and Sinetica Industries Srl of Italy (Sinetica).
Workspace planning and consulting services
We also provide workspace planning and consulting services to our customers to help them
optimise usage of space which we believe increases work performance and productivity.
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Notable Projects
Some of the notable projects in Malaysia that we have completed include those for large listed
companies, educational institutions and other notable enterprises such as:
Tenaga Nasional Berhad (Malaysias largest electricity utilities provider);
Utusan Malaysia Berhad (a major newspaper publisher in Malaysia);
Universiti Teknologi Malaysia;
University College of Technology, Sarawak;
AIA Berhad;
The New Straits Times Press (Malaysia) Berhad;
World Wildlife Fund - Malaysia;
Bermaz Motor Trading Sdn Bhd (for its Mazda showroom and office);
Sime Darby Auto Performance Sdn Bhd (for its Porsche showroom and office);
Ahmad Zaki Sdn. Bhd. (for the Ahmad Zaki Resources Berhad headquarters of its holding
company); and
Dewan Bandaraya Kuala Lumpur (Kuala Lumpur City Hall).
Further, we have, through our overseas dealers, also supplied our products to Emirates
National Bank Dubai, Hamad Medical Corporation (the manager of one of Qatars biggest
hospitals), Abu Dhabi Police General Headquarters, Abu Dhabi Gas Industries Ltd. (GASCO)
in the Middle East, PwC Isla Lipana & Co. in the Philippines and JM Financial Ltd. in India.
Our customers
We derive our revenue from our wide customer base situated across well-diversified
geographical markets spanning more than 40 countries in Africa, Australasia, Asia, Middle
East and North America.
Our customers are broadly defined in the following two (2) categories:
(a) Domestic Sales customers
Our Domestic Sales are derived mainly from project sales by way of tenders to, and
directly negotiated contracts with contractors who operate in the office renovation and
fit-out sector, corporate customers who require renovation and fit-out services for their
corporate offices and walk in customers who place orders at our showrooms. Other
Domestic Sales are derived from sales made to distributors, resellers and retailers and
OEM customers.
Customers from the Domestic Sales channel accounted for 33.3%, 42.7% and 46.3% of
our revenue for FY2012, FY2013 and FY2014 respectively.
(b) Export Sales customers
Our Export Sales are primarily to overseas dealers such as furniture importers,
distributors and furniture retailers who generally resell our products to end-users through
their respective retail networks and furniture brand owners that purchase from us on an
OEM basis.
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We mainly secure new overseas customers by participating in international furniture trade
fairs or directly marketing our products to dealers, retailers and brand owners of office
furniture.
As at the Latest Practicable Date, we had more than 90 overseas dealers who marketed
our products to end-users in more than 40 countries.
Customers from the export sales channel accounted for 66.7%, 57.3% and 53.7% of our
revenue for FY2012, FY2013 and FY2014 respectively.
OUR PRODUCTS AND RELATED SERVICES
The system furniture that we sell includes the following:
CORE PRODUCTS
A. System Series
This is a series of office furniture that allows our customers to have the flexibility of
configuring and catering workstations to different office layouts and floor plans. It is
categorised into various systems, covering (i) panel systems; (ii) desking systems; and
(iii) modular systems, and each of such systems has been designed to satisfy different
requirements of the end-users.
(i) Panel Systems. Our panel systems are a suite of flexible bundled workspace
furniture that comprises partitions and dividers, integrated work tops and shelving
for open plan workstations and cubicles. Our panel systems allow our customers to
integrate electrical components, such as telecommunication cables and electrical
cables, into each workstations panel, thereby providing a more organised and
aesthetic office workspace for end-users.
We currently have four (4) product lines of panel systems, which are sold under the
Flex, Eco 65, Ez Clip and Fonte II models.
(ii) Desking Systems. Our desking systems comprise desks and workstations with the
flexibility to add on screens, panels and cable trunkings for wire management. Using
this system, individual workspaces can be installed on an integrated basis into
multiple user workstations of different configurations or clusters.
We currently have three (3) product lines of desking systems comprising of the
Corium, Lex and Solo models.
(iii) Modular Systems. Our modular systems are a basic line of independent
freestanding desks and accompanying components such as storage cabinets. The
systems allow for ease of change of configuration and flexibility for end users to
position as they require within their office.
We currently have three (3) product lines of modular systems namely the Mente,
Multi and Otto models.
B. Reception Furniture
Our reception furniture, which is our range of corporate reception counters and front desk
furniture, is designed to showcase our customers corporate image. Our reception
furniture is complementary in design to our panel systems range of office furniture and
allows for flexibility of configuration to cater to different sizes and designs of reception
areas. It can also be reconfigured if required, for instance, where a reception area is
redesigned or expanded.
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C. Architectural Wall Systems
Our architectural wall systems, which are sold under the Fonte model, are full height
wall partitions designed, engineered and produced to enable our customers to create one
(1) or more smaller enclosed spaces or rooms within their premises as an alternative to
permanent fixed wall structures. Our wall systems allow for various material options such
as veneer, laminates, fabrics, clear and opaque glass, whiteboard and acrylic.
The wall systems are easily assembled and dismantled. As such, they can be
reconfigured and reused for a new office layout if required.
D. Meeting And Conference Tables
We have a range of extendable meeting and conference tables that are foldable, easily
stored and can be reconfigured easily. We currently carry three (3) types of meeting and
conference tables, namely the metal leg meeting tables, panel leg meeting tables and
foldable or flip tables. Each of our meeting and conference tables can be equipped with
cable management accessories and trunking for wires and come in a variety of materials
and finishings. The designs of some of our meeting and conference tables are
complementary to certain models of our system furniture which allow for a uniform design
element for the entire suite of office furniture.
E. Executive Series
Our executive series is a suite of office furniture comprising desks, cabinets, coffee tables
and discussion tables designed for the senior management segment of the market. We
have various models for our executive series office furniture with different design and
material options.
F. Filing and Storage
To complete our full range of system furniture, we carry a range of filing and storage
solutions comprising shelves, filing cabinets and drawer units. Our storage solutions are
available in various design and material options and can be configured based on our
customers requirements. In addition, our storage units can be freestanding and double
up as space dividers.
ANCILLARY PRODUCTS
We also supply the following ancillary products that we source from third party manufacturers:
more than 40 models of seatings such as executive chairs, mesh chairs, task/work chairs,
sofas, lounge chairs, collaborative chairs and stacking chairs;
work tools such as CPU holders, keyboard trays, monitor arms, wire trays, stationary
trays and holders;
power options such as cable channels, cable boxes and accessories; and
presentation products such as whiteboards.
INTERNATIONAL PREMIUM BRANDS
We are also the reseller in Malaysia for various established international brands of premium
office furniture from Zco, Dauphin and Sinetica.
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WORKSPACE PLANNING AND CONSULTING
In order to enhance our business and to better serve our customers who place orders for our
system furniture, we also provide related services to value add for our customers. Such
services are broadly split into the following categories:
(a) Workspace Planning
We provide workspace planning services, through our team of office design and space
planning specialists, to help our customers optimise the usage of their office space based
on their requirements and office floor plan.
(b) Workspace Consulting
We believe that good workspace design leads to good staff performance.
We provide workspace consulting to our customers to provide tailor-made solutions and
help them create a workplace that can increase work performance and productivity.
We do this by helping customers choose suitable products for their requirements as well
as advocate benefits of design elements and proper office layout to improve staff
performance.
To ensure that the design and layout of their workspace meets our customers
requirements, we conduct site visits and work closely with our customers, their appointed
interior designers, and/or office renovation contractors in providing such customised
services.
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OUR BUSINESS PROCESS
The following flow chart illustrates our typical business process for our products from the
research and development to sales, production and delivery:
Market research and
sales data analysis
Design proposal
Review of new designs
Prototype
Approval of prototype
Product Launch
R
e
s
e
a
r
c
h

a
n
d

D
e
v
e
l
o
p
m
e
n
t

Provide mock-up/
Attend interview
Tender preparation
Project sales
(including showroom
sales
(1)(2)
)
Customer orders
Dealer or OEM sales
Project awarded
Production
Project/ order delivery
S
a
l
e
s

P
r
o
d
u
c
t
i
o
n

a
n
d

d
e
l
i
v
e
r
y
Notes:
1. For some of the smaller projects and showroom sales, our customers will place orders and take delivery of their
orders without having to go through the full project sales business process.
2. For projects with our customers, we enter into contracts with our customers and such contracts will generally
include terms such as the delivery schedule, quantity and pricing of our products and/or services. Smaller scale
projects with contract value of less than RM2.0 million will usually take less than two (2) months to complete
whereas bigger scale projects with contract value of more than RM2.0 million may take two (2) to six (6) months
or more to complete. The duration of our projects is dependent on the project schedule and site condition.
103
Research and Development
The research and development phase for a new product will be headed by our Head of
Research and Development and Managing Director of Steeltema, Bevan Walters together with
our Executive Director and CEO, Matthew Law and our Technical Adviser, Roland Law. This
phase involves identifying designs which we believe have commercial appeal, based on
market trends and feedback from customers. Our research and development team will then
produce a design proposal or initial sketch of the new product which will be reviewed together
with Roland Law, our senior management and our sales and marketing team to assess the
commercial and production viability.
Once a design is approved, our research and development team will, in collaboration with
other departments, produce a production prototype.
Once the production prototype is approved, Matthew Law and Bevan Walters will work with
other relevant departments for the launch of the new product.
Sales
Our sales comprise project sales (including showroom sales), dealer sales and OEM sales.
Upon receiving an invitation to tender, or request for quotation, our sales and marketing
department together with Matthew Law will form a tender committee which includes person
in-charge from our sales and marketing department, costing department as well as research
and development team. The tender committee will evaluate the customer requirements to work
out our proposal. The options are then reviewed and approved by Matthew Law before our
formal submission to the customer for their evaluation.
During the evaluation process, our customer may require us to provide mock-ups and to attend
interviews to clarify issues such as pricing and technical details, and to respond to any other
queries relating to our proposal. Once we are selected as a supplier, we will generally be
issued a letter of award or a purchase order as a formal acceptance of our proposal.
For dealer sales, OEM sales and certain showroom sales orders, we will confirm the details of
the orders with our customers.
Production
For project sales, a project manager will be appointed to head a project execution team which
will ensure the timely execution of the project in accordance with the requirements of the
customer.
For all types of orders, our logistics department will first check the availability of stock for the
finished goods. If the stock is available, the logistics department will arrange for the delivery
of orders to the customers. If the stock is not available, job orders will be issued for our
production department to commence production to fulfill order requirements.
Delivery
For project sales, the project manager together with our customers representatives will carry
out an inspection of the project site to ensure site readiness. Once this is ascertained, the
installation team will install the furniture on site.
After our installation team has completed the installation, the customers representatives will
then conduct an inspection to ensure requirements are met.
For the other types of orders, the logistics department will arrange for delivery and installation
(if required) to our customers. In the event that we arrange for our overseas dealers to assist
in the installation of the furniture, our overseas dealers will sometimes charge us a fee for
rendering such service.
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PROCUREMENT
In addition to the manufacturing and supply of our own products, we also procure and supply
ancillary products from third party manufacturers such as seatings, work tools such as CPU
holders, keyboard trays, monitor arms, wire trays, stationary trays and holders, power options
such as cable channels, cable boxes and accessories as well as presentation products such
as whiteboards. We are also the authorised reseller in Malaysia for premium office furniture
from Zco, Dauphin and Sinetica.
We sell such ancillary products as resellers or distributors and we may also package and
supply these products together with our projects.
MARKETING AND SALES
We have a dedicated sales and marketing team led by Matthew Law who is assisted by our
Manager (Export and Marketing), Ryonn Leong. As at 28 February 2014, they were assisted
by a team consisting of 15 personnel.
Our sales and marketing team is in charge of the formulation of marketing strategies, securing
of new customers, maintenance of customer relationships and performing competitor and
market analyses.
Within our sales and marketing team is our project tendering group which prospects for sales
through (i) public tender notices; (ii) invitations from key industry participants (such as
architects, interior designers and renovation contractors), (iii) government electronic tenders
from public institutions and government agencies; and (iv) direct marketing calls to prospective
customers.
(a) Leads from referrals
We develop strong long-term relationships with our customers. This often leads to
referrals and requests for quotations from both existing and new customers. Our close
business relationships with key industry participants such as architects, interior designers
and renovation contractors also allow us to obtain business from their referrals.
We also receive enquiries from prospective customers through referrals from our existing
suppliers and customers.
(b) Regular advertisements in major print and new media
We advertise regularly through major newspapers, magazines and trade directories in
Malaysia such as the South East Asia Furniture Manufacturers & Exporters Directory and
the Malaysia Furniture Manufacturers & Exporters Directory, and through exhibitions and
trade fairs. Through these avenues, we enhance public awareness of our products as well
as promote our products in both the local and overseas markets.
In addition, we showcase our products and capabilities through our website
www.versalink.com.
(c) Participating and attending trade fairs and exhibitions to showcase our products,
generate leads and keep abreast of market trends
We attend and/or actively participate in international trade fairs and exhibitions, which
include the following:
(i) Malaysia International Furniture Fair, Malaysia;
(ii) ARCHIDEX trade fair, Malaysia;
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(iii) International Furniture Fair, Singapore.
(iv) ORGATEC, Germany;
(v) China International Furniture Fair, the PRC;
(vi) Shenzhen Furniture Fair, the PRC;
(vii) Shanghai International Furniture Fair, the PRC;
(viii) INDEX Dubai, Dubai; and
(ix) Mebel Exhibition, Russian Federation.
We believe that, through our participation in events, we will be able to raise our corporate
profile, market our products and services to an international audience and at the same
time generate new sales.
Our senior management also regularly attends the following trade fairs to keep abreast of
the latest industry trends:
(i) Neocon in Chicago and Los Angeles, USA; and
(ii) Salone Internazionale Del Mobile in Milan, Italy.
(d) Showrooms
Our showrooms not only function as retail outlets but also as concept stores for our newly
designed products. Our showrooms cater to walk-in customers who make ad-hoc
purchases and for small office renovation projects. They also allow us to showcase our
products to our industry participants such as architects, interior designers and renovation
contractors and customers.
Our three (3) showrooms are located at Lot 6119 and Lot AL 121 which are both in the
state of Selangor; and No. 19, Jalan SiLC 1/6, i-Park, Kawasan Perindustrian SiLC,
79200 Nusajaya (No. 19, Jalan SiLC 1/6) in the state of Johor.
(e) Collaboration with Pertubuhan Akitek Malaysia, the Malaysian Institute of
Architects (PAM)
We jointly hold nationwide events with PAM such as architectural, design and interior road
shows. The events are mainly targeted at architects and interior designers, and are
intended to instil knowledge and encourage office furniture innovations and marketing
research for domestic growth and networking.
QUALITY CONTROL AND ASSURANCE
Our ability to consistently produce high quality products is critical to the success of our
business. As such, we place strong emphasis on the ultimate quality of our products and
maintain stringent quality control and assurance measures throughout our manufacturing
processes. This enables us to produce high quality products to satisfy the demands and
expectations of our customers. As at 28 February 2014, we had a team of approximately 20 QA
and QC personnel who were headed by our QA manager, who reports to Matthew Law.
106
We have established the following QA and QC systems to ensure consistency in the quality of
our products we supply:
(a) QA process for ancillary products, raw materials, components and parts purchased
by us
Upon the arrival of ancillary products, raw materials, components and parts which we
source from third parties at our warehouse, our inventory controller, together with our QA
and QC personnel, will verify the quality of such products against the delivery order
before accepting and moving such items to our store. In the case where the entire unit of
items are purchased from our suppliers, such as office chairs, we would generally inspect
samples of each item to ensure that the quality of such completed units meet our in-house
quality requirement. For ancillary products, raw materials, components and parts that we
purchase in bulk, our quality control officer would generally inspect them on a sample
basis for each shipment.
In the event of any discrepancies or non-conformity in the quantity, quality or
specifications of ancillary products, raw materials, components and parts delivered to us,
such products will be rejected by our QA and QC personnel and he will inform our
procurement team accordingly. The procurement personnel will then make the necessary
arrangements to return such relevant products to the supplier so that replacements can
be supplied.
(b) Quality inspections during our production process
Sampling checks will also be carried out at various stages of the production process to
detect production defects, in particular on aspects concerning dimension, colour,
specifications and quality of finishing of the products. We test the functionality of our
products via an assembly test by our quality control personnel before we proceed with the
next stage of the production process.
(c) Final quality inspection
To ensure that the finished products conform to our customers specifications prior to
delivery, we conduct final inspections and checks on all the goods we produce based on
random sampling prior to the packaging process on the products dimensions, packing
standards, packaging labels, shipping labels and hardware fittings. We check the labeling
of each of our packages to ensure compliance with delivery orders before delivery.
During the Period under Review, our customers had not returned any significant value of
defective goods and we had not faced any major cancellation of orders from our customers.
RESEARCH AND DEVELOPMENT
We believe that research and development is crucial in providing us with a competitive edge
and increasing our operating efficiency.
As at 28 February 2014, our research and development team, which had 14 employees and
was headed by Bevan Walters, who works closely with Matthew Law and Roland Law to create
designs that accommodate customer preferences and trends. The responsibilities of our
research and development team included, inter alia, creating new designs and concepts,
conducting checks in relation to intellectual property rights, production of design sketches and
preparing prototypes for presentation to our potential customers at trade shows or in
one-on-one meetings.
We conduct market assessments of current trends and consumers preferences regularly. Our
products are targeted primarily at corporate customers in developed markets (such as USA,
Canada and Australia) and emerging markets (such as Africa, Asia and Middle East).
107
Our research and development team works with European design houses and designers to
create, conceptualise, prototype and develop new system furniture.
As a percentage of our revenue for each of FY2012, FY2013 and FY2014, our research and
development expenses were not significant.
WORKPLACE SAFETY AND HEALTH MEASURES
We have established a workplace safety and health policy to ensure that all works in our
workplace at our premises located at Lot 6118 and Lot 6119 are carried out in accordance with
the OSHA and other applicable legislations such as the Fire Services Act 1988 (Act 341) of
Malaysia.
We are committed to ensuring that:
(a) a safe and healthy working environment is provided for all our employees;
(b) there is enhanced safety and health awareness of our safety practices amongst our
employees and contractors;
(c) unintended incidents and accidents are avoided; and
(d) local safety and health regulations are complied with.
We have established a Plan, Do, Check, Act policy. The first step, Plan, entails the
identification of potential workplace risks and hazards and the implementation of legally
compliant control measures. The second step, Do, involves the allocation of personnel based
on their respective skillset, conducting training, the preparation of documents like manuals,
obtaining participation feedback and ensuring emergency preparedness. The third step,
Check, entails the monitoring and evaluation of the aforementioned measures, conducting
subsequent investigations and the implementation of corrective actions whenever necessary.
The last step, Act, is for the conducting of management reviews on the effectiveness of the
measures and identifies areas for improvement on the policy.
We have also put in place internal rules and regulations to ensure the safety of visitors,
suppliers and contractors visiting our premises, and limits the exposure to any hazardous
chemicals, wastes or material within the premises.
STAFF TRAINING
Our employees are instrumental to the continued success and development of our Group. In
order to better serve our customers, our employees are required to undergo ongoing training
to enhance their product knowledge and be informed of the latest designs and market
developments of the office furniture industry. We organise both internal and external training
programmes for our employees from time to time so that they will be able to perform according
to their scope of work at an optimal level.
Our training programmes can be classified into the following three (3) main categories:
(a) Orientation training
All new employees are required to undergo orientation programmes conducted by our
human resource department to familiarise themselves with our corporate policies and
practices. These induction programmes are conducted in-house with emphasis on
matters relating to employee conduct and discipline, housekeeping, quality and safety
awareness.
108
(b) Technical training
We believe that the level of technical competence and product knowledge of our
employees is the key to maintaining our competitive position. We provide regular in-house
trainings for our operation employees on OSHA and equipment operation and keep them
up to date on the latest industry developments and market trends. We also send selected
employees to participate in seminars, conferences and training courses on a regular
basis.
(c) On-the-job training
On-the-job training reinforces the technical training which our employees have to undergo
and is managed by the employees immediate supervisors. Immediate supervisors will
closely monitor individual employees, and impart practical skills and working knowledge
that are necessary for them to perform their task. We provide on-the-job training which
covers areas of product knowledge, equipment operation, and QA and QC for our newly
recruited employees carried out by our senior supervisors or external trainers.
Our non-operation employees are also required to undergo on-the-job training in the
areas of general management, finance, communications and any other relevant areas,
which are deemed necessary for them to perform their tasks. This allows them to improve
their work performance in their respective business units. Some examples of on-the-job
training are those that focus on the development, deployment and maintenance of
systems that are required for various business and operation processes as well as
training which is focused on the improvement of the quality of our business and operation
processes through reducing defects in our products.
AWARDS AND CERTIFICATIONS
Our commitment to excellence is evidenced by the awards and certifications that we have
received over the years, some of which are set out below:
Year Award / Certification Award authority
2014 GREENGUARD Gold Greenguard Environmental Institute
2014 GREENGUARD Greenguard Environmental Institute
2013 PEFC ST 2001:2008 Malaysia Timber Certification Council
2013 PEFC ST 2002:2010 SIRIM QAS International Sdn Bhd
2009 FSC-STD-40-004 V2-0 SGS South Africa (Pty) Ltd.
As a testament to our quality commitment, we were one of the first companies in the office
furniture manufacturing industry in Malaysia to be recognised with internationally recognised
certifications such as ISO 9002:1994 Quality Standards in 1999, ISO 9001:2000 Quality
Standards in 2000, (ISO 9001:2008) Quality Management System Standards by Lloyds
Register Quality Assurance in 2011 and the 28th International Trophy for Quality (New
Millenium Award) in 2000. Further, as a testament to our achievement and performance in
Malaysia, we were conferred the Malaysia Enterprise 50 Award in 2001 and 2002.
INSURANCE
As at the Latest Practicable Date, we maintained the following insurance policies to cover,
inter alia, our operational, human resource and fixed asset risks:
(a) electronic equipment and devices all risks insurance;
109
(b) fire insurance on office equipment, furniture, fixtures and fittings and stock in trade;
(c) fire consequential loss insurance on loss of gross profit, payroll and audit fees suffered
due to fire;
(d) personal accident insurance for our Directors;
(e) group personal accident insurance for our employees;
(f) group hospital and surgical insurance for our employees;
(g) plant and machinery all risks insurance;
(h) public liability insurance in relation to legal liabilities to third parties; and
(i) Directors and officers liability and company reimbursement insurance on any loss arising
from claim first made against an insured person.
The above insurance policies are reviewed annually to ensure that they adequately satisfy
both regulatory and business requirements. We may increase the coverage if we deem it
necessary and appropriate.
We have not experienced any difficulties obtaining or renewing our insurance policies, or on
realising claims under any of our insurance policies. As at the Latest Practicable Date, our
Directors believed that the policy specifications and insured limits of these insurances were in
line with normal commercial practice. Save as disclosed under the section entitled Risk
Factors of this Offer Document, our Directors believed that the coverage from these insurance
policies was adequate for our present operations.
MANUFACTURING FACILITY
Our principal manufacturing facility is located at Lot 6119 and our spray paint line is located
at Lot 6118. The premises comprise the production and warehouse areas, as well as showroom
and office, with a total built up area of approximately 17,800 m
2
.
The details for our production capacity in relation to our manufacturing of system furniture are
set out below:
< FY2012 > < FY2013 > < FY2014 >
Annual
Production
Capacity
(1)
m
3
Approximate
Utilisation
Rate
(2)
%
Annual
Production
Capacity
(1)
m
3
Approximate
Utilisation
Rate
(2)
%
Annual
Production
Capacity
(1)
m
3
Approximate
Utilisation
Rate
(2)
%
39,000 66.0 39,000 67.0 39,000 70.0
Notes:
1. Our annual production capacity is calculated based on the following assumptions:
i. a daily production throughput to fill two (2) containers of 65 m
3
capacity each. For reference purposes,
a 65 m
3
capacity container can hold approximately 550 units of flat packed desks of box dimensions
1.20m by 0.70 m by 0.14 m; and
ii. our manufacturing facility operating for 11 hours per day, 25 days per month and 12 months a year.
2. Approximate utilisation rate is calculated based on actual annual production output divided by annual production
capacity.
110
PROPERTIES AND FIXED ASSETS
Properties
Our Group owns the following properties (all of which are located in Malaysia):
Owner Location
Approximate
area Tenure
Use of
property Encumbrances
m
2
Jemaramas Jaya Lot 6119 17,800 Freehold Manufacturing
facility,
warehouse,
office and
showroom
Charged by
UOB KL
Jemaramas Jaya Lot 6118 7,200 Freehold Warehouse and
spray paint line
Charged by
UOB KL
(1)
Note:
1. Jemaramas Jaya is in the process of discharging this charge.
Please refer to the section entitled General Information on our Group Approvals Yet To Be
Obtained In Respect Of Our Warehouse of this Offer Document for further details.
Our Group leases the following properties (all of which are located in Malaysia):
Lessor Location Floor area
Use of
property
Lease
period
Approximate
monthly
rental
(including
service
charge, where
applicable)
m
2
RM
Yonlian Realty
Sdn Bhd
B-03-07 and
B-3A-10, Meru
Court Apartment,
Lot 4932, Batu
5
1
2, Jalan Meru,
41050 Klang,
Selangor Darul
Ehsan
160 Accommodation
of workers
From 1
August 2013
to 31 July
2015
1,200
Chong Lee
Meng
Lots 20, 22, 24
and 26, Jalan
Meru, 41050
Klang, Selangor
Darul Ehsan
(1)
3,720 Storage
(1)
From 1
January 2005
to 31
December
2014
2,000
Menteri Besar
Selangor
(Pemerbadanan)
No. 14, Jalan
Muafakat 3,
Taman Dato
Bandar, Meru,
41050 Klang,
Selangor Darul
Ehsan
120 Accommodation
of workers
1 October
2013 to 30
September
2014
600
111
Lessor Location Floor area
Use of
property
Lease
period
Approximate
monthly
rental
(including
service
charge, where
applicable)
m
2
RM
Kong Lian
Industrial Park
Sdn Bhd
(Kong Lian)
AL 121, 13th
Miles, Jalan
Subang, 47000
Sungai Buloh,
Selangor Darul
Ehsan
(2)
1,078 Showroom N.A. 28,600
Mun Peng
Foong
PT11081, Solok
Teluk Batu 1,
Taman AMJ,
Industrial Park
258 Manufacturing
facility of
Steeltema
Lease from 1
May 2012
with an
option to
renew with
one (1)
month notice
for a further
term of six
(6) months
5,000
BSL Venture
Sdn. Bhd.
(BSL Venture)
No. 19, Jalan
SiLC 1/6,
Kawasan
Perindustrian SiLC
Nusajaya, 79200
Nusajaya, Johor
Darul Takzim
1,190 Showroom 1 June 2014
to 31 May
2017
19,200
Notes:
1. This property was previously used for the Workers Accommodation. As at the Latest Practicable Date, all our
workers had moved out of the Workers Accommodation.
2. We occupy such premises for our showroom and pay rent of approximately RM28,600 per month to Kong Lian.
There is no formal lease agreement entered into with Kong Lian and there is no fixed tenure for our occupation
of the premises. We are in the process of actively sourcing for an alternative location for our Sungai Buloh
Showroom and in any case we will vacate the premises on or before 28 February 2015.
As at the Latest Practicable Date and save as otherwise disclosed in this Offer Document, our
Directors were not aware of any breach of any obligations under the abovementioned leases
that would result in their termination by the lessor or non-renewal, if required, when they
expire.
Other Fixed Assets
We own other material fixed assets comprising mainly furniture and fittings, computers,
software, office equipment, motor vehicles, machinery and equipment. As at 28 February 2014,
our fixed assets, excluding our properties, had a net book value of approximately
RM6,574,000.
Save as disclosed in this section and save for some of our motor vehicles and machinery which
are under hire purchase arrangements, as at the Latest Practicable Date, none of our fixed
assets were subjected to any mortgage, pledge or any other encumbrances or otherwise used
as security for any bank borrowings.
112
To the best of our Directors knowledge, save as disclosed in the section entitled Government
Regulations Malaysia of this Offer Document, there were no regulatory requirements or
environmental issues that may materially affect our utilisation of our fixed assets as at the
Latest Practicable Date.
APPROVALS YET TO BE OBTAINED IN RESPECT OF OUR WAREHOUSE
Our Groups Warehouse is situated at Lot 6118 and held under the Title. Lot 6118 had been
purchased by Jemaramas Jaya from separate owners and had been amalgamated by
Jemaramas Jaya thereafter to create the Title. Please refer to the section entitled General
Information on our Group Properties And Fixed Assets of this Offer Document for further
details.
There are certain issues relating to the approvals yet to be obtained concerning our
Warehouse, as set out below. These issues do not relate to Lot 6119 where our principal
manufacturing facility is situated:
(a) Planning permission
Under the TCPA, the erection of our Warehouse requires planning permission from the
local municipal council of Klang, Majlis Perbandaran Klang (the MPK). However,
planning permission had not been sought before the erection of our Warehouse in 2007.
The construction of our Warehouse without planning permission will deem it an
unauthorised development under the TCPA and Jemaramas Jaya and/or its directors will
be subject to penalties under the TCPA.
MPK, as guided by its standard operating procedures, will make relevant examinations,
inspections and investigations on our Warehouse before taking any administrative actions
and/or enforcement against Jemaramas Jaya. If the conditions imposed by MPK are not
complied with by Jemaramas Jaya, MPK can serve a warning notice which will provide an
additional 30 days for Jemaramas Jaya to comply with MPKs conditions. If this is not
complied with, MPK will issue a final warning before they proceed to take court action
against Jemaramas Jaya.
On conviction, Jemaramas Jaya and/or its directors may be subject to a fine not
exceeding RM500,000 or imprisonment for a term not exceeding two (2) years or both.
The Directors understand that there are no prior recorded decisions in any superior court
in Malaysia which has convicted and/or upheld convictions where a sentence of
imprisonment has been imposed by reason of having an unauthorised development
under the TCPA.
Jemaramas Jaya had submitted an application to obtain planning permission on 26 March
2014 and is awaiting a response from the authorities. Upon receipt from the authorities,
Jemaramas Jaya will proceed to make applications to obtain building permission, convert
the category-of-use of the Title and obtain the CCC.
(b) Land use categorisation
As the land on which our Warehouse is situated has not been categorised for industrial
use under the NLC, Jemaramas Jaya may be in breach of the NLC, and may be subject
to fine and/or compelled to remedy the breach.
In the event that enforcement proceedings are commenced against it by the relevant
authority, Jemaramas Jaya may be required to show cause why a fine should not be
imposed in respect of such breach. If the breach is capable of remedy, Jemaramas Jaya
will be given opportunity to remedy the breach, and only in the event of failure to comply
113
with the requisite remedial action required by the authority, a more drastic measure of
temporary possession of the land may be imposed, and in the case of persistent breach
despite various opportunities of rectification, the land may be permanently forfeited.
As at the Latest Practicable Date, the Company had not received any notifications or
demands by any authority in relation to the potential breach in the land use categorisation
on the Title.
(c) Building permission
The erection and usage of our Warehouse also comes within the ambit of the SDBA.
Under the SDBA, the erection of our Warehouse requires the prior written permission of
the local authority.
As such written permission was not obtained by Jemaramas Jaya in connection with the
erection of our Warehouse, Jemaramas Jaya and/or its directors may be liable to a fine
not exceeding RM50,000 or imprisonment of up to three (3) years or both for such breach,
and may additionally be liable to a further fine of RM1,000 for each day the offence is
continued after conviction. Additionally, if an application is made by MPK to the
sentencing Magistrate, the Magistrate may make a mandatory order to require the
alteration or demolition of our Warehouse.
Even if no legal proceedings are commenced, as the building permission application is
only being submitted after the building has been built, Jemaramas Jaya may be required
to pay a penalty between approximately RM45,000 and RM180,000. In addition, MPK is
empowered to require Jemaramas Jaya to take other rectification action which may
include demolition of our Warehouse.
The Directors understand that there are no recorded decisions in any superior court in
Malaysia where a sentence of imprisonment has been imposed by reason of having a
building which lacks the requisite building permission under the SDBA.
(d) CCC
Under the SDBA, any person who occupies or permits to be occupied any building of any
part thereof without a CCC shall be liable on conviction to a fine not exceeding
RM250,000 or to the imprisonment term not exceeding ten (10) years or both. As planning
permission and building permission are required before a CCC can be obtained, our
Warehouse does not possess a CCC, and Jemaramas Jaya is potentially in breach of the
SDBA.
The Directors understand that there are no prior recorded decisions in any superior court
in Malaysia which has convicted where a sentence of imprisonment has been imposed by
reason of having a building which lacks a CCC.
BSL Holdings, Matthew Law, Arica Walters, Adam Law, Peggy Lee and Jay Law have
jointly and severally provided an indemnity to Jemaramas Jaya for Accounting Write-offs.
Jemaramas Jaya has undertaken that in the event that possession of Lot 6118 is returned
to Jemaramas Jaya following temporary possession not exceeding three (3) years by the
relevant authorities, Jemaramas Jaya shall forthwith return an amount equivalent to the
Accounting Write-offs to BSL Holdings, Matthew Law, Arica Walters, Adam Law, Peggy
Lee and Jay Law. The liability of BSL Holdings, Matthew Law, Arica Walters, Adam Law,
Peggy Lee and Jay Law shall terminate on the date when the required approvals have
been obtained.
114
APPROVALS YET TO BE OBTAINED IN RESPECT OF CERTAIN OF OUR LEASE
PROPERTIES
Sungai Buloh Showroom
Versalink Marketing occupies the Sungai Buloh Showroom owned by Kong Lian for which
Versalink Marketing pays a monthly rent of approximately RM28,600. There is no formal lease
entered into with Kong Lian. Please refer to the section entitled General Information on our
Group Properties And Fixed Assets of this Offer Document for further details.
We understand that the Sungai Buloh Showroom does not possess a CCC. Versalink
Marketing, as a tenant of such building lacking a CCC, may potentially be in breach of the
SDBA and Versalink Marketing and/or its directors is liable on conviction to a fine not
exceeding RM250,000 or to the imprisonment for a term not exceeding ten (10) years or both.
Kong Lian has confirmed that it has not received any notifications or documents from any
Malaysian regulatory authority regarding the CCC yet to be obtained, and has undertaken and
agreed to notify Versalink Marketing forthwith should it be served with such notification or
documents. In the event that enforcement action is taken against Kong Lian, we will relocate
our Sungai Buloh Showroom to alternative premises.
We are in the process of actively sourcing for an alternative location for our Sungai Buloh
Showroom and, in any case, we will vacate the premises on or before 28 February 2015.
and severally provided an indemnity to the Company and Versalink Marketing for all fines,
claims or losses incurred or suffered by Versalink Marketing resulting from or relating to any
non-compliance with the SDBA or other legal and regulatory requirements for the period from
the date on which Versalink Marketing first occupied the Sungai Buloh Showroom up to the
date on which Versalink Marketing vacates the Sungai Buloh Showroom. The liability of BSL
Holdings, Matthew Law, Arica Walters, Adam Law, Peggy Lee and Jay Law shall terminate
three (3) years from 28 February 2015.
Having considered the fact that the Sungai Buloh Showroom is leased from a third party, the
Legal Adviser to our Company on Malaysia Law is of the view that, following the vacation of
the Sungai Buloh Showroom by our Group and termination of the tenancy (Termination), as
there will be no further contravening circumstance, the risk of enforcement action against our
Group after Termination by the authorities for such non-compliance in relation to the Sungai
Buloh Showroom is low.
Workers Accommodation
Jemaramas Jaya occupies Lots 20, 22, 24 and 26 owned by an unrelated individual for which
Jemaramas Jaya pays a monthly rent of approximately RM2,000. Please refer to the section
entitled General Information on our Group Properties And Fixed Assets of this Offer
Jemaramas Jaya had erected the Workers Accommodation on Lots 20, 22, 24 and 26 without
obtaining planning permission, building permission and CCC.
It is likely that Jemaramas Jaya will be liable for failure to obtain planning permission and
building permission in relation to the erection of the Workers Accommodation, and would be
liable for the penalties in the event of enforcement by the authorities. Please refer to the
sections entitled General Information on our Group Approvals Yet To Be Obtained In
Respect Of Our Warehouse Planning Permission and General Information on our Group
Approvals Yet To Be Obtained In Respect Of Our Warehouse Building Permission of this
Offer Document for further details on the consequences for having yet to obtain the planning
permission and building permission.
115
In the event that the authorities take the view that the CCC is required for the Workers
Accommodation, Jemaramas Jaya and/or its directors may also be exposed to imprisonment
and/or fines for possible non compliance with the SDBA in this regard. Please refer to the
section entitled General Information on our Group Approvals Yet To Be Obtained In Respect
Of Our Warehouse CCC of this Offer Document for further details on the consequences for
having yet to obtain the CCC.
As at the Latest Practicable Date, all our workers had moved out of the Workers
Accommodation and we are taking steps to reinstate Lots 20, 22, 24 and 26 to its original form
by 31 December 2014.
and severally provided an indemnity to the Company and Jemaramas Jaya for all fines, claims
or losses incurred or suffered by Jemaramas Jaya resulting from or any non-compliance with
the SDBA and TCPA or other legal and regulatory requirements for the period from the date on
which Jemaramas Jaya first leased and occupied the premises situated at Lots 20, 22, 24 and
26 up to the date (the Reinstatement Date) on which Jemaramas Jaya dismantles and
demolishes the container accommodation with separate toilet and kitchen facilities and
reinstates Lots 20, 22, 24 and 26 to its original form. The liability of BSL Holdings, Matthew
Law, Arica Walters, Adam Law, Peggy Lee and Jay Law shall terminate three (3) years from the
later of 31 December 2014 and the Reinstatement Date.
Having considered the fact that Lots 20, 22, 24 and 26 are leased from a third party, the Legal
Adviser to our Company on Malaysia Law is of the view that, as the workers have moved out
of the Workers Accommodation, following the complete reinstatement of Lots 20, 22, 24 and
26 and termination of the tenancy by our Group, there will be no further contravening
circumstance and thereafter the risk of enforcement action by the authorities for such
non-compliance against our Group in relation to the Workers Accommodation is low.
CORPORATE SOCIAL RESPONSIBILITY
We recognise that for long term sustainability, we need to look beyond the financial parameters
and strike a balance between business profitability and corporate social responsibility. We
have taken various steps to play our part in contributing to the welfare of the society and
communities in the environment we operate in. Hence, we support important causes such as
environmental preservation, donation to the needy, and community services.
Some of our initiatives include:
(a) Environmental preservation
We are committed to the responsible use and protection of the natural environment
through conservation and sustainable practices. We strive to reduce the environmental
impact of our manufacturing operations by substituting raw materials with
environmentally friendly alternatives. Besides adopting environmentally friendly internal
guidelines on electricity, water, power and paper conservation, we also issue periodic
internal newsletters which feature articles on environmental preservation.
(b) Giving back to the community
We regularly support various services and activities within our community. We have made
donations and provided sponsorships to, amongst others, schools, orphanages and old
folks homes. Further, we are also involved in annual community services projects at
various charitable organisations.
Our Company is required to disclose our corporate social responsibility policies with reference
to the SGX-STs Guide to Sustainability Reporting for Listed Companies published on 27 June
2011.
116
Our Board of Directors ensure that all pertinent matters relating to corporate social
responsibility are considered and supported in our operations and administrative processes
and are consistent with our stakeholders best interest.
Our Board of Directors will establish a corporate social responsibility policy which will include
the review of the following areas of our activities:
(a) to review and recommend our policy in respect of corporate social responsibility issues;
(b) to review our health, safety and environmental policies and standards;
(c) to review the social impact of our business practices in the communities that we operate
in;
(d) to review and recommend policies and practices with regard to key stakeholders such as
our shareholders, suppliers, customers and employees; and
(e) to review and recommend existing and new policies and practices with regard to
regulators.
INTELLECTUAL PROPERTY
1. Trademarks
As an integral part of our branding, as at the Latest Practicable Date, our Group had
registered and/or acquired the following registered trademarks in order to protect our
brand names against any unauthorised use, infringement or misappropriation:
Trademark Class
Country of
registration
Registration
number
Registration Date/
Effective Date Expiry date
20
(4)
Malaysia 07012809 4 June 2009 24 August 2019
(1)
20
(4)
Malaysia 00001288 27 January 2011 14 February
2020
20
(5)
Malaysia 92005994 4 July 2007 4 July 2017
(2)
20
(6)
The PRC 3582204 21 October 2005 20 October 2015
(3)
20
(6)
The PRC 3582205 21 October 2005 20 October 2015
Notes:
1. This trademark was acquired by Jemaramas Jaya from our Executive Director and COO, Arica Walters on
30 December 2013. Please refer to the section entitled Interested Person Transactions Past Interested
Person Transactions of this Offer Document for further details.
2. This trademark was acquired by Jemaramas Jaya from our Executive Director (Singapore and Johor
Operations), Adam Law on 6 May 2014. Please refer to the section entitled Interested Person
Transactions Past Interested Person Transactions of this Offer Document for further details.
3. This trademark was acquired by Jemaramas Jaya from our Executive Director (Singapore and Johor
Operations), Adam Law on 6 May 2014. Please refer to the section entitled Interested Person
Transactions Past Interested Person Transactions of this Offer Document for further details.
117
4. Class 20: Furniture, mirrors, picture frames; goods (not included in other classes) of wood, cork, reed,
cane, wicker, horn, bone, ivory, whalebone, shell, amber, mother-of-pearl, meerschaum and substitutes
for all these materials, or of plastics which includes chairs (seats), cupboards, desks (furniture), filing
cabinets, furniture, furniture (office), furniture (partitions of woods), furniture of metal, furniture shelves,
office furniture and writing desks.
5. Class 20: Furniture, mirrors, picture frames; goods (not included in other classes) of wood, cork, reed,
cane, wicker, horn, bone, ivory, whalebone, shell, amber, mother-of-pearl, meerschaum and substitutes
for all these materials, or of plastics.
6. Class 20: Furniture, mattresses, picture frames, bamboo craftworks, bamboo products (excluding hats,
mats, cushions), glass steel craftworks, wooden, wax, plaster or plastic craftworks, non-metallic hardware
for furniture and wooden slats.
As at the Latest Practicable Date, we had applied for registration of the following
trademarks:
Trademark Class
Country of
registration
Date of
application Status
20
(1)
Singapore 12 June 2014 Pending
(series of 2) 20
(1)
Singapore 12 June 2014 Pending
20
(1)
The PRC 3 June 2014 Pending
20
(1)
UAE 19 June 2014 Pending
Note:
1. Class 20: Chairs (seats), cupboards, desks, filing cabinets, furniture, furniture (for partitions of woods),
furniture of metal, furniture shelves, office furniture and writing desks.
2. Licences
In June 2014, Jemaramas Jaya entered into a private deed to document its arrangement
with a couple of Italian designers (the Jemaramas Jaya Italian Designers) to design
an executive desk system, for a basic fixed fee. Jemaramas Jaya will pay the Jemaramas
Jaya Italian Designers an additional fixed daily fee to render assistance on the realisation
of the design, production, development and manufacturing of the executive desk system.
The Jemaramas Jaya Italian Designers will also receive royalties based on a
predetermined formula in connection with the sale of the executive desk system. The
intellectual property rights in connection with the executive desk system are exclusive to
Jemaramas Jaya.
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In June 2014, Jemaramas Jaya entered into two (2) design agreements to document its
arrangements with an Italian company involved mainly in the field of industrial design,
including the provision of design services for the creation of furniture products
(Jemaramas Jaya Italian Design Company), to design (i) a cabinet for office use; and
(ii) an executive or managerial level desk system respectively, for a basic fixed fee each.
In the event that the designs from the Jemaramas Jaya Italian Design Company are used
for any finished products sold by Jemaramas Jaya, Jemaramas Jaya will pay the
Jemaramas Jaya Italian Design Company a commission based on a predetermined
formula. The intellectual property rights in connection with the cabinet for office use and
the executive or managerial level desk system which the Jemaramas Jaya Italian Design
Company is shall be solely owned by and assigned to Jemaramas Jaya. The Jemaramas
Jaya Italian Design Company provided an undertaking that the designs originated and
were created by it and, to its knowledge, do not infringe or violate the intellectual property
rights or any other rights of any third party.
Save as disclosed above, we do not own or use any other patents, trademarks or
intellectual property on which our business or profitability is materially dependent.
In the past, we have not had to incur any legal costs in protecting infringements against
our copyrights, trademarks or other intellectual property rights and have not had to incur
any legal costs with regards to infringement of third partys intellectual property rights.
As at the Latest Practicable Date, we were not aware of any infringement of our
intellectual property rights or of any claims that we have infringed third party intellectual
property rights.
Nonetheless, we cannot be certain that our products do not or will not infringe valid
patents, copyrights or other intellectual property rights held by third parties. Please refer
to the section entitled Risk Factors - We are exposed to risks of infringement of our
intellectual property rights and the unauthorised use of our trademarks and we may face
litigation suits for intellectual property infringement of this Offer Document for further
details.
MAJOR CUSTOMERS
Our customers, which include contractors, corporate customers, dealers and OEM customers,
comprise broadly of Domestic Sales customers and Export Sales customers as described in
our General Information on our Group Business Overview section of the Offer Document.
The bulk of our Domestic Sales are derived from project sales (including showroom sales).
However, we also derive Domestic Sales revenue from local dealers and OEM dealers.
Our Export Sales are primarily to overseas dealers and furniture brand owners that purchase
from us on an OEM basis.
Revenue contribution from our customers varies from year to year as a significant portion of
our business is conducted on a project basis. We may not generate similar projects in terms
of size and scope with the same customer in subsequent years.
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The following table sets forth our customers who accounted for five per cent. (5.0%) or more
of our total revenue for each of the past three (3) financial years. Customers that are, to the
best of our knowledge, related to one another have been grouped together and treated as a
single customer.
As a percentage of our total
revenue
Customer Country FY2012 FY2013 FY2014
% % %
Heartwood Distributors Ltd. Canada 19.3 10.5 7.9
Modern Emirates Furniture & Office
Equipments
UAE 5.9 9.9 7.2
Tenaga Nasional Berhad Malaysia 1.8 9.4 1.3
ABC-Advanced Business Concept LLC UAE 3.1 7.9 5.0
Ahmad Zaki Sdn. Bhd. Malaysia 1.3 7.3
Group For Wooden Industries Qatar 6.6
Regency Inc. USA 5.5 6.5 4.9
Bina Puri Construction Sdn. Bhd. Malaysia 5.6
Of our major customers for the past three (3) financial years, Bina Puri Construction Sdn. Bhd.,
Tenaga Nasional Berhad and Ahmad Zaki Sdn. Bhd. are our project sales customers. The other
major customers above are our overseas dealers and overseas OEM customers.
The amount we sell to our major customers varies from year to year, depending on the projects
undertaken by them and/or demand from the end customers of our dealers and OEM
customers for our products.
Our Directors are of the opinion that our business and profitability are currently not dependent
on any single customer or on any particular industrial, commercial or financial contract with
any customer.
To the best of their knowledge, our Directors are not aware of any information or arrangement
which would lead to a cessation or termination of our current relationship with any of our major
customers.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their
respective Associates has any substantial interest, direct or indirect, in any of the above major
customers.
MAJOR SUPPLIERS
Our suppliers are carefully selected by our Group based on a variety of factors, including their
reputation, reliability, quality and pricing of their products, timely delivery of their products and
the length of their business relationship with our Group. We generally do not enter into
long-term or exclusive contracts with any of our major suppliers as this provides us with the
flexibility to source for quality products at economical prices from suppliers worldwide. As at
the Latest Practicable Date, our Group had not encountered any significant production
disruption due to shortage of supplies from our suppliers to meet our production requirements.
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The following table sets forth our suppliers accounting for five per cent. (5.0%) or more of our
Groups total purchases in FY2012, FY2013 and FY2014:
As a percentage of total
purchases
Supplier Products supplied FY2012 FY2013 FY2014
% % %
Panel Plus Co., Ltd. Melamine faced
chipboards
20.8 17.9 20.1
FFCL Raw materials,
components and
furniture products
20.7 21.4 16.0
Metal Works International
Asia Ltd.
Metal legs and
components
9.0 4.4 4.3
Mieco Manufacturing Sdn. Bhd. Melamine faced
chipboards
6.3 6.8 4.6
Miracle Office Solution Sdn. Bhd. Office chairs 3.3 5.7 2.9
Our Directors are of the opinion that our Group is not dependent on a single supplier and the
products supplied by the above major suppliers can be sourced from other suppliers in the
market without significant difficulties.
To the best of their knowledge, save for FFCL with whom we have ceased transactions, our
Directors are not aware of any information or arrangement which would lead to a cessation or
non-renewal of our current relationship with any of our major suppliers.
As at the Latest Practicable Date, Adam Law was the ultimate holder of 100.0% of the equity
interest in FFCL. Between the establishment of FFCL up to 31 July 2014, Jemaramas Jaya was
the registered holder of such interest, holding in trust for Matthew Law, Adam Law and Roland
Law. On 31 July 2014, Matthew Law and Roland Law agreed to transfer all their beneficial
interests in FFCL to Adam Law and all the registered equity interest in FFCL was formally
transferred by Jemaramas Jaya to Adam Law upon the issuance of a new business licence by
the relevant authorities to FFCL. As such, Adam Law is currently the sole legal and beneficial
holder of all the equity interests in FFCL. FFCL is therefore treated as an interested person of
our Company. As at the Latest Practicable Date, FFCL did not have any significant business
activity and our Company had ceased to purchase raw materials, components and furniture
products from FFCL. As at the Latest Practicable Date, our Company was purchasing such
products from other suppliers in the PRC.
For further details, please refer to the section entitled Interested Person Transactions of this
Offer Document.
Save as disclosed above, none of our Directors or Substantial Shareholders or their respective
Associates has any material interest, direct or indirect, in any of the major suppliers listed
above.
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CREDIT MANAGEMENT
Credit terms to our customers
Our finance department regularly monitors and oversees payment from our customers.
(a) Projects sales
The credit terms for our customers on a project basis vary from customer to customer
depending on the contractual terms of the individual projects and are typically in line with
the office furniture industry standards in Malaysia. The credit terms granted to our
existing customers are determined based on their financial background and
creditworthiness, the transaction volume, payment history and length of relationship with
us.
Generally, for larger scale projects, the contract value is payable to us on a progressive
basis depending on the stage of completion of the project. We usually invoice our
customers based on project milestones. Upon submission of our invoice to our customers,
we generally grant them credit terms ranging from 30 to 90 days.
A sum of approximately five per cent. (5.0%) of the contract value, known as a retention
sum, is usually payable at the end of the defects liability period which generally lasts six
(6) to 12 months from the date of the final inspection of the office furniture installed at site.
For smaller scale projects and showroom sales, we require full payment upon the delivery
of products.
(b) Dealers and OEM customers
We do not normally enter into long-term contracts with our dealers and OEM customers
and all sales to our dealers and OEM customers are based on confirmed sales orders.
For overseas dealers, we usually obtain letters of credit issued by financial institutions or
require full payment upon delivery of goods. We undertake the following measures to
minimise our credit risks:
(i) closely monitoring our dealers accounts and following-up to ensure that the full
payment of the sales amount has been received based on the terms of the letters of
credit after copies of the shipping documents are made available to them; and
(ii) original shipping documents, such as the bills of lading, invoices and packing lists,
are made available to our customers only upon receipt of the full payment by
telegraphic transfer or the collection of letters of credit (at sight or on term) in favour
of our subsidiary companies issued by financial institutions which are essentially
written undertakings given by the financial institutions on behalf of our overseas
customers for payment, without which our customers will not be able to take delivery
of their cargo from the ports.
We generally grant our OEM customers credit terms ranging from 30 to 90 days from
delivery of the products.
We will also review and assess overdue debts and make allowance for doubtful trade
receivables on a case-by-case basis, depending on the creditworthiness of the debtor at the
relevant time. We had not made any material allowance for doubtful trade receivables in the
last three (3) financial years. Doubtful trade receivables (where provision has not been
previously made) will be written off when our management considers recovery to be unlikely.
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The trade receivables written off and trade receivables turnover of our Group for the Period
under Review were as follows:
FY2012 FY2013 FY2014
Trade receivables written off during the year
(RM000)
3
Trade receivables turnover (days)
(1)
30 30 36
Note:
1. The trade receivables turnover is calculated based on the average of the opening and closing trade receivables
balances of the relevant financial year divided by the corresponding revenue and multiplied by 365 days.
Credit terms from our suppliers
The credit terms granted by our suppliers vary from supplier to supplier and is dependent
upon, inter alia, our relationship with the suppliers and the size of the transactions. Generally,
our suppliers grant us credit terms ranging from 30 to 90 days from delivery of the products or
materials. For our suppliers who are based outside of Malaysia, payment is effected by way of
letters of credit or telegraphic transfers.
Our trade payables turnover during the Period under Review were as follows:
FY2012 FY2013 FY2014
Trade payables turnover (days)
(1)
64 54 39
Note:
1. The trade payables turnover is calculated based on the average of the opening and closing trade payables
balances of the relevant financial year divided by the corresponding costs of sales and multiplied by 365 days.
Our trade payables turnover from FY2012 to FY2014 had been gradually decreasing due to
better invoicing and payment coordination with our suppliers.
INVENTORY MANAGEMENT
Our inventories comprise mainly ancillary products, raw materials, components and parts,
work in progress and finished goods.
Our ancillary products, raw materials, components and parts are melamine face chipboards,
metal legs, metal components, PVC edge banding, hardware and packaging materials and
high pressure laminates. Our work in progress goods consist of a variety of raw materials,
components and parts used for the manufacture of our furniture and our finished goods consist
of furniture we manufacture and ancillary products we procure from third parties.
We maintain a readily available stock of ancillary products, raw materials, components and
parts and finished goods, which allows us to achieve time savings for our customers by
reducing the production lead times between receiving their orders and commencing the
manufacturing process. We typically maintain quantities of our ancillary products, raw
materials, components and parts and finished goods based on secured orders from customers,
sales forecasts and our managements outlook on price trends.
Our storekeepers perform inventory counts on a regular basis, while a full inventory count is
carried out on an annual basis. Our management will review on a monthly basis the results of
inventory checks conducted by our warehouse manager and his team to assess the status of
various inventory levels and to identify slow moving inventories in order to plan for inventory
replenishment and to manage product obsolescence.
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Our inventory turnover during the Period under Review were as follows:
FY2012 FY2013 FY2014
Inventory turnover (days)
(1)
90 99 84
Note:
1. The inventory turnover is calculated based on the average of the opening and closing inventory balance of the
relevant financial year divided by cost of sales for the financial year multiplied by 365 days.
We believe our high level of inventory allows us to shorten our delivery lead time to customers
thus helping us to maintain our competitiveness.
COMPETITION
We operate in a competitive environment and face competition from new and existing
competitors based in Malaysia and elsewhere.
To the best of their knowledge, our Directors consider the following companies to be our main
competitors:
Bristol Technologies Sdn. Bhd. and its group of companies
Euro Holdings Berhad
Artmatrix Manufacturing Sdn. Bhd. and Artmatrix Technology Sdn. Bhd.
Merryfair Chair System Sdn. Bhd.
Our other competitors include international brands such as Knoll, Inc., Steelcase Inc., Herman
Miller, Inc. and Haworth Inc..
Our Directors and Substantial Shareholders do not have any material interest, direct or
indirect, in any of the above competitors.
COMPETITIVE STRENGTHS
We have a very comprehensive offering of products and services and are able to turn
around products quickly
We are able to provide an efficient one-stop service, which includes a broad range of products
and services such as the design, manufacture and supply of office furniture and accessories
as well as workspace consulting and planning services. As we are a fully integrated furniture
manufacturer, we are also able to have control over the quality of our products and our
production costs. This has allowed us to be one of the leading office furniture providers in
Malaysia.
We are well stocked with ancillary products, raw materials, components and parts, work in
progress and finished goods, which allows us to take on projects with short deadlines. Upon
receiving an order confirmation, we are able to begin manufacturing the required products
using the stock kept in our warehouse. As such, we are able to reduce the production lead
times between receiving the order and commencing the manufacturing process. We are thus
able to deliver our products quickly and efficiently.
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We have an established track record and experienced management team
We have an established reputation with our customers due to our long history, our Versalink
brand and our senior management team who has a track record of over 20 years in the office
furniture industry. We have established ourselves as a leading player in the mid to high end
segment of the industry and as stated in the Industry Report and we are one of the most
profitable companies among the top comparable companies in Malaysia. We believe that we
have built a strong commercial identity through our Versalink brand name, which has grown
to be associated with high quality and reliable office furniture, as well as trendy and functional
designs.
Our Group is helmed by a senior management team which has extensive experience in the
furniture industry. Matthew Law, Arica Walters and Adam Law, have collectively been
instrumental in the formulation of our strategic direction and expansion plans. We are also
supported by a team of experienced and dedicated managers.
Our Directors believe that our established track record and the experience of our management
team provides us with a competitive advantage over other companies in our industry.
We have strong design capabilities as a result of our continued collaboration with
overseas designers
We aim to continually introduce unique and innovative designs in our products. We constantly
strive to improve our products, product range, and production methods to keep up with the
ever-changing market trends and to enhance our competitiveness. To this end, we have a
strong research and development team, which enables us to deliver a wide range of products
for our target consumer groups. Members of the research and development team also attend
exhibitions in Europe, America and Asia and look out for new and innovative techniques in
product development and design, which we can use and adapt to our products. Furthermore,
our product design capabilities are boosted by our strong working relationships with our Italian
designers. Through our frequent collaborations with them, we are able to provide our
customers with furniture exhibiting cutting edge designs. We feel that this enables us to stay
competitive and to adapt to the changing styles and desires of our customers and the office
furniture industry.
We have developed strong relationships with our large and diversified pool of
customers
We sell to geographical markets spanning more than 40 countries in Africa, Asia, Australasia,
Middle East and North America. Our Groups customer base includes corporate customers,
dealers and OEM customers which can be classified under the category of either domestic
Malaysia sales or export sales. We have been servicing some of our customers for more than
ten (10) years.
We maintain regular contacts with our customers and they provide us with regular updates on
market trends and in-depth knowledge of the market conditions which enable us to better
understand our customers requirements. Through such contacts, we are also able to plan our
inventory requirements and innovate the design of our system furniture so that our customers
needs are being met.
We believe that we have been able to develop strong relationships with our customers by
virtue of our ability to meet their product needs, in particular in terms of quality and product
range, and we are able to do so in a timely manner with effective service and competitive
pricing.
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PROSPECTS
Our Group designs, manufactures and supplies a wide range of system furniture and provides
workspace consulting and planning services.
Accordingly, the prospects for our business are dependent upon the economic conditions and
activities which impact the office furniture industry. Moving forward, the prospects of our
industry are as follows:
(a) Demand growth from emerging countries
Based on the Industry Report, growth in Asian nations has prompted an increase of office
furniture imports from Malaysia over the past five (5) years. From 2009 to 2013, the
collective imports of Malaysian office furniture from Asian nations had grown by a CAGR
of four per cent. (4.0%). Malaysia exports more than half of its office furniture to Asian
countries. It is expected that the furniture manufacturing industry will see stable global
demand growth, with an increasing trend in imports of consumer goods in emerging
countries. An increase in foreign direct investments gave rise to multi-national
corporations expanding their operations into other emerging countries by setting up
offices in these regions. As a result, new offices will be furnished, thus, creating demand
for office furniture. As one of the worlds largest exporters of office furniture, Malaysian
manufacturers are poised to capitalise on this increase in demand.
(b) Recovery of major economies
According to the Industry Report, after Asia, North America represented the second
largest export market for Malaysian made office furniture. The recovery of the USA
economy since the 2008 financial crisis has seen an increase in consumption of office
furniture. From 2009 to 2013, the region has seen a CAGR of 12.0% in office furniture
imports from Malaysia, and is expected to continue to grow, as the economy recovers in
the North American region. The economic recovery resulted in a rise in commercial
activities, thus, increasing the demand for furniture to be used to furnish new offices.
Imports from Eurozone nations are met with slightly lower growth rates of 3.8%. The
largest European importer of Malaysian office furniture is the UK, which recorded 16.3%
growth over the past five (5) years. Demand for Malaysia-manufactured office furniture is
expected to grow, in tandem with the recovery of the European nations.
(c) Growth of commercial property developments in Malaysia
Based on the Industry Report, Malaysias foreign investments over the years have been
flowing steadily into the country. Through the efforts of the Malaysia Investment
Development Authority and Investing in Greater Kuala Lumpur, Malaysia is able maintain
its efforts in attracting foreign companies into the country thus generating a demand for
office supplies and increasing the prospects for the Malaysian office furniture
manufacturers. Property development activities in Malaysia, in commercial districts such
as Klang Valley, have increased over the years. The total office supply recorded a CAGR
of 4.1% from 2009 to 2013. It is in the pipeline that an additional 0.7 million m
2
of new
office space is being scheduled to be released in Malaysia in 2014.
(d) Push towards high-value products and services
According to the Industry Report, demand for products that are better designed and made
from sustainable practices is on the rise. End-users, especially those in the USA and
Europe, are aware of furniture manufacturing practices and are increasingly conscious
about their impact on the environment. As such, there is an increasing demand for
certified office furniture that complies with international safety and environmental
standards. Matured office furniture production industries, such as those in Malaysia, are
attuned to the requirements of their clients, and have research and development
126
capabilities to cater to this segment. Also, the cumulative knowledge in the industry has
led to the rise of solutions-based services such as those of project sales. As a result, the
industry is able to realise higher profitability from sales of high-value, internationally
recognised products, and provision of value-added services. The gradual shift towards
high-value products and services may also alleviate pressure from higher production
costs and increased competition from other exporting countries like the PRC and
Vietnam. Such industry-wide shifts are seen as necessary for the continued growth of the
local furniture manufacturing industry.
(e) Use of research and technology
Based on the Industry Report, the furniture manufacturing industry is an important
industry in Malaysia, in terms of export revenue and growth potential. As such, the
industry enjoys strong governmental support, which comes in the form of incentives and
programmes to adopt the use of technology. The use of high-tech procedures in furniture
manufacturing is expected to push growth in the industry, by way of driving productivity
and mitigating future increases in cost of labour and/or material. Throughout the years,
Malaysias office furniture manufacturing industry has accumulated considerable
experience and built up expertise in modern manufacturing processes. With growing
investments into high-tech production processes, it is projected that the domestic industry
will be able to keep up with increased future demands and challenges.
Please refer to Appendix B Industry Report in this Offer Document for further details.
TRENDS AND ORDER BOOK
Based on the revenue and operations of our Group as at the Latest Practicable Date, our
Directors had made the following observations for FY2015:
(a) we intend to expand our business operations, both in Malaysia and internationally. In
connection with such expansion activities, we expect to increase our promotional and
marketing activities in Malaysia and overseas, and as such our costs would increase in
this regard. Such business expansion and increased marketing activities may not
translate into an immediate increase in revenue;
(b) we expect to incur increased directors and staff remuneration expenses, due to Directors
Fees implementation of Service Agreements and increase in employee numbers in line
with our Groups expansion plans; and
(c) we envisage that project sales, particularly in the domestic Malaysia market, will form a
larger portion of our sales in the long term. This will result in our revenue stream being
less evenly spread out throughout the year due to the inherent nature of project sales,
which generally are billed only at major milestones.
For HY2015, our Directors expect that our profit for the financial period may be significantly
lower than the corresponding period of the previous year in view of the listing expenses
incurred by us in connection with the Invitation and increased costs (such as higher directors
and staff remuneration expenses and increased costs in connection with expansion and
marketing activities), coupled with a possibility that our revenue may not be uniformly spread
throughout the year due to a significant portion of our revenue being derived from project
sales. Please refer to the risk factor entitled We may record an interim loss for HY2015 of this
Generally, we do not have any long term contracts with our customers for the supply of
products and services and our delivery time frame normally ranges from one (1) month to two
(2) months from the receipt of purchase orders, depending on factors such as stock
availability, complexity of product requirements, destination and method of delivery.
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As at 28 February 2014, our order book for our Domestic Sales customers and our Export
Sales customers was approximately RM5.3 million out of which all had been completed as at
the Latest Practicable Date. As at the Latest Practicable Date, our order book for our Domestic
Sales customers and our Export Sales customers based on confirmed sales orders was
approximately RM6.3 million.
The bulk of our orders for our Domestic Sales customers are project sales by way of tender
offers or directly negotiated contracts. Our products for such customers are delivered and
installed in accordance with the requirements of our customers based on the different stages
of the projects. The tender process normally ranges from three (3) to six (6) months. In
addition, our orders for our Export Sales customers such as overseas dealers and furniture
brand owners that purchase from us on an OEM basis are subject to variation, modification and
cancellation or delays due to unanticipated changes.
Due to the nature of our business which includes Domestic Sales and Export Sales and our
normal delivery time frame of only one (1) to two (2) months from receipt of purchase orders
as aforesaid, our Directors believe that the state of our order book at any particular date is not
necessarily reflective or indicative of our Groups overall financial results and performance at
the relevant point in time and our revenues for the succeeding period.
Save as disclosed above and in the sections entitled Risk Factors, Managements
Discussion and Analysis of Financial Position and Results of Operation and General
Information on our Group Prospects of this Offer Document respectively, and barring any
unforeseen circumstances, our Directors believe that there are no other known recent trends
in production, sales and inventory, the costs and selling prices of our products and services or
other known trends, uncertainties, demands, commitments, or events that are reasonably
likely to have a material and adverse effect on our revenue, profitability, liquidity or capital
resources, or that would cause financial information disclosed in this Offer Document to be not
necessarily indicative of our future operating results or financial condition. Please also refer
to the section entitled Cautionary Note Regarding Forward-Looking Statements of this Offer
Document.
BUSINESS STRATEGIES AND FUTURE PLANS
We intend to grow our core business by increasing our domestic market share in Malaysia and
increasing our exports to overseas markets. Our growth strategies are as follows:
(i) Continue to reinforce and strengthen our market position in Malaysia
We believe we are one of the leading players in the design and manufacture of system
furniture in Malaysia. It is our intention to leverage on our market position to increase our
market share in the Malaysian market. Our Directors believe that there are significant
prospects in the office furniture market in Malaysia in growth areas such as the Klang
Valley, Iskandar Malaysia and Penang, as the supply of new offices to the market is
expected to increase over the next few years.
To achieve this, we intend to increase our market share as follows:
Increasing our participation in tendering for office and commercial fit-out projects by
working closely with key market participants such as architects, interior designers
and renovation contractors.
Increasing our sales through our online portal http://store.versalink.com in which our
potential customers can order our products online. We aim to tap on the increasing
popularity of e-commerce in Malaysia and also to reach out to other parts of
Malaysia where we do not have a showroom.
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Explore setting up new showrooms ourselves or in conjunction with business
partners to increase the visibility of our brand and presence in other parts of
Malaysia. We have in June 2014 set up a new showroom in Nusajaya, in the Iskandar
region of the state of Johor, Malaysia to be close to customers in Johor Bahru and
Singapore.
(ii) Focus on increasing the exports of our Versalink brand of system furniture
In line with our plan to expand our overseas business, we plan to increase the exports of
our products to existing markets such as the Middle East, Asia and Africa, and to explore
opportunities to export to new markets in Europe.
As part of our efforts to widen our global presence, we have engaged an international
branding and public relations firm to undertake a branding and re-positioning exercise for
our Versalink brand and our Group. We also intend to participate in more overseas
tradeshows, exhibitions and advertising in overseas magazines and publications.
We intend to utilise approximately S$0.8 million of our net proceeds from the New Shares
to marketing, advertising and promotional activities.
(iii) To increase our production capabilities by investing in new machinery, upgrading
to better machinery and relocating Steeltemas production facilities and/or setting
up other new production facilities
We intend to relocate Steeltemas manufacturing operations by the first quarter of FY2016
to a new factory which will house the metal working production facilities to produce metal
parts and components for use in our system furniture and for sale to third parties. To this
end, we intend to utilise approximately S$0.4 million of our net proceeds from the New
Shares to fund the set up of the new production facility for Steeltema and the acquisition
of new machinery such as tapering machines, tube bending machines and air compressor
for such facility.
We also intend to upgrade our machinery and equipment in Jemaramas Jayas production
facility to replace aging machinery with new machinery including panel saw machines,
edge bending machines and CNC machines to enhance our production efficiency. We may
also expand the production capabilities of Jemaramas Jaya by setting up or acquiring new
production facilities. In this regard, we intend to utilise approximately S$3.4 million of our
net proceeds from the New Shares to fund the upgrading and/or acquisition of new
machinery for Jemaramas Jaya and for the setting up of such new production facilities.
(iv) To establish a regional presence and explore investments, acquisitions and/or joint
ventures
We intend to establish a regional presence with a view to replicating our success in our
project tendering business in other countries such as Singapore, Thailand, Philippines,
Vietnam and Indonesia. We may expand our geographical coverage by setting up
subsidiaries or representative offices or branches in new markets. As a start, we have set
up a branch office of Jemaramas Jaya in Singapore on 21 April 2014 to spearhead our
expansion plans here.
We may consider investing in or acquiring other companies with businesses similar or
complementary to our business, and/or joint ventures with suitable parties as and when
the opportunities arise. We will evaluate potential companies for factors such as brand
acceptance, synergistic benefits, sharing of technical resources, reduction of operational
costs and higher market penetration, before engaging them in negotiations.
Currently, we are not in discussion with any party for investments, acquisitions, joint
ventures or strategic alliances. Should we decide to enter into an investment, acquisition,
joint venture or strategic alliance, we will seek approval, where necessary, from our
Shareholders and the relevant authorities as required by the relevant laws and
regulations.
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GOVERNMENT REGULATIONS
We have identified the main laws and regulations (apart from those pertaining to general
business requirements) that materially affect our operations and the relevant regulatory bodies
in Malaysia. Save as disclosed in the sections entitled Risk Factors, Approvals Yet To Be
Obtained In Respect Of Our Warehouse and Approvals Yet To Be Obtained In Respect Of Our
Lease Properties in this Offer Document, details of these laws and regulations (apart from
those pertaining to general business requirements) are set out below:
Malaysia
MANUFACTURING ACTIVITY LICENCES
As a manufacturer in Malaysia, our Group is subject to local by-laws which is mandated and
governed by the local authority flowing from the Local Authority Act 1976 (Act 171). Any
company conducting business activities is required to obtain business and advertising licences
from the local authority which the business premise is situated. The business premise shall be
inspected or supervised by the local authority, which is empowered to grant,
grant-with-condition(s), not grant and revoke licences which have been granted. This business
licence has been granted to Jemaramas Jaya by the local authority on yearly basis.
Further, as Jemaramas Jaya has more than 75 employees, the Industrial Co-ordination Act
1975 requires any company of that size or larger, which is engaged in manufacturing activities
to be granted by the Malaysian Ministry of International Trade and Industry (MITI). MITI has
granted Jemaramas Jaya this manufacturing licence on 20 June 2006.
WORKPLACE SAFETY AND HEALTH
By virtue of the OSHA, every employer is under a duty to ensure (insofar practicable) the
safety, health and welfare of its employees. These measures include (insofar practicable),
providing and maintaining the plant and systems of work such that they are safe and
non-hazardous. Another measure is making arrangements to ensure that the environment is
safe and without risks to health in connection with the use or operation, handling, storage and
transport of equipment and substances which include providing information, instruction,
training and supervision as necessary to ensure that the safety and health at work of its
employees is safe and has adequate facilities for its employees welfare.
The OSHA also imposes a duty on the person who designed or built any plant to ensure
(insofar practicable) that the plant is designed and constructed so as to be safe and without
risks to health when properly used. The person who designed or built is to also carry necessary
research with a view to the discovery and (insofar practicable), eliminate and/or minimise any
risk to safety or health to which the design of the plant may give rise.
EMPLOYMENT LAWS
The Industrial Relations Act 1967 (Act 177) (IRA) provides the legal framework and
procedures for employees and/or former employees who have been unfairly dismissed and/or
constructively dismissed by their employers. The IRA provides employees an avenue to seek
redress via the Malaysian industrial court, which specialises in handling industrial relation
matters only. Generally, former employees who are unfairly and/or unlawfully dismissed by an
employer may seek reinstatement to their former position (and remuneration) or compensation
in lieu of reinstatement up to 24 months of their last drawn salary.
The Employment Act 1955 (Act 265) (the EA) on the other hand provides for the minimum
work benefits/requirements for certain categories of employees (local and foreign) only
includes employees who earn a monthly wage of RM2,000 and below, and employees involve
in manual labour, supervisors of such manual labourers and drivers, irrespective of their
monthly wage. The EA provides the statutory minimum and regulations the employees working
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hours, overtime payment, annual leave, sick leave, maternity leave, public holidays, method
of the payment of wages, duration of termination notices as well as termination and lay off
benefits. Moreover, if there is inconsistency between the terms of the employment contract and
the minimum standards of the EA, the more favourable terms will be enjoyed by the employee.
Foreigners are prohibited to be employed in Malaysia under the Immigration Act 1959 (Act
155) unless they have valid employment permits and visas which shall specify the duration of
employment, that is subject to renewal.
The Workmens Compensation Act 1952 (Act 273) (WCA) on the other hand regulates the
payment of compensation to workmen for injury suffered in the course of their employment but
the category of workmen covered is limited to employees whose monthly wages are below
RM500 (unless they are workmen who are employed for manual labour, to which the RM500
limit is not applicable). The employer is mandated under the WCA to compensate and pay for
expenses incurred in the employees rehabilitation. As for those employees of our Group who
are not covered by the WCA, they are covered by the Employees Social Security Act 1969 (Act
4) (SOCSO) whereby employers have the statutory duty to insure its employees in the
manner provided under the SOCSO, in respect of injuries occurring in the course of the
employment. Further, the Employees Provident Fund Act 1991 mandates employers to make
statutory contributions of 13% of the employees salaries (for employees with wages less than
RM5,000 a month) or 12% of the employees salaries (for employees with wages more than
RM5,000 a month).
As at 28 February 2014, our Group had been timely in payment of SOCSO and statutory
contributions of our employees.
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INTERESTED PERSON TRANSACTIONS
In general, transactions between our Group and any of our interested persons (namely, our
Directors, CEO or Controlling Shareholders of our Company or the Associates of such
Directors, CEO or Controlling Shareholders) would constitute interested person transactions
for the purpose of Chapter 9 of the Listing Manual. This section sets out details of interested
person transactions for the last three (3) financial years ended FY2014 and for the period
commencing from 1 March 2014 up to the Latest Practicable Date (the Relevant Period).
Save as disclosed below and in the sections entitled General Information on our Group
Restructuring Exercise and Acquisition of Steeltema by our Company of this Offer
Document, our Group does not have any other material transactions with any of its interested
persons during the Relevant Period.
INTERESTED PERSONS
The following persons or companies are considered interested persons or related persons for
the purposes of this section and the section entitled Interested Person Transactions -
Potential Conflicts of Interests of this Offer Document.
(a) BSL Venture
BSL Venture, a company incorporated in Malaysia, is an investment holding company.
BSL Venture is 16% owned by Matthew Law, 16% owned by Arica Walters, 16% owned by
Adam Law, 16% owned by Jay Law, 20% owned by Roland Law and 16% owned by Peggy
Lee. Matthew Law, Adam Law and Roland Law are also directors of BSL Venture.
(b) Matthew Law
Matthew Law, as our Executive Director and CEO and our Controlling Shareholder, is an
interested person of our Company.
(c) Arica Walters
Arica Walters, as our Executive Director and COO, is an interested person of our
Company.
(d) Adam Law
Adam Law, as our Executive Director (Singapore and Johor Operations), is an interested
person of our Company.
(e) Roland Law
Roland Law, as an immediate family member of our Executive Director and CEO, Matthew
Law, our Executive Director and COO, Arica Walters and our Executive Director
(Singapore and Johor Operations), Adam Law, is an interested person of our Company.
(f) Peggy Lee
Peggy Lee, as the founding shareholder and Controlling Shareholder of our Company, is
an interested person of our Company.
(g) Designworx Limited
Designworx Limited, a company incorporated in New Zealand, was engaged in the
distribution and resale of Versalink furniture in New Zealand and as at the Latest
Practicable Date was a dormant company.
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Designworx Limited, being 50.0% owned by Arica Walters and 50.0% owned by her
spouse, Bevan Walters, is an Associate of Arica Walters and is as such, an interested
person of our Company. Arica Walters and Bevan Walters are also directors of
Designworx Limited.
(h) FFCL
FFCL, a company incorporated in the PRC, was engaged in the manufacture and sale of
furniture and as at the Latest Practicable Date, FFCL does not have any significant
business activity.
As at the Latest Practicable Date, Adam Law was the ultimate holder of 100.0% of the
equity interest in FFCL. Between the establishment of FFCL up to 31 July 2014,
Jemaramas Jaya was the registered holder of such interest, holding in trust for Matthew
Law, Adam Law and Roland Law. On 31 July 2014, Matthew Law and Roland Law agreed
to transfer all their beneficial interests in FFCL to Adam Law and all the registered equity
interest in FFCL was formally transferred by Jemaramas Jaya to Adam Law upon the
issuance of a new business licence by the relevant authorities to FFCL. As such, Adam
Law is currently the sole legal and beneficial holder of all the equity interests in FFCL.
FFCL, being an Associate of Adam Law, is therefore treated as an interested person of the
Company.
PAST INTERESTED PERSON TRANSACTIONS
Sales and purchases of furniture products by Jemaramas Jaya to and from Designworx
Limited
During the Relevant Period, Jemaramas Jaya sold various furniture products to Designworx
Limited for distribution and resale in New Zealand. The total sales by Jemaramas Jaya to
Designworx Limited during the Relevant Period were as follows:
FY2012 FY2013 FY2014
From
1 March 2014
to the Latest
Practicable
Date
RM000 RM000 RM000 RM000
Sales of furniture products to
Designworx Limited 147 67 19
On 1 January 2012, 1 February 2012 and 5 April 2012, Jemaramas Jaya repurchased from
Designworx Limited certain stock of furniture products of a value of RM87,823, RM51,808 and
RM23,453 respectively.
The respective sales and purchases were entered into on arms length basis and on normal
commercial terms, as they were at prices consistent with the standard export prices for such
products sold to other third party customers. As at the Latest Practicable Date, all amounts due
to/from Jemaramas Jaya from/to Designworx Limited had been fully settled. Our Group has
since ceased business transactions with Designworx Limited, and such transactions are not
expected to recur.
Designworx Limited has ceased business activity since early 2014 and is currently dormant.
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Purchases of raw materials, components and furniture products from FFCL
During the Relevant Period, Jemaramas Jaya purchased raw materials, components and
furniture products from FFCL. The purchases were entered into on arms length basis. The
total purchases from FFCL during the Relevant Period were as follows:
FY2012 FY2013 FY2014
From 1
March 2014
to the Latest
Practicable
Date
RM000 RM000 RM000 RM000
Purchases of raw materials,
components and furniture
products from FFCL
5,819 5,994 5,797
As at the Latest Practicable Date, all amounts due from Jemaramas Jaya to FFCL had been
fully settled. Our Group has since ceased to purchase any raw materials, components or
furniture products from FFCL and such transactions are not expected to recur.
Acquisition of trademark by Jemaramas Jaya from Arica Walters
On 30 December 2013, Jemaramas Jaya acquired the Versalink trademark which is
registered in Malaysia, from Arica Walters for a purchase consideration of RM10. The
transaction was not on an arms length basis as we believe that the value of the trademark is
higher than the purchase consideration. This is a one off transaction and we do not expect
such transactions to recur in the future.
Acquisition of trademarks by Jemaramas Jaya from Adam Law
On 6 May 2014, Jemaramas Jaya acquired the Versalink trademark and the vL Versalink
trademark which are registered in the PRC from Adam Law for a purchase consideration of
RM10 each respectively.
The transactions were not on an arms length basis as we believe that the values of the
trademarks are higher than the purchase considerations. These were one off transactions and
we do not expect such transactions to recur in the future.
Disposal of motor vehicles by our Group
In February 2013, Jemaramas Jaya disposed of one (1) motor vehicle each to Arica Walters
and Roland Law, and Versalink Marketing disposed of one (1) motor vehicle to Matthew Law,
for a cash consideration of RM5,000 for each of the three (3) motor vehicles. The transactions
were not on an arms length basis. As at the time of the respective sale, the book value of the
motor vehicle sold to Roland Law was RM48,820, and the book value of the motor vehicles
sold to Matthew Law and Arica Walters were nil. These were one off transactions and we do
not expect such transactions to recur.
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Transactions with Fame Garments
During the Relevant Period, Jemaramas Jaya and Versalink Marketing purchased uniforms for
their workers from Fame Garments, a sole proprietorship in Malaysia. Fame Garments is
principally engaged in the business of trading and manufacturing of garments and textile
products and is owned by Lee Ah Ngeou, the brother of Peggy Lee.
Purchases from Fame Garments by each of Jemaramas Jaya and Versalink Marketing during
the Relevant Period were as follows:
FY2012 FY2013 FY2014
From 1 March 2014
to the Latest
Practicable Date
RM000 RM000 RM000 RM000
Jemaramas Jaya 10 3
Versalink Marketing 13 54
The purchases from Fame Garments by each of Jemaramas Jaya and Versalink Marketing
were on normal commercial terms and on arms length basis.
We have ceased such transactions with Fame Garments since FY2014.
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS
Personal guarantees provided by Matthew Law, Arica Walters and Peggy Lee to secure
bank and credit facilities for the benefit of Jemaramas Jaya
As at the Latest Practicable Date, Matthew Law, Arica Walters and Peggy Lee had provided
personal guarantees to secure bank and credit facilities for the benefit of Jemaramas Jaya as
set out below:
Financial
Institution
Type of
facility
Total
amount of
facilities
granted
Personal
guarantees
provided by
Amount
guaranteed
Largest
amount
outstanding
during the
Relevant
Period
(Based on
month end
balances)
Amount
outstanding
as at the
Latest
Practicable
Date
RM000 RM000 RM000 RM000
UOB KL Overdraft, term
loans and
trade facilities
17,126 Matthew Law,
Arica Walters
and Peggy Lee
(joint and
several)
22,962 12,000 7,398
135
Financial
Institution
Type of
facility
Total
amount of
facilities
granted
Personal
guarantees
provided by
Amount
guaranteed
Largest
amount
outstanding
during the
Relevant
Period
(Based on
month end
balances)
Amount
outstanding
as at the
Latest
Practicable
Date
RM000 RM000 RM000 RM000
AmBank Overdraft and
trade facilities
2,600 Matthew Law,
Arica Walters
and Peggy Lee
(joint and
several)
2,600 1,248
MBB General
banking
facilities
800 Matthew Law,
Arica Walters
and Peggy Lee
(joint and
several)
1,100 300
There were no fees paid to Matthew Law, Arica Walters and Peggy Lee, for providing the above
personal guarantees. Accordingly, the above transactions are not carried out on an arms
length basis nor on normal commercial terms but are nonetheless not prejudicial to the
interests of our Group. The largest aggregate amount guaranteed was RM22,962,000 during
the Relevant Period.
Following the admission of our Company to Catalist, we intend to request for the discharge of
the above personal guarantees by Matthew Law, Arica Walters and Peggy Lee and replace
them with corporate guarantees provided by our Group. Our Directors do not expect any
material change in the terms and conditions of the relevant credit facilities arising from the
discharge of the personal guarantees. Should any of the financial institutions disagree to the
release and we fail to secure alternative facilities on terms similar to those applicable to our
current facilities, Matthew Law, Arica Walters and Peggy Lee will continue to guarantee the
facilities.
Rental arrangement with BSL Venture
In June 2014, Versalink Marketing entered into a lease agreement with BSL Venture, an
investment holding company incorporated in Malaysia, to lease a factory building from BSL
Venture, the said factory building, with a built up floor area of approximately 1,190 m
2
, is
located at No. 19, Jalan SiLC 1/6 in the state of Johor and is used as a showroom, office and
warehouse. The tenure of the lease is for a period of three (3) years commencing from 1 June
2014 and at a rental amount of approximately RM19,200 per month. The monthly rental
charged by BSL Venture represents approximately four per cent. (4.0%) discount to the market
rental value determined by an independent valuer. Pursuant to the terms of the lease, we have
also paid to BSL Venture a security deposit equivalent to approximately half a months rental.
The aggregate rental paid by our Group since commencement of the rent up to the Latest
Practicable Date was RM19,177.50.
Under the terms of the lease, Versalink Marketing shall have an option to renew the lease for
a further three (3) year period at a rental amount equivalent to the then prevailing market value
determined by an independent valuer. Any renewal of the lease shall be subject to the then
applicable listing rules.
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In the event that BSL Venture intends to dispose of the factory building, BSL Venture shall give
Versalink Marketing the first right of refusal to purchase the factory building from BSL Venture.
BSL Venture shall provide not less than two (2) months notification to Versalink Marketing to
contemplate purchasing the factory building.
Although the transaction above is not conducted on an arms length basis, it is beneficial to our
Group and we intend to continue with such lease for so long as it is beneficial to our Group.
OTHER TRANSACTIONS
We set forth below transactions involving persons connected to our Group but which do not fall
within the ambit of the definition of an interested person transaction under Chapter 9 of the
Listing Manual.
Transactions with Steeltema
1. Purchases of metal parts and components from Steeltema
Steeltema is a company which we acquired on 22 July 2014. Prior to this acquisition, the
shareholders of Steeltema were Arica Walters, Bevan Walters and Tan Moon Chuan, an
unrelated third party. Jemaramas Jaya purchases metal parts and components from
Steeltema. The purchases were at prices comparable to other suppliers of metal parts
and components. The total purchases from Steeltema during the Relevant Period up to
the point when Steeltema became a subsidiary of our Company were as follows:
FY2012 FY2013 FY2014
From
1 March 2014
to the date of
acquisition
of Steeltema
by our
Company
RM000 RM000 RM000 RM000
Purchases of metal parts
and components from
Steeltema
431 689 294
2. Corporate guarantees provided by Jemaramas Jaya to secure a hire purchase
facility for the benefit of Steeltema
Jemaramas Jaya has provided a corporate guarantee to secure all amounts due under the
hire purchase facility granted by BMW Credit (Malaysia) Sdn. Bhd. in December 2012 to
Steeltema in connection with its acquisition of a robot arm welder. The hire purchase
facility was for an amount of RM135,000 and as at the date on which Steeltema was
acquired by our Company (being 22 July 2014), the outstanding amount under the hire
purchase facility was approximately RM66,000. There were no fees received by
Jemaramas Jaya for providing the corporate guarantee.
3. Transactions with Aldo Furniture (PJ) Sdn. Bhd. (Aldo Furniture (PJ)) and Aldo
Furniture Sdn. Bhd. (Aldo Furniture)
Aldo Furniture (PJ) and Aldo Furniture are companies incorporated in Malaysia that carry
on the business of trading and sale of kitchen cabinets.
Arica Walters and Peggy Lee were formerly shareholders of Aldo Furniture (PJ) holding
25.17% and 25.17% of its issued shares respectively. 16.33% of the issued shares in Aldo
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Furniture (PJ) was held by Law Kian Chuan, the cousin of Arica Walters and the remaining
shareholding was held by an unrelated third party. In March 2013, Arica Walters, Peggy
Lee and Law Kian Chuan sold and transferred all their shares in Aldo Furniture (PJ) to two
(2) unrelated third parties.
Arica Walters and Peggy Lee were also formerly shareholders of Aldo Furniture holding
37.75% and 37.75% of its issued shares respectively. The remaining 24.5% in Aldo
Furniture was held by Law Kian Chuan, the cousin of Arica Walters. In March 2013, Arica
Walters and Peggy Lee sold and transferred all their shares in Aldo Furniture to Law Kian
Chuan and Lim Yet Yen, the spouse of Law Kian Chuan.
Versalink Marketing previously sold and supplied kitchen cabinets on an OEM basis to
Aldo Furniture (PJ) and Aldo Furniture. Sales by Versalink Marketing to Aldo Furniture
(PJ) and Aldo Furniture during the Relevant Period were as follows:
FY2012 FY2013 FY2014
From
1 March 2014
to the Latest
Practicable
Date
RM000 RM000 RM000 RM000
Aldo Furniture (PJ) 225 36
Aldo Furniture 158 17
The sales by Versalink Marketing to Aldo Furniture (PJ) and Aldo Furniture were on
normal commercial terms and on an arms length basis at prices comparable to what
Versalink Marketing charged to its other customers. Versalink Marketing ceased to supply
such products to Aldo Furniture (PJ) and Aldo Furniture since January 2013.
GUIDELINES AND REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON
TRANSACTIONS
All future interested person transactions will be properly documented and submitted to our
Audit Committee for periodic review to ensure that they are carried out on an arms length
basis, on normal commercial terms and will not be prejudicial to the interests of our minority
Shareholders. Our Audit Committee will adopt the following procedures when reviewing
interested person transactions.
In relation to any purchase of products or procurement of services from interested persons,
successful quotes from at least two (2) unrelated third parties in respect of the same or
substantially the same type of transactions will be used as comparison wherever possible. The
purchase price or procurement price shall not be higher than the most competitive price of the
two (2) comparative prices from the two (2) unrelated third parties. Our Audit Committee will
review the comparable transactions, taking into account, the suitability, quality and cost of the
product or service, and the experience and expertise of the supplier.
In relation to any sale of products or provision of services to interested persons, the price and
terms of two (2) other completed transactions of the same or substantially the same type of
transactions to unrelated third parties are to be used as comparison wherever possible. The
interested persons shall not be charged at rates lower than that charged to the unrelated third
parties.
When renting properties from or to an interested person, our Audit Committee shall take
appropriate steps to ensure that such rent is commensurate with the prevailing market rates,
including adopting measures such as making relevant enquiries with landlords of similar
properties and obtaining suitable reports or reviews published by property agents (as
138
necessary), including independent valuation report by a property valuer, where necessary
and/or appropriate. The rent payable shall be based on the most competitive market rental rate
of similar properties in terms of size and location, based on the results of the relevant
enquiries.
In the event that it is not possible for appropriate information (for comparative purposes) to be
obtained, our Audit Committee will determine whether the price, fees and/or the other terms
offered by or to the interested persons are fair and reasonable, and approve such interested
person transaction. In so determining, our Audit Committee will consider whether the price,
fees and/or other terms is in accordance with usual business practices and pricing policies and
consistent with the usual margins and/or terms to be obtained for the same or substantially
similar types of transactions to determine whether the relevant transaction is undertaken at an
arms length basis and on normal commercial terms.
All interested person transactions above S$100,000 are to be approved by a member of our
Audit Committee who shall not be an interested person in respect of the particular transaction.
All interested person transactions below S$100,000 are to be approved by our Group Finance
Director for the time being or such other senior executive(s) of our Company designated by our
Audit Committee from time to time for such purpose.
Any contracts to be made with an interested person shall not be approved unless the pricing
is determined in accordance with our usual business practices and policies, consistent with the
usual margin given or price received by us for the same or substantially similar type of
transactions between us and unrelated parties, and the terms are no more favourable to the
interested person than those extended to or received from unrelated parties.
In addition, we shall monitor all interested person transactions entered into by us categorising
the transactions as follows:
(a) a category one interested person transaction is one where the value thereof is equal to
or in excess of three per cent. (3.0%) of the NTA of our Group; and
(b) a category two interested person transaction is one where the value thereof is below
three per cent. (3.0%) of the NTA of our Group.
Category one interested person transactions must be approved by our Audit Committee prior
to entry. Category two interested person transactions need not be approved by our Audit
Committee prior to entry but shall be reviewed on a quarterly basis by our Audit Committee.
In respect of all interested person transactions, we shall adopt the following policies:
(a) In the event that a member of our Audit Committee is interested in any interested person
transaction, he will abstain from deliberating, reviewing and/or approving that particular
transaction.
(b) We shall maintain a register to record all interested person transactions which are
entered into by our Group, including any quotations obtained from unrelated parties to
support the terms of the interested person transactions.
(c) We shall incorporate into our internal audit plan a review of all interested person
transactions entered into by our Group.
(d) Our Audit Committee shall review the internal audit reports at least half-yearly to ensure
that all interested person transactions are carried out on an arms length basis and in
accordance with the procedures outlined above. Furthermore, if during these periodic
reviews, our Audit Committee believes that the guidelines and procedures as stated
above are not sufficient to ensure that the interests of minority Shareholders are not
prejudiced, we will adopt new guidelines and procedures. The Audit Committee may
request for an independent financial advisers opinion as it deems fit.
139
We shall ensure that all interested person transactions comply with the provisions in Chapter
9 of the Listing Manual, and if required, we will seek independent Shareholders approval for
such transactions. In accordance with Rule 919 of the Listing Manual, interested persons and
their Associates shall abstain from voting on resolutions approving interested person
transactions involving themselves and our Group. In addition, such interested persons shall
not act as proxies in relation to such resolutions unless voting instructions have been given by
the Shareholder(s).
Our Board of Directors will ensure that all disclosures, approvals and other requirements on
interested person transactions, including those required by prevailing legislation, the Listing
Manual and relevant accounting standards, are complied with. We will disclose in our annual
report the aggregate value of interested person transactions during the financial year.
POTENTIAL CONFLICTS OF INTERESTS
All our Directors have a duty to disclose their interests in respect of any transaction in which
they have any personal material interest or any actual or potential conflict of interest (including
a conflict that arises from their directorship or employment or personal investment in any
corporation). Upon such disclosure, such Directors will not participate in any proceedings of
our Board and shall abstain from voting in respect of any such transaction where the conflict
arises.
Designworx Limited, a company incorporated in New Zealand, was engaged in the distribution
and resale of Versalink furniture in New Zealand and as at the Latest Practicable Date was a
dormant company. Designworx Limited is 50.0% owned by Arica Walters and 50.0% owned by
her spouse, Bevan Walters. Arica Walters and Bevan Walters are also directors of Designworx
Limited.
As at the Latest Practicable Date, Adam Law was the ultimate holder of 100.0% of the equity
interest in FFCL. Between the establishment of FFCL up to 31 July 2014, Jemaramas Jaya was
the registered holder of such interest, holding in trust for Matthew Law, Adam Law and Roland
Law. On 31 July 2014, Matthew Law and Roland Law agreed to transfer all their beneficial
interests in FFCL to Adam Law and all the registered equity interest in FFCL was formally
transferred by Jemaramas Jaya to Adam Law upon the issuance of a new business licence by
the relevant authorities to FFCL. As such, Adam Law is currently the sole legal and beneficial
holder of all the equity interests in FFCL. FFCL is therefore treated as an interested person of
the Company. As at the Latest Practicable Date, FFCL did not have any significant business
activity.
For further details, please refer to the section entitled Interested Person Transactions of this
Offer Document.
Non-Competition Deeds
To mitigate any potential conflicts of interests, our Company has entered into a
non-competition deed with each of Designworx Limited and FFCL (collectively, the
Non-Competition Deeds) on 19 August 2014.
Under the Non-Competition Deeds, each of Designworx Limited and FFCL irrevocably and
unconditionally undertook that it will not carry on or be engaged, concerned, provide expertise
or be interested directly or indirectly in, any business that may compete, directly or indirectly,
with any business carried on from time to time by our Company or any of our present or future
subsidiaries, that is in the business of the design, manufacture and supply of a wide range of
office furniture and the provision of workspace consulting and planning and the provision of
related services.
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The Non-Competition Deeds shall commence on the date on which our Shares commence
trading on Catalist and shall terminate on the earliest of the following dates:
(a) the date on which our Company ceases to be listed on Catalist or the Main Board of the
SGX-ST;
(b) the date on which Designworx Limited or FFCL (as the case may be) is wound up;
(c) the date on which Arica Walters or Adam Law, as the case may be, ceases to be an
interested person; and
(d) in the event that our Company does not exercise its right of first refusal and call option
in respect of the shares in Designworx Limited or the equity interest in FFCL (as the case
may be), the date on which Arica Walters and Bevan Walters dispose their entire
shareholding in Designworx Limited to independent third parties or Adam Law disposes
his entire equity interest in FFCL to independent third parties.
Right Of First Refusal And Call Option Agreements
Our Company has also entered into a right of first refusal and call option agreement with the
shareholders of Designworx Limited (being Arica Walters and Bevan Walters) and the
registered holder and beneficial owner of the entire paid up equity interest of FFCL (being
Adam Law) (collectively, the ROFR and Call Option Agreements) on 19 August 2014.
Under the ROFR and Call Option Agreements, Arica Walters, Bevan Walters and Adam Law (as
the case may be) granted our Company the following:
(a) a right of first refusal in respect of any sale of their shares in Designworx Limited (Option
Shares) or his equity interest in FFCL (as the case may be) (Option Equity Interest);
and
(b) in consideration of a fee of S$1.00, the right of our Company, in its absolute discretion,
at any time, to require Arica Walters and/or Bevan Walters or Adam Law to sell or
otherwise transfer the Option Shares or Option Equity Interest (as the case may be) to our
Company or its nominee in accordance with the terms and conditions of the ROFR and
Call Option Agreements.
The ROFR and Call Option Agreements shall commence on 19 August 2014 and shall
terminate upon each of Arica Walters and Bevan Walters or Adam Law (as the case may be)
ceasing to be an interested person.
Save as disclosed in the sections entitled Interested Person Transactions, General
Information on our Group History and Development, General Information on our Group
Major Suppliers, Restructuring Exercise and Acquisition of Steeltema by our Company of
this Offer Document, and save in respect of Designworx Limited and FFCL, none of our
Directors, Executive Officers, Substantial Shareholders or any of their Associates has any
material interest, direct or indirect, in:
(a) any material transactions to which we were or are to be a party;
(b) any company carrying on the same business or a similar trade which competes materially
and directly with the existing businesses of our Group; and
(c) any enterprise or company that is our customer or supplier of goods and services.
141
Interests of Experts
No expert is interested, directly or indirectly, in the promotion of, or in any property or assets
which have, within the two (2) years preceding the date of this Offer Document, been acquired
or disposed of by or leased to our Company or any of its subsidiaries or are proposed to be
acquired or disposed of by or leased to our Company or any of its subsidiaries.
No expert is employed on a contingent basis by our Company or any of our subsidiaries; or has
a material interest, whether direct or indirect, in our Shares or the shares of our subsidiaries;
or has a material economic interest, whether direct or indirect, in our Company, including an
interest in the success of the Invitation.
Interests of Sponsor and Issue Manager, Underwriter and Placement Agent, and
Malaysian Financial Adviser to Jemaramas Jaya
In the reasonable opinion of our Directors, save as disclosed below and in the section entitled
General and Statutory Information Management, Underwriting and Placement
Arrangements of this Offer Document, our Company does not have any material relationship
with the Sponsor and Issue Manager, the Underwriter and Placement Agent or any other
financial adviser in relation to the Invitation:
(a) CIMB Bank is the Sponsor and Issue Manager of the Invitation;
(b) CIMB Securities is the Underwriter and Placement Agent of the Invitation;
(c) CIMB Bank is the Receiving Bank of the Invitation;
(d) CIMB Bank will be the continuing sponsor of our Company for an initial period of three (3)
years from the date our Company is admitted and listed on Catalist; and
(e) cfSolutions is the Malaysian Financial Adviser to Jemaramas Jaya.
142
DIRECTORS, MANAGEMENT AND STAFF
DIRECTORS
Our Board of Directors is entrusted with the responsibility for the overall management of our
Group. The particulars of our Directors are set out below:
Name Age Address Principal Occupation
Dr Wilson Tay 64 Lot 6119 Jalan Haji Salleh,
Batu 5 , Off Jalan Meru,
41050 Klang, Selangor Darul
Ehsan, Malaysia
Independent Non-Executive
Chairman
Matthew Law 39 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Executive Director and CEO
Arica Walters 39 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Executive Director and COO
Adam Law 36 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Executive Director
(Singapore and Johor
Operations)
Chin Chee Choon 41 100 Beach Road #30-00,
Shaw Towers, Singapore
189702
Independent Director
Chow Wen Kwan 40 1 Shenton Way #21-06
Singapore 068803
Independent Director
Our Directors career and academic history, business experience and general areas of
responsibility within our Group are set out below:
Dr Wilson Tay joined our Group on 21 August 2014 and is our independent Non-Executive
Chairman. He is currently the Chief Executive Officer and Principal Consultant of Omni View
Consulting (M) Sdn Bhd, a strategic human capital and corporate transformation consulting
firm. At the end of 2013, he retired from his position as the Professor of Management and Dean
of the Faculty of Business, Communications and Law at INTI International University in
Malaysia. He previously worked as the Chief Executive Officer of Malaysian Institute of
Management, Vice President and Head of Technopreneur Development Flagship of Multimedia
Development Corporation (Malaysia), Chief Executive Officer of TEC Asia Centre Sdn Bhd in
Malaysia and was the Director of Corporate Services at the Art Gallery of Western Australia.
Having worked in these senior management positions, he is well qualified and experienced in
corporate management.
Dr Wilson Tay is qualified as a Chartered Accountant and Chartered Secretary. He is a Fellow
of the Institute of Chartered Accountants in Australia, Fellow of the Australian Society of
Certified Practicing Accountants in Australia, Fellow of the Institute of Chartered Secretaries
and Administrators in Australia and Fellow of the Institute of Corporate Managers, Secretaries
and Administrators Ltd. in Australia. He holds a Bachelors Degree in Business (Accounting),
Graduate Diploma in Business and Administration and Master of Business from Western
Australian Institute of Technology in Australia, a Doctorate of Management (with Distinction)
from the International Management Centres validated by Southern Cross University in
Australia.
143
Matthew Law joined our Group in January 1994 and is currently our Executive Director and
CEO. He has been our CEO since 2012 and is responsible for our Groups strategic direction
and expansion plans, developing and maintaining relationships with our customers and
suppliers as well as overseeing our Groups general operations, in particular, the sales, sales
support, marketing, research and development, QA and QC and purchasing departments. He
started out as a Sales, Production and Purchasing Assistant in our Group, and later took on
various other positions including Sales Executive (Export), Export Sales cum Production
Coordinator, and Export Manager. He was previously a director of Jemaramas Jaya and is
currently a director of Versalink Technology.
Matthew Law holds a Bachelors Degree in Business Administration from Camden University
of the USA.
He was previously a committee member and assistant secretary general of the Kuala Lumpur
and Selangor Furniture Industry Association (KLSFIA) since 2001, and has been the vice
president of KLSFIA since 2011.
Arica Walters joined our Group in June 1995 and was appointed our Executive Director and
COO in 2014. She is responsible for the strategic planning for the business expansion of our
Group, overseeing corporate compliance in operational matters as well as overseeing our
Groups general operations, in particular, the human resource and administration, finance and
accounts, logistics and warehouse, production, and information technology and business
development departments. She started out as an Export Assistant in our Group, and later took
on various other positions including Export Executive, Assistant Business Manager, Export
Manager, Export Director and Deputy Chief Executive Officer. She was previously a director of
Jemaramas Jaya and Versalink Marketing and is currently a director of Steeltema.
Arica Walters holds a Diploma in Business Administration, majoring in Marketing, from
Singapore Polytechnic and a Bachelors Degree in Business Studies from Charles Sturt
University of Australia.
Adam Law joined our Group in September 2005 and is currently our Executive Director
(Singapore and Johor Operations). He is in charge of the production, sales, project and site
management aspects of our Group and the technical aspects of our products. He also enforces
our Groups procedures and policies in the branch office of Jemaramas Jaya in Singapore and
oversees the operations of the branch office, with a focus on its production, sales, project and
site management and technical departments. He started off as and is still an executive director
of FFCL in the PRC, then he became a director of Jemaramas Jaya in September 2005.
Adam Law, holds a National Technical Certificate Grade 3 in Motor Vehicle Mechanics and a
Certificate of Apprenticeship in Automative Technology (Light Vehicles) from the Institute of
Technical Education, and a Certificate of Participation (Solid Edge with Synchronous
Technology Fundamental Training) from Esolid Solutions Sdn Bhd of Malaysia.
Chin Chee Choon is our Independent Director and was appointed to our Board on 21 August
2014. He is currently a director in the assurance department of Nexia TS Public Accounting
Corporation and heads the corporate governance and risk management services of the firm.
He has more than 17 years of experience in external audit, internal audit and risk management
with two Big Four accounting firms in Singapore, namely Deloitte & Touche and
PricewaterhouseCoopers, and two (2) US multinational corporations, Computer Sciences
Corporation and Murphy Oil Corporation, prior to joining Nexia TS Public Accounting
Corporation. He graduated with a Bachelors Degree in Accounting from the University of
South Australia, and he is a Fellow Certified Practicing Accountant of CPAAustralia, a Certified
Internal Auditor of the Institute of Internal Auditors, a Chartered Accountant of Singapore and
Certified Public Accountant of the Institute of Singapore Chartered Accountants and an
Ordinary Member of the Singapore Institute of Directors.
144
Chow Wen Kwan is our Independent Director and was appointed to our Board on 21 August
2014. He is currently a partner of ATMD Bird & Bird LLP in Singapore. Chow Wen Kwan has
more than 13 years of experience in legal practice and his practice focuses on mergers and
acquisitions, private equity as well as equity and debt capital markets. He had worked in Fried,
Frank, Harris, Shriver & Jacobson LLP in New York, Hogan Lovells in Hong Kong and White
& Case LLP and Drew & Napier LLC in Singapore. Chow Wen Kwan graduated with a Bachelor
of Laws from the National University of Singapore in 1998 and a Master of Laws from the
University of Virginia in 1999. He also holds a certificate in Governance as Leadership from the
Harvard Kennedy School. Chow Wen Kwan is qualified to practise in Singapore and New York,
USA.
Our Directors have the appropriate experience and expertise to act as directors of our
Company, as evidenced by their business and working experience set out above. Chin Chee
Choon and Chow Wen Kwan have prior experience as directors of public listed companies in
Singapore and are therefore familiar with the roles and responsibilities of a director of a public
listed company in Singapore.
Dr Wilson Tay, Matthew Law, Arica Walters and Adam Law have attended the Listed Company
Director Essentials Understanding the Regulatory Environment in Singapore: What Every
Director Ought to Know course conducted by the Singapore Institute of Directors and are
aware of the roles and responsibilities of a director of a public listed company in Singapore.
The list of present and past principal directorships of each Director over the last five (5) years
up to the Latest Practicable Date and excluding those held in our Company, is set out below:
Name Present Directorships Past Directorships
Dr Wilson Tay Group Corporations Group Corporations
Nil Nil
Other Corporations Other Corporations
Harrison Assessments
(Malaysia) Sdn. Bhd.
MIM-IMS Education Sdn. Bhd.
Malaysia Venture Capital
Management Berhad
Mind-Quest Consultancy
Sdn. Bhd.
Omni View Consulting (M)
Sdn. Bhd.
Vistage Malaysia Sdn Bhd
Matthew Law Group Corporations Group Corporations
Versalink Technology Jemaramas Jaya
BSL Venture FFCL
BSL Holdings Inc.
145
Arica Walters Group Corporations Group Corporations
Steeltema Jemaramas Jaya
Versalink Marketing
Designworx Limited
Labonik Industries Sdn. Bhd.
Aldo Furniture (PJ) Sdn. Bhd.
Aldo Furniture Sdn. Bhd.
Frezen MSC Sdn. Bhd.
(1)
Great Circuit Sdn. Bhd.
(1)
Hui Kian Furniture Sdn.
Bhd.
(1)
Major Top Sdn. Bhd.
(2)
Adam Law Group Corporations Group Corporations
Jemaramas Jaya Nil
Versalink (S)
FFCL Nil
Chin Chee Choon Group Corporations
Nil
Group Corporations
Nil
NTS Asia Advisory Sdn Bhd Charisma Energy Services
Limited
Goldtron Limited
(now known as ICP Ltd)
Nexia TS Public Accounting
Corporation
Chow Wen Kwan Group Corporations
Nil
Group Corporations
Nil
Hafary Holdings Limited
Ley Choon Group Holdings
Limited
SMJ International Holdings
Ltd.
Duty Free International
Limited
Weiye Holdings Ltd
Zhongxin Fruit And Juice
Limited
Notes:
1. These companies have been dissolved.
2. This company has been wound up.
146
EXECUTIVE OFFICERS
The day-to-day operations of our Group are entrusted to our Executive Directors who are
assisted by an experienced and qualified team of Executive Officers. The particulars of our
Executive Officers are set out below:
Name Age Address Designation
Bevan Walters 41 PT 11081 Solok Telok Batu 1
Taman AMJ Industrial Park
Shah Alam 40460, Selangor,
Malaysia
Head of Research and
Development and Managing
Director of Steeltema
Ong Ying Ling 46 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Group Finance Director
Ryonn Leong 33 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Manager (Export and
Marketing)
Henry Lim 49 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Manager (Production)
Yoon Hooi Eng 33 Lot 6119 Jalan Haji Salleh,
Ehsan, Malaysia
Group Accountant
Our Executive Officers career and academic history, business experience and areas of
responsibility within our Group are set out below:
Bevan Walters joined Steeltema in December 2011 and is currently its Managing Director.
Following the completion of our acquisition of Steeltema in 22 July 2014, he was appointed our
Head of Research and Development and is responsible for the research and development for
our Group. In 1989, he started his career as a junior technician at Konica Minolta New Zealand
Ltd. In 1992, he worked as a manager at Car Breakers Car Parts Specialists in New Zealand.
In 1999, he worked as a senior technician at Ocom Limited in New Zealand. From 2001 to
2005, he worked as a Branch Service Manager at Toshiba in New Zealand, prior to working as
a Sales Manager at HPL Waikato Limited from 2005 to 2006. He was appointed as a director
at HPL Auckland 2006 Limited in New Zealand which is currently dormant. He also served as
a director at Machinery Worx Limited in New Zealand from 2007 to 2010. Since 2008, he has
been serving as the Managing Director of Designworx Limited in New Zealand.
Bevan Walters completed a Foundation Introduction to Electrical-Electronic Engineering
course and obtained a New Zealand Certificate in Engineering (Mechanical) from Waikato
Polytechnic in New Zealand. He was awarded the Advanced Vocational Awards (Mechanical
Drawing) by the New Zealand Qualifications Authority.
Ong Ying Ling joined our Group in April 2012 and is currently our Group Finance Director. She
is responsible for the financial operations of our Group and is currently assisted by Ms Yoon
Hooi Eng, our Group Accountant who has 15 years of experience in the accounting and finance
fields. In 1988, she started her career as an Audit Senior I at BDO Binder, Certified Public
Accountants, in Malaysia. In 1994, she worked as an Audit Senior II at Ernst & Young, Certified
Public Accountants, in Malaysia. In 1995, she became the Group Finance Manager at Super
147
Enterprise Holdings Berhad, a company listed on the main market of Bursa Malaysia. In 2003,
she worked as the Group Internal Audit Manager of Super Enterprise Holdings Berhad, and
became the Group Finance and Administration Manager in 2004.
Ong Ying Ling has completed the following examinations conducted by the Malaysia
Association of Certified Public Accountants: Foundation Examination, Professional
Examination I and Professional Examination II (Module 5).
Ryonn Leong joined our Group in February 2012 and is currently our Manager (Export and
Marketing). He is responsible for the export and marketing aspects of our Group. In 2004, he
started his career as a Key Account Executive at HL Display (Malaysia) Sdn. Bhd. In 2006, he
worked as a Regional Product and Marketing Manager at HL Display Asia Pte Ltd. In 2009, he
worked as a Regional Key Account Manager at Polymer Composite Asia Sdn. Bhd. In 2010, he
worked as a Field Sales Manager at F&N Dairies (M) Sdn. Bhd.
Ryonn Leong holds a Diploma in Science (Information System Engineering) from Tunku Abdul
Rahman College in Malaysia, an Advanced Diploma in Commerce, majoring in Management
and Marketing, from Metropolitan College Malaysia (in collaboration with Curtin University of
Technology, Western Australia) and a Bachelors Degree in Commerce, majoring in
Management and Marketing, from Curtin University of Technology of Australia.
Henry Lim joined our Group in March 2012 and is currently our Manager (Production). He is
responsible for the overall planning and production operations of our Group. In 1990, he
started his career as a production officer at Applied Magnetics (M) Sdn. Bhd. In 1992, he
worked as a product specialist at Schering Plough (M) Sdn. Bhd. In 1994, he worked as a
technical sales executive at National Starch and Chemical (M) Sdn. Bhd. In 1996, he worked
as a capacity planner and production superintendent at Intel Technology (M) Sdn. Bhd. In
2003, he worked as Operation Manager at Novaris Technology (M) Sdn. Bhd. In 2008, he
worked as Production Manager at AIC Semiconductor Sdn. Bhd. In 2010, he worked as
Operation Manager at Teleplan Technology Services Sdn. Bhd.
Henry Lim holds a Bachelors Degree in Science from Campbell University of the USA. He was
awarded a Certificate of Achievement for successfully completing the ISO9000:2000 Auditor /
Lead Auditor Programme by the International Register of Certificated Auditors and IATCA
Compliant in 2004.
Yoon Hooi Eng joined our Group in January 2014 and is currently our Group Accountant. She
reports directly to our Group Finance Director and has been responsible for the financial
accounting and reporting function of our Groups business since she joined. She is also
involved in the oversight of our Groups treasury functions as well as the day to day accounting
and all financial operations of our Group. In 1999, she started her career as an account and
company secretarial assistant at KMK Management Services Sdn Bhd. In 2004, she worked as
an Audit Senior at Ng Chin Huan & Associates. In 2007, she worked as a Senior Accounts
Executive in GPA Holdings Berhad. In 2009, she worked as an Assistant Accountant at
Advance Synergy Berhad.
Yoon Hooi Eng holds a Third Level Group Diploma in Accounting from Systematic College in
Malaysia and is certified as a Member by the Association of Chartered Certified Accountants
and a Chartered Accountant by the Malaysian Institute of Accountants.
148
The list of present and past principal directorships of each Executive Officers over the last five
(5) years up to the Latest Practicable Date and excluding those held in our Company, is set out
below:
Bevan Walters Group Corporations Group Corporations
Steeltema Nil
Designworx Limited
HPL Auckland 2006 Limited
Nil
Ong Ying Ling Group Corporations Group Corporations
Nil Nil
Nil Nil
Ryonn Leong Group Corporations Group Corporations
Nil Nil
Nil Nil
Henry Lim Group Corporations Group Corporations
Nil Nil
Nil Nil
Yoon Hooi Eng Group Corporations Group Corporations
Nil Nil
Nil Ideal NMS Sdn. Bhd.
Kalbu Hartawan Sdn. Bhd.
(1)
Lexia Corporation Sdn.
Bhd.
(1)
Note:
1.
These companies have been dissolved.
Matthew Law, Arica Walters, and Adam Law are siblings. They, together with Jay Law, are the
children of our Technical Adviser, Roland Law, who is married to Peggy Lee (a Controlling
Shareholder of our Company). Bevan Walters is the husband of Arica Walters. Save as
disclosed in this section and the section titled Shareholders of this Offer Document, none of
our Directors, Executive Officers has any familial relationship with another Executive Officer
or with any Director or Substantial Shareholder of our Company.
149
To the best of our knowledge and belief, there is no arrangement or understanding with a
Controlling Shareholder, Substantial Shareholder, customer or supplier of our Company or
other person, pursuant to which any of our Directors or Executive Officers was selected as a
Director or an Executive Officer of our Company.
Relationships between our Directors, Controlling Shareholders, Substantial
Shareholders and Executive Officers
As at the Latest Practicable Date, excluding our Directors, Controlling Shareholders,
Substantial Shareholders and Executive Officers whose relationship with one another is
disclosed above and in the section entitled Shareholders Ownership Structure of the Offer
Document, there were three (3) employees (out of a total of 442 employees) who are related
to our Directors, Controlling Shareholders and Substantial Shareholders, and their particulars
are set out below:
Name Title
Relationship with our
Directors, Controlling
Shareholders and Substantial
Shareholders
Law Cha Bu@
Law Siew Mey
(1)
Manager Aunt of the Law Siblings
Ng Kian Weng Product and Design Executive Cousin of the Law Siblings
Wong Hon Mui Personal Assistant to our
Executive Director and CEO
Wife of Matthew Law
Note:
1. She occupies a managerial position in our Group.
150
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151
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES
Directors and Executive Officers
The remuneration (including salary, bonus, contributions to CPF, EPF, directors fees,
allowances and benefits-in-kind) paid during FY2013 and FY2014 and the estimated
remuneration to be paid for FY2015 to our Directors and Executive Officers for services
rendered to our Group are set out in the following remuneration bands:
Directors FY2013 FY2014
FY2015
(estimated)
Dr Wilson Tay Band A
Matthew Law Band A Band A Band A
Arica Walters Band A Band A Band A
Adam Law Band A Band A Band A
Chin Chee Choon Band A
Chow Wen Kwan Band A
Executive Officers
Bevan Walters Band A Band A Band A
Ong Ying Ling Band A Band A Band A
Ryonn Leong Band A Band A Band A
Henry Lim Band A Band A Band A
Yoon Hooi Eng Band A Band A
Note:
1. Remuneration band:
Band A refers to remuneration of an amount up to S$250,000 per annum.
Related Employees
The aggregate remuneration (which comprises salaries, bonuses and benefits-in-kind only) of
employees (excluding Executive Officers) who are related to our Directors, Substantial
Shareholders or Controlling Shareholders for each of FY2013 and FY2014 amounted to
approximately RM767,000 and RM880,000 respectively.
For the current financial year ending 28 February 2015, the estimated aggregate remuneration
(which comprises salaries, bonuses and benefits-in-kind only) of employees (excluding
Executive Officers) who are related to our Directors, Substantial Shareholders or Controlling
Shareholders is approximately RM1.2 million. For avoidance of doubt, these employees
include Peggy Lee, Roland Law, Jay Law, Law Cha Bu @ Law Siew Mey, Ng Kian Weng and
Wong Hon Mui. Please see the sections entitled Shareholders Ownership Structure and
Directors, Management and Staff Relationships Between Our Directors, Controlling
Shareholders, Substantial Shareholders and Executive Officers of this Offer Document for
further details.
The basis of determining the remuneration of these related employees is the same as the basis
of determining the remuneration of other unrelated employees.
The aggregate remuneration of each related employee would be subject to annual review and
majority approval of our Remuneration Committee to ensure that their remuneration packages
are in line with our Groups staff remuneration guidelines and commensurate with their
respective job scopes and levels of responsibilities. Remuneration of employees who are
related to our Directors, Controlling Shareholders and Substantial Shareholders exceeding
152
S$150,000 during the year will be disclosed in our annual reports. Any bonus, salary increase,
benefits-in-kind and/or promotion for these related employees will also be subject to the review
and approval of our Remuneration Committee. In addition, any future employment of
employees related to our Directors, Controlling Shareholders and/or Substantial Shareholders
and their proposed terms of employment will be subject to the review and approval of our
Nominating Committee. In the event that a member of our Remuneration Committee or
Nominating Committee is related to the employee under review, he will abstain from
participating in the review.
Pursuant to paragraph 9.4 in the Code of Corporate Governance 2012, the details of the
remuneration (which comprises salaries, bonuses and benefits-in-kind only) of employees who
are immediate family members of a director or the CEO, and whose remuneration exceeds
S$50,000 during the year should be disclosed in the annual report. This will be done on a
named basis with clear indication of the employees relationship with the relevant director or
the CEO. We will disclose in our annual report the aforesaid details.
EMPLOYEES
A breakdown of our full-time employees by function is as follows:
As at
29 February < As at 28 February >
Function 2012 2013 2014
Senior management 3 5 5
Research and development 10 14 14
Purchasing 6 5 5
Sales, sales support and marketing 37 41 43
QA and QC 16 20 21
Production 250 266 252
Logistics and warehouse 59 75 71
Finance and accounts 5 5 7
Human resource and administration 12 14 16
Information technology 2 1 1
Total 400 446 435
We do not experience any significant seasonal fluctuations in our number of employees. We
do not employ any temporary or part time employees.
For each of FY2012, FY2013 and FY2014, all our full-time employees were employed in
Malaysia.
We do not experience any significant seasonal fluctuations in our number of employees. We
do not employ any temporary or part time employees.
None of our employees is a member of any labour unions. The relationship and cooperation
between our management and employees is good and this is expected to continue in the
future. Whilst we have experienced short-lived strikes or work stoppages in the past which
were successfully resolved, none of such work stoppages or labour disputes has materially
affected our operations.
Pension or retirement benefits
Other than amounts set aside or accrued in respect of the relevant laws and regulations, we
have not set aside or accrued any amounts for any of our employees to provide for pension,
retirement or similar benefits to our employees.
153
SERVICE AGREEMENTS
We have entered into separate Service Agreements with our Executive Directors, namely our
Executive Director and CEO, Matthew Law, our Executive Director and COO, Arica Walters
and our Executive Director (Singapore and Johor Operations), Adam Law (the Executives).
The Service Agreements provide for, inter alia, the salary payable to the Executives, annual
leave, medical benefits, grounds of termination, and certain restrictive covenants (industry
non-compete obligations as set out below). In addition, the Executives are entitled to the use
of motorcars and their related expenses will be paid for by our Company. The Service
Agreements are for a period of two (2) years with effect from the date of admission of our
Company on Catalist (unless otherwise terminated by either party giving not less than six (6)
months notice (or such shorter period as may be mutually agreed between the parties) to the
other). We may also at any time forthwith terminate the Service Agreements of the Executives
if he or she, inter alia, shall be guilty of any dishonesty, gross misconduct or wilful neglect of
duty or shall commit any continued material breach of the provisions of his/her respective
Service Agreement, becomes bankrupt or persistently refuses to carry out any reasonable
lawful order given to him/her in the course of his/her employment or persistently fails diligently
to attend to his/her duties hereunder.
Pursuant to their respective Service Agreements, Matthew Law, Arica Walters and Adam Law
are entitled to a fixed monthly salary of RM38,500, RM38,500 and S$10,000 respectively, and
an annual wage supplement of two (2) months basic salary, to be pro-rated accordingly if the
period of employment of the Executives for the relevant financial year is shorter than six (6)
calendar months.
In addition, Matthew Law and Arica Walters are also entitled to a performance bonus (the
Performance Bonus) in respect of each financial year commencing from and including
FY2015, which is calculated based on the consolidated net profit before tax (NPBT) and
exceptional items of our Group, before taking into account the Performance Bonus as follows:
NPBT Performance Bonus
RM15 million NPBT RM30 million 0.8% of the amount of the NPBT in excess of RM15
million
RM30 million < NPBT RM40 million RM120,000 plus 0.5% of the amount of NPBT in
excess of RM30 million
NPBT > RM40 million RM170,000 plus 0.3 % of the amount of NPBT in
excess of RM40 million
All travelling, accommodation, entertainment and other out-of-pocket expenses reasonably
incurred by our Executives in the process of discharging their duties on behalf of our Group will
be borne by us.
Under each Service Agreement, the remuneration of the Executives shall be subject to annual
review by the Remuneration Committee.
Each of the Executives has agreed, inter alia, in his/her Service Agreement that he/she will not
during his/her employment with our Company and for a period of six (6) months from the date
of cessation of his/her employment with our Company be engaged or concerned or interested,
whether as a shareholder, director, employee, partner, agent or otherwise, in any business in
competition with the business of our Group carries on prior to the date that he/she ceases to
be an employee of our Company (other than as a holder of not more than five per cent. (5%)
of the total issued shares or debentures of any company listed on any recognised stock
exchange provided that he/she does not or shall not participate in or is otherwise involved in
the management of such company or solicit or attempt to solicit any customers or employees
from our Group).
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Upon termination of their respective Service Agreements, each of Matthew Law, Arica Walters
and Adam Law is entitled to a fixed monthly sum of RM26,950, RM26,950 and $7,000
respectively for the period of six (6) months from the date he/she ceases to be an employee
of our Company in consideration of his/her agreement to comply with his/her non-competition
and non-solicitation obligations in his/her respective Service Agreement.
Save as disclosed above, there are no existing or proposed service agreements between our
Company, our Group Companies and any of our Directors. Save as disclosed above, there are
no existing or proposed service agreements entered or to be entered into by our Directors with
our Company or any of our Group Companies which provide for benefits upon termination of
employment.
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VERSALINK PERFORMANCE SHARE PLAN
AND VERSALINK EMPLOYEE SHARE OPTION SCHEME
In conjunction with our listing on Catalist, we have adopted a performance share plan known
as the Versalink Performance Share Plan (the Performance Share Plan) and a share
option scheme known as the Versalink Employee Share Option Scheme (the ESOS), both
of which were approved by our Shareholders by way of written resolutions passed on 18
August 2014. The rules of our Performance Share Plan and ESOS are set out in Appendices
F and G to this Offer Document, respectively.
Both the Performance Share Plan and the ESOS will provide eligible participants (each a
Participant and collectively, the Participants) with an opportunity to participate in the
equity of our Company and to motivate them towards better performance through increased
dedication and loyalty. Both the Performance Share Plan and ESOS form an integral
component of our compensation plan and are designed primarily to reward and retain
employees whose services are vital to the growth and performance of our Company and/or our
Group.
The Performance Share Plan and ESOS are designed to complement each other. The aim of
implementing more than one incentive plan is to increase our Groups flexibility and
effectiveness in its continuing efforts to reward, retain and motivate employees to achieve
better performance by providing our Group with a more comprehensive set of remuneration
tools and further strengthen our competitiveness in attracting and retaining local and foreign
talent.
Unlike the ESOS whereby Participants are required to pay the exercise price of the Options (as
described below), the Performance Share Plan allows our Group to provide an incentive for
Participants to achieve certain specific performance targets by awarding fully paid Shares to
Participants after these targets have been met.
In addition, the assessment criteria for granting Options under the ESOS are more general
(e.g. based on length of service and general performance of our Group) and do not relate to
specific performance targets imposed by our Group. On the other hand, the assessment
criteria for granting of Awards (as described below) under the Performance Share Plan will be
based on specific performance targets or to impose time-based service conditions, or a
combination of both.
As at the date of this Offer Document, no Options has been granted under the ESOS and no
Awards has been granted under the Performance Share Plan.
A. VERSALINK PERFORMANCE SHARE PLAN
Objectives of the Performance Share Plan
The main objectives of the Performance Share Plan are as follows:
(a) to attract potential employees with relevant skills to contribute to our Group and to create
value for Shareholders;
(b) to instill loyalty to, and a stronger identification by the Participants with the long-term
prosperity of, our Group;
(c) to motivate the Participants to optimise their performance standards and efficiency and to
maintain a high level of contribution to our Group;
(d) to give recognition to the contributions made by the Participants to the success of our
Group; and
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(e) to retain key employees of our Group whose contributions are essential to the long-term
prosperity of our Group.
Summary of the Performance Share Plan
The following is a summary of the rules of the Performance Share Plan. Any capitalised term
as used throughout this section, unless otherwise defined, shall bear the meanings as defined
in Appendix F of this Offer Document.
(a) Eligibility
The Performance Share Plan allows for participation by confirmed employees of our Group
(including Executive Directors) and Non-Executive Directors (including Independent Directors)
who have attained the age of 21 years on or before the relevant date of Award provided that
none shall be an undischarged bankrupt at the relevant time, and who, in the absolute
discretion of the Remuneration Committee will be eligible to participate in the Performance
Share Plan.
Controlling Shareholders or their Associates who meet the above eligibility criteria are eligible
to participate in the Performance Share Plan provided that (a) the participation of, and (b) the
terms of each grant and the actual number of Awards granted under the Performance Share
Plan to, a Participant who is a Controlling Shareholder or an Associate of a Controlling
Shareholder shall be approved by our independent Shareholders in separate resolutions for
each such person.
There shall be no restriction on the eligibility of any Participant to participate in any other share
incentive schemes or share plans implemented or to be implemented by our Company or any
other company within our Group.
Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility for
participation in the Performance Share Plan may be amended from time to time at the absolute
discretion of the Remuneration Committee.
(b) Awards
Awards represent the right of a Participant to receive fully paid Shares free of charge, upon the
Participant achieving the prescribed performance targets.
The selection of the Participants and the number of Shares which are the subject of each
Award to be granted to a Participant in accordance with the Performance Share Plan shall be
determined at the absolute discretion of the Remuneration Committee, which shall take into
account criteria such as, inter alia, the rank, scope of responsibilities, performance, years of
service and potential for future development and contribution to the success of our Group.
In the case of a performance-related Award, the performance targets will be set by the
Remuneration Committee depending on each individual Participants job scope and
responsibilities. The performance targets to be set shall take into account both the medium
and long-term corporate objectives of our Group and the individual performance of the
Participant and will be aimed at sustaining long-term growth. The corporate objectives shall
cover market competitiveness, business growth and productivity growth. The performance
targets could be based on criteria such as sales growth, growth in earnings and returns on
investment. In addition, the Participants length of service with our Group, achievements of
past performance targets, ability to value-add to our Groups performance and development
and overall enhancement to Shareholder value, amongst others, will be taken into account.
Awards may be granted at any time in the course of a financial year, provided that in the event
that an announcement on any matter of an exceptional nature involving unpublished price
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sensitive information is imminent, Awards may only be vested and hence any Shares
comprised in such Awards may only be delivered on or after the second Market Day from the
date on which the aforesaid announcement is made.
An Award letter confirming the Award will be sent to each Participant as soon as reasonably
practicable after the Award is finalised, specifying, inter alia, in relation to the Award:
(i) (in relation to a performance-related Award), the performance targets and the
performance period during which the prescribed performance targets are to be met;
(ii) the number of Shares to be vested on the Participant; and
(iii) the date by which the Award shall be vested.
The Remuneration Committee will take into account various factors when determining the
method to arrive at the exact number of Shares comprised in an Award. Such factors include,
but are not limited to, the current price of the Shares, the total issued share capital of our
Company and the pre-determined Singapore dollar amount which the Remuneration
Committee decides that a Participant deserves for meeting his performance targets. For
example, Shares may be awarded based on predetermined Singapore dollar amounts such
that the quantum of Shares comprised in the Award is dependent on the closing price of the
Shares transacted on the Market Day that such Award is vested. Alternatively, the
Remuneration Committee may decide for absolute numbers of Shares to be awarded to
Participants irrespective of the price of the Shares. The Remuneration Committee shall
monitor the grant of Awards carefully to ensure that the size of the Performance Share Plan
will comply with the relevant Catalist Rules.
(c) Size and duration of the Performance Share Plan
The total number of Shares which may be delivered pursuant to the vesting of Awards on any
date, when added to the aggregate number of Shares issued and/or issuable in respect of (i)
all Awards granted under the Performance Share Plan; (ii) all Options granted under the
ESOS; and (iii) all other Shares issued and/or issuable under any other share-based incentive
schemes or share plans of our Company, shall not exceed 15.0% of the total number of issued
Shares (including treasury shares) of our Company from time to time.
Our Directors believe that the size of the Performance Share Plan will give our Company
sufficient flexibility to decide the number of Shares to be offered under the Performance Share
Plan. However, it does not indicate that the Remuneration Committee will definitely issue
Shares up to the prescribed limit. The Remuneration Committee will exercise its discretion in
deciding the number of Shares to be granted to each Participant under the Performance Share
Plan. This, in turn, will depend on, and be commensurate with, the performance and value of
the Participant to our Group.
The aggregate number of Shares that are available to the Controlling Shareholders and their
associates under the Performance Share Plan shall not exceed 25.0% of the total number of
Shares available under the Performance Share Plan. The number of Shares that are available
to each Controlling Shareholder or each of their Associates under the Performance Share Plan
shall not exceed 10.0% of the Shares available under the Performance Share Plan.
The Performance Share Plan shall continue in force at the discretion of the Remuneration
Committee, subject to a maximum period of ten (10) years commencing on the date on which
the Performance Share Plan is adopted by our Company in general meeting, provided always
that the Performance Share Plan may continue beyond the above stipulated period with the
approval of our Shareholders by ordinary resolution in general meeting and of any relevant
authorities which may then be required.
Notwithstanding the expiry or termination of the Performance Share Plan, any Awards made
to Participants prior to such expiry or termination will continue to remain valid.
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(d) Operation of the Performance Share Plan
The Remuneration Committee shall have the discretion to determine whether performance
targets have been met (whether fully or partially) or exceeded and/or whether the Participants
performance and/or contribution to our Company and/or any of our subsidiaries justifies the
vesting of an Award. In making any such determination, the Remuneration Committee shall
have the right to make reference to the audited results of our Company or our Group, as the
case may be, to take into account such factors as the Remuneration Committee may determine
to be relevant, such as changes in accounting methods, taxes and extraordinary events, and
further, the right to amend the performance targets if the Remuneration Committee decides
that it would be a fairer measure of performance.
Awards may only be vested and consequently any Shares comprised in such Awards shall only
be delivered upon the Remuneration Committee being satisfied that the Participant has
achieved the performance targets.
Subject to the prevailing legislation and the provisions of the Catalist Rules, our Company will
be delivering Shares to Participants upon vesting of their Awards by way of an issue of New
Shares or the transfer of existing Shares held as treasury shares to the Participants. In
determining whether to issue New Shares or to purchase existing Shares for delivery to
Participants upon the vesting of their Awards, our Company will take into account factors such
as the number of Shares to be delivered, the prevailing market price of the Shares and the
financial effect on our Company of either issuing New Shares or purchasing existing Shares.
New Shares allotted and issued on the release of an Award shall rank in full for all
entitlements, including dividends or other distributions declared or recommended in respect of
the then existing Shares, the record date for which is on or after the date of issue of the New
Shares or the date of transfer of treasury shares pursuant to the vesting of the Award, and shall
in all other respects rank pari passu with other existing Shares then in issue.
(e) Adjustments and alterations under the Performance Share Plan
(i) Variation of Capital
If a variation in the issued ordinary share capital of our Company (whether by way
of a capitalisation of profits or reserves or rights issue, capital reduction,
subdivision, consolidation, distribution or otherwise) shall take place, then:
(A) the class and/or number of Shares which are the subject of an Award to the
extent not yet vested; and/or
(B) the class and/or number of Shares over which future Awards may be granted
under the Performance Share Plan,
shall be adjusted by the Remuneration Committee to give each Participant the same
proportion of the equity capital of our Company as that to which he was previously
entitled and, in doing so, the Remuneration Committee shall determine, at its own
discretion, the manner in which such adjustment shall be made.
Unless the Remuneration Committee considers an adjustment to be appropriate, the
following events shall not normally be regarded as a circumstance requiring
adjustment:
(A) the issue of securities as consideration for an acquisition or a private placement
of securities;
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(B) the cancellation of issued Shares purchased or acquired by our Company by
way of a market purchase of such Shares undertaken by our Company on the
SGX-ST during the period when a share purchase mandate granted by
Shareholders (including any renewal of such mandate) is in force;
(C) the issue of Shares or other securities convertible into or with rights to acquire
or subscribe for Shares to its employees pursuant to any share option scheme
or share plan approved by Shareholders in general meeting, including the
Performance Share Plan; and
(D) any issue of Shares arising from the exercise of any warrants or the conversion
of any convertible securities issued by our Company.
Notwithstanding the provisions of the rules of the Performance Share Plan:
(A) the adjustment must be made in such a way that a Participant will not receive
a benefit that a Shareholder does not receive; and
(B) any adjustment (except in relation to a capitalisation issue) must be confirmed
in writing by the Auditors (acting only as experts and not as arbitrators) to be in
their opinion, fair and reasonable.
(ii) Modifications to the Performance Share Plan
Any or all the provisions of the Performance Share Plan may be modified and/or
altered at any time and from time to time by resolution of the Remuneration
Committee, provided that:
(A) any modification or alteration which would be to the advantage of the
Participants under the Performance Share Plan shall be subject to the prior
approval of Shareholders in a general meeting; and
(B) no modification or alteration shall be made without due compliance with the
Catalist Rules and such other regulatory authorities as may be necessary.
(f) Reporting requirements
Under the Catalist Rules, an immediate announcement must be made on the date of the grant
of an Award and provide details of the grant, including the following:
(i) date of grant;
(ii) market price of the Shares on the date of grant of the Award;
(iii) number of Shares granted under the Award;
(iv) number of Shares granted to Directors under the Award, if any; and
(v) the vesting period in relation to the Award.
The following disclosures (as applicable) will be made by our Company in our annual
report for so long as the Performance Share Plan continues in operation:
(A) the names of the members of the Remuneration Committee administering the
Performance Share Plan;
(B) in respect of the following Participants:
(1) Directors of our Company; and
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(2) Participants (other than those in paragraph (B)(1) above) who have
received Shares pursuant to the vesting of Awards granted under the
Performance Share Plan which, in aggregate, represent five per cent. (5%)
or more of the total number of Shares available under the Performance
Share Plan,
the following information will be required:
(AA) the name of the Participant;
(BB) the aggregate number of Shares comprised in Awards which have been
granted to such Participant during the financial year under review;
(CC) the aggregate number of Shares comprised in Awards which have been
granted to such Participant since the commencement of the Performance
Share Plan to the end of the financial year under review;
(DD) the aggregate number of Shares comprised in Awards which have been
issued and/or transferred to such Participants pursuant to the vesting of
Awards under the Performance Share Plan since the commencement of
the Performance Share Plan to the end of the financial year under review;
and
(EE) the aggregate number of Shares comprised in Awards which have not been
vested as at the end of the financial year under review; and
(C) such other information as may be required by the Catalist Rules or the
Companies Act.
(g) Role and composition of the Remuneration Committee
The Remuneration Committee shall be responsible for the administration of the Performance
Share Plan and shall consist of the Directors. As at the date of this Offer Document, the
Remuneration Committee comprises Dr Wilson Tay, Chin Chee Choon and Chow Wen Kwan.
The Remuneration Committee shall have the power, from time to time, to make and vary such
rules (not being inconsistent with the Performance Share Plan) for the implementation and
administration of the Performance Share Plan as they think fit including, but not limited to:
(i) imposing restrictions on the number of Awards that may be vested within each financial
year; and
(ii) amending performance targets, if by so doing it would be a fairer measure of performance
for a Participant or for the Performance Share Plan as a whole.
In compliance with the requirements of the Catalist Rules, any Participant of the Performance
Share Plan who is a member of the Remuneration Committee shall not be involved in the
deliberation or decision in respect of Awards granted to or to be granted to him.
Rationale for participation by the Controlling Shareholders and their Associates in the
Our Company acknowledges that the services and contributions of employees who are
Controlling Shareholders or Associates of our Controlling Shareholders are important to the
development and success of our Group. The extension of the Performance Share Plan to
confirmed full-time employees who are Controlling Shareholders and Associates of our
Controlling Shareholders allows our Group to have a fair and equitable system to reward
employees who have actively contributed to the progress and success of our Group. The
161
participation of the Controlling Shareholders and their Associates in the Performance Share
Plan will serve both as a reward to them for their dedicated services to our Group and a
motivation for them to take a long-term view of our Group.
Although Participants who are Controlling Shareholders or Associates of our Controlling
Shareholders may already have shareholding interests in our Company, the extension of the
Performance Share Plan to include them ensures that they are equally entitled, with the other
employees of our Group, who are not Controlling Shareholders or Associates of our Controlling
Shareholders, to take part and benefit from this system of remuneration. We are of the view
that a person who would otherwise be eligible should not be excluded from participating in the
Performance Share Plan solely by reason that he/she is a Controlling Shareholder or an
Associate of our Controlling Shareholders.
The specific approval of our independent Shareholders is required for the participation of such
persons as well as the actual number of and terms of such Awards. A separate resolution must
be passed for each of such Participant. In seeking such approval from our independent
Shareholders, clear justification as to the participation of our Controlling Shareholders and
their Associates, the number of and terms of the Awards to be granted to the Controlling
Shareholders and their Associates shall be provided. Accordingly, we are of the view that there
are sufficient safeguards against any abuse of the Performance Share Plan resulting from the
participation of employees who are Associates of our Controlling Shareholders.
Rationale for participation by Non-Executive Directors (including Independent
Directors)
While the Performance Share Plan caters principally to Group Employees, it is recognised that
there are other persons who make significant contributions to our Group through their close
working relationships with our Group, even though they are not employed within our Group.
Such persons include the Non-Executive Directors.
The Non-Executive Directors are persons from different professions and working backgrounds,
bringing to our Group their wealth of knowledge, experience, business expertise and contacts
in the business community. They play an important role in helping our Group shape its
business strategy by allowing our Group to draw on their diverse backgrounds and working
experience. It is crucial for our Group to attract, retain and incentivise the Non-Executive
Directors. By aligning the interests of the Non-Executive Directors with the interests of our
Shareholders, our Company aims to instill a sense of commitment on the part of the
Non-Executive Directors towards serving the short and long-term objectives of our Group.
Our Directors are of the view that including the Non-Executive Directors in the Performance
Share Plan will show our Companys appreciation for them and further motivate them in their
contribution towards the success of our Group. However, as their services and contributions
cannot be measured in the same way as the full-time employees of our Group, while it is
desired that participation in the Performance Share Plan be made open to the Non-Executive
Directors, any Awards that may be granted to any such Non-Executive Director would be
intended only as a token of our Companys appreciation.
For the purpose of assessing the contributions of the Non-Executive Directors, the
Remuneration Committee will propose a performance framework comprising mainly
non-financial performance measurement criteria, such as the extent of involvement and
responsibilities shouldered by the Non-Executive Directors. In addition, the Remuneration
Committee will also consider the scope of advice given, the number of contacts and size of
deals which our Group is able to procure from those contacts and recommendations made by
the Non-Executive Directors. The Remuneration Committee may also decide that no Awards
shall be made in any financial year or no grant and/or Award may be made at all.
It is envisaged that the vesting of Awards, and hence the number of Shares to be delivered to
the Non-Executive Directors based on the criteria set out above will be relatively small, in
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terms of the frequency and numbers. Based on this, the Directors are of the view that the
participation by the Non-Executive Directors in the Performance Share Plan will not
compromise the independent status of those who are Independent Directors.
Financial effects of the Performance Share Plan
Cost of Awards
Singapore Financial Reporting Standard 102 (FRS 102) relating to share-based payment
took effect for all listed companies from 1 January 2005. Participants will receive Shares and
the Awards would be accounted for as equity-settled share-based transactions, as described
in the following paragraphs.
The fair value of employee services received in exchange for the grant of the Awards will be
recognised as a charge to profit or loss over the period between the grant date and the vesting
date of an Award. The total amount of the charge over the vesting period is determined by
reference to the fair value of each Award granted at the grant date and the number of Shares
vested at the vesting date, with a corresponding credit to reserve account. Before the end of
the vesting period, at each accounting year end, the estimate of the number of Awards that are
expected to vest by the vesting date is subject to revision, and the impact of the revised
estimate will be recognised in profit or loss with a corresponding adjustment to the reserve
account. After the vesting date, no adjustment to the charge to profit or loss is made. This
accounting treatment has been referred to as the modified grant date method because the
number of Shares included in the determination of the expense relating to employee services
is adjusted to reflect the actual number of Shares that eventually vest but no adjustment is
made to changes in the fair value of the Shares since the grant date.
The amount charged to profit or loss would be the same whether our Company settles the
Awards by issuing New Shares or by purchasing existing Shares. The amount of the charge to
profit or loss also depends on whether or not the performance target attached to an Award is
measured by reference to the market price of the Shares. This is known as a market condition.
If the performance target is a market condition, the probability of the performance target being
met is taken into account in estimating the fair value of the Award granted at the grant date,
and no adjustments to amounts charged to profit or loss are made if the market condition is
not met. However, if the performance target is not a market condition, the fair value per Share
of the Awards granted at the grant date is used to compute the amount to be charged to profit
or loss at each accounting date, based on an assessment at that date of whether the
non-market conditions would be met to enable the Awards to vest. Thus, where the vesting
conditions do not include a market condition, there would be no charge to profit or loss if the
Awards do not ultimately vest.
In the event that the Participants receive cash, our Company shall measure the fair value of
the liability at the grant date. Until the liability is settled, our Company shall re-measure the fair
value of the liability at each accounting date and at the date of settlement, with changes in the
fair value recognised in profit or loss.
Share capital
The Performance Share Plan will result in an increase in our Companys issued share capital
where new Shares are issued to Participants. The number of New Shares issued will depend
on, among others, the size of the Awards granted under the Performance Share Plan. In any
case, the Performance Share Plan provides that the number of shares to be issued under the
Performance Share Plan will be subject to a maximum limit of 15.0% of our total issued
Shares. The aggregate number of Shares available under the Performance Share Plan shall
not exceed 15.0% of the total issued share capital of our Company post-Invitation and from
time to time. If instead of issuing New Shares to the Participants, treasury shares are
transferred to Participants or our Company pays the equivalent cash value, the Performance
Share Plan would have no impact on our Companys total number of issued Shares.
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NTA
The Performance Share Plan will result in a charge to our Companys profit or loss over the
period from the grant date to the vesting date of the Awards. The amount of the charge will be
computed in accordance with FRS 102. When the New Shares are issued under the
Performance Share Plan, there would be no effect on the NTA. However, if instead of issuing
New Shares to Participants, existing Shares are purchased for delivery to Participants, or our
Company pays the equivalent cash value, the NTA would be impacted by the cost of the Shares
purchased or the cash payment, respectively.
EPS
The Performance Share Plan will result in a charge to earnings equivalent over the period from
the grant date to the vesting date, computed in accordance with FRS 102. It should again be
noted that the delivery of Shares to Participants of the Performance Share Plan will generally
be contingent upon the Participants meeting the prescribed performance targets and
conditions.
B. VERSALINK EMPLOYEE SHARE OPTION SCHEME
Objectives of the ESOS
The objectives of the ESOS are as follows:
(a) to motivate participants to optimise their performance standards and efficiency and
to maintain a high level of contribution to our Group;
(b) to retain key employees and directors whose contributions are essential to the
long-term growth and profitability of our Group;
(c) to instill loyalty to, and a stronger identification by Participants with the long-term
(d) to attract potential employees with relevant skills to contribute to our Group and to
create value for our Shareholders; and
(e) to align the interests of Participants with the interests of our Shareholders.
Summary of the ESOS
The following is a summary of the rules of the ESOS. Any capitalised terms used herein shall,
unless otherwise defined, bear the same meanings as defined in Appendix G of this Offer
Document.
(a) Participants
The ESOS allows for participation by confirmed employees of our Group (including Executive
Directors) and Non-Executive Directors (including Independent Directors) who have attained
the age of 21 years on or before the relevant date of grant of the Options, provided that none
shall be an undischarged bankrupt or have entered into a composition with his creditors.
Controlling Shareholders and their Associates are eligible to participate in the ESOS, provided
that (i) the participation of, and (ii) the terms of any Options to be granted and the actual
number of Shares to be granted under the ESOS to a Participant who is a Controlling
Shareholder or an Associate of a Controlling Shareholder shall be approved by the
independent Shareholders in separate resolutions for each such person.
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(b) Administration
The ESOS shall be administered by the Remuneration Committee with powers to determine,
inter alia, the following:
(i) persons to be granted Options;
(ii) number of Options to be granted; and
(iii) recommendations for modifications to the ESOS.
As at the date of this Offer Document, our Remuneration Committee comprises Dr Wilson Tay,
Chin Chee Choon and Chow Wen Kwan. The Remuneration Committee will consist of Directors
(including Directors or persons who may be participants of the ESOS). A member of the
Remuneration Committee who is also a Participant of the ESOS must not be involved in any
deliberation or decision in respect of Options granted or to be granted to him.
(c) Size of the ESOS
The total number of Shares over which the Remuneration Committee may grant Options on any
date, when added to the number of Shares issued and issuable in respect of (i) all Options
granted under the ESOS; (ii) all Awards granted under the Performance Share Plan; and (iii)
all outstanding options or awards granted under such other share-based incentive schemes of
our Company, shall not exceed 15.0% of the number of issued Shares (including treasury
shares) on the day immediately preceding the Offer Date of the Option.
Our Directors believe that this limit gives us sufficient flexibility to decide upon the number of
Option Shares to offer our existing and new employees. The number of eligible Participants is
expected to grow over the years. Our Company, in line with its goal of ensuring sustainable
growth, is constantly reviewing its position and considering the expansion of its talent pool
which may involve employing new employees. The employee base, and thus the number of
eligible Participants, will increase as a result. If the number of Options available under the
ESOS is limited, our Company may only be able to grant a small number of Options to each
eligible Participant which may not be a sufficiently attractive incentive. Our Company is of the
opinion that it should have a sufficient number of Options to offer to new employees as well
as to existing ones. The number of Options offered must also be significant to serve as a
meaningful reward for contributions to our Group. However, it does not necessarily mean that
the Remuneration Committee will definitely issue Option Shares up to the prescribed limit. The
Remuneration Committee shall exercise its discretion in deciding the number of Option Shares
to be granted to each employee, which will depend on the performance and value of the
employee to our Group.
(d) Maximum entitlements
The aggregate number of Shares comprised in any Option to be offered to a Participant under
the ESOS shall be determined at the absolute discretion of the Remuneration Committee,
which shall take into account (where applicable) criteria such as rank, past performance, years
of service and potential development of that Participant.
The aggregate number of Shares in respect of which Options may be granted to Controlling
Shareholders and their Associates under the ESOS shall not exceed 25.0% of the total number
of Shares available under the ESOS. The aggregate number of Shares in respect of which
Options may be granted to any individual Controlling Shareholder or Associate of a Controlling
Shareholder under the ESOS shall not exceed ten per cent. (10.0%) of the total number of
Shares available under the ESOS.
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(e) Options, exercise period and exercise price
The Options that are granted under the ESOS may have exercise prices that are, at the
Remuneration Committees discretion, set at a price (the Market Price) equal to the average
of the last dealt prices for the Shares on Catalist for five (5) consecutive Market Days
immediately preceding the relevant date of grant of the relevant Option; or at a discount to the
Market Price (subject to a maximum discount of 20.0%). Options which are fixed at the Market
Price (the Market Price Option) may be exercised after the first anniversary of the date of
grant of that Option while Options exercisable at a discount to the Market Price (the
Discounted Option) may only be exercised after the second anniversary from the date of
grant of that Option. Options granted under the ESOS will have a life span of ten (10) years.
(f) Grant of Options
Under the rules of the ESOS, there are no fixed periods for the grant of Options. As such, offers
for the grant of Options may be made at any time at the discretion of the Remuneration
Committee. However, no Option shall be granted during the period of 30 days immediately
preceding the date of announcement of our Companys interim or final results (as the case may
be).
In addition, in the event that an announcement on any matter of an exceptional nature
involving unpublished price sensitive information is imminent, offers may only be made after
the second Market Day from the date on which the aforesaid announcement is made.
(g) Termination of Options
Special provisions in the rules of the ESOS deal with the lapse or earlier exercise of Options
in circumstances which include the termination of the Participants employment in our Group,
the bankruptcy of the Participant, the death of the Participant, a take-over of our Company and
the winding-up of our Company.
(h) Acceptance of Offer
The grant of Options shall be accepted within 30 days from the date of offer. Offers of Options
made to grantees, if not accepted by the closing date, will lapse. Upon acceptance of the offer,
the grantee must pay our Company a consideration of S$1.00.
(i) Rights of Shares arising from the exercise of Options
Shares arising from the exercise of Options are subject to the provisions of the Memorandum
and Articles of Association of our Company. The Shares so allotted will, upon issue, rank pari
passu in all respects with the then existing issued Shares, save for any dividend, rights,
allotments or distributions, the record date for which is prior to the relevant exercise date of
the Option. For such purposes, record date means the date as at the close of business on
which our Shareholders must be registered in order to participate in any dividends, rights,
allotments or other distributions (as the case may be).
(j) Duration of the ESOS
The ESOS shall continue in operation for a maximum duration of ten (10) years commencing
on the date on which the ESOS is adopted by our Company in general meeting and may be
continued for any further period thereafter with the approval of our Shareholders by ordinary
resolution in general meeting and of any relevant authorities which may then be required.
(k) Abstention from voting
Shareholders who are eligible to participate in the ESOS are to abstain from voting on any
Shareholders resolution relating to the ESOS, including, where applicable, (i) implementation
of the ESOS; (ii) discount quantum; and (iii) participation by, and Option granted to, Controlling
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Shareholders and their Associates, and should not accept nominations as proxies or otherwise
for voting in respect of such resolution unless specific instructions have been given in the
proxy instrument on how the votes are to be cast.
Grant of Discounted Options
Discounted Options will only be granted to deserving employees whose performances have
been consistently good and/or whose future contributions to our Group will be invaluable. The
ability to offer Discounted Options will operate as a means to recognise the performance of
Participants as well as to motivate them to continue to excel while encouraging them to focus
on improving the profitability and returns of our Group to a level that benefits our
Shareholders, when these are eventually reflected through an appreciation of our Share Price.
Discounted Options would be perceived in a more positive light by the Participants, inspiring
them to work hard and produce results in order to be offered Discounted Options as only
employees who have made significant contributions to the success and development of our
Group would be granted Discounted Options.
The flexibility to grant Discounted Options is also intended to cater to situations where the
stock market performance has overrun the general market conditions. In such events, the
Remuneration 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
of 20.0%); and
(b) determine the Participants to whom, and the Options to which, such reduction in exercise
prices will apply.
In determining whether to give a discount and the quantum of the discount, the Remuneration
Committee shall be at liberty to take into consideration factors including the performance of
our Company and our Group, the performance of the Participant concerned, the contribution
of the Participant to the success and development of our Group and the prevailing market
conditions.
At present, our Company foresees that Discounted Options may be granted principally in the
following circumstances:
(a) Firstly, where it is considered more effective to reward and retain talented employees by
way of a Discounted Option rather than a Market Price Option. This is to reward the
outstanding performers who have contributed significantly to our Groups performance
and the Discounted Option serves as an additional incentive to such Group employees.
Options granted by our Company on the basis of Market Price may not be as attractive
and realistic in the event of an overly buoyant market and inflated Share prices. Hence
during such period the ability to offer Discounted Options would allow our Company to
grant Options on a more realistic and economically feasible basis. Furthermore,
Discounted Options will give an opportunity to our Group employees to realise some
tangible benefits even if external events cause the Share price to remain largely static.
(b) Secondly, where it is more meaningful and attractive to acknowledge a Participants
achievements through a Discounted Option rather than paying him a cash bonus. For
example, Discounted Options may be used 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 to supplement cash rewards in lieu
of larger cash bonuses or annual wage supplements. Accordingly, it is possible that
merit-based cash bonuses or rewards may be combined with grants of Market Price
Options or Discounted Options, as part of eligible employees compensation packages.
The ESOS will provide our Group employees with an incentive to focus more on improving
the profitability of our Group thereby enhancing shareholder value when these are
eventually reflected through the price appreciation of our Shares after the vesting period.
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The Remuneration Committee will have the absolute discretion to grant Discounted Options,
to determine the level of discount (subject to a maximum discount of 20.0% of the Market
Price) and the grantees to whom, and the Options to which, such discount in the exercise price
will apply provided that our 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
not exceeding the maximum discount as aforesaid.
Our Company may also grant Options without any discount to the Market Price. Additionally,
our Company may, if it deems fit, impose conditions on the exercise of the Options (whether
such Options are granted at the Market Price or at a discount to the Market Price), such as
restricting the number of Shares for which the Option may be exercised during the initial years
following its vesting.
Rationale for participation by employees of our Group (including the Executive
Directors) in the ESOS
The extension of the ESOS to employees of our Group (including Executive Directors) allows
us to have a fair and equitable system to reward employees and Executive Directors of our
Group who have made and who continue to make significant contributions to the long-term
growth of our Group.
We believe that the grant of Options to the employees and Executive Directors of our Group
will enable us to attract, retain and provide incentives to its Participants to produce higher
standards of performance as well as encourage greater dedication and loyalty to our Group.
This would enable our Company to give recognition to past contributions and services as well
as to motivate participants generally to contribute towards the long-term growth of our Group.
Rationale for participation by the Controlling Shareholders and their Associates in the
ESOS
Our Company acknowledges that the services and contributions of employees who are
Controlling Shareholders and Associates of our Controlling Shareholders are important to the
development and success of our Group. The extension of the ESOS to confirmed full-time
employees who are Controlling Shareholders and Associates of our Controlling Shareholders
allows our Group to have a fair and equitable system to reward employees who have actively
contributed to the progress and success of our Group. The participation of the Controlling
Shareholders and their Associates in the ESOS will serve both as a reward to them for their
dedicated services to our Group and a motivation for them to take a long-term view of our
Group.
Although Participants who are Controlling Shareholders and Associates of our Controlling
Shareholders may already have shareholding interests in our Company, the extension of the
ESOS to include them ensures that they are equally entitled as the other employees of our
Group who are not Controlling Shareholders or Associates of our Controlling Shareholders, to
take part and benefit from this system of remuneration. We are of the view that a person who
would otherwise be eligible should not be excluded from participating in the ESOS solely by
reason that he/she is a Controlling Shareholder or an Associate of our Controlling
Shareholders.
The specific approval of our independent Shareholders is required for the participation of such
persons as well as the actual number of and terms of such Options. A separate resolution must
be passed for each of such Participant. In seeking such approval from our independent
Shareholders, clear justification as to the participation of our Controlling Shareholders and/or
their Associates, the number of and terms (including the exercise price) of the Options to be
granted to the Controlling Shareholder and/or their Associates shall be provided. Accordingly,
we are of the view that there are sufficient safeguards against any abuse of the ESOS resulting
from the participation of employees who are Controlling Shareholders and Associates of our
Controlling Shareholders.
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Rationale for participation by our Non-Executive Directors (including Independent
Directors) in the ESOS
Although our Non-Executive Directors are not involved in the day-to-day running of our
operations, they play an invaluable role in furthering the business interests of our Group by
contributing their experience and expertise. The participation by Non-Executive Directors in
the ESOS will provide our Company with a further avenue to acknowledge and recognise their
services and contributions to our Group as it may not always be possible to compensate them
fully or appropriately by increasing the directors fees or other forms of cash payment. For
instance, the Non-Executive Directors may bring strategic or other such value to our Company
which may be difficult to quantify in monetary terms. The grant of Options to Non-Executive
Directors will allow our Company to attract and retain experienced and qualified persons from
different professional backgrounds to join our Company as Non-Executive Directors, and to
motivate existing Non-Executive Directors to take extra efforts to promote the interests of our
Company and/or our Group.
In deciding whether to grant Options to the Non-Executive Directors, the Remuneration
Committee will take into consideration, among other things, the services and contributions
made to the growth, development and success of our Group and the years of service of a
particular Non-Executive Director. The Remuneration Committee may also, where it considers
relevant, take into account other factors such as the economic conditions and our Companys
performance.
In order to minimise any potential conflict of interests and not to compromise the independence
of the Non-Executive Directors, our Company intends to grant only a nominal number of
Options granted under the ESOS to such Non-Executive Directors.
Cost of Options granted under the ESOS to our Company
Any options granted under the ESOS, whether such options are Market Price Options or
Discounted Options, would have a fair value. In the event that such Options are granted at
prices below the fair value of the Options, there will be a cost to our Company. Such costs are
higher in the case of Discounted Options, where such Options are granted with exercise prices
set at a discount to the prevailing Market Price of our Shares. The cost to our Company of
granting Options with a discounted exercise price under the ESOS would be as follows:
(a) the exercise of an Option at a discounted exercise price would translate into a reduction
of the proceeds from the exercise of such Options, as compared to the proceeds that our
Company would have received from such exercise had the exercise been made at the
prevailing Market Price of our Shares. Such reduction of the exercise proceeds would
represent the monetary cost to our Company of granting Options with a discounted
exercise price;
(b) as the monetary cost of granting Options with a discounted exercise price is borne by our
Company, the earnings of our Company would effectively be reduced by an amount
corresponding to the reduced interest earnings that our Company would have received
from the difference in proceeds from an exercise price with no discount versus the
discounted exercise price. Such reduction would, accordingly, result in the dilution of our
Companys EPS; and
(c) the effect of the issue and allotment of new Shares upon the exercise of Options on our
Companys NAV per Share is accretive if the exercise price is above the NAV per Share,
but dilutive otherwise.
The costs as discussed above would only materialise upon the exercise of the relevant
Options. Share options have value because the option to buy a companys share for a fixed
price during an extended future time period is a valuable right, even if there are restrictions
attached to such an Option. As our Company is required to account for share-based awards
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granted to our employees, the cost of granting Options will affect our financial results as this
cost to our Company would be required to be charged to our Companys profit or loss
commencing from the time Options are granted. Subject as aforesaid, as and when Options
are exercised, the cash inflow will add to the NTA of our Company and its share capital base
will grow. Where Options are granted with subscription prices that are set at a discount to the
Market Prices for our Shares prevailing at the time of the grant of such Options, the amount
of the cash inflow to our Company on the exercise of such Options would be diminished by the
quantum of the discount given, as compared with the cash inflow that would have been
receivable by our Company had the Options been granted at the Market Price of our Shares
prevailing at the time of the grant.
The grant of Options will have an impact on our Companys reported profit under the
accounting rules in the Singapore Financial Reporting Standards which is effective for
financial periods beginning on or after 1 January 2005. It requires the recognition of an
expense in respect of Options granted. The expenses will be based on the fair value of the
Options at the date of grant (as determined by an option-pricing model) and will be recognised
over the vesting period.
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CORPORATE GOVERNANCE
Our Articles provide that our Directors will consist of not less than two (2) Directors. None of
our Directors are appointed for any fixed terms, but one-third of our Directors are required to
retire at every annual general meeting of our Company. Hence, the maximum term for each
Director is three (3) years. Directors who retire are eligible to stand for re-election.
Our Directors recognise the importance of corporate governance and the offering of high
standards of accountability to our Shareholders. Our Board of Directors has formed three (3)
committees: (i) the Audit Committee; (ii) the Nominating Committee; and (iii) the Remuneration
Committee.
Our Board of Directors comprises six (6) Directors, of which, three (3) are Independent
Directors. Our Independent Directors do not have any existing business or professional
relationship of a material nature with our Group, our other Directors, Controlling Shareholder
and/or Substantial Shareholders. Our Independent Directors are also not related to other
Directors, Controlling Shareholder and/or Substantial Shareholders.
Our Directors are of the view that given the current board composition and based on the above,
there are sufficient safeguards and checks to ensure that the process of decision-making by
our Board is independent and based on collective decision-making without our Chairman and
CEO being able to exercise considerable power and influence.
Audit Committee
Our Audit Committee comprises Chin Chee Choon, Dr Wilson Tay and Chow Wen Kwan. The
Chairman of our Audit Committee is Chin Chee Choon.
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 control environment in our Group.
Our Audit Committee will provide a channel of communication between our Board, our
management and our external auditors on matters relating to audit.
Our Audit Committee will meet periodically to perform the following functions:
(a) review the audit plans of the external auditors and internal auditors, their evaluation of the
system of internal controls, their audit report, their management letter and our
managements response, where applicable;
(b) review with the independent internal auditors the internal audit plans and their evaluation
of the adequacy of our internal control and accounting system before submission of the
results of such review to our Board for approval and making recommendations on the
internal control and accounting system to be adopted by our Group, where applicable;
(c) review the external and internal auditors reports;
(d) review the co-operation given by our management and/or our Companys officers to our
external auditors and our internal auditors, where applicable;
(e) review the financial statements of our Company and our Group, and discuss any
significant adjustments, major risk areas, changes in accounting policies, compliance
with Singapore Financial Reporting Standards, concerns and issues arising from the
audits including any matters which the auditors may wish to discuss in the absence of
management, where necessary, before their submission to our Board for approval;
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(f) review and discuss with auditors any suspected fraud, irregularity or infringement of any
relevant laws, rules or regulations, which has or is likely to have a material impact on our
Groups operating results or financial position and our managements response;
(g) review and/or approve (as applicable) transactions falling within the scope of Chapter 9
and Chapter 10 of the Listing Manual if any;
(h) review any potential conflicts of interest and set out a framework to resolve or mitigate
any potential conflicts of interests;
(i) review our key financial risk areas, with a view to providing an independent oversight on
our Groups financial reporting, the outcome of such review to be disclosed in the annual
reports or, where the findings are material, announced immediately via SGXNET;
(j) review the independence of the external auditors and recommend their appointment or
re-appointment, remuneration and terms of engagement;
(k) review and approve foreign exchange hedging policies implemented by our Group and
conduct periodic review of foreign exchange transactions and hedging policies and
procedures;
(l) undertake such other reviews and projects as may be requested by our Board and report
to our Board its findings from time to time on matters arising and requiring the attention
of our Audit Committee;
(m) review arrangements by which our staff may, in confidence, raise concerns about possible
improprieties in matters of financial reporting and to ensure that arrangements are in
place for the independent investigations of such matter and for appropriate follow-up; and
(n) undertake generally such other functions and duties as may be required by statute or the
Listing Manual, and by such amendments made thereto from time to time.
Apart from the duties listed above, our Audit Committee shall commission and review the
findings of internal investigations into matters where there is any suspected fraud or
irregularity, or failure of internal controls or suspected infringement of any Singapore law, rule
or regulation which has or is likely to have a material impact on our Groups operating results
and/or financial position. In the event that a member of our Audit Committee is interested in
any matter being considered by our Audit Committee, he will abstain from reviewing and
deliberating on that particular transaction or voting on that particular resolution.
Our Audit Committee shall also commission an annual internal control audit until such time as
our Audit Committee is satisfied that our Groups internal controls are robust and effective
enough to mitigate our Groups internal control weaknesses (if any). Prior to the
decommissioning of such an annual audit, our Board is required to report to the SGX-ST and
the continuing sponsor of our Company on how the key internal control weaknesses have been
rectified, and the basis for the decision to decommission the annual internal control audit.
Thereafter, such audits may be initiated by our Audit Committee as and when it deems fit to
satisfy itself that our Groups internal controls remain robust and effective. Upon completion
of the internal control audit, appropriate disclosure will be made via SGXNET of any material,
price-sensitive internal control weaknesses and any follow-up actions to be taken by our
Board.
Currently, based on the internal controls established and maintained by our Group, work
performed by the internal and external auditors, and reviews performed by our management
and our Board, our Board of Directors, to the best of its knowledge and belief, with the
concurrence of our Audit Committee, is of the opinion that the internal controls of our Group
are adequate to address financial, operational and compliance risks of our Group.
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Our Board of Directors notes that all internal control systems contain inherent limitations and
no system of internal controls could provide absolute assurance against the occurrence of
material errors, poor judgement in decision-making, human errors, losses, fraud or other
irregularities.
Our Audit Committee, after having conducted an interview with our Group Finance Director,
Ong Ying Ling, and after having considered:
(a) the qualifications and past working experiences of Ong Ying Ling (as described in the
section entitled Directors, Management and Staff Executive Officers of this Offer
Document) which are compatible with her position as Group Finance Director of our
Group;
(b) Ong Ying Lings past audit, financial and accounting related experiences;
(c) Ong Ying Lings demonstration of the requisite competency in finance-related matters of
our Group in connection with the preparation for the listing of our Company;
(d) the absence of negative feedback on Ong Ying Ling from the representatives of our
Groups Independent Auditor and Reporting Accountant, RSM Chio Lim LLP; and
(e) the absence of internal control weaknesses attributable to Ong Ying Ling identified during
the internal control review conducted,
is of the view that Ong Ying Ling is suitable for the position of Group Finance Director of our
Group.
Further, after making all reasonable enquiries, and to the best of their knowledge and belief,
nothing has come to the attention of our Audit Committee members to cause them to believe
that Ong Ying Ling does not have the competence, character and integrity expected of a group
finance director of a listed issuer.
In addition, Ong Ying Ling confirms that she is familiar with the business operations,
accounting systems and policies and the internal controls of our Group.
Ong Ying Ling shall be subject to performance appraisal by our Audit Committee on an annual
basis to ensure satisfactory performance.
Nominating Committee
Our Nominating Committee comprises Chow Wen Kwan, Dr Wilson Tay, Chin Chee Choon and
Arica Walters. The Chairman of the Nominating Committee is Chow Wen Kwan. Our
Nominating Committee will be responsible for:
(a) reviewing and recommending the nomination or re-nomination of our Directors having
regard to our Directors contribution and performance;
(b) determining on an annual basis whether or not a Director is independent;
(c) deciding whether or not a Director is able to and has been adequately carrying out his
duties as a director;
(d) reviewing and approving any new employment of related persons and the proposed terms
of their employment;
(e) reviewing of board succession plans for Directors, in particular, the Chairman and the
CEO;
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(f) developing a process for evaluation of the performance of the Board, its committees and
Directors;
(g) reviewing training and professional developments programs for the Board; and
(h) appointment and re-appointment of Directors (including alternate directors, if applicable).
Our Nominating Committee will decide how our Boards performance is to be evaluated and
propose objective performance criteria, subject to the approval of our Board, which address
how our Board has enhanced long-term shareholders value. Our Board will also implement a
process to be carried out by our Nominating Committee for assessing the effectiveness of our
Board as a whole and for assessing the contribution of each individual Director to the
effectiveness of our Board. Each member of our Nominating Committee shall abstain from
voting on any resolutions in respect of the assessment of his performance or re-nomination as
a Director.
Having regard to Guideline 4.4 of the Code of Corporate Governance 2012, each Director with
multiple board representations will ensure that he devotes sufficient time and attention to the
affairs of our Company.
Chow Wen Kwan currently sits on the board of three (3) other companies listed on the SGX-ST.
The Nominating Committee is of the opinion that Chow Wen Kwan is able to devote sufficient
time to discharge his duties as a Director.
Remuneration Committee
Our Remuneration Committee comprises Dr Wilson Tay, Chin Chee Choon and Chow Wen
Kwan. The Chairman of our Remuneration Committee is Dr Wilson Tay.
Our Remuneration Committee will recommend to our Board a framework of remuneration for
our Directors and key executives, and determine specific remuneration packages for our
Executive Director. The recommendations of our Remuneration Committee shall be submitted
for endorsement by the entire Board. All aspects of remuneration, including but not limited to
directors fees, salaries, allowances, bonuses, the Awards to be granted under the
Performance Share Plan, the Options to be issued under the ESOS and benefits-in-kind shall
be covered by our Remuneration Committee.
Our Remuneration Committee will also review our obligations arising in the event of
termination of our Executive Directors and Executive Officers contracts of service to ensure
that such contracts of service contain fair and reasonable termination clauses which are not
overly generous. Each member of our Remuneration Committee shall abstain from voting on
any resolutions in respect of his remuneration package.
Our Remuneration Committee will also perform an annual review of the remuneration of
employees related to our Directors, Executive Officers, Controlling Shareholder and/or
Substantial Shareholders to ensure that their remuneration packages are in line with our staff
remuneration guidelines and commensurate with their respective job scopes and level of
responsibilities. Any bonuses, pay increases and/or promotions for these related employees
will also be subject to the review and approval of our Remuneration Committee. Each member
of our Remuneration Committee shall abstain from voting on any resolutions in respect of his
remuneration package or that of employees related to him.
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EXCHANGE RATES
The exchange rate between the RM and S$ as at the Latest Practicable Date was RM2.554 to
S$1.00.
The table below sets out the high and low exchange rates for RM/S$ for each month for each
of the six (6) months prior to the Latest Practicable Date. The table indicates how many RM
can be bought with S$1.00.
RM/S$ Rate
High Low
February 2014 2.634 2.581
March 2014 2.610 2.567
April 2014 2.618 2.578
May 2014 2.611 2.554
June 2014 2.591 2.555
July 2014 2.577 2.547
1 August 2014 to the Latest Practicable Date 2.579 2.552
The following table sets out, for each of the financial periods indicated, the average exchange
rate between the RM and S$, calculated by using the average of the exchange rates on the last
day of each month during each financial period indicated.
RM/S$ Rate
Average Closing
FY2014 2.545 2.585
FY2013 2.488 2.496
FY2012 2.441 2.397
The above exchange rates have been calculated with reference to exchange rates quoted from
Bloomberg L.P. and should not be construed as representations that the RM amounts actually
represent such S$ amounts or could be converted into S$ at the rate indicated or at any other
rate.
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EXCHANGE CONTROLS
The following is a description of the exchange controls that exist in the key jurisdictions which
our Group currently operates in.
Singapore
Currently, there are no Singapore governmental laws, decrees, regulations and other
legislation that may affect the following:
(a) the import or export of capital, including the availability of cash and cash equivalents for
use by our Group; and
(b) the remittance of dividends, interest or other payments to non-resident holders of our
Companys securities.
Malaysia
There are no restrictions on the repatriation of capital, profits, dividends, interest, fees or
rental by foreign direct investors or portfolio investors, subject to withholding tax, if any, and
provided such remittance is effected through licensed remittance service providers (including
licenced banks). Such remittance should be made in foreign currency (save for the currency
of Israel).
Further, it is to be noted that any direct investment abroad, inter-company borrowing or foreign
currency-denominated trade financing by a resident entity in Malaysia shall be subject to the
prevailing foreign exchange administration rules as issued by Bank Negara Malaysia which are
subject to change from time to time as and when Bank Negara Malaysia deems fit to support
the overall macroeconomic objective of maintaining monetary and financial stability.
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CLEARANCE AND SETTLEMENT
Upon listing and quotation on Catalist, our Shares will be traded under the book-entry
settlement system of CDP, and all dealings in and transactions of our Shares through Catalist
will be effected in accordance with the terms and conditions for the operation of Securities
Accounts with CDP, as amended from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on
behalf of persons who maintain, either directly or through Depository Agents, Securities
Accounts with CDP. Persons named as direct Securities Account holders and Depository
Agents in the Depository Register maintained by CDP, rather than CDP itself, will be treated,
under our Articles and the Companies Act, as members of our Company in respect of the
number of Shares credited to their respective Securities Accounts.
Persons holding our Shares in Securities Accounts with CDP may withdraw the number of
Shares they own from the book-entry settlement system in the form of physical share
certificates. Such share certificates will, however, not be valid for delivery pursuant to trades
transacted on Catalist although they will be prima facie evidence of title and may be
transferred in accordance with our Articles. A fee of S$10 for each withdrawal of 1,000 Shares
or less and a fee of S$25 for each withdrawal of more than 1,000 Shares is payable upon
withdrawing our Shares from the book-entry settlement system and obtaining physical share
certificates. In addition, a fee of S$2 or such other amount as our Directors may decide is
payable to the share registrar for each share certificate issued and a stamp duty of S$10 is
also payable where our Shares are withdrawn in the name of the person withdrawing our
Shares or S$0.20 per S$100 or part thereof of the last transacted price where it is withdrawn
in the name of a third party. Persons holding physical share certificates who wish to trade on
Catalist must deposit with CDP their share certificates together with the duly executed and
stamped instruments of transfer in favour of CDP, and have their respective Securities
Accounts credited with the number of Shares deposited before they can effect the desired
trades. A fee of S$10 is payable upon the deposit of each instrument of transfer with CDP. The
above fees may be subject to such charges as may be in accordance with CDPs prevailing
policies or the current tax policies that may be in force in Singapore from time to time.
Transactions in our Shares under the book-entry settlement system will be reflected by the
sellers Securities Account being debited with the number of Shares sold and the buyers
Securities Account being credited with the number of Shares acquired. No transfer stamp duty
is currently payable for our Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on Catalist is payable at the rate of 0.0325%
of the transaction value. The clearing fee, instrument of transfer deposit fee and share
withdrawal fee may be subject to Singapore GST at the prevailing rate of seven per cent.
(7.0%) (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 CDP on a scripless basis. Settlement of trades on a normal ready basis on
Catalist generally takes place on the third Market Day following the transaction date, and
payment for the securities is generally settled on the following business day. CDP holds
securities on behalf of investors in Securities Accounts. An investor may open a direct account
with CDP or a sub-account with a CDP Depository Agent. The CDP Depository Agent may be
a member company of the SGX-ST, bank, merchant bank or trust company.
177
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1. None of our Directors, Executive Officers and Controlling Shareholders:
(a) has, at any time during the last ten (10) years, had an application or a petition under
any bankruptcy laws of any jurisdiction filed against him or against a partnership of
which he was a partner at the time when he was a partner or at any time within two
(2) years from the date he ceased to be a partner;
(b) has, at any time during the last ten (10) years, had an application or a petition under
any law of any jurisdiction filed against an entity (not being a partnership) of which
he was a director or an equivalent person or a key executive, at the time when he
was a director or an equivalent person or a key executive of that entity or at any time
within two (2) years from the date he ceased to be a director or an equivalent person
or a key executive of that entity, for the winding 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
or dishonesty which is punishable with imprisonment, or has been the subject of any
criminal proceedings (including any pending criminal proceedings of which he is
aware) for such purpose;
(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a
breach of any law or regulatory requirement that relates to the securities or futures
industry in Singapore or elsewhere, or has been the subject of any criminal
proceedings (including any pending criminal proceedings of which he is aware) for
such breach;
(f) has, at any time during the last ten (10) years, had judgment entered against him in
any civil proceedings in Singapore or elsewhere involving a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore
or elsewhere, or a finding of fraud, misrepresentation or dishonesty on his part, nor
has he been the subject of any civil proceedings (including any pending civil
proceedings of which he is aware) involving an allegation of fraud, misrepresentation
or dishonesty on his part;
(g) has ever been convicted in Singapore or elsewhere of any offence in connection with
the formation 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 the management of any entity or business trust;
(i) has ever been the subject of any order, judgment or ruling of any court, tribunal or
governmental body permanently or temporarily enjoining him from engaging in any
type of business practice or activity;
(j) has ever, to his knowledge, been concerned with the management or conduct, in
Singapore or elsewhere, of affairs of:
(i) any corporation which has been investigated for a breach of any law or
regulatory requirement governing corporations in Singapore or elsewhere;
178
(ii) any entity (not being a corporation) which has been investigated for a breach of
any law or regulatory requirement governing such entities in Singapore or
elsewhere;
(iii) any business trust which has been investigated for a breach of any law or
regulatory requirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law
or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; or
(k) has been the subject of any current or past investigation or disciplinary proceedings,
or has been reprimanded or issued any warning, by the Authority or any other
regulatory authority, professional body or governmental agency, whether in
Singapore or elsewhere.
Disclosures relating to Bevan Walters
In April 2014, Bevan Walters appeared as a prosecution witness in a criminal trial of two
(2) individuals who had allegedly committed fraudulent transactions relating to certain
sales of excavators. Bevan assisted as a witness to the Crown prosecutor of New Zealand
in his capacity as the owner of the trading company that purchased the excavators from
the two (2) individuals, and was at no time the subject of the criminal charges. Bevan
Walters understands that the two (2) individuals have since been convicted.
SHARE CAPITAL
2. As at the Latest Practicable Date, there was only one (1) class of shares in the capital of
our Company. There were no founder, management or deferred shares. The rights and
privileges attached to our Shares are stated in our Articles.
3. Save as disclosed below and in the sections entitled Share Capital and Restructuring
Exercise of this Offer Document, there were no changes in the issued and paid-up share
capital of our Company and our subsidiaries within the last three (3) years preceding the
Latest Practicable Date.
Date of issue
Number of
shares issued
Issue price
per share
Purpose of
issue
Resultant
issued share
capital
Our Company
21 April 2014 1 S$1 Incorporation S$1
Steeltema
22 June 2012 499,000 RM1 Working capital RM500,000
17 January 2012 998 RM1 Working capital RM1,000
15 December 2011 2 RM1 Incorporation RM2
Versalink (S)
6 June 2014 1 S$1 Incorporation S$1
179
4. Save as disclosed above and under the sections entitled Share Capital and
Restructuring Exercise of this Offer Document, no shares in, or debentures of, our
Company or any of our subsidiaries have been issued, or are proposed to be issued, as
fully or partly paid for cash or for a consideration other than cash, during the last three
(3) years preceding the date of lodgement of this Offer Document.
MATERIAL CONTRACTS
5. The following contracts, not being contracts entered into in the ordinary course of
business, have been entered into by our Company and our four (4) subsidiaries within the
two (2) years preceding the date of lodgement of this Offer Document and are or may be
material:
(a) the sale and purchase agreement dated 22 July 2014 entered into between our
Company as purchaser and Matthew Law, Arica Walters, Adam Law and Peggy Lee,
collectively as vendors, pursuant to which our Company acquired the entire issued
and paid-up share capital of Jemaramas Jaya. Please refer to the section entitled
Restructuring Exercise of this Offer Document for further details;
(b) the sale and purchase agreement dated 22 July 2014 entered into between our
Company as purchaser and Matthew Law and Peggy Lee, collectively as vendors,
pursuant to which our Company acquired the entire issued and paid-up share capital
of Versalink Technology. Please refer to the section entitled Restructuring Exercise
of this Offer Document for further details;
(c) the sale and purchase agreement dated 22 July 2014 entered into between our
Company as purchaser and Arica Walters and Peggy Lee, collectively as vendors,
pursuant to which our Company acquired the entire issued and paid-up share capital
of Versalink Marketing. Please refer to the section entitled Restructuring Exercise
of this Offer Document for further details;
(d) the sale and purchase agreement dated 22 July 2014 entered into between our
Company as purchaser and Arica Walters, Bevan Walters and Tan Moon Chuan, an
unrelated third party, collectively as vendors, pursuant to which our Company
acquired the entire issued and paid-up share capital of Steeltema. Please refer to
the section entitled Acquisition of Steeltema by our Company of this Offer
(e) the deed of assignment dated 30 December 2013 entered into between Jemaramas
Jaya as purchaser and Arica Walters as vendor, pursuant to which Jemaramas Jaya
acquired a trademark for RM10. Please refer to the section entitled Interested
Person Transactions Past Interested Person Transactions of this Offer Document
for further details;
(f) the deed of assignment dated 6 May 2014 entered into between Jemaramas Jaya as
purchaser and Adam Law as vendor, pursuant to which Jemaramas Jaya acquired
two (2) trademarks for an aggregate purchase consideration of RM20. Please refer
to the section entitled Interested Person Transactions Past Interested Person
Transactions of this Offer Document for further details;
(g) the Non-Competition Deeds dated 19 August 2014 entered into between our
Company and each of Designworx Limited and FFCL. Please refer to the section
entitled Potential Conflicts of Interests Non-Competition Deeds of this Offer
180
(h) the ROFR and Call Option Agreements dated 19 August 2014 entered into between
our Company and the shareholders of each of Designworx Limited and FFCL. Please
refer to the section entitled Potential Conflicts of Interests Right Of First Refusal
And Call Option Agreements of this Offer Document for further details;
(i) the letter of indemnity dated 19 August 2014 from our Controlling Shareholders,
namely BSL Holdings, Matthew Law and Peggy Lee, and our Substantial
Shareholders, namely Arica Walters, Adam Law and Jay Law, to our Company.
Please refer to the section entitled General Information on our Group Approvals
Yet To Be Obtained In Respect Of Our Warehouse of this Offer Document for further
details;
(j) the service agreements dated 22 August 2014 entered into between our Company
and each of the Executive Directors, namely Matthew Law, Arica Walters and Adam
Law. Please refer to the section entitled Directors, Management and Staff
Service Agreements of this Offer Document for further details;
(k) the letter of confirmation and undertaking dated 12 May 2014 from Kong Lian to
Versalink Marketing. Please refer to the section entitled General Information on our
Group Approvals Yet To Be Obtained In Respect Certain Of Our Lease Properties
Sungai Buloh Showroom of this Offer Document for further details; and
(l) the letter of indemnity dated 19 August 2014 from our Controlling Shareholder,
namely BSL Holdings, Matthew Law and Peggy Law, and our Substantial
Shareholders, namely Arica Walters, Adam Law and Jay Law, to our Company,
Versalink Marketing and Jemaramas Jaya. Please refer to the risk factors entitled
We may be affected by certain approvals yet to be obtained in respect of our Sungai
Buloh Showroom and We may be affected by certain approvals yet to be obtained
in respect of certain accommodation which we had previously provided to our
workers as well as the sections entitled General Information on our Group
Approvals Yet To Be Obtained In Respect Of Certain Of Our Lease Properties
Sungai Buloh Showroom and General Information on our Group Approvals Yet
To Be Obtained In Respect Of Certain Of Our Lease Properties Workers
Accommodation of this Offer Document for further details.
LITIGATION
6. Save as disclosed below, as at the Latest Practicable Date, neither our Company nor any
member of our Group was engaged in any legal or arbitration proceedings, including
those which are pending or known to be contemplated, which may have or have had in the
last 12 months before the date of lodgement of this Offer Document, a material effect on
our Groups financial position or profitability.
On 9 September 2013, our subsidiary, Versalink Marketing, was informed that its
ex-employee, Audra Lim Suet Mong, intended to claim against Versalink Marketing for her
alleged wrongful dismissal (Audra Lim) on 29 July 2013. On 29 April 2014, Versalink
Marketing received a letter from the Ministry of Human Resources of Malaysia informing
them that this matter has been referred to the industrial court under Malaysias Industrial
Relations Act 1967. On 21 August 2014, Audra Lim, via her solicitors served a statement
of claim on Versalink Marketing seeking inter alia reinstatement to her former position
without loss of wages and allowances. We are seeking legal advice and intend to
vigorously contest the claim. Based on the Malaysian Industrial Relations Act 1967, the
maximum claim against which can be made by a former employee for unlawful dismissal,
if proven, is for the period between dismissal up to the time of re-employment by her
former employee, subject to a maximum of 24 months of the employees last drawn salary.
181
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
7. Pursuant to the Management and Sponsorship Agreement, our Company and the Vendors
appointed CIMB Bank to sponsor and manage the Invitation. CIMB Bank will receive a
management fee from our Company for such services rendered.
8. Pursuant to the Underwriting and Placement Agreement, our Company and the Vendors
appointed CIMB Securities as the Underwriter to underwrite our offer of the Offer Shares
for a commission of 3.0% of the Invitation Price for each Offer Share (Underwriting
Commission), payable by our Company and the Vendors (in the proportion in which the
Offer Shares are offered by our Company and the Vendors) pursuant to the Invitation.
CIMB Securities may at its own expense make sub-underwriting arrangements in respect
of its underwriting obligations.
9. Pursuant to the Underwriting and Placement Agreement, our Company and the Vendors
appointed CIMB Securities as the Placement Agent to subscribe for and/or purchase, or
procure subscriptions for and/or purchase of the Placement Shares for a placement
commission of 3.0% of the Invitation Price for each Placement Share, to be paid by our
Company and the Vendors (in the proportion in which the Placement Shares are offered
by our Company and the Vendors). CIMB Securities may at its own expense make
sub-placement arrangements in respect of its placement obligations.
10. Brokerage payable for the Offer Shares will be paid by our Company and the Vendors to
members of the SGX-ST, merchant banks and members of the Association of Banks in
Singapore in respect of successful applications made on Application Forms bearing their
respective stamps, or to Participating Banks in respect of successful applications made
through Electronic Applications at their respective ATMs or their IB websites at the rate
of 0.25% of the Invitation Price for each Offer Share or in the case of DBS Bank, 0.75%
of the Invitation Price for each Offer Share. In addition, DBS Bank will levy a minimum
brokerage fee of S$10,000.
Subscribers of the Placement Shares may be required to pay a brokerage fee of up to one
per cent. (1.0%) of the Invitation Price for each Placement Share to the Placement Agent.
11. CIMB Bank may, in its absolute discretion but after prior consultation with our Company
and the Vendors, by notice in writing to our Company and the Vendors if reasonably
practicable, rescind or terminate the Management and Sponsorship Agreement at any
time prior to or on the date of commencement of trading of our Shares on Catalist, on the
occurrence of certain events, including, inter alia:
(a) the issue of a Stop Order by the SGX-ST, acting as agent on behalf of the Authority,
or other competent authority (notwithstanding that a supplementary or replacement
offer document is subsequently registered with the SGX-ST);
(b) there shall come to the knowledge of CIMB Bank any breach of the warranties or
undertakings in the Management and Sponsorship Agreement or that any of the
warranties or undertakings in the Management and Sponsorship Agreement is
untrue or incorrect or misleading;
(c) any occurrence of certain specified events (described in the Management and
Sponsorship Agreement) which comes to the knowledge of CIMB Bank;
(d) there shall have been:
(i) in the reasonable opinion of CIMB Bank, any material adverse change, or any
development or event involving a prospective material adverse change, in the
condition (financial or otherwise), business, trading position, operations,
management, assets, prospects, performance or general affairs of our
Company or any of our Group companies or of our Group as a whole;
182
(ii) any introduction or prospective introduction of or any change or prospective
change in any legislation, regulation, order, notice, policy, rule, guideline or
directive (whether or not having the force of law and including, without
limitation, any directive, notice or request issued by the Authority, the Securities
Industry Council of Singapore, the SGX-ST or any other relevant authorities) in
Singapore or elsewhere or in the interpretation or application thereof by any
court, government body, regulatory authority or other competent authority in
Singapore or elsewhere;
(iii) any change, or any development involving a prospective change or any crisis in
local, national, regional or international monetary, financial and capital markets
(including stock market, foreign exchange market, inter-bank market or interest
rates or money market), political, industrial, economic, legal or monetary
conditions, taxation or exchange controls (including, without limitation, the
imposition of any moratorium, suspension or material restriction on trading in
securities generally on the SGX-ST (including Catalist);
(iv) any event or series of events in the nature of force majeure (as defined in the
Management and Sponsorship Agreement);
(v) any proceedings, formal investigations or enquiries are commenced against our
Company, any of our Group companies or the Vendors or any Director of our
Company or any of our Group companies; or
(vi) any other occurrence of any nature whatsoever, which shall in the reasonable
opinion of CIMB Bank (1) result or be likely to result in an adverse fluctuation
or adverse conditions in the stock market in Singapore or elsewhere; or (2) be
likely to materially prejudice the success of the Invitation, subscription or
placement of the Invitation Shares (whether in the primary market or in respect
of dealings in the secondary market); or (3) make it impracticable, inadvisable,
inexpedient or not commercial viable to proceed with any of the transactions
contemplated in the Management and Sponsorship Agreement; or (4) be such
that no reasonable manager and sponsor would have entered into the
Management and Sponsorship Agreement; or (5) result or be likely to result in
the issue of a Stop Order by the SGX-ST, acting as agent on behalf of the
Authority, or other competent authority pursuant to the SFR and/or the Catalist
Rules; or (6) make it not commercially viable or otherwise contrary to or outside
the usual commercial practices of managers and sponsors in Singapore for
CIMB Bank to observe or perform or be obliged to observe or perform the terms
of the Management and Sponsorship Agreement;
(e) without limiting the generality of the foregoing, if it comes to the notice of CIMB Bank
(1) any statement contained in this Offer Document or the Application Forms which
in the opinion of CIMB Bank has become or been discovered to be untrue, incorrect
or misleading in any respect or (2) circumstances or matters have arisen or have
been discovered, which would, if this Offer Document was to be issued at that time,
constitute in the reasonable opinion of CIMB Bank, an omission of material
information, and our Company and the Vendors fail to lodge a supplementary or
replacement offer document within a reasonable time after being notified of such
misrepresentation or omission or fail to promptly take such steps as CIMB Bank may
reasonably require to inform investors of the lodgement of such supplementary offer
document or document; or
(f) the Underwriting and Placement Agreement is terminated pursuant to its provisions.
183
12. The Underwriting and Placement Agreement is conditional upon, among other things, the
Management and Sponsorship Agreement not having been terminated or rescinded
pursuant to the provisions of the Management and Sponsorship Agreement.
MISCELLANEOUS
13. There has been no previous issue of Shares by our Company or offer for sale of our
Shares to the public within the two (2) years preceding the date of this Offer Document.
14. There had not been any public takeover offer by a third party in respect of our Companys
Shares or by our Company in respect of shares of another corporation or units of a
business trust which has occurred between 1 March 2013 and the Latest Practicable
Date.
15. Save as disclosed in the sub-section entitled Management, Underwriting and Placement
Arrangements under this section of this Offer Document, no commission, discount or
brokerage had been paid or other special terms granted within the two (2) years
preceding the Latest Practicable Date or is payable to any Director, promoter, expert,
proposed director or any other person for subscribing or agreeing to subscribe or
procuring or agreeing to procure subscriptions for any shares in, or debentures of, our
Company or any of our subsidiaries.
16. No expert was employed on a contingent basis by our Group or has an interest, directly
or indirectly, in the promotion of, or in any property or assets which have, within the two
(2) years preceding the Latest Practicable Date, been acquired or disposed of by or
leased to our Company or any of our subsidiaries or are proposed to be acquired or
disposed of by or leased to our Company or any of our subsidiaries.
17. Application monies received by our Company in respect of successful applications
(including successful applications which are subsequently rejected) will be placed in a
separate non-interest bearing account with CIMB Bank (the Receiving Bank). Any
refund of all or part of the application monies to unsuccessful or partially successful
applicants will be made without any interest or any share of revenue or any other benefit
arising therefrom.
18. Save as disclosed in this Offer Document, our Directors were not aware of any event
which has occurred between the end of FY2014 and the Latest Practicable Date which
may have a material effect on the financial position and results of our Group or the
financial information provided in this Offer Document.
19. Save as disclosed in this Offer Document, the financial condition and operations of our
Group are not likely to be affected by any of the following:
(a) known trends or demands, commitments, events or uncertainties that will result in or
are reasonably likely to result in our Groups liquidity increasing or decreasing in any
material way;
(b) material commitments for capital expenditure;
(c) unusual or infrequent events or transactions or any significant economic changes
that may materially affect the amount of reported income from operations; and
(d) the business and financial prospects and any significant recent trends in production,
sales and inventory, and in the costs and selling prices of products and services and
known trends or uncertainties that have had or that we reasonably expect will have
a material favourable or unfavourable impact on revenues, profitability, liquidity,
capital resources or operating income or that would cause financial information
disclosed to be not necessarily indicative of the future operating results or financial
condition of our Company.
184
20. Details, including the name, address and professional qualifications including
membership in a professional body of the auditors of our Company from its date of
incorporation are as follows:
Name and address Professional body
Partner-in-charge/
Professional
qualification
RSM Chio Lim LLP
8 Wilkie Road
#04-08 Wilkie Edge
Singapore 228095
Institute of Singapore
Chartered Accountants
Chan Sek Wai (a member
of the Institute of
Singapore Chartered
Accountants)
We currently have no intention of changing our auditor after the listing of our Company
on Catalist.
CONSENTS
21. RSM Chio Lim LLP, the Independent Auditor and Reporting Accountant, has given and
has not withdrawn its written consent to the issue of this Offer Document with the
inclusion herein of the Independent Auditors Report as set out in Appendix A of this Offer
Document respectively in the form and context in which they are respectively included
and references to its name in the form and context in which it appears in this Offer
Document and to act in such capacity in relation to this Offer Document.
22. Converging Knowledge, named as the Independent Market Researcher, has given and
has not withdrawn its written consent to the issue of this Offer Document with the
inclusion herein of its statements in the sections entitled Industry Overview, Prospects
and Appendix B Industry Report in this Offer Document and in the form and context
in which they appear in this document, and references to its name in the form and context
which it appears in this Offer Document and to act in such capacity in relation to this Offer
Document.
23. The Sponsor and Issue Manager, the Underwriter and Placement Agent, the Solicitors to
the Invitation, the Share Registrar, the Malaysian Financial Adviser to Jemaramas Jaya,
the Receiving Bank and Crowe Horwath Malaysia, have each given and have not
withdrawn their written consents to the issue of this Offer Document with the inclusion
herein of their names and references thereto in the form and context in which they
respectively appear in this Offer Document and to act in such respective capacities in
relation to this Offer Document.
24. Each of the Solicitors to the Invitation, the Share Registrar, the Principal Bankers and the
Receiving Bank do not make, or purport to make, any statement in this Offer Document
or any statement upon which a statement in this Offer Document is based and, to the
maximum extent permitted by law, expressly disclaim and take no responsibility for any
liability to any persons which is based on, or arises out of, the statements, information or
opinions in this Offer Document.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS AND THE VENDORS
25. This Offer Document has been seen and approved by our Directors and the Vendors.
They collectively and individually accept full responsibility for the accuracy of the
information given in this Offer Document and confirm after making all reasonable
enquiries, that to the best of their knowledge and belief, this Offer Document constitutes
full and true disclosure of all material facts about the Invitation, our Company and our
subsidiaries, and our Directors and the Vendors are not aware of any facts the omission
of which would make any statement in this Offer Document misleading. Where information
185
in this Offer Document has been extracted from published or otherwise publicly available
sources or obtained from a named source, the sole responsibility of our Directors and the
Vendors has been to ensure that such information has been accurately and correctly
extracted from those sources and/or reproduced in this Offer Document in its proper form
and context.
DOCUMENTS AVAILABLE FOR INSPECTION
26. The following documents or copies thereof may be inspected at our registered office at
8 Wilkie Road, #03-01, Wilkie Edge, Singapore 228095 during normal business hours for
a period of six (6) months from the date of registration of this Offer Document:
(a) the Memorandum and Articles of Association of our Company;
(b) the Independent Auditors Report as set out in Appendix A of this Offer Document;
(c) the audited financial statements of Jemaramas Jaya for FY2012, FY2013 and
FY2014; Versalink Marketing for FY2012, FY2013 and FY2014; Versalink
Technology for FY2012, FY2013 and 2014; and Steeltema for FY2012, FY2013 and
2014;
(d) the material contracts referred to in this Offer Document;
(e) the letters of consent referred to in this Offer Document; and
(f) the Industry Report set out in Appendix B of this Offer Document prepared by the
Independent Market Researcher.
186
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(Registration No: 201411394N)
Combined Financial Statements
For the Financial Years Ended 29 February 2012, 28 February 2013 and 2014

$33(1',;$
A-1
INDEPENDENT AUDITORS REPORT ON THE COMBINED FINANCIAL STATEMENTS FOR THE
FINANCIAL YEARS ENDED 29 FEBRUARY 2012, 28 FEBRUARY 2013 AND 2014 OF VERSALINK
HOLDINGS LIMITED
16 September 2014
The Board of Directors
8 Wilkie Road,
#03-01 Wilkie Edge,
Singapore 228095.
Dear Sirs
Report on the Combined Financial Statements
We have audited the accompanying combined financial statements of Versalink Holdings Limited (the
Company) and its subsidiaries (the Group), comprising the combined statement of financial position
as at 29 February 2012, 28 February 2013 and 2014, and the combined statement of profit or loss and
other comprehensive income, combined statement of changes in equity and combined statement of
cash flows of the Group for the financial years ended 29 February 2012, 28 February 2013 and 2014,
and a summary of significant accounting policies and other explanatory information, as set out on
pages A-4 to A-50.
As described in Note 1 to the combined financial statements, the combined financial statements for the
financial years ended 29 February 2012, 28 February 2013 and 2014 were presented in a manner
similar to a pooling-of-interest method to give retrospective application to transactions involving entities
under common control, as a result of a Restructuring Exercise undertaken.
Managements Responsibility for the Combined Financial Statements
Management is responsible for the preparation of these combined financial statements that give a true
and fair view in accordance with the provisions of the Singapore Financial Reporting Standards, and
for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable
assurance that assets are safeguarded against loss from unauthorised use or disposition; and
transactions are properly authorised and that they are recorded as necessary to permit the preparation
of true and fair statements of profit or loss and other comprehensive income and statements of
financial position and to maintain accountability of assets.
Independent Auditors Responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the combined financial statements are free from material misstatement.
A-2
INDEPENDENT AUDITORS REPORT ON THE COMBINED FINANCIAL STATEMENTS FOR THE
FINANCIAL YEARS ENDED 29 FEBRUARY 2012, 28 FEBRUARY 2013 AND 2014 OF
VERSALINK HOLDINGS LIMITED

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the combined financial statements. The procedures selected depend on the auditors judgement,
including the assessment of the risks of material misstatement of the combined financial statements,
whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entitys preparation of the combined financial statements that give a true and fair view
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entitys internal control.

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 combined
financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.

Opinion

In our opinion, the abovementioned combined financial statements of the Group present fairly, in all
material respects, the state of affairs of the Group as at 29 February 2012, 28 February 2013 and
2014 and of its results of operations, changes in equity and cash flows for each of the financial years
ended 29 February 2012, 28 February 2013 and 2014 in accordance with Singapore Financial
Reporting Standards.

Restriction on Distribution and Use

This report has been prepared solely for inclusion in the Offer Document of the Company in
connection with the proposed initial public offering of ordinary shares in the capital of the Company
on Catalist of the Singapore Exchange Securities Trading Limited.

Yours faithfully

RSM Chio Lim LLP
Public Accountants and
Chartered Accountants

Singapore

Partner in charge: Chan Sek Wai
A member of the Institute of Singapore Chartered Accountants
A-3
COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED
29 FEBRUARY 2012, 28 FEBRUARY 2013 AND 2014 OF VERSALINK HOLDINGS LIMITED

Combined Statements of Profit or Loss and Other Comprehensive Income

Notes 2012 1. 2013 2014
RM000 2. RM000 RM000

Revenue 4 49,279 3. 59,694 78,839
Cost of Sales (33,373) 4. (36,990) (46,439)
Gross Profit 15,906 5. 22,704 32,400
Other Items of Income
Interest Income 148 188 119
Other Credits 5 1,116 510 756
Other Items of Expense
Marketing and Distribution Expenses 6 (3,664) (4,402) (6,600)
Administrative Expenses 6 (6,182) (6,739) (7,320)
Other Charges 5 (137) (70) (33)
Finance Costs 6 (824) (686) (519)
Profit Before Tax 6,363 6. 11,505 18,803
Income Tax Expense 8 (1,987) (2,787) (4,259)
Profit, Net of Tax 4,376 7. 8,718 14,544

Total Comprehensive Income
4,376 8. 8,718 14,544

Earnings Per Share (Sen Ringgit Malaysia)

Basic and diluted 9
3.98

7.93

13.22

The accompanying notes form an integral part of these financial statements.
A-4

Combined Statements of Financial Position
As at 29 February 2012, 28 February 2013 and 2014

Notes 2012 9. 2013 2014
RM000 0. RM000 RM000
ASSETS
Non-Current Assets
Property, Plant and Equipment 11 26,136 27,001 25,363
Total Non-Current Assets 26,136 27,001 25,363

Current Assets
Inventories 12 9,690 10,276 11,076
Trade Receivables 13 4,690 5,217 10,315
Income Tax Recoverable 1,064
Other Assets 14 989 1,292 2,828
Cash and Cash Equivalents 15 12,463 12,605 13,134
Total Current Assets 28,896 29,390 37,353

Total Assets 55,032 56,391 62,716

EQUITY AND LIABILITIES
Equity
Share Capital 16 3,479 3,479 3,479
Retained Earnings 28,116 36,834 40,878
Total Equity 31,595 40,313 44,357

Non-Current Liabilities
Deferred Tax Liabilities 8 1,167 1,450 911
Other Financial Liabilities, Non-Current 18 5,421 1,823 1,490
Total Non-Current Liabilities 6,588 3,273 2,401

Current Liabilities
Income Tax Payable 64 1,912
Trade and Other Payables 17 11,728 7,306 11,230
Other Financial Liabilities, Current 18 5,121 5,435 2,816
Total Current Liabilities 16,849 12,805 15,958

Total Liabilities 23,437 16,078 18,359

Total Equity and Liabilities 55,032 56,391 62,716

A-5

Combined Statements of Changes in Equity
1.
2.
3.

Total
Equity
Share
Capital
Retained
Earnings
4.
RM000 RM000 RM000 5.
6.
Balance at 1 March 2011 27,219 3,479 23,740 7.
Movement in Equity: 8.
Total Comprehensive Income for the Year 4,376 4,376 9.
Balance at 29 February 2012 31,595 3,479 28,116 10
Movements in Equity: 11
Total Comprehensive Income for the Year 8,718 8,718 12
Balance at 28 February 2013 40,313 3,479 36,834 13
Movements in Equity: 14
Total Comprehensive Income for the Year 14,544 14,544 15
Dividends (Note 10) (10,500) (10,500) 16
Closing Balance at 28 February 2014 44,357 3,479 40,878 17

A-6

Combined Statements of Cash Flows 1.
For the Financial Years Ended 29 February 2012, 28 February 2013 and 2014 2.
3.
2012 1. 2013 2014 4.
RM000 2. RM000 RM000 5.
Cash Flows From Operating Activities 6.
Profit before Tax 6,363 11,505 18,803 7.
Adjustments for: 8.
Depreciation of Property, Plant and Equipment 1,957 1,842 2,289 9.
(Gains) Losses on Disposal of Plant and Equipment (87) 4 (4) 10.
Interest Income (148) (188) (119) 11.
Interest Expenses 824 686 519 12.
Plant and Equipment Written Off 134 66 17 13.
Operating Cash Flows before Changes in Working Capital 9,043 13,915 21,505 14.
Inventories (2,909) (586) (800) 15.
Trade Receivables (1,000) (527) (5,098) 16.
Other Assets 151 (303) (1,536) 17.
Trade and Other Payables 3,159 (3,366) 1,467 18.
Net Cash Flows From Operations 8,444 9,133 15,538 19.
Income Taxes Paid (717) (1,376) (2,950) 20.
Net Cash Flows From Operating Activities 7,727 7,757 12,588 21.
22.
Cash Flows From Investing Activities 23.
Purchase of Property, Plant and Equipment (2,417) (3,043) (688) 24.
Disposals of Plant and Equipment 87 266 24 25.
Interest Received 148 188 119 26.
Net Cash Flows Used In Investing Activities (2,182) (2,589) (545) 27.
28.
Cash Flows From Financing Activities 29.
Amount due to Directors 82 (1,056) (543) 30.
Decrease in Other Financial Liabilities (17) (2,053) (1,451) 31.
Finance Lease Repayments (1,086) (1,310) (940) 32.
Interest Paid (824) (686) (519) 33.
Dividends Paid (7,500) 34.
Cash Restricted in Use (29) (52) (48) 35.
Net Cash Flows Used In Financing Activities (1,874) (5,157) (11,001)
36.
37.
Net Increase in Cash and Cash Equivalents 3,671 11 1,042 38.
Cash and Cash Equivalents, Statement of Cash Flows,
Beginning Balance 6,770 10,441 10,452
39.
Cash and Cash Equivalents, Statement of Cash Flows,
Ending Balance (Note 15A) 10,441 10,452 11,494
40.

A-7

Notes to Combined Financial Statements
29 February 2012, 28 February 2013 and 2014

1. General

1.1. The Company

The Company is incorporated in Singapore with limited liability. The Company changed its
name to Versalink Holdings Limited upon its conversion to a public limited company on 20
August 2014. The combined financial statements are presented in Ringgit Malaysia (RM)
and all values are rounded to the nearest thousand (RM000) except when otherwise
indicated.

The principal activities of the Company are those of an investment holding company and the
provision of management services to the Group. The principal activities and the details of the
subsidiaries are described below.

The report is prepared solely for inclusion in the Offer Document in connection with the
proposed listing of the Companys shares on Catalist of Singapore Exchange Securities
Trading Limited.

The registered office address of the Company is: 8 Wilkie Road, #03-01 Wilkie Edge,
Singapore 228095. The Company is situated in Singapore. The principal place of business is
Lot 6119, J alan Haji Salleh, Batu 51/2 Off J alan Meru 41050 Klang Selangor, Malaysia.

1.2. The Restructuring Exercise

The Group was formed through the Restructuring Exercise which involved a series of
acquisitions and the rationalisation of the corporate and shareholding structure for the
purposes of the Invitation. Pursuant to the Restructuring Exercise, the Company became the
holding company of the Group.

The Restructuring Exercise involved the following steps:

(a) Incorporation of the Company

The Company was incorporated on 21 April 2014 in Singapore in accordance with
the Companies Act as a private limited company with an issued and paid-up share
capital of S$1 comprising one share, which was held by Law Kian Guan.

A-8

1. General (Contd)

1.2. The Restructuring Exercise (Contd)

(b) Acquisition of Jemaramas Jaya Sdn. Bhd. (Jemaramas Jaya)

On 22 J uly 2014, the Company entered into a sale and purchase agreement with
Law Kian Siong, Law Pei Ling, Law Kian Guan and Lee Yuet Chin pursuant to which
the Company acquired, the entire issued and paid-up capital of J emaramas J aya at
an aggregate consideration of RM32,100,867 (the Jemaramas Jaya Purchase
Consideration), which was determined based on the audited net assets of
J emaramas J aya as at 28 February 2014. The J emaramas J aya Purchase
Consideration was satisfied by the allotment and issue of an aggregate 79,502,889
Shares, credited as fully paid in the following manner:

Name of allottee Number of Shares issued to such allottee

Law Kian Siong 15,512,759
Law Pei Ling 15,512,759
Law Kian Guan 16,672,901
Lee Yuet Chin 31,804,470
Total 79,502,889

Upon completion of the aforesaid acquisition, J emaramas J aya Sdn. Bhd. became a
wholly-owned subsidiary of the Company.

(c) Acquisition of Versalink Marketing Sdn. Bhd. (Versalink Marketing)

Law Pei Ling and Lee Yuet Chin pursuant to which the Company acquired from Law
Pei Ling and Lee Yuet Chin, the entire issued and paid-up capital of Versalink
Marketing at an aggregate consideration of RM12,036,556 (the Versalink Marketing
Purchase Consideration), which was determined based on the audited net assets of
Versalink Marketing as at 28 February 2014. The Versalink Marketing Purchase
Consideration was satisfied by the allotment and issue of an aggregate 29,810,440


Law Pei Ling 12,775,903
Lee Yuet Chin 17,034,537
Total 29,810,440

Upon completion of the aforesaid acquisition, Versalink Marketing Sdn. Bhd. became
a wholly-owned subsidiary of the Company.

A-9

1. General (Contd)


(d) Acquisition of Versalink Technology Sdn. Bhd. (Versalink Technology)

Law Kian Siong and Lee Yuet Chin pursuant to which the Company acquired from
Law Kian Siong and Lee Yuet Chin, the entire issued and paid-up capital of Versalink
Technology at an aggregate consideration of RM277,257 (the Versalink Technology
Purchase Consideration), which was determined based on the audited net assets of
Versalink Technology as at 28 February 2014. The Versalink Technology Purchase
Consideration was satisfied by the allotment and issue of an aggregate 686,670


Law Kian Siong 343,335
Lee Yuet Chin 343,335
Total 686,670

Upon completion of the aforesaid acquisition, Versalink Technology Sdn. Bhd.
became a wholly-owned subsidiary of the Company.

A-10

1. General (Contd)


The subsidiaries held by the Company as of the date of this report are as follows:-

Name of Subsidiaries, Country of Incorporation,
Place of Operations and Principal Activities
Percentage of equity
held by Group

Paid up capital
RM000

J emaramas J aya Sdn. Bhd.
(a)
100% 2,398
Malaysia
Manufacturing, marketing and sale of system furniture

Versalink Marketing Sdn. Bhd.
(a)
100% 980
Malaysia
Marketing and sale of system furniture and other furniture
related products

Versalink Technology Sdn. Bhd.
(a)
100% 100
Malaysia
Dormant

Versalink (S) Pte Ltd 100% *
Singapore
Marketing and sale of system furniture and other furniture
related products

* One ordinary share of no par value totaling S$1.

(a) The statutory auditors of the three subsidiaries mentioned above are Crowe Horwath,
Malaysia from financial year ended 28 February 2013 onwards. The statutory auditor for
financial year ended 29 February 2012 was by other independent auditor. The financial
statements for the financial year ended 29 February 2012 were reaudited by Crowe
Horwath, Malaysia. Crowe Horwath, Malaysia has expressed an unqualified audit
opinion on the statutory financial statements for the financial years ended 28 February
2013 and 2014, and the reaudited financial statements for 29 February 2012.

1.3. Basis of Preparation and Presentation of the Combined Financial Statements

The Groups combined financial statements for the financial years ended 29 February 2012,
28 February 2013 and 2014 were prepared primarily based on the audited financial
statements of the subsidiaries, J emaramas J aya Sdn. Bhd., Versalink Marketing Sdn. Bhd.
and Versalink Technology Sdn. Bhd.

The Group restructuring has been accounted for using the pooling-of-interest method.
Accordingly, the Groups combined financial statements for the financial years ended 29
February 2012, 28 February 2013 and 2014 have been prepared as if the Group has been in
existence prior to the Restructuring Exercise. The assets and liabilities are brought into the
combined statements of financial position at the existing carrying amounts. The figures of the
Group for the financial years ended 29 February 2012, 28 February 2013 and 2014 represent
the combined results, state of affairs, changes in equity and cash flows as if the Group,
pursuant to the Restructuring Exercise, had existed since 1 March 2011.

A-11

2. Summary of Significant Accounting Policies

Accounting Convention

The financial statements have been prepared in accordance with the Singapore Financial
Reporting Standards (FRS) and the related Interpretations to FRS (INT FRS) as issued by
the Singapore Accounting Standards Council. The financial statements are prepared on a
going concern basis under the historical cost convention except where an FRS requires an
alternative treatment (such as fair values) as disclosed where appropriate in these financial
statements. Other comprehensive income comprises items of income and expenses
(including reclassification adjustments) that are not recognised in the income statement, as
required or permitted by FRS. Reclassification adjustments are amounts reclassified to profit
or loss in the income statement in the current period that were recognised in other
comprehensive income in the current or previous periods.

Basis of Preparation of the Financial Statements

The preparation of combined financial statements in conformity with generally accepted
accounting principles requires the management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the financial year. Actual results could differ from those estimates. The
estimates and assumptions are reviewed on an ongoing basis. Apart from those involving
estimations, management has made judgements in the process of applying the entitys
accounting policies. The areas requiring managements most difficult, subjective or complex
judgements, or areas where assumptions and estimates are significant to the financial
statements, are disclosed at the end of this footnote, where applicable.

Basis of Presentation

The combined financial statements include the financial statements made up to the end of
the financial year of the Company and all of its subsidiaries. The combined financial
statements are the financial statements of the Group in which the assets, liabilities, equity,
income, expenses and cash flows of the parent and its subsidiaries are presented as those of
a single economic entity and are prepared using uniform accounting policies for like
transactions and other events in similar circumstances. All significant intragroup balances
and transactions, including income, expenses and cash flows are eliminated on consolidation.
The combined financial statements include the income and expenses of a subsidiary from
the date the entity gains control until the date when the entity ceases to control the subsidiary.
Income and expenses of the subsidiary are based on the amounts of the assets and liabilities
recognised in the combined financial statements at the acquisition date.

Changes in the Groups ownership interest in a subsidiary that do not result in the loss of
control are accounted for within equity as transactions with owners in their capacity as
owners. The carrying amounts of the Group's and non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiary. When the Group loses control
of a subsidiary it derecognises the assets and liabilities and related equity components of the
former subsidiary. Any gain or loss is recognised in profit or loss. Any investment retained in
the former subsidiary is measured at its fair value at the date when control is lost and is
subsequently accounted as available-for-sale financial assets in accordance with FRS 39.

A-12

2. Summary of Significant Accounting Policies (Contd)

Revenue Recognition

The revenue amount is the fair value of the consideration received or receivable from the
gross inflow of economic benefits during the financial year arising from the course of the
activities of the entity and it is shown net of any related sales taxes, estimated returns and
rebates. Revenue from the sale of goods is recognised when significant risks and rewards of
ownership are transferred to the buyer, there is neither continuing managerial involvement to
the degree usually associated with ownership nor effective control over the goods sold, and
the amount of revenue and the costs incurred or to be incurred in respect of the transaction
can be measured reliably. Revenue from rendering of services that are not significant
transactions is recognised as the services are provided or when the significant acts have
been completed. Interest revenue is recognised using the effective interest method.

Segment Reporting

The Group discloses financial and descriptive information about its reportable segments.
Reportable segments are operating segments or aggregations of operating segments that
meet specified criteria. Operating segments are components about which separate financial
information is available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing the performance. Generally, financial
information is reported on the same basis as is used internally for evaluating operating
segment performance and deciding how to allocate resources to operating segments.

Foreign Currency Transactions

The functional currency is the Malaysian Ringgit as it reflects the primary economic
environment in which the entity operates. Transactions in foreign currencies are recorded in
the functional currency at the rates ruling at the dates of the transactions. At the end of each
financial year, recorded monetary balances and balances measured at fair value that are
denominated in non-functional currencies are reported at the rates ruling at the end of the
financial year and fair value dates respectively. All realised and unrealised exchange
adjustment gains and losses are dealt with in profit or loss except when recognised in other
comprehensive income and if applicable deferred in equity such as for qualifying cash flow
hedges. The presentation is in the functional currency.

Translation of Financial Statements of Other Entities

Each entity in the Group determines the appropriate functional currency as it reflects the
primary economic environment in which the relevant reporting entity operates. In translating
the financial statements of such an entity for incorporation in the consolidated financial
statements in the presentation currency the assets and liabilities denominated in other
currencies are translated at end of the financial year rates of exchange and the income and
expense items for each statement presenting profit or loss and other comprehensive income
are translated at average rates of exchange for the financial year. The resulting translation
adjustments (if any) are recognised in other comprehensive income and accumulated in a
separate component of equity until the disposal of that relevant reporting entity.

A-13


Employee Benefits

Contributions to defined contribution retirement benefit plans are recorded as an expense as
they fall due. The entity's legal or constructive obligation is limited to the amount that it
agrees to contribute to an independently administered fund which is the Employees
Provident Fund in Malaysia (a government managed retirement benefit plan) and the Central
Provident Fund in Singapore (a government managed retirement benefit plan). For
employee leave entitlement the expected cost of short-term employee benefits in the form of
compensated absences is recognised in the case of accumulating compensated absences,
when the employees render service that increases their entitlement to future compensated
absences; and in the case of non-accumulating compensated absences, when the absences
occur. A liability for bonuses is recognised where the entity is contractually obliged or where
there is constructive obligation based on past practice.

Income Tax

The income taxes are accounted using the asset and liability method that requires the
recognition of taxes payable or refundable for the current year and deferred tax liabilities and
assets for the future tax consequence of events that have been recognised in the financial
statements or tax returns. The measurements of current and deferred tax liabilities and
assets are based on provisions of the enacted or substantially enacted tax laws; the effects
of future changes in tax laws or rates are not anticipated. Income tax expense represents the
sum of the tax currently payable and deferred tax. Current and deferred income taxes are
recognised as income or as an expense in profit or loss unless the tax relates to items that
are recognised in the same or a different period outside profit or loss.

For such items recognised outside profit or loss the current tax and deferred tax are
recognised (a) in other comprehensive income if the tax is related to an item recognised in
other comprehensive income; and (b) directly in equity if the tax is related to an item
recognised directly in equity. Deferred tax assets and liabilities are offset when they relate to
income taxes levied by the same income tax authority. The carrying amount of deferred tax
assets is reviewed at end of each financial year and is reduced, if necessary, by the amount
of any tax benefits that, based on available evidence, are not expected to be realised.

A deferred tax amount is recognised for all temporary differences, unless the deferred
tax amount arises from the initial recognition of an asset or liability in a transaction which (i)
is not a business combination; and (ii) at the time of the transaction, affects neither
accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for
all taxable temporary differences associated with investments in subsidiaries except where
the reporting entity is able to control the timing of the reversal of the taxable temporary
difference and it is probable that the taxable temporary difference will not reverse in the
foreseeable future or for deductible temporary differences, they will not reverse in the
foreseeable future and they cannot be utilised against taxable profits.

A-14


Borrowing Costs

Borrowing costs are interest and other costs incurred in connection with the borrowing of
funds. The interest expense is calculated using the effective interest rate method. Borrowing
costs are recognised as an expense in the period in which they are incurred except that
borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset that necessarily take a substantial period of time to get ready for their
intended use or sale are capitalised as part of the cost of that asset until substantially all the
activities necessary to prepare the qualifying asset for its intended use or sale are complete.

Property, Plant and Equipment

Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the
assets less their residual values over their estimated useful lives of each part of an item of
these assets. The annual rates of depreciation are as follows:

Furniture and fittings 10% 20%
Plant and machinery 10% 20%
Renovation 10%
Motor vehicles 15% 20%
Buildings 2%
Freehold land Not depreciated

An asset is depreciated when it is available for use until it is derecognised even if during that
period the item is idle. Fully depreciated assets still in use are retained in the financial
statements.

Property, plant and equipment are carried at cost on initial recognition and after initial
recognition at cost less any accumulated depreciation and any accumulated impairment
losses. The gain or loss arising from the derecognition of an item of property, plant and
equipment is determined as the difference between the net disposal proceeds, if any, and the
carrying amount of the item and is recognised in profit or loss. The residual value and the
useful life of an asset is reviewed at least at the end of each financial year and, if
expectations differ significantly from previous estimates, the changes are accounted for as a
change in an accounting estimate, and the depreciation charge for the current and future
periods are adjusted.

Cost also includes acquisition cost, borrowing cost capitalised and any cost directly
attributable to bringing the asset or component to the location and condition necessary for it
to be capable of operating in the manner intended by management. Subsequent costs are
recognised as an asset only when it is probable that future economic benefits associated with
the item will flow to the entity and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to profit or loss when they are incurred.

A-15


Leases

Whether an arrangement is, or contains, a lease, it is based on the substance of the
arrangement at the inception date, that is, whether (a) fulfilment of the arrangement is
dependent on the use of a specific asset or assets (the asset); and (b) the arrangement
conveys a right to use the asset. Leases are classified as finance leases if substantially all
the risks and rewards of ownership are transferred to the lessee. All other leases are
classified as operating leases. At the commencement of the lease term, a finance lease is
recognised as an asset and as a liability in the statement of financial position at amounts
equal to the fair value of the leased asset or, if lower, the present value of the minimum
lease payments, each determined at the inception of the lease. The discount rate used in
calculating the present value of the minimum lease payments is the interest rate implicit in
the lease, if this is practicable to determine; if not, the lessees incremental borrowing rate is
used. Any initial direct costs of the lessee are added to the amount recognised as an asset.
The excess of the lease payments over the recorded lease liability are treated as finance
charges which are allocated to each financial year during the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability. Contingent rents
are charged as expenses in the financial year in which they are incurred. The assets are
depreciated as owned depreciable assets. Leases where the lessor effectively retains
substantially all the risks and benefits of ownership of the leased assets are classified as
operating leases. For operating leases, lease payments are recognised as an expense in
profit or loss on a straight-line basis over the term of the relevant lease unless another
systematic basis is representative of the time pattern of the user's benefit, even if the
payments are not on that basis. Lease incentives received are recognised in profit or loss as
an integral part of the total lease expense.

Subsidiaries

A subsidiary is an entity including unincorporated and special purpose entity that is controlled
by the Group. Control is the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities accompanying a shareholding of more than one
half of the voting rights or the ability to appoint or remove the majority of the members of the
Board of Directors or to cast the majority of votes at meetings of the Board of Directors. The
existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity.

Business Combinations

Business combinations are accounted for by applying the acquisition method. There were
none during the financial years.

A-16


Impairment of Non-Financial Assets

Irrespective of whether there is any indication of impairment, an annual impairment test is
performed at the same time every year on an intangible asset with an indefinite useful life or
an intangible asset not yet available for use. The carrying amount of other non-financial
assets is reviewed at the end of each financial year for indications of impairment and where
an asset is impaired, it is written down through profit or loss to its estimated recoverable
amount. The impairment loss is the excess of the carrying amount over the recoverable
amount and is recognised in profit or loss. The recoverable amount of an asset or a cash-
generating unit is the higher of its fair value less costs to sell and its value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). At the end of each financial year non-financial assets other than goodwill
with impairment loss recognised in prior periods are assessed for possible reversal of the
impairment. An impairment loss is reversed only to the extent that the assets carrying
amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.

Inventories

Inventories are measured at the lower of cost (first in first out method) and net realisable
value. Net realisable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make the sale.
A write down on cost is made where the cost is not recoverable or if the selling prices have
declined. Cost includes all costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition. In the case of manufactured
inventories and work in progress, cost includes an appropriate share of overheads based on
normal operating capacity.

Financial Assets

Initial recognition, measurement and derecognition:

A financial asset is recognised on the statement of financial position when, and only when,
the entity becomes a party to the contractual provisions of the instrument. The initial
recognition of financial assets is at fair value normally represented by the transaction price.
The transaction price for financial asset not classified at fair value through profit or loss
includes the transaction costs that are directly attributable to the acquisition or issue of the
financial asset. Transaction costs incurred on the acquisition or issue of financial assets
classified at fair value through profit or loss are expensed immediately. The transactions are
recorded at the trade date.

A-17


Financial Assets (Contd)

Irrespective of the legal form of the transactions performed, financial assets are
derecognised when they pass the substance over form based on the derecognition test
prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the
transfer of control. Financial assets and financial liabilities are offset and the net amount is
reported in the statement of financial position if there is currently a legally enforceable right
to offset the recognised amounts and there is an intention to settle on a net basis, to realise
the assets and settle the liabilities simultaneously.

Subsequent measurement based on the classification of the financial assets in one of the
following four categories under FRS 39 is as follows:

1. Financial assets at fair value through profit or loss: As at end of the financial year
dates there were no financial assets classified in this category.

2. Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Assets that are for sale
immediately or in the near term are not classified in this category. These assets are
carried at amortised costs using the effective interest method (except that short-
duration receivables with no stated interest rate are normally measured at
original invoice amount unless the effect of imputing interest would be significant)
minus any reduction (directly or through the use of an allowance account) for
impairment or uncollectibility. Impairment charges are provided only when there is
objective evidence that an impairment loss has been incurred as a result of one or
more events that occurred after the initial recognition of the asset (a loss event) and
that loss event (or events) has an impact on the estimated future cash flows of the
financial asset or group of financial assets that can be reliably estimated. The
methodology ensures that an impairment loss is not recognised on the initial
recognition of an asset. Losses expected as a result of future events, no matter how
likely, are not recognised. For impairment, the carrying amount of the asset is
reduced through use of an allowance account. The amount of the loss is recognised
in profit or loss. An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was recognised. Typically
the trade and other receivables are classified in this category.

3. Held-to-maturity financial assets: As at end of the financial year dates there were no
financial assets classified in this category.

4. Available-for-sale financial assets: As at end of the financial year dates there were
no financial assets classified in this category.

Cash and Cash Equivalents

Cash and cash equivalents include bank and cash balances, on demand deposits and any
highly liquid debt instruments purchased with an original maturity of three months or less.
For the statement of cash flows the item includes cash and cash equivalents less cash
subject to restriction and bank overdrafts payable on demand that form an integral part of
cash management.

A-18


Hedging

The entity is exposed to currency and interest rate risks. The policy is to reduce currency
and interest rate exposures through derivatives and other hedging instruments. From time to
time, there may be borrowings and foreign exchange arrangements or interest rate swap
contracts or similar instruments entered into as hedges against changes in interest rates,
cash flows or the fair value of the financial assets and liabilities. They are carried at fair value.
The gain or loss from remeasuring these hedging or other arrangement instruments at fair
value are recognised in profit or loss. The derivatives and other hedging instruments used
are described below in the notes to the financial statements.

Derivatives

All derivatives are initially recognised and subsequently carried at fair value. Accounting for
derivatives engaged in hedging relationships is described in the above section. Certain
derivatives are entered into in order to hedge some transactions and all the strict hedging
criteria prescribed by FRS 39 are not met. In those cases, even though the transaction has its
economic and business rationale, hedge accounting cannot be applied. As a result, changes
in the fair value of those derivatives are recognised directly in profit or loss and the hedged
item follows normal accounting policies.

Financial Liabilities

Initial recognition, measurement and derecognition:

A financial liability is recognised on the statement of financial position when, and only when,
the entity becomes a party to the contractual provisions of the instrument and it is
derecognised when the obligation specified in the contract is discharged or cancelled or
expires. The initial recognition of financial liability is at fair value normally represented by
the transaction price. The transaction price for financial liability not classified at fair value
through profit or loss includes the transaction costs that are directly attributable to the
acquisition or issue of the financial liability. Transaction costs incurred on the acquisition or
issue of financial liability classified at fair value through profit or loss are expensed
immediately. The transactions are recorded at the trade date. Financial liabilities including
bank and other borrowings are classified as current liabilities unless there is an unconditional
right to defer settlement of the liability for at least 12 months after the end of the financial
year.

Subsequent measurement based on the classification of the financial liabilities in one of the
following two categories under FRS 39 is as follows:

1. Liabilities at fair value through profit or loss: Liabilities are classified in this category
when they are incurred principally for the purpose of selling or repurchasing in the
near term (trading liabilities) or are derivatives (except for a derivative that is a
designated and effective hedging instrument) or have been classified in this category
because the conditions are met to use the fair value option and it is used. Financial
guarantee contracts if significant are initially recognised at fair value and are
subsequently measured at the greater of (a) the amount determined in accordance
with FRS 37 and (b) the amount initially recognised less, where appropriate,
cumulative amortisation recognised in accordance with FRS 18. All changes in fair
value relating to liabilities at fair value through profit or loss are charged to profit or
loss as incurred.

A-19


Financial Liabilities (Contd)

2. Other financial liabilities: All liabilities, which have not been classified as in the
previous category fall into this residual category. These liabilities are carried at
amortised cost using the effective interest method. Trade and other payables and
borrowings are usually classified in this category. Items classified within current trade
and other payables are not usually re-measured, as the obligation is usually known
with a high degree of certainty and settlement is short-term.

Fair Value Measurement

Fair value is taken to be the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date (that
is, an exit price). It is a market-based measurement, not an entity-specific measurement.
When measuring fair value, management uses the assumptions that market participants
would use when pricing the asset or liability under current market conditions, including
assumptions about risk. The entitys intention to hold an asset or to settle or otherwise fulfil a
liability is not taken into account as relevant when measuring fair value. In making the fair
value measurement, management determines the following: (a) the particular asset or
liability being measured (these are identified and disclosed in the relevant notes below); (b)
for a non-financial asset, the highest and best use of the asset and whether the asset is used
in combination with other assets or on a stand-alone basis; (c) the market in which an orderly
transaction would take place for the asset or liability; and (d) the appropriate valuation
techniques to use when measuring fair value. The valuation techniques used maximise the
use of relevant observable inputs and minimise unobservable inputs. These inputs are
consistent with the inputs a market participant may use when pricing the asset or liability.

The fair value measurements and related disclosures categorise the inputs to valuation
techniques used to measure fair value by using a fair value hierarchy of three levels. These
are recurring fair value measurements unless stated otherwise in the relevant notes to the
financial statements. Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities that the entity can access at the measurement date. Level 2
inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the
asset or liability. The level is measured on the basis of the lowest level input that is
significant to the fair value measurement in its entirety. Transfers between levels of the fair
value hierarchy are deemed to have occurred at the beginning of the financial year.

If a financial instrument measured at fair value has a bid price and an ask price, the price
within the bid-ask spread or mid-market pricing that is most representative of fair value in the
circumstances is used to measure fair value regardless of where the input is categorised
within the fair value hierarchy. If there is no market, or the markets available are not active,
the fair value is established by using an acceptable valuation technique.

The carrying values of current financial instruments approximate their fair values due to the
short-term maturity of these instruments and the disclosures of fair value are not made when
the carrying amount of current financial instruments is a reasonable approximation of the fair
value. The fair values of non-current financial instruments may not be disclosed separately
unless there are significant differences at the end of the financial year and in the event the
fair values are disclosed in the relevant notes to the financial statements.

A-20


Equity

Equity instruments are contracts that give a residual interest in the net assets of the
Company. Ordinary shares are classified as equity. Equity instruments are recognised at the
amount of proceeds received net of incremental costs directly attributable to the transaction.
Dividends on equity are recognised as liabilities when they are declared. Interim dividends
are recognised when declared by the Directors.

Provisions

A liability or provision is recognised when there is a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Provisions are made using best estimates of the amount required
in settlement and where the effect of the time value of money is material, the amount
recognised is the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the provision due to passage
of time is recognised as interest expense. Changes in estimates are reflected in profit or loss
in the financial year they occur.

Critical Judgements, Assumptions and Estimation Uncertainties

The critical judgements made in the process of applying the accounting policies that have the
most significant effect on the amounts recognised in the financial statements and the key
assumptions concerning the future, and other key sources of estimation uncertainty at the
end of each financial year, 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.
These estimates and assumptions are periodically monitored to ensure they incorporate all
relevant information available at the date when financial statements are prepared. However,
this does not prevent actual figures differing from estimates.

Net realisable value of inventories:
A review is made periodically on inventory for excess inventory and declines in net realisable
value below cost and an allowance is recorded against the inventory balance for any such
declines. These reviews require management to consider the future demand for the products.
In any case the realisable value represents the best estimate of the recoverable amount and
is based on the acceptable evidence available at the end of each financial year and
inherently involves estimates regarding the future expected realisable value. The usual
considerations for determining the amount of allowance or write-down include ageing
analysis, technical assessment and subsequent events. In general, such an evaluation
process requires significant judgement and materially affects the carrying amount of
inventories at the end of each financial year. Possible changes in these estimates could
result in revisions to the stated value of the inventories. The carrying amount is disclosed in
the Note 12 on inventories.

A-21


Critical Judgements, Assumptions and Estimation Uncertainties (Contd)

Useful lives of property, plant and equipment:
The estimates for the useful lives and related depreciation charges for property, plant and
equipment is based on commercial and other factors which could change significantly as a
result of innovations and in response to market conditions. The depreciation charge is
increased where useful lives are less than previously estimated lives, or the carrying
amounts written off or written down for technically obsolete items or assets that have been
abandoned. It is impracticable to disclose the extent of the possible effects. It is reasonably
possible, based on existing knowledge, that outcomes within the next financial year that are
different from assumptions could require a material adjustment to the carrying amount of the
balances affected. The carrying amount of the specific asset (or class of assets) at 29
February 2012, 28 February 2013 and 2014 affected by the assumption was approximately
RM20,267,000, RM20,751,000 and RM19,114,000, respectively.

Allowance for doubtful accounts:
An allowance is made for doubtful accounts for estimated losses resulting from the
subsequent inability of the customers to make required payments. If the financial conditions
of the customers were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances may be required in future periods. To the extent that it is
feasible impairment and uncollectibility is determined individually for each item. In cases
where that process is not feasible, a collective evaluation of impairment is performed. At the
end of the financial year, the receivables carrying amount approximates the fair value and
the carrying amounts might change materially within the next financial year but these
changes would not arise from assumptions or other sources of estimation uncertainty at the
end of the financial year. The carrying amount of receivables is disclosed in Note 13 on trade
and other receivables.

Determination of functional currency:
In determining the functional currencies of the entities in the Group, judgement is required to
determine the currency that mainly influences sales prices of goods and services and of the
country whose competitive forces and regulations mainly determine the sales prices of its
goods and services. The functional currencies of the entities in the Group are determined
based on managements assessment of the economic environment in which the entities
operate and the entities process of determining sales prices.

Income tax amounts:
The Group recognises tax liabilities and assets tax based on an estimation of the likely taxes
due, which requires significant judgement as to the ultimate tax determination of certain
items. Where the actual amount arising from these issues differs from these estimates, such
differences will have an impact on income tax and deferred tax amounts in the period when
such determination is made. In addition management judgement is required in determining
the amount of current and deferred tax recognised and the extent to which amounts should or
can be recognised. A deferred tax asset is recognised if it is probable that the entity will earn
sufficient taxable profit in future periods to benefit from a reduction in tax payments. This
involves the management making assumptions within its overall tax planning activities and
periodically reassessing them in order to reflect changed circumstances as well as tax
regulations. Moreover, the measurement of a deferred tax asset or liability reflects the
manner in which the entity expects to recover the assets carrying value or settle the liability.
As a result, due to their inherent nature assessments of likelihood are judgmental and not
susceptible to precise determination. The income tax amounts are disclosed in the Note 8 on
income tax.

A-22

3. Related Party Relationships and Transactions

FRS 24 defines a related party as a person or entity that is related to the reporting entity and
it includes (a) A person or a close member of that persons family if that person: (i) has
control or joint control over the reporting entity; (ii) has significant influence over the reporting
entity; or (iii) is a member of the key management personnel of the reporting entity or of a
parent of the reporting entity. (b) An entity is related to the reporting entity if any of the
following conditions apply: (i) The entity and the reporting entity are members of the same
Group; (ii) One entity is an associate or joint venture of the other entity; (iii) Both entities are
joint ventures of the same third party; (iv) One entity is a joint venture of a third entity and
the other entity is an associate of the third entity; (v) The entity is a post-employment benefit
plan for the benefit of employees of either the reporting entity or an entity related to the
reporting entity; (vi) The entity is controlled or jointly controlled by a person identified in (a);
(vii) A person identified in (a) (i) has significant influence over the entity or is a member of
the key management personnel of the entity (or of a parent of the entity).

3.1 Related parties other than related companies:

There are transactions and arrangements between the reporting entity and related parties
and the effects of these on the basis determined between the parties are reflected in these
financial statements. The current related party balances are unsecured without fixed
repayment terms and interest unless stated otherwise.

Significant related party transactions:

In addition to the transactions and balances disclosed elsewhere in the notes to the financial
statements, this item includes the following:
Related parties
2012
RM000
2013
RM000
2014
RM000

Sales (529) (119) (19)
Purchases of materials 5,959 6,426 6,487
Purchases of equipment 24

Directors
2012
RM000
2013
RM000
2014
RM000

Sales of motor vehicles 15

Related parties are companies in which the Directors have an interest in and exercise
influence.

A-23

3. Related Party Relationships and Transactions (Contd)

3.2 Key management compensation:

2012
RM000
2013
RM000
2014
RM000

Salaries and other short-term employee
benefits 997 1,474 1,660

Included in the above amounts are the following items:

2012
RM000
2013
RM000
2014
RM000

Fees to directors of the Group 360 360 360
Remuneration of Directors of the Group 630 720 793

Key management personnel are the Directors and those persons having authority and
responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly.

3.3. Other receivables from and other payables to related parties:

The trade transactions and the trade receivables and payables balances arising from sales
and purchases of goods and services are disclosed elsewhere in the notes to the financial
statements.

The movements in other payables to directors are as follows:

Directors

2012
RM000
2013
RM000
2014
RM000
Other payables:
Balance at beginning of the year 1,564 1,646 590
Amounts paid in and settlement of liabilities on
behalf of the Group 143 273 268
Amounts paid out and settlement of liabilities
on behalf of the Directors (61) (1,329) (811)
Declared dividends 10,500
Dividends paid (7,500)
Balance at end of the year (Note 17) 1,646 590 3,047

4. Revenue

2012
RM000
2013
RM000
2014
RM000

Sale of goods 49,279 59,694 78,839

A-24

5. Other Credits and (Other Charges)

2012
RM000
2013
RM000
2014
RM000

Allowance for impairment on trade receivables (3) (16)
Bad debt recovered 24
Litigation compensation 627 71 155
Foreign exchange adjustment gains 171 420 448
Gains (Losses) on disposal of plant and equipment 87 (4) 4
Plant and equipment written off (134) (66) (17)
Insurance claims 188 5 115
Sundry income 19 14 34
979 440 723

Presented in profit or loss as:
Other Credits 1,116 510 756
Other Charges (137) (70) (33)
Net 979 440 723

6. Marketing and Distribution Expenses, Administrative Expenses and Finance Costs

The major components include the following:
2012
RM000
2013
RM000
2014
RM000

Marketing and distribution expenses
Advertisement and promotions 513 444 484
Sales commissions 74 321 1,473
Depreciation expense 245 223 237
Employee benefits expense 1,356 1,364 1,459
Showrooms rental expense 333 333 338
Logistics expense 639 957 708
Installation charges 1,027

Administrative expenses
Depreciation expense 629 490 929
Employee benefits expense 3,416 4,032 3,918

Finance costs

This is for interest expense.

A-25

7. Employee Benefits Expense

2012
RM000
2013
RM000
2014
RM000

Short term employee benefits expense 9,019 9,654 11,522
Contributions to defined contribution plan 506 626 668
Other benefits 171 228 249
Total employee benefits expense 9,696 10,508 12,439

The employee benefits expense is charged as
follows:
Cost of sales 4,924 5,112 7,062
Marketing and distribution expenses (Note 6) 1,356 1,364 1,459
Administrative expenses (Note 6) 3,416 4,032 3,918
Total employee benefits expense 9,696 10,508 12,439

8. Income Tax

8A. Components of tax expense recognised in profit or loss include:

2012
RM000
2013
RM000
2014
RM000

Current tax expense:
Current tax expense 757 2,600 4,972
Under (Over) adjustments in respect of prior periods 105 (96) (174)
Subtotal 862 2,504 4,798

Deferred tax expense:
Deferred tax expense (income) 117 287 (252)
Under (Over) adjustments in respect of prior periods 1,008 (4) (287)
Subtotal 1,125 283 (539)
Total income tax expense 1,987 2,787 4,259

Substantially all of the Groups operations are located in Malaysia for the financial years
under review. Accordingly, the Malaysian statutory tax rate of 25% is used in the
reconciliation below.

A-26

8. Income Tax (Contd)

The income tax in profit or loss varied from the amount of income tax amount determined by
applying the Malaysian statutory income tax rate of 25% to profit or loss before income tax
as a result of the following differences:

2012
RM000
2013
RM000
2014
RM000

Profit before tax 6,363 11,505 18,803

Income tax expense at the above rate 1,591 2,876 4,701
Not deductible items 152 110 157
Tax exemptions and credits (63)
Utilisation of reinvestment allowances and double
deductions (843)
Differential in tax rate (75) (75) (75)
Under (Over) adjustment to tax in respect of prior
periods 1,113 (100) (461)
Other items less than 3% each 49 (24)
Total income tax expense 1,987 2,787 4,259

There are no income tax consequences of dividends to owners of the Company.

The amount of income tax payable outstanding as at end of the financial years ended 29
February 2012, 28 February 2013 and 2014 is Nil, RM64,000 and RM1,912,000 respectively,
such an amount is net of tax advances, which, according to the tax rules, were paid before
end of the financial year.

8B. Deferred tax expense recognised in profit or loss include:

2012
RM000
2013
RM000
2014
RM000

Excess of tax over book depreciation on plant and
equipment 1,125 325 (296)
Unrealised loss on foreign exchange (42) (92)
Allowance for inventories (151)
Total deferred tax expense recognised in profit or
loss 1,125 283 (539)

8C. Deferred tax balance in the statements of financial position:

2012
RM000
2013
RM000
2014
RM000
Deferred tax liabilities recognised in profit or loss:
Excess of tax over book depreciation on plant and
equipment 1,125 1,450 1,154
Unrealised gains (loss) on foreign exchange 42 (92)
Allowance for inventories (151)
Net 1,167 1,450 911

A-27

9. Earnings Per Share

Basic earnings per share amount is calculated by dividing the profit attributable to ordinary
equity holders of the Company by the weighted average number of pre-invitation ordinary
shares of no par value as follows:

2012
RM000
2013
RM000
2014
RM000

Net profit attributable to ordinary equity holders of
the Company 4,376 8,718 14,544

000 000 000
Weighted average number of pre-invitation shares 110,000 110,000 110,000

Diluted earnings per share is similar to basic earnings per share as there were no potential
dilutive ordinary shares existing during the relevant period.

10. Dividends on Equity Shares

2012
RM000
2013
RM000
2014
RM000

First interim single tier dividend paid of RM2.29 per
ordinary share for J emaramas J aya Sdn. Bhd. 5,500
First interim single tier dividend paid of RM2.04 per
ordinary share for Versalink Marketing Sdn. Bhd. 2,000
Final single tier dividend paid of RM1.02 per
ordinary share for Versalink Marketing Sdn. Bhd. 1,000
Single tier dividend paid of RM20.00 per share for
Versalink Technology Sdn. Bhd.

2,000

10,500

The dividends were paid in respect of ordinary shares of J emaramas J aya Sdn. Bhd.,
Versalink Marketing Sdn. Bhd. and Versalink Technology Sdn. Bhd. to the shareholders of
these companies prior to the completion of the Restructuring Exercise.

Dividends amounting to RM7,500,000 have been paid before the financial year ended 28
February 2014 and the balance of RM3,000,000 remained payable at the end of the financial
year ended 28 February 2014 and is included in the other payables due to directors, who are
also shareholders of the respective companies, in Note 17.

A-28

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A-29

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A-30

11. Property, Plant and Equipment (Contd)

Allocation of the depreciation expense:

2012
RM000
2013
RM000
2014
RM000

Cost of sales 1,083 1,129 1,123
Marketing and Distribution Expenses 245 223 237
Administrative expenses 629 490 929
Total 1,957 1,842 2,289

a) Certain items are under finance lease agreements (see Note 18B).

b) The net book value of property, plant and equipment which have been pledged as
securities for banking facilities (see Note 18A) are as follows:

2012
RM000
2013
RM000
2014
RM000

Freehold land 5,869 6,250 6,250
Buildings 11,685 12,672 12,514
Total 17,554 18,922 18,764

c) Fully depreciated plant and equipment still in use had an initial cost of:

2012
RM000
2013
RM000
2014
RM000

Furniture and fittings 318 407 1,340
Plant and machinery 4,584 4,362 4,343
Motor vehicles 858 324 459
Renovation 3 3 27
Total 5,763 5,096 6,169

A-31

12. Inventories

2012
RM000
2013
RM000
2014
RM000

Raw materials 7,083 7,339 8,268
Work-in-progress 305 122 237
Finished goods 2,302 2,815 2,571
9,690 10,276 11,076

Inventories are stated after allowance.
Movements in allowance:
Balance at beginning of the year
Charge to profit or loss included in cost of sales (606)
Balance at end of the year (606)

Changes in inventories of finished goods and
work-in-progress (increase) (441) (330) (129)
The write-downs of inventories charged to profit or
loss included in cost of sales 606

There are no inventories pledged as security for liabilities.

13. Trade Receivables

2012
RM000
2013
RM000
2014
RM000

Trade receivables:
Outside parties 4,453 5,096 10,296
Less allowance for impairment (3) (3) (16)
Related party (Note 3) 240 124 35
Total trade receivables 4,690 5,217 10,315

Movements in above allowance:
Balance at beginning of the year 3 3
Charge for trade receivables to profit or loss
included in other charges (Note 5) 3 16
Bad debts written off (3)
Balance at end of the year 3 3 16

14. Other Assets

2012
RM000
2013
RM000
2014
RM000

Advance payments on purchases of inventories 381 409 1,379
Deposits 123 142 186
Prepayments 485 741 1,263
989 1,292 2,828

A-32

15. Cash and Cash Equivalents

2012
RM000
2013
RM000
2014
RM000

Not restricted in use 11,146 11,236 11,717
Cash pledged for bank facilities 1,317 1,369 1,417
12,463 12,605 13,134

The rate of interest for the cash on interest earning balances for financial years ended 29
February 2012, 28 February 2013 and 2014 of RM5,217,000, RM3,770,000 and
RM2,946,000 ranged between 2.40% to 3.40%, 2.55% to 3.05% and 2.55% to 3.05%
respectively, and for a tenor of one to twelve months.

Within these balances, RM1,317,000, RM1,369,000 and RM1,417,000, are pledged to banks
to secure bank facilities for financial years ended 29 February 2012, 28 February 2013 and
2014 (see Note 18A). In addition, RM204,800, RM211,278 and RM225,265 was held by a
director on behalf of the Group. The balances held by a director have been transferred to the
Group subsequent to the financial year ended 28 February 2014.

15A. Cash and cash equivalents in the combined statement of cash flows:

2012
RM000
2013
RM000
2014
RM000

Amount as shown above 12,463 12,605 13,134
Cash pledged for bank facilities (1,317) (1,369) (1,417)
Bank overdrafts (705) (784) (223)
Cash and cash equivalents for combined
statement of cash flows purposes at end of the
year 10,441 10,452 11,494

15B. Non-cash transactions:

For the financial year ended 29 February 2012, there were acquisitions of certain assets
under plant and equipment with a total cost of RM410,000 acquired by means of finance
leases. There were no such acquisitions by means of finance leases for financial years ended
28 February 2013 and 2014 respectively.

16. Share Capital

Number
of shares
issued
Share
capital
000 RM000
Ordinary shares of RM1.00 Each:
Balance at 1 March 2011, 29 February 2012, 28 February
2013 and 28 February 2014
(a)
3,479 3,479

(a) The share capital represents the combined share capital of J emaramas J aya Sdn. Bhd.,
Versalink Marketing Sdn. Bhd. and Versalink Technology Sdn. Bhd. prior to the
Restructuring Exercise (Note 1.2).

The ordinary shares of RM1.00 each which are fully paid carry no right of fixed income and
with one vote per share. The Company is not subject to any externally imposed capital
requirements.

A-33

16. Share Capital (Contd)

Capital Management:

The objectives when managing capital are: to safeguard the reporting entitys ability to
continue as a going concern, so that it can continue to provide returns for owners and
benefits for other stakeholders, and to provide an adequate return to owners by pricing the
sales commensurately with the level of risk. The management sets the amount of capital to
meet its requirements and the risk taken. There were no changes in the approach to capital
management during the financial years. The management manages the capital structure and
makes adjustments to it where necessary or possible in the light of changes in conditions and
the risk characteristics of the underlying assets. In order to maintain or adjust the capital
structure, the management may adjust the amount of dividends paid to owners, return capital
to owners, issue new shares, or sell assets to reduce debt. Adjusted capital comprises all
components of equity (that is, share capital and reserves).

The management monitors the capital on the basis of the debt-to-adjusted capital ratio. This
ratio is calculated as net debt / adjusted capital (as shown below). Net debt is calculated as
total borrowings less cash and cash equivalents.

2012
RM000
2013
RM000
2014
RM000

Net debt:
All current and non-current borrowings including
finance leases (Note 18) 10,542 7,258 4,306
Less cash and cash equivalents (12,463) (12,605) (13,134)
Net debt (1,921) (5,347) (8,828)

Adjusted capital 31,595 40,313 44,357

Debt-to-adjusted capital ratio N.M. N.M. N.M.

N.M.: Not meaningful

For the financial years ended 29 February 2012, 28 February 2013 and 2014, the Groups
total borrowings are less than the total cash and cash equivalents as disclosed in Note 15.
The debt-to-adjusted capital ratio therefore may not provide a meaningful indicator of the risk
from borrowings.

A-34

17. Trade and Other Payables

2012
RM000
2013
RM000
2014
RM000

Trade payables:
Outside parties 5,414 2,560 5,895
Related parties (Note 3) 1,541 1,422 4
Subtotal 6,955 3,982 5,899

Other payables:
Directors (Note 3) (Note A) 1,646 590 3,047
Outside parties and accrued liabilities 1,520 1,235 1,314
Deposits received from customers 1,607 1,499 970
Subtotal 4,773 3,324 5,331
Total trade and other payables 11,728 7,306 11,230

Note A: Included in other payables to directors as at 28 February 2014 are dividend payables
of RM3,000,000. Also see Note 10. The amounts have been paid subsequent to the financial
year ended 28 February 2014.

18. Other Financial Liabilities

2012
RM000
2013
RM000
2014
RM000
Non-Current:
Financial instruments with fixed interest rates:
Bank loans (secured) (Note 18A) 4,368 1,710 1,490
Finance lease payables (Note 18B) 1,053 113
Non-Current 5,421 1,823 1,490

Current:
Financial instruments with floating interest rates:
Bankers acceptance (secured) (Note 18A) 1,053 601 296
Financial instruments with fixed interest rates:
Bank loans (secured) (Note 18A) 1,242 2,667 1,459
Bank overdrafts (secured) (Note 18A) 705 784 223
Bankers acceptance (secured) (Note 18A) 811 443 725
Finance lease payables (Note 18B) 1,310 940 113
Current 5,121 5,435 2,816
Total 10,542 7,258 4,306

The non-current portion of bank loans are repayable as follows:

2012
RM000
2013
RM000
2014
RM000

Later than 1 year and not later than 5 years 3,305 1,710 1,490
Later than 5 years 1,063
Total non-current portion 4,368 1,710 1,490

A-35

18. Other Financial Liabilities (Contd)

The range of floating rate interest rates paid were as follows:

2012
%
2013
%
2014
%

Bankers acceptance (secured) 4.70 4.95 4.70 4.95 4.70 4.95

The fixed rate interest rates paid were as follows:

2012
%
2013
%
2014
%

Bank loans (secured) 7.10 7.10 4.65
Bank overdrafts (secured) 8.10 7.85 7.85
Bankers acceptance (secured) 4.70 4.45 4.45

18A. Bank Loans, Bank Overdrafts and Bankers acceptance

The bank agreements for certain of the bank loans, overdrafts and bankers acceptance
provide among other matters for the following:

(a) First party charge against the freehold land and buildings of the Group as disclosed
in Note 11.
(b) J oint and several guarantees by certain directors of the Company and subsidiaries.
(c) Corporate guarantee for RM1,900,000 executed by Versalink Marketing Sdn. Bhd.
to J emaramas J aya Sdn. Bhd..
(d) Fixed deposits with banks disclosed in Note 15.

The repayment terms of the bank loans are as follows:

Term loan 1 at KLIBOR
+1.35% per annum
Repayable in 24 equal monthly instalments of RM31,518,
effective from J uly 2013.
+1.35% per annum
+1.35% per annum
+1.35% per annum
effective from November 2005.

The fair values of the bank loans, bank overdrafts and bankers acceptance were estimated
by discounting the future cash flows payable under the terms of the loan using the year-end
market interest rate applicable to loans of similar credit risk, terms and conditions (Level 2).
The fair value of the bank borrowings is a reasonable approximation of the carrying amount.

A-36

18. Other Financial Liabilities (Contd)

18B. Finance Lease Payables

29 February 2012
Minimum
payments
Finance
charges
Present
value
RM000 RM000 RM000
Minimum lease payments payable:
Due within one year 1,396 (86) 1,310
Due within 2 to 5 years 1,079 (26) 1,053
Total 2,475 (112) 2,363

Net carrying value of plant and equipment under finance leases (RM000) 4,164

28 February 2013
Minimum
payments
Finance
charges
Present
value
RM000 RM000 RM000
Due within one year 964 (24) 940
Due within 2 to 5 years 115 (2) 113
Total 1,079 (26) 1,053

Net carrying value of plant and equipment under finance leases (RM000) 3,557

28 February 2014
Minimum
payments
Finance
charges
Present
value
RM000 RM000 RM000
Due within one year 115 (2) 113
Total 115 (2) 113

Net carrying value of plant and equipment under finance leases (RM000) 424

There are leased assets under finance leases. All leases are on a fixed repayment basis and
no arrangements have been entered into for contingent rental payments. The obligations
under the finance leases are secured by the lessors charge over the leased assets. Other
details are as follows:

2012

2013

2014

Average lease term, in years
3 3 3
Average effective borrowing rate per year
2.48 2.75 2.48 2.75 2.48 2.75

The total for finance leases and the average effective borrowing rate per year is disclosed
above. The fair value of the finance leases were estimated by discounting the future
cashflows payable under the terms of the finance leases using the year-end rules as
disclosed above which is applicable to similar finance leases (Level 3).

A-37

19. Derivative Financial Instruments

2012
RM000
2013
RM000
2014
RM000

Non-hedging instruments - Forward foreign
exchange contracts gains (Note 19A) 53

The fair value of forward currency contracts is based on the current value of the difference
between the contractual exchange rate and the market rate at the end of the financial year.
The fair value is regarded as a level 2 fair value measurement for financial instruments.
These are not recorded as they are not significant.

19A. Forward Currency Contracts

2013 Principal
Reference
currency Maturity Favourable
US$000 RM000

Forward currency contract 1,000 RM 29 J uly 2013 53

Currency derivatives are utilised to hedge significant future transactions and cash flows. The
entity is party to a variety of foreign currency forward contracts in the management of its
exchange rate exposures. The instruments purchased are primarily denominated in the
currencies of the entitys principal markets. As a matter of principle, the entity does not enter
into derivative contracts for speculative purposes.

20. Financial Instruments: Information on Financial Risks

20A. Classification of Financial Assets and Liabilities

The following table summarises the carrying amount of financial assets and liabilities
recorded at the end of the financial year by FRS 39 categories:

2012
RM000
2013
RM000
2014
RM000
Financial assets:
Cash and cash equivalents 12,463 12,605 13,134
Loans and receivables 4,690 5,217 10,315
At end of the year 17,153 17,822 23,449

Financial liabilities:
Other financial liabilities measured at
amortised cost 10,542 7,258 4,306
Trade and other payables measured at
amortised cost 10,121 5,807 10,260
At end of the year 20,663 13,065 14,566

There are no significant fair value measurements recognised in the statement of financial
position.

Further quantitative disclosures are included throughout these financial statements.

A-38

20. Financial Instruments: Information on Financial Risks (Contd)

20B. Financial Risk Management

The main purpose for holding or issuing financial instruments is to raise and manage the
finances for the entitys operating, investing and financing activities. The main risks arising
from the entitys financial instruments are credit risk, interest risk, liquidity risk, foreign
currency risk and market price risk comprising interest rate and currency risk exposures.
Management has certain practices for the management of financial risks. These guidelines
set up the short and long term objectives and action to be taken in order to manage the
financial risks. The major guidelines are the following:

1. Minimise interest rate, currency, credit and market risk for all kinds of transactions.
2. Maximise the use of natural hedge: favouring as much as possible the natural off-
setting of sales and costs and payables and receivables denominated in the same
currency and therefore put in place hedging strategies only for the excess balance. The
same strategy is pursued with regard to interest rate risk.
3. All financial risk management activities are carried out and monitored by senior
management staff.
4. All financial risk management activities are carried out following good market practices.
5. When appropriate may consider investing in shares or similar instruments.
6. When appropriate enter into derivatives or any other similar instruments solely for
hedging purposes.

There have been no changes to the exposures to risk; the objectives, policies and processes
for managing the risk and the methods used to measure the risks.

20C. Fair Value of Financial Instruments

The analyses of financial instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 are disclosed in the relevant notes to the financial
statements. These include both the significant financial instruments stated at amortised cost
and at fair value in the statement of financial position. The carrying values of current
financial instruments approximate their fair values due to the short-term maturity of these
instruments and the disclosures of fair value are not made when the carrying amount of
current financial instruments is a reasonable approximation of the fair value.

20D. Credit Risk on Financial Assets

Financial assets that are potentially subject to concentrations of credit risk and failures by
counterparties to discharge their obligations in full or in a timely manner consist principally of
cash balances with banks, cash equivalents and receivables. The maximum exposure to
credit risk is: the total of the fair value of the financial assets; the maximum amount the entity
could have to pay if the guarantee is called on; and the full amount of any payable
commitments at the end of the financial year. Credit risk on cash balances with banks and
any other financial instruments is limited because the counter-parties are entities with
acceptable credit ratings. For credit risk on receivables an ongoing credit evaluation is
performed on the financial condition of the debtors and a loss from impairment is recognised
in profit or loss. The exposure to credit risk with customers is controlled by setting limits on
the exposure to individual customers and these are disseminated to the relevant persons
concerned and compliance is monitored by management. There is no significant
concentration of credit risk on customers, as the exposure is spread over a large number of
counter-parties and customers unless otherwise disclosed in the notes to the financial
statements below.

Note 15 discloses the maturity of the cash and cash equivalents balances.
A-39


20D. Credit Risk on Financial Assets (Contd)

As part of the process of setting customer credit limits, different credit terms are used. The
average credit period generally granted to trade receivable customers in 2012, 2013 and
2014 is about 30 to 60 days. But some customers take a longer period to settle the amounts.

(a) Ageing analysis of the age of trade receivable amounts that are past due as at the
end of financial years but not impaired:

2012
RM000
2013
RM000
2014
RM000
Trade receivables:
Less than 3 months 1,713 816 4,554
3 to 6 months 10 49 250
Over 6 months 561 222 1,429
Total 2,284 1,087 6,233

(b) Ageing analysis as at the end of financial years of trade receivables amounts that are
impaired:

2012
RM000
2013
RM000
2014
RM000
Trade receivables:
Over 6 months 3 3 16
Total 3 3 16

Other receivables are normally with no fixed terms and therefore there is no maturity.
Management has made arrangements to ensure that all non-trade debts are settled before
the listing date.

Concentration of trade receivable customers as at end of financial year:

2012
RM000
2013
RM000
2014
RM000

Top 1 customer 1,203 683 1,946
Top 2 customers 2,105 1,177 3,505
Top 3 customers 2,630 1,523 4,171

A-40


20E. Liquidity Risk Financial Liabilities Maturity Analysis

The following table analyses the non-derivative financial liabilities by remaining contractual
maturity (contractual and undiscounted cash flows):

Less than 2 - 5 More than
1 year years 5 years Total
RM000 RM000 RM000 RM000
29 February 2012
Non-derivative financial liabilities:
Gross borrowings commitments 4,247 4,312 507 9,066
Gross finance lease obligations 1,396 1,079 2,475
Trade and other payables 10,121 10,121
At end of the year 15,764 5,391 507 21,662

28 February 2013
Gross borrowings commitments 4,775 1,951 6,726
Gross finance lease obligations 964 115 1,079
At end of the year 11,546 2,066 13,612

28 February 2014
Gross borrowings commitments 2,809 1,584 4,393
Gross finance lease obligations 115 115
At end of the year 13,184 1,584 14,768

The undiscounted amounts on the borrowings with fixed and floating interest rates are
determined by reference to the conditions existing at the financial date.

Bank facilities:

2012
RM000
2013
RM000
2014
RM000

Undrawn borrowing facilities 11,670 12,471 13,333

The undrawn borrowing facilities are available for operating activities and to settle other
commitments. Borrowing facilities are maintained to ensure funds are available for the
forecasted operations. A monthly schedule showing the maturity of financial liabilities and
unused bank facilities is provided to management to assist them in monitoring the liquidity
risk.

A-41


20F. Interest Rate Risk

The interest rate risk exposure is mainly from changes in floating interest rates. The interest
from financial assets including cash balances is not significant. The following table analyses
the breakdown of the significant financial instruments (excluding derivatives) by type of
interest rate:

2012
RM000
2013
RM000
2014
RM000
Financial liabilities with interest:
Fixed rate 9,489 6,657 4,010
Floating rates 1,053 601 296
10,542 7,258 4,306

Financial assets with interest:
Fixed rate 5,217 3,770 2,946

The interest rates are disclosed in Notes 15 and 18.

Sensitivity analysis: The effect on pre-tax profit is not significant.

20G. Foreign Currency Risk

Analysis of amounts denominated in major non-functional currencies:

United
States
Dollar
Chinese
Renminbi
Singapore
Dollar Total
RM000 RM000 RM000 RM000
29 February 2012
Financial assets:
Trade receivables 499 102 601
Cash and bank balances 1,169 172 1,341
Total financial assets 1,668 274 1,942

Trade and other payables (2,734) (1,317) (4,051)
Total financial liabilities (2,734) (1,317) (4,051)
Net financial (liabilities) assets at end of
the year (1,066) (1,317) 274 (2,109)

28 February 2013
Financial assets:

Trade payables (396) (1,281) (1,677)
Total financial liabilities (396) (1,281) (1,677)
Net financial assets at end of the year 2,674 (1,281) 716 2,109

A-42


20G. Foreign Currency Risk (Contd)

United
States
Dollar

Chinese
Renminbi
Singapore
Dollar Total
RM000 RM000 RM000 RM000
28 February 2014
Financial assets:
Other assets 300 300

Trade and other payables (1,223) (1,295) (13) (2,531)
Total financial liabilities (1,223) (1,295) (13) (2,531)
Net financial assets (liabilities) at end of
the year 1,680 (1,295) 259 644

There is exposure to foreign currency risk as part of its normal business.

Sensitivity analysis: The effect on pre-tax profit is not significant.

21. Capital Commitments

2012
RM000
2013
RM000
2014
RM000

Commitments to purchase equipment 108 138

22. Operating Lease Payment Commitments

At the end of the reporting year the total of future minimum lease payment commitments
under operating leases for employees accommodations that are cancellable by giving
relevant notices or forfeiture of deposits are as follows:

2012
RM000
2013
RM000
2014
RM000

Not later than one year 37 37 38
Later than one year and not later than five years 38 24 6
Later than five years.
Total operating lease payment commitments 75 61 44

Rental expense for employees accommodations for
the year 36 37 37

Operating lease payments are for rentals payable for certain accommodations for employees.

A-43

23. Events After the End of the Financial Year

Events after the end of the financial year ended 28 February 2014 are as follows:

(a) On 21 April 2014, a subsidiary, J emaramas J aya Sdn. Bhd. registered a branch in
Singapore in accordance with the Companies Act.

(b) A subsidiary entered into a lease agreement with a related party, to lease an
industrial building located at No. 19, J alan SILC 1/6, i-Park, Kawasan Perindustrian
SILC, 79200 Nusajaya, J ohor, Malaysia for use as a showroom, office and
warehouse. The tenure of the lease is for a period of three years commencing from 1
J une 2014 and at a rental amount of RM19,177.50 per month.

(c) On 6 J une 2014, the Company incorporated a wholly owned subsidiary, Versalink (S)
Pte Ltd in Singapore in accordance with the Companies Act as a private limited
company with an issued and paid-up share capital of S$1 comprising one share each.

(d) On 22 J uly 2014, the Company acquired all the shares in Steeltema (M) Sdn. Bhd.,
for a consideration of RM500,000.

(e) The Restructuring Exercise (See Note 1.2).

(f) On 22 J uly 2014, the Company issued 109,999,999 ordinary shares of no par value
in relation to the acquisition of subsidiaries as disclosed in Note 1.2(b), (c) and (d)
respectively.

(g) Pursuant to written resolutions passed on 18 August 2014, the shareholders of the
Company approved, inter alia, the following:

(i) the conversion of the Company into a public company limited by shares and
the change of the Companys name to Versalink Holdings Limited;

(ii) the adoption of the new Articles of Association of the Company;

(iii) the adoption of an employee performance share plan known as the
Versalink Performance Share Plan; and

(iv) the adoption of an employee share option scheme known as the Versalink
Employee Share Option Scheme.

A-44

24. Financial Information by Operating Segments

24A. Information about Reportable Segment Profit or Loss, Assets and Liabilities

Disclosure of information about operating segments, products and services, the geographical
areas, and the major customers are made as required by FRS 108 Operating Segments.
This disclosure standard has no impact on the reported results or financial position of the
Group.

For management monitoring and reporting purposes, the Group is organised into two major
operating segments: domestic sales of office furniture and export sales of office furniture.
Such a structural organisation is determined by the nature of risks and returns associated
with each business segment and defines the management structure as well as the internal
reporting system. It represents the basis on which the management reports the primary
segment information. They are managed separately because each business requires
different strategies.

The segments are as follows:

The domestic sales segment is for sales of office furniture derived from local market in
Malaysia.

The export sales segment is for sales of office furniture to overseas countries.

Inter-segment sales are measured on the basis that the entity actually used to price the
transfers. Internal transfer pricing policies of the Group are as far as practicable based on
market prices. The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies.

The management reporting system evaluates performances based on a number of factors.
However the primary profitability measurement to evaluate segments operating results is the
gross profit.

A-45

24. Financial Information by Operating Segments (Contd)

24B. Profit or Loss from Continuing Operations and Reconciliations

Segment information about these businesses is presented below:-

Export Domestic Group
RM000 RM000 RM000

Continuing Operations 2012
Revenue by Segment
Total Revenue by Segment 42,981 16,486 59,467
Inter-Segment Sales (10,090) (98) (10,188)
Total Revenue 32,891 16,388 49,279

Cost of Sales by Segment
Total Cost of Sales by Segment (31,769) (11,618) (43,387)
Inter-Segment Cost of Sales 9,916 98 10,014
Total Cost of Sales (21,853) (11,520) (33,373)

Gross Profit 11,038 4,868 15,906

Recurring EBITDA 9,144
Finance costs (824)
Depreciation (1,957)
Profit before tax from continuing operations 6,363
Income Tax Expense (1,987)
Profit from continuing operations 4,376

Revenue by Segment
Inter-Segment Sales (13,592) (32) (13,624)
Total Revenue 34,179 25,515 59,694

Inter-Segment Cost of Sales 13,689 32 13,721

Gross Profit 13,352 9,352 22,704

Finance costs (686)

A-46


24B. Profit or Loss from Continuing Operations and Reconciliations (Contd)

RM000 RM000 RM000

Revenue by Segment
Inter-Segment Sales (20,581) (20,581)
Total Revenue 42,339 36,500 78,839

Inter-Segment Cost of Sales 20,601 20,601

Gross Profit 19,103 13,297 32,400

Finance costs (519)

24C. Assets and Reconciliations

Export Domestic Unallocated Group 1.
RM'000 RM'000 RM'000 RM'000 2.
3.
2012 4.
Total assets for reportable segments 43,559 13,675 57,234 5.
Elimination of Inter-Segment
receivables (1,520) (682) (2,202)
6.
Total assets per combined
statement of financial position 42,039 12,993 55,032
7.
8.
2013 9.
Total assets for reportable segments 43,200 15,963 59,163 10
receivables (2,772) (2,772)
11
12
13
2014 14
Total assets for reportable segments 46,153 18,749 64,902 15
receivables (835) (1,351) (2,186)
16
17

A-47


24D. Liabilities and Reconciliations

Export Domestic Unallocated Group
RM'000 RM'000 RM'000 RM'000

2012
Total liabilities for reportable segments 19,150 5,322 24,472
Elimination of Inter-Segment payables (682) (1,520) (2,202)
Unallocated:
Deferred tax liabilities 1,167 1,167
Total liabilities per combined
statement of financial position 18,468 3,802 1,167 23,437

2013
Total liabilities for reportable segments 16,427 973 17,400
Elimination of Inter-Segment payables (2,772) (2,772)
Unallocated:
Deferred tax liabilities 1,450 1,450
statement of financial position 13,655 973 1,450 16,078

2014
Total liabilities for reportable segments 13,781 5,853 19,634
Elimination of Inter-Segment payables (1,351) (835) (2,186)
Unallocated:
Deferred tax liabilities 911 911
statement of financial position 12,430 5,018 911 18,359

24E. Other Material Items and Reconciliations

RM'000 RM'000 RM'000
Capital expenditure
2012 1,582 1,245 2,827
2013 2,835 208 3,043
2014 558 130 688

RM'000 RM'000 RM'000
Allowance for impairment loss on inventory
obsolescence, net
2012
2013
2014 593 13 606

A-48


24F. Geographical Information

Revenue based on geographical locations of customers is as follows:-

2012
RM000
2013
RM000
2014
RM000
Revenue:
Malaysia 16,388 25,515 36,500
Middles East 11,823 17,818 22,986
North America 12,229 10,209 10,163
Asia (others) 5,646 3,552 5,873
Others 3,193 2,600 3,317
Consolidated revenue 49,279 59,694 78,839

Substantially all the Groups operations are located in Malaysia for the financial years under
review, therefore the carrying amount of non-current assets are within Malaysia.

24G. Information about Major Customers

2012
RM000
2013
RM000
2014
RM000

Top 1 customer in more than one segment 9,520 6,261 6,220
Top 2 customers in more than one segment 12,404 12,163 11,937
Top 3 customers in more than one segment 15,113 17,751 17,580

25. Adoption of Financial Reporting Standards

All new or revised Singapore Financial Reporting Standards were adopted for the first time
from the effective dates for the applicable financial years.

A-49
26. Future Changes in Financial Reporting Standards
The following new or revised Singapore Financial Reporting Standards that have been issued
will be effective in future. The transfer to the new or revised standards from the effective dates
is not expected to result in material adjustments to the financial position, results of operations,
or cash flows for the following year.
FRS No. Title
Effective date for
periods beginning
on or after
FRS19 Defined Benefit Plans: Employee Contributions
(Amendments)
1 Jul 2014
FRS 27 Consolidated and Separate Financial Statements
(Amendments)
1 Jul 2013
FRS 27 Separate Financial Statements (Revised) 1 Jan 2014
FRS 28 Investments in Associates and Joint Ventures (Revised)
(*)
1 Jan 2014
FRS 36 Amendments to FRS 36: Recoverable Amount
Disclosures for Non-Financial Assets (relating to goodwill)
(*)
1 Jan 2014
FRS 39 Amendments to FRS 39: Novation of Derivatives and
Continuation of Hedge Accounting (*)
1 Jan 2014
FRS 110 Consolidated Financial Statements 1 Jan 2014
FRS 111 Joint Arrangements (*) 1 Jan 2014
FRS 112 Disclosure of Interests in Other Entities 1 Jan 2014
FRS 110 Amendments to FRS 110, FRS 111 and FRS 112 1 Jan 2014
FRS 114 Regulatory Deferral Accounts (*) 1 Jan 2016
INT FRS 121 Levies (*) 1 Jan 2014
(*) Not relevant to the Group.
27. Approval of Combined Financial Statements
The combined financial statements were approved and authorised for issue by the Board of
Directors on 16 September 2014.
A-50
APPENDIX B
INDUSTRY REPORT
The following section is the Industry Report prepared by Converging Knowledge, which has
been included in this Offer Document. Converging Knowledge had drawn its analysis from the
furniture industry, and has based the Industry Report on a combination of primary and desktop
(published resources) research. Primary research involves discreet interviews tapping on the
knowledge, experience and opinions of relevant companies, industry associations, technical
institutions, government bodies and academic institutions. Desktop research includes, but is
not limited to, a review of local newspapers and news wires/agencies, leading industry and
trade publications, websites of regulatory authority as well as relevant government agencies
and websites of companies. Converging Knowledge has advised that it has prepared the
Industry Report in an independent and objective manner and has taken adequate care to
ensure the accuracy and completeness of the Industry Report. Converging Knowledge has
also advised us that the Industry Report represents a true and fair view of the industry within
the boundaries and limitations of secondary statistics, primary research and continued
industry movements. It notes that the opinions expressed are opinions of human sources and
caution as to the subjective nature of such information. Converging Knowledges
methodologies for identifying and collecting information and data, and therefore the
information discussed in the Industry Report, may differ from those of other sources, including
that of our Company.
While we believe that the information and data in the Industry Report are reliable, we cannot
ensure the accuracy of the information or data, and none of our Company, the Vendors, the
Sponsor and Issue Manager, the Underwriter, the Placement Agent, or any of our and their
respective affiliates or advisors have independently verified this information or data. You
should not assume that the information and data contained in this section is accurate as of any
date other than the date of this Offer Document, except as otherwise indicated. You should
also be aware that since the date of this Offer Document, there may have been changes in the
industry and the various sectors therein which could affect the accuracy or completeness of
the information in this section.
B-1

Singapore Malaysia Hong Kong
Delivering Research Intelligence To Business
The Office Furniture Industry
in Malaysia
This report is prepared for
20 August 2014
B-2
Converging Knowledge The Office Furniture Industry in Malaysia | Page 2

DISCLAIMER

Converging Knowledge has prepared this report in an independent and objective manner and
has taken adequate care to ensure the accuracy and completeness of the report. We believe
that this report represents a true and fair view of the industry within the boundaries and
limitations of secondary statistics, primary research and continued industry movements. We
note that the opinions expressed are opinions of human sources and caution as to the
subjective nature of such information.

This material should not be construed as an offer to sell or the solicitation of an offer to buy in
any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any
action based on this material. It is for the general information of clients of Converging
Knowledge. It does not take into account the particular investment objectives, financial
situations, or needs of individual clients. Before acting on any advice or recommendation in
this material, clients should consider whether it is suitable for their particular circumstances
and, if necessary, seek professional advice.

Converging Knowledge and/or any of its affiliates and/or any persons related thereto do not
accept any liability whatsoever for direct or consequential losses or damages that may arise
from the use of information contained in this report. No part of this material may be (i) copied,
photocopied, or duplicated in any form by any means or (ii) redistributed without Converging
Knowledge prior written consent.

CONVERGING KNOWLEDGE CONTACTS

Singapore Headquarters
Tel: +65 6225 8781
Fax: +65 6323 0132
43 B&C Tras Street, Singapore 078982
Email: enquiries@convergingknowledge.com

Malaysia
Tel: +603 2333 8950
Fax: +603 2333 8899
E-8-6 Megan Avenue 1, No. 189 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia
Email: enquiries.my@convergingknowledge.com

Hong Kong
Tel: +852 8197 8261
Fax: +852 3118 6161
Suite A, 12/F Ritz Plaza, 122 Austin Road, TST Kowloon, Hong Kong
Email: enquiries.hk@convergingknowledge.com

B-3

RESEARCH SCOPE

The Client wishes to conduct research on the Furniture Industry in Malaysia for the purpose of
an Initial Public Offering (IPO). Our objective is to assist the Client in conducting primary and
secondary research to gain insights into the above focus areas and sector.

The report will include the following:

1. Executive Summary

2. Overview of the Furniture Industry in Malaysia
a. Overview of the Furniture Industry in Malaysia, with focus on office furniture
manufacturers and exporters
i. Description of furniture industry in Malaysia
ii. Key Trade Statistics
Statistics will be based on latest reported figures from government
and industry associations
To secure copyright clearance from other published sources, where
needed

b. Industry Structure
i. Description of differing segments in the furniture industry
ii. Description of the company (the Client) within the industry sector

3. Major Trends in the Industry
a. Global and regional trends that will impact the business in Asia, with emphasis on
Malaysias key furniture export markets, in particular, the Middle East (Dubai and
Saudi Arabia), Canada and Asia

b. Issues and challenges
i. For example
Technology
Skilled labour
Design patents

4. Competitive Landscape in Malaysia
a. Overview of Competitive Landscape
i. Nature of competition
ii. Barrier to entry and exit

b. Major Players in the Office Furniture Industry
i. Peer comparison of ultimate clients competitors
ii. Market positioning/ ranking
Note that we will require the purchase of financials.
iii. SWOT Analysis
B-4

5. Assessment of the PRC
a. To access whether competitors in the PRC can pose as a threat

6. Malaysia Governing Policies and Regulations
a. To focus on relevant policies and regulations affecting the furniture industry

7. Outlook and Prospects of the Industry
a. Industry outlook and prospects of the office furniture industry
b. Estimated growth rate

* Note: Slight changes have been made to the flow of this report for better clarity.

B-5
RESEARCH APPROACH
The research will be conducted on a best effort basis through a combination of primary and
desktop (published resources) research up to 13 August 2014, to address the scope of
research.
Primary research involves discreet interviews tapping on the knowledge, experience and
opinions of relevant companies, industry associations, technical institutions, government
bodies and academic institutions.
Desktop research includes, but is not limited to, a review of the following:
x Local newspapers and news wires/agencies;
x Leading industry and trade publications;
x Websites of regulatory authority as well as relevant government agencies; and
x Websites of companies.
B-6

CONTENTS
1. EXECUTIVE SUMMARY .....................................................................................................8
2. OVERVIEW OF THE FURNITURE INDUSTRY IN MALAYSIA .......................................11
2.1 Description of the Furniture Industry in Malaysia ............................................................11
2.1.1 Malaysias Office Furniture Segment............................................................................15
2.2 Industry Structure ............................................................................................................22
2.2.1 Differing Segments .......................................................................................................22
2.2.2 Structure of the Office Furniture Industry in Malaysia ..................................................23
2.2.3 Distribution Activities ....................................................................................................24
3. MAJOR TRENDS IN THE OFFICE FURNITURE INDUSTRY .........................................26
4. ISSUES AND CHALLENGES OF THE OFFICE FURNITURE INDUSTRY .....................30
5. COMPETITIVE LANDSCAPE IN MALAYSIA ..................................................................33
5.1 Overview of Competitive Landscape ...............................................................................33
5.1.1 Nature of Competition ...................................................................................................33
5.1.2 Barriers to Entry ............................................................................................................34
5.2 Major Players in the Office Furniture Industry in Malaysia ..............................................37
5.2.1 Peer Comparison of the Competitors ...........................................................................37
5.2.2 Market Ranking .............................................................................................................39
5.2.3 SWOT Analysis .............................................................................................................41
6. ASSESSMENT OF THE PEOPLES REPUBLIC OF CHINA...........................................42
7. MALAYSIAS GOVERNING POLICIES AND REGULATIONS .......................................43
7.1 Malaysias Policies and Regulations Governing the Domestic Furniture Industry ..........43
7.2 Other Regulations Affecting the Furniture Industry .........................................................45
8. OUTLOOK AND PROSPECTS OF THE INDUSTRY .......................................................47
B-7

LIST OF FIGURES

Figure 1: Malaysias Furniture Exports versus Imports from 2009 to 2013 ............................... 12
Figure 2: Top 10 Export Destinations of Malaysias Furniture in 2013 ...................................... 13
Figure 3: Total Sales Value of Malaysia Manufactured Furniture from 2009 to 2013 ............... 15
Figure 4: Malaysias Office Furniture Exports versus Imports from 2009 to 2013 .................... 16
Figure 5: Top 10 Export Destinations of Malaysias Office Furniture in 2013 ........................... 17
Figure 6: Total Stock, Incoming Supply and Occupancy Rate of Office Space in Malaysia
from 2009 to 2013 ...................................................................................................... 18
Figure 7: Number of Regional Establishments Approved as at 31 December 2013 ................. 19
Figure 8: Total Stock, Incoming Supply and Occupancy Rate of Office Space in Johor from
2009 to 2013 .............................................................................................................. 21
Figure 9: Structure of Malaysias Furniture Industry .................................................................. 24
B-8

1. EXECUTIVE SUMMARY

The furniture industry encompasses the production and distribution of furniture made from
wood, metal or plastic material. The industry may be divided based on three broad furniture
categories household furniture, outdoor furniture and office furniture.

Players in the furniture industry may specialise in a specific furniture segment or deal in more
than one segment as a generalist. Some players in the market are mainly engaged in trading,
functioning as wholesalers/dealers and retailers. Others are involved in upstream operations,
functioning as furniture designers and/or manufacturers. More established players may be
full-fledged operators, and are engaged in the entire value chain.

This report focuses on the production and distribution of the office furniture category, which
includes the manufacturing of desks, partitions and components for a complete functional
workstation. Malaysia is well positioned internationally, being ranked second in Asia and
seventh globally based on office furniture exports. While most of the office furniture produced
is exported, the domestic market is estimated to be between 30.0% and 40.0% of the total
office furniture segment.

In order to serve the domestic market, some of the local office furniture manufacturers have
positioned themselves to engage in project sales. Through project sales, these industry
players are able to acquire bulk orders either directly from corporate end-users, or from
intermediaries serving these corporate clients, to furnish their offices with complete and
integrated office furniture systems. In Malaysia, project sales constitute as much as 70.0% -
80.0% of overall domestic sales.

Research indicates that there are over 500 furniture manufacturers registered as members of
manufacturers. Further research indicates that 43 out of the 119 are registered as office
furniture manufacturers exclusively. The Group is one of the largest office furniture
manufacturers in Malaysia, with the capability to undertake project sales.
B-9

Some of the key market trends of the Malaysian furniture industry are summarised as follows:
Increasing demand for furniture from emerging markets such as those in Asia and the
Middle East, due to economic growth and demography.
Consumers and businesses have become more discerning in their choices of
furniture, requesting for products that have less negative impacts on the environment
and are "green-certified".
As cities become denser and space becomes limited, there is a growing demand for
compact, space efficient and multi-use furniture, with office space reduction being one
of the most popular options to save a companys production cost.
Businesses are turning to office furniture manufacturers that can provide value-added
services such as consultation services on design layout, modification, fixing and
installation services.
Increasing property development activities in Asia and Malaysia, as large
corporations expand their operations and set up regional and country offices.
Prospects of the office furniture industry in Malaysia are positive, with contributing factors
such as demand growth from emerging countries and growth of commercial property
development in Malaysia. Sales of Malaysian office furniture are expected to grow by 5.0% to
10.0% annually from 2013 to 2018, driven mainly by export sales. The factors driving industry
developments are:
Demand Growth from Emerging Countries
Growth in Asian nations has prompted an increase of office furniture imports from
Malaysia over the past five years. From 2009 to 2013, the collective imports of
Malaysian office furniture from Asian nations have grown by a compound annual
growth rate (CAGR) of 4.0%. Malaysia exports more than half of their office furniture
to Asian countries. It is expected that the furniture manufacturing industry will see
stable global demand growth, with an increasing trend in imports of consumer goods
in emerging countries.

Recovery of Major Economies
After Asia, North America represented the second largest export market for Malaysian
made office furniture. The recovery of the USA economy since the 2008 financial
crisis has seen an increase in consumption of office furniture. From 2009 to 2013, the
region has seen a CAGR of 12.0% in office furniture imports from Malaysia, and is
expected to continue to grow, as the economy recovers in the North American region.
B-10

Growth of Commercial Property Developments in Malaysia
Through the efforts of Malaysia Investment Development Authority and Investing in
Greater Kuala Lumpur, Malaysia is able maintain its efforts in attracting foreign
companies into the country. Property development activities in Malaysia, in
commercial districts such as Klang Valley, have increased over the years. Total office
supply recorded a CAGR of 4.1% from 2009 to 2013. It is in the pipeline that an
additional 0.7 million square metres of new office space is being scheduled to be
released in Malaysia in 2014.

Push Towards High-value Products and Services
The cumulative knowledge in the industry has led to the rise of solutions-based
services such as those of project sales. As a result, the industry is able to realise
higher profitability from sales of high-value, internationally recognised products, and
provision of value-added services. The gradual shift towards high-value products and
services may also alleviate pressure from higher production costs and increased
competition from other exporting countries like China and Vietnam.

Use of Research and Technology
Throughout the years, Malaysias office furniture manufacturing industry has
accumulated considerable experience, and built up expertise in modern
manufacturing processes. With growing investments into high-tech production
processes, the domestic industry is expected to be able to keep up with increased
future demands and challenges.
B-11

2. OVERVIEW OF THE FURNITURE INDUSTRY IN
MALAYSIA

2.1 Description of the Furniture Industry in Malaysia

Malaysia is Asias third-largest furniture exporter and 12
th
globally. The country exported
USD2.9 billion (RM9.1 billion
1
) worth of furniture in 2013, with the United States (USA),
Singapore, Japan, Australia and Germany being among the top buyers.
2

Overall, Malaysias furniture exports grew by a compounded annual growth rate (CAGR) of
approximately 5.2% from 2009 to 2013. While the countrys furniture exports have been
following an upward trend for most of the five-year period, the value declined by 8.9% in 2013,
which was attributed to the slowdown in demand following uncertainty in the global economic
landscape, particularly in the USA, Europe and Japan. Exports of Malaysian timber products
such as furniture are expected to increase again in 2014, following proactive plans to promote
the timber and furniture industries, as well as optimism for further economic recovery.
3

1
Conversion by OANDA from USD to RM based on annual average exchange rate in 2013 at RM1/USD0.32
2
Derived from trade statistics compiled by Intracen
3
Interviews with industry professionals
B-12

Figure 1: Malaysias Furniture Exports versus Imports from 2009 to 2013

Source: International Trade Centre

The Malaysian government has identified the furniture industry as one of the main
contributors to the domestic wood-based industry. It targets an annual growth of 6.5% for
wooden furniture
4
with hopes for furniture exports to reach USD5.3 billion (RM16.6 billion
5
) by
2020.
6

Majority of Malaysias furniture production is exported
7
. The USA is the biggest export
destination for Malaysias furniture industry, accounting for USD692.1 million (RM2,162.8
million
8
) or 24.2% of the countrys furniture exports for 2013. The second and third largest
importers of Malaysias furniture are Singapore and Japan respectively. In 2013, exports to

4
6 April 2013, The Star, Malaysia, Two Office Furniture Manufacturers Share Their Business Strategies
http://www.thestar.com.my/News/Community/2013/04/17/Two-office-furniture-manufacturers-share-their-business-
strategies/.
5
6
Ministry of Plantation Industries and Commodities http://www.kppk.gov.my/index.php/utama/sumber/speeches-
2013/419-9th-export-furniture-exhibition-efe-2013.html
7
Interviews
8
Conversion by OANDA from USD RM based on annual average exchange rate in 2013 at RM1/USD0.32
B-13

Singapore constituted 9.3% (USD264.8 million or RM827.5 million
9
) of Malaysias furniture
exports, while exports to Japan made up 8.5% (USD242.2 million or RM756.9 million
10
). The
five largest importers of Malaysian furniture, the USA, Singapore, Japan, Australia and
Germany accounted for 54.7% of total exports. In addition, the United Kingdom (UK) and the
United Arab Emirates (UAE) rank as the 6th and 7th export destinations of Malaysian
furniture. Malaysias furniture exports to Southeast Asia grew by 13.9% from 2009 to 2013.
11

The figure below shows the top 10 export destinations of Malaysias furniture.

Figure 2: Top 10 Export Destinations of Malaysias Furniture in 2013

Note:
Major contributors under "Others" include Hong Kong, Indonesia, Saudi Arabia and the Republic of Korea,
amongst others.


9
10
11
International Trade Centre, Intracen. Compiled from Department of Statistics Malaysia and UN Comtrade
http://www.trademap.org/Country_SelProductCountry_TS.aspx
B-14

Total Sales Value of Furniture Manufactured in Malaysia
Malaysia is home to a vibrant furniture manufacturing industry. Its proximity to high-quality
tropical hardwoods in the country, such as Ramin, Nyatoh and Meranti, amongst others, and
the know-how of furniture manufacturing allow Malaysias furniture manufacturers to produce
high-quality furniture for the global market.

Malaysias furniture industry has also benefited
from strong government support, which has propelled the industry towards modern and
efficient production processes.

In 2013, the total sales value of furniture manufactured in Malaysia (not including stone,
concrete and ceramic furniture) was RM4.8 billion (USD1.6 billion
12
). This value refers to the
total amount of furniture produced in 2013, based on their ex-factory sales price. Ex-factory
sales price is the selling price of the furniture by factories to their direct clients, and excludes
discounts or rebates, transportation charges, commissions, margins of third-party agents, and
any tax or duties paid to the government. The total sales value provides an estimation of the
total furniture manufacturing output for Malaysia, and does not equate to the export value, in
view of the exclusions.

From 2009 to 2013, growth rates peaked at 2012, reaching 10.8% (USD1.7 billion or RM5.2
billion in sales value
13
), notwithstanding two years of negative year-on-year growth in 2009
and 2013, a result of the 2008 financial crisis as well as the ongoing distress in the eurozone.
The furniture industry recorded a CAGR of 2.2%, in terms of total sales value, from 2009 to
2013. Overall, manufacturing output for furniture follows the movement of furniture exports,
indicating that local furniture production is strongly influenced by export demand.

12
Conversion by OANDA from RM to USD based on annual average exchange rate in 2013 at RM1/USD0.32
13
B-15

Figure 3: Total Sales Value of Malaysia Manufactured Furniture from 2009 to 2013

Notes:
Sales value refers to the sales from factory to the buyers (ex-factory). The values do not take into account retail
sales value.
Data was collected through the Monthly Manufacturing Survey and excludes establishments with less than 100
workers
Manufacture of furniture of all kinds (household, office, restaurant and institutional furniture and fixtures), and of
any material. Does not include furniture made of stone, concrete or ceramic as well as medical, surgical, dental
and veterinary furniture. This data also excludes lighting, fittings or lamps. For a more detailed description, refer
to Malaysia Standard Industrial Classification 2000 (MSIC article 3610)
Figures are based on the latest data available and are subject to revision.

Source: Department of Statistics, Malaysia

2.1.1 Malaysias Office Furniture Segment

The export market is a major driving force for the office furniture segment. Malaysia is well
positioned internationally, being ranked second in Asia and seventh globally based on office
furniture exports
14
. From 2009 to 2013, the value of office furniture exports increased by a
CAGR of 4.8%, reaching USD205.8 million (RM663.9 million
15
) in 2013. This export value

14
Derived based on trade statistics from Intracen
15
B-16

was 8.3% lower than that of 2012 due to the challenging global economy landscape in the
USA, Europe and Japan.
16
The domestic market represents 30.0% to 40.0% of the total
office furniture segment
17
. Domestic demand in Malaysia, which is brought about by
increasing commercial activity, is expected to fuel growth in the countrys office furniture
segment.

Figure 4: Malaysias Office Furniture Exports versus Imports from 2009 to 2013


The five largest markets represented 50.1% of total office furniture exports. Singapore is the
largest market for Malaysias office furniture, accounting for 15.0% of office furniture exports
from Malaysia in 2013. The second largest export market is the USA (12.6%), with the third
being India (10.0%). The UAE, in fourth place, is also the largest market from the Middle East,
accounting for 7.4%, followed by Australia at 5.1%.

16
14 November 2013, Borneo Post Online, Slightly lower timber exports likely this year, says unggah
http://www.theborneopost.com/2013/11/14/slightly-lower-timber-exports-likely-this-year-says-uggah/
17
Interviews
B-17

Figure 5: Top 10 Export Destinations of Malaysias Office Furniture in 2013

Notes:
Major contributors under "Others" include countries such as New Zealand, Kenya, the Philippines and Indonesia.
The data presented in this figure may not be accurate due to rounding differences.


Positive business sentiments and key structural reforms in Asia over the recent years have
attracted and opened up the region to investment inflows. Increasing economic activity, in
particular, has drawn multinational ("MNC") and international companies to Asia, which has
an impact on the demand for office space in the region, including Malaysia.

From 2009 to 2013, total stock of office space in Malaysia recorded a CAGR of 4.1%. While
total stock of office space in the country grew at a gradual pace, occupancy rate of office
space in Malaysia has remained stable at above 80.0% over the past five years. Incoming
supply of office space in Malaysia in the same five-year period (2009 to 2013) witnessed
minimal fluctuations, and stood at 2.2 million square metres ("sqm") in 2013.

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This trend signifies stable annual take-up rate of office space in Malaysia over the long term,
due to increasing commercial activities and foreign investment interests.

Figure 6: Total Stock, Incoming Supply and Occupancy Rate of Office Space in Malaysia from
2009 to 2013

Notes:
Data may be subject to future revision.
Incoming supply is defined as units where construction works are in progress.
Total stock is defined as units where construction works are completed and any leftover stocks that are not
demolished.

Source: National Property Information Centre

Stable growth in the demand for office space has a positive impact on the domestic office
furniture industry, particularly for companies that are able to position themselves as a one-
stop solutions provider. The industry players that have the expertise and knowledge to
undertake solutions-based furnishing services and integrated furnishing projects, also known
as "project sales", are one-stop solutions providers for the end-users. Other manufacturers
are known as wholesale manufacturers of general furniture, including home, office and
industrial furniture. One-stop solutions providers typically serve both domestic and MNC high-
value corporate clients.

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Demand for office space and furnishings in Malaysia will be buoyed by the influx of MNCs.
The country has also been attracting international companies to establish their operational
headquarters, regional and representative offices there. As at 31 December 2013, MNCs
such as Hitachi Systems, Linde, Clariant, Rentokil Initial, Schlumberger, IBM, Worley Parsons,
Aecom, Toshiba, Alstom, Philips Healthcare, Cargill, Google and Aker Solutions have
established or will be establishing offices in Malaysia
18
. These indicate potential for growth in
project sales, as these companies look to maximise office space to house large-scale
operations with a larger headcount. In 2013, there were 3,350 approved regional operations
in Malaysia, with regional offices and operational headquarters comprising 35.1% of the
total
19
.

Figure 7: Number of Regional Establishments Approved as at 31 December 2013

Source: Malaysian Investment Development Authority

18
InvestKL. "InvestKL Attract 32 MNCs to Greater Kuala Lumpur
http://www.investkl.com/News-@-InvestKL_Attracts_32_MNCs_to_Greater_Kuala_Lumpur.aspx
19
Malaysian Investment Development Authority -
http://www.mida.gov.my/env3/uploads/PerformanceReport/2013/IPR2013
B-20

Demand for office space in Malaysia is high for newer, well-located and better quality
buildings. High-end office property development projects in the pipeline, for example, those in
Kuala Lumpur and Iskandar Malaysia in Johor, are expected to sustain demand for office
furniture. Notable projects include the Tun Razak Exchange, Warisan Merdeka (the Heritage
of Independence Tower), KL Metropolis in Greater Kuala Lumpur, and Medini in Iskandar
Malaysia. The Malaysian government is offering incentives to companies within the Tun
Razak Exchange and Iskandar region. These incentives, which include 10.0% allowance for
building expenditures, capital allowance of 60.0%, and 40.0% for renovation costs, stamp
duty exemption on sales and purchase agreements, amongst others,
20
will form an impetus to
attract companies, including those from neighbouring Singapore, to relocate to the new
offices in these areas.

Iskandar Malaysia is the main southern development corridor in Johor. The economic zone,
which covers 2,217 square kilometres, was allocated RM6.83 billion (USD2.52 billion
21
) by the
government in 2006, and is the largest single development project ever to be undertaken in
the region. The government is shaping the Iskandar region in Johor into a metropolitan hub,
which will encompass luxury residences, high value commercial, services and industrial
districts, as well as leisure centres.
22
Iskandar Malaysia stands out as a compelling and
convenient investment destination, especially for Singapore companies, due to factors such
as close proximity to Singapore, warm bilateral ties and investment-friendly policies. The
proposed Johor Bahru-Singapore rapid transit and the Kuala Lumpur-Singapore high speed
rail link will improve the connectivity and shorten travelling time between Johor Bahru and
Singapore, as well as Kuala Lumpur and Singapore, thus, boosting Iskandar Malaysia as a
lower-cost alternative location to Singapore.

20
InvestKL, from Borneo Post Sabah
http://www.investkl.com/News-@-Tun_Razak_Exchange_Wall_Street_for_Malaysia.aspx
21
22
Iskandar Malaysia http://www.iskandarmalaysia.com.my/pdf/brochures/Iskandar_Malaysia_EN.pdf
B-21

Figure 8: Total Stock, Incoming Supply and Occupancy Rate of Office Space in Johor from
2009 to 2013

Note:
Data may be subject to future revision.

Source: National Property Information Centre

Over the last five years, the occupancy rate of office space within the state of Johor has been
relatively stable, hovering above the 70.0% mark. Since 2009, stocks of office space have
been on the rise. Although office stocks declined by 2.3% in 2012, it rebounded in 2013, with
an increase of 16,500 sqm, equivalent to 1.6%. The decline in 2012 may have been
temporary, a result of older buildings being demolished.

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2.2 Industry Structure

2.2.1 Differing Segments

Malaysias furniture industry may be divided based on product lines. In this research, this
industry is segmented by three broad furniture categories (i) household furniture, (ii) outdoor
furniture and (iii) office furniture
23
. Players in the furniture industry may specialise in a specific
furniture segment or deal in more than one segment as a generalist.

A brief definition of these three broad furniture segments is provided as follows:

(i) Household Furniture
Household furniture refers to any furniture pieces or sets that are commonly used in the home.
These include dining tables, kitchen cabinets, beds and TV consoles, amongst others.

(ii) Outdoor Furniture
Outdoor furniture is specifically designed for outdoor use. They include garden furniture,
poolside furniture, patio furniture, deck furniture, and all other furniture catering to outdoor
living spaces. As they are designed for outdoor use, they are typically made of weather-
resistant materials, which can withstand extreme temperatures and fluctuations in humidity.

(iii) Office Furniture
Office furniture refers to furniture used in the office. Common pieces found in the office
include the office desk, which provides the main workspace for many to carry out the
functions required by them for work. Some desks have flat work surfaces made to hold the
computer and for the user to carry out tasks. Others have built-in storage compartments for
the purpose of holding files and office supplies. For office systems furniture, desks,
compartments and partition systems are integrated to form a complete functional workstation.

23
There are other categories of furniture. This industry structure is centred on the three main ones. Other categories
of furniture will not be mentioned in this report.
B-23

2.2.2 Structure of the Office Furniture Industry in Malaysia

The furniture industry may be further segregated by way of the value chain. Some players in
the market are mainly engaged in trading, functioning as wholesalers/ dealers and retailers.
Others are involved in upstream operations, functioning as furniture designers and/or
manufacturers. Bigger and more established players may be full-fledged operators, and are
engaged in the entire value chain. They are essentially manufacturers, but with in-house
capabilities to design their own furniture; for some, they also have the expertise to build,
market and manage their own brands. Most of these players work closely with wholesalers/
dealers/ export agents, some of whom have their strong contacts in garnering project sales.
Others may have their own contacts and networks to engage in some form of wholesaling or
secure project sales themselves. These players often have their own showrooms, which not
only showcase their finished products, but also retail to walk-in customers. Please refer to the
section of 2.2.3 for more insights to the distribution activities of office furniture manufacturers.

The figure below shows the structure of the furniture industry:

B-24
Figure 9: Structure of Malaysias Furniture Industry
Note:
x The section in the red enclosure marks the position of Versalink Holdings Limited in the industry.
Source: Converging Knowledge
2.2.3 Distribution Activities
Distribution activities in the industry can be further categorised as either through retail or
project-based activities. Some manufacturers sell their products to wholesalers/ exporters,
who may, in turn, supply to retailers catering directly to end-users. Direct retail and wholesale-
to-retail activities represent the conventional distribution route. This route also consists of
export activities to overseas retailers.
Project-based orders, also known project sales, mainly involve refurbishment of or providing
furnishings to, office buildings or units. In the current environment, project sales constitute a
Furniture Industry
Household
Furniture
Office
Furniture
Outdoor
Furniture
Design
Manufacture
Retail
Export/
Wholesale
Project
Sales
B-25

major component of overall sales (by as much as 70.0% to 80.0%) for larger furniture
manufacturers
24
. Under project sales, furniture manufacturers usually deal directly with the
customers in the design and manufacture of office furniture, in accordance to customers
specifications. However, for overseas project sales, manufacturers often go through
appointed agents, who will not only be responsible for securing these orders, but also serve
as an intermediary in the supply of manpower to integrate and install the partitions and desk
systems. Some manufacturers possess the expertise and provide value-added services by
providing consultation services and layout planning to their clients, while others may focus on
supplying the furniture components to the local agents. Unlike most retail sales, project sales
are bulk orders, requiring customisations in the finished products. As such, it is usually the
larger manufacturers that have the capacity and capability to undertake project sales.

24
Interviews with industry players
B-26

3. MAJOR TRENDS IN THE OFFICE FURNITURE
INDUSTRY

Being an export-oriented industry, office furniture manufacturing in Malaysia is influenced by
both global and domestic consumer trends. With the Malaysian government pushing the
industry towards developing modern product designs and processes, it is also expected that
innovations in products and materials will have a significant positive impact on the office
furniture industry in the country. The section below highlights some of the more significant
trends in the industry.

Demand Shifts within Global Office Furniture Market
The global furniture market has seen demand shift towards the Asia Pacific, South America,
and the Middle East. Emerging markets are expected to make up an increasing share of the
office furniture export markets. The growth of demand in these regions offset the slower pace
of demand in Europe and the USA.
25

Many countries in the Middle East are undergoing expansion and development programmes,
which boost demand for furniture in the region. For instance, the large construction sector in
Saudi Arabia, worth USD624.0 billion (RM1,950.0 billion
26
) in 2013, has lent a platform to
propel the countrys demand in office furniture. It has been reported that the furniture market
in Saudi Arabia, is estimated to be worth USD2.2 billion (RM6.9 billion).
27
Saudi Arabia and
the UAE are also the largest importers of Malaysian office furniture from the Middle East,
accounting for 11.1% of the countrys exports for 2013
28
. As such, rising demand from these
Middle Eastern markets will present opportunities for further growth for Malaysias office
furniture exports. .

25
11 March 2013, The Borneo Post, Global furniture trade seeing shift in market gravity, expects 5 point growth
worldwide http://www.theborneopost.com/2013/03/11/global-furniture-trade-seeing-shift-in-market-gravity-expects-
5-pct-growth-worldwide/
26
27
DecoFair 2014 Website, Extracted 6 June 2014 -
http://decofair.com/en/aboutmarket
28
Intracen
B-27

International furniture makers have also started to expand their furniture business or
redirected their demand focus to countries in the Asia Pacific region such as Malaysia,
Thailand, Indonesia and the Philippines. Positive economic developments, sizeable
populations and favourable business climates are among the factors drawing furniture makers
to this region.

Green Furniture
Todays consumers are more knowledgeable and forthcoming in seeking out information
before making any purchases. With environmental awareness on the rise, consumers have
become more discerning in their choices, requesting for products that have less negative
impacts on the environment. Green furniture refers to the use of environmentally-friendly and
non-toxic materials, and is made from sustainable practices. Examples of green furniture
include those that are made of chipboards from recycled wood material, and uses processes
that do not damage the environment. Chipboards manufactured by processes involving
formaldehyde pose potential health problems to users, and an increasing number of furniture-
makers, who are aware of such problems, are turning to safer and innovative manufacturing
processes.

Environmental and furniture associations, along with various government authorities, have
developed green certification schemes to evaluate furniture manufacturers. These certification
schemes (such as the Singapore Green label scheme
29
and the Malaysias GREENGUARD
certification programme
30
) evaluate the supply chain of furniture manufacturers to ensure that
their products are made from sustainable processes and green materials.

Countries in Europe as well as Australia have endorsed regulations to prevent sale of
furniture products that come from illegal logging. As a result, furniture producers and
exporters are required to ensure that their products are made from certified timber, and play a
part in preventing illegal logging and reduce global warming. Green furniture manufacturers
are, thus, able to leverage on their green certifications and production methodology to ensure
that they are able to meet various countries import regulations. These will, in turn, allow them
to sell more of their products to environmental conscious buyers internationally.

29
Singapore Green Label Scheme http://www.sec.org.sg/sgls/about-green-label.php
30
Malaysia GREENGUARD Certification Scheme http://formica.com.my/component/content/article/29
B-28

Trends on Saving Space
As cities become denser and space becomes limited, there is a growing demand for compact,
space efficient and multi-use furniture. Office space reduction is one of the most popular
options to save a companys production cost. Similarly, space efficient furniture is also
increasingly popular in suburbs, as people are drawn to the aesthetics and functionality of
modern furniture. Thus, demand for space-efficient furniture is expected to persist, as living
and working spaces become smaller.

Project Sales and Solutions-based Services
Businesses are turning to office furniture manufacturers that can provide value-added
services. In addition to incorporating space saving elements in their office furniture, these
manufacturers possess the expertise to provide consultation services on office furniture
layouts to maximise available space. Individual components of office furniture (chairs, desks
and partitions) of a particular series are designed to be integrated together, optimising the use
of the space and layout, and accommodating a higher number of employees. These
companies may also provide modification, fixing and installation services. These
manufacturers have become the one-stop solutions provider for office furniture and fittings.

Increase in Property Development Activities
Property development activities in Malaysia, as well as key export markets, are fuelling
demand for office furniture. Increasing economic activity in Asia, coupled with rising
competition among Asian countries to draw investments from international global companies,
will further boost demand for offices in the region. Direct investments into developing
countries in Asia amounted to USD226.4 billion (RM707.5 billion
31
) in 2013, after witnessing a
CAGR of 18.0% from 2009 to 2013
32
. Growth of foreign direct investments into Asia is
expected to remain stable in the long term. With MNCs expanding their operations and setting
up offices in the country, this trend will potentially give rise to increased demand for office
furniture.

Demand for office space in Malaysia, especially in key commercial districts such as Klang
Valley, has risen over recent years. Total occupied office space recorded a CAGR of 3.4%
from 2009 to 2013, and grew by 2.9% from 2012 to 2013, with a total floor area of 15.7 million
sqm. Total office space (occupied and non-occupied) recorded a CAGR of 4.1% from 2009 to

31
32
April 2014. International Monetary Fund, World Economic Outlook Database -
http://www.imf.org/external/pubs/ft/weo/2014/01/weodata/index.aspx.
B-29

2013. Occupancy rates of office space in Malaysia remain high, with an annual average of
83.4% from 2009 to 2013. As of end 2013, an additional 2.2 million sqm of office space is in
the pipeline, while another 0.5 million sqm of office space is being planned for future
completion
33
. It was also reported that an additional 0.7 million sqm of new office spaces are
scheduled to be launched by 2014. This continuing new influx of office spaces will need to be
furnished, thus, benefiting the office furniture industry.
34
Meanwhile, efforts by Malaysia
Investment Development Authority ("MIDA") and Investing in Greater Kuala Lumpur
(InvestKL) to attract foreign companies into Malaysia have pushed demand for office space
in the country. The trend of incoming office space demand and supply in Malaysia is expected
to increase the prospects for Malaysian furniture manufacturers.

The trend for office space is positive in key export markets as well. UAE, the fourth largest
importer of Malaysian office furniture, saw stocks of office space in the two biggest districts of
Abu Dhabi and Dubai grow at a CAGR of 18.4% and 15.7%, respectively, from 2009 to
2013
35
.

33
NAPIC, Laporan Pasaran Tahunan. 2009 to 2013 editions -
34
31 July 2013, The Star, Malaysia, New office space puts pressure on existing buildings in KL
http://www.thestar.com.my/business/business-news/2013/07/31/space-war.aspx/
35
Jones Lang LaSalle, Real Estate Market Overview.
B-30

4. ISSUES AND CHALLENGES OF THE OFFICE
FURNITURE INDUSTRY

Three key issues and challenges faced by players in the Malaysian furniture industry are
human resources challenges, shortage of raw materials as well as branding and
differentiation.

Challenges in Hiring Manufacturing Workers
The furniture industry is a labour-intensive sector. As such, a large number of skilled workers
are required for this industry in Malaysia. The manufacture of wood-based furniture, which
requires skilled craftsmanship, is expected to grow between 11.4% and 13.7% yearly, from
2014 to 2017
36
. However, many furniture exporters have reported that they had to turn down
orders due to production constraints, resulting from labour shortages
37
. Shortage in domestic
manpower has brought about increased reliance on foreign workers for the manufacturing
industry. The high dependency on foreign workers creates challenges, as labour policies such
as an increase in levy for foreign workers and quota restrictions will increase difficulties to
employing sufficient labour.
38
.

In order to address the lack of skilled workers in the furniture industry, the Malaysian Timber
Industry Board (MTIB) has been training local youth, to equip them with the skill set to work
in this industry. The MTIB has also established a job-matching platform for local graduates.
Within this platform, furniture companies can recruit candidates with basic knowledge and
skills in the timber and furniture industry as their employees with greater ease.
39
This

36
Malaysia Timber Industry Board (2011). Furniture Industry in Malaysia Status & market Prospects -
http://www.mtib.gov.my/repository/perdagangan/cik%20rubi%20print.pdf
37
Malaysia Timber Industry Board (2011). Furniture Industry in Malaysia Status & market Prospects -
http://www.mtib.gov.my/repository/perdagangan/cik%20rubi%20print.pdf
38
27 April 2012. The Star Malaysia. Furniture industry to get 16,000 new foreign workers
http://www.thestar.com.my/News/Nation/2012/04/27/Furniture-industry-to-get-16000-new-foreign-workers/
39
Malaysian Timber Industry Board
http://www.mtib.gov.my/index.php?option=com_content&view=article&id=1949%3Alocal-workforce-in-the-timber-
and-furniture&catid=43%3Aselected-news&lang=en
B-31

programme is expected to mitigate future labour shortage from both domestic and foreign
sources.

Shortage of Raw Materials
The furniture industry in Malaysia is generally not subject to major shortage of raw materials,
even though supply of selected ranges may pose some challenge to those who are heavily
reliant on them. Although Malaysia is a leading producer of timber, much of the higher-grade
timber is exported overseas. Domestic furniture manufacturers must, therefore, vie for the
remaining stocks of better quality timber, which will ensure that their final products meet
quality standards. Currently, most of Malaysias export of wooden furniture, such as home
furniture and office furniture are made of rubberwood. As Malaysia is one of the worlds
largest producers of rubber, the access to rubberwood is addressed. While there were reports
on shortages of rubberwood due to exports, authorities have alleviated this shortage by taking
measures such as implementing a rubberwood export quota, as well as urging local
manufacturers to explore new alternative raw materials.
40
Some office furniture manufacturers
were able to reduce their reliance on rubberwood by producing furniture with other forms of
raw materials. Other raw materials like laminated plywood, fibreboard, chipboards and
Medium Density Fibreboards (MDF) are available locally, or otherwise, may be easily
obtained from overseas sources.
41

Branding and Differentiation
The furniture manufacturing industry is highly fragmented, with approximately 85.0% of
industry players being small and medium sized companies
42
. Research indicates that most
furniture manufacturers in Malaysia are involved in the production of home furniture. Faced
with stiff competition, these industry players are required to differentiate themselves from the
rest of their counterparts. One of the strategies adopted is product specialisation. Product
specialisation allows some players to focus on more niche areas such as office system
furniture or office chairs.

Marketing and branding activities are catered towards showcasing their products design,
quality, functionalities and properties, along with providing good after sales services. Other

40
Forest Research Institute Malaysia http://www.frim.gov.my/?p=296
41
Interviews
42
Manufacturing SMEs in Malaysia are defined as companies with sales turnover of less than RM50 million, and less
than 200 employees. National SME Development Council, Malaysia
http://www.smeinfo.com.my/index.php?option=com_content&view=article&id=1456&Itemid=820

B-32

strategies employed by industry players include the increasing focus on product aesthetics,
incorporation of ergonomic elements as well as the integration of green and environmental
friendly materials for the furniture. Ergonomic furniture are able to appeal to office furniture
buyers, as the main objective of ergonomic furniture manufacturers is to design safe products,
which will reduce or prevent repetitive strains, thus, promoting workplace safety and
improving productivity.
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5. COMPETITIVE LANDSCAPE IN MALAYSIA

5.1 Overview of Competitive Landscape

There are no official statistics on the number of furniture manufacturers in Malaysia. However,
research indicates that there are over 500 furniture manufacturers registered as members of
manufacturers. Further research indicated that 43 out of the 119 are registered as office
furniture manufacturers exclusively. Most furniture factories in Malaysia are located in the
states of Johor, Selangor, Perak, Penang, Malacca and Kuala Lumpur.
43
As one of the largest
exporters of furniture in the world, a large proportion of these manufacturers products are
sold and distributed to overseas markets.

5.1.1 Nature of Competition

The competitive landscape of the furniture industry is highly intense, with most of the industry
players manufacturing home furniture. In order to stay competitive, furniture manufacturers
may seek to diversify its offerings into other product segments such as kitchen, office or
garden furniture. Furniture manufacturers may also specialise in serving niche segments. Of
the 119 registered office furniture manufacturers, 76 (63.9%) of them have also listed
themselves as manufacturers of other types of furniture. The remaining 43 (36.1%) have
registered themselves as exclusive office furniture manufacturers.

The market positioning is also another key factor that industry players compete in. Lower end
office furniture manufacturers may be able to leverage on their ability to mass produce
standardised products to keep production cost low. Alternatively, manufacturers are able to

43
Chapter 4 ~ Statement of Need. Preliminary Environmental Impact Assessment for the Proposed Logging Activities
on 60 Hectares at Mukim Relai, Daerah Chiku, Jajahan Gua Musang , Kelantan Darul Naim for Batu Hitam Enterprise
- https://ekas.doe.gov.my/eia/upload/Ex_Sum/201309021159210.Chapter%204%20-
%20Statement%20of%20Need.pdf
B-34

position themselves in the mid-to-high end segment by producing higher quality products or
by selling customised and modular furniture to cater to the needs of their clients.

Some office furniture manufacturers have also increased emphasis on securing orders
through project sales. Project sales refer to the acquisition of bulk orders either directly from
corporate end-users or from intermediaries serving these corporate clients. Unlike
conventional wholesale and retail modes, project sales enable furniture manufacturers to
have the advantage of bringing in bigger orders, and thus, boost overall turnover.

New technologies are also being adopted by industry players to improve the companies
capabilities and production efficiency. These new technologies implemented will be able to
streamline various production and supply chain processes, thus, providing the manufacturers
with the abilities to produce and distribute their products effectively. With an increase in
demand for different types of office layouts and themes, new technologies implemented may
also focus on adding value to the furniture manufacturers products through product finishings
and designs.
44

5.1.2 Barriers to Entry

The office furniture industry in Malaysia has moderately high barriers to entry, which include
high capital outlay, technical know-how, skilled labour, credibility with suppliers and clients,
and certifications and licences with the relevant authorities.

Capital and Labour Requirement
Manufacturing of office furniture requires a company to have a well-equipped medium to large
production facility to accommodate the multitude of production activities. Investments into
furniture manufacturing equipment such as precision milling machines, woodworking
machines and assembly lines are substantial cost factors in the initial stage of operations.
Apart from upkeep costs of plant and equipment, the company may also have to consider
upgrades at later stages, so as to remain competitive and move towards a more efficient
production cycle, or to incorporate cutting-edge technology into their products. Upgrades may
include the addition of research facilities to develop new materials or better designed products.

44
Malaysia External Trade Development Corporation http://www.matrade.gov.my/en/foriegn-buyers-section/69-
industry-write-up--products/621-furniture
B-35

On the other hand, the company will also need to hire and retain skilled and experienced staff,
whose knowledge on the processes and product design will add value towards the companys
final products and services. Retention of experienced staff is integral towards the long-term
growth of the company. Therefore, it is important for the manufacturing company to provide
the right working conditions and benefits, as well as skills development and exposure to
industry trends.

Credibility with Suppliers and Customers
In the initial phase, a new furniture manufacturer needs to establish their network of suppliers
and agents to quickly develop their credibility. Well-established furniture manufacturers have
existing sales and distribution networks, which are able to reach a wide customer base and
compete for market share. In terms of supply, existing manufacturers that are capable of
producing and selling large quantities of furniture are also able to negotiate effectively with
their supplier networks to reduce their cost of raw materials. This is also achieved through
good working relationships and efficient supply chain network with suppliers of important
materials such as chipboards, MDFs, metal frames or plastics. Good relationships with their
suppliers will ensure that the company has ready access to the highest quality materials for its
products at more competitive prices.

Therefore, a new entrant is faced with high barriers to entry, as they are unable to tap on the
existing market to achieve production at economies of scale, as well as accessing supplies at
lower cost, which are already available to existing manufacturers with their supplier networks.

Branding
Existing players are able to adopt different marketing strategies such as positioning their
furniture as low cost mass market products, while others may choose to sell their products
based on its high quality, reliability and durability. Manufacturers can further solidify their
position by providing good after-sales customer services or by providing customised and
modular furniture. With a reliable and trusted brand, furniture manufacturers are able to
secure their market share, thus, preventing new players from penetrating the market to gain
market share.

Certifications and Awards
Certification for sustainable practices may also serve as a barrier to entry for some companies
who seek to move towards the high-end segments. Some client segments may be willing to
pay more for environmentally-friendly products, and they demand certain standards in the
manufacturing process. Certification from reputable bodies such as the Forest Stewardship
B-36

Council and Programme for the Endorsement of Forest Certification ("PEFC") provides a
measure of "green manufacturing" practiced by the company. Furthermore, these
certifications contribute towards the company's overall branding. Apart from green certification,
companies also seek to get certified for general best practices and quality standards, such as
those of ISO 9002 and ISO 9001 among others. Certifications require commitment of
resources and reinvestments into best practices in supply chain management, manufacturing
processes and research. These certifications serve as a testament to the quality of the
companys products, thus, lending an edge to its branding.

B-37
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B-41

5.2.3 SWOT Analysis

Strengths Weaknesses
Research and development capabilities
Well established. Company with credible
reputation and brand name.
Positioned to capitalise on increasing
need for workplace planning and
consulting
International network of dealers to
explore overseas market
One of the seven companies in Malaysia
that is GREENGUARD certified
Has only one overseas branch office.
Constraints over marketing and sales
activities in foreign market.
Opportunities Threats
Booming export market in emerging
countries
Strong Malaysian government support
for the industry
New innovations and technology for
office systems furniture
Increasing scope for office systems
integration and project sales
Higher costs of raw materials
Increasing labour shortages
Competition from developing countries
(e.g. China, Indonesia)

B-42

6. ASSESSMENT OF THE PEOPLES REPUBLIC OF
CHINA

While Malaysias furniture industry has a strong footing in the international market, it has been
facing stiff competition from its counterparts in China. China-made furniture has gained
popularity among consumers with its lower pricing, a result of Chinese manufacturers having
a general pricing advantage, brought about by lower production costs.

Research indicates that consumers today are more knowledgeable, and have become more
discerning in their purchases. Along with higher buying power, consumers make their
purchasing decisions on the basis of both price and quality. While price is an important
consideration, consumers also take into account of the quality, with increased willingness to
pay more for furniture of better make. Malaysia-manufactured furniture is perceived to be
superior to their Chinese competitors in terms of quality. The furniture industry in Malaysia is
regarded globally as a well-established one, and is known for its quality furniture. This
cushions Malaysia from competition from its Chinese counterparts, particularly for the mid and
high-end product segments.

The cost advantages that Chinese manufacturers had enjoyed have since been affected by
factors such as the appreciation of the Renminbi and rising labour costs. Rapid
industrialisation in China has led to increasing demand for labour, and thus, higher
competition among manufacturers for workers. This, as a result, has put upward pressure on
wages. Higher costs of labour in China are subsequently passed on to consumers in the form
of higher furniture prices, thus, narrowing the price disparity between made-in-Malaysia
furniture and those made in China.

B-43

7. MALAYSIAS GOVERNING POLICIES AND
REGULATIONS

7.1 Malaysias Policies and Regulations Governing the
Domestic Furniture Industry

National Timber Industry Policy
45

In 2009, the Ministry of Plantation Industries and Commodities (MPIC) launched a blueprint
for the systematic long-term growth of the Malaysian timber industry for the period 2009 to
2020 called the National Timber Industry Policy (NATIP). The NATIP envisioned a vibrant
wood-based industry that can contribute to Malaysias development, with furniture and panel
products as the main contributors of this growth. The policy outlines the development plans
for the industry, and determines the appropriate policy directions for critical aspects of the
timber and furniture industry.

NATIP sets the path for sustainable development of the timber industry, aimed at achieving
the target of RM53.0 billion (USD14.8 billion
46
) in export earnings by 2020. The policy also
targets furniture exports to achieve RM16.0 billion (USD5.1 billion
47
) by 2020. In order to
support the policy, the government has implemented various programmes to support the
development of the furniture industry, like the forest plantation programme, to ensure
sustainable supply of raw materials for the furniture industry, as well incentives to fund the
furniture companies.
48

Malaysian Timber Certification Scheme
The Malaysian Timber Certification Scheme (MTCS) is a national certification system that
certifies forest products from sustainable resources. The Malaysian Timber Certification
Council (MTCC) was established in 1998 to develop and operate the MTCS. Under the
MTCS, timber manufacturers, including furniture makers, are encouraged to seek the global

45
Malaysia Timber Industry Board http://www.mtib.gov.my/natip/Natip3.pdf
46
47
48
Ministry of Plantation Industries and Commodities http://www.kppk.gov.my/index.php/utama/sumber/speeches-
2013/419-9th-export-furniture-exhibition-efe-2013.html
B-44

Forestry Stewardship Council (FSC) standards and to place the FSC-MTC label on their
export products.
49
The certification is important, as furniture manufacturers in Malaysia are
under pressure to supply furniture made from certified timber due to both environmental and
legality issues. In the international market, buyers have become more conscious of the
availability of timber and timber products made from sustainable sources.
50

Under the voluntary scheme, timber manufacturers, including furniture makers and exporters
of timber products, are encouraged to seek certification to comply with FSC standards, and to
put the FSC-MTCC label on their export products.

Promotion of Investment Act 1986
The Promotion of Investment Act, 1986 (PIA, 1986) provides tax incentives for the
development of the manufacturing, agricultural and tourist sectors in Malaysia. The tax
incentives provided for under the PIA, 1986 include the Pioneer Status, Investment Tax
Allowance (ITA), Abatement of Adjusted Income, Export Allowance, Double Deduction for
Promotion of Exports, and Industrial Building Allowance for Hotels.
51
Starting from 2 March
2012, the Malaysian government produced a revised list of promoted products under the PIA,
1986, in which the design, development and production of wooden furniture is listed as
promoted products that are eligible for consideration of pioneer status and investment tax
allowance.
52

Companies that are producing or are engaged in promoted products or activities are eligible
to apply for Pioneer Status. Companies that are granted Pioneer Status will be able to enjoy a
tax exemption on 70.0% of the statutory income for five years. They pay tax on 30.0% of their
statutory income, with the exemption period commencing from its production day. Moreover,
companies located in Sabah, Sarawak, the Federal Territory of Labuan, and the designated
Eastern Corridor of Peninsular Malaysia (i.e., Kelantan, Terengganu, Pahang and the district
of Mersing in Johor) will be granted 85.0% of tax exemption on statutory income for 5 years.
53

Other than the Pioneer Status, the ITA is another incentive that is designed to cater for
projects that have large capital investments with long gestation periods. Under the ITA,
companies that are producing or engaged in promoted products or activities will be granted

49
Malaysian Timber Certification Council http://www.mtcc.com.my/
50
Malaysia Furniture Promotion Council
http://www.mfpc.com.my/index.php?option=com_content&view=article&id=703&ordering=3
51
Attorney Generals Chambers Malaysia http://www.agc.gov.my/Akta/Vol.%207/Act%20327.pdf
52
Malaysian Investment Development Authority http://www.mida.gov.my/env3/uploads/images/invest/invest-
pdf/APP1_02032012.pdf
53
Ministry of Finance Malaysia
http://www.treasury.gov.my/index.php?option=com_content&view=article&id=704&Itemid=200&lang=en
B-45

an allowance of 60.0%, in respect of qualifying capital expenditure incurred within five years
from the date of the incurrence of the first capital expenditure. The allowance can be utilised
to set off (exempt) up to 70.0% of the statutory income in the assessment year.
54

Third Industrial Masterplan
In 2006, the Malaysian government launched the Third Industrial Master Plan (IMP3) that
contained a 15-year economic blueprint mapping out Malaysias growth strategy from 2006 to
2020. Under the IMP3, the furniture industry was identified as target to be developed into a
vibrant hub that provides quality and innovative designs to the global markets. In order to
reach the objective, the Malaysian government implemented several measures, for example,
transforming the furniture industry from an original equipment manufacturing (OEM) base to
an own design manufacturing (ODM) one, and own brand manufacturing (OBM) centre for
furniture products.
55

7.2 Other Regulations Affecting the Furniture Industry

European Unions Forest Law Enforcement, Governance and Trade Voluntary
Partnership Agreement
The European Union (EU) implemented a law on the legality of timber being exported to the
EU countries. Starting from 1 March 2013, timber used for products to be exported to the EU
are required to be certified as obtained from legal sources. Under the Forest Law
Enforcement, Governance and Trade (FLEGT) Voluntary Partnership Agreement (VPA),
the legality of the timber is certified through the establishment of a Timber Legality Assurance
System (TLAS) on a regional basis, namely Peninsular Malaysia, Sabah and Sarawak.
MTIB is the authority responsible for issuing the TLAS.
56
The recently introduced TLAS seeks
to enhance the due diligence process for European importers and works to supplement the
existing accreditation scheme, such as PEFC by MTCC.

The Malaysian Furniture Promotion Council (MFPC) has urged furniture manufacturers to
closely monitor the EUs FLEGT law, and prepare accordingly to take advantage of the green

54
Ministry of Finance Malaysia
http://www.treasury.gov.my/index.php?option=com_content&view=article&id=703&Itemid=200&lang=en
55
Ministry of International Trade and Industry
http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_8ab58e8f-7f000010-72f772f7-dbf00272
56
Malaysia EU FLEGT VPA http://www.flegtvpa.my/introduction
B-46

entry for exports into the EU countries.
57
According to MTIB, furniture exports from Malaysia
are benefiting from the FLEGT VPA initiative, as timber used in Malaysias furniture products
are certified to be from legal sources, and can thus, be accepted by EU under the EU Timber
Regulations.
58

57
Malaysia Furniture Promotion Council
http://www.mfpc.com.my/index.php?option=com_content&view=article&id=704&ordering=4
58
Malaysia EU FLEGT VPA
http://www.flegtvpa.my/news?p_p_id=XY_CMS_MULTI_WAR_xycmsportlet_INSTANCE_8zVB&p_p_lifecycle=0&p_
p_state=normal&p_p_mode=view&p_p_col_id=column-
1&p_p_col_pos=1&p_p_col_count=2&_XY_CMS_MULTI_WAR_xycmsportlet_INSTANCE_8zVB_jspPage=%2Fhtml
%2Fxy%2Fcms%2Fview_multi_cms.jsp&_XY_CMS_MULTI_WAR_xycmsportlet_INSTANCE_8zVB_cur=1&_XY_CM
S_MULTI_WAR_xycmsportlet_INSTANCE_8zVB_delta=20&_XY_CMS_MULTI_WAR_xycmsportlet_INSTANCE_8z
VB_keywords=&_XY_CMS_MULTI_WAR_xycmsportlet_INSTANCE_8zVB_advancedSearch=false&_XY_CMS_MUL
TI_WAR_xycmsportlet_INSTANCE_8zVB_andOperator=true
B-47

8. OUTLOOK AND PROSPECTS OF THE INDUSTRY

The office furniture industry in Malaysia is expected to grow by 5.0% to 10.0% annually from
2013 to 2018
59
. Growth in sales of office furniture is reported to be driven mainly by export
sales, particularly to emerging markets.

Demand Growth from Emerging Countries
Growth in Asian nations has prompted an increase of office furniture imports from Malaysia
over the past five years. From 2009 to 2013, the collective imports of Malaysian office
furniture from Asian nations have grown by a CAGR of 4.0%
60
. Malaysia exports more than
half of their office furniture to Asian countries. It is expected that the furniture manufacturing
industry will see stable global demand growth, with an increasing trend in imports of
consumer goods in emerging countries. An increase in foreign direct investments gave rise to
MNCs expanding their operations into other emerging countries by setting up offices in these
regions. As a result, new offices will be furnished, thus, creating demand for office furniture.
As one of the worlds largest exporters of office furniture, Malaysian manufacturers are poised
to capitalise on this increase in demand.

Recovery of Major Economies
After Asia, North America represented the second largest export market for Malaysian made
office furniture. The recovery of the USA economy since the 2008 financial crisis has seen an
increase in consumption of office furniture. From 2009 to 2013, the region has seen a CAGR
of 12.0% in office furniture imports from Malaysia
61
, and is expected to continue to grow, as
the economy recovers in the North American region. The economic recovery resulted in a rise
in commercial activities, thus, increasing the demand for furniture to furnish new offices.
Imports from eurozone nations are met with slightly lower growth rates of 3.8%
62
. The largest
European importer of Malaysian office furniture is the UK, which recorded a 16.3% growth
over the past five years
63
. Demand for Malaysian-manufactured office furniture is expected to
grow, in tandem with the recovery of the European nations.

59
Interviews with industry players
60
Intracen, Tabulated by Converging Knowledge
61
62
63
B-48

Growth of Commercial Property Developments in Malaysia
Malaysias foreign investments, over the years, have been flowing steadily into the country.
Through the efforts of MIDA and InvestKL, Malaysia is able maintain its efforts in attracting
foreign companies into the country, thus, generating a demand for office supplies and
increasing the prospects for the Malaysian office furniture manufacturers. Property
development activities in Malaysia, in commercial districts such as Klang Valley, have
increased over the years. Total office supply recorded a CAGR of 4.1% from 2009 to 2013. It
is in the pipeline that an additional 0.7 million sqm of new office space is being scheduled to
be released in Malaysia in 2014
64
.

Push Towards High-value Products and Services
Demand for products that are better designed and made from sustainable practices is on the
rise. End-users, especially those in the USA and Europe, are also aware of furniture
manufacturing practices, and are increasingly conscious about their impact on the
environment. As such, there is an increasing demand for certified office furniture that
complies with international safety and environmental standards. Matured office furniture
production industries, such as those in Malaysia, are attuned to the requirements of their
clients, and have Research & Development capabilities to cater to this segment. Also, the
cumulative knowledge in the industry has led to the rise of solutions-based services such as
those of project sales. As result, the industry is able to realise higher profitability from sales of
high-value, internationally recognised products, and provision of value-added services. The
gradual shift towards high-value products and services may also alleviate pressure from
higher production costs and increased competition from other exporting countries like China
and Vietnam. Such industry-wide shifts are seen as necessary for the continued growth of the
local furniture manufacturing industry.

Use of Research and Technology
The furniture manufacturing industry is an important industry in Malaysia, in terms of export
revenue and growth potential. As such, the industry enjoys strong governmental support,
which comes in the form of incentives and programmes to adopt the use of technology. The
use of high-tech procedures in furniture manufacturing is expected to push growth in the
industry, by way of driving productivity and mitigating future increases in cost of labour and/or
material. Throughout the years, Malaysias office furniture manufacturing industry has
accumulated considerable experience, and built up expertise in modern manufacturing
processes. With growing investments into high-tech production processes, it is projected that
the domestic industry will be able to keep up with increased future demands and challenges.

64
31 July 2013, The Star, Malaysia, New office space puts pressure on existing buildings in KL
http://www.thestar.com.my/business/business-news/2013/07/31/space-war.aspx/
B-49
Converging Knowledge The Office Furniture Industry in Malaysia

Converging Knowledge Pte Ltd has prepared this report in an independent and objective
manner and has taken adequate care to ensure the accuracy and completeness of the report.
We believe that this report represents a true and fair view of the industry within the
boundaries and limitations of secondary statistics, primary research and continued industry
movements. Our research has been conducted to present a view of the overall industry and
may not necessarily reflect the performance of individual companies in this industry. We are
not responsible for the decisions and/ or actions of the readers of this report. This report
should also not be considered as a recommendation to buy or not to buy the shares of any
company or companies.

EDDY TAN KONG YIAM
Director
Converging Knowledge Pte Ltd

B-50
APPENDIX C
DESCRIPTION OF ORDINARY SHARES
The following statements are brief summaries of the rights and privileges of Shareholders
conferred by the laws of Singapore and the Articles of our Company. These statements
summarise the material provisions of the Articles but are qualified in entirety by reference to
the Articles.
Ordinary Shares
There are no founders, management, deferred or unissued shares reserved for issue for any
purpose. We have only one (1) class of shares, namely, our ordinary shares which have
identical rights in all respects and rank equally with one another. All of the ordinary shares are
in registered form. Our Company may, subject to the provisions of the Companies Act and the
rules of the SGX-ST, purchase its Shares. However, it may not, except in circumstances
permitted by the Companies Act, grant any financial assistance for the acquisition or proposed
acquisition of its own Shares.
New Shares
New Shares may only be issued with the prior approval in a general meeting of our
Shareholders. The aggregate number of Shares to be issued pursuant to such approval may
not exceed 100.0% (or such other limit as may be prescribed by the SGX-ST) of our issued
share capital for the time being, of which the aggregate number of shares to be issued other
than on a pro-rata basis to our Shareholders shall not exceed 50.0% (or such other limit as
may be prescribed by the SGX-ST) of our issued share capital for the time being (the
percentage of issued share capital being based on our issued Shares at the time such
authority is given after adjusting for new Shares arising from the conversion of convertible
securities or employee share options on issue at the time such authority is given and any
subsequent consolidation or sub-division of Shares). The approval, if granted, will lapse at the
conclusion of the annual general meeting following the date on which the approval was granted
or the date by which the annual general meeting is required by law to be held, whichever is the
earlier but any approval may be previously revoked or varied by our Company in general
meeting. Subject to the foregoing, the provisions of the Companies Act and any special rights
attached to any class of shares currently issued, all new Shares are under the control of our
Board who may allot and issue the same with such rights and restrictions as it may think fit.
Shareholders
Only persons who are registered in the register of Shareholders of our Company and, in cases
in which the person so registered is CDP, the persons named as the Depositors in the
Depository Register maintained by CDP for the Shares, are recognised as our Shareholders.
Our Company will not, except as required by law, recognise any equitable, contingent, future
or partial interest in any Share or other rights for any Share other than the absolute right
thereto of the registered holder of that Share or of the person whose name is entered in the
Depository Register for that Share. Our Company may close the register of Shareholders for
any time or times if it provides the SGX-ST at least ten (10) clear market days notice.
However, the register of Shareholders may not be closed for more than 30 days in aggregate
in any calendar year. Our Company typically closes the register of Shareholders to determine
Shareholders entitlement to receive dividends and other distributions.
C-1
Transfer of Shares
There is no restriction on the transfer of fully paid Shares except where required by law or the
Listing Manual or the rules or by-laws of any stock exchange on which our Company is listed.
Our Board may decline to register any transfer of Shares which are not fully paid Shares, or
Shares on which our Company has a lien. Our Shares may be transferred by a duly signed
instrument of transfer in a form approved by the SGX-ST or any stock exchange on which our
Company is listed.
Our Board may also decline to register any instrument of transfer unless, among other things,
it has been duly stamped and is presented for registration together with the share certificate
and such other evidence of title as it may require. Our Company will replace lost or destroyed
certificates for Shares if it is properly notified and if the applicant pays a fee which will not
exceed S$2 and furnishes any evidence and indemnity that our Board may require.
General Meetings of Shareholders
Our Company is required to hold an annual general meeting every year. Our Board may
convene an extraordinary general meeting whenever it thinks fit and must do so if
Shareholders representing not less than ten per cent. (10.0%) of the total voting rights of all
Shareholders request in writing that such a meeting be held. In addition, two (2) or more
Shareholders holding not less than ten per cent. (10.0%) of the issued share capital of our
Company (excluding treasury shares) may call a meeting. Unless otherwise required by law or
by our Articles, voting at general meetings is by ordinary resolution, requiring an affirmative
vote of a simple majority of the votes cast at that meeting. An ordinary resolution suffices, for
example, for the appointment of directors. A special resolution, requiring the affirmative vote
of at least 75.0% of the votes cast at the meeting, is necessary for certain matters under
Singapore law, including voluntary winding up, amendments to the Memorandum of
Association and our Articles, a change of the corporate name and a reduction in the share
capital. Our Company must give at least 21 days notice in writing for every general meeting
convened for the purpose of passing a special resolution. Ordinary resolutions generally
require at least 14 days notice in writing. The notice must be given to every Shareholder who
has supplied our Company with an address in Singapore for the giving of notices and must set
forth the place, the day and the hour of the meeting and, in the case of special business, the
general nature of that business.
Voting Rights
A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by
proxy. Proxies need not be a Shareholder. A person who holds ordinary shares through the
SGX-ST book-entry settlement system will only be entitled to vote at a general meeting as a
Shareholder if his name appears on the Depository Register maintained by CDP 48 hours
before the general meeting. Except as otherwise provided in our Articles, two (2) or more
Shareholders must be present in person or by proxy to constitute a quorum at any general
meeting. Under the Articles, on a show of hands, every Shareholder present in person and by
proxy shall have one vote (provided that in the case of a Shareholder who is represented by
two (2) proxies, only one of the two (2) proxies as determined by that Shareholder or, failing
such determination, by the Chairman of the meeting in his sole discretion shall be entitled to
vote on a show of hands), and on a poll, every Shareholder present in person or by proxy shall
have one vote for each Share which he holds or represents. A poll may be demanded in certain
circumstances, including by the chairman of the meeting or by any Shareholder or
Shareholders present in person or by proxy and representing not less than ten per cent.
(10.0%) of the total voting rights of all Shareholders having the right to attend and vote at the
meeting or by not less than two (2) Shareholders present in person or by proxy and entitled
to vote. In the case of an equality of vote, whether on a show of hands or a poll, the chairman
of the meeting shall be entitled to a casting vote.
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Dividends
Our Company may, by ordinary resolution of our Shareholders, declare dividends at a general
meeting, but it may not pay dividends in excess of the amount recommended by our Board. Our
Company must pay all dividends out of its profits. Our Board may also declare an interim
dividend without the approval of our Shareholders. All dividends are paid pro-rata among our
Shareholders in proportion to the amount paid up on each Share, unless the rights attaching
to an issue of any Share provide otherwise. Unless otherwise directed, dividends are paid by
cheque or warrant sent through the post to each Shareholder at his registered address.
Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable
to a Shareholder whose name is entered in the Depository Register shall, to the extent of
payment made to CDP, discharge our Company from any liability to that Shareholder in respect
of that payment.
Bonus and Rights Issues
Our Board may, with approval by our Shareholders at a general meeting, capitalise any
reserves or profits and distribute the same as bonus Shares credited as paid-up to our
Shareholders in proportion to their shareholdings. Our Board may also issue rights to take up
additional Shares to Shareholders in proportion to their shareholdings. Such rights are subject
to any conditions attached to such issue and the regulations of any stock exchange on which
our Company is listed.
Take-overs
Under the Singapore Code on Take-overs and Mergers (Singapore Take-over Code), issued
by the Authority pursuant to section 321 of the SFA, any person acquiring an interest, either
on his own or together with parties acting in concert with him, in 30.0% or more of the voting
Shares must extend a takeover 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, either on his own or together with parties acting in
concert with him, between 30.0% and 50.0% of the voting rights acquires additional voting
shares representing more than one per cent. (1.0%) of the voting shares in any six (6) month
period. Under the Singapore Take-over Code, the following individuals and companies will be
presumed 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);
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and
(vii) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights;
(b) a company with any of its directors (together with their close relatives, related trusts as
well as companies 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;
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(d) a person with any investment company, unit trust or other fund whose investment such
person manages on a discretionary basis, but only in respect of the investment account
which such person manages;
(e) a financial or other professional adviser, including a stockbroker, with its customer in
respect of the shareholdings 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
shareholdings of the adviser and any of those funds in the customer total ten per
cent. (10.0%) or more of the customers equity share capital;
(f) directors of a company (together with their close relatives, related trusts and companies
controlled by any of such directors, their close relatives and related trusts) which is
subject to an offer or where 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);
(iv) any person who is accustomed to act in accordance with the instructions of (i);
(v) companies controlled by any of (i), (ii), (iii) or (iv); and
(vi) any person who has provided financial assistance (other than a bank in the ordinary
course of business) to any of the above for the purchase of voting rights.
Under the Singapore Take-over Code, a mandatory offer made with consideration other
than cash must be accompanied by a cash alternative at not less than the highest price
paid by the offeror or any person acting in concert within the preceding six (6) months.
Liquidation or Other Return of Capital
If our Company is liquidated or in the event of any other return of capital, holders of our Shares
will be entitled to participate in any surplus assets in proportion to their shareholdings, subject
to any special rights attaching to any other class of shares.
Indemnity
As permitted by Singapore law, our Articles provide that, subject to the Companies Act, our
Board and officers shall be entitled to be indemnified by our Company against, inter alia, any
liability incurred in defending any proceedings, whether civil or criminal, which relate to
anything done or omitted to have been done as an officer, director or employee and in which
judgment is given in their favour or in which they are acquitted or in connection with any
application under any statute for relief from liability in respect thereof in which relief is granted
by the court. Our Company may not indemnify our Directors and officers against any liability
which by law would otherwise attach to them in respect of any negligence, wilful default,
breach of duty or breach of trust of which they may be guilty in relation to our Company.
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Limitations on Rights to Hold or Vote Shares
Except as described in Voting Rights and Take-overs above, there are no limitations
imposed by Singapore law or by our Articles on the rights of non-resident Shareholders to hold
or vote in respect of our Shares.
Minority Rights
The rights of minority Shareholders of Singapore-incorporated companies are protected under
Section 216 of the Companies Act, which gives the Singapore courts a general power to make
any order, upon application by any Shareholder of our Company, as they think fit to remedy any
of the following situations:
(a) if our affairs are being conducted or the powers of our Board are being exercised in a
manner oppressive to, or in disregard of the interests of, one (1) or more of our
Shareholders; or
(b) if we take an action, or threaten to take an action, or our Shareholders pass a resolution,
or propose to pass a resolution, which unfairly discriminates against, or is otherwise
prejudicial to, one (1) or more of our Shareholders, including the applicant.
Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in
no way limited to those listed in the Companies Act itself. Without prejudice to the foregoing,
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 the name of, or on behalf of, our Company by
a person or persons and on such terms as the court may direct;
(d) provide for the purchase of a minority Shareholders shares by our other Shareholders or
by us and, in the case of a purchase of Shares by us, a corresponding reduction of our
share capital;
(e) provide that our Memorandum of Association or our Articles be amended; or
(f) provide that we be wound up.
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APPENDIX D
SUMMARY OF SELECTED ARTICLES OF ASSOCIATION OF OUR COMPANY
The discussion below provides information about certain provisions of our Articles of
Association. This description is only a summary and is qualified by reference to our Articles of
Association, a copy of which will be displayed at our registered office at 8 Wilkie Road, #03-01,
Wilkie Edge, Singapore 228095. The following are extracts of the provisions in our Articles
relating to:
Directors
(a) Ability of interested directors to vote
Every Director shall observe the provisions of Section 156 of the Companies Act relating
to the disclosure of the interests of our Directors in transactions or proposed transactions
with our Company or of any office or property held by a Director which might create duties
or interests in conflict with his duties or interests as a Director. Notwithstanding such
disclosure, a Director shall not vote in regard to any transactions or proposed
transactions or arrangement in which he has directly or indirectly a personal material
interest although he shall be taken into account in ascertaining whether a quorum is
present.
(b) Remuneration
The remuneration in the case of a Director other than an Executive Director shall
comprise: (i) fees which shall be a fixed sum and/or (ii) such fixed number of shares in
the capital of our Company, and shall not at any time be by commission on, or percentage
of, the profits or turnover, and no Director whether an Executive Director or otherwise
shall be remunerated by a commission on, or percentage of turnover.
Any Director who is appointed to any executive office or serves on any committee or who
otherwise performs or renders services, which in the opinion of our Directors are outside
his ordinary duties as a Director, may, subject to Section 169 of the Companies Act, be
paid such extra remuneration as our Directors may determine.
Our Directors may procure the establishment and maintenance of or participate in or
contribute to any non-contributory or contributory pension or superannuation fund or life
assurance scheme or any other scheme whatsoever for the benefit of and pay, provide for
or procure the grant of donations, gratuities, pensions, allowances, benefits or
emoluments to any persons (including Directors and Executive Officers) who are or shall
have been at any time in the employment or service of our Company or of the
predecessors in business of our Company or of any subsidiary company, and the wives,
widows, families or dependants of any such persons. Our Directors may also procure the
establishment and subsidy of, or subscription and support to, any institutions,
associations, clubs, funds or trusts calculated to be for the benefit of any such persons
as aforesaid or otherwise to advance the interests and well-being of our Company or of
any such other company as aforesaid or of our members and payment for or towards the
insurance of any such persons as aforesaid, and subscriptions or guarantees of money
for charitable or benevolent objects or for any exhibition or for any public, general or
useful object.
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(c) Borrowing
Our Directors may at their discretion exercise every borrowing power vested in our
Company by our Memorandum of Association or permitted by law and may borrow or raise
money from time to time for the benefit of our Company and secure the payment of such
sums by mortgage, charge or hypothecation of all or any of the property or assets of our
Company including any uncalled or called but unpaid capital or by the issue of debentures
or otherwise as they may think fit.
(d) Retirement Age Limit
There is no retirement age limit for Directors under our Articles of Association. Section
153(1) of the Companies Act however, provides that no person of or over the age of
70 years shall be appointed a director of a public company, unless he is appointed or
re-appointed as a director of the company or authorised to continue in office as a director
of the company by way of an ordinary resolution passed at an annual general meeting of
the company.
(e) Shareholding Qualification
There is no shareholding qualification for Directors in the Memorandum and Articles of
Association of our Company.
Share rights and restrictions
Our Company currently has one (1) class of shares, namely, ordinary shares. Only persons
who are registered on our register of members and in cases in which the person so registered
is CDP, the persons named as the depositors in the depository register maintained by CDP for
the ordinary shares, are recognised as our shareholders.
(a) Dividends and distribution
We may, by ordinary resolution of our shareholders, declare dividends at a general
meeting, but we may not pay dividends in excess of the amount recommended by our
Board of Directors. We must pay all dividends out of our profits. All dividends are paid pro
rata amongst our shareholders in proportion to the amount paid up on each shareholders
ordinary shares, unless the rights attaching to an issue of any ordinary share provide
otherwise. Unless otherwise directed, dividends are paid by check or warrant sent
through the post to each shareholder at his registered address. Notwithstanding the
foregoing, the payment by us to CDP of any dividend payable to a shareholder whose
name is entered in the depository register shall, to the extent of payment made to CDP,
discharge us from any liability to that shareholder in respect of that payment.
The payment by our Directors of any unclaimed dividends or other moneys payable on or
in respect of a share into a separate account shall not constitute our Company a trustee
in respect thereof. All dividends unclaimed after being declared may be invested or
otherwise made use of by our Directors for the benefit of our Company and any dividend
unclaimed after a period of six (6) years from the date of declaration of such dividend may
be forfeited and if so shall revert to our Company. However, our Directors may at any time
thereafter at their absolute discretion annul any such forfeiture and pay the dividend so
forfeited to the person entitled thereto prior to the forfeiture. If the Depository returns any
such dividend or moneys to our Company, the relevant Depositor shall not have any right
or claim in respect of such dividend or moneys against our Company if a period of six (6)
years has elapsed from the date of the declaration of such dividend or the date on which
such other moneys are first payable. For the avoidance of doubt no member shall be
entitled to any interest, share of revenue or other benefit arising from any unclaimed
dividends, howsoever and whatsoever.
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Our Directors may retain any dividends or other moneys payable on or in respect of a
share on which our Company has a lien, and may apply the same in or towards
satisfaction of the debts, liabilities or engagements in respect of which the lien exists.
(b) Voting rights
A holder of our ordinary shares is entitled to attend, speak and vote at any general
meeting, in person or by proxy. Proxies need not be a shareholder. A person who holds
ordinary shares through the SGX-ST book-entry settlement system will only be entitled to
vote at a general meeting as a shareholder if his name appears on the depository register
maintained by CDP 48 hours before the general meeting. Except as otherwise provided
in our Articles of Association, two (2) or more shareholders must be present in person or
by proxy to constitute a quorum at any general meeting. Under our Articles of Association,
on a show of hands, every shareholder present in person and by proxy shall have one (1)
vote, and on a poll, every shareholder present in person or by proxy shall have one (1)
vote for each ordinary share which he holds or represents. A poll may be demanded in
certain circumstances, including by the Chairman of the meeting or by any shareholder
present in person or by proxy and representing not less than one-tenth of the total voting
rights of all shareholders having the right to attend and vote at the meeting or by any two
(2) shareholders present in person or by proxy and entitled to vote. In the case of a tie
vote, whether on a show of hands or a poll, the Chairman of the meeting shall be entitled
to a casting vote.
Change in capital
Changes in the capital structure of our Company (for example, an increase, consolidation,
cancellation, sub-division or conversion of our share capital) require shareholders to pass an
ordinary resolution. Ordinary resolutions generally require at least 14 days notice in writing.
The notice must be given to each of our shareholders who have supplied us with an address
in Singapore for the giving of notices and must set forth the place, the day and the hour of the
meeting. Our Company may reduce its share capital or any undistributable reserve in any
manner, subject to any requirements and consents required by law.
Variation of rights of existing shares or classes of shares
If at any time the share capital is divided into different classes, the rights attached to any class
(unless otherwise provided by the terms of issue of the shares of that class) may, subject to
the provisions of the Companies Act, whether or not our Company is being wound up, be varied
or abrogated either with the consent in writing of the holders of three-quarters of the issued
shares of the class or with the sanction of a special resolution passed at a separate general
meeting of the holders of shares of the class and to every such special resolution the
provisions of Section 184 of the Companies Act shall with such adaptations as are necessary
apply. To every such separate general meeting, the provisions of these Articles relating to
general meetings shall mutatis mutandis apply.
Provided always that:
(a) the necessary quorum shall be two (2) persons at least holding or representing by proxy
or by attorney one-third of the issued shares of the class and that any holder of shares
of the class present in person or by proxy or by attorney may demand a poll, but where
the necessary majority for such a special resolution is not obtained at the meeting,
consent in writing if obtained from the holders of three-fourths of the issued shares of the
class concerned within two (2) months of the meeting shall be as valid and effectual as
a special resolution carried at the meeting; and
(b) where all the issued shares of the class are held by one (1) person, the necessary quorum
shall be one (1) person and such holder of shares of the class present in person or by
proxy or by attorney may demand a poll.
D-3
The repayment of preference capital other than redeemable preference capital or any other
alteration of preference shareholders rights may only be made pursuant to a special resolution
of the preference shareholders concerned, Provided Always That where the necessary
majority for such a special resolution is not obtained at a meeting, consent in writing if obtained
from the holders of three-fourths of the preference shares concerned within two (2) months of
the meeting, shall be as valid and effectual as a special resolution carried at the meeting.
Limitations on foreign or non-resident shareholders
There are no limitations imposed by Singapore law or by our Articles of Association on the
rights of our shareholders who are regarded as non-residents of Singapore, to hold or vote
their shares.
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APPENDIX E
TAXATION
The statements made herein regarding taxation are general in nature and are based on certain
aspects of the tax laws of Singapore and administrative guidelines issued by the relevant
authorities in force as of the date of this Offer Document and are subject to any changes in
such laws or administrative guidelines, or in the interpretation of these laws or guidelines,
occurring after such date, which changes could be made on a retrospective basis. These laws
and guidelines are also subject to various interpretations and the relevant tax authorities or the
courts could later disagree with the explanations or conclusions set out below. The statements
below are not to be regarded as advice on the tax position of any holder of our Shares or of
any person acquiring, holding, selling or otherwise dealing with our Shares or on any tax
implications arising from the acquisition, ownership, sale or other dealings in respect of our
Shares. The statements made herein do not purport to be a comprehensive or exhaustive
description of all of the tax considerations that may be relevant to a decision to purchase, own
or dispose of our Shares and do not purport to deal with the tax consequences applicable to
all categories of investors some of which (such as dealers in securities) may be subject to
special rules. Prospective Shareholders are advised to consult their own tax advisers as to the
Singapore or other tax consequences of the acquisition, ownership or disposal of our Shares.
The statements below are based on the assumption that our Company is a tax resident in
Singapore for Singapore income tax purposes. It is emphasised that neither our Company nor
any other persons involved in this Offer Document accepts responsibility for any tax effects or
liabilities resulting from the subscription for, purchase, holding or disposal of our Shares.
INCOME TAX
Individual Income Tax
An individual is a tax resident in Singapore in a year of assessment if, in the preceding year,
he was physically present in Singapore or exercised an employment in Singapore (other than
as a director of a company) for 183 days or more, or if he ordinarily resides in Singapore.
Individual taxpayers who are Singapore tax residents are subject to Singapore income tax on
income accruing in or derived from Singapore. All foreign-sourced income received in
Singapore on or after 1 January 2004 and certain Singapore sourced investment income from
financial instruments derived by a Singapore tax resident individual (except for income
received through a partnership in Singapore or derived from the carrying on of a trade or
business in Singapore) is exempt from Singapore income tax if the Comptroller of Income Tax
(the Comptroller) is satisfied that the exemption would be beneficial to the individual.
Non-resident individuals are subject to Singapore income tax on income accruing in or derived
from Singapore. Non-resident individuals are not subject to tax on foreign-sourced income
received in Singapore and certain Singapore-sourced investment income from financial
instruments.
A Singapore tax resident individual is taxed at progressive rates ranging from 0.0% to 20.0%.
Income derived by a non-resident individual is, subject to certain exceptions and conditions,
normally taxed at the rate of 20.0%. Singapore employment income derived by a non-resident
individual is taxed at a flat rate of 15.0% or at resident rates, whichever yields a higher tax.
Corporate Income Tax
A company is regarded as resident in Singapore for Singapore tax purposes if the control and
management of its business is exercised in Singapore.
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Singapore resident companies are subject to Singapore income tax on income accruing in or
derived from Singapore and on foreign-sourced income received or deemed received in
Singapore, subject to certain exceptions.
Under the tax laws, foreign-sourced income in the form of dividends, branch profits and service
income received or deemed to be received in Singapore by Singapore resident companies on
or after 1 June 2003 are exempt from Singapore income tax if the following prescribed
conditions are all met:
(i) such income is subject to tax of a similar character to income tax under the law of the
jurisdiction from which such income is received;
(ii) at the time the income is received in Singapore, the highest rate of tax of a similar
character to income tax (by whatever name called) levied under the law of the territory
from which the income is received on any gains or profits from any trade or business
carried on by any company in that territory at that time is not less than 15.0%; and
(iii) the Comptroller is satisfied that the tax exemption would be beneficial to the Singapore
resident company.
Non-resident companies are subject to income tax on income accruing in or derived from
Singapore, and on foreign-sourced income received or deemed received in Singapore, subject
to certain exceptions.
The corporate tax rate in Singapore for both resident and non-resident companies is currently
17.0%. Corporate tax exemption will apply to the first S$300,000 of a companys normal
chargeable income as follows:
(i) 75% of up to the first S$10,000 of a companys chargeable income; and
(ii) 50% of up to the next S$290,000 of a companys chargeable income.
The remaining chargeable income (after the tax exemption) will be fully taxable at the
prevailing corporate tax rate of 17.0%.
In the 2013 Budget, the Minister of Finance has announced that both resident and non-resident
companies will enjoy a corporate income tax rebate from year of assessment 2013 to year of
assessment 2015. This rebate will be based on 30% of the tax payable up to a maximum rebate
of S$30,000 per year of assessment. This rebate will not apply to income derived by a
non-resident company that is subject to final withholding tax.
Dividend Distributions
Singapore adopts the one-tier corporate tax system. Under the one-tier corporate tax system,
the tax paid by a Singapore tax resident company is a final tax and the after-tax profits of the
company can be distributed to its shareholders as tax exempt (one-tier) dividends. Dividends
payable by Singapore companies on the one-tier corporate tax system would be tax exempt
from Singapore income tax in the hands of their shareholders. Such dividends are referred to
as tax exempt (one-tier) dividends.
Where our Company is considered to be resident in Singapore, it will be under the one-tier
corporate tax system. In such a situation, when our Company distributes dividends, these
dividends will be tax exempt (one-tier) dividends and such dividends are tax exempt in
Singapore in the hands of our shareholders.
There is no Singapore withholding tax on dividends paid to both Singapore resident
shareholders as well as non Singapore resident shareholders. Foreign shareholders are
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advised to consult their own tax advisors in respect of the tax laws of their respective countries
of residence, which are applicable on such dividends received by them and the applicability of
any double taxation agreement that their country of residence may have with Singapore.
Gain on Disposal of Our Shares
Singapore does not impose tax on capital gains. However, gains may be construed to be of an
income nature and subject to Singapore income tax if they arise from activities which are
regarded as the carrying on of a trade or business in Singapore.
Any profits from the disposal of our Shares, if regarded as capital profits, are not taxable in
Singapore unless the seller is regarded as having derived gains of an income nature in
Singapore, in which case, the disposed gains would be taxable as trading income and not
treated as non-taxable capital gains.
Pursuant to Section 13Z of Income Tax Act (Chapter 134 of Singapore) and based on the IRAS
e-Tax Guide on Income Tax: Certainty of Non-taxation of Companies Gains on Disposal of
Equity Investments dated 30 May 2012, the gains derived from the disposal of ordinary shares
in an investee company during the period 1 June 2012 to 31 May 2017 (both dates inclusive)
is not taxable if immediately prior to the date of the share disposal, the divesting company had
held at least 20.0% of the ordinary shares in the investee company for a continuous period of
at least 24 months. This rule does not apply to a divesting company which is in a business of
insurance whose gains or profits from the disposal of shares are included as part of its income
based on the provisions of Section 26 of the Income Tax Act (Chapter 134 of Singapore), or
disposal of shares in an unlisted investee company that is in the business of trading or holding
Singapore immovable properties (other than the business of property development).
In addition, Shareholders who adopt the tax treatment to be aligned with the Singapore
Financial Reporting Standard 39 Financial Instruments - Recognition and Measurement (FRS
39) may be taxed on gains (not being gains in the nature of capital) even though no sale or
disposal of our Shares is made. Shareholders who may be subject to such tax treatment should
consult their own accounting and tax advisers regarding the Singapore income tax
consequences of their subscription, purchase, holding or disposal of our Shares.
STAMP DUTY
No stamp duty is payable if an instrument of transfer is not executed or the instrument of
transfer is executed outside Singapore and not brought into Singapore. However, stamp duty
may be payable if the instrument of transfer which is executed outside Singapore is received
in Singapore.
There is no stamp duty payable on the subscription for, allotment or holding of our Shares.
Where our Shares evidenced in certificated form are acquired in Singapore, stamp duty is
payable on the instrument of transfer of our Shares at the rate of S$0.20 for every S$100 or
part thereof of the consideration for, or market value of, our Shares, whichever is higher.
The purchaser is liable for stamp duty, unless there is an agreement to the contrary.
Stamp duty is not applicable to electronic transfers of our Shares through the scripless trading
system operated by CDP.
ESTATE DUTY
Singapore estate duty has been abolished with effect from 15 February 2008.
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GOODS AND SERVICES TAX (GST)
General
The sale of our Shares by a GST-registered investor belonging in Singapore through an
SGX-ST member to another person belonging in Singapore is an exempt supply and so would
not be subject to GST. In this regard, generally, GST directly incurred by the GST-registered
investor in making such supplies may not be recovered from the Comptroller of GST. If our
Shares are sold by a GST-registered person who is a member of the Association of Banks in
Singapore, the input tax is recoverable subject to the conditions stipulated by the Comptroller
of GST subject to input tax recovery conditions.
Where our Shares are supplied by a GST-registered investor to a person belonging outside
Singapore and who is outside Singapore at the time the sale is executed, the sale is generally
a taxable sale subject to GST at zero-rate. Any GST incurred by a GST-registered investor in
the making of this taxable supply in the course of or furtherance of a business, subject to the
provisions of the GST Act, may be recovered from the Comptroller of GST.
Services consisting of arranging, broking, underwriting or advising on the issue, allotment or
transfer of ownership of our Shares rendered by a GST-registered person to an investor
belonging in Singapore for GST purposes in connection with the investors purchase, sale or
holding of our Shares will be subject to GST at the standard rate, currently at seven per cent.
(7.0%). Similar services rendered to an investor belonging outside Singapore are subject to
GST at zero-rate, provided that the investor belongs outside Singapore when the services are
performed and the services provided do not directly benefit any Singapore persons.
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APPENDIX F
RULES OF THE VERSALINK PERFORMANCE SHARE PLAN
1. NAME OF THE PERFORMANCE SHARE PLAN
The Performance Share Plan shall be called the Versalink Performance Share Plan.
2. DEFINITIONS
2.1 In this Performance Share Plan, unless the context otherwise requires, the following
words and expressions shall have the following meanings:
Adoption Date : The date on which the Performance Share Plan is
adopted by our Company in general meeting
Auditors : The auditors of our Company for the time being
Award : An award of Shares granted under the
Board : Our board of Directors of our Company for the
time being
SGX-ST
Catalist Rules : Section B of the Listing Manual of the SGX-ST, as
time
Commencement Date : The date for the commencement of the
Committee : The remuneration committee of our Company, or
such other committee comprising directors of our
Company duly authorised and appointed by our
Board to administer this Performance Share Plan
time
Company : Versalink Holdings Limited
Controlling Shareholder : A Shareholder who, in relation to our Company,
has control, as further defined in Rule 2.2
Director : A person holding office as a director of our
Company for the time being
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ESOS : The Versalink Employee Share Option Scheme,
as modified or supplemented from time to time,
the terms of which are set out in Appendix G of
this Offer Document
Group : Our Company and its subsidiaries
Group Employee : Any confirmed employee of our Group (including
any Group Executive Director) selected by the
Committee to participate in the Performance
Share Plan in accordance with the provisions
thereof
Group Executive Director : A director of our Company and/or any of its
subsidiaries, as the case may be, who performs
an executive function
Market Day : A day on which the SGX-ST is open for trading of
securities
New Shares : The new Shares which may be allotted and issued
from time to time pursuant to the vesting of
Awards granted under the Performance Share
Plan
Non-Executive Director : A director of our Company and/or any of its
subsidiaries, as the case may be, other than a
Group Executive Director
Option : The right to subscribe for Shares granted or to be
granted pursuant to the ESOS
Participant : A person who is selected by the Committee to
participate in the Performance Share Plan in
accordance with the provisions of the
Performance Share Plan : The Versalink Performance Share Plan, as
modified or supplemented from time to time
Performance Targets : The performance targets prescribed by the
Committee to be fulfilled by a Participant for any
particular period under the Performance Share
Plan
Record Date : The date fixed by our Company for the purposes
of determining entitlements to dividends or other
distributions to or rights of holders of Shares
Rules : The rules of the Performance Share Plan, as the
same may be amended or supplemented from
time to time
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Shareholders : Registered holders of Shares except where the
shall, in relation to such Shares, mean the
persons to whose securities accounts maintained
with CDP are credited with the Shares
Shares : Ordinary shares in the capital of our Company
Treasury Shares : Issued Shares of our Company which were (or are
treated as having been) purchased by our
Company in circumstances which Section 76H of
the Companies Act applies and have since
purchase been continuously held by our
Company
Vesting Date : In relation to Shares which are the subject of an
Award which has been released in accordance
with Rule 10, the date (as determined by the
Committee and notified to the relevant
Participant) on which those Shares will vest
pursuant to Rule 10
S$ and cents : Singapore dollars and cents respectively
2.2 For the purposes of the Performance Share Plan:
(a) in relation to a Shareholder (including, where the context requires, our Company),
control means the capacity to dominate decision-making, directly or indirectly, in
relation to the financial and operating policies of that company;
(b) unless rebutted, a person who holds directly or indirectly, a shareholding of 15.0%
or more of our Companys issued share capital shall be presumed to be a Controlling
Shareholder; and
(c) in relation to a Controlling Shareholder, his associate shall have the meaning
ascribed to it by the Catalist Rules or any other publication prescribing rules or
regulations for corporations admitted to Catalist (as modified, supplemented or
amended from time to time).
2.3 The terms Depositor and Depository Agent shall have the meanings ascribed to them
respectively by Section 130A of the Companies Act.
2.4 Any reference in the Performance Share Plan or the Rules to any enactment is a
reference to that enactment as for the time being amended or re-enacted. Any word
defined under the Companies Act or any statutory modification thereof and used in the
Performance Share Plan and the Rules shall have the meaning assigned to it under the
Companies Act.
2.5 Words importing the singular number shall include the plural number where the context
admits and vice versa. Words importing the masculine gender shall include the feminine
gender where the context admits.
2.6 Any reference to a time of day shall be a reference to Singapore time.
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3. OBJECTIVES
3.1 The main objectives of the Performance Share Plan are as follows:
(a) to attract potential employees with relevant skills to contribute to our Group and to
create value for Shareholders;
(b) to instill loyalty to, and a stronger identification by the Participants with the long-term
prosperity of our Group;
(c) to motivate the Participants to optimise their performance standards and efficiency
and to maintain a high level of contribution to our Group;
(d) to give recognition to the contributions made by the Participants to the success of
our Group; and
(e) to retain key employees of our Company whose contributions are essential to the
long-term prosperity of our Group.
4. ELIGIBILITY
4.1 The following persons (provided that such persons are not undischarged bankrupts at the
relevant time) shall be eligible to participate in the Performance Share Plan at the
absolute discretion of the Committee:
(a) Group Employees (including Group Executive Directors) who have attained the age
of 21 years on or before the date of grant of the Award; and
(b) Non-Executive Directors (including independent Directors) who have attained the
age of 21 years on or before the date of grant of the Award.
4.2 Controlling Shareholders and the associates of the Controlling Shareholders who meet
the eligibility criteria in Rule 4.1 shall be eligible to participate in the Performance Share
Plan provided that (a) the participation of, and (b) the terms of each grant and the actual
number of Awards granted under the Performance Share Plan, to a Participant who is a
Controlling Shareholder or an associate of a Controlling Shareholder shall be approved
by the independent Shareholders in separate resolutions for each such person.
4.3 Participants who are also Shareholders and are eligible to participate in the Performance
Share Plan must abstain from voting on any resolution relating to the Performance Share
Plan, including the participation in the Performance Share Plan and grant of Awards to the
Participants, and should not accept nominations as proxies or otherwise for voting in
respect of such resolution unless specific instructions have been given in the proxy
instrument on how the votes are to be casted.
4.4 Controlling Shareholders and their associates shall abstain from voting on the resolution
in relation to their participation in the Performance Share Plan and grant of Awards to
them.
4.5 For the purposes of determining eligibility to participate in the Performance Share Plan,
the secondment of a Group Employee to another company within our Group shall not be
regarded as a break in his employment or his having ceased by reason only of such
secondment to be a full-time employee of our Group.
4.6 There shall be no restriction on the eligibility of any Participant to participate in any other
share incentive schemes or share plans implemented or to be implemented by our
Company or any other company within our Group.
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4.7 Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility
for participation in the Performance Share Plan may be amended from time to time at the
absolute discretion of the Committee.
5. LIMITATIONS UNDER THE PERFORMANCE SHARE PLAN
5.1 The total number of Shares which may be delivered pursuant to the vesting of Awards on
any date, when added to the aggregate number of Shares issued and/or issuable in
respect of (a) all Awards granted under the Performance Share Plan; (b) all Options
granted under the ESOS; and (c) all other Shares issued and/or issuable under any other
share-based incentive schemes or share plans of our Company, shall not exceed 15.0%
of the total number of issued Shares (including Treasury Shares) of our Company from
time to time.
5.2 Shares which are the subject of Awards which have lapsed for any reason whatsoever
may be the subject of further Awards granted by the Committee under the Performance
Share Plan.
5.3 The aggregate number of Shares available to the Controlling Shareholders and the
associates of the Controlling Shareholders (including adjustments made in accordance
with Rule 11) shall not exceed 25.0% of the Shares available under the Performance
Share Plan.
5.4 The number of Shares available to each Controlling Shareholder or associate of the
Controlling Shareholder (including adjustments made in accordance with Rule 11) shall
also not exceed ten per cent. (10.0%) of the Shares available under the Performance
Share Plan.
6. DATE OF GRANT
The Committee may grant Awards at any time in the course of a financial year, provided
that in the event that an announcement on any matter of an exceptional nature involving
unpublished price sensitive information is imminent, Awards may only be vested and
hence any Shares comprised in such Awards may only be delivered on or after the second
Market Day from the date on which the aforesaid announcement is made.
7. AWARDS
7.1 The selection of the Participants and number of Shares which are the subject of each
Award to be granted to a Participant in accordance with the Performance Share Plan shall
be determined at the absolute discretion of the Committee, which shall take into account
criteria such as, inter alia, the rank, scope of responsibilities, performance, years of
service and potential for future development and contribution to the success of our Group.
7.2 In the case of a performance-related Award, the Performance Targets will be set by the
Committee depending on each individual Participants job scope and responsibilities. The
Performance Targets to be set shall take into account both the medium and long-term
corporate objectives of the Group and the individual performance of the Participant and
will be aimed at sustaining long-term growth. The corporate objectives shall cover market
competitiveness, business growth and productivity growth. The Performance Targets
could be based on criteria such as sales growth, growth in earnings and return on
investment. In addition, the Participants length of service with our Group, achievement
of past Performance Targets, value-add to our Groups performance and development
and overall enhancement to shareholder value, amongst others, will be taken into
account.
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7.3 As soon as reasonably practicable after an Award is finalised by the Committee, the
Committee shall send an Award letter to the Participant confirming the said Award. The
said Award letter shall specify, inter alia, the following:
(a) in relation to a performance-related Award, the Performance Targets for the
Participant and the period during which the Performance Targets shall be met;
(b) the number of Shares to be vested on the Participant; and
(c) the date by which the Award shall be vested.
7.4 The Committee shall take into account various factors when determining the method to
arrive at the exact number of Shares comprised in an Award. Such factors include, but are
not limited to, the current price of the Shares, the total issued share capital of our
Company and the predetermined dollar amount which the Committee decides that a
Participant deserves for meeting his Performance Targets. For example, Shares may be
awarded based on predetermined dollar amounts such that the quantum of Shares
comprised in Awards is dependent on the closing price of Shares transacted on the
Market Day the Award is vested. Alternatively, the Committee may decide absolute
numbers of Shares to be awarded to Participants irrespective of the price of the Shares.
The Committee shall monitor the grant of Awards carefully to ensure that the size of the
Performance Share Plan will comply with the relevant rules of the Catalist Rules.
7.5 Awards are personal to the Participant to whom it is given and shall not be transferred
(other than to a Participants personal representative on the death of that Participant),
charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the
prior approval of the Committee.
8. VESTING OF THE AWARDS
8.1 Notwithstanding that a Participant may have met his Performance Targets, no Awards
shall be vested:
(a) upon the bankruptcy of the Participant or the happening of any other event which
results in his being deprived of the legal or beneficial ownership of such Award;
(b) in the event of any misconduct on the part of the Participant as determined by the
Committee in its discretion;
(c) subject to Rule 8.2, upon the Participant ceasing to be in the employment of our
Group for any reason whatsoever; or
(d) in the event that the Committee shall, at its discretion, deem it appropriate that such
Award to be given to a Participant shall so lapse on the grounds that any of the
objectives of the Performance Share Plan (as set out in Rule 3) have not been met.
8.2 A Participant shall be entitled to an Award so long as he has met the Performance Targets
notwithstanding that he may have ceased to be employed by the Group after the fulfilment
of such Performance Targets. For the purpose of this Rule 8.2, the Participant may cease
to be so employed in any of the following events, namely:
(a) through ill health, injury or disability (in each case, evidenced to the satisfaction of
the Committee);
(b) redundancy;
(c) death;
(d) retirement at or after the legal retirement age;
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(e) retirement before the legal retirement age with the consent of the Committee; or
(f) any other event approved by the Committee.
9. TAKE-OVER AND WINDING UP OF OUR COMPANY
9.1 Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for
the Shares, a Participant shall (notwithstanding that the vesting period for the Award has
not expired) be entitled to the Shares under the Awards if he has met the Performance
Targets which fall within the period commencing on the date on which such offer for a
take-over of our Company is made or, if such offer is conditional, the date on which such
offer becomes or is declared 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)-month period, at the recommendation of the offeror and with the approvals of the
Committee and the SGX-ST, such expiry date is extended to a later date (in either
case, being a date falling not later than the last date on which the Performance
Targets are to be met); or
(b) the date of expiry of the period for which the Performance Targets are to be met,
provided that if during such period, the offeror becomes entitled or bound to exercise
rights of compulsory acquisition under the provisions of the Companies Act and,
being entitled to do so, gives notice to the Participants that it intends to exercise
such rights on a specified date, the Participant shall be obliged to fulfill such
Performance Targets until the expiry of such specified date or the expiry date of the
Performance Targets relating thereto, whichever is earlier, before an Award can be
vested.
9.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed
for the purposes of, or in connection with, a scheme for the reconstruction of our
Company or its amalgamation with another company or companies, each Participant who
has fulfilled his Performance Target shall be entitled, notwithstanding the provisions
herein and the fact that the vesting period for such Award has not expired but subject to
Rule 9.5, to any Shares under the Awards so determined by the Committee to be released
to him during the period commencing on the date upon which the compromise or
arrangement is sanctioned by the court and ending either on the expiry of 60 days
thereafter or the date upon which the compromise or arrangement becomes effective,
whichever is later.
9.3 If an order or an effective resolution is made for the winding-up of our Company on the
basis of its insolvency, all Awards, notwithstanding that they may have been so vested
shall be deemed or become null and void.
9.4 In the event of a members voluntary winding-up (other than for amalgamation or
reconstruction), the Awards shall so vest in the Participant for so long as, in the absolute
determination by the Committee, the Participant has met the Performance Targets prior
to the date that the members voluntary winding-up shall be deemed to have been
commenced or effective in law.
9.5 If in connection with the making of a general offer referred to in Rule 9.1 or the scheme
referred to in Rule 9.2 or the winding-up referred to in Rule 9.4, arrangements are made
(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 payment of cash or by any other form of benefit, no release of Shares under the Award
shall be made in such circumstances.
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10. RELEASE OF AWARDS
10.1 As soon as reasonably practicable after the end of each performance period, the
Committee shall review the Performance Targets specified in respect of that Award and
determine whether they have been satisfied and, if so, the extent to which they have been
satisfied (whether fully or partially) and the number of Shares to be released.
10.2 The Committee shall have the discretion to determine whether Performance Targets have
been met (whether fully or partially) or exceeded and/or whether the Participants
performance and/or contribution to our Company and/or any of its subsidiaries justifies
the vesting of an Award. In making any such determination, the Committee shall have the
right to make reference to the audited results of our Company or our Group, as the case
may be, to take into account such factors as the Committee may determine to be relevant,
such as changes in accounting methods, taxes and extraordinary events, and further, the
right to amend the Performance Targets if the Committee decides that a changed
Performance Targets would be a fairer measure of performance.
10.3 Awards may only be vested and consequently any Shares comprised in such Awards shall
only be delivered upon the Committee being satisfied that the Participant has achieved
the Performance Targets.
10.4 Subject to the prevailing legislation and the provisions of the Catalist Rules, our Company
will deliver Shares to Participants upon vesting of their Awards by way of an issue of New
Shares or the transfer of existing Shares held as Treasury Shares to the Participants.
10.5 In determining whether to issue New Shares or to purchase existing Shares for delivery
to Participants upon the vesting of their Awards, our Company will take into account
factors such as the number of Shares to be delivered, the prevailing market price of the
Shares and the financial effect on our Company of either issuing New Shares or
purchasing existing Shares.
10.6 The Committee will procure, upon approval of the Board, the allotment or transfer to each
Participant of the number of Shares which are to be released to that Participant pursuant
to an Award under Rule 7. Any proposed issue of New Shares will be subject to there
being in force at the relevant time the requisite Shareholders approval under the
Companies Act for the issue of Shares. Any allotment of New Shares pursuant to an
Award will take into account the rounding of odd lots.
10.7 Where New Shares are to be allotted or any Shares are to be transferred to a Participant
pursuant to the release of any Award, the Vesting Date will be a trading day falling as soon
as practicable after the review of the Committee referred to in Rule 10.1. On the Vesting
Date, the Committee will procure the allotment or transfer of each Participant of the
number of Shares so determined.
10.8 Where New Shares are to be allotted upon the vesting of any Award, our Company shall,
as soon as practicable after allotment, where necessary, apply to the SGX-ST for the
permission to deal in and for quotation of such Shares on the SGX-ST.
10.9 Shares which are allotted or transferred on the release of an Award to a Participant shall
be issued in the name of, or transferred to, CDP to the credit of either:
(a) the securities account of that Participant maintained with CDP;
(b) the securities sub-account of that Participant maintained with a Depository Agent; or
(c) the CPF investment account maintained with a CPF agent bank,
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in each case, as designated by that Participant. Until such issue or transfer of such
Shares has been effected, that Participant shall have no voting rights nor any
entitlements to dividends or other distributions declared or recommended in respect of
any Shares which are the subject of the Award granted to him.
10.10 New Shares allotted and issued, and existing Shares held in treasury procured by our
Company for transfer, on the release of an Award, shall be subject to all the provisions
of the Memorandum and Articles of Association of our Company and the Companies Act,
and shall rank in full for all entitlements, including dividends or other distributions
declared or recommended in respect of the then existing Shares, the Record Date for
which is on or after the date of issue of the New Shares or the date of transfer of Treasury
Shares pursuant to the vesting of the Award, and shall in all other respects rank pari
passu with other existing Shares then in issue.
10.11 Shares which are allotted, and/or Treasury Shares which are transferred, on the vesting
of an Award to a Participant, may be subject to such moratorium as may be imposed by
the Committee.
11. VARIATION OF CAPITAL
11.1 If a variation in the issued ordinary share capital of our Company (whether by way of a
capitalisation of profits or reserves or rights issue, capital reduction, subdivision,
consolidation, distribution or otherwise) shall take place, then:
(a) the class and/or number of Shares which are the subject of an Award to the extent
not yet vested; and/or
(b) the class and/or number of Shares over which future Awards may be granted under
the Performance Share Plan,
shall be adjusted by the Committee to give each Participant the same proportion of the
equity capital of our Company as that to which he was previously entitled and, in doing
so, the Committee shall determine at its own discretion the manner in which such
adjustment shall be made.
11.2 The following events shall not normally be regarded as a circumstance requiring
adjustment:
(a) the issue of securities as consideration for an acquisition or a private placement of
securities;
(b) the cancellation of issued Shares purchased or acquired by our Company by way of
a market purchase of such Shares undertaken by our Company on the SGX-ST
during the period when a share purchase mandate granted by Shareholders
(including any renewal of such mandate) is in force;
(c) the issue of Shares or other securities convertible into or with rights to acquire or
subscribe for Shares to its employees pursuant to any share option scheme or share
plan approved by Shareholders in general meeting, including the Performance Share
Plan; and
(d) any issue of Shares arising from the exercise of any warrants or the conversion of
any convertible securities issued by our Company.
11.3 Notwithstanding the provisions of Rule 11.1:
(a) the adjustment must be made in such a way that a Participant will not receive a
benefit that a Shareholder does not receive; and
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(b) any adjustment (except in relation to a capitalisation issue) must be confirmed in
writing by the Auditors (acting only as experts and not as arbitrators) to be in their
opinion, fair and reasonable.
11.4 Upon any adjustment required to be made pursuant to this Rule 11, our Company shall
notify the Participant (or his duly appointed personal representatives where applicable) in
writing and deliver to him (or his duly appointed personal representatives where
applicable) a statement setting forth the class and/or number of Shares thereafter to be
issued or transferred on the vesting of an Award. Any adjustment shall take effect upon
such written notification being given.
12. ADMINISTRATION OF THE PERFORMANCE SHARE PLAN
12.1 The Plan shall be administered by the Committee in its absolute discretion with such
powers and duties as are conferred on it by the Board, provided that no member of the
Committee shall participate in any deliberation or decision in respect of Awards granted
or to be granted to him.
12.2 The Committee shall have the power, from time to time, to make and vary such rules (not
being inconsistent with the Performance Share Plan) for the implementation and
administration of the Performance Share Plan as they think fit including, but not limited
to:
(a) imposing restrictions on the number of Awards that may be vested within each
financial year; and
(b) amending Performance Targets if by so doing, it would be a fairer measure of
performance for a Participant or for the Performance Share Plan as a whole.
12.3 Any decision of the Committee made pursuant to any provision of the Performance Share
Plan (other than a matter to be certified by the Auditors) shall be final and binding
(including any decisions pertaining to the number of Shares to be vested) or to disputes
as to the interpretation of the Performance Share Plan or any rule, regulation, procedure
thereunder or as to any rights under the Performance Share Plan.
13. NOTICES AND ANNUAL REPORT
13.1 Any notice required to be given by a Participant to our Company shall be sent or made
to the registered office of our Company or such other addresses as may be notified by our
Company to him in writing.
13.2 Any notices or documents required to be given to a Participant or any correspondence to
be made between our Company and the Participant shall be given or made by the
Committee (or such person(s) as it may from time to time direct) on behalf of our
Company and shall be delivered to him by hand or sent to him at his home address
according to the records of our Company or at the last known address of the Participant
and if sent by post, shall be deemed to have been given on the day following the date of
posting.
13.3 The following disclosures (as applicable) will be made by our Company in its annual
report for so long as the Performance Share Plan continues in operation:
(a) the names of the members of the Committee administering the Performance Share
Plan;
(b) in respect of the following Participants:
(i) Directors of our Company; and
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(ii) Associates of the Controlling Shareholders; and
(iii) Participants (other than those in paragraph (b)(i) and (ii) above) who have
received Shares pursuant to the vesting of the Awards granted under the
Performance Share Plan which, in aggregate, represent five per cent. (5.0%) or
more of the total number of Shares available under the Performance Share
Plan, the following information:
(aa) the name of the Participant;
(bb) the aggregate number of Shares comprised in Awards which have been
granted to such Participant during the financial year under review;
(cc) the aggregate number of Shares comprised in Awards which have been
granted to such Participant since the commencement of the Performance
Share Plan to the end of the financial year under review;
(dd) the aggregate number of Shares comprised in Awards which have been
issued and/or transferred to such Participant pursuant to the vesting of
Awards under the Performance Share Plan since the commencement of
the Performance Share Plan to the end of the financial year under review;
and
(ee) the aggregate number of Shares comprised in Awards which have not been
vested as at the end of the financial year under review; and
(c) such other information as may be required by the Catalist Rules or the Companies
Act.
If any of the above is not applicable, an appropriate negative statement shall be included.
14. MODIFICATIONS TO THE PERFORMANCE SHARE PLAN
14.1 Any or all the provisions of the Performance Share Plan may be modified and/or altered
at any time and from time to time by resolution of the Committee, provided that:
(a) any modification or alteration which would be to the advantage of Participants under
the Performance Share Plan shall be subject to the prior approval of Shareholders
in a general meeting; and
(b) no modification or alteration shall be made without due compliance with the Catalist
Rules and such other regulatory authorities as may be necessary.
14.2 Written notice of any modification or alteration made in accordance with this Rule 14 shall
be given to all Participants.
15. TERMS OF EMPLOYMENT UNAFFECTED
The terms of employment of a Participant (who is a Group Employee) shall not be affected
by his participation in the Performance Share Plan, which shall neither form part of such
terms nor entitle him to take into account such participation in calculating any
compensation or damages on the termination of his employment for any reason.
16. DURATION OF THE PERFORMANCE SHARE PLAN
16.1 The Performance Share Plan shall continue to be in force at the discretion of the
Committee, subject to a maximum period of ten (10) years commencing on the Adoption
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Date, provided always that the Performance Share Plan may continue beyond the above
stipulated period with the approval of our Companys shareholders by ordinary resolution
in general meeting and of any relevant authorities which may then be required.
16.2 The Performance Share Plan may be terminated at any time at the discretion of the
Committee or by an ordinary resolution of our Company in general meeting subject to all
other relevant approvals which may be required and if the Performance Share Plan is so
terminated, no further Awards shall be offered by our Company thereunder.
16.3 Notwithstanding the expiry or termination of the Performance Share Plan, any Awards
made to Participants prior to such expiry or termination will continue to remain valid.
17. TAXES
All taxes (including income tax) arising from the grant and/or disposal of Shares pursuant
to the Awards granted to any Participant under the Performance Share Plan shall be
borne by that Participant.
18. COSTS AND EXPENSES
18.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with
the issue and allotment or transfer of any Shares pursuant to the Awards in CDPs name,
the deposit of share certificate(s) with CDP, the Participants securities account with CDP,
or the Participants securities sub-account with a CDP Depository Agent.
18.2 Save for the taxes referred to in Rule 17 and such other costs and expenses expressly
provided in the Performance Share Plan to be payable by the Participants, all fees, costs
and expenses incurred by our Company in relation to the Performance Share Plan
including but not limited to the fees, costs and expenses relating to the allotment, issue
and/or delivery of Shares pursuant to the Awards shall be borne by our Company.
19. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained, the Board, the Committee and our
Company shall not under any circumstances be held liable for any costs, losses,
expenses and damages whatsoever and howsoever arising in any event, including but not
limited to our Companys delay in issuing or transferring the Shares or applying for or
procuring the listing of the Shares on the SGX-ST.
20. DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the
Committee and its decision shall be final and binding in all respects.
21. CONDITION OF AWARDS
Every Award shall be subject to the condition that no Shares would be issued or
transferred pursuant to the vesting of any Award if such issue or transfer would be
contrary to any law or enactment, or any rules or regulations of any legislative or
non-legislative governing body for the time being in force in Singapore or any other
relevant country having jurisdiction in relation to the issue or transfer of Shares hereto.
22. GOVERNING LAW
The Performance Share Plan shall be governed by, and construed in accordance with, the
laws of the Republic of Singapore. The Participants, by accepting Awards in accordance
with the Performance Share Plan, and our Company irrevocably submits to the exclusive
jurisdiction of the courts of the Republic of Singapore.
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APPENDIX G
RULES OF THE VERSALINK EMPLOYEE SHARE OPTION SCHEME
1. NAME OF THE ESOS
The ESOS shall be called the Versalink Employee Share Option Scheme.
2. DEFINITION
In the ESOS, unless the context otherwise requires, the following words and expressions
shall have the following meanings:
Auditors : The auditors of our Company for the time being
Award : An award of Shares granted under the
Board : The board of directors of our Company for the
time being
SGX-ST
Catalist Rules : Section B of the Listing Manual of the SGX-ST, as
time
Committee : The remuneration committee of our Company, or
such other committee comprising directors of our
Company duly authorised and appointed by our
Board to administer this ESOS
time
Company : Versalink Holdings Limited
Controlling Shareholder : A Shareholder exercising control over our
Company and unless rebutted, a person who
controls directly or indirectly 15.0% or more of our
Companys issued share capital shall be
presumed to be a Controlling Shareholder of our
Company
Date of Grant : In relation to an Option, the date on which the
Option is granted to a Participant pursuant to
Rule 7
Director : A person holding office as a director of our
Company for the time being
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ESOS : The Versalink Employee Share Option Scheme,
as modified or supplemented from time to time
Exercise Price : The price at which a Participant shall subscribe
for each Share upon the exercise of an Option
which shall be the price as determined in
accordance with Rule 9, as adjusted in
accordance with Rule 10
Grantee : A person to whom an offer of an Option is made
Group : Our Company and its subsidiaries
Group Employee : Any confirmed employee of our Group (including
any Group Executive Director) selected by the
Committee to participate in the ESOS in
accordance with the provisions thereof
Group Executive Director : A director of our Company and/or any of its
subsidiaries, as the case may be, who performs
an executive function
Market Day : A day on which the SGX-ST is open for trading of
securities
Market Price : A price equal to the average of the last dealt
prices for the Shares on the SGX-ST over the five
(5) consecutive Trading Days immediately
preceding the Date of Grant of that Option, as
determined by the Committee by reference to the
daily official list or any other publication published
by the SGX-ST, rounded to the nearest whole
cent in the event of fractional prices
Non-Executive Director : A director of our Company and/or any of its
subsidiaries, as the case may be, other than a
Group Executive Director
Offer Date : The date on which an offer to grant an Option is
made pursuant to the ESOS
Option : The right to subscribe for Shares granted or to be
granted to a Group Employee pursuant to the
ESOS and for the time being subsisting
Participant : The holder of an Option
Performance Share Plan : The Versalink Performance Share Plan, as the
same may be modified or altered from time to time
Record Date : The date as at the close of business on which the
Shareholders must be registered in order to
participate in any dividends, rights, allotments or
other distributions
Rules : The rules of the ESOS, as the same may be
amended or supplemented from time to time
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Securities Account : The securities account maintained by a Depositor
with CDP
Shareholders : Registered holders of Shares except where the
shall, in relation to such Shares, mean the
persons to whose securities accounts maintained
with CDP are credited with the Shares
Shares : Ordinary shares in the capital of our Company
Sponsor and Issue
Manager
: CIMB Bank Berhad, Singapore Branch (or such
other sponsor as may be appointed by our
Company from time to time)
Trading Day : A day on which the Shares are traded on Catalist
S$ and cents : Singapore dollars and cents respectively
2.2 For the purposes of the ESOS:
(a) in relation to a Shareholder (including, where the context requires, our Company),
control means the capacity to dominate decision-making, directly or indirectly, in
relation to the financial and operating policies of that company;
(b) unless rebutted, a person who holds directly or indirectly, a shareholding of 15.0%
or more of our Companys total number of issued shares excluding treasury shares
shall be presumed to be a Controlling Shareholder; and
(c) in relation to a Controlling Shareholder, his associate shall have the meaning
ascribed to it by the Catalist Rules or any other publication prescribing rules or
regulations for corporations admitted to Catalist (as modified, supplemented or
amended from time to time).
2.3 The terms Depositor and Depository Agent shall have the meanings ascribed to them
respectively by Section 130A of the Companies Act.
2.4 Any reference in the ESOS or the Rules to any enactment is a reference to that enactment
as for the time being amended or re-enacted. Any word defined under the Companies Act
or any statutory modification thereof and used in the ESOS and the Rules shall have the
meaning assigned to it under the Companies Act.
2.5 Words importing the singular number shall include the plural number where the context
admits and vice versa. Words importing the masculine gender shall include the feminine
gender where the context admits.
2.6 Any reference to a time of day shall be a reference to Singapore time.
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3. OBJECTIVES OF THE ESOS
3.1 The ESOS will provide an opportunity for Group Employees who have contributed
significantly to the growth and performance of our Group (including Group Executive
Directors) and Non-Executive Directors (including independent Directors) and who satisfy
the eligibility criteria as set out in Rule 4 of the ESOS, to participate in the equity of our
Company.
3.2 The ESOS is primarily a share incentive scheme. It recognises the fact that the services
of such Group Employees are important to the success and continued well-being of the
Group. Implementation of the ESOS will enable our Company to give recognition to the
contributions made by such Group Employees. At the same time, it will give such Group
Employees an opportunity to have a direct interest in our Company and will also help to
achieve the following positive objectives:
(a) to motivate each Participant to optimise his performance standards and efficiency
and to maintain a high level of contribution to our Group;
(b) to retain key employees and Directors whose contributions 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
(d) to attract potential employees with relevant skills to contribute to our Group and to
create value for the Shareholders; and
(e) to align the interests of the Participants with the interests of the Shareholders.
4. ELIGIBILITY
4.1 Confirmed Group Employees (including Group Executive Directors) and Non-Executive
Directors (including independent Directors) who have attained the age of 21 years on or
prior to the relevant Offer Date and are not undischarged bankrupts and have not entered
into a composition with their respective creditors, shall be eligible to participate in the
ESOS at the absolute discretion of the Committee.
4.2 Controlling Shareholders and their associates who have contributed to the development
and success of our Group shall be eligible to participate in the ESOS, provided that (a)
the participation of, and (b) the terms of any Options to be granted and the actual number
of Options to be granted under the ESOS, to a Participant who is a Controlling
Shareholder or an associate of a Controlling Shareholder shall be approved by the
independent Shareholders in separate resolutions for each such person, with such
separate resolutions including approval for the actual number and terms of Options to be
granted to that person. Our Company will at such time provide the rationale and
justification for any proposal to grant the Controlling Shareholders or associates of the
Controlling Shareholders any options (including the rationale for any discount to the
market price, if so proposed).
Such Controlling Shareholder and his associate shall abstain from voting on the
resolution in relation to his participation in the ESOS and the grant of Options to him.
4.3 For the purposes of determining eligibility to participate in the ESOS, the secondment of
a confirmed Group Employee to another company within the Group shall not be regarded
as a break in his employment or his having ceased by reason only of such secondment
to be a full-time employee of our Group.
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4.4 There will be no restriction on the eligibility of any Participant to participate in any other
share option or share incentive schemes implemented by any other companies within our
Group.
4.5 Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility
for participation in the ESOS may be amended from time to time at the absolute discretion
of the Committee, which would be exercised judiciously.
5. MAXIMUM ENTITLEMENT
5.1 Subject to Rule 4, Rule 5.1, Rule 5.2 and Rule 10, the aggregate number of Shares in
respect of which Options may be offered to a Grantee for subscription in accordance with
the ESOS shall be determined at the discretion of the Committee, who shall take into
account criteria such as rank, past performance, years of service and potential
development of the Participant.
5.2 The aggregate number of Shares issued and issuable in respect of all Options granted
under the ESOS available to the Controlling Shareholders and associates of the
Controlling Shareholders shall not exceed 25.0% of the total number of Shares available
under the ESOS.
5.3 The number of Shares issued and issuable in respect of all Options granted under the
ESOS available to each Controlling Shareholder or associate of a Controlling
Shareholder under the ESOS shall not exceed ten per cent. (10.0%) of the total number
of Shares available under the ESOS.
6. LIMITATION ON SIZE OF THE ESOS
The total number of Shares over which the Committee may grant Options on any date,
when added to the number of Shares issued and issuable in respect of (a) all Options
granted under the ESOS; (b) all Awards granted under the Performance Share Plan; and
(c) all outstanding options or awards granted under such other share-based incentive
schemes of our Company, shall not exceed 15.0% of the number of issued Shares
(including treasury shares, as defined in the Companies Act) on the day immediately
preceding the Offer Date of the Option.
7. OFFER DATE
The Committee may, save as provided in Rule 4, Rule 5 and Rule 6, offer to grant Options
to such Grantees as it may select in its absolute discretion at any time during the period
when the ESOS is in force, except that no Option shall be granted during the period of 30
days immediately preceding the date of announcement of our Companys interim and/or
final results (as the case may be). In addition, in the event that an announcement on any
matter of an exceptional nature involving unpublished price sensitive information is made,
offers to grant Options may only be made on or after the second Market Day on which
such announcement is released.
An offer to grant the Option to a Grantee shall be made by way of a letter (the Letter of
Offer) in the form or substantially in the form set out in Schedule A, subject to such
amendments as the Committee may determine from time to time.
8. ACCEPTANCE OF OFFER
An Option offered to a Grantee pursuant to Rule 7 may only be accepted by the Grantee
within 30 days after the relevant Offer Date and not later than 5.00 p.m. on the 30th day
from such Offer Date (a) by completing, signing and returning to our Company the
acceptance form (Acceptance Form) in or substantially in the form set out in Schedule
B, subject to such modification as the Committee may from time to time determine,
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accompanied by payment of S$1.00 as consideration and (b) if, at the date on which our
Company receives from the Grantee the Acceptance Form in respect of the Option as
aforesaid, he remains eligible to participate in the ESOS in accordance with these Rules.
If a grant of an Option is not accepted strictly in the manner as provided in this Rule, such
offer shall, upon the expiry of the 30 day period, automatically lapse and shall forthwith
be deemed to be null and void and be of no effect.
Our Company shall be entitled to reject any purported acceptance of a grant of an Option
made pursuant to this Rule 8 or exercise notice (Exercise Notice) in or substantially in
the form set out in Schedule C given pursuant to Rule 12 which does not strictly comply
with the terms of the ESOS.
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 in part or in any way whatsoever without the Committees prior
written approval, but may be exercised by the Grantees duly appointed personal
representative as provided in Rule 11.6 in the event of the death of such Grantee.
The Grantee may accept or refuse the whole or part of the offer. If only part of the offer
is accepted, the Grantee shall accept the offer in multiples of 1,000 Shares or any multiple
thereof.
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 no claim whatsoever against our Company.
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 this Rule within the 30 day 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 to his acceptance of the Option; or
(d) the Grantee being a Group Employee ceases to be in the employment of the Group
or (being a Director) ceases to be a Director of our Company, in each case, for any
reason whatsoever prior to his acceptance of the Option; or
(e) our Company is liquidated or wound-up prior to the Grantees acceptance of the
Option.
9. EXERCISE PRICE
Subject to any adjustment pursuant to Rule 10, the Exercise Price for each Share in
respect of which an Option is exercisable shall be determined by the Committee, in its
absolute discretion, on the Date of Grant, at:
(a) a price equal to the Market Price; or
(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
other percentage or amount as may be determined by the Committee and
permitted by the SGX-ST); and
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(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 not exceeding the maximum discount as aforesaid.
In making any determination under item (b) above on whether to give a discount and the
quantum of such discount, the Committee shall be at liberty to take into consideration
such criteria as the Committee may, at its absolute discretion, deem appropriate,
including but not limited to:
(a) the performance of our Company and/or its subsidiaries, as the case may be;
(b) the years of service and individual performance of the eligible Group Employee or
Director;
(c) the contribution of the eligible Group Employee or Director to the success and
development of our Company and/or our Group; and
(d) the prevailing market conditions.
In the event that our Company is no longer listed on the SGX-ST or any other relevant
stock exchange or trading in the Shares on the SGX-ST or such stock exchange is
suspended for any reason for 14 days or more, the Exercise Price for each Share in
respect of which an Option is exercisable shall be the fair market value of each such
Share as determined by the Committee in good faith.
10. ALTERATION OF CAPITAL
10.1 If a variation in the issued share capital of our Company (whether by way of a
capitalisation of profits or reserves or rights issue or reduction (including any reduction
arising by reason of our Company purchasing or acquiring its issued Shares), subdivision,
consolidation or distribution, or otherwise howsoever) should take place, then:
(a) the Exercise Price for the Shares, class and/or number of Shares comprised in the
Options 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 to Participants,
may be adjusted in such manner as the Committee may determine to be appropriate
including retrospective adjustments where such variation occurs after the date of exercise
of an Option but the Record Date relating to such variation precedes such date of
exercise and, except in relation to a capitalisation issue, upon the written confirmation of
the Auditors (acting only as experts and not as 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 a result, the Participant receives a benefit that a Shareholder does not receive; and
(b) unless the Committee, after considering all relevant circumstances, considers it
equitable to do so.
10.3 The issue of securities as consideration for an acquisition of any assets by our Company,
or the cancellation of issued Shares purchased or acquired by our Company by way of
market purchase of such Shares undertaken by our Company on the SGX-ST during the
period when a share purchase mandate granted by Shareholders (including any renewal
of such mandate) is in force, shall not be regarded as a circumstance requiring
adjustment under the provisions of this Rule 10.
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10.4 The restriction on the number of Shares to be offered to any Grantee under Rule 5 above,
shall not apply to the number of additional Shares or Options over additional Shares
issued by virtue of any adjustment to the number of Shares and/or Options pursuant to
this Rule 10.
10.5 Upon any adjustment required to be made pursuant to this Rule 10, our Company shall
notify each Participant (or his duly appointed personal representative(s)) in writing and
deliver to him (or, where applicable, his duly appointed personal representative(s)) a
statement setting forth the new Exercise Price thereafter in effect and the 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 in part (provided that an Option may be exercised in part only in respect of 1,000
Shares or any multiple thereof), at any time, by a Participant after the first anniversary of
the Offer Date of that Option, provided always that the Options shall be exercised before
the tenth anniversary of the relevant Offer Date, or such earlier date as may be
determined by the Committee, failing which all unexercised Options shall immediately
lapse and become null and void and a Participant shall have no claim against our
Company.
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 1,000 Shares or any multiple thereof), at any time, by a Participant after the
second anniversary from the Offer Date of that Option, provided always that the Options
shall be exercised before the tenth anniversary of the relevant Offer Date, or such earlier
date as may be determined by the Committee, failing which all unexercised Options shall
immediately lapse and become null and void and a Participant shall have no claim against
our Company.
11.3 An Option shall, to the extent unexercised, immediately lapse and become null and void
and a Participant shall have no claim against our Company:
(a) subject to Rules 11.4, 11.5 and 11.6, upon the Participant ceasing to be in the
employment of our Company or any of the companies within our Group for any
reason whatsoever; or
(b) upon the bankruptcy of the Participant or the happening of any other event which
result in his being deprived of the legal or beneficial ownership of such Option; or
(c) in the event of misconduct on the part of the Participant, as determined by the
Committee in its absolute discretion.
For the purpose of Rule 11.3(a), a Participant shall be deemed to have ceased to be so
employed as of the date the notice of termination of employment is tendered 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 our Group by reason of his:
(a) ill health, injury or disability, in each case, as certified by a medical practitioner
approved by the Committee;
(b) redundancy;
(c) retirement at or after a normal retirement age; or
(d) retirement before that age with the consent of the Committee,
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or for any other reason approved in writing by the Committee, he may, at the absolute
discretion of the Committee exercise any unexercised Option within the relevant Option
Period and upon the expiry 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
company within our Group or the undertaking or part of the undertaking of such
subsidiary, being transferred otherwise than to another company within our Group;
or
(b) for any other reason, provided the Committee gives its consent in writing, he may,
at the absolute discretion of the Committee, exercise any unexercised Options within
the relevant Option Period and upon the expiry of such period, the Option shall
immediately lapse and become null and void.
11.6 If a Participant dies and at the date of his death holds any unexercised Option, such
Option may, at the absolute discretion of the Committee, be exercised by the duly
appointed legal personal representatives of the Participant within the relevant Option
Period and upon the expiry of such period, the Option shall immediately lapse and
become null and void.
11.7 If a Participant, who is also a Group Executive Director, ceases to be a Director for any
reason whatsoever, he may, at the absolute discretion of the Committee, exercise any
unexercised Option within the relevant option period and upon the expiry of such period,
the Option shall immediately lapse 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 part only in respect of 1,000 Shares or any multiple thereof), by a Participant
giving notice in writing to our Company in or substantially in the form set out in Schedule
C (the Exercise Notice), subject to such amendments as the Committee may from time
to time determine. Every Exercise Notice must be accompanied by a remittance for the
full amount of the aggregate Exercise Price in respect of the Shares which have been
exercised under the Option, the relevant CDP charges (if any) and any other
documentation the Committee may require. All payments shall be made by cheque,
cashiers order, bank draft or postal order made out in favour of our Company. An Option
shall be deemed to be exercised upon the receipt by our Company of the abovementioned
Exercise Notice duly completed and the receipt by our Company of the full amount of the
aggregate Exercise Price in respect of the Shares which have been exercised under the
Option.
12.2 Subject to:
(a) such consents or other actions required by any competent authority under any
regulations or enactments for the time being in force as may be necessary; and
(b) compliance with the Rules, the Companies Act and the Memorandum of Association
of our Company, our Company shall, as soon as practicable after the exercise of an
Option by a Participant but in any event within ten (10) Market Days after the date
of the exercise of the Option in accordance with Rule 12.1, allot the Shares in
respect of which such Option has been 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 of that Participant by
ordinary post or such other mode of delivery as the Committee may deem fit.
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12.3 Our Company shall, if necessary, as soon as practicable after the exercise of an Option,
apply for the listing and quotation of the Shares which may be issued upon exercise of the
Option and the Shares (if any) which may be issued to the Participant pursuant to any
adjustments made in accordance with Rule 10.
12.4 Shares which are allotted on the exercise of an Option by a Participant shall be issued,
as the Participant may elect, in the name of CDP to the credit of the securities account
of the Participant maintained with CDP or the Participants 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 the Memorandum and Articles of Association of our Company and shall rank
pari passu in all respects with the then existing issued Shares in the capital of our
Company except for any dividends, rights, allotments or other distributions, the Record
Date for which is prior to the date such Option is exercised.
12.6 Our Company shall keep available sufficient unissued Shares to satisfy the full exercise
of all Options 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 to time by resolution of the Committee, except that:
(a) any modification or alteration which shall alter adversely the rights attaching to any
Option granted 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 or alteration 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 total number of Shares
which would fall to be allotted upon exercise in full of all outstanding Options;
(b) any modification or alteration which would be to the advantage of Participants under
the ESOS 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 Sponsor
and Issue Manager or (if required) any other stock exchange on which the Shares
are quoted and listed, and such other regulatory authorities as may be necessary.
For the purposes of Rule 13.1(a), the opinion of the Committee as to whether any
modification or alteration 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 time by resolution (and without other formality, save for the prior approval of the
Sponsor and Issue Manager) amend or alter the ESOS in any way to the extent necessary
to cause the ESOS to comply with any statutory provision or the provision or the
regulations of any regulatory or other relevant authority or body.
13.3 Written notice of any modification or alteration made in accordance with this Rule 13 shall
be given to 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
maximum period of ten (10) years, commencing on the date on which the ESOS is
adopted by our Company in general meeting. Subject to compliance with any applicable
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laws and regulations in Singapore, the ESOS may be continued beyond the above
stipulated period with the approval of the Shareholders by ordinary resolution 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 ordinary resolution of
the Shareholders at a general meeting subject to all other relevant approvals which may
be required and if the ESOS is so terminated, no further Options shall be offered by our
Company hereunder.
14.3 The termination, discontinuance or expiry of the ESOS shall be without prejudice to the
rights accrued to Options which have been granted and accepted as provided in Rule 8,
whether such Options have been exercised (whether fully or partially) or not.
15. TAKE-OVER AND WINDING UP OF OUR COMPANY
15.1 In the event of a take-over offer being made for our Company, Participants (including
Participants holding 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 Rule 15.5, be entitled to exercise such Options in full or in part
during the period commencing on the date on which such offer is made or, if such offer
is conditional, the date on which the offer becomes or is declared 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) month
period, at the recommendation of the offeror and with the approvals of the
Committee and the SGX-ST, such expiry date is extended to a later date (being a
date falling not later than the 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 and void.
Provided always that if during such period the offeror becomes entitled or bound to
exercise the rights of compulsory acquisition of the Shares under the provisions of the
Companies Act and, being entitled to do so, gives notice to the Participants that it intends
to exercise such rights on a specified date, the Option shall remain exercisable by the
Participants until such specified date or the expiry of the Option Period relating thereto,
whichever is earlier. Any Option not so exercised by the said specified date shall lapse
and become null and void.
Provided that the rights of acquisition or obligation to acquire stated in the notice shall
have been exercised or performed, as the case may be. If such rights of acquisition or
obligations have not been exercised or performed, all Options shall, subject to Rule 11.3,
remain exercisable until the expiry of the Option Period.
15.2 If, under any applicable laws, the court sanctions a compromise or arrangement proposed
for the purposes of, or in connection with, a scheme for the reconstruction of our
Company or its amalgamation with another corporation or corporations, Participants
(including Participants holding Options which are then not exercisable pursuant to the
provisions of Rule 11.1 and 11.2) shall notwithstanding Rules 11 and 12 but subject to
Rule 15.5, be entitled to exercise any Option then held by them during the period
commencing on the date upon which the compromise or arrangement is sanctioned by the
court and ending either on the expiry of 60 days thereafter or the date upon which the
compromise or arrangement becomes effective, whichever is later (but not after the expiry
of the Option period relating thereto), whereupon any unexercised Option shall lapse and
become null and void, provided always that the date of exercise of any Option shall be
before the expiry of the relevant Option Period.
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15.3 If an order or an effective resolution is passed for the winding up of our Company on the
basis of its insolvency, all Options, to the extent unexercised, shall lapse and become null
and void.
15.4 In the event a notice is given by our Company to its members to convene a general
meeting for the purposes of considering and, if thought fit, approving a resolution to
voluntarily wind-up our Company, our Company shall on the same date as or soon after
it despatches such notice to each member of our Company give notice thereof to all
Participants (together with a notice of the existence of the provision of this Rule 15.4) and
thereupon, each Participant (or his personal representative) shall be entitled to exercise
all or any of his Options at any time not later than two business days prior to the proposed
general meeting of our Company by giving notice in writing to our Company, accompanied
by a remittance for the full amount of the aggregate Exercise Price for the shares in
respect of which the notice is given whereupon our Company shall as soon as possible
and in any event, no later than the business day immediately prior to the date of the
proposed general meeting referred to above, allot the relevant Shares to the Participant
credited as fully paid.
15.5 If in connection with the making of a general offer referred to in Rule 15.1 above or the
scheme referred to in Rule 15.2 above or the winding up referred to in Rule 15.4 above,
arrangements are made (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 their Options or the payment of cash or the
grant of other options or otherwise, a Participant holding an Option, which is not then
exercisable, may not, at the discretion of the Committee, be permitted to exercise that
Option as provided for in this Rule 15.
15.6 If the events stipulated in this Rule 15 should occur, to the extent that an Option is not
exercised within the respective periods referred to herein in this Rule 15, it shall lapse
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 and duties as are conferred upon it by the Board.
16.2 The Committee shall have the power, from time to time, to make or vary such regulations
(not being inconsistent with the ESOS) as it may consider necessary, desirable or
expedient for it to administer and give effect to the ESOS.
16.3 Any decision of the Committee, made pursuant to any Rule of the ESOS (other than a
matter to be certified by the Auditors), shall be final and binding (including any decisions
pertaining to disputes as to the interpretation of the Rules of the ESOS or any rule,
regulation or procedure thereunder or as to any rights under the ESOS).
16.4 A Director who is a member of the Committee shall not be involved in its deliberation in
respect of Options to be granted to him.
17. NOTICES
17.1 Any notice given by a Participant to our Company shall be sent by post or delivered to the
registered office of our Company or such other address as may be notified by our
Company to the Participant in writing.
17.2 Any notice or documents given by our Company to a Participant shall be sent to the
Participant by hand or sent to him at his home address stated in the records of our
Company or the last known address of the Participant, and if sent by post shall be deemed
to have been given on the day immediately 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 our
Company or any subsidiary (as the case may be) and any Participant and the rights and
obligations of any individual under the terms of the office or employment with such
company within the Group shall not be affected by his participation in the ESOS or any
right which he may have to participate in it or any Option which he may hold and the ESOS
or any Option shall afford such an individual no additional rights to compensation or
damages in consequence of the termination of such office or employment for any reason
whatsoever.
18.2 The ESOS shall not confer on any person any legal or equitable rights (other than those
constituting the Options themselves) against the Company and/or any subsidiary directly
or indirectly or give rise to any cause of action at law or in equity against our Company
or any subsidiary.
19. TAXES
All taxes (including income tax) arising from the exercise of any Option granted to any
Participant under 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 issue and allotment of any Shares pursuant to the exercise of any Option in CDPs
name, the deposit of share certificate(s) with CDP, the Participants securities account
with CDP or the Participants securities sub-account with a Depository Agent or CPF
investment account with a CPF agent bank and 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 Rules to be payable by the
Participants, all fees, costs and expenses incurred by our Company in relation to the
ESOS including but not limited to the fees, costs and expenses relating to the allotment
and issue of Shares pursuant to the exercise of any Option shall be borne by our
Company.
21. CONDITION OF OPTION
Every Option shall be subject to the condition that no Shares shall be issued pursuant to
the exercise of an Option if such issue would be contrary to any law or enactment, or any
rules or regulations of any legislative or non-legislative governing body for the time being
in force in Singapore or any other relevant country.
22. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained and subject to the Companies Act, our
Board, the Committee and our Company shall not under any circumstances be held liable
for any costs, losses, expenses and damages whatsoever and howsoever arising in
respect of any matter under or in connection with the ESOS, including but not limited to
our Companys delay in allotting and issuing the Shares or in applying for or procuring the
listing of the Shares on the SGX-ST (or any other relevant stock exchange).
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23. DISCLOSURE IN ANNUAL REPORT
Our 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
the avoidance of doubt, shall include Participants who have exercised all their
Options in any particular financial year):
(i) participants who are Directors of our Company; and
(ii) participants who are Controlling Shareholders of our Company and their
associates; and
(iii) participants other than those in (i) and (ii) above, who receive five per cent.
(5.0%) or more of the total number of options available under the scheme;
Name of
Participant
Options
granted during
financial year
under review
(including
terms)
Aggregate
Options
granted since
commencement
of the ESOS to
end of financial
year under
review
Aggregate
Options
exercised since
commencement
of the ESOS to
end of financial
year under
review
Aggregate
Options
outstanding as
at end of
financial year
under review
(c) In respect of options granted to directors and employees of the parent company and
its subsidiaries:
(i) the names of and number and terms of options granted to each director or
employee of the parent company and its subsidiaries who receives five per
cent. (5.0%) or more of the total number of options available to all directors and
employees of the parent company and its subsidiaries under the scheme,
during the financial year under review; and
(ii) the aggregate number of options granted to the directors and employees of the
parent company and its subsidiaries for the financial year under review, and
since the commencement 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
market value 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.
Provided that if any of the above requirements is not applicable, an appropriate
negative statement must be included.
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24. ABSTENTION FROM VOTING
Shareholders who are eligible to participate in the ESOS shall abstain from voting on any
Shareholders resolution relating to the ESOS, including, where applicable, (i)
implementation of the ESOS; (ii) discount quantum; and (iii) participation by any Option
granted to Controlling Shareholders and their associates, and should not accept
nominations as proxies or otherwise for voting in respect of such resolution unless
specific instructions have been given in the proxy instrument on how the votes are to be
cast.
25. DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the
Committee and its 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 of Singapore. The Participants, by accepting Options in accordance with the
ESOS, and our Company submit to the exclusive jurisdiction of the courts of the Republic
of Singapore.
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Schedule A
VERSALINK 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 Versalink Employee Share
Option Scheme (the ESOS), you have been nominated to participate in the ESOS by the
Committee (the Committee) appointed by the Board of Directors of Versalink Holdings
Limited (the Company) to administer the ESOS. Terms as defined in the Rules of the
ESOS shall have the same meaning when used in this letter.
2. Accordingly, in consideration of the payment of a sum of S$1.00, an offer is hereby
made to grant you an option (the Option), to subscribe for and be
allotted Shares at the price of S$ per Share.
3. The Option is personal to you and shall not be transferred, charged, pledged, assigned
or otherwise 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 at the 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 the enclosed Acceptance Form with a sum of S$1.00 not later than 5.00 p.m.
on , failing which this offer will lapse.
Yours faithfully,
For and on behalf of
Name:
Designation:
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Schedule B
ACCEPTANCE FORM
Serial No:
Date:
To: The Committee,
Versalink Employee Share Option Scheme
8 Wilkie Road
#03-01, Wilkie Edge
Singapore 228095
Closing Date for Acceptance of Offer :
Number of Shares Offered :
Exercise Price for each Share : S$
Total Amount Payable : S$
I have read your Letter of Offer dated and agree to be bound by the
terms of the Letter of Offer and ESOS referred to therein. Terms defined in your Letter of Offer
shall have the same meanings when used in this Acceptance Form.
I hereby accept the Option to subscribe for Shares at S$ per
Share. I enclose cash for S$1.00 in payment for the purchase of the Option/I authorise my
employer to deduct the sum of S$1.00 from my salary in payment for the purchase of the
Option.
I understand that I am not obliged to exercise the Option.
I confirm that my acceptance of the Option will not result in the contravention of any applicable
law or regulation in relation to the ownership of shares in the Company or options to subscribe
for such shares.
I agree to keep all information pertaining to the grant of the Option to me confidential.
I further acknowledge and confirm that you have not made any representation to induce me to
accept the offer in respect of the said Option and that the terms of the Letter of Offer and this
Acceptance Form constitute the entire agreement between us relating to the offer.
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Please print in block letters
Name in full :
Designation :
Address :
Nationality :
*NRIC/Passport No. :
Signature :
Date :
Note:
* Delete where inapplicable
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Schedule C
EXERCISE NOTICE
Total number of ordinary shares (the Shares)
offered at S$ per Share
(the Exercise Price) under the ESOS on
(Date of Grant) :
Number of Shares previously allotted
thereunder :
Outstanding balance of Shares to be
allottedthereunder :
Number of Shares now to be subscribed :
To: The Committee,
8 Wilkie Road
#03-01, Wilkie Edge
Singapore 228095
1. Pursuant to your Letter of Offer dated and my acceptance thereof, I
hereby exercise the Option to subscribe for Shares in the capital of
Versalink Holdings Limited (the Company) at S$ per Share.
2. I enclose a *cheque/cashiers order/bankers 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
Versalink Employee Share Option Scheme and the 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
other person.
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 Depository Agent/CPF investment account with my Agent
Bank specified below and I hereby agree to bear such fees or other charges as may be
imposed by CDP in respect thereof.
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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 where inapplicable
G-20
APPENDIX H
TERMS, CONDITIONS AND PROCEDURES
FOR APPLICATION AND ACCEPTANCE
You are invited to apply and subscribe for and/or purchase the Invitation Shares at the
Invitation Price for each Invitation Share subject to the following terms and conditions set out
below and in the relevant printed application forms to be used for the purpose of this Invitation
and which forms part of the Offer Document (the Application Forms or, as the case may be,
the Electronic Applications (as defined herein));
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 INVITATION SHARES OR
INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER
OF INVITATION SHARES WILL BE REJECTED.
2. Your application for Offer Shares may be made by way of printed WHITE Offer Shares
Application Forms or by way of Electronic Applications through ATMs belonging to the
Participating Banks (ATM Electronic Applications) or through Internet Banking (IB)
websites of the relevant Participating Banks (Internet Electronic Applications, which
together with ATM Electronic Applications, shall be referred to as Electronic
Applications).
Your application for the Placement Shares may only be made by way of printed BLUE
Placement Shares Application Forms.
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 (1)
application in your own name for the Offer Shares or the Placement Shares. If you
submit an application for Offer Shares by way of an Offer Shares Application Form,
you MAY NOT submit another application for Offer Shares by way of an Electronic
Application and vice versa. Such separate applications shall be deemed to be
multiple applications and may be rejected at the discretion of our Company, the
Agent.
If you submit an application for Offer Shares by way of an ATM Electronic
Application, you MAY NOT submit another application for Offer Shares by way of an
Internet Electronic Application and vice versa. Such separate applications shall be
deemed to be multiple applications and may be rejected at the discretion of our
Company, the Vendors, the Sponsor and Issue Manager, and the Underwriter and
Placement Agent.
If you, being other than an approved nominee company, have submitted an
application for Offer Shares in your own name, you should not submit any other
application for Offer Shares, whether by way of an Offer Shares Application Form or
by way of an Electronic Application, for any other person. Such separate
applications shall be deemed to be multiple applications and may be rejected at the
discretion of our Company, the Vendors, the Sponsor and Issue Manager, and the
If you have made an application for Placement Shares, you should not make any
application for Offer Shares either by way of an Offer Shares Application Form or by
way of an Electronic Application and vice versa. Such separate applications shall
be deemed to be multiple applications and may be rejected at the discretion of our
Placement Agent.
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Conversely, if you have made an application for Offer Shares either by way of an
Electronic Application or by way of an Offer Shares Application Form, you may not
make any application for Placement Shares. Such separate applications shall be
deemed to be multiple applications and may be rejected at the discretion of our
Placement Agent.
Joint and multiple applications for the Invitation Shares may be rejected at the
Underwriter and Placement Agent. If you submit or procure submissions of multiple
share applications for Offer Shares, Placement Shares or both Offer Shares and
Placement Shares, you may be deemed to have committed an offence under the
Penal Code (Chapter 224) of Singapore and the SFA, and your applications may be
referred to the relevant authorities for investigation. Multiple applications or those
appearing to be or suspected of being multiple applications may be rejected at the
4. We will not accept applications from any person under the age of 18 years, undischarged
bankrupts, sole-proprietorships, partnerships, or non-corporate bodies, joint Securities
Account holders of CDP and from applicants whose addresses (as furnished in their
Application Forms or, in the case of Electronic Applications, contained in the records of
the relevant Participating Banks, 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 the Securities Account with CDP in the name of the deceased at the time of the
application.
5. We will not recognise the existence of a trust. Any application by a trustee or trustees
must therefore be made in his/her/their own name(s) and without qualification or, where
the application is made by way of an Application Form by a nominee, in the name(s) of
an approved nominee company or companies after complying with paragraph 6 below.
6. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BY
APPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are defined
as banks, merchant banks, finance companies, insurance companies, licenced securities
dealers in Singapore and nominee companies controlled by them. Applications made by
persons acting as nominees other than approved nominee companies shall be rejected.
7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A
SECURITIES ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR
APPLICATION. If you do not have an existing Securities Account with CDP in your own
name at the time of your application, your application will be rejected (if you apply by way
of an Application Form), or you will not be able to complete your Electronic Application (if
you apply by way of an Electronic Application). If you have an existing Securities Account
with CDP but fail to provide your Securities Account number or provide an incorrect
Securities Account number in Section B of the Application Form or in your Electronic
Application, as the case may be, your application is liable to be rejected. Subject to
paragraph 8 below, your application shall be rejected if your particulars such as name,
NRIC/passport number, nationality and permanent residence status provided in your
Application Form or in the case of an Electronic Application, contained in records of the
relevant Participating Bank at the time of your Electronic Application, as the case may be,
differ from those particulars in your Securities Account as maintained with CDP. If you
possess more than one (1) individual direct Securities Account with CDP, your application
shall be rejected.
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8. If your address as stated in the Application Form or, in the case of an Electronic
Application, contained in the records of the relevant Participating Bank, as the case
may be, is different from the address registered with CDP, you must inform CDP of
your updated address promptly, failing which the notification letter on successful
allotment and/or allocation and other correspondence from CDP will be sent to your
address last registered with CDP.
9. Our Company and the Vendors, in consultation with the Sponsor and Issue
Manager, and the Underwriter and Placement Agent, reserve the right to reject any
application which does not conform strictly to the instructions set out in the
Application Form and in this Offer Document or which does not comply with the
instructions for Electronic Applications or with the terms and conditions of this
Offer Document 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 remittance or improper form of remittance.
Our Company and the Vendors further reserve the right to treat as valid any
applications not completed or submitted or effected in all respects in accordance
with the instructions set out in the Application Forms or the instructions for
Electronic Applications or the terms and conditions of this Offer Document, and
also to present for payment or other processes all remittances at any time after
receipt and to have full access to all information relating to, or deriving from, such
remittances or the processing thereof.
Without prejudice to the rights of our Company and the Vendors, the Sponsor and
Issue Manager, and the Underwriter and Placement Agent, as agents of our
Company and the Vendors, have been authorised to accept, for and on behalf of our
Company and the Vendors such other forms of application as the Sponsor and Issue
Manager, and the Underwriter and Placement Agent deem appropriate.
10. Our Company and the Vendors reserve the right to reject or to accept, in whole or in part,
or to scale down or to ballot any application, without assigning any reason therefor, and
no enquiry and/or correspondence on the decision with regards hereto will be entertained.
This right applies to applications made by way of Application Forms and by way of
Electronic Applications. In deciding the basis of allotment and/or allocation, which shall
be at our discretion, due consideration will be given to the desirability of allotting and/or
allocating the Invitation Shares to a reasonable number of applicants with a view to
establishing an adequate market for the Shares.
11. Share certificates will be registered in the name of CDP and will be forwarded only to
CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days
after the close of the Application List, and subject to the submission of valid applications
and payment for the Invitation Shares, a statement of account stating that your Securities
Account has been credited with the number of Invitation Shares allotted and/or allocated
to you, if your application is successful. This will be the only acknowledgement of
application monies received and is not an acknowledgement by our Company and the
Vendors. You irrevocably authorise CDP to complete and sign on your behalf, as
transferee or renouncee, any instrument of transfer and/or other documents required for
the issue and/or transfer of the Invitation Shares allotted and/or allocated to you. This
authorisation applies to applications made by way of Application Forms and by way of
Electronic Applications.
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11A. In the event that our Company lodges a supplementary or replacement offer document
(Relevant Document) pursuant to the SFA or any applicable legislation in force from
time to time prior to the close of the Invitation, and the Invitation Shares have not been
issued and/or transferred, we (as well as on behalf of the Vendors) will (as required by law
and subject to the SFA), at our sole and absolute discretion, either:
(a) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date
of the lodgement of the Relevant Document, give you notice in writing of how to
obtain, or arrange to receive, a copy of the same and provide you with an option to
withdraw your application and take all reasonable steps to make available within a
reasonable period the Relevant Document to you if you have indicated that you wish
to obtain, or have arranged to receive, a copy of the Relevant Document;
(b) within seven (7) days of the lodgement of the Relevant Document give you a copy
of the Relevant Document and provide you with an option to withdraw your
application; or
(c) deem your application as withdrawn and cancelled and shall, within seven (7) days
from the date of lodgement of the Relevant Document, return all monies paid in
respect of any application, without interest or any share of revenue or benefit arising
therefrom.
Where you have notified us within 14 days from the date of lodgement of the Relevant
Document of your wish to exercise your option under Paragraph 11A(a) and (b) above to
withdraw your application, we (as well as on behalf of the Vendors) shall pay to you all
monies paid by you on account of your application for the Invitation Shares without
interest or any share of revenue or other benefit arising therefrom and at your own risk,
within seven (7) days from the receipt of such notification.
In the event that at the time of the lodgement of the Relevant Document, the Invitation
Shares have already been issued and/or transferred but trading has not commenced, we
(as well as behalf of the Vendors) will (as required by law and subject to the SFA), at our
sole and absolute discretion, either:
(d) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date
of the lodgement of the Relevant Document, give you notice in writing of how to
obtain, or arrange to receive, a copy of the same and provide you with an option to
return to our Company the Invitation Shares which you do not wish to retain title in
and take all reasonable steps to make available within a reasonable period the
Relevant Document to you if you have indicated that you wish to obtain, or have
arranged to receive, a copy of the Relevant Document;
(e) within seven (7) days from the lodgement of the Relevant Document give you a copy
of the Relevant Document and provide you with an option to return the Invitation
Shares which you do not wish to retain title in; or
(f) (i) in the case of the New Shares, deem the issue as void and refund your
payments for the New Shares (without interest or any share of revenue or other
benefits arising therefrom and at your own risk) within seven (7) days from the
date of lodgement of the supplementary or replacement offer document; and
(ii) in the case of Vendor Shares, deem the sale of the Vendor Shares as void, and
in the case where documents to evidence title to the Vendor Shares (the title
documents) have been issued to you, within seven (7) days from the date of
lodgement of the supplementary or replacement offer document, inform you to
return the title documents within 14 Market Days from the date of lodgement of
the supplementary or replacement offer document, and within seven (7) days
from receipt of the title documents or the date of lodgement of the
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supplementary or replacement offer document, whichever is the later, refund
your payments for the Vendor Shares (without interest or any share of revenue
or other benefits arising therefrom and at your own risk),
and you shall not have any claim against our Company, the Vendors, the Sponsor
and Issue Manager, and the Underwriter and Placement Agent.
Any applicant who wishes to exercise his option under paragraph 11A(d) and (e) above
to return the Invitation Shares issued and/or transferred to him shall, within 14 days from
the date of lodgement of the Relevant Document, notify our Company of this and return
all documents, if any, purporting to be evidence of title of those Invitation Shares,
whereupon we (as well as on behalf of the Vendors) shall, subject to compliance with
applicable laws and the Articles of Association of our Company, within seven (7) days
from the receipt of such notification and documents, pay to him all monies paid by him for
the Invitation Shares without interest or any share of revenue or other benefit arising
there from and at his own risk, and the Invitation Shares issued and/or transferred to him
shall be void.
Additional terms and instructions applicable upon the lodgement of the Relevant
Document, including instructions on how you can exercise the option to withdraw your
application or return the Invitation Shares allotted and/or allocated to you, may be found
in such Relevant Document.
12. In the event of an under-subscription for Offer Shares as at the close of the Application
List, that number of Offer Shares under-subscribed shall be made available to satisfy
applications for the Placement Shares to the extent that there is an over-subscription for
Placement Shares as at the close of the Application List.
In the event of an under-subscription for Placement Shares as at the close of the
Application List, that number of Placement Shares under-subscribed shall be made
available to satisfy applications for Offer Shares to the extent that there is an
over-subscription for Offer Shares as at the close of the Application List.
In the event of an over-subscription for Offer Shares as at the close of the Application List
and Placement Shares are fully subscribed or over-subscribed as at the close of the
Application List, the successful applications for Offer Shares will be determined by ballot
or otherwise as determined by our Directors and the Vendors after consultation with the
Sponsor and Issue Manager, and the Underwriter and Placement Agent and approved by
the SGX-ST.
In all the above instances, the basis of allotment and/or allocation of the Invitation Shares
as may be decided by our Directors and the Vendors in ensuring a reasonable spread of
shareholders of our Company, shall be made public as soon as practicable via an
announcement through the SGX-ST and through an advertisement in a generally
circulating daily press.
You hereby consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent residency status, CDP Securities Account number, CPF
Investment Account number (if applicable) and shares application amount from your
account with the relevant Participating Bank to the Share Registrar and Share Transfer
Agent, SCCS, SGX-ST, CDP, our Company, the Vendors, the Sponsor and Issue Manager,
and the Underwriter and Placement Agent.
13. You irrevocably authorise CDP to disclose the outcome of your application, including the
number of Invitation Shares allotted and/or allocated to you pursuant to your application,
to us, the Vendors, the Sponsor and Issue Manager, the Underwriter and Placement
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Agent and any other parties so authorised by the foregoing persons. CDP shall not be
liable for any delays, failures, or inaccuracies in the recording, storage or transmission of
delivery of data relating to Electronic Applications.
14. Any reference to you or the applicant in this section shall include an individual, a
corporation, an approved nominee and trustee applying for the Offer Shares by way of an
Offer Shares Application Form or by way of an Electronic Application and a person
applying for the Placement Shares through the Placement Agent by way of a Placement
Shares Application Form.
15. By completing and delivering an Application Form or by making and completing an
Electronic Application by (in the case of an ATM Electronic Application) pressing the
Enter or OK or Confirm or Yes or any other relevant key on the ATM (as the case
may be) or by (in the case of an Internet Electronic Application) clicking Submit or
Continue or Yes or Confirm or any other relevant button on the IB website screen of
the relevant Participating Banks (as the case may be) in accordance with the provisions
of this Offer Document, you:
(a) irrevocably offer, agree and undertake to subscribe for and/or purchase the number
of Invitation Shares specified in your application (or such smaller number for which
the application is accepted) at the Invitation Price for each Invitation Share and
agree that you will accept such Invitation Shares as may be allotted and/or allocated
to you, in each case on the terms of, and subject to the conditions set out in this Offer
Document and the Memorandum and Articles of Association of our Company;
(b) agree that, in the event of any inconsistency between the terms and conditions for
the application set out in this Offer Document and those set out in the IB websites
or ATMs of the relevant Participating Banks, the terms and conditions set out in this
Offer Document shall prevail;
(c) agree that the aggregate Invitation Price for the Invitation Shares applied for is due
and payable to our Company and the Vendors upon application;
(d) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such
information, representations and declarations will be relied on by our Company and
the Vendors in determining whether to accept your application and/or whether to allot
and/or allocate any Invitation Shares to you;
(e) (i) consent to the collection, use, processing and disclosure of your
name/NRIC/passport number or company registration number, address, nationality,
permanent resident status, CDP Securities Account number, share application
amount, the outcome of your application (including the number of Invitation Shares
allocated to you pursuant to your application) and other personal data (Personal
Data) by the Share Registrar, CDP, SCCS, the SGX-ST, the Participating Banks, our
Company, the Sponsor and Issue Manager, the Underwriter and Placement Agent
and/or other authorised operators (the Relevant Parties) for the purpose of the
processing of your application of the Invitation Shares, and in order for the Relevant
Parties to comply with any applicable laws, listing rules and/or guidelines
(collectively, the Purposes) and warrant that such Personal Data is true, accurate
and correct, (ii) warrant that where you, as an approved nominee company, disclose
the Personal Data of the beneficial owner(s) for the collection, use, processing and
disclosure by the Relevant Parties of the Personal Data of such beneficial owner(s)
for the Purposes, (iii) agree that the Relevant Parties may do anything or disclose
any Personal Data or matters without notice to you if the Sponsor and Issue
Manager, and the Underwriter and Placement Agent considers them to be required
or desirable in respect of any applicable policy, law, regulation, government entity,
regulatory authority or similar body, and (iv) agree that you will indemnify the
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Relevant Parties in respect of any penalties, liabilities, claims, demands, losses and
damages as a result of your breach of warranties. You also agree that the Relevant
Parties shall be entitled to enforce this indemnity (collectively, the Personal Data
Privacy Terms); and
(f) agree and warrant that, if the laws of any jurisdictions outside Singapore are
applicable to your application, you have complied with all such laws and none of our
Placement Agent will infringe any such laws as a result of the acceptance of your
application.
16. Our acceptance of applications will be conditional upon, inter alia, our Company and the
Vendors being satisfied that:
(a) permission has been granted by the SGX-ST to deal in and for quotation for all our
existing Shares (including the Vendor Shares), the New Shares, the Performance
Shares and the Option Shares on Catalist;
(b) the Management and Sponsorship Agreement and the Underwriting and Placement
Agreement referred to in the section entitled General and Statutory Information -
Management, Underwriting and Placement Arrangements of this Offer Document
have become unconditional and have not been terminated or cancelled prior to such
date as our Company may determine; and
(c) the SGX-ST, acting as an agent on behalf of the Authority, has not served a stop
order (Stop Order) which directs that no or no further shares to which this Offer
Document relates be allotted and/or allocated or issued and/or transferred.
17. In the event that a Stop Order in respect of the Invitation Shares is served by the SGX-ST,
acting as an agent on behalf of the Authority or other competent authority, and
(a) in the case where the Invitation Shares have not been issued and/or transferred, all
applications shall be deemed to have been withdrawn and cancelled and our
Company (as well as on behalf of the Vendors) shall refund all monies paid on
account of your application of the Invitation Shares (without interest or any share of
revenue or other benefit arising therefrom and at your own risk) to you within 14 days
of the date of the Stop Order; or
(b) in the case where the Invitation Shares have already been issued, and/or transferred
but trading has not commenced, the issue and/or transfer of the Invitation Shares
shall be deemed to be void and our Company (as well as on behalf of the Vendors)
shall, within 14 days from the date of the Stop Order, refund all monies paid on
account of your application for the Invitation Shares (without interest or any share of
revenue or other benefit arising therefrom and at your own risk).
This shall not apply where only an interim Stop Order has been served.
18. In the event that an interim Stop Order in respect of the Invitation Shares is served by the
SGX-ST, acting as an agent on behalf of the Authority, or other competent authority, no
Invitation Shares shall be issued and/or transferred to you during the time when the
interim Stop Order is in force.
19. The SGX-ST, acting as an agent on behalf of the Authority or other competent authority,
is not able to serve a Stop Order in respect of the Invitation Shares if the Invitation Shares
have been issued and/or transferred, listed on a securities exchange and trading in the
Invitation Shares has commenced.
H-7
In the event of any changes in the closure of the Application List or the time period during
which the Invitation is open, we will publicly announce the same through a SGXNET
announcement to be posted on the internet at the SGX-ST website, http://www.sgx.com
and through a paid advertisement in a local English newspaper.
20. Our Company and the Vendors will not hold any application in reserve.
21. Our Company and the Vendors will not allot and/or allocate Shares on the basis of this
Offer Document later than six (6) months after the date of registration of this Offer
Document by the SGX-ST, acting as an agent on behalf of the Authority.
22. Additional terms and conditions for applications by way of Application Forms are set out
on pages H-8 to H-12 of this Offer Document.
23. Additional terms and conditions for applications by way of Electronic Applications are set
out on pages H-12 to H-21 of this Offer Document.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION
FORMS
Applications by way of an Application Form shall be made on, and subject to, the terms and
conditions of this Offer Document including but not limited to the terms and conditions
appearing below as well as those set out under the section entitled Terms, Conditions and
Procedures for Application and Acceptance of this Offer Document, 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 Application Forms
and WHITE envelopes A and B for Offer Shares, the BLUE Application Forms for
Placement Shares, accompanying and forming part of this Offer Document.
We draw your attention to the detailed instructions contained in the respective Application
Forms and this Offer Document for the completion of the Application Forms which must
be carefully followed. Our Company and the Vendors, in consultation with the
Sponsor and Issue Manager, and the Underwriter and Placement Agent reserve the
right to reject applications which do not conform strictly to the instructions set out
in the Application Forms and this Offer Document or to the terms and conditions of
this Offer Document or which are illegible, incomplete, incorrectly completed or
which are accompanied by improperly drawn remittances or improper form of
remittance.
2. Your Application Forms must be completed in English. Please type or write clearly in ink
using BLOCK LETTERS.
3. All spaces in the Application Forms except those under the heading FOR OFFICIAL USE
ONLY must be completed and the words NOT APPLICABLE or N.A. should be written
in any space that is not applicable.
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 your identity card (if you have such an identification document) or
in your passport and, in the case of a corporation, in your full name as registered with a
competent authority. If you are a non-individual, you must complete the Application Form
under the hand of an official who must state the name and capacity in which he signs the
Application Form. If you are a corporation completing the Application Form, you are
required to affix your Common Seal (if any) in accordance with your Memorandum and
Articles of Association or equivalent constitutive documents of the corporation. If you are
a corporate applicant and your application is successful, a copy of your Memorandum and
H-8
Articles of Association or equivalent constitutive documents must be lodged with our
Companys Share Registrar and Share Transfer Office. Our Company and the Vendors
reserve the right to require you to 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 Form with 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, on page 1 of the Application Form, your application is liable to be rejected.
6. You (whether you are an individual or corporate applicant, whether incorporated or
unincorporated and wherever incorporated or constituted) will be required to declare
whether you are a citizen or permanent resident of Singapore or a corporation in which
citizens or permanent residents of Singapore or any body corporate constituted under any
statute of Singapore having an interest in the 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
beneficial owner 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 citizens or permanent residents of Singapore or any body corporate
whether incorporated or unincorporated and wherever incorporated or constituted under
any statute of Singapore have an interest in the aggregate of more than 50.0% of the
issued share capital of or interests in such corporation.
7. Your application must be accompanied by a remittance in Singapore currency for the full
amount payable, in respect of the number of Invitation Shares applied for, in the form of
a BANKERS DRAFT or CASHIERS ORDER drawn on a bank in Singapore, made out in
favour of VERSALINK SHARE ISSUE ACCOUNT crossed A/C PAYEE ONLY, and
with your name and address written clearly on the reverse side. Applications not
accompanied by any payment or accompanied by any other form of payment will not
be accepted. We will reject remittances bearing NOT TRANSFERABLE or NON
TRANSFERABLE crossings. No acknowledgement or receipt will be issued by our
Company, the Vendors or the Sponsor and Issue Manager for applications and application
monies received.
8. Monies paid in respect of unsuccessful applications are expected to be returned (without
interest or any share of revenue or other benefit arising therefrom) to you by ordinary post
within 24 hours of balloting of applications at your own risk. Where your application is
rejected or accepted in part only, the full amount or the balance of the application monies,
as the case may be, will be refunded (without interest or any share of revenue or other
benefit arising therefrom) to you by ordinary post at your own risk within 14 days after the
close of the Application List, provided that the remittance accompanying such application
which has been presented for payment or other processes has been honoured and
application monies have been received in the designated share issue account. In the
event that the Invitation does not proceed for any reason, the full amount of the
application monies received will be refunded (without interest or any share of revenue or
other benefit arising therefrom) to you by ordinary post at your own risk within five (5)
Market Days of the termination of the Invitation. In the event that the Invitation is
cancelled by us (as well as on behalf of the Vendors) following the issuance of a Stop
Order by the SGX-ST, acting as an agent on behalf of the Authority, the application
monies received will be refunded (without interest or any share of revenue or other benefit
arising therefrom) to you by ordinary post at your own risk within 14 days from the date
of the Stop Order.
H-9
9. Capitalised terms used in the Application Forms and defined in this Offer Document shall
bear the meanings assigned to them in this Offer Document.
10. You irrevocably agree and acknowledge that your application is subject to risks of fires,
acts of God and other events beyond the control of the Participating Banks, our Company,
our Directors, the Vendors, the Sponsor and Issue Manager, the Underwriter and
Placement Agent and/or any other party involved in the Invitation, and if, in any such
event, our Company, the Vendors, the Sponsor and Issue Manager, the Underwriter and
Placement Agent and/or the relevant Participating Bank do not receive your Application
Form, you shall have no claim whatsoever against our Company, the Vendors, the
Sponsor and Issue Manager, the Underwriter and Placement Agent, the relevant
Participating Bank and/or any other party involved in the Invitation for the Invitation
Shares applied for or for any compensation, loss or damage.
11. By completing and delivering the Application Form, you agree that:
(a) in consideration of our Company (and on behalf of the Vendors) having distributed
the Application Form to you and agreeing to close the Application List at 12.00 noon
on 22 September 2014 or such other time or date as our Company and the Vendors
may, in consultation with the Sponsor and Issue Manager, the Underwriter and
Placement Agent decide and by completing and delivering the Application Form:
(i) your application is irrevocable; and
(ii) your remittance will be honoured on first presentation and that any monies
returnable may be held pending clearance of your payment without interest or
any share of revenue or other benefit arising therefrom;
(b) neither our Company, the Vendors, the Sponsor and Issue Manager, the Underwriter
and Placement Agent nor any other party involved in the Invitation shall be liable for
any delays, failures or inaccuracies in the recording, storage or in the transmission
or delivery of data relating to your application to us or CDP due to breakdowns or
failure of transmission, delivery or communication facilities or any risks referred to
in paragraph 10 above or to any cause beyond their respective controls;
(c) all applications, acceptances and contracts resulting therefrom under the Invitation
shall be governed by and construed in accordance with the laws of Singapore and
that you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(d) in respect of the Invitation Shares for which your application has been received and
not rejected, acceptance of your application shall be constituted by written
notification and not otherwise, notwithstanding any remittance being presented for
payment by or on behalf of our Company;
(e) you will not be entitled to exercise any remedy of rescission for misrepresentation at
any time after acceptance of your application;
(f) in making your application, reliance is placed solely on the information contained in
this Offer Document and that none of our Company, the Vendors, the Sponsor and
Issue Manager, the Underwriter and Placement Agent or any other person involved
in the Invitation shall have any liability for any information not so contained;
(g) you accept and agree to the Personal Data Privacy Terms set out in this Offer
Document;
H-10
(h) you consent to the disclosure of your name, NRIC/passport number, address,
nationality, permanent resident status, CDP Securities Account number, and share
application amount to our Share Registrar, CDP, SCCS, SGX-ST, our Company, the
Vendors, the Sponsor and Issue Manager, the Underwriter and Placement Agent or
other authorised operators; and
(i) you irrevocably agree and undertake to purchase and/or subscribe for the number of
Invitation Shares applied for as stated in the Application Form or any smaller number
of such Invitation Shares that may be allotted and/or allocated to you in respect of
your application. In the event that our Company and the Vendors decide to allot
and/or allocate a smaller number of Invitation Shares or not to allot and/or allocate
any Invitation Shares to you, you agree to accept such decision as final.
Applications for Offer Shares
1. Your application for Offer Shares MUST be made using the WHITE Offer Shares
Application Forms and WHITE official envelopes A and B. ONLY ONE (1)
APPLICATION should be enclosed in each envelope.
2. You must:
(a) enclose the WHITE Offer Shares Application Form, duly completed and signed,
together with the correct remittance in accordance with the terms and conditions of
this Offer Document in the WHITE envelope A provided;
(b) in the appropriate spaces on WHITE 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;
(c) Seal the WHITE envelope A;
(d) write, in the special box provided on the larger WHITE envelope B addressed to
Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place #32-01
Singapore Land Tower, Singapore 048623, the number of Offer Shares for which
the application is made; and
(e) insert WHITE envelope A into WHITE envelope B, seal WHITE envelope B, affix
adequate Singapore postage on WHITE official envelope B (if despatching by
ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY
HAND at your own risk to Boardroom Corporate & Advisory Services Pte. Ltd., 50
Raffles Place #32-01 Singapore Land Tower, Singapore 048623, to arrive by
12.00 noon on 22 September 2014 or such other time as our Company and the
Vendors may, in consultation with the Sponsor and Issue Manager, and the
Underwriter and Placement Agent decide. Local Urgent Mail or Registered Post
must NOT be used. No acknowledgement of receipt will be issued for any
application or remittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or improper form of remittance or which are not honoured
upon their first presentation are liable to be rejected.
H-11
Applications for Placement Shares
1. Your application for Placement Shares MUST be made using the BLUE Placement Shares
Application Forms. ONLY ONE (1) APPLICATION should be enclosed in each envelope.
2. The completed and signed BLUE Placement Shares Application Form and the correct
remittance in full in respect of the number of Placement Shares applied for (in accordance
with the terms and conditions of this Offer Document) with your name and address written
clearly on the reverse side, must be enclosed and sealed in an envelope to be provided
by you. You must affix adequate Singapore postage on the envelope (if despatching by
ordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY
POST OR DELIVERED BY HAND at your own risk to Boardroom Corporate & Advisory
Services Pte. Ltd., 50 Raffles Place #32-01 Singapore Land Tower, Singapore
048623, to arrive by 12.00 noon on 22 September 2014 or such other time as our
Company and the Vendors may, in consultation with the Sponsor and Issue
Manager, and the Underwriter and Placement Agent, decide. Local Urgent Mail or
Registered Post must NOT be used. No acknowledgement of receipt will be issued for
any application or remittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by
improperly drawn remittances or improper form of remittance or which are not honoured
upon their first presentation are liable to be rejected.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM
Electronic Applications) and the IB website screens (in the case of Internet Electronic
Applications) of the relevant Participating Banks. For illustration purposes, the procedures for
Electronic Applications through ATMs and the IB website of the UOB Group are set out
respectively in the Steps for an ATM Electronic Application through ATMs of the UOB Group
and the Steps for an Internet Electronic Application through the IB website of the UOB Group
(collectively, the Steps) appearing on pages H-17 to H-21 of this Offer Document.
The Steps set out the actions that you must take at an ATM or the IB website of the UOB Group
to complete an Electronic Application. Please read carefully the terms of this Offer Document,
the Steps and the terms and conditions for Electronic Applications set out below before making
an Electronic Application. Any reference to you or the applicant in this section Additional
Terms and Conditions for Electronic Applications and the Steps shall refer to you making an
application for Offer Shares through an ATM or the IB website of a relevant Participating Bank.
You must have an existing bank account with and be an ATM cardholder of one (1) of the
Participating Banks before you can make an Electronic Application at the ATMs. An ATM card
issued by one (1) Participating Bank cannot be used to apply for Offer Shares at an ATM
belonging to other Participating Banks. For an Internet Electronic Application, you must have
an existing bank account with an IB User Identification (User ID) and a Personal
Identification Number/Password (PIN) given by the relevant Participating Bank. The Steps
set out the actions that you must take at ATMs or the IB website of the UOB Group to complete
an Electronic Application. The actions that you must take at ATMs or the IB websites of other
Participating Banks are set out on the ATM screens or the IB website screens of the relevant
Participating Banks. Upon the completion of your ATM Electronic Application transaction, you
will receive an ATM transaction slip (Transaction Record), confirming the details of your
Electronic Application. Upon completion of your Internet Electronic Application, there will be an
on-screen confirmation (Confirmation Screen) of the application which can be printed for
your record. The Transaction Record or your printed record of the Confirmation Screen is for
your retention and should not be submitted with any Application Form.
H-12
You must ensure that you enter your own Securities Account number when using the
ATM card issued to you in your own name. If you fail to use your own ATM card or if you
do not key in your own Securities Account number, your application will be rejected. If
you operate a joint bank account with any of the Participating Banks, you must ensure
that you enter your own Securities Account number when using the ATM card issued to
you in your own name. Using your own Securities Account number with an ATM card
which is not issued to you in your own name will render your ATM Electronic Application
liable to be rejected.
You must ensure, when making an Internet Electronic Application, that your mailing address for
the account selected for the application is in Singapore and the application is being made in
Singapore and you will be asked to declare accordingly. Otherwise your application is liable to
be rejected. In connection with this, you wil be asked to declare that you are in Singapore at
the time when you make the application.
You shall make an Electronic Application in accordance with and subject to the terms and
conditions of this Offer Document including but not limited to the terms and conditions
appearing below and those set out under the section entitled Terms, Conditions and
Procedures for Application and Acceptance of this Offer Document as well as the
Memorandum and Articles of Association of our Company.
1. In connection with your Electronic Application for Offer Shares, you are required to
confirm statements to the following effect in the course of activating your Electronic
Application:
(a) that you have received a copy of this Offer Document (in the case of ATM
Electronic Applications only) and have read, understood and agreed to all the
terms and conditions of application for Offer Shares and this Offer Document
prior to effecting the Electronic 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 residency status, share application amount,
CPF Investment Account number (if applicable) and CDP Securities Account
number and application details and other personal data (the Relevant
Particulars) with the relevant Participating Bank to the CDP, CPF, SCCS,
SGX-ST, Share Registrar, our Company, the Vendors, the Sponsor and Issue
Manager, the Underwriter and Placement Agent or other authorised operators
(the Relevant Parties); and
(c) that this is your only application for Offer Shares and it is made in your own
name and at your own risk.
Your application will not be successfully completed and cannot be recorded as a
completed transaction in the ATM or on the IB website unless you press the Enter or
Confirm or Yes or OK or any other relevant key in the ATM or click Confirm or OK
or Submit or Continue or Yes or any other relevant button on the IB website screen.
By doing so, you shall be treated as signifying your confirmation of each of the above
three (3) statements. In respect of statement 1(b) above, such confirmation, shall signify
and shall be treated as your written permission, given in accordance with the relevant
laws of Singapore including Section 47(2) of the Banking Act (Chapter 19) of Singapore
to the disclosure by the relevant Participating Bank of the Relevant Particulars to the
Relevant Parties.
H-13
2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT
APPLYING FOR OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THAT
ANY ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION
MADE BY YOU AS THE BENEFICIAL OWNER.
YOU SHOULD MAKE ONLY ONE (1) ELECTRONIC APPLICATION FOR OFFER
SHARES AND SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES
OR PLACEMENT SHARES, WHETHER AT THE ATMS OR THE IB WEBSITES (IF ANY)
OF ANY PARTICIPATING BANK OR ON THE APPLICATION FORMS. IF YOU HAVE
MADE AN APPLICATION FOR OFFER SHARES OR PLACEMENT SHARES ON AN
APPLICATION FORM, YOU SHALL 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 you make your Electronic Application at the ATM or IB website of the relevant
participating bank, failing which your Electronic Application will not be completed or
accepted. Any Electronic Application which does not conform strictly to the
instructions set out in this Offer Document or on the screens of the ATM or the IB
website of the relevant Participating Bank through which your Electronic
Application is being made shall be rejected.
You may make an ATM Electronic Application at the ATM of any Participating Bank or an
Internet Electronic Application at the IB website of the relevant Participating Bank for the
Offer Shares using only cash by authorising such Participating Bank to deduct the full
amount payable from your account with such Participating Bank.
4. You irrevocably agree and undertake to subscribe for, purchase and/or to accept the
number of Offer Shares applied for as stated on the Transaction Record or the
Confirmation Screen or any lesser number of Offer Shares that may be allotted and/or
allocated to you in respect of your Electronic Application.
In the event that our Company and the Vendors decide to allot and/or allocate any lesser
number of such Offer Shares or not to allot and/or allocate any Offer Shares to you, you
agree to accept such decision as final. If your Electronic Application is successful, your
confirmation (by your action of pressing the Enter or Confirm or Yes or OK or any
other relevant key on the ATM or clicking Confirm or OK or Submit or Continue or
Yes or any other relevant button on the IB website screen) of the number of Offer Shares
applied for shall signify and shall be treated as your acceptance of the number of Offer
Shares that may be allotted and/or allocated to you and your agreement to be bound by
the Memorandum and Articles of Association of our Company. You also irrevocably
authorise CDP to complete and sign on your behalf as transferee or renouncee any
instrument of transfer and/or required for the transfer of the Offer Shares that may be
allotted and/or allocated to you.
5. Our Company and the Vendors will not keep any applications in reserve. Where your
Electronic Application is unsuccessful, the full amount of the application monies will be
refunded in Singapore currency (without interest or any share of revenue or other benefit
arising therefrom) to you by being automatically credited to your account with your
Participating Bank within 24 hours of balloting of the applications provided that the
remittance in respect of such application which has been presented for payment or other
processes have been honoured and the application monies have been received in the
designated share issue account. Trading on a WHEN ISSUED basis, if applicable, is
expected to commence after such refund has been made.
Where your Electronic Application is rejected or accepted in part only, the full amount or
the balance of the application monies, as the case may be, will be refunded in Singapore
currency (without interest or any share of revenue or other benefit arising therefrom) to
you by being automatically credited to your account with your Participating Bank within
H-14
14 days after the close of the Application List provided that the remittance in respect of
such application which has been presented for payment or other processes have been
honoured and the application monies have been received in the designated share issue
account.
Responsibility for timely refund of application monies arising from unsuccessful or
partially successful Electronic Applications lies solely with the respective
Participating Banks. Therefore, you are strongly advised to consult your
Participating Bank as to the status of your Electronic Application and/or the refund
of any monies to you from unsuccessful or partially successful Electronic
Application, to determine the exact number of Offer Shares allotted and/or allocated
to you before trading the Offer Shares on Catalist. You may also call CDP Phone at
6535 7511 to check the provisional results of your application by using your T-pin
(issued by CDP upon your application for the service) and keying in the stock code
(that will be made available together with the results of the allotment and/or
allocation via an announcement through the SGX-ST and by advertisement in a
generally circulating daily press). To sign up for the service, you may contact CDP
customer service officers. Neither the SGX-ST, the CDP, the SCCS, the Participating
Banks, our Company, the Vendors, the Sponsor and Issue Manager nor the
Underwriter and Placement Agent assume any responsibility for any loss that may
be incurred as a result of you having to cover any net sell positions or from buy-in
procedures activated by the SGX-ST.
6. If your Electronic Application is unsuccessful, no notification will be sent by the
relevant Participating Banks.
If you make Electronic Applications through the ATMs or the IB websites of the following
Participating Banks, you may check the provisional results of your Electronic Applications
as follows:
Bank Telephone ATM/Internet
Operating
Hours
Service
Expected
From
UOB
Group
1800 222 2121 ATM (Other Transactions -
IPO Results Enquiry)
(1)
http://www.uobgroup.com
(1)
24 hours a
day
Evening of the
balloting day
DBS
Bank
1800 339 6666
(for POSB
account holders)
1800 111 1111
(for DBS
account holders)
Internet Banking
http://www.dbs.com
(2)
24 hours a
day
Evening of the
balloting day
OCBC 1800 363 3333 ATM/Internet Banking/
Phone Banking
http://www.ocbc.com
24 hours a
day
Evening of the
balloting day
Notes:
1. If you have made your Electronic Application through the ATMs or IB website of the UOB Group, you may
check the results of your application through UOB Personal Internet Banking, ATMs of the UOB Group or
UOB Phone Banking Services.
2. If you have made your Electronic Application through the ATMs or IB website of DBS Bank, you may check
the results of your application through the channel listed above.
7. You irrevocably agree and acknowledge that your Electronic Application is subject to risks
of electrical, electronic, technical and computer-related faults and breakdowns, fires, acts
H-15
of God and other events beyond the control of the Participating Banks, our Company, the
Vendors, the Sponsor and Issue Manager, the Underwriter and Placement Agent and if,
in any such event, our Company, the Vendors, the Sponsor and Issue Manager, the
Underwriter and Placement Agent and/or the relevant Participating Bank do not receive
your Electronic Application, or data relating to your Electronic Application or the tape or
any other devices containing such data is lost, corrupted or not otherwise accessible,
whether wholly or partially for whatever reason, you shall be deemed not to have made
an Electronic Application and you shall have no claim whatsoever against our Company,
our Directors, the Vendors, the Sponsor and Issue Manager, the Underwriter and
Placement Agent and/or the relevant Participating Bank for Offer Shares applied for or for
any compensation, loss or damage.
8. Electronic Applications shall close at 12.00 noon on 22 September 2014 or such
other time as our Company and the Vendors may, in consultation with the Sponsor
and Issue Manager, and the Underwriter and Placement Agent decide. Subject to the
paragraph above, an Internet Electronic Application is deemed to be received when it
enters the designated information system of the relevant Participating Bank, that is, when
there is an on-screen confirmation of the application.
9. You are deemed to have irrevocably requested and authorised our Company to:
(a) register the Offer Shares allotted and/or allocated 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 earned or other benefit
arising therefrom) the application monies, should your Electronic Application be
unsuccessful, by automatically crediting your bank account with your Participating
Bank with the relevant amount within 24 hours of the balloting of applications; 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 part only, by automatically crediting your bank account with your
Participating Bank with the relevant amount within 14 days after the close of the
Application List.
10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must
be made in your own name and without qualification. Our Company will reject any
application by any person acting as nominee except those made by approved nominee
companies only.
11. All your particulars in the records of your relevant Participating Bank at the time you make
your Electronic Application shall be deemed to be true and correct and your relevant
Participating Bank and the Relevant Parties shall be entitled to rely on the accuracy
thereof. If there has been any change in your particulars after the time of the making of
your Electronic Application, you shall promptly notify your relevant Participating Bank.
12. You should ensure that your personal particulars as recorded by both CDP and the
relevant Participating Bank are correct and identical, otherwise, your Electronic
Application is liable to be rejected. You should promptly inform CDP of any change in
address, failing which the notification letter on successful allotment and/or allocation will
be sent to your address last registered with CDP.
H-16
13. By making and completing an Electronic Application, you are deemed to have agreed that:
(a) in consideration of our Company making available the Electronic Application facility,
through the Participating Banks as the agents of our Company, at the ATMs and IB
websites (if any):
(i) your Electronic Application is irrevocable; and
(ii) your Electronic Application, our acceptance and the contract resulting
therefrom under the Invitation shall be governed by and construed in
accordance with the laws of Singapore and you irrevocably submit to the
non-exclusive jurisdiction of the Singapore courts;
(b) neither our Company, the Vendors, the Sponsor and Issue Manager, the Underwriter
and Placement Agent, the Participating Banks nor CDP shall be liable for any delays,
failures or inaccuracies in the recording, storage or in the transmission or delivery
of data relating to your Electronic Application to our Company or CDP due to
breakdowns or failure of transmission, delivery or communication facilities or any
risks referred to in paragraph 7 above or to any cause beyond our respective
controls;
(c) in respect of Offer Shares for which your Electronic Application has been
successfully completed and not rejected, acceptance of your Electronic Application
shall be constituted by written notification by or on behalf of our Company and not
otherwise, notwithstanding any payment received by or on behalf of our Company
and not otherwise, notwithstanding any payment received by or on behalf of our
Company;
(d) you will not be entitled to exercise any remedy of rescission or misrepresentation at
any time after acceptance of your application; and
(e) in making your application, reliance is placed solely on the information contained in
this Offer Document and that none of our Company, the Vendors, the Sponsor and
Issue Manager, the Underwriter and Placement Agent or any other person involved
in the Invitation shall have any liability for any information not so contained.
Steps for Electronic Applications through the ATMs and the IB website of the UOB Group
The instructions for Electronic Applications will appear on the ATM screens and the IB website
screens of the respective Participating Banks. For illustrative purposes, the steps for making
an Electronic Application through ATMs or through the IB website of the UOB Group are shown
below. Instructions for Electronic Applications appearing on the ATM screens and the IB
website screens (if any) of the relevant Participating Banks (other than the UOB Group) may
differ from that represented below.
Steps for an ATM Electronic Application through ATMs of the UOB Group
Owing to space constraints on the UOB Groups ATM screens, the following terms will appear
in abbreviated form:
& : and
CDP : THE CENTRAL DEPOSITORY (PTE) LIMITED
CPF : THE CENTRAL PROVIDENT FUND
NRIC or IC : NATIONAL REGISTRATION IDENTITY CARD
PIN : PERSONAL IDENTIFICATION NUMBER
H-17
PR : PERMANENT RESIDENT
SCCS : SECURITIES CLEARING & COMPUTER SERVICES (PTE) LIMITED
Step 1 : Insert your personal Unicard, Uniplus card or UOB VISA/MASTER card and key in
your personal identification number.
2 : Select CASHCARD/OTHER TRANS.
3 : Select SECURITIES APPLICATION.
4 : Select the share counter which you wish to apply for.
5 : Read and understand the following statements which will appear on the screen:
THIS OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE
MADE IN, OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/OFFER
INFORMATION STATEMENT/DOCUMENT OR SUPPLEMENTARY
DOCUMENTS. ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR
UNITS OF SECURITIES) WILL NEED TO MAKE AN APPLICATION IN THE
MANNER SET OUT IN THE PROSPECTUS/OFFER INFORMATION
STATEMENT/DOCUMENT OR SUPPLEMENTARY DOCUMENTS.
(Press ENTER to continue)
PLEASE CALL 1800 222 2121 IF YOU WOULD LIKE TO FIND OUT WHERE
YOU CAN OBTAIN A COPY OF THE PROSPECTUS/OFFER INFORMATION
STATEMENT/DOCUMENT OR SUPPLEMENTARY DOCUMENT.
WHERE APPLICABLE, A COPY OF THE PROSPECTUS/OFFER
DOCUMENT HAS BEEN LODGED WITH AND/OR REGISTERED BY THE
MONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO
RESPONSIBILITY FOR THE CONTENTS OF THE PROSPECTUS/OFFER
DOCUMENT.
6 : Read and understand the following terms which will appear on the screen:
YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF THE
PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT/
SUPPLEMENTARY DOCUMENT AND THIS ELECTRONIC APPLICATION.
(Press ENTER key to continue)
YOU CONSENT TO DISCLOSE YOUR NAME, IC/PASSPORT,
NATIONALITY, ADDRESS, APPLICATION AMOUNT, CPF INVESTMENT
ACCOUNT NUMBER AND CDP ACCOUNT NUMBER FROM YOUR
ACCOUNTS TO CDP, CPF, SCCS, SHARE REGISTRARS, SGX-ST AND
ISSUER/VENDOR(S).
THIS IS YOUR ONLY FIXED PRICE APPLICATION AND IS IN YOUR NAME
AND AT YOUR RISK.
H-18
7 : Screen will display:
NRIC/Passport No. XXXXXXXXXXXX
IF YOUR NRIC/PASSPORT NUMBER IS INCORRECT, PLEASE CANCEL THE
TRANSACTION AND NOTIFY THE BRANCH PERSONALLY.
(Press CANCEL or CONFIRM)
8 : Select mode of payment i.e. CASH ONLY. You will be prompted to select Cash
Account type to debit (i.e., CURRENT ACCOUNT/I-ACCOUNT, CAMPUS
ACCOUNT OR SAVINGS ACCOUNT/TX ACCOUNT). Should you have a few
accounts linked to your ATM card, a list of linked account numbers will be
displayed for you to select.
9 : After you have selected the account, your CDP Securities Account number will be
displayed for you to confirm or change (This screen with your CDP Securities
Account number will be shown if your CDP Securities Account number is already
stored in the ATM system of the UOB Group). If this is the first time you are using
the UOB Groups ATM to apply for securities, your CDP Securities Account
number will not be stored in the ATM system of the UOB Group, and the following
screen will be displayed for your input of your CDP Securities Account number.
10 : Read and understand the following terms which will appear on the screen:
1. YOU ARE REQUIRED TO ENTER YOUR CDP ACCOUNT NUMBER FOR
YOUR FIRST IPO/SECURITIES APPLICATION. THIS ACCOUNT NUMBER
WOULD BE DISPLAYED FOR FUTURE APPLICATIONS.
2. DO NOT APPLY FOR JOINT ACCOUNT HOLDER OR THIRD PARTIES.
3. PLEASE ENTER YOUR OWN CDP ACCOUNT NUMBER (12 DIGITS) &
PRESS ENTER.
If you wish to terminate the transaction, please press CANCEL.
11 : Key in your CDP Securities Account number (12 digits) and select
CONFIRM-YES.
12 : Select your nationality status.
13 : Key in the number of shares you wish to apply for and press the ENTER key.
14 : Check the details of your Electronic Application on the screen and press ENTER
key to confirm your Electronic Application.
15 : Select NO if you do not wish to make any further transactions and remove the
Transaction Record. You should keep the Transaction Record for your own
reference only.
Steps for an Internet Electronic Application through the IB website of the UOB Group
Owing to space constraints on the UOB Groups IB website screens, the following terms will
appear in abbreviated form:
H-19
NRIC or I/C : National Registration Identity Card
PR : Permanent Resident
SGD : Singapore Dollars
SCCS : Securities Clearing and Computer Services (Pte) Limited
SGX : Singapore Exchange Securities Trading Limited
Step 1. Connect to the UOB Group at http://www.uobgroup.com.
2. Locate the UOB Online Services Login icon on the top right hand side of the
Home Page.
3. Point on UOB Online Services Login icon and at the drop list select UOB
Personal Internet Banking
4. Enter your Username and Password and click Login.
5. Click on Proceed under the Full Access Mode.
6. You will receive a SMS One-Time Password. Enter the SMS One-Time Password
and click Proceed.
7. Click on EPS/Securities/CPFIS, followed by Securities, followed by
Securities Application.
8. Read the IMPORTANT notice and complete the declarations found on the bottom
of the page by answering Yes/No to the questions.
9. Click Continue.
10. Select your country of residence (you must be residing in Singapore to apply), and
click Continue.
11. Select the Securities Counter from the drop list (If there are concurrent IPOs)
and click Submit.
12. Check the Securities Counter, select the mode of payment and account number
to debit and click on Submit.
13. Read the important instructions and click on Continue to confirm that:
1. You have read, understood and agreed to all the terms of this application and
the Prospectus/Document or Supplementary Document.
2. You consent to disclose your name, I/C or passport number, address,
nationality, CDP Securities Account Number, CPF Investment Account
Number (if applicable), and application details to the Securities registrars,
SGX, SCCS, CDP, CPF Board and issuer/vendor(s).
3. This application is made in your own name, for your own account and at your
own risk.
4. For FIXED/MAX price Securities application, this is your only application. For
TENDER price Securities application, this is your only application at the
selected tender price.
H-20
5. For FOREIGN CURRENCY securities, subject to the terms of the issue,
please note the following: The application monies will be debited from your
bank account in SGD, based on the Banks exchange profit or loss, or
application monies may be debited and refunds credited in SGD at the same
exchange rate.
6. For 1
ST
-COME-1
ST
-SERVE securities, the number of securities applied for
may be reduced, subject to the availability at the point of application.
14. Check your personal details, details of the share counter you wish to apply for and
account to debit.
Select (a) Nationality;
Enter (b) your CDP Securities Account number; and
(c) the number of shares applied for.
Click Submit.
15. Check your personal particulars (name, NRIC/Passport number and nationality),
details of the share counter you wish to apply for, CDP Securities Account number,
account to debit and number of securities applied for.
16. Click Confirm, Edit or Home.
17. Print the Confirmation Screen (optional) for your own reference and retention only.
H-21
(Incorporated in the Republic of Singapore on 21 April 2014)
Reception Furniture
Executive Series
Work Tools
Panel Systems
Filing & Storage
Power Options
Desking Systems
Seating
Modular Systems
OUR PRODUCTS
Lot 6119 Jalan Haji Salleh,
Batu 5, Off Jalan Meru, 41050 Klang,
Selangor Darul Ehsan, Malaysia
T +6 03 3392 6888
F +6 03 3392 3377
W www.versalink.com
OFFER DOCUMENT DATED 16 SEPTEMBER 2014
(Registered by the Singapore Exchange Securities Trading Limited acting as
agent on behalf of the Monetary Authority of Singapore on 16 September 2014)
This document is important. If you are in any doubt as to the action you
should take, you should consult your legal, nancial, tax or other professional
adviser(s).
CIMB Bank Berhad, Singapore Branch (the Sponsor and Issue Manager) has
made an application to the Singapore Exchange Securities Trading Limited (the
SGX-ST) for permission to deal in, and for quotation of, all the ordinary shares
(the Shares) in the capital of Versalink Holdings Limited (the Company)
already issued (including the Vendor Shares (as dened herein)), the new
shares (the New Shares) which are the subject of the Invitation (as dened
herein), the new Shares which may be issued from time to time under the
Performance Share Plan (as dened herein) (the Performance Shares) and
the new Shares which may be issued upon the exercise of the options to be
granted under the ESOS (as dened herein) (the Option Shares) on Catalist
(as dened herein). Acceptance of applications for the Invitation Shares (as
dened herein) will be conditional upon issue of the New Shares and the
listing and quotation of all our existing issued Shares (including the Vendor
Shares), the New Shares, the Performance Shares and the Option Shares.
Monies paid in respect of any application accepted will be returned if the
admission and listing do not proceed. The dealing in and quotation of the
Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared
with larger or more established companies listed on the Main Board of the
SGX-ST. In particular, companies may list on Catalist without a track record
of protability and there is no assurance that there will be a liquid market
in the shares or units of shares traded on Catalist. You should be aware of
the risks of investing in such companies and should make the decision to
invest only after careful consideration and, if appropriate, consultation with
your professional adviser(s).
This offer of Invitation Shares is made in or accompanied by an offer
document that has been registered by the SGX-ST acting as agent on
behalf of the Monetary Authority of Singapore (the Authority).
Neither the Authority nor the SGX-ST has examined or approved the contents of this
Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility
for the contents of this Offer Document, including the correctness of any of the
statements or opinions made or reports contained in this Offer Document. The
SGX-ST does not normally review the application for admission but relies on the
Sponsor and Issue Manager conrming that our Company is suitable to be listed
and complies with the Listing Manual (as dened herein). Neither the Authority
nor the SGX-ST has in any way considered the merits of the Shares (including
the Vendor Shares), the New Shares, the Performance Shares and the Option
Shares being offered for investment. The registration of this Offer Document by
the SGX-ST does not imply that the Securities and Futures Act (Chapter 289) of
Singapore, or any other legal or regulatory requirements, or requirements under
the SGX-STs listing rules, have been complied with.
We have not lodged this Offer Document in any other jurisdiction.
Investing in our Shares involves risks which are described in the section entitled
RISK FACTORS of this Offer Document.
After the expiration of six (6) months from the date of registration of this Offer
Document, no person shall make an offer of our Shares, or allot, issue or sell any
of our Shares, on the basis of this Offer Document; and no ofcer or equivalent
person or promoter of our Company will authorise or permit the offer of any of
our Shares or the allotment, issue or sale of any of our Shares, on the basis of
Invitation in respect of 37,000,000 Invitation Shares comprising 25,000,000 New Shares and 12,000,000 Vendor Shares, as follows:
(a) 1,500,000 Offer Shares at S$0.30 each by way of public offer; and
(b) 35,500,000 Placement Shares at S$0.30 each by way of placement,
payable in full on application.
CIMB Bank Berhad (13491-P)
Singapore Branch
(Incorporated in Malaysia)
(Company Registration No.: 198701621D)
(Incorporated in the Republic of Singapore)
Underwriter and Placement Agent
CORPORATE PROFILE
BUSINESS OVERVIEW
Established in 1991

Versalink Holdings Limited - Offer Document Dated 16 September 2014

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(Company Registration No.: 201411394N)

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