25 October 2006 - National University of Singapore

Transcription

texchemgf pg1 10/24/06 3:44 PM Page 1
TEXCHEM-PACK HOLDINGS (S) LTD.
A packaging solutions provider in Southeast Asia
and the People’s Republic of China with a strong
emphasis on design and manufacturing
technology
(Incorporated in the Republic of Singapore on 27 August 2003)
(Registration Number : 200308296H)
PROSPECTUS dated 25 October 2006
(registered with the Monetary Authority of Singapore on 25 October 2006)
This document is important. If you are in any doubt as to the action you should take, you should consult your
legal, financial, tax, or other professional adviser.
Design and manufacture a wide range of specialised plastic packaging products
We have applied to the Singapore Exchange Securities Trading Limited (“SGX-ST”) for permission to deal
in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of Texchem-Pack Holdings (S) Ltd. (the
“Company”) already issued and the new Shares (the “New Shares”) which are the subject of the
Invitation (as defined in this Prospectus). Such permission will be granted when we have been admitted
to the Official List of the SGX-ST. The dealing in, and quotation of, the Shares will be in Singapore dollars.
Serve mainly the semiconductor, data storage, consumer electronics and electrical,
and telecommunications industries
Acceptance of applications will be conditional upon, inter alia, permission being granted by the SGX-ST to
deal in and for quotation of all our existing issued Shares and the New Shares. If the completion of the
Invitation does not occur because the said permission is not granted or for any other reason, monies paid
in respect of any application accepted will be returned to you, subject to applicable laws, at your own risk,
without interest or any share of revenue or other benefit arising therefrom and you will not have any right or claim
against us or DBS Bank Ltd (the “Manager, Underwriter and Placement Agent”).
10 production facilities strategically located in Malaysia, Thailand, the PRC and Vietnam
The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed
or reports contained in this Prospectus. Admission to the Official List of the SGX-ST is not to
be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares or the
New Shares.
Customers include multinationals that are major players in their respective industries,
such as Seagate, Sony and Solectron
Integrated manufacturing capability ranging from design and product development,
prototyping and mould fabrication
A copy of this Prospectus has been lodged with, and registered by, the Monetary Authority of Singapore
(the “Authority”) on 28 September 2006 and 25 October 2006, respectively. The Authority assumes no responsibility
for the contents of this Prospectus. Lodgement with, or registration by, the Authority of this Prospectus does
not imply that the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”),
or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered
the merits of our Shares or the New Shares, as the case may be, being offered or in respect of which
the Invitation (as defined in this Prospectus) is made, for investment. We have not lodged or registered this Prospectus
in any other jurisdiction.
No Shares shall be allotted or allocated on the basis of this Prospectus later than six months after the date
of registration of this Prospectus by the Authority.
Investing in our Shares involves risks. Potential investors in the Company are advised to read the
“Risk Factors” section of this Prospectus and the rest of the Prospectus carefully and to seek professional
advice if in doubt.
Invitation in respect of 29,850,000 New Shares comprising:
(a)
3,000,000 Offer Shares at S$0.40 each by way of public offer; and
(b) 26,850,000 Placement Shares by way of placement comprising:
(i)
26,600,000 Placement Shares at S$0.40 each for applications by way of
Placement Share application forms; and
(ii) 250,000 Internet Placement Shares at S$0.40 each for applications made
through the Internet website of DBS Vickers Online (Singapore) Pte Ltd;
payable in full on application.
Manager, Underwriter and Placement Agent
Contact details of principal place of business:
T (604) 229-6000
F (604) 229-1430
Level 18 Menara PSCI 39 Jalan Sultan Ahmad Shah 10050 Penang Malaysia
integrated
packaging solutions provider
technology
New Shares.
advice if in doubt.
(a)
(i)
T (604) 229-6000
F (604) 229-1430
integrated
We intend to recommend and distribute approximately
50% of net profits as dividends in FY2006
competitive strengths
Integrated manufacturing process capability
Ability to provide a full range of packaging related services and products
Shortens lead time between the design to production stages for our customers,
thereby reducing costs and time-to-market of their products
Multi-site production facilities in Asia
Close proximity to customers enables quick response time, shorter delivery
lead time and just-in-time delivery
Ability to handle and execute high volume orders
Focused on technology advancement and research and development
Continually develop new products and designs in consultation with our
customers
Forged strategic relationships that improve our technological capabilities
Developed processes that increase cost-efficiencies and add flexibility
to our manufacturing capabilities
Advanced design and mould fabrication capabilities
Design centres utilising CAD/CAM software facilitate customers’ product
design process
Technical capability to fabricate moulds to complement our design capabilities
Commitment to high standards of service and quality
Quality certifications and awards from customers are testaments to our
commitment to service and quality
Directly involved in the initial design stages for various customers’ product
development projects
Strong management team
Management team led by our Executive Chairman, Dato’ Seri Fumihiko
Konishi
Our Deputy Chairman and Chief Executive Officer, Lee Siew Khee, Jeffrey,
has more than 20 years of experience in the field of marketing, particularly
in the sale of plastics and chemicals
Our President and Chief Operating Officer, Yap Kee Keong, has a wealth
of experience and oversees the Group’s management and operations
our key products
prospects and
business strategies
Increasing demand for semiconductor,
data storage, consumer electronics and
electrical, and telecommunications
products in the region
• Market our products and services to other
significant players in these industries who
are not currently our customers
Greater emphasis on aesthetics in the
design and manufacture of consumer
electronics and electrical products and
telecommunication products
• Capitalise on trends by leveraging our
technological capabilities
Increasing trend for major manufacturers
to relocate their manufacturing facilities to
lower cost production regions in Asia
• Remain in close proximity to customers’
manufacturing facilities to respond to their
needs quickly and facilitate prompt delivery
of their products
We manufacture a variety of plastic packaging products for technology related industries. Some of our products are as follows:
PRODUCT
DESCRIPTION
PACKAGING
PRODUCTS
future plans
CUSTOMER INDUSTRIES
SEMICONSUMER
CONDUCTOR ELECTRONICS
& ELECTRICAL
Thermoformed
Packaging
Products
• Clamshells
• Blister packs
• Packaging trays
••
Precision Injection
Moulded Products
• IC trays
• Shipping hoods
and combs
•
Embossed
Carrier Tapes
• Semiconductor
components
packaging
••
Extruded Profiles
• IC tubes
• Air conditioning gaskets
• Vinyl tubes
••
Expanded
Polystyrene
• Protective packaging
• Insulation structures
••
DATA
TELECOMSTORAGE MUNICATIONS
••
••
Growing industries in Asia will lead to an
increasing demand for packaging products
and precision injection moulded products
and components
• Develop new products and expand our
customer base in industries that are less
cyclical such as the medical and automotive
industries.
•
•
•
••
••
•
•
As an integrated technology packaging solutions provider, we also manufacture raw materials such as compounded polymers and
extruded sheets as well as film and flexographic printing plates used in flexographic printing and flexible packaging industries.
PRODUCT
APPLICATIONS
Compounded Polymers
Raw material for extruded sheets and precision
injection moulded parts
Extruded Sheets
Raw material for thermoformed packaging products
Film
Used for flexographic and offset printing
Flexographic Printing Plates
Used for printing of designs and artwork on
packaging products
Expand and upgrade manufacturing facilities
• Expand and upgrade manufacturing facilities
in Malaysia, Thailand and the PRC to cater
to our expected business and production
requirements
Strengthen research and development and
design capabilities
• Upgrade research facilities to develop new
polymer compounds and materials with
special characteristics to suit customers’
needs
• Recruit more engineers for our research and
development team and enter into other technical
collaborations with universities
• Acquire design software and hardware and hire
additional design engineers to improve the design
services we offer our customers
Develop new markets and customers
• Currently working with our technology partner to
develop new packaging products for the medical
industry in Asia
• Explore opportunities to develop precision
injection moulded products and components
for the automotive market in Thailand through
strategic technology partnerships
• Develop products for the liquid crystal display
market with the assistance of technology
partners
Seek growth through acquisitions, joint ventures
and strategic alliances
• Seek new opportunities that will bring economies
of scale to our operations and diversify our product
base
financial highlights
Group Revenue (RM million)
Group Profit After Tax (RM million)
HY2006
HY2006
113.3
HY2005
HY2005
99.1
FY2005
50
100
150
2.8
FY2003
131.5
0
11.5
FY2004
136.9
FY2003
6.0
FY2005
201.7
FY2004
8.6
200
250
5.5
0
2
4
6
8
10
12
14
We intend to recommend and distribute approximately
50% of net profits as dividends in FY2006
competitive strengths
Integrated manufacturing process capability
Ability to provide a full range of packaging related services and products
Shortens lead time between the design to production stages for our customers,
thereby reducing costs and time-to-market of their products
Multi-site production facilities in Asia
Close proximity to customers enables quick response time, shorter delivery
lead time and just-in-time delivery
Ability to handle and execute high volume orders
Focused on technology advancement and research and development
Continually develop new products and designs in consultation with our
customers
Forged strategic relationships that improve our technological capabilities
Developed processes that increase cost-efficiencies and add flexibility
to our manufacturing capabilities
Advanced design and mould fabrication capabilities
Design centres utilising CAD/CAM software facilitate customers’ product
design process
Technical capability to fabricate moulds to complement our design capabilities
Commitment to high standards of service and quality
Quality certifications and awards from customers are testaments to our
commitment to service and quality
Directly involved in the initial design stages for various customers’ product
development projects
Strong management team
Management team led by our Executive Chairman, Dato’ Seri Fumihiko
Konishi
Our Deputy Chairman and Chief Executive Officer, Lee Siew Khee, Jeffrey,
has more than 20 years of experience in the field of marketing, particularly
in the sale of plastics and chemicals
Our President and Chief Operating Officer, Yap Kee Keong, has a wealth
of experience and oversees the Group’s management and operations
our key products
prospects and
business strategies
Increasing demand for semiconductor,
data storage, consumer electronics and
electrical, and telecommunications
products in the region
• Market our products and services to other
significant players in these industries who
are not currently our customers
Greater emphasis on aesthetics in the
design and manufacture of consumer
electronics and electrical products and
telecommunication products
• Capitalise on trends by leveraging our
technological capabilities
Increasing trend for major manufacturers
to relocate their manufacturing facilities to
lower cost production regions in Asia
• Remain in close proximity to customers’
manufacturing facilities to respond to their
needs quickly and facilitate prompt delivery
of their products
We manufacture a variety of plastic packaging products for technology related industries. Some of our products are as follows:
PRODUCT
DESCRIPTION
PACKAGING
PRODUCTS
future plans
CUSTOMER INDUSTRIES
SEMICONSUMER
CONDUCTOR ELECTRONICS
& ELECTRICAL
Thermoformed
Packaging
Products
• Clamshells
• Blister packs
• Packaging trays
••
Precision Injection
Moulded Products
• IC trays
• Shipping hoods
and combs
•
Embossed
Carrier Tapes
• Semiconductor
components
packaging
••
Extruded Profiles
• IC tubes
• Air conditioning gaskets
• Vinyl tubes
••
Expanded
Polystyrene
• Protective packaging
• Insulation structures
••
DATA
TELECOMSTORAGE MUNICATIONS
••
••
Growing industries in Asia will lead to an
increasing demand for packaging products
and precision injection moulded products
and components
• Develop new products and expand our
customer base in industries that are less
cyclical such as the medical and automotive
industries.
•
•
•
••
••
•
•
As an integrated technology packaging solutions provider, we also manufacture raw materials such as compounded polymers and
extruded sheets as well as film and flexographic printing plates used in flexographic printing and flexible packaging industries.
PRODUCT
APPLICATIONS
Compounded Polymers
Raw material for extruded sheets and precision
injection moulded parts
Extruded Sheets
Raw material for thermoformed packaging products
Film
Used for flexographic and offset printing
Used for printing of designs and artwork on
packaging products
Expand and upgrade manufacturing facilities
• Expand and upgrade manufacturing facilities
in Malaysia, Thailand and the PRC to cater
to our expected business and production
requirements
Strengthen research and development and
design capabilities
• Upgrade research facilities to develop new
polymer compounds and materials with
special characteristics to suit customers’
needs
• Recruit more engineers for our research and
development team and enter into other technical
collaborations with universities
• Acquire design software and hardware and hire
additional design engineers to improve the design
services we offer our customers
• Currently working with our technology partner to
develop new packaging products for the medical
industry in Asia
• Explore opportunities to develop precision
injection moulded products and components
for the automotive market in Thailand through
strategic technology partnerships
• Develop products for the liquid crystal display
market with the assistance of technology
partners
Seek growth through acquisitions, joint ventures
and strategic alliances
• Seek new opportunities that will bring economies
of scale to our operations and diversify our product
base
financial highlights
Group Revenue (RM million)
Group Profit After Tax (RM million)
HY2006
HY2006
113.3
HY2005
HY2005
99.1
FY2005
50
100
150
2.8
FY2003
131.5
0
11.5
FY2004
136.9
FY2003
6.0
FY2005
201.7
FY2004
8.6
200
250
5.5
0
2
4
6
8
10
12
14
CONTENTS
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . .
14
DETAILS OF THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
— Listing on the SGX-ST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
— Indicative Timetable for Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
— Overview of Our Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
— Summary Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
THE INVITATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
— Risks Related to Our Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
— Risks Related to Our Securities and Our Trading Market . . . . . . . . . . . . . . . . . . . . . . . . .
37
INVITATION STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39
USE OF PROCEEDS FROM THE INVITATION AND EXPENSES INCURRED . . . . . . . . . . .
40
PLAN OF DISTRIBUTION AND UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
46
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51
RESTRUCTURING EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52
GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
SELECTED CONSOLIDATED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .
56
— Operating Results of Our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
56
— Financial Position of Our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
1
CONTENTS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
— Overview of Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
— Review of Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
— Review of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
— Capital Expenditure and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
— Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
— Foreign Exchange Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
— Credit Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
— Inventory Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
79
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
— History and Development of Our Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80
— Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
— Quality and Reliability Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
— Awards and Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
— Customers and Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
— Suppliers and Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96
— Marketing and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
— Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
— Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
— Staff Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100
— Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100
— Competitive Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
101
— Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
103
— Properties and Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
— Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
112
— Business Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
— Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
— Future Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
116
MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
119
— Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
119
— Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
122
— Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
— Service Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
— Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128
— Management Reporting Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
131
2
CONTENTS
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132
— Ownership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
132
— Principal Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
— Moratorium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS . . . . . . . . . .
134
— Past Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134
— Existing and Future Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
139
— Shareholders’ Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
— Potential Conflict of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
154
DESCRIPTION OF ORDINARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
156
EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
160
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164
CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
167
GENERAL AND STATUTORY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
168
APPENDIX A
: TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION
AND ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-1
APPENDIX B : RETIREMENT AND RESIGNATION SCHEME FOR DIRECTORS . . . . . .
B-1
APPENDIX C : THE REPORT FROM THE REPORTING ACCOUNTANTS IN RELATION
TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS SUBSIDIARIES FOR
THE YEARS ENDED 31 DECEMBER 2003, 2004 AND 2005. . . . . . . . . .
C-1
APPENDIX D : THE REVIEW REPORT FROM THE REPORTING ACCOUNTANTS IN
RELATION TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS OF TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS
SUBSIDIARIES FOR THE SIX MONTHS ENDED 30 JUNE 2006 . . . . . .
D-1
APPENDIX E
: TRB AND ITS SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E-1
APPENDIX F
: LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE
INDEPENDENT DIRECTORS OF TEXCHEM-PACK HOLDINGS (S) LTD..
F-1
APPENDIX G : ENGLISH TRANSLATIONS OF THE PERMITS ISSUED BY THE BOARD
OF INVESTMENT OF THAILAND TO TEXPACK (THAILAND) . . . . . . . .
G-1
3
CORPORATE INFORMATION
BOARD OF DIRECTORS
:
Dato’ Seri Fumihiko Konishi (Executive Chairman)
Lee Siew Khee, Jeffrey
(Deputy Chairman and Chief Executive Officer)
Yap Kee Keong (President and Chief Operating Officer)
Lee Chin (Non-Executive Director)
Tony Tan Choon Keat (Independent Director)
Koji Miura (Independent Director)
Kim Seah Teck Kim (Independent Director)
Lim Siang Kai (Independent Director)
JOINT COMPANY SECRETARIES
:
Yap Wai Ming (LLB (Hons))
Lean Min-Tze (LLB (Hons))
REGISTERED OFFICE
:
9 Raffles Place #32-00
Republic Plaza
Singapore 048619
MANAGER, UNDERWRITER AND
PLACEMENT AGENT
:
DBS Bank Ltd
6 Shenton Way
DBS Building Tower One
Singapore 068809
REPORTING ACCOUNTANTS AND
AUDITORS
:
KPMG, Singapore
Certified Public Accountants
16 Raffles Quay
#22-00 Hong Leong Building
Singapore 048581
KPMG, Malaysia
Chartered Accountants
1st Floor, Wisma Penang Garden
42 Jalan Sultan Ahmad Shah
10050 Penang, Malaysia
SOLICITORS TO THE INVITATION
:
Stamford Law Corporation
Republic Plaza
Singapore 048619
SOLICITORS TO THE MANAGER,
UNDERWRITER, AND
PLACEMENT AGENT
:
Venture Law LLC
Singapore Land Tower
Singapore 048623
LEGAL ADVISERS TO THE
COMPANY ON MALAYSIAN LAW
:
Tay & Partners
6th Floor Plaza See Hoy Chan
Jalan Raja Chulan
50200 Kuala Lumpur, Malaysia
4
CORPORATE INFORMATION
COMPANY ON PRC LAW
:
Shu Jin Law Firm
24/7, Aerospace Skyscraper, 4019 Shennan Road,
Shenzhen, People’s Republic of China 518048
Shanghai Office:
Suite 2204, Maxdo Center,
No. 8 Xingyi Road, Hong Qiao, Shanghai,
People’s Republic of China 200336
COMPANY ON THAI LAW
:
Dharmniti Law Office Co., Ltd.
4th Floor, Nai Lert Tower, 2/4, Wireless Road, Lumphini,
Pathumwan, Bangkok 10330 Thailand
COMPANY ON VIETNAMESE
LAW
:
Phuoc & Partners AttorneyatLaw
Suite # 603, Capital Place
6 Thai Van Lung Street
Ben Nghe Ward, District 1
Ho Chi Minh City, Vietnam
INDEPENDENT FINANCIAL
ADVISER
:
Deloitte & Touche Corporate Finance Pte Ltd
6 Shenton Way #32-00
DBS Building Tower Two
Singapore 068809
SHARE REGISTRAR AND SHARE
TRANSFER OFFICE
:
M&C Services Private Limited
138 Robinson Road
#17-00 The Corporate Office
Singapore 068906
PRINCIPAL BANKERS
:
HSBC Bank Malaysia Berhad
1, Downing Street
CIMB Bank Berhad
(formerly known as Bumiputra-Commerce Bank Berhad)
1, Beach Street
Malayan Banking Berhad
9, Union Street
RHB Bank Berhad
44, Beach Street
Southern Bank Berhad
Menara BHL Bank
51, Jalan Sultan Ahmad Shah
RECEIVING BANK
:
DBS Bank Ltd
6 Shenton Way
DBS Building Tower One
Singapore 068809
5
DEFINITIONS
In this Prospectus and the accompanying Application Forms, and, in relation to the Electronic
Applications, the instructions appearing on the screens of ATMs and IB websites of the relevant
Participating Banks or the Internet website of DBS Vickers Online, unless the context otherwise
requires, the following terms or expressions shall have the following meanings:
Group Companies
“Company” or “Texpack Holdings”
:
Texchem-Pack Holdings (S) Ltd.
“Eye Graphic”
:
Eye Graphic Sdn. Bhd.
“Eye Graphic (Vietnam)”
:
Eye Graphic (Vietnam) Co., Ltd.
“Group” or the “Texpack Group”
:
Texpack Holdings and its subsidiaries, namely Texpack,
Texpack (Johor), Texpack (Thailand), Texpack (KL), Eye
Graphic, Texpolymers, Texpack (Vietnam), Eye Graphic
(Vietnam), Texpack (Wuxi) and TEP, collectively
“TEP”
:
Texchem Engineering Plastics Sdn. Bhd.
“Texpack”
:
Texchem-Pack (M) Bhd.
“Texpack (Johor)”
:
Texchem-Pack (Johor) Sdn. Bhd.
“Texpack (KL)”
:
Texchem-Pack (KL) Sdn. Bhd.
“Texpack (Thailand)”
:
Texchem-Pack (Thailand) Co., Ltd.
“Texpack (Vietnam)”
:
Texchem-Pack (Vietnam) Co., Ltd.
“Texpack (Wuxi)”
:
Texchem-Pack (Wuxi) Co., Ltd.
“Texpolymers”
:
Texchem Polymers Sdn. Bhd.
Other Companies, Organisations and Agencies
“Authority”
:
The Monetary Authority of Singapore
“Bursa Malaysia”
:
Bursa Malaysia Securities Berhad
“CDP” or “Depository”
:
The Central Depository (Pte) Limited
“DBS Bank”, “Manager”,
“Underwriter” or “Placement
Agent” or “Receiving Bank”
:
DBS Bank Ltd
“DBS Vickers Online”
:
DBS Vickers Online (Singapore) Pte. Ltd.
“Fumakilla”
:
Fumakilla Malaysia Berhad
“Hutchinson”
:
Hutchinson Technology Inc.
“Malaysian SC”
:
Malaysian Securities Commission
“Mektec”
:
Mektec Manufacturing Corporation (Thailand) Ltd.
6
DEFINITIONS
“Nidec”
:
Nidec (Dalian) Limited
“Rapro Pack”
:
Rapro Pack Co., Ltd.
“RH Murphy”
:
R.H. Murphy Co., Inc
“Sanko Kasei”
:
Sanko Kasei (M) Sdn. Bhd.
“SCCS”
:
Securities Clearing & Computer Services (Pte) Ltd
“Seagate”
:
The group of companies consisting of Seagate Technology
International (Wuxi) Co., Ltd., Seagate Technology INTL,
Seagate Technology LLC and Seagate Technology
(Thailand) Ltd
“SGX-ST”
:
Singapore Exchange Securities Trading Limited
“Share Registrar”
:
M&C Services Private Limited
“SIRIM”
:
SIRIM Berhad, formerly known as the Standards and
Industrial Research Institute of Malaysia, a Malaysian
government-owned company and the national organisation
of standardisation and quality
“Solectron”
:
Solectron Technology Sdn. Bhd.
“Sony”
:
Sony EMCS (Malaysia) Sdn. Bhd.
“Texchem Holdings”
:
Texchem Holdings Sdn. Bhd.
“Texchem Materials”
:
Texchem Materials Sdn. Bhd.
“Texchem Singapore”
:
Texchem Singapore Private Limited
“Texcorp”
:
Texchem Corporation Sdn. Bhd.
“Texcorp Group”
:
Texcorp, its subsidiaries and associated companies
“Texpack (Philippines)”
:
Texchem-Pack (Philippines) Inc.
“TRB”
:
Texchem Resources Bhd.
“TRB Group”
:
TRB, its subsidiaries and associated companies
“Application Forms”
:
The printed application forms to be used for the purpose of
the Invitation and which form part of this Prospectus
“Application List”
:
The list of applications for subscription of the Invitation
Shares
“ASEAN”
:
Association of South East Asian Nations
General
7
DEFINITIONS
“Associate”
:
(a)
in relation to an entity, means:
(i)
in a case where the entity is a substantial
shareholder, Controlling Shareholder, substantial
interest-holder or controlling interest-holder, its
related corporation, related entity, associated
company or associated entity; or
(ii)
in any other case, (A) a director or an equivalent
person, (B) where the entity is a corporation, a
Controlling Shareholder of the entity, (C) where
the entity is not a corporation, a controlling
interest-holder of the entity, (D) a subsidiary, a
subsidiary entity, an associated company, or an
associated entity, or (E) a subsidiary, a
subsidiary entity, an associated company, or an
associated entity, of the Controlling Shareholder
or controlling interest-holder, as the case may
be,
of the entity; and
(b)
in relation to an individual, means:
(i)
his immediate family;
(ii)
a trustee of any trust of which the individual or
any member of the individual’s immediate family
is a beneficiary or, where the trust is a
discretionary trust, a discretionary object, when
the trustee acts in that capacity; or
(iii)
any corporation in which he and his immediate
family (whether directly or indirectly) have
interests in voting shares of an aggregate of not
less than 30% of the total votes attached to all
voting shares
“ATM”
:
An automated teller machine of a Participating Bank
“Audit Committee”
:
The audit committee of our Board as at the date of this
Prospectus, unless the context otherwise requires
“Board” or “Board of Directors”
:
The board of Directors as at the date of this Prospectus
unless the context otherwise requires
“Companies Act”
:
The Companies Act, Chapter 50, of Singapore
“Controlling Shareholder”
:
A person who holds directly or indirectly 15% or more of the
nominal amount of all voting shares in our Company (unless
determined otherwise by the SGX-ST), or in fact exercises
control over our Company
“CPF”
:
The Central Provident Fund
8
DEFINITIONS
“Directors”
:
The directors of our Company as at the date of this
“Electronic Applications”
:
Applications for the Offer Shares made through an ATM or
through the IB websites of the relevant Participating Bank or
applications for the Internet Placement Shares made
through the Internet website of DBS Vickers Online, subject
to and on the terms and conditions set out in this
Prospectus
“EPS”
:
Earnings per Share
“Executive Directors”
:
The executive Directors as at the date of this Prospectus,
unless the context otherwise requires
“Executive Officers”
:
The executive officers of our Group as at the date of this
“FY”
:
Financial year ended or, as the case may be, ending 31
December
“HY”
:
Six months ended 30 June
“IB”
:
Internet Banking
“Independent Directors”
:
The non-executive independent Directors as at the date of
this Prospectus, unless the context otherwise requires
“Internet Placement Shares”
:
250,000 Placement Shares for which our Company invites
applications to be made through the Internet website of
DBS Vickers Online, subject to and on the terms and
conditions set out in this Prospectus
“Invitation”
:
Our invitation to the public in Singapore to subscribe for the
Invitation Shares at the Issue Price, subject to and on the
terms and conditions set out in this Prospectus
“Issue Price”
:
S$0.40 for each New Share
“Latest Practicable Date”
:
15 September 2006, being the latest practicable date prior
to the lodgement of this Prospectus with the Authority
“Market Day”
:
A day on which the SGX-ST is open for trading in securities
“New Shares” or “Invitation
Shares”
:
29,850,000 new Shares for which we invite applications to
subscribe for pursuant to the Invitation, subject to and on
the terms and conditions set out in this Prospectus
“Nominating Committee”
:
The nominating committee of our Board as at the date of
“Non-Executive Directors”
:
The non-executive Directors as at the date of this
9
DEFINITIONS
“NAV”
:
Net asset value, which is taken to be total assets less total
liabilities
“NTA”
:
Net tangible assets, which is taken to be total assets, less
intangible assets, total liabilities and minority interests
“Offer”
:
The offer by us of the Offer Shares to the public in
Singapore for subscription at the Issue Price, subject to and
on the terms and conditions set out in this Prospectus
“Offer Shares”
:
3,000,000 New Shares which are the subject of the Offer
“Participating Banks”
:
DBS Bank (including POSB), Oversea-Chinese Banking
Corporation Limited (“OCBC”) and United Overseas Bank
Limited and its subsidiary, Far Eastern Bank Limited (the
“UOB Group”)
“Placement”
:
The placement of the Placement Shares by the Placement
Agent on our behalf for subscription at the Issue Price,
subject to and on the terms and conditions set out in this
Prospectus
“Placement Shares”
:
26,850,000 New Shares (including the Internet Placement
Shares) which are the subject of the Placement
“PRC” or “China”
:
The People’s Republic of China, excluding the Hong Kong
Special Administrative Region and the Macau Special
Administrative Region for the purposes of this Prospectus
“Prospectus”
:
This Prospectus dated 25 October 2006 issued by our
Company in respect of the Invitation
“Remuneration Committee”
:
The remuneration committee of our Board as at the date of
“Restructuring Exercise”
:
The restructuring exercise undertaken to rationalise and
streamline our corporate structure as described under
“Restructuring Exercise” of this Prospectus
“Retirement and Resignation
Scheme”
:
The Retirement and Resignation Scheme established by
our Company pursuant to which benefits are payable to the
directors of our subsidiaries upon their cessation as
directors whether by retirement or resignation the details of
which are further set out under “Management —
Compensation” of this Prospectus and in Appendix B of this
Prospectus
“Securities Account”
:
The securities account maintained by a Depositor with CDP
but does not include a securities sub-account
“Securities and Futures Act”
:
The Securities and Futures Act, Chapter 289 of Singapore
10
DEFINITIONS
“SGX-ST Listing Manual”
:
The listing manual issued by the SGX-ST, as amended or
modified from time to time
“Shares”
:
Ordinary shares in the capital of our Company
“Subdivision”
:
The subdivision of every one ordinary share in the issued
and paid-up share capital of our Company into 10 ordinary
shares referred to under “Share Capital” of this Prospectus
“Substantial Shareholder”
:
A person who holds directly or indirectly 5% or more of the
total issued share capital in our Company
“UK”
:
United Kingdom
“US” or “USA” or “United States”
:
United States of America
“$” or “S$” and “cents”
:
Singapore dollars and cents, respectively
“cm2”
:
Square centimetre
“Dong”
:
Vietnamese Dong
“RM” and “sen”
:
Ringgit Malaysia and sen, respectively
“RMB”
:
PRC Renminbi
“sq ft”
:
Square feet
“sq m”
:
Square metre
“THB”
:
Thai Baht
“tonnes”
:
Metric ton
“USD” or “US$”
:
United States dollar and cents, respectively
“%” or “per cent”
:
Per centum or percentage
Currencies and Units
The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings
ascribed to them respectively in Section 130A of the Companies Act.
The terms “associated company”, “associated entity”, “controlling interest-holder”, “related
corporation”, “related entity”, “subsidiary”, “subsidiary entity” and “substantial interest-holder” shall have
the same meanings ascribed to them respectively in the Securities and Futures (Offers of Investments)
(Shares and Debentures) Regulations 2005.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders and
vice versa. References to persons shall include corporations.
Any reference in this Prospectus, the Application Forms or the Electronic Applications to any statute or
enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any
word defined under the Companies Act, the Securities and Futures Act or any statutory modification
thereof or the SGX-ST Listing Manual and used in this Prospectus, the Application Forms or the
11
DEFINITIONS
Electronic Applications shall, where applicable, have the meaning assigned to it under the Companies
Act and the Securities and Futures Act, or such statutory modification, or the SGX-ST Listing Manual,
as the case may be.
Any reference in this Prospectus, the Application Forms or the Electronic Applications to Shares being
allotted to an applicant includes allotment and/or allocation to CDP for the account of that applicant.
Any reference to a date or time of day in this Prospectus, the Application Forms or the Electronic
Applications shall be a reference to Singapore date or time, unless otherwise stated.
References in this Prospectus to “we”, “our”, and “us” (or other grammatical variations thereof) refer to
our Company, our Group or any member of our Group, as the context requires.
Any discrepancies in the tables included in this Prospectus between the listed amounts and the totals
thereof are due to rounding differences. Accordingly, figures shown in totals in certain tables may not
be an arithmetic aggregation of the figures that precede them.
12
GLOSSARY OF TECHNICAL TERMS
To facilitate a better understanding of our business, the following glossary provides a description of
some of the technical terms and abbreviations commonly found in our industry. The terms and their
assigned meanings may not correspond to standard industry meanings or usages of these terms.
“CAD/CAM”
:
Computer Aided Design/Computer Aided Manufacturing
“clamshell”
:
A plastic packaging product which functions as a box with a hinge to
clamp and secure component parts
“CNC”
:
Computer Numerical Control. A CNC machine is a machine that is
used for mould fabrication
“E blocks”
:
The internal mechanism that moves the read/write head to the
proper track
“ESD”
:
Electrostatic discharge
“head stack assemblies” or
“HSA”
:
The component that reads and writes data on the hard disc
comprising magnetic read/write heads installed on an actuator that
resembles a record needle pickup arm which positions the heads
over the desired cylinder on the media
“HIPS”
:
High Impact Polystyrene, a thermoplastic copolymer with good
impact properties which also can be repeatedly softened by heat
and hardened by cooling without changing its properties
“hood and comb”
:
A form of plastic packaging used to protect the slider head of a disc
drive during the assembly process
“IC” or “chip”
:
Integrated Circuit. An integrated circuit, sometimes called a chip or
die, is a semiconductor device fabricated on a wafer, which is a
large and thin circular base material usually made of silicon. An IC
comprises thousands or millions of tiny resistors, capacitors, and
transistors that are combined as a system to function as an
amplifier,
oscillator,
timer,
counter,
computer
memory,
microprocessor, or various other semiconductor functions
“mould”
:
A tool used to shape plastic parts and components through a
moulding process
“mould fabrication”
:
This refers to the process of designing and making a mould
“semiconductor”
:
The basic building block of an electronic device. A semiconductor is
made from material that is neither conductive nor insulative at room
temperature, such as silicon, gallium arsenide, and germanium.
Such materials possess selective conductivity characteristics which
makes them useful as electronics materials
“shipping rails”
:
Extruded plastic tubes used in the semiconductor industry to pack
mainly electronics components for shipment purposes
“suspension”
:
A major component that holds magnetic read/write heads at
microscopic distances above the disks in rigid disk drives
“3D”
:
Three-dimensional
13
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
All statements contained in this Prospectus, statements made in the press releases and oral
statements that may be made by our Company, Directors, Executive Officers, or employees acting on
our behalf, that are not statements of historical fact, constitute “forward-looking statements”. Some of
these statements can be identified by words that have a bias towards, or are, forward-looking such as
“anticipate”, “believe”, “could”, “estimate”, “expect”, “if”, “intend”, “may”, “plan”, “possible”, “probable”,
“project”, “should”, “will” and “would” or other similar words. However, these words are not the exclusive
means of identifying forward-looking statements. All statements regarding our Group’s expected
financial position, business strategy, plans and prospects and future prospects of our Group’s industry
are forward-looking statements. These forward-looking statements, including but not limited to
statements as to our Group’s revenue and profitability, prospects, future plans and other matters
discussed in this Prospectus 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 Group’s actual, future results, performance or achievements to be materially different from
any future results, performance or achievements expected, expressed or implied by such forwardlooking statements. Certain risk factors are discussed in more detail under “Risk Factors” of this
Prospectus. All forward-looking statements by or attributable to us, or persons acting on our behalf,
contained in this Prospectus are expressly qualified in their entirety by such factors. These forwardlooking statements are applicable only as at the date of this Prospectus.
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 Prospectus, we advise you not to place undue reliance on these statements. Our
actual future results may differ materially from those anticipated in these forward looking statements.
Neither our Company, the Manager, the Underwriter, the Placement Agent, their respective advisers nor
any other person represents or warrants to you that our actual future results, performance or
achievements will be as discussed in those statements.
Our actual future results may differ materially from those anticipated in these forward-looking
statements as a result of risks faced by us. Our Company, the Manager, the Underwriter and the
Placement Agent disclaim any responsibility to update any of those forward-looking statements or
publicly announce any revisions to those forward-looking statements to reflect future developments,
events or circumstances. We are, however, subject to the provisions of the Securities and Futures Act
and the SGX-ST Listing Manual regarding corporate disclosure. In particular, pursuant to Section 241
of the Securities and Futures Act, if after the Prospectus is registered but before the close of the
Invitation, our Company becomes aware of: (a) a false or misleading statement in the Prospectus; (b)
an omission from the Prospectus of any information that should have been included in it under Section
243 of the Securities and Futures Act; or (c) a new circumstance that has arisen since the Prospectus
was lodged with the Authority and would have been required by Section 243 of the Securities and
Futures Act to be included in the Prospectus, if it had arisen before the Prospectus was lodged and that
is materially adverse from the point of view of an investor, we may lodge a supplementary or
replacement prospectus with the Authority.
14
DETAILS OF THE INVITATION
LISTING ON THE SGX-ST
We have applied to the SGX-ST for permission to deal in, and for quotation of, all our Shares already
issued and the New Shares. Such permission will be granted when our Company has been admitted
to the Official List of the SGX-ST. No Shares shall be allotted or allocated on the basis of this
Prospectus later than six months after the date of registration of this Prospectus. Acceptance of
applications will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in, and
for quotation of, all the existing issued Shares and the New Shares. If the completion of the Invitation
does not occur because the said permission is not granted or for any other reason (including where the
Authority issues a stop order), monies paid in respect of any application accepted will be returned,
subject to applicable laws, without interest or any share of revenue or other benefit arising therefrom
and at the applicant’s own risk and the applicant will not have any claim against us, the Manager, the
Underwriter or the Placement Agent.
The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions
expressed or reports contained in this Prospectus. Admission to the Official List of the SGX-ST is not
to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares
or the New Shares.
A copy of this Prospectus has been lodged with and registered by the Authority who assumes no
responsibility for its contents. Lodgement with, or registration by, the Authority of this Prospectus does
not imply that the Securities and Futures Act, or any other legal or regulatory requirements, have been
complied with. The Authority has not, in any way, considered the merits of our Shares or the New
Shares, as the case may be, being offered or in respect of which the Invitation is made, for investment.
We are subject to the provisions of the Securities and Futures Act and the SGX-ST Listing Manual
regarding corporate disclosure. In particular, if after this Prospectus is registered but before the close
of the Invitation, we become aware of:–
(a)
a false or misleading statement in this Prospectus;
(b)
an omission from this Prospectus of any information that should have been included in it under
Section 243 of the Securities and Futures Act; or
(c)
a new circumstance that has arisen since this Prospectus was lodged with the Authority which
would have been required by Section 243 of the Securities and Futures Act to be included in this
Prospectus if it had arisen before this Prospectus was lodged,
that is materially adverse from the point of view of an investor, we may lodge a supplementary or
replacement prospectus with the Authority pursuant to Section 241 of the Securities and Futures Act.
Under the Securities and Futures Act, the Authority may, in certain circumstances issue a stop order
(the “Stop Order”) to our Company, directing that no or no further Shares to which this Prospectus
relates, be allotted or issued. Such circumstances will include a situation where this Prospectus (i)
contains a statement or matter, which in the opinion of the Authority is false or misleading, (ii) omits any
information that should be included in accordance with the Securities and Futures Act, (iii) does not, in
the opinion of the Authority, comply with the requirements of the Securities and Futures Act 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 pursuant to Section 242 of the Securities and
Futures Act and applications to subscribe for the Invitation Shares have been made prior to the Stop
Order, and:
15
(a)
where the Invitation Shares have not been issued to the applicants, the applications for the
Invitation Shares shall be deemed to have been withdrawn and cancelled (as required by law) and
we shall refund all the application monies to the applicants within 14 days of the date of the Stop
Order; or
(b)
where the Invitation Shares have been issued to the applicants but trading has not commenced,
the issue of the Invitation Shares will (as required by law) be deemed void and we shall refund the
application monies to the applicants within 14 days of the date of the Stop Order.
Monies paid on account of your application will be returned to you at your own risk, without interest or
any share of revenue or benefit arising therefrom, and you will not have any claim against our
Company, the Manager, the Underwriter or the Placement Agent.
This Prospectus has been seen and approved by our Directors and they individually and collectively
accept full responsibility for the accuracy of the information given in this Prospectus and confirm, having
made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the
opinions expressed in this Prospectus are fair and accurate in all material respects as of the date of this
Prospectus and that there are no material facts the omission of which would make any statement in this
Prospectus misleading and that this Prospectus constitutes full and true disclosure of all material facts
about the Invitation, our Company, our subsidiaries, our Shares and the New Shares.
Neither our Company, our Directors, the Manager, the Underwriter, the Placement Agent nor any other
party involved in the Invitation is making any representation to any person regarding the legality of an
investment in our Shares by such person under any investment or any other laws or regulations. No
information in this Prospectus should be considered to constitute business, financial, legal or tax advice
regarding an investment in our Shares and the New Shares. Investors should be aware that they may
be required to bear the financial risk of an investment in our Shares for an indefinite period of time. Each
prospective investor should consult his own professional or other advisers for business, financial, legal
or tax advice regarding an investment in our Shares and the New Shares.
No person has been or is authorised to give any information or to make any representation not
contained in this Prospectus in connection with the Invitation and, if given or made, such information
or representation must not be relied upon as having been authorised by us, the Manager, the
Underwriter or the Placement Agent. Neither the delivery of this Prospectus and the Application Forms
nor the Invitation (or any other documents relating thereto) shall, under any circumstances, constitute
a continuing representation or create any suggestion or implication that there has been no change or
development reasonably likely to involve a change in our affairs, condition or prospects or in the
statements of fact or information contained in this Prospectus since the date of this Prospectus. Where
such changes occur and are material, or are required to be disclosed by law, the SGX-ST and/or any
other regulatory or supervisory body or agency, we will make promptly an announcement of the same
to the SGX-ST and the public, and if required, lodge a supplementary or replacement document with
the Authority pursuant to Section 241 of the Securities and Futures Act and will take immediate steps
to comply with the requirements of the Securities and Futures Act and the regulations issued
thereunder. We will also comply with all other applicable requirements of the Authority and/or the
SGX-ST. All applicants should take note of any such announcements and/or supplementary or
replacement documents and, upon the release or issue of such announcements and/or supplementary
or replacement documents, shall be deemed to have notice of such changes. Save as expressly stated
in this Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to our
future performance or policies.
The Invitation Shares are offered for subscription solely on the basis of the information contained and
representations made in the Prospectus.
16
This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon
by any other persons other than the applicants in connection with their application for the Invitation
Shares or for any other purpose.
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for 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.
Where prior to the lodgement of the supplementary or replacement prospectus, applications have been
made under this Prospectus for the Invitation Shares and:
(a)
(b)
where the Invitation Shares have not been issued to the applicants, our Company shall either:
(i)
within two days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement prospectus, give applicants notice in writing
of how to obtain, or arrange to receive, a copy of the same and provide applicants with an
option to withdraw their applications and take all reasonable steps to make available within
a reasonable period the supplementary or replacement prospectus to applicants who have
indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary
or replacement prospectus; or
(ii)
within seven days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, 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 our Company shall, within seven days
from the date of lodgement of the supplementary or replacement prospectus, return all
monies paid in respect of any application to the applicant, without interest or any share of
revenue or benefit arising therefrom, at each applicant’s own risk and the applicants shall
have no claim against us, the Manager, the Underwriter or the Placement Agent; or
where the Invitation Shares have been issued to the applicants, our Company shall either:
(i)
within two days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement prospectus, give applicants notice in writing
of how to obtain, or arrange to receive, a copy of the same and provide applicants with an
option to withdraw their applications and take all reasonable steps to make available within
a reasonable period the supplementary or replacement prospectus to applicants who have
indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary
or replacement prospectus; or
(ii)
within seven days from the date of lodgement of the supplementary or replacement
prospectus, give the applicants the supplementary or replacement prospectus, as the case
may be, and provide the applicants with an option to return our Shares, which they do not
wish to retain title in; or
(iii)
treat the issue and/or sale of the Invitation Shares as void, in which case the issue or sale
shall be deemed void and our Company shall, within seven days from the date of lodgement
of the supplementary or replacement prospectus, return all monies paid in respect of any
application, without interest or any share of revenue or benefit arising therefrom.
An applicant who wishes to exercise this 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 prospectus,
notify our Company of this, whereupon our Company shall, within seven days from the receipt of such
17
notification, pay to him all monies paid by him on account of his application for those Invitation Shares
without interest or a share of revenue or benefit arising therefrom, at the applicant’s own risk and the
applicant shall have no claim against us, the Manager, the Underwriter or the Placement Agent.
An applicant who wishes to exercise this option under paragraph (b)(i) or (ii) to return our Invitation
Shares issued to him shall, within 14 days from the date of lodgement of the supplementary or
replacement prospectus, notify our Company of this and return all documents, if any, purporting to be
evidence of title to those Invitation Shares, to our Company, whereupon our Company shall, within
seven days from the receipt of such notification and documents, if any, pay to him all monies paid by
him for those Shares without interest or a share of revenues or benefit arising therefrom and the issue
of those Shares shall be deemed to be void.
Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,
during office hours from:
DBS Bank Ltd
6 Shenton Way
#36-01 DBS Building Tower One
Singapore 068809
and from branches of DBS Bank (including POSB), members of the Association of Banks in Singapore,
members of the SGX-ST and merchant banks in Singapore. A copy of this Prospectus is also available
on the SGX-ST website, http://www.sgx.com.
The Application List will open at 10.00 a.m. on 31 October 2006 and will remain open until 12.00
noon on the same day or for such further period or periods as our Directors may, in consultation
with DBS Bank, decide, subject to any limitation under all applicable laws. Where a
supplementary or replacement prospectus has been lodged with the Authority, the Application
List shall be kept open for at least 14 days after the lodgement of the supplementary or
replacement prospectus.
18
INDICATIVE TIMETABLE FOR LISTING
An indicative timetable for the Invitation and trading in our Shares is set out for your reference:
Indicative time/date
Event
26 October 2006, 9.00 am
Opening date and time for the Invitation
31 October 2006, 12.00 noon
Close of Application List and closing date and time for the Invitation
1 November 2006
Balloting of applications, if necessary (in the event of oversubscription for the Offer Shares)
2 November 2006, 9.00 am
Commence trading on a “ready” basis
7 November 2006
Settlement date for all trades done on a “ready” basis on 2
November 2006
The above timetable is only indicative as it assumes that (i) the date of closing of the Application List
will be 31 October 2006, (ii) the date of admission of our Company to the Official List of the SGX-ST
will be 2 November 2006, (iii) the SGX-ST shareholding spread requirement will be complied with, and
(iv) the Invitation Shares will be issued and fully paid-up prior to 9.00 am on 2 November 2006. The
actual date on which our Shares will commence trading on a “ready” basis will be announced when it
is confirmed by the SGX-ST.
The above timetable and procedures may be subject to such modification as the SGX-ST may, in its
absolute discretion, decide, including the decision to permit trading on a “ready” basis and the
commencement date of such trading.
Investors should consult the SGX-ST’s announcement on “ready” trading date on the Internet (at
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.
We will make public the results of the level of subscription for the Invitation Shares and the basis of
allocation of the Invitation Shares, as soon as it is practicable after the close of the Application List:
(a)
through a SGXNET announcement to be posted on the Internet at the SGX-ST website,
http://www.sgxnet.sgx.com; and
(b)
through a paid advertisement in a major local English language newspaper.
In the event of an early or extended closure of the Application List or the shortening or extension of the
time period during which the Invitation is open, we will publicly announce the same through the
channels described in (a) and (b) above.
19
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and is subject to, the more detailed information and
financial statements (including the notes thereto) appearing elsewhere in this Prospectus. We urge you
to carefully consider all the information presented in this Prospectus, particularly the section on “Risk
Factors”, before deciding to invest in our Shares.
OVERVIEW OF OUR GROUP
Our Group
Our Company was incorporated in Singapore on 27 August 2003 under the Companies Act as a private
limited company and subsequently converted to a public company limited by shares on 10 September
2004. Our Company is a subsidiary of TRB, a listed company in Malaysia, and is the holding company
of Texpolymers, Eye Graphic (which wholly-owns Eye Graphic (Vietnam)) and Texpack, the
intermediate holding company of our other subsidiaries, namely, Texpack (Thailand), Texpack (Johor),
TEP, Texpack (KL) (which wholly-owns Texpack (Vietnam)) and Texpack (Wuxi). Please refer to “Group
Structure” of this Prospectus for a diagrammatic representation of our Group.
Our Business
We are a leading packaging solutions provider in Southeast Asia with a strong emphasis on design and
manufacturing technology. We have integrated manufacturing process capability with multi-site
production facilities to serve the needs of our customers. We are engaged in the design, manufacture
and sale of a variety of plastic packaging products, ranging from thermoformed trays, precision injection
moulded products, embossed carrier tapes, extruded sheets and profiles, expanded polystyrene
products to flexographic printing plates used for the printing of designs and artwork on a variety of
packaging products. We provide integrated manufacturing services ranging from design and product
development, prototyping and mould fabrication to cater to the different needs of our customers. Our
packaging products are manufactured utilising four main processes, namely thermoforming, precision
injection moulding, extrusion and expanded polystyrene moulding.
Our customers are mainly from the semiconductor, consumer electronics and electrical, data storage
and telecommunications industries. Some of our customers are major players in their respective
industries, for example, Seagate, Sony and Solectron. We work closely with our key customers in the
development of the packaging of their products and our involvement typically begins from the initial
design stage up to commercial production.
Currently, we have production facilities in Malaysia, Thailand, the PRC and Vietnam. Most of our
production facilities are equipped with design centres utilising CAD/CAM software and CNC machines,
allowing us to offer three-dimensional visualisation capabilities, prototyping and product design and
mould fabrication services to our customers. We also have clean room and washing facilities for the
cleaning and packing of our products where required.
Competitive Strengths
Our competitive strengths are as follows:
We are an integrated technology packaging solutions provider with multi-site production
facilities
Being vertically integrated, we incorporate various elements including material customisation,
packaging design, mould fabrication, high volume manufacturing, inventory management, quality
assurance, just-in-time delivery and even recycling in the provision of our customised packaging
solutions. Our vertical integration also extends to producing extruded plastic sheets, which are the raw
20
PROSPECTUS SUMMARY
materials for the production of thermoforming products, as well as customised compounded polymers
(which are the basic raw materials for the production of extruded plastic sheets).
With our multi-site production facilities located in Malaysia, Thailand, the PRC and Vietnam, we are
able to provide just-in-time delivery by being located in close proximity to our major customers’
operations.
We are committed to high standards of service and quality
With our commitment to service and quality and our years of experience in servicing our customers in
the semiconductor, consumer electronics and electrical, data storage and telecommunications
industries, and our familiarity with our major customers, we believe that we have established a
reputation as a specialist in the provision of packaging solutions. One of the key elements of our
commitment to service is our policy of maintaining close proximity to our customers’ operations to better
serve them.
We have advanced design and mould fabrication capabilities
We use 3D CAD/CAM software and CNC facilities for our product design. These facilities allow the
customer to visualise our products in a three-dimensional format without having to build an actual
model. In addition, adjustments and modifications to the designs of our packaging products can be
made rapidly, even as the designs for our customers’ products are being fine-tuned. This significantly
shortens the entire product design process, which we believe, gives the customer confidence in our
products and capabilities.
We are focused on technology advancement and research and development
Through our customer driven research and development efforts, we are developing new polymer
compounds to improve the quality of our products. We also have technical collaborations with the
University of Akron in the US and Professor Masao Sumita of the Tokyo Institute of Technology for
research and development in the area of new polymer compounds for packaging materials. For more
details, please refer to “Business — Research and Development” and “Business — Marketing and
Distribution” of this Prospectus.
We have a strong management team
We believe that our management team has the relevant experience and professional skills to lead the
Group through future challenges. Our management team is led by our Executive Chairman, Dato’ Seri
Fumihiko Konishi, who is responsible for the overall business strategy of our Group. His entrepreneurial
qualities and determination have played an important role in the growth of the TRB Group. He is ably
assisted by our Deputy Chairman and Chief Executive Officer, Lee Siew Khee, Jeffrey, who has more
than 20 years experience in the field of marketing, particularly in the sale of plastics and chemicals and
our President and Chief Operating Officer, Yap Kee Keong, who has a wealth of experience in the sales,
marketing and distribution of industrial raw materials, as well as relevant experience in the electronics
packaging manufacturing sector.
Business Strategy
Focus on the semiconductor, consumer electronics and electrical, data storage and
telecommunications industries
Although our customers in the semiconductor, consumer electronics and electrical, data storage and
telecommunications industries already contribute significantly to our revenue, we believe that these
21
PROSPECTUS SUMMARY
industries continue to offer potential growth opportunities. We aim to market our products and services
to the other significant players in these industries who are not currently our customers. We believe that
there is also an increasing demand for our products and services in these industries due to the
increasing affluence of consumers in the region. We note that as a result of increased competition and
the need for product differentiation, there is now greater emphasis on aesthetics in the design and
manufacture of consumer electronics and electrical products and telecommunications products,
resulting in higher expectations and more stringent requirements in packaging. We believe that we are
well positioned to capitalise on these trends by leveraging on our technological capabilities such as our
design and mould fabrication facilities and our one-stop integrated service capability.
Remain close to our customers
One of our key strategies is to remain close to our customers so that we can respond to their needs
quickly and facilitate the prompt delivery of their products. The establishment of our overseas
production facilities was largely driven by the expansion of our customers’ manufacturing facilities to
these regions. We intend to continue with this strategy for the foreseeable future. Our strategy is to
follow any relocation by our major customers to lower cost production regions like the PRC and the
other lower cost countries in Asia. Our management team and our engineers work closely with our
customers and visit them regularly to keep in touch with their latest developments and plans which
enables us to continually update them of our capabilities and to determine the technology that will best
suit their needs.
Improving our technological capabilities
We believe that the ability to offer new packaging solutions and polymers to our customers is critical in
attracting and retaining customers. In order to maintain our competitive edge, we need to continually
improve our design and technological capabilities as well as develop new polymer compounds to
expand the range of products and services that we offer to our customers. We also believe that we need
to constantly improve our manufacturing processes to achieve greater cost efficiency and to be able to
offer quality products in order to retain our existing customers and attract new ones.
Future Plans
Expand and upgrade our manufacturing facilities
To cater to our expected business and production requirements, we plan to expand and upgrade our
production facilities in Malaysia, Thailand and in the PRC. This will be funded by the proceeds from the
Invitation. The factory expansion and upgrading of our production facilities will result in increased
capacity and also improved quality control.
Strengthen our research and development capabilities
In order to keep pace with advancements in technology and changing customer requirements and in
line with our emphasis on polymer development, we intend to enhance our research and development
capabilities by equipping Texpolymers with clean room facilities and analytical testing equipment
necessary for our research and development activities. We also plan to recruit more engineers for our
research and development team and enter into other technical collaborations with universities to
increase our technological know-how and capabilities relating to the design and development of
innovative products. These plans will be funded by the proceeds from the Invitation.
22
PROSPECTUS SUMMARY
Strengthen our design capabilities
To maintain our position as a leading packaging solutions provider, capable of delivering value-added
services to our customers, we intend to enhance our design capabilities by acquiring software and
hiring additional design engineers with the aim of improving the design services that we offer to our
customers. These plans will be funded by the proceeds from the Invitation.
We intend to grow our business through the development of new products and through the expansion
of our customer base in the industries that we currently serve and in other industries that are less
cyclical. We believe that there is an increasing demand for medical services due to demographic factors
such as an ageing population and the increasing threats of new viruses and diseases. This is likely to
lead to more research and development activities in the fields of medicine and biotechnology, which
provides opportunities for us to develop packaging products for customers in the medical industry. We
also believe that there is potential for growth in the automotive industry for precision injection moulded
products and components in Asia and intend to explore opportunities in the automotive industry in
Thailand for such new products.
Seek growth through acquisitions, joint ventures and strategic alliances
We intend to grow our Group by seeking new opportunities that will bring economies of scale to our
existing operations and enhance shareholder value. In particular, we plan to acquire the remaining 49%
stake in the share capital of Eye Graphic on terms that are beneficial to our Company and our
shareholders. In addition to the aforementioned, we will attempt to identify new investments and
acquisitions to expand or diversify our product base, as well as potential strategic alliances or joint
ventures in existing or new markets we are interested in.
Our Contact Details
Our principal place of business is located at Level 18, Menara PSCI, 39 Jalan Sultan Ahmad Shah
10050 Penang and our registered office is located at 9 Raffles Place #32-00 Republic Plaza, Singapore
048619. Our telephone number is (604) 229 6000. Our facsimile number is (604) 229 1430. Our internet
address is www.texchem-pack.com. Information contained in our website does not constitute part
of this Prospectus.
23
PROSPECTUS SUMMARY
SUMMARY FINANCIAL DATA
You should read the following summary financial data in conjunction with our Audited Consolidated
Financial Statements and our Unaudited Consolidated Interim Financial Statements and their
respective related notes, “Selected Consolidated Financial Information” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this
Prospectus. The following summary financial data are derived from our Audited Consolidated Financial
Statements and our Unaudited Consolidated Interim Financial Statements. Our Audited Consolidated
Financial Statements for the Financial Years ended 31 December 2003, 2004 and 2005, are set out in
Appendix C of this Prospectus. Our Unaudited Consolidated Interim Financial Statements for the six
months ended 30 June 2006, are set out in Appendix D of this Prospectus.
INCOME STATEMENT DATA:
(RM’000)
Revenue
<
FY2003
131,546
Audited
FY2004
136,914
>
FY2005
201,726
39,056
34,526
50,086
24,855
31,862
Profit before taxation
7,425
4,138
12,311
6,430
9,550
Profit for the year
5,540
2,810
11,519
6,028
8,619
5.59
2.61
12.37
6.37
9.31
Gross profit
Earnings per share (sen)(1)
BALANCE SHEET DATA:
(RM’000)
<
Unaudited
>
HY2005
HY2006
99,142
113,297
Audited
As at 31 December 2005
Unaudited
As at 30 June 2006
77,736
77,568
Net current liabilities
(18,852)
(10,621)
Non-current liabilities
(30,552)
(29,461)
35,227
44,145
31.1
40.8
Property, plant and equipment
Total equity
NTA per share (sen)
(2)
Notes:
(1)
For comparative purposes, EPS is calculated using net profit attributable to ordinary shareholders of the relevant period and
divided by our pre-Invitation issued share capital of 89,550,000 Shares.
(2)
The NTA per share is calculated based on our pre-Invitation issued share capital of 89,550,000 Shares.
24
THE INVITATION
Issue Size
:
29,850,000 New Shares, offered in Singapore by way of
public offer and placement, comprising 3,000,000 Offer
Shares and 26,850,000 Placement Shares.
The New Shares, upon issue and allotment, will rank pari
passu in all respects with the existing issued Shares.
Issue Price
:
S$0.40 for each New Share.
Purpose of the Invitation
:
The purpose of the Invitation is to secure admission of our
Company to the Official List of the SGX-ST. Our Directors
are of the view that the listing of our Company and the
quotation of our Shares on the Official List of the SGX-ST
will enhance our public image regionally and overseas and
enable us to tap the capital markets for the expansion of our
operations.
The Offer
:
The Offer comprises an invitation by our Company to the
public in Singapore to subscribe for 3,000,000 Offer Shares
at the Issue Price, subject to and on the terms and
conditions set out in this Prospectus.
The Placement
:
The Placement comprises an offering of 26,850,000
Placement Shares by way of private placement comprising:
Listing Status
:
(i)
26,600,000 Placement Shares at S$0.40 for each
Placement Share for applications by way of
Placement Share Application Forms; and
(ii)
250,000 Internet Placement Shares at S$0.40 for
each Internet Placement Share for applications made
through the Internet website of DBS Vickers Online.
Prior to the Invitation, there has been no public market for
our Shares. Our Shares will be quoted in Singapore dollars
on the Main Board of the SGX-ST, subject to the admission
of our Company to the Official List of the SGX-ST, and
permission for dealing in, and for quotation of, our Shares
being granted by the SGX-ST and the Authority not issuing
a Stop Order.
25
RISK FACTORS
An investment in our Shares involves risks. You should carefully consider and evaluate each of the
following risk factors (which are not intended to be exhaustive) and all of the other information set forth
in this Prospectus before deciding to invest in our Shares. Some of the following risk factors relate
principally to the industry in which we operate and our business in general. Other considerations relate
principally to general economic and political conditions, the securities market and ownership of the
Shares, including possible future sales of our Shares.
This Prospectus also contains forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in these forward-looking statements as a
result of certain factors, including the risks faced by us described below and elsewhere in the
Prospectus.
If any of the following risks and uncertainties develop into actual events, our business, financial
condition, results of operations and/or prospects could be materially and adversely affected. In such
circumstances, the trading price of our Shares could decline and you may lose all or part of your
investment. To the best of our Directors’ knowledge and belief, all risk factors which are material to
investors in making an informed judgement on our Group have been set out below.
RISKS RELATED TO OUR BUSINESS
We face intense competition in our business
The industry in which we operate is highly competitive and we face competition from other
manufacturers of plastic packaging products in both the local and foreign markets. Some of these
manufacturers have similar capabilities and compete with each other on key attributes which include
manufacturing competency, reliability, quality of products and services, pricing, time-to-market and
available production capacity. There can be no assurance that we can compete successfully in the
future and maintain or increase our market share. Should we be unable to compete effectively, our
business will be adversely affected.
Any significant increase in the prices of our raw materials would have an adverse impact on our
profitability
The raw materials used for the manufacture of our products comprise mainly extruded plastic sheets,
plastic resins and compounds. The cost of our raw materials accounted for approximately 74.2%,
73.0%, 74.1% and 72.0% of our total cost of sales in FY2003, FY2004, FY2005 and HY2006,
respectively. In order to ensure that we are able to efficiently deliver quality products to our customers
at competitive prices, we need to obtain sufficient quantities of good quality raw materials at reasonable
prices in a timely manner. We do not have formal long-term supply arrangements with our suppliers
(which is the norm in our industry). Accordingly, there is no assurance that we will be able to obtain
sufficient quantities of raw materials of an acceptable quality from our suppliers at reasonable prices.
In addition, it is usual for some of our customers to designate either the grade of the extruded sheets,
plastic resins and compounds to be used or the suppliers from whom we are to purchase such raw
materials or both. There are limited suppliers for certain grades of these raw materials. For instance,
for our thermoforming business, we have to purchase certain grades of extruded sheets from a single
producer, which accounted for approximately 26.7%, 34.4%, 33.0% and 30.1% of our total purchases
for FY2003, FY2004, FY2005 and HY2006, respectively. Please see “Business — Suppliers and Raw
Materials” of this Prospectus for further details. Where our customers designate the suppliers from
whom we are to purchase raw materials, such customers would generally have negotiated directly with
these suppliers and the prices of such raw materials would have been fixed. In these instances, we do
not have the flexibility of purchasing our raw materials from different suppliers and we may not be able
26
RISK FACTORS
to further negotiate with the designated suppliers for bulk discounts to control our costs. In the event
that our suppliers are unable to fulfil our raw material needs, we may not be able to seek alternative
sources of supply in a timely manner or we may be subject to higher costs from alternative suppliers.
This may adversely affect our profitability if we are unable to meet our customers’ orders and/or if we
are unable to pass on the increase in raw material costs to our customers.
We are exposed to the risks of margin erosion of our products
The life cycle for a particular design of our products generally ranges from 12 to 24 months depending
on the model type. Intense competition from our competitors and the gradual maturity of customers’
product line would generally lead to margin erosion over the life cycles of our products. We attempt to
balance this downward pressure on our selling prices by managing and lowering our overall
manufacturing costs through measures such as sourcing for alternative raw materials, improving the
designs and rationalising our manufacturing processes for our products. However, should we fail to do
so, this will result in lower profit margins and our financial performance will be adversely affected.
We are dependent on certain major customers
At present, our major customers include Seagate, Solectron and Nidec. These three customers
contributed in aggregate approximately 35.6%, 39.7%, 35.1% and 30.9% of our total revenue for
FY2003, FY2004, FY2005 and HY2006, respectively. We anticipate that for the foreseeable future, we
will continue to depend on these major customers for a significant portion of our revenue. There is no
assurance that we will be able to decrease our dependence on these major customers over time nor
can we assure you that we will continue to enjoy the same levels of business from them. The loss of,
or significant reduction in orders from, these customers would have a material adverse impact on our
financial performance. Please see “Business — Customers and Markets” of this Prospectus for further
details on our major customers.
We are dependent on the semiconductor, consumer electronics and electrical, data storage and
Our products are mainly supplied to customers who are in the semiconductor, consumer electronics
and electrical, data storage and telecommunications industries. The demand for our packaging
products is directly related to the demand for the products of our customers, such as consumer
electronic and electrical products and appliances, semiconductors and ICs, as well as hard disk drives.
Generally, any significant decline in demand for our customers’ products will result in a decrease in the
demand for our products by our customers.
Almost all of our revenue is derived from customers in these industries. Please see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Analysis of Performance
by Industries — Revenue by Industry Segment” of this Prospectus for a detailed breakdown of our
revenue derived from each industry. A decline in any of the above industries will have a material
adverse impact on our financial performance.
We may be affected by delays in the launch of our customers’ new products
Our customers have previously delayed the launch of their new products. These delays may be caused
by factors such as economic downturns which would adversely affect the anticipated demand for these
new products, product modifications initiated by our customers, shortages of other components used
in the manufacturing of these new products and/or delays in the marketing of these products. If there
is a delay in the launch of a new product by our customers, the sales of our products which are meant
for the packaging of these new products will also be delayed. This may have an adverse impact on our
revenue and financial performance.
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RISK FACTORS
We expect to incur significant capital expenditure in the future in connection with our growth
plans and therefore may require additional financing in the future
To grow our business, we intend to increase our production capacity. This will require substantial capital
expenditure for additional equipment. Such expenditure is likely to be made in advance of increased
sales. However, we cannot assure you that our revenue will increase after such expenditure has been
made. Our failure to do so would adversely affect our profitability and our growth plans.
In addition, we may need to obtain additional debt or equity financing to fund our capital expenditure.
Additional equity financing may result in dilution to the holders of our Shares. Additional debt financing
may be required which, if obtained, may:
•
limit our ability to pay dividends or require us to seek consent for the payment of dividends;
•
increase our vulnerability to general adverse economic and industry conditions;
•
limit our ability to pursue our growth plan;
•
require us to dedicate a substantial portion of our cash flow from operations to payments on our
debt, thereby reducing the availability of our cash flow to fund capital expenditure, working capital
and other general corporate purposes; and/or
•
limit our flexibility in planning for, or reacting to, changes in our business and our industry.
We cannot assure you that we will be able to obtain the additional financing on terms that are
acceptable to us or at all. For more information on our capital expenditure, please see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations — Capital Expenditure and
Commitments” of this Prospectus.
We do not have any long term contracts with our customers
We do not have any long term contractual agreements with any of our customers for the purchase of
our products, which is the norm in our industry. Our customers also do not provide us with binding
forecasts of their purchases from us for any period. As a result, we have no significant backlog. The lack
of significant backlog makes it difficult for us to forecast our revenue for any future period. Moreover,
our customers have in the past varied and may continue to vary order levels significantly from period
to period. Where a product line is terminated by our customer, the customer will compensate us for the
excess inventory if there was a pre-agreed arrangement. However, our customers are generally not
responsible for any unused raw materials that result from a forecast exceeding actual orders.
Accordingly, we cannot assure you that our customers will continue to place orders with us at the same
levels in the future as they had in prior periods. If there is a reduction of purchase orders from our
customers, our revenue and profitability will be adversely affected.
Rapid technological innovation and advancement may affect our ability to compete effectively
A substantial portion of our products are sold to the semiconductor, consumer electronics and electrical,
data storage and telecommunications industries. The end products of these industries are generally
characterised by rapid technological changes and a high rate of obsolescence. Such rapid
technological changes have led to a shortening of the product lead-times and product life-cycles of our
customers. The continued acceptance of our products by our customers will depend on our ability to
adapt quickly to such technological changes and improve our products accordingly. Our inability to
anticipate, forecast or adapt to such changes may render our products and services redundant or less
competitive and materially and adversely affect our ability to maintain or increase our market share in
the future. This will in turn adversely impact our financial performance. Although we have and will
continue to invest in research and development, there is no assurance that such investment will enable
us to compete effectively or maintain or improve our financial performance.
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RISK FACTORS
We depend on key management personnel and the loss of such personnel may adversely affect
our operations
Our future performance will depend largely on our ability to retain our key management personnel, in
particular our Executive Directors, namely, Dato’ Seri Fumihiko Konishi, Lee Siew Khee, Jeffrey and
Yap Kee Keong, who are collectively responsible for implementing business growth, corporate
development and overall business strategies. In addition, we also depend to a significant extent on the
persons set out under “Management” of this Prospectus. Although we practise succession planning and
have identified successors for all key management personnel responsible for the day-to-day
management of our Group, we cannot assure you that we will be able to retain our key management
personnel and the loss of such personnel without suitable replacements may have a material adverse
effect on our business, financial condition, results of operations and/or prospects.
Our major customers may seek alternative suppliers
We are the single-source supplier of packaging products for some of our major customers (please refer
to the section “Management’s Discussion and Analysis of Financial Condition and Results of
Operations — Review of Results of Operations” of this Prospectus). Some of such customers may find
alternative suppliers to reduce the concentration risk associated with having a sole supplier for their
manufacturing needs. In the event that any of our major customers seek alternative suppliers to fulfil
their production requirements, our revenue and financial performance will be adversely affected.
Our major customers may no longer require our products
Our major customers are multinational corporations with access to considerable resources and are
capable of substantial technical innovation. There is a possibility that they may develop products which
may no longer require our packaging products. If this were to happen, our products may be rendered
obsolete and our future prospects would be adversely affected.
The Retirement and Resignation Scheme could have an impact on our liquidity and cashflow
We have established a Retirement and Resignation Scheme for the directors of our subsidiaries. Under
the terms of our Retirement and Resignation Scheme, the benefits are accrued to each eligible director
for each year of service and for each company in our Group of which he is a director (except for our
Company). The benefits accrued in each year of service increases with the position of the director and
the amount of the shareholders’ funds of the companies of which he is a director. All benefits accrued
under the Retirement and Resignation Scheme may be paid to the director upon the director’s
resignation or retirement. Alternatively, we have the discretion to pay all or part of the benefits accrued
to each director at the end of every 10 years of service. Please see “Management — Compensation —
Retirement and Resignation Scheme” of this Prospectus and Appendix B of this Prospectus for further
details on our Retirement and Resignation Scheme.
As at 31 December 2005, we made a provision of approximately RM0.8 million for our Retirement and
Resignation Scheme. This amount of provision remained unchanged as at 30 June 2006. Our cash and
bank balances was approximately RM8.8 million and RM8.9 million as at 31 December 2005 and as at
30 June 2006, respectively. If this provision becomes significant in the future and if we are required to
pay all or a significant amount under our Retirement and Resignation Scheme within a short period of
time, we could experience an adverse impact on our liquidity and cashflow.
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RISK FACTORS
Our insurance coverage may not be sufficient for our loss against accidental physical loss or
damage occasioned by fire
Our properties, fixed assets and inventories are insured against accidental physical loss or damage
occasioned by fire. We are also covered by insurance policies for risks such as burglary. However,
significant damage to our operations, whether as a result of fire or other causes, may have a material
adverse impact on our operations and if our insurance coverage is insufficient to cover our loss against
such events, our financial performance may be adversely affected. In addition, we are not insured
against business disruptions due to force majeure events. If such events were to occur, our business
may be materially and adversely affected.
We are dependent on the political, economic, regulatory and social conditions in the countries
in which we operate
We have manufacturing operations in Malaysia, Thailand, the PRC and Vietnam. Accordingly, our
business and future growth is dependent on the political, economic, regulatory and social conditions of
these countries. Any changes in the policies implemented by the governments of any of these countries
which result in currency and interest rate fluctuations, capital restrictions, and changes in duties and
taxes detrimental to our business could materially and adversely affect our operations, financial
performance and future growth.
Risks relating to the PRC
We began operations in the PRC in February 2003. Our operations in the PRC accounted for
approximately 19.3% and 15.3% of our Group’s revenue for FY2005 and HY2006, respectively.
Therefore, our financial performance and future growth are dependent on the social, economic and
political conditions of the PRC. Unfavourable changes in the social, economic and political conditions
of the PRC or in the PRC government policies in the future may have a negative impact on our
operations and business in the PRC which will in turn adversely affect our overall financial performance.
Since 1978, the PRC government has been introducing reforms and is expected to continue to reform
the rules and regulations governing its economic and political systems. Any change in the political and
economic policies of the PRC government may lead to a change in the laws and regulations or the
interpretation of the same, as well as changes in the foreign exchange regulations, taxation and import
and export restrictions, which may in turn adversely affect our co-operation and dealings with business
associates. While the current policy of the PRC government seems to be one of pursuing economic
reform policies to encourage investments and greater economic de-centralisation, there is no
assurance that such policies will continue to prevail in the future.
Our business and operations in the PRC are subject to the laws and regulations promulgated by the
PRC government. The PRC legal system is a codified legal system made up of written laws,
regulations, circulars, administrative directives, and internal guidelines as well as judicial
interpretations. Unlike common law jurisdictions like Singapore, decided cases do not form part of the
legal structure of the PRC and thus have no binding effect. As such, the administration of laws and
regulations of the PRC may be subject to a certain degree of discretion by the authorities. This has
resulted in the outcome of dispute resolutions not having the level of consistency or predictability as in
other countries which have more developed legal systems. Furthermore, in line with its transformation
from a centrally planned economy to a more free and market oriented economy, the PRC government
is still in the process of developing a comprehensive set of laws and regulations. As the legal system
of the PRC is still evolving, laws and regulations or the interpretation of the same may be subject to
change.
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RISK FACTORS
In particular, under the Income Tax Law of the PRC for Enterprise with Foreign Investment & Foreign
Enterprises, our subsidiary in Wuxi is entitled to full exemption from Enterprise Income Tax for the first
two years and a 50% reduction for the next three years commencing from its first profitable year after
offsetting all losses carried forward from previous years. Hence, the revocation or any adverse change
in the tax policies of the PRC and/or the local government may have a material negative effect on our
operations and financial results.
Risks relating to Malaysia
We have six operating Malaysian subsidiaries, namely, Texpack, TEP, Texpack (KL), Texpack (Johor),
Texpolymers and Eye Graphic. As at the Latest Practicable Date, pursuant to the Guidelines on the
Acquisition of Interests, Mergers and Take-overs By Local and Foreign Interests issued by the Foreign
Investment Committee (the “FIC”) of Malaysia (the “FIC Guidelines”), the prior approval of the FIC is
generally required, inter alia, for any proposed acquisition of 15% or more of the voting rights by any
one foreign interest or the proposed acquisition by any associated or non-associated group of foreign
interests in the aggregate of 30% or more of the voting right of a Malaysian company or business. A
foreign interest includes companies or institutions incorporated outside Malaysia. Although the FIC
Guidelines do not have the force of law (as they are not legislation passed by the Malaysian parliament
or regulations under any existing laws) and do not impose any penalty for non-compliance, there are
indirect sanctions that the FIC can impose. For example, the FIC could persuade local authorities (such
as the immigration department or the local town council) not to grant to companies which are not in
compliance with the FIC Guidelines, licences or permits that may be required under Malaysian law
relating to the operations of these companies.
Pursuant to the Industrial Co-ordination Act 1975 of Malaysia, persons involved in any manufacturing
activity in Malaysia must obtain a licence from the Ministry of International Trade and Industry (“MITI”)
to engage in such manufacturing activity if the manufacturing company’s shareholders’ funds is RM2.5
million or above or if it employs 75 or more full-time employees.
The MITI may, in their discretion, having regard to the national economic, social objectives and
promotion of the orderly development of manufacturing activities in Malaysia, impose certain conditions
for the issue of the manufacturing licence and non-compliance with such conditions may result in the
manufacturing licence being revoked.
As at the Latest Practicable Date, any acquisition of interest in a company issued with a manufacturing
licence by the MITI is exempted from the FIC Guidelines. Such acquisition only requires the prior
approval of the MITI or notification to the MITI of any sale of shares in such a company as the case may
be and does not require the approval of the FIC.
Any future changes to existing FIC Guidelines or the introduction of new regulations governing foreign
ownership could affect our investments in our Malaysian subsidiaries as we may be required by the
Malaysian authorities to restructure our equity interest in our Malaysian subsidiaries. This may result in
a loss of management and operational control, which would in turn materially and adversely affect the
operations and performance of our Group.
Our Malaysian subsidiaries have been granted manufacturing licences by the MITI and accordingly,
based on existing FIC Guidelines, the acquisition of interests in our Malaysian subsidiaries will only be
subject to the conditions of the manufacturing licences granted by the MITI, namely, the prior approval
of the MITI or notification to the MITI of any sale of shares in the relevant company as the case may
be. The manufacturing licences granted to our Malaysian subsidiaries, namely, Texpack, TEP, Texpack
(KL) and Texpack (Johor), by the MITI are conditional upon TRB maintaining an effective interest of
51% or more in each of their share capital. Consequently, foreign interests may acquire up to 49% of
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RISK FACTORS
our Company’s issued share capital without the prior approval of the MITI. If TRB does not comply with
MITI’s conditions, there can be no assurance that the MITI will not revoke the manufacturing licences
of our Malaysian subsidiaries. In such an event, we may need to cease our operations in Malaysia,
which could have a material and adverse effect on our operations and financial performance. The
manufacturing licences granted to Texpolymers and Eye Graphic stipulate that the MITI must be
notified in the event of any sale of shares in such companies.
The requirement that TRB maintains an effective equity interest of 51% in four of our Malaysian
subsidiaries as mentioned above will limit our ability to raise funds by issuing equity in the future (apart
from rights issues where TRB undertakes to subscribe for its entire allocation of rights entitlement) as
this may dilute the effective equity interest of TRB. As such, we may not be able to obtain funding
through the placement of our Shares (where TRB’s shareholding in our Company may be diluted below
51%) for the expansion of our business as may be required in the future or we may be required to seek
alternative sources of debt funding which may be more expensive.
We have obtained an indemnity from TRB in respect of any losses that we may sustain arising from the
non-compliance by TRB of the above condition. However, the losses (including the nature, amount and
extent) that we may claim from TRB depends on, inter alia, the circumstances at the time of the breach
of these conditions and at the time of the claim. In the event of a dispute, we may be required to enforce
the indemnity through a court process which may be costly and which may take time. Further, there can
be no assurance that a court (whether in Singapore or elsewhere) will award us in full or at all any of
the amounts that we may claim under the indemnity obtained from TRB.
Pursuant to the Guidelines on Foreign Participation in the Distributive Trade Services in Malaysia (“the
CDT Guidelines”), with effect from 1 December 2004, all proposals for foreign involvement in the
distributive trade in Malaysia must obtain the approval of the Committee on Distributive Trade (“CDT”),
Ministry of Domestic Trade and Consumer Affairs (“MDTCA”). Distributive traders include
manufacturers and suppliers who distribute their products in the domestic market. Pursuant to these
guidelines, such a manufacturing company which distributes its products in the domestic market must
incorporate a separate local legal entity as its marketing arm and this entity will be subjected to the rules
and conditions laid down in the CDT Guidelines. No CDT approval was obtained by our Company in its
acquisition of our Malaysian subsidiaries and as such, our Malaysian subsidiaries have not complied
with the relevant CDT Guidelines. There are on-going discussions between the relevant industries and
the MDTCA to exclude manufacturing companies licensed by the MITI from the CDT Guidelines. Like
the FIC Guidelines, the CDT Guidelines do not have the force of law (as it is not legislation passed by
the Malaysian parliament or regulations under any existing laws) and do not impose any penalty for
non-compliance.
Risks relating to Thailand
Texpack (Thailand) has obtained certain fiscal and non-fiscal incentives from the Board of Investment
of Thailand (“BOI”). The BOI is the governmental agency in Thailand responsible for providing
incentives to stimulate investments in Thailand. These privileges include certain tax exemptions, the
right to bring into Thailand non-Thai nationals as skilled workers or experts, the right to own land in
Thailand and the reduction of import duties on certain machinery not locally produced in Thailand.
Hence, the revocation of any of these privileges or any adverse change in the policies of the BOI and/or
the provincial government may have a material adverse effect on our operations and financial results.
For FY2003, FY2004, FY2005 and HY2006, Texpack (Thailand) accounted for approximately 23.7%,
22.0%, 24.7% and 22.6% of our Group’s total revenue, respectively. There is no assurance that our
incentives from the BOI will not be revoked or amended to our detriment in the future. If so, our Group’s
operations in Thailand and our financial performance may be adversely affected.
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RISK FACTORS
For details on the incentives and conditions set by the BOI relating to our operations in Thailand, please
see “Government Regulations” of this Prospectus.
Risks relating to Vietnam
Although Vietnam has opened up its economy since 1986, the political, regulatory and economic
outlook for businesses and investors in Vietnam is, to an extent, not certain. Vietnam is still in the
process of developing its legal system, so as to meet the needs of investors and to encourage foreign
investment. Any future changes to governmental guidelines, laws or regulations or the introduction of
new regulations governing foreign ownership could also affect our investments in our Vietnamese
subsidiary, which may affect the operations and profitability of our Group. Furthermore, precedents on
the interpretation, implementation and enforcement of Vietnam laws and regulations are limited.
Accordingly, the outcome of dispute resolution may not be as consistent or predictable as in other more
developed jurisdictions and it may be difficult to obtain swift and equitable enforcement of the laws in
Vietnam or to obtain enforcement of judgment by a court of another jurisdiction.
According to the investment licence issued to Texpack (Vietnam) by the Dong Nai Industrial Zone
Authorities, Texpack (Vietnam) is required to pay the following taxes:
(a)
annual corporate income tax at the rate of 15% of earned profit according to the investment
licence No. 165/GP-KCN-DN dated 29 October 2002 issued by the Management Body of
Industrial Zones of Dong Nai province (the standard corporate income tax rate as at the date of
this Prospectus is 28%); and
(b)
other taxes under the regulations existing at the time when the tax becomes due.
The following tax incentives have been granted to Texpack (Vietnam) according to the investment
licence issued to it:
(a)
exemption from corporate income tax for a period of two years from the first profit making year of
the company (tax profit and not accounting profit); and
(b)
exemption from import duties for goods stipulated in Articles 57 and 58 of Decree 24/2000/ND-CP
dated 31 July 2000 (as amended and supplemented by Article 16.6 of Decree 149/2005/ ND-CP
of the Government of Vietnam dated 8 December 2005 and Item 11.41 of the List of Trade and
Sectors where investment incentives apply) in relation to the Law on Foreign Investment in
Vietnam.
According to the investment licence issued to Eye Graphic (Vietnam) by the Dong Nai Industrial Zone
Authorities, Eye Graphic (Vietnam) is required to pay the following taxes:
(a)
annual corporate income tax at the rate of 15% of earned profit according to the investment
licence No. 44/GP-KCN-DN dated 28 April 2000 issued by the Management Body of Industrial
Zones of Dong Nai province (the standard corporate income tax rate as at the date of this
Prospectus is 28%); and
(b)
other taxes under the regulations existing at the time when the tax becomes due.
The following tax incentives have been granted to Eye Graphic (Vietnam) according to the investment
licence issued to it:
(a)
exemption from corporate income tax for a period of two years from the first profit making year of
the company (which was used up by Eye Graphic (Vietnam) in FY2002 and FY2003); and
(b)
exemption from import duties for goods stipulated in Articles 57 and 58 of Decree 24/2000/ND-CP
dated 31 July 2000 (as amended and supplemented by Article 16.6 of Decree 149/2005/ ND-CP
33
RISK FACTORS
of the Government of Vietnam dated 8 December 2005 and Item 11.41 of the List of Trade and
Sectors where investment incentives apply) in relation to the Law on Foreign Investment in
Vietnam.
There is no assurance that these tax rates and incentives from the Dongnai Industrial Zone Authorities
will not be amended or revoked to our detriment in the future. If so, our Group’s operations in Vietnam
and our financial performance may be adversely affected.
Risks relating to foreign exchange controls
In some countries in which we operate, we are subject to foreign exchange controls or restrictions
imposed by the government and relevant authorities. Such foreign exchange controls or restrictions
may affect our operations, for example, our ability to convert these currencies as and when required to
make payments. Furthermore, these foreign exchange controls or restrictions may impede the ability
of our subsidiaries to repatriate capital, dividends and profits.
In Malaysia, according to the Bank Negara Malaysia’s Circular dated 1 April 2005 on General
Payments, a resident is permitted to make payment of profits, dividends, fees, rental and royalty to a
non-resident without registering the same with the Controller of Foreign Exchange (the “Controller”) or
obtaining the prior permission of the Controller. However, a payment declaration form is required by
remitting banks for all payments above the equivalent of RM50,000. Further, payments for investments
abroad exceeding the equivalent of RM50,000 by Malaysian residents are required to be registered
with the Controller.
In the PRC, since the introduction of the unified floating rate system in 1994, movements in the
exchange rate of the RMB against other currencies are, to some extent, subject to market forces.
Nevertheless, the People’s Bank of China continues to publish on each bank business day, the RMB
exchange rates against major foreign currencies. As such, the RMB is still not a freely convertible
currency. In the PRC, the State Administration for Foreign Exchange (“SAFE”) regulates the conversion
of the RMB into foreign currencies. Currently, foreign investment enterprises (“FIEs”) are required to
apply to the SAFE for “Foreign Exchange Registration Certificates for Foreign Investment Enterprises”.
Texpack (Wuxi) is an FIE. With such registration certifications (which need to be renewed annually),
FIEs are allowed to open foreign currency accounts including the “settlement account” and “capital
account”. Currency translation within the scope of the “settlement account” (e.g. remittance of foreign
currencies for payment of dividends, etc.) can be effected without requiring the approval of the SAFE.
However, conversion of currency in the “capital account” (for example, for capital items such as direct
investment, loans and securities) still requires the approval of the SAFE. We cannot provide any
assurance that the PRC regulatory authorities will not impose further restrictions on the convertibility of
the RMB. As certain of our Group’s profits are denominated in RMB, any future restrictions on currency
exchanges may limit our ability to repatriate the profits for the distribution of dividends to our
shareholders or for funding our other business activities outside the PRC. There can be no assurance
that the current foreign exchange rulings will not be changed to our detriment.
In accordance with the Exchange Controls Act of Thailand, foreign funds and profits made from
Thailand are subject to the following:
(a)
the remittance of dividends or other proceeds are not subject to any exchange control
requirements;
(b)
however, for the remittance of foreign currencies in an amount equivalent to US$20,000 or more,
the Bank of Thailand requires that documentary evidence be furnished to the remitting bank to
establish the legitimacy of the transaction; and
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RISK FACTORS
(c)
furthermore, for the purchase of foreign currencies in any amount equivalent to US$20,000 or
more, the Bank of Thailand requires that documentary evidence be furnished to the remitting
banks to establish the legitimacy of the transaction.
In addition, dividends declared by Texpack (Thailand) are generally subject to a withholding tax rate of
10%. However, when our dividends are derived from income earned from BOI incentive schemes,
those dividends are not subject to the normal withholding tax.
In Vietnam, there is currently no restriction on the repatriation of dividends from Texpack (Vietnam) and
Eye Graphic (Vietnam) provided the dividends are remitted in foreign currencies, except that any
payments in foreign currencies overseas will be subject to clearance by banks in Vietnam (who will
normally require supporting documents and evidence proving that Vietnam tax liabilities, if any, on the
payments have been settled). However, we cannot provide any assurance that the Vietnamese
authorities will not impose restrictions on the convertibility of the Dong. Should the Vietnamese
government tighten or otherwise change the foreign exchange rules or exchange rate, our earnings,
cash flow and ability to pay dividends could be adversely affected.
To date, we have not encountered any adverse changes, in particular, with regard to the repatriation of
capital, profits, dividends or interest from our overseas subsidiaries to us with respect to the exchange
control requirements. However, should the governments in the jurisdictions in which we operate or in
which we intend to expand our business tighten or otherwise change their regulations regarding
repatriation of their local currency, this may adversely affect our ability to receive funds vis-à-vis our
investments in these overseas subsidiaries or to receive capital, profits, interest or dividends from
them. In such event, our earnings, cash flow and ability to pay dividends may be adversely affected.
Please refer to “Exchange Controls” of this Prospectus for further details.
We require various licences and permits to operate our business
We hold various licences and permits issued by various governmental authorities or departments in
Malaysia, Thailand, Vietnam and the PRC for the conduct of our operations. These licences and
permits are necessary to enable us to carry on our operations and businesses in the respective
countries. The licences and permits are generally subject to conditions stipulated in the licences and
permits and/or in the relevant laws or regulations under which such licences and permits are issued.
Failure to comply with such conditions could result in the suspension, withdrawal or revocation of the
relevant licence or permit. As such, we have to constantly monitor and ensure that we comply 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 or be forced to relocate such
operations to another jurisdiction. If so, there would be an adverse impact on our Group’s operations
and financial performance.
We are affected by regional and worldwide social, political and economic conditions
Globalisation has resulted in our dependence on global social, political and economic conditions. In
particular, the uncertainties arising from the recent war in Iraq as well as the increased threat of
terrorism may cause our customers to take a cautious approach to business. Such adverse changes
in social, political and economic conditions may result in higher costs of raw materials or in cancellation,
reduction or delay in orders, which will have an adverse effect on our financial performance.
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RISK FACTORS
For instance, the outbreak of the severe acute respiratory syndrome or an outbreak of the A(H5N1)
strain of avian influenza in the regions where our operations are based may have an adverse impact
on our operations and our financial performance. Consumer sentiment and spending could be affected
and may lead to a deterioration in economic conditions. We may also be compelled to suspend our
operations in the affected countries for an indefinite period if any of our employees contract these
diseases or if a substantial portion of our workforce refuses to work for fear of contracting such
diseases.
Our results of operations may also be influenced in part by the political situation in Thailand which has
been unstable from time to time in the past. Since January 2004, there have been numerous terrorist
incidents and other sporadic acts of violence, including attacks on Thailand’s security forces, caused
by separatist groups in southern Thailand. More recently, on or about 19 September 2006, certain
members of Thailand’s military staged a coup to overthrow Thaksin Shinawatra and his government. In
the event of an escalation in the political instability in Thailand, our results of operations in Thailand may
be adversely affected.
Our future performance will depend on our ability to implement our expansion plans
successfully
We intend to expand and improve our existing production facilities. Please see “Business − Future
Plans” in this Prospectus for further details. While we have planned such expansion based on an
expectancy of increased business from our customers and business from new customers, there is no
assurance that we will be able to secure new business from existing and new customers. We expect
to incur substantial depreciation and other expenses in connection with the implementation of these
plans. In addition, our expansion will result in an increase in the fixed costs of our operations. Our ability
to maintain or increase our profitability will be dependent, in part, upon our ability to generate increasing
revenues and to maintain or increase the utilisation rates of our machines and production lines. The
expansion of our production facilities, if not well managed, may result in the inefficient use of the
expanded capacity. This may adversely affect our results of operations. Any failure on our part to
successfully manage our expansion plans could have an adverse impact on our business, financial
condition and results of operations.
We are subject to foreign currency exposure, which can materially and adversely affect our
operating results and financial position
Apart from having operations in Malaysia, Thailand, the PRC and Vietnam, we also export our products
to other countries. We are subject to foreign exchange risks as our receipts are partly denominated in
USD and partly in the local currency of the countries in which our products are sold. Our purchases of
raw materials are denominated in USD, Japanese Yen, Singapore dollar, Renminbi, Malaysian Ringgit,
Thai Baht, and Vietnamese Dong. Our operating expenses are generally incurred in the local currency
of the countries in which our operations are based. As the currency of our receipts and purchases are
not fully matched, we are exposed to foreign currency risk. We may face higher costs of raw materials
should these currencies fluctuate against us. We are also exposed to fluctuations in foreign exchange
arising from the difference in timing between our receipt and payment of funds. Accordingly, any
significant foreign currency fluctuations may have an adverse impact on our financial performance.
In addition, the financial statements of our Group’s subsidiaries are prepared in RM, USD, THB and
Dong. To prepare our Group’s consolidated financial statements, we translated the financial statements
of these subsidiaries to RM, based on the exchange rates prevailing during the year or at the balance
sheet date. Any significant fluctuation in the exchange rates between USD, THB and Dong vis-à-vis RM
would have an impact on our Group’s consolidated financial statements. We are not able to assure you
36
RISK FACTORS
that we will be able to successfully manage our foreign exchange risks. Further, there can be no
assurance that the foreign exchange policies of the countries in which we operate will not be changed
to our detriment.
Our foreign exchange gains amounted to approximately RM0.5 million, RM0.6 million, RM1.1 million
and RM0.1 million in FY2003, FY2004, FY2005 and HY2006, respectively.
RISKS RELATED TO OUR SECURITIES AND OUR TRADING MARKET
TRB, our Controlling Shareholder will retain significant control over our Company after the
Invitation, which will allow it to substantially influence the outcome of matters submitted to
shareholders for approval
Immediately after the completion of the Invitation, our Controlling Shareholder, TRB, is expected to
retain 75.0% of the issued share capital of our Company. As a result, TRB will be able to substantially
influence the outcome of matters submitted to shareholders for approval, for instance, matters relating
to mergers or other business combinations, the acquisition or disposition of assets, our access to
capital markets, the payment of dividends, the election of Directors, and even the reduction of capital.
Further, TRB will also have veto power with respect to any ordinary or special resolution tabled at
shareholders’ meetings. Such concentration of ownership may also delay, deter or prevent a change in
control of our Company, even if such change may be beneficial to our minority shareholders.
Our Shares have never been publicly traded and their prices might be volatile
Prior to the Invitation, there has not been a public market for our Shares. We cannot predict the extent
to which a trading market will develop or how liquid that market might become. The Issue Price is
determined by negotiations between representatives of the Underwriter and us and may not be
indicative of prices that will prevail in the trading market after the completion of the Invitation.
The trading prices of our Shares could be subject to fluctuations in response to quarterly variations in
our results of operations, changes in general economic conditions, changes in accounting principles or
other developments affecting us, our suppliers, our customers, our competitors, our involvement in
litigation, additions or departures in key personnel, any announcements by us of corporate
developments, changes in financial estimates by securities analysts, the operating and stock price
performance of other companies and other events or factors. The global financial markets have
experienced significant price and volume fluctuations and market prices of shares of technology
companies have been and continue to be extremely volatile. Volatility in the price of our Shares may
be caused by factors outside our control and may be unrelated or disproportionate to our operating
results.
An active or liquid market for our Shares is not assured
We cannot predict the extent to which the Invitation will result in the development of an active or liquid
public trading market for our Shares offered pursuant to the Invitation or how liquid any public trading
market will be. Active or liquid trading markets generally result in lower price volatility and more efficient
execution of buy and sell orders for investors. Liquidity in the market for a particular security is often
a function of the volume of the underlying shares that are publicly held by unrelated parties.
37
RISK FACTORS
Future sales of securities by our Company or existing shareholders may adversely affect the
price of our Shares
The market price of our Shares could decline after the Invitation as a result of sale of a large number
of Shares or the perception that such sales could occur. These sales might also make it more difficult
for us to offer Shares in the future at a time and at a price that we deem appropriate. Upon completion
of the Invitation, we will have an aggregate of 119,400,000 Shares issued and outstanding. Except as
described under “Principal Shareholders — Moratorium” of this Prospectus, there are no restrictions on
the ability of our existing shareholders to sell their Shares.
Investors in our Shares will face immediate and substantial dilution in our NAV per Share and
may experience future dilution
Our Issue Price of 40.0 cents is higher than our Company’s NAV per Share of approximately 23.9 cents
(adjusted for the net proceeds from the Invitation) based on our share capital immediately after the
Invitation. As such, there is an immediate and substantial dilution in our NAV per Share for investors
who are allotted and issued Shares pursuant to the Invitation. Please refer to “Dilution” of this
Prospectus for further details.
In addition, 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 shareholders are unable or unwilling to participate in such
fund-raising, such shareholders will suffer dilution in their shareholdings.
38
INVITATION STATISTICS
Issue Price
S$0.40
Net Tangible Assets
The NTA per Share based on the unaudited consolidated balance sheet of our
Group as at 30 June 2006, adjusted for the Restructuring Exercise and the
Subdivision (the “Adjusted NTA”):
(a) before adjusting for the estimated net proceeds from the Invitation and
based on our Company’s pre-Invitation issued share capital of
89,550,000 Shares
(b) after adjusting for the estimated net proceeds from the Invitation and
based on our Company’s post-Invitation issued share capital of
119,400,000 Shares
Premium of Issue Price over the Adjusted NTA per Share
(a) before adjusting for the estimated net proceeds from the Invitation and
based on our Company’s pre-Invitation issued share capital of
89,550,000 Shares
(b) after adjusting for the estimated net proceeds from the Invitation and
based on our Company’s post-Invitation issued share capital of
119,400,000 Shares
Earnings
Historical net earnings per Share based on the consolidated results of our
Group for FY2005 and our Company’s pre-Invitation issued share capital of
89,550,000 Shares
Price Earnings Ratio
Historical price earnings ratio based on the Issue Price and the historical net
earnings per Share(3) based on the consolidated results of our Group for
FY2005 and our Company’s pre-Invitation issued share capital of 89,550,000
Shares
Net Operating Cash Flow(4)
Historical net operating cash flow per Share of our Group for FY2005, based
on our Company’s pre-Invitation issued share capital of 89,550,000 Shares
Price to Cash Flow Ratio
Ratio of Issue Price to historical net operating cash flow of our Group for
FY2005, based on our Company’s pre-Invitation issued share capital of
89,550,000 Shares
Market Capitalisation
Based on the Issue Price of S$0.40 per Share and our Company’s postInvitation issued share capital of 119,400,000 Shares
17.7 cents(1)
21.1 cents(2)
126.0 percent
89.6 percent
5.4(3) cents
7.4 times
16.7(3) cents
2.4 times
S$47.8 million
Notes:
(1)
Converted RM to S$, based on a RM/S$ exchange rate adopted by the Company of 2.306 as at 30 June 2006.
(2)
Converted RM to S$, based on a RM/S$ exchange rate adopted by the Company of 2.320 as at the Latest Practicable Date.
(3)
Converted RM to S$, based on an average RM/S$ exchange rate adopted by the Company of 2.276 for FY2005.
(4)
Net operating cash flow is defined as profit before taxation adjusted for non-cash operating activities such as depreciation
for property, plant and equipment and amortisation of intangible assets, changes in working capital, income taxes and
retirement benefits paid.
39
USE OF PROCEEDS FROM THE INVITATION AND EXPENSES INCURRED
The net proceeds to be raised by our Company from the sale of New Shares are estimated to be
approximately RM22.1 million (equivalent to approximately S$9.5 million based on the exchange rate
on the Latest Practicable Date). The estimated net proceeds of approximately S$9.5 million represent
the amount that we will receive after deducting estimated underwriting commission and other expenses
related to the Invitation.
We intend to use the net proceeds for the purposes set out below:
(a)
approximately RM12.4 million (equivalent to approximately S$5.3 million based on the exchange
rate on the Latest Practicable Date) to be used to expand and upgrade our manufacturing facilities
as described in “Business — Future Plans” of this Prospectus;
(b)
rate on the Latest Practicable Date) to be used to strengthen our research and development
capabilities as described in “Business — Future Plans” of this Prospectus;
(c)
rate on the Latest Practicable Date) to be used to strengthen our design capabilities as described
in “Business — Future Plans” of this Prospectus; and
(d)
the balance of RM3.7 million (equivalent to approximately S$1.6 million based on the exchange
rate on the Latest Practicable Date) to be used for our general working capital requirements.
Pending the deployment of the net proceeds as aforesaid, the funds will be used to repay our
Company’s revolving credit facilities (which are described under “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of this Prospectus) or placed in short-term
deposits with financial institutions, used to invest in short-term money market instruments and/or used
for working capital requirements as our Directors may deem appropriate.
In the opinion of our Directors, no minimum amount must be raised from the Invitation.
The estimated expenses in connection with the Invitation to be borne by our Company is approximately
RM5.6 million (equivalent to approximately S$2.4 million based on the exchange rate on the Latest
Practicable Date). The allocation of each principal intended use of proceeds and each item of expenses
is set out below:
RM’000
As a percentage of
gross proceeds
from the Invitation
(%)
Use of proceeds
Expansion and upgrading of manufacturing facilities
12,350
44.6
Strengthening our research and development capabilities
4,730
17.0
Strengthening our design capabilities
1,292
4.7
General working capital requirements
3,679
13.3
162
0.6
4,124
14.9
Underwriting commission, placement commission and brokerage
694
2.5
Miscellaneous expenses
670
2.4
27,701
100.00
Expenses
Listing fees
Professional fees
TOTAL
40
PLAN OF DISTRIBUTION AND UNDERWRITING
The Issue Price of S$0.40 is determined by us in consultation with the Manager, the Underwriter and
the Placement Agent, based on the market conditions and estimated market demand for our Shares.
The Issue Price is the same for all Invitation Shares and is payable in full on application.
This section should be read in conjunction with, and is qualified in its entirety by references to “Terms
and Conditions and Procedures for Application and Acceptance” in Appendix A of this Prospectus.
Investors may apply to subscribe for any number of New Shares in integral multiples of 1,000 Shares.
In order to ensure a reasonable spread of Shareholders, we have the absolute discretion to prescribe
a limit to the number of New Shares to be allotted to any single applicant and/or to allot New Shares
above or under such prescribed limit as we shall deem fit.
Offer Shares
The Offer Shares are made available to the members of the public in Singapore for subscription at the
Issue Price. Pursuant to the terms and conditions contained in the management and underwriting
agreement signed between our Company, the Manager and the Underwriter dated 25 October 2006
(the “Management and Underwriting Agreement”), our Company has appointed DBS Bank to manage
the Invitation and DBS Bank has agreed to underwrite our Offer Shares. The Management and
Underwriting Agreement may be terminated by the Underwriter at any time prior to the dealing of the
Offer Shares upon the occurrence of certain events, including among other things, certain force
majeure events. The Management and Underwriting Agreement will be conditional upon the occurrence
of certain events, including the fulfilment by our Company, or waiver by the SGX-ST, of all conditions
contained in the letter of eligibility from the SGX-ST for the listing and quotation of our Shares on the
Main Board of the SGX-ST.
In the event of under-subscription for the Offer Shares and that there are no excess applications for the
Placement Shares, the Underwriter will be committed to subscribe and/or procure subscriptions for all
the unsubscribed Offer Shares subject to the terms and conditions of the Management and
Underwriting Agreement. DBS Bank may, at its absolute discretion, appoint one or more subunderwriters for the Offer Shares.
In the event of an under-subscription for the Offer Shares as at the close of the Application List, the
number of Offer Shares not subscribed for shall be made available to satisfy excess applications for the
Placement Shares (including the Internet Placement Shares) to the extent there is an over-subscription
for the Placement Shares as at the close of the Application List.
In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or
the Placement Shares (including the Internet Placement Shares) are fully subscribed or oversubscribed as at the close of the Application List, the successful applications for the Offer Shares will
be determined by ballot or otherwise as determined by our Directors, in consultation with the Manager,
and approved by the SGX-ST.
Placement Shares
Applications for the Placement Shares may only be made by way of Placement Shares application form
or through the website of DBS Vickers Online.
41
Pursuant to the terms and conditions in the placement agreement signed between our Company and
the Placement Agent dated 25 October 2006 (“Placement Agreement”), the Placement Agent has
agreed to subscribe for and/or procure subscriptions for the Placement Shares at the Issue Price. The
Placement Agent may, at its absolute discretion, appoint one or more sub-placement agents for the
Placement Shares. The Placement Agreement may be terminated by the Placement Agent at any time
prior to the dealing of the Placement Shares upon the occurrence of certain events, including, among
other things, certain force majeure events. The Placement Agreement will be conditional upon the
Management and Underwriting Agreement not having been determined or rescinded pursuant to the
provisions of the Management and Underwriting Agreement and the occurrence of certain events,
including the fulfilment by our Company, or waiver by the SGX-ST, of all conditions contained in the
letter of eligibility from the SGX-ST for the listing and quotation of our Shares on the Main Board of the
SGX-ST.
In the event of an under-subscription for the Placement Shares as at the close of the Application List,
the number of Placement Shares not subscribed for shall be made available to satisfy excess
applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as
at the close of the Application List.
In the event of an under-subscription for the Internet Placement Shares to be applied for through the
Internet website of DBS Vickers Online as at the close of the Application List, that number of Internet
Placement Shares not subscribed for shall be made available to satisfy applications for the Placement
Shares by way of Placement Shares application forms to the extent that there is an over-subscription
for such Placement Shares (not including the Internet Placement Shares) as at the close of the
Application List or to satisfy excess applications for the Offer Shares to the extent there is an
over-subscription for the Offer Shares at the close of the Application List.
Subscribers of Placement Shares (including the Internet Placement Shares) may be required to pay
brokerage (and if so required, such brokerage will be up to 1.0% of the Issue Price).
Underwriting and Placement Commissions and Brokerage
Our Company has agreed to pay DBS Bank an underwriting commission of 2.25% on the Issue Price
for each Offer Share, as well as a management fee pursuant to the Management and Underwriting
Agreement. Our Company has also agreed to pay DBS Bank a placement commission of 2.5% on the
Issue Price for each Placement Share for agreeing to subscribe for and/or procure subscribers for the
Placement Shares pursuant to the Placement Agreement. In addition, our Company will pay brokerage
at the rate of 0.25% of the Issue Price for each Offer Share in respect of successful applications for the
Offer Shares pursuant to the Invitation (whether made by way of Application Forms or through
Electronic Applications). In respect of the Offer Shares, the brokerage will be paid to members of the
SGX-ST, merchant banks and members of the Association of Banks in Singapore in respect of
successful applications made on the Application Forms bearing their respective stamps, or to the
relevant Participating Bank and/or the relevant IB websites in respect of successful applications made
through Electronic Applications at their respective ATMs (or IB websites).
Subscription for Invitation Shares
None of our Directors or substantial shareholders intend to subscribe for the Invitation Shares.
As at the date of lodgement of this Prospectus, we are not aware of any person who intends to
subscribe for more than 5% of the Invitation Shares.
42
Further, no Shares shall be allocated or allotted on the basis of this Prospectus later than six months
after the date of registration of this Prospectus by the Authority.
Material Relationships
Save for DBS Bank’s role as the Manager, the Underwriter, the Placement Agent and the Receiving
Bank in connection with the Invitation, in the reasonable opinion of our Directors, we do not have any
material relationship with DBS Bank. However, in future, DBS Bank may engage in commercial banking
and/or investment banking transactions with our Group and may in future receive customary fees.
43
DIVIDEND POLICY
Our Company has declared and paid dividends during the past two financial years as shown below.
Dividend Declared and
Paid by the Company
Dividend Declared and
Paid by the Company
per Share
FY2004
S$1,575,000
S$0.18(2)
FY2005
S$1,800,000(1)
S$0.20(1)(2)
Notes:
(1)
S$1,125,000 of the dividend declared in FY2005 was paid in January 2006.
(2)
Based on the pre-invitation share capital (before the Subdivision) of 8,955,000 Shares.
On 18 August 2006, our Company declared and paid an interim dividend of S$1,343,250 out of the
profits of the Company for FY2006.
Save as disclosed above, our Company has not distributed any dividends on its Shares in FY2003,
FY2004, FY2005 and for the period beginning 1 January 2006 and up to the Latest Practicable Date.
We did not have any dividend policy previously. For FY2006, our Directors expect to recommend and
distribute approximately 50% of our net profit as dividends to our shareholders, subject to our earnings,
financial position, results of operations, capital needs, plans for expansion and other factors which our
Directors may deem appropriate. In considering dividend payments for the financial years thereafter,
our Directors will take into account our current desire to maintain the dividend levels subject to our
objective of maximising shareholder value over the long term and the aforementioned factors.
We may, by ordinary resolution, declare dividends at a general meeting, but we may not pay dividends
in excess of the amount recommended by our Board of Directors. Our Board of Directors may, without
the approval of our shareholders, also declare interim dividends. We must pay all cash dividends out
of our distributable profits.
Information relating to taxes payable on dividends are set out under “Taxation” of this Prospectus.
You should note that all the foregoing statements are merely statements of our present intention and
do not constitute a legally binding obligation on the part of our Company in respect of the payment of
any dividends (including those that may be proposed for FY2006) which may be subject to modification
(including reduction or non-declaration thereof) in our Directors’ sole and absolute discretion.
You should not make any inference from the foregoing statements as to our actual future profitability
or our ability to pay any future dividends.
44
EXCHANGE RATES
Our audited financial statements are expressed in RM. The exchange rates between Malaysian Ringgit
and Singapore dollars as outlined in the table below have been presented solely for information only.
The following table sets out the high and low exchange rates between the Malaysian Ringgit and the
Singapore dollar for each of the previous six months prior to the Latest Practicable Date. The table
illustrates how many Malaysian Ringgit may be bought with one Singapore dollar.
High
Low
March 2006
2.297
2.276
April 2006
2.299
2.274
May 2006
2.310
2.264
June 2006
2.322
2.283
July 2006
2.329
2.300
August 2006
2.340
2.324
Source: Bloomberg L.P.
The following table sets forth, for the financial years indicated, the average and closing exchange rates
between the Malaysian Ringgit and the Singapore dollar. The average exchange rates are calculated
using the average of the closing exchange rates on each Market Day during each financial year. Where
applicable, the exchange rates in this table are used for the translation of our Group’s financial
statements in respect of the same financial year disclosed elsewhere in this Prospectus.
RM/S$
Average
Closing
FY2003
2.181
2.234
FY2004
2.249
2.329
FY2005
2.276
2.273
Bloomberg L.P. has not consented to the inclusion of the exchange rates quoted under this section for
the purposes of Section 249 of the Securities and Futures Act and is thereby not liable for these
exchange rates under Sections 253 and 254 of the Securities and Futures Act. The Company has
included the above exchange rates in the proper form and context in the Prospectus and has not
verified the accuracy of these exchange rates.
The above exchange rates have been presented solely for information only 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 and vice versa.
As at the Latest Practicable Date, the exchange rate for RM/S$ is 2.320(1).
For certain parts of this Prospectus, we have converted Malaysian Ringgit into Singapore dollars for the
convenience of the potential investors of our Company. Unless otherwise stated, the exchange rate
used for the conversion for Malaysian Ringgit/Singapore dollar is 2.320(1), which is the exchange rate
as at the Latest Practicable Date.
Note:
(1)
45
SHARE CAPITAL
Texpack Holdings was incorporated in Singapore on 27 August 2003 under the Companies Act as a
private limited company under the name of Texchem-Pack Holdings (S) Pte Ltd. Texpack Holdings
subsequently changed its name to Texchem-Pack Holdings (S) Ltd. in connection with its conversion
to a public company limited by shares on 10 September 2004.
As at 1 January 2005, the beginning of our most recently completed financial year, our issued and
paid-up share capital was S$7,500,000 comprising 7,500,000 ordinary shares. On 29 December 2005,
1,455,000 ordinary shares of $1.00 each were allotted and issued to TRB pursuant to the Restructuring
Exercise further described under “Restructuring Exercise” of this Prospectus. As at 31 December 2005,
the end of our most recently completed financial year, our issued and paid-up share capital was
S$8,955,000 comprising 8,955,000 ordinary shares of $1.00 each. On 26 September 2006, we
undertook a restructuring of our share capital by way of the Subdivision (as defined and described
below). As at the date of this Prospectus, our issued and paid-up capital was S$8,955,000 comprising
89,550,000 Shares, and we have only one class of shares in the capital of our Company, being the
Shares. There are no founder, management, deferred or unissued shares reserved for issue for any
purpose. The rights and privileges of our Shares are stated in our Articles of Association.
Pursuant to resolutions passed on 26 September 2006, our Shareholders approved, inter alia, the
following:
(a)
the subdivision of every one ordinary share in the issued and paid-up share capital of our
Company into 10 ordinary shares (the “Subdivision”);
(b)
the issue of the New Shares pursuant to the Invitation which when fully paid, allotted and issued,
will rank pari passu in all respect with the existing issued Shares;
(c)
the adoption of a new set of Articles of Association;
(d)
that, pursuant to Article 133 and Section 161 of the Companies Act, our Directors be authorised
to: (i) allot and issue shares in our Company; and (ii) issue convertible securities and any shares
in our Company pursuant to the conversion of such convertible securities, (whether by way of
rights, bonus or otherwise) at any time and from time to time upon such terms and conditions
whether for cash or otherwise with such rights and restrictions and for such purposes and to such
persons as our Directors shall in their absolute discretion deem fit, provided that the aggregate
number of such shares to be issued pursuant to such authority shall not exceed 50 per cent of the
post-Invitation issued share capital of our Company and that the aggregate number of shares to
be issued other than on a pro-rata basis to the then existing shareholders of our Company shall
not exceed 20 per cent of the post-Invitation issued share capital of our Company, and, unless
revoked or varied by our Company in general meeting, such authority shall take effect from the
date of listing of our Shares on the SGX-ST and shall continue to be in force until the conclusion
of the next annual general meeting of our Company or the date by which the next annual general
meeting is required by law to be held, whichever is earlier.
For the purposes of this resolution, and pursuant to Rules 806(3) and 806(4) of the SGX-ST
Listing Manual, “post-Invitation issued share capital” shall mean the enlarged issued and paid-up
share capital of our Company after the completion of the Invitation, after adjusting for: (i) new
shares arising from the conversion or exercise of any convertible securities; (ii) new shares arising
from the exercise of share options or the vesting of share awards outstanding or subsisting at the
time such authority is given, provided the options or awards were granted in compliance with the
SGX-ST Listing Manual; and (iii) any subsequent consolidation or sub-division of shares;
(e)
the adoption of the Shareholders’ Mandate set out in further detail under “Interested Person
Transactions and Conflicts of Interests — Shareholders’ Mandate” of this Prospectus; and
(f)
the approval of the Retirement and Resignation Scheme for adoption by our subsidiaries.
46
SHARE CAPITAL
Details of the changes in our issued and paid-up share capital since our incorporation and the issued
and paid-up share capital immediately after the Invitation are as follows:
Number of
Shares
At incorporation
Paid-up Capital
(S$)
2
2
8,954,998
8,954,998
Subdivision of one ordinary share into 10 ordinary shares
89,550,000
8,955,000
Pre-Invitation issued share capital
89,550,000
8,955,000
New ordinary shares to be issued pursuant to the Invitation
29,850,000
11,940,000
119,400,000
20,895,000
New ordinary shares issued pursuant to the Restructuring Exercise
Post-Invitation issued share capital
The shareholders’ funds of our Company as at incorporation, after adjustments to reflect the
Restructuring Exercise and the Subdivision, and immediately after the Invitation are set out below.
These statements should be read in conjunction with the Audited Consolidated Financial Statements
and the Unaudited Consolidated Interim Financial Statements of Our Company set out in Appendix C
and Appendix D of this Prospectus, respectively.
(S$)
Total Equity
At Incorporation
Balance as at 30
June 2006 and after
the Subdivision
Immediately After the
Invitation
2
8,955,000(1)
Reserves
–
(2)
9,344,319(2)
Minority interest
–
833,912(2)
833,912(2)
Total equity
2
Issued and paid-up share capital
9,344,319
19,133,231
18,459,655
28,637,886
Notes:
(1)
Based on the historical exchange rates of Malaysian Ringgit/Singapore dollar as at the respective dates of allotment and
issue of the shares.
(2)
Based on a RM/S$ exchange rate adopted by the Company of 2.306 as at 30 June 2006.
The changes in the issued and paid-up share capital of our Company and our subsidiaries within the
three years preceding the date of this Prospectus are set out as follows:
Our Company
Date
Event
Number
of Shares
Issued
27 August 2003
Incorporation
2
S$1.00
S$1.00
S$2.00
6 September 2004
Restructuring Exercise
7,499,998
S$1.00
S$1.00
S$7,500,000
29 December 2005
Restructuring Exercise
1,455,000
S$1.00
S$1.00
S$8,955,000
26 September 2006
Subdivision
89,550,000
–
–
S$8,955,000
47
Par Value
Issue Price
Per Share
Resultant issued
share capital
SHARE CAPITAL
Texpolymers
Date
Event
Number
of Shares
Issued
10 January 2005
Incorporation
2
RM1.00
RM1.00
RM2.00
18 August 2005
Allotment and issue of
6,999,998 shares
6,999,998
RM1.00
RM1.00
RM7,000,000
Number
of Shares
Issued
Par Value
Issue Price
Per Share
Resultant issued
share capital
7,000,000
RM1.00
RM1.00
RM25,000,000
Par Value
Issue Price
Per Share
Resultant issued
share capital
Texpack
Date
Event
30 August 2004
Capitalisation of
shareholders loan
from TRB (as part of
the Restructuring
Exercise)
Texpack (Vietnam)
Date
Event
Additional Legal Capital
Resultant Legal Capital
12 September 2003
Increase in legal capital
USD200,000
USD650,000(1)
24 November 2005
USD70,000
USD720,000(2)
Eye Graphic (Vietnam)
Date
Event
Additional Legal Capital
Resultant Legal Capital
30 August 2004
USD150,000
USD700,000(3)
Notes:
(1)
Legal capital consisting of USD410,146 in cash and USD239,854 in machinery and equipment.
(2)
Legal capital consisting of USD410,146 in cash and USD309,854 in machinery and equipment.
(3)
Legal capital consisting of USD485,000 in cash and USD215,000 in, inter alia, machinery and raw materials.
No person has been or has the right to be given an option to subscribe for or purchase any securities
of our Company or of any of our subsidiaries.
Save as disclosed above, no shares in, or debentures of, our Company or any of our subsidiaries had
been issued, or were proposed to be issued, as fully or partly paid for in cash or for a consideration
other than cash, within the three years preceding the date of this Prospectus.
48
CAPITALISATION AND INDEBTEDNESS
The following table shows our cash and cash equivalents and capitalisation as at 31 July 2006:
(i)
as adjusted to give effect to the Subdivision; and
(ii)
as adjusted to give effect to the issue of 29,850,000 New Shares pursuant to the Invitation and
the application of the net proceeds.
You should read this table in conjunction with the Audited Consolidated Financial Statements and the
Unaudited Consolidated Interim Financial Statements of our Company and their respective related
notes set out in Appendix C and Appendix D of this Prospectus and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” of this Prospectus.
As at 31 July 2006 and
adjusted for the Subdivision
As adjusted for the
Invitation
10,479
32,530
59,095
59,095
9,828
9,828
Issued and paid-up capital
20,674
42,725
Reserves
19,396
19,396
Total attributable to equity holders of the parent
40,070
62,121
108,993
131,044
RM’000
Cash and bank balances
Short-term debt:(1)
(2)
Unsecured
Long-term debt: (1) (3)
Unsecured
Total capitalisation and indebtedness
Notes:
(1)
All debts are unsecured and guaranteed.
(2)
Inclusive of hire purchase amounting to RM0.5 million.
(3)
Inclusive of hire purchase amounting to RM1.0 million.
As at the Latest Practicable Date, our total credit lines amounted to RM147.6 million, which comprise
finance leases, term loans, revolving credit facilities, bankers’ acceptances, trust receipts, guarantees,
standby letters of credit and overdraft facilities, of which our total unutilised credit lines amounted to
approximately RM78.9 million.
As at the Latest Practicable Date, our short-term debts of approximately RM57.9 million comprise bank
overdraft, revolving credit, trust receipts, bankers’ acceptances and finance leases. Our long-term
debts amount to approximately RM9.4 million. Our long and short-term bank borrowings are unsecured
and guaranteed by TRB.
49
CAPITALISATION AND INDEBTEDNESS
Save as disclosed above and under “Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Liquidity and Capital Resources” of this Prospectus, there were no
material changes from 1 August 2006 to the Latest Practicable Date in the level of our borrowings,
indebtedness or liabilities, and our total liquidity and capital resources, save for scheduled repayments
of our bank and financing facilities and changes in our retained earnings arising from day-to-day
operations in the ordinary course of business.
To the best of our Directors’ knowledge, we are not in breach of any of the terms and conditions or
covenants associated with any credit arrangement or bank loan which could materially affect our
financial position and results or business operations, or the investments of our Shareholders.
As at the Latest Practicable Date, we did not have any contingent liabilities.
50
DILUTION
Dilution is defined herein as the amount by which the Issue Price paid by subscribers of the Invitation
Shares pursuant to this Invitation exceeds our NAV per Share immediately after the Invitation.
The NAV of our Company as at 30 June 2006 (adjusted for the Restructuring Exercise and the
Subdivision) was S$19.1 million(1) or 21.4 cents(1) per Share. NAV per Share is determined by dividing
our NAV (total assets less total liabilities) as at 30 June 2006 by the number of shares issued and
outstanding immediately before the Invitation.
Pursuant to the Invitation in respect of 29,850,000 New Shares at the Issue Price, our NAV per Share,
after adjusting for the estimated net proceeds from the Invitation and based on the post-Invitation
issued share capital of 119,400,000 Shares, would have been 23.9 cents. This represents an
immediate increase in NAV per Share of 2.5 cents to our existing Shareholders and an immediate
dilution in NAV per Share of 16.1 cents or approximately 40.3 per cent to new investors.
The following table illustrates this dilution per Share:
Cents
Issue Price
40.0
NAV per Share as at 30 June 2006 adjusted for the Restructuring Exercise and the
Subdivision based on the pre-Invitation issued share capital of 89,550,000 Shares(1)
21.4
Increase in NAV per Share attributable to existing shareholders
2.5
Adjusted NAV per Share after the Invitation
23.9
Dilution in NAV per Share to new public investors
16.1
The following table summarises the total number of Shares acquired by our Directors and substantial
shareholders during the period of three years prior to the date of lodgement of this Prospectus, the total
consideration paid by them and the average effective cash cost per Share to our Directors and
substantial shareholders, and to our new public shareholders pursuant to the Invitation
%
Total
consideration
(S$)
%
Average
effective
cash cost per
share (cents)
89,550,000
75.0
8,955,000
42.9
10.0
29,850,000
25.0
11,940,000
57.1
40.0
119,400,000
100.0
20,895,000
100.0
Number of
Shares
acquired
Texchem Resources Bhd(2)
New public shareholders
Total
Notes:
(1)
Based on a RM/S$ exchange rate adopted by the Company of 2.306 as at 30 June 2006.
(2)
Dato’ Seri Fumihiko Konishi and Texchem Holdings Sdn. Bhd. are deemed to be interested in the shareholding of TRB as
further described under “Principal Shareholders — Ownership Structure” of this Prospectus.
51
RESTRUCTURING EXERCISE
Prior to the Invitation, a restructuring exercise (the “Restructuring Exercise”) was carried out to
rationalise and streamline our corporate structure, resulting in our Company becoming the holding
company of our Group.
TRB, an investment holding company incorporated in Malaysia on 8 November 1973, was our Group’s
ultimate holding company. At that time, we were the packaging division of the TRB Group and our
corporate structure consists of Texpack as the intermediate holding company of the other subsidiaries,
namely, Texpack (Thailand), Texpack (Johor), TEP, Texpack (KL) (which wholly-owns Texpack
(Vietnam)), Texpack (Wuxi) and Texchem-Pack (Penang) Sdn. Bhd. (“Texpack (Penang)”) (which has
been dissolved with effect from 1 July 2006).
Our Company was incorporated on 27 August 2003 as the holding company for our Group.
The restructuring was carried out in three steps, the first of which was the disposal of Texpack (Penang)
to TRB (the “Disposal”). On 8 September 2003, TRB and Texpack entered into a conditional share sale
agreement (subsequently supplemented by a side letter between the parties dated 8 June 2004)
pursuant to which TRB acquired all the issued and paid-up ordinary shares in Texpack (Penang), an
inactive company and Texpack’s wholly-owned subsidiary, for a cash consideration of RM15,035. The
consideration was arrived at on a willing-buyer-willing-seller basis and based on the unaudited NTA of
Texpack (Penang) as at 30 June 2003. At the relevant time of the Disposal, Texpack and its subsidiaries
were still wholly-owned by TRB. The Disposal was completed on 6 September 2004.
On 8 September 2003, our Company also entered into a conditional reorganisation agreement with
TRB (subsequently supplemented by a supplemental agreement entered into between the same
parties dated 20 October 2003 and further supplemented by a side letter between the parties dated 8
June 2004) pursuant to which our Company acquired the entire issued and paid-up share capital of
Texpack, comprising 25,000,000 ordinary shares of RM1.00 each from TRB (the “Reorganisation”) by
way of a share swap. This involved the allotment and issue of 7,499,998 new ordinary shares of S$1.00
each in our Company to TRB in return for the transfer of 18,000,000 ordinary shares of RM1.00 each
in Texpack by TRB and TRB directing Texpack to allot and issue 7,000,000 new ordinary shares of
RM1.00 each to our Company. The Reorganisation was completed on 6 September 2004.
The third step of the Restructuring Exercise involved the acquisition of Eye Graphic from TRB. On 22
December 2005, TRB and our Company entered into a conditional share sale agreement pursuant to
which our Company acquired 1,020,000 ordinary shares representing 51% of the issued and paid-up
share capital of Eye Graphic from TRB, for a cash consideration of RM3,274,000 which was TRB’s cost
of investment as recorded in its books. Such amount was initially recorded as an amount due and
payable and then subsequently satisfied by the allotment and issue of 1,455,000 new ordinary shares
of S$1.00 each in our Company. The said acquisition was completed on 29 December 2005 and
resulted in Eye Graphic (Vietnam), a wholly-owned subsidiary of Eye Graphic, becoming a subsidiary
of our Company.
Following the completion of the Restructuring Exercise, the structure of our Group is as set out under
“Group Structure” of this Prospectus.
52
GROUP STRUCTURE
As at the date of this Prospectus, our Group structure is as set out below:
51%
100%
100%
TEXCHEM POLYMERS
SDN. BHD.
EYE GRAPHIC
SDN. BHD.
TEXCHEM-PACK (M)
BHD.
100%
EYE GRAPHIC
(VIETNAM) CO., LTD.
100%
100%
TEXCHEM-PACK
(THAILAND) CO.,
(1)
LTD.
TEXCHEM-PACK
(JOHOR) SDN.
BHD.
100%
TEXCHEM-PACK
(KL) SDN. BHD.
100%
TEXCHEM
ENGINEERING
PLASTICS
SDN. BHD.
100%
TEXCHEM-PACK
(WUXI) CO., LTD.
100%
TEXCHEM-PACK
(VIETNAM)
CO., LTD.
Our Company currently has ten subsidiaries, the details of which are set out below.
Name
Date and
place of
incorporation
Texchem-Pack
(M) Bhd.
18 January
1979, Malaysia
Texchem
Engineering
Plastics Sdn. Bhd.
31 December
1979, Malaysia
Principal place
of business
Issued and
paid-up capital
Effective
interest
Manufacture and
sale of
thermoformed
packaging products
and investment
holding
No. 1465 Mukim 11,
Lorong Perusahaan
Maju 6
Fasa 4, Kawasan
Perindustrian Perai
13600 Perai, Pulau
Pinang, Malaysia
RM25,000,000
100%
Manufacture and
sale of shipping
rails, profiles and
precision injection
moulded trays/parts
and embossed
carrier tapes
No. Plot 1241, Bayan
Lepas Free Trade Zone
(Phase III) 11900 Bayan
Lepas, Pulau Pinang,
Malaysia
RM14,500,000
100%
Principal business
53
GROUP STRUCTURE
Name
Date and
place of
incorporation
Texchem-Pack
(KL) Sdn. Bhd.
6 April 1989,
Malaysia
Texchem-Pack
(Johor) Sdn. Bhd.
Principal place
of business
Issued and
paid-up capital
Effective
interest
Manufacture and
sale of expanded
polystyrene
products, heavyduty triple wall
corrugated carton
products,
thermoformed
packaging
products, shipping
rails and investment
holding
1 Persiaran
Perusahaan, Section 23,
40000 Shah Alam,
Selangor Darul Ehsan,
Malaysia
RM10,000,000
100%
2 August 1993,
Malaysia
Manufacture and
sale of
thermoformed
packaging products
No. 3, Jalan Mutiara 7
Taman Perindustrian
Plentong 81750 Masai
Johor Darul Takzim,
Malaysia
RM5,000,000
100%
Texchem
Polymers Sdn.
Bhd.
10 January
2005, Malaysia
Manufacture and
sale of extruded
plastic sheets and
polymer
compounds and
providing
consultation
services
No. 1465, Mukim 11,
Lorong Perusahaan
Maju 6 Prai Industrial
Estate, Phase 4, 13600
Seberang Perai
RM7,000,000
100%
Eye Graphic Sdn.
Bhd.
22 October
1990, Malaysia
Trading, design and
manufacture of
flexo photopolymer
printing plates
5 Lorong Perusahaan
Maju 11, Taman
Perusahaan Pelangi,
13600 Prai, Penang
RM2,000,000
51%(1)
Texchem-Pack
(Thailand) Co.,
Ltd.
6 October
1997, Thailand
Manufacture and
sale of
thermoformed
packaging products
and precision
injection moulded
trays/parts and
mould and tooling
250/1 Moo 2, Bangpa-In
Industrial Estate, KlongJig, District Bangpa-In,
Ayutthaya, 13160
Thailand
THB60,000,000
100%(2)
Texchem-Pack
(Wuxi) Co., Ltd.(3)
29 May 2002,
PRC
Manufacture and
sale of
thermoformed
packaging products
and precision
injection moulded
trays/parts
No. 28–71, ChangJiang
Nan-Lu WangZhuang
Industrial Park 2
Wuxi National High-Tech
Industrial Development
Zone, Wuxi, Jiangsu, the
PRC
USD3,100,000
(registered
capital)
100%
Principal business
54
GROUP STRUCTURE
Name
Date and
place of
incorporation
Principal business
Principal place
of business
Issued and
paid-up capital
Effective
interest
Texchem-Pack
(Vietnam) Co.,
Ltd.(4)
29 October
2002, Vietnam
Manufacture and
sale of expanded
polystyrene
products and
heavy-duty triple
wall corrugated
carton products and
thermoformed
packaging parts
and provision of
packaging product
design services
No. 26, Road 3A, Bien
Hoa Industrial Zone 2,
Dong Nai Province,
Vietnam
USD720,000
(legal capital)(5)
100%
Eye Graphic
(Vietnam) Co.,
Ltd.(6)
28 April 2000
Design and
manufacture and
sale of flexographic
printing plates
28, Road 3A, Bien Hoa
Industrial Zone 2, Dong
Nai Province, Vietnam
USD700,000
(legal capital)(7)
51%
Notes:
(1)
49% of the share capital of Eye Graphic is held by Eye Corporate Planning Co., Ltd., an independent third party unrelated
to any of our Directors or substantial shareholders.
(2)
Each of the six shares of THB100 each are held on trust for Texpack by Yap Kee Keong and Dato’ Seri Fumihiko Konishi
(both of whom are our Directors), Teo See Keong, Songpol Ratanasuwan and Toh Kulchonchan (all three of whom are our
Executive Officers) and Lim Eng Chai (an employee of the TRB Group).
(3)
The term of operation of Texpack (Wuxi) is 30 years, commencing from 29 May 2002. Prior to the expiration of the term,
Texpack (Wuxi) may (subject to the unanimous approval of its shareholders) apply to its original examination and approval
authority to extend the duration of its term of establishment. Upon the expiration of its term of establishment, Texpack (Wuxi)
will be liquidated in accordance with the laws of the PRC and its assets will, after liquidation, be distributed to its
shareholders in accordance with their respective equity stakes in Texpack (Wuxi).
(4)
The term of operation of Texpack (Vietnam) is 45 years from 29 October 2002. There are currently no provisions in the Law
on Investment (which replaces the Law on Foreign Investment) in Vietnam that stipulate conditions for the extension of the
term of operation of a foreign invested enterprise and as such, Texpack (Vietnam) must technically terminate its business
activities upon the expiration of its term of operation.
(5)
For Texchem-Pack (Vietnam) Co., Ltd, the total amount of legal capital contributed is USD720,000 (consisting of
USD410,146 in cash and USD309,854 in machinery and equipment).
(6)
The term of operation of Eye Graphic (Vietnam) Co., Ltd is 45 years from 28 April 2000. There are currently no provisions
in the Law on Investment (which replaces the Law on Foreign Investment) in Vietnam that stipulate conditions for the
extension of the term of operation of a foreign invested enterprise and as such, Eye Graphic (Vietnam) Co., Ltd must
technically terminate its business activities upon the expiration of its term of operation.
(7)
For Eye Graphic (Vietnam) Co., Ltd, the total amount of legal capital contributed is USD700,000 (consisting of USD485,000
in cash and USD215,000 in machinery and raw materials).
Other than the companies in our Group described above, all the other related companies of our
Company are set out under “TRB and its Subsidiaries” in Appendix E of this Prospectus. We do not
have any associated companies.
55
SELECTED CONSOLIDATED FINANCIAL INFORMATION
You should read the following in conjunction with our Audited Consolidated Financial Statements and
the Unaudited Consolidated Interim Financial Statements and the related notes set out in Appendix C
and Appendix D of this Prospectus respectively and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of this Prospectus.
OPERATING RESULTS OF OUR GROUP
(RM’000)
<
FY2003
Audited
FY2004
FY2005
Revenue
131,546
136,914
201,726
99,142
113,297
Cost of sales
(92,490)
(102,388)
(151,640)
(74,287)
(81,435)
Gross profit
39,056
34,526
50,086
24,855
31,862
4,183
3,924
7,535
2,956
3,704
(7,017)
(6,969)
(14,472)
(5,400)
(8,607)
(24,516)
(22,138)
(25,549)
(13,435)
(14,829)
(769)
(936)
(614)
(3,512)
(4,269)
(4,675)
(2,546)
(2,580)
7,425
4,138
12,311
6,430
9,550
Income tax expense
(1,885)
(1,328)
Profit for the year
5,540
2,810
11,519
6,028
8,619
5,002
2,341
11,077
5,701
8,336
538
469
442
327
283
5,540
2,810
11,519
6,028
8,619
5.59
2.61
12.37
6.37
9.31
Other operating income
Distribution expenses
Administrative expenses
Other operating expenses
Finance costs
>
(792)
<
Unaudited
>
HY2005
HY2006
–
(402)
–
(931)
Attributable to:
Equity holders of the parent
Minority interests
Profit for the year
Earnings per Share (sen)(1)
Note:
(1)
For comparative purposes, EPS for the periods under review is computed based on net profit attributable to ordinary
shareholders of the parent of the relevant periods divided by the pre-Invitation issued share capital of 89,550,000 Shares.
56
SELECTED CONSOLIDATED FINANCIAL INFORMATION
FINANCIAL POSITION OF OUR GROUP
Audited
As at 31 December 2005
Unaudited
As at 30 June 2006
77,736
77,568
5,741
5,719
119
119
1,035
821
84,631
84,227
Inventories
20,942
25,462
Trade and other receivables
48,719
53,236
8,760
8,906
78,421
87,604
163,052
171,831
Share capital
20,674
20,674
Reserves
12,909
21,548
33,583
42,222
1,644
1,923
35,227
44,145
Other payables
16,046
16,087
Interest-bearing liabilities
10,945
9,435
3,561
3,939
30,552
29,461
Trade and other payables
45,853
38,967
49,483
58,014
1,937
1,244
97,273
98,225
Total liabilities
127,825
127,686
Total equity and liabilities
163,052
171,831
(RM’000)
Non-current assets
Intangible assets
Other non-current assets
Deferred tax assets
Current assets
Total assets
Equity attributable to equity holders of the parent
Minority interests
Total equity
Deferred tax liabilities
Current liabilities
Current tax payable
57
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our results of operations and financial position should be read in
conjunction with the Audited Consolidated Financial Statements and the Unaudited Consolidated
Interim Financial Statements, and the respective related notes included elsewhere in this Prospectus.
This discussion contains forward-looking statements that involve risks and uncertainties. Our actual
results may differ significantly from those projected in the forward-looking statements. Factors that
might cause future results to differ significantly from those projected in the forward-looking statements
include, but are not limited to, those discussed below and elsewhere in this Prospectus, particularly in
“Risk Factors” of this Prospectus. Under no circumstances should the inclusion of such forward-looking
statements herein be regarded as a representation, warranty or prediction with respect to the accuracy
of the underlying assumptions by our Company, the Manager, the Underwriter, the Placement Agent or
any other person. Investors are cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof. Please refer to “Cautionary Note on Forward-Looking
Statements” of this Prospectus.
OVERVIEW OF RESULTS
manufacturing technology. We have integrated manufacturing process capability and multi-site
and sale of a variety of plastic packaging products, ranging from thermoformed trays, embossed carrier
tapes, extruded plastic sheets and profiles, precision injection moulded products, expanded
polystyrene products to flexographic printing plates used for the printing of designs and artwork on a
variety of packaging products.
Revenue
Our sources of revenue are derived mainly from five product segments: thermoformed products,
precision injection moulded plastic products, expanded polystyrene products, embossed carrier tapes,
extruded plastic sheets and profiles and flexographic printing plates. All of our products are customised
to the specific requirements of our customers.
(a)
Thermoformed Products
Our main source of revenue is derived from the manufacture and sale of thermoformed products
used in the data storage, semiconductor, consumer electronics and electrical and
telecommunications industries such as clamshells, blister packs and packaging trays. The
thermoformed products segment is the largest revenue contributor of our Group and accounted
for approximately 66.6%, 69.3%, 71.7% and 64.3% of our revenue in FY2003, FY2004, FY2005
and HY2006, respectively.
For thermoformed products, revenue is recognised upon the delivery of the finished products to
our customers. Our major customers in this product segment include Seagate, Solectron and
Nidec.
(b)
Precision Injection Moulded Plastic Products
We manufacture and sell precision injection moulded plastic parts and trays that are used for
protective packaging of semi-finished and finished components and finished products for the
semiconductor, data storage and telecommunications industries. Revenue from this segment
accounted for approximately 5.8%, 3.6%, 9.5% and 18.2% of our revenue in FY2003, FY2004,
FY2005 and HY2006, respectively.
58
Revenue from this segment is recognised upon the delivery of the finished products to our
customers. Our major customers in this product segment include Seagate and Hutchinson.
(c)
Expanded Polystyrene Products
We manufacture and sell expanded polystyrene products used for protective packaging of
finished products and components for room air-conditioners in the consumer electronics and
electrical industry. Revenue from this segment accounted for approximately 9.1%, 10.4%, 6.9%
and 5.9% of our revenue in each of FY2003, FY2004, FY2005 and HY2006, respectively.
customers. Our major customers in this product segment include Sony, Panasonic and Mabuchi
Motor Vietnam Ltd.
(d)
Embossed Carrier Tapes, Extruded Plastic Sheets and Profiles
We manufacture and sell embossed carrier tapes and extruded profiles which are used for
protective packaging for components used in the semiconductor, data storage and
telecommunications industries. We also manufacture and sell extruded plastic sheets sold as raw
materials to external parties. Revenue for this segment accounted for approximately 11.0%,
10.0%, 6.8% and 6.1% of our revenue in each of FY2003, FY2004, FY2005 and HY2006,
respectively.
customers. Our major customers in this product segment include Molex (Malaysia) Sdn. Bhd.,
Bemis Asia Pacific Sdn. Bhd. and Texas Instrument (M) Sdn. Bhd.
(e)
We manufacture flexographic printing plates used for flexographic printing of packaging materials
mainly for consumer electronics and electrical and food industries. Revenue from this segment
accounted for approximately 6.9%, 6.1%, 4.5% and 5.0% of our revenue in each of FY2003,
FY2004, FY2005 and HY2006, respectively.
customers. Our major customers in this product segment include Sony, Panasonic and Genting
Sanyen Industrial Paper Sdn. Bhd.
Key Factors Affecting Our Revenue
Key factors that can affect our revenue include the following:
(a)
Our ability to keep up with technological innovation and advancement, and develop new
products/designs to retain our existing customers and secure new businesses
The industry in which we operate is highly competitive and we face intense competition from other
manufacturers of plastic packaging products in both the local and foreign markets. We compete
on, inter alia, technology, product quality, pricing, responsiveness, service, as well as proximity to
our customers’ production facilities. Our future revenue is dependent on our ability to adapt
quickly to the technological changes in the consumer electronics, data storage and semiconductor
industries. Such technological changes have resulted in shorter product lead-times and product
life-cycles of our customers’ products. If we fail to anticipate, forecast or adapt to such changes
59
or should we be unable to maintain or improve our technology, quality, responsiveness, service,
pricing, proximity to our customers’ production facilities, the demand for our products will decline
and our revenue will correspondingly be adversely affected. Please see “Business —
Competition” of this Prospectus for further information.
(b)
Dependence on the data storage, semiconductor and consumer electronics and electrical
industries
Our products are mainly supplied to customers in the data storage, semiconductor and consumer
electronics and electrical industries. Revenue from the data storage, semiconductor and
consumer electronics and electrical industries accounted for approximately 32.7%, 36.8% and
28.9% of our total revenue in FY2005, respectively, and approximately 40.6%, 29.5% and 27.8%
of our total revenue in HY2006, respectively. Our ability to secure new businesses and contracts
depends on the global economic conditions which affect the demand of our customers’ products
and indirectly the demand of our products. In particular, any decrease in demand in our
thermoformed and precision injection moulded plastic packaging products by our customers in the
data storage and semiconductor industries will have a material impact on our revenue.
(c)
Dependence on certain major customers
Our total sales to our three major customers, Seagate, Solectron and Nidec accounted for
approximately 35.1% of our total revenue in FY2005 and approximately 30.9% of our total
revenue for HY2006. Any slowdown in global demand for our major customers’ products or
decrease in their market share, or the loss of our status as their qualified supplier, will have an
adverse impact on our financial performance. Further, our customers may also choose to shift
their facilities to countries where our existing manufacturing sites are unable to serve them
adequately. In such instances, we may not be able to secure any business from them if they
choose to purchase from local suppliers who are nearer to their new production facilities.
(d)
Delay in the launch of our customers’ new products
The time between the award of a new project and the commencement of mass production of our
products ranges from approximately 3 months to 12 months for data storage, semiconductor and
consumer electronics and electrical products. This is mainly due to the time required to
incorporate design changes and obtain final approval from our customers. Historically, delays in
the launch of our customers’ products had adversely affected our operations and financial
performance. These delays arose generally due to product modifications initiated by our
customers, shortages of other parts or components used in the production of our customers’
products and/or delays in the marketing of these products. If there are any significant delays in our
customers’ new product launches in the future, it is expected that our sales of plastic packaging
products will be adversely affected.
(e)
We do not have any long term contracts with our customers
We do not have any long term contractual agreements with any of our customers to purchase our
products, which is the norm in our industry. Our customers also do not provide us with binding
forecasts of their purchases from us for any period. As a result, we have no significant backlog.
The lack of significant backlog makes it difficult for us to forecast our revenues for any future
period. Moreover, our customers have in the past varied and may continue to vary order levels
significantly from time to time. Where a product line is terminated by our customer, the customer
will compensate us for the excess inventory if there was a pre-agreed arrangement. However, our
60
customers are generally not responsible for any unused raw materials that result from a forecast
exceeding actual orders. If our customers vary their purchase orders with us, our revenue will be
affected.
(f)
Our major customers may no longer require our products
Our major customers are multinational corporations with access to considerable resources and
are capable of substantial technical innovation. There is a possibility that they may develop
products which may no longer require our packaging products. If this were to happen, our
packaging products may be rendered obsolete and our revenue would be adversely affected.
Cost of Sales
The main components of our cost of sales are raw materials cost, production labour cost and factory
overheads incurred to manufacture the finished products. Our cost of sales accounted for
approximately 70.3%, 74.8%, 75.2% and 71.9% of our revenue in FY2003, FY2004, FY2005 and
HY2006, respectively.
The cost of raw materials accounted for approximately 74.2%, 73.0%, 74.1% and 72.0% of our total
cost of sales in FY2003, FY2004, FY2005 and HY2006, respectively. Raw materials comprised mainly
extruded plastic sheets, compounds and resins. Costs of these raw materials are primarily dependent
on the fluctuation of oil prices as these are petrochemical-based products and the grade of the extruded
plastic sheets, plastic resins and compounds to be used are determined by our customers. Some of our
customers also specify the suppliers whom we are to purchase from. In order to maintain the quality of
our products, we are not allowed to change suppliers without the prior approval of these customers. In
instances where we have the flexibility to select the suppliers, we purchase from suppliers who are able
to offer us attractive terms taking into consideration their price, product quality, services and ability to
provide on-time delivery. We do not have any formal long term arrangements with our suppliers, hence,
we may be subjected to fluctuations in prices of raw materials. If we are unable to increase our sales
prices to cover any significant increase in cost of raw materials on a timely basis or find a cheaper
source of supply which is approved by our customers, our cost of sales will increase.
Our production labour cost comprised salaries and related expenses of operators, line leaders,
supervisors, technicians, engineers and others who are directly involved in the manufacture of our
products. Production labour cost accounted for approximately 12.5%, 12.6%, 10.2% and 10.5% of our
total cost of sales for FY2003, FY2004, FY2005 and HY2006, respectively. These labour costs are
dependent on the availability of labour in the job market, the qualifications and experience of workers
hired, charges imposed by authorities (for example, the foreign workers’ levy), the number of workers
required and the labour hours charged. Our cost of sales will increase if our production labour costs
increase significantly.
Factory overheads accounted for approximately 13.3%, 14.4%, 15.7% and 17.5% of our cost of sales
in FY2003, FY2004, FY2005 and HY2006, respectively. Our factory overheads include rental of
facilities, production consumables, utilities expenses, repair and maintenance expenses, depreciation
of property, plant and equipment related to production and other indirect overheads.
Gross Profit Margin
Gross profit margin for FY2003, FY2004, FY2005 and HY2006 were approximately 29.7%, 25.2%,
24.8% and 28.1%, respectively.
61
Other Operating Income
Other operating income includes net gains on disposal of plant and equipment, net foreign exchange
gain, interest income on bank deposits, scrap sales and sundry income. Sundry income comprises
mainly income from the design and fabrication of moulds. Other operating income accounted for
approximately 3.2%, 2.9%, 3.7% and 3.3%, of our revenue in FY2003, FY2004, FY2005 and HY2006,
respectively.
Distribution Expenses
Distribution expenses constituted approximately 5.3%, 5.1%, 7.2% and 7.6% of our revenue in FY2003,
FY2004, FY2005 and HY2006, respectively, and comprised mainly distribution and logistics costs to
distribute products to our customers, marketing expenses such as cost incurred for participating in
trade exhibitions, sales commission and related retainer fees payable to sales agents in Japan and the
US, salaries and travelling and other expenses incurred by our sales and marketing personnel and
other miscellaneous expenses related to distribution.
Administrative Expenses
Administrative expenses constituted approximately 18.6%, 16.2%, 12.7% and 13.1% of our revenue in
FY2003, FY2004, FY2005 and HY2006, respectively, and comprised mainly administrative and
management staff cost, directors’ remuneration, corporate management fee (please refer to “Interested
Person Transactions and Conflicts of Interests” of this Prospectus for further details), research and
development cost, insurance premiums, other expenses related to employee training and development,
and benefits, telecommunications, office supplies and services, utilities, office repair and maintenance,
depreciation of office equipment and other miscellaneous expenses.
Other Operating Expenses
Other operating expenses constituted approximately 0.6%, 0.7% and 0.3% of our revenue in FY2003,
FY2004 and FY2005 respectively and comprised fixed assets and aborted projects written off and the
amortisation of goodwill on consolidation. No other operating expenses were recorded in HY2006.
Finance Costs
Finance costs comprised commissions paid on bank guarantees and letter of credits and interest
payments arising from a loan which we obtained from TRB, trade facilities granted by banks, term loans
and finance leases. The loan from TRB was obtained in FY2005 to refinance our outstanding term loan
of RM23.9 million which was drawn down in FY2003 to finance our acquisition of TEP and Texpack
(KL). TRB charges a fixed interest rate of 7.0% per annum on the loan and the loan has to be repaid
over 11 semi-annual instalments. Please refer to “Interested Person Transactions and Conflicts of
Interests” of this Prospectus for further details. The term loans were mainly used to finance the
acquisition of machinery and building improvements in Thailand and the PRC. The finance leases were
obtained to finance the purchase of motor vehicles.
Finance costs constituted approximately 2.7%, 3.1%, 2.3% and 2.3% of our revenue in FY2003,
FY2004, FY2005 and HY2006, respectively.
62
Income Tax Expense
Income tax expense for FY2003, FY2005 and HY2006 were lower than the amount determined by
applying the prevailing corporate tax rate. This was due mainly to our eligibility for reinvestment
allowance, double tax deduction of export promotional expenses and research and development
expenses. Income tax expense for FY2004 was higher than the amount determined by applying the
prevailing corporate tax rate as tax was charged on an aborted project written off that was disallowed
for tax purposes.
Texpack (Thailand) was granted promotion privileges by the Board of Investment of Thailand with
respect to the manufacture of thermoformed trays and was exempted from tax in respect of profits
generated from such sales for a period of seven years commencing from FY1998, the financial year
when Texpack (Thailand) began generating income from its operations. Texpack (Thailand) was
granted further similar promotion privileges by the Board of Investment Thailand with respect to the
manufacture of precision injection moulded products and was exempted from tax in respect of profit
generated from such sales for a period of seven years commencing from FY2003.
Texpack (Wuxi) is entitled to a two-year state income tax exemption, commencing from the first
profit-making year (net of all accumulated losses), followed by a 50.0% reduction in state income tax
payable in the next three years.
Texpack (Vietnam) is entitled to a three-year exemption from enterprise income tax commencing from
the first profit-making year (without offsetting any unutilised tax losses). Texpack (Vietnam) has not
utilised these tax incentives as they have yet to record any profit since incorporation. Please refer to
“Business — Government Regulations” of this Prospectus for more information.
Our effective tax rate for the last three financial years and six months ended 30 June 2006 were as
follows:
As a percentage of profit before taxation
FY2003
FY2004
FY2005
HY2006
25.4%
32.1%
6.4%
9.7%
Inflation
The impact of inflation on our financial performance over the periods under review was not significant.
Seasonality
The sales of our packaging products to the data storage, semiconductor, consumer electronics and
electrical and telecommunications industries are affected mainly by holiday periods and consumer
spending patterns and are, therefore, largely seasonal. Historically, our sales to customers in this
industry experienced an increase in the second and third quarters of each year due to higher demand
for our customers’ products during the festive periods starting from Christmas in December and ending
after the Chinese New Year in January or February.
Order Book
As at the Latest Practicable Date, our order book contained orders of approximately RM14.6 million for
thermoformed products, RM6.9 million for precision injection moulded plastic products, RM0.6 million
for expanded polystyrene products, RM3.0 million for embossed carrier tapes and extruded plastic
sheets and profiles, RM0.5 million for flexographic printing plates and RM58,000 for other products.
63
Our order book consists of orders for which we have received confirmed purchase orders and which
may be scheduled for delivery within the next few months. Generally, these orders are subject to
cancellation, deferral or rescheduling by our customers. Due to the possibility of changes in delivery
schedules, cancellation or potential delays in the shipment of these packaging products, our order book
as of any particular date may not be indicative of our revenues for any succeeding period.
REVIEW OF RESULTS OF OPERATIONS
Analysis of Performance by Product Segments
A breakdown of our revenue for the last three financial years ended 31 December 2003, 2004 and
2005, and the six months ended 30 June 2005 and 2006 is presented below. Although it is possible to
segment our revenue by products, the allocation of costs cannot be done in a similar manner with
reasonable accuracy. This is because our operation costs such as administrative costs and certain
distribution costs are general costs that are pooled and used to serve all our customers. Any attempt
to match these expenses to sales of various products may not be accurate.
Revenue by Product Segments
FY2003
RM’000
Thermoformed Products
Precision Injection Moulded
Plastic Products
Unaudited
FY2005
FY2004
% RM’000
87,624
66.6
94,825
% RM’000
69.3 144,694
HY2005
% RM’000
HY2006
% RM’000
%
71.7
71,696
72.3
72,809
64.3
7,635
5.8
4,959
3.6
19,068
9.5
7,188
7.3
20,580
18.2
Expanded Polystyrene
Products
12,030
9.1
14,235
10.4
13,929
6.9
7,848
7.9
6,735
5.9
Embossed Carrier Tapes,
Extruded Plastic Sheets
and Profiles
14,377
11.0
13,632
10.0
13,801
6.8
6,914
7.0
6,966
6.1
9,063
6.9
8,437
6.1
9,086
4.5
4,898
4.9
5,689
5.0
817
0.6
826
0.6
1,148
0.6
598
0.6
518
0.5
100.0 201,726
100.0
99,142
100.0 113,297
100.0
(1)
Others
Total
131,546
100.0 136,914
Note:
(1)
Includes sales of heavy duty triple wall corrugated carton products.
Analysis of Performance by Industry Segments
A breakdown of our revenue according to various industries for the last three financial years ended 31
December 2003, 2004 and 2005 and the six months ended 30 June 2005 and 2006 is presented below.
Although it is possible to segment our revenue by industry segments, the allocation of costs cannot be
done in a similar manner with reasonable accuracy. This is because our operating costs such as
administrative costs and distribution costs are general costs that are pooled and used to serve all our
customers. We do not track the allocation of our cost of sales and operating costs by industry segments
and any attempt to match these expenses to sales to the various industry segments may not be
meaningful.
64
Revenue by Industry Segments
FY2003
RM’000
Unaudited
FY2005
FY2004
% RM’000
% RM’000
HY2005
% RM’000
HY2006
% RM’000
%
Data Storage
62,441
47.5
47,866
35.0
65,931
32.7
32,193
32.4
45,972
40.6
Semiconductor
25,678
19.5
41,031
30.0
74,184
36.8
38,733
39.1
33,414
29.5
Consumer Electronics and
Electrical
43,230
32.9
46,733
34.1
58,259
28.9
27,155
27.4
31,445
27.8
197
0.1
1,284
0.9
2,858
1.4
1,061
1.1
1,734
1.5
−
−
−
−
494
0.2
−
−
732
0.6
100.0 201,726
100.0
99,142
100.0 113,297
100.0
Telecommunications
(1)
Others
Total
131,546
100.0 136,914
Note:
(1)
Includes sales to the medical industry.
Analysis of Performance by Geographical Region
We segment our geographical sales based on the invoicing addresses of our customers. The final
delivery of our products is to a location specified by our customers, which in turn could be different from
the location of our customers. A breakdown of our revenue by geographical regions for the last three
financial years ended 31 December 2003, 2004 and 2005, and the six months ended 30 June 2005 and
2006 is presented below. Although it is possible to segment our revenue by geographical regions, the
allocation of costs cannot be done in a similar manner with reasonable accuracy. This is because our
operating costs such as administrative costs and distribution costs are general costs that are pooled
and used to serve all our customers. We do not track the allocation of our cost of sales and operating
costs by geographical regions and any attempt to match these expenses to sales to the various
geographical regions may not be meaningful.
Revenue by Geographical Regions
FY2003
RM’000
(1)
Unaudited
FY2005
FY2004
% RM’000
% RM’000
HY2005
% RM’000
HY2006
% RM’000
%
Malaysia
61,800
47.0
71,785
52.4
76,481
37.9
40,915
41.3
36,345
32.1
Thailand
40,203
30.6
31,444
23.0
50,185
24.9
25,394
25.6
28,674
25.3
PRC
12,098
9.2
14,312
10.5
44,386
22.0
19,830
20.0
23,797
21.0
Singapore
11,624
8.8
13,340
9.7
11,416
5.7
5,662
5.7
7,705
6.8
5,821
4.4
6,033
4.4
19,258
9.5
7,341
7.4
16,776
14.8
100.0 201,726
100.0
99,142
100.0 113,297
100.0
Others(2)
Total
131,546
100.0 136,914
Notes:
(1)
Most of our customers with invoicing addresses in Malaysia are located in the designated Free Trade Zone in Malaysia and
their products are typically exported to the US, Japan and other overseas countries.
(2)
Includes Japan, Vietnam, Philippines, Indonesia, Korea, Taiwan, UK and the US.
65
HY2005 vs HY2006
Revenue
Our revenue increased by approximately RM14.2 million or 14.3% from RM99.1 million in HY2005 to
RM113.3 million in HY2006 due mainly to an increase in revenue from the precision injection moulded
plastic products segment. The increase in revenue from the precision injection moulded plastic
products segment of approximately RM13.4 million or 186.1% from RM7.2 million in HY2005 to RM20.6
million in HY2006 was due mainly to increased sales to our major customers, Hutchinson in the US and
Seagate in the PRC and Thailand. Both of these customers are in the data storage industry.
Revenue from thermoformed products increased by approximately RM1.1 million or 1.5% from RM71.7
million in HY2005 to RM72.8 million in HY2006 due mainly to an increase in demand for our products
generated by the introduction of new models by a customer in the consumer electronics and electrical
industry in Thailand.
Revenue from flexographic printing plates increased by approximately RM0.8 million or 16.3% from
RM4.9 million in HY2005 to RM5.7 million in HY2006. The increase was due mainly to the increase in
demand from our customers in the consumer electronics and electrical industry.
Revenue from expanded polystyrene products decreased by approximately RM1.1 million or 14.1%
from RM7.8 million in HY2005 to RM6.7 million in HY2006 due mainly to increased competition which
led to lower sales in Malaysia.
Revenue from embossed carrier tapes, extruded plastic sheets and profiles products in HY2005
compared to HY2006 remained relatively unchanged and amounted to RM6.9 million and RM7.0 million
in HY2005 and HY2006, respectively.
Cost of Sales
Our cost of sales increased by approximately RM7.1 million or 9.6% from RM74.3 million in HY2005 to
RM81.4 million in HY2006 in tandem with our increase in revenue. Our raw materials cost decreased
as a percentage of our cost of sales from 72.9% in HY2005 to 72.0% in HY2006 due to optimisation
of material usage.
Gross Profit Margin
Our gross profit margin increased by approximately three percentage points from 25.1% in HY2005 to
28.1% in HY2006. The increase was due mainly to cost improvements through optimising our material
usage, lowering labour costs from headcount control and lowering factory overheads per unit from
higher utilisation of production facilities.
Our other operating income increased by approximately RM0.7 million or 23.3% from RM3.0 million in
HY2005 to RM3.7 million in HY2006. This increase was due mainly to an increase in scrap sales as a
result of higher production volume.
66
Our distribution expenses increased by approximately RM3.2 million or 59.3% from RM5.4 million in
HY2005 to RM8.6 million in HY2006. The increase was due mainly to an increase in distribution and
logistics costs as a result of increased sales and an increase in marketing expenses, which includes
retainer fees and sales commissions paid to our sales agents in the US and Japan.
Our administrative expenses increased by approximately RM1.4 million or 10.4% from RM13.4 million
in HY2005 to RM14.8 million in HY2006. The increase was due mainly to an increase in management
fees paid to Texcorp of approximately RM0.3 million in tandem with the increase in revenue, an
increase in provision for bonus and directors’ fees of RM0.6 million as a result of the Company’s
performance in HY2006 and higher research and development costs and administrative and operating
costs related to Polymer Research Centre of RM0.2 million.
Finance Costs
Our finance costs remained relatively unchanged. Our finance costs in HY2005 and HY2006 was
RM2.5 million and RM2.6 million, respectively.
Profit before Taxation
Our profit before taxation increased by approximately RM3.2 million or 50.0% from RM6.4 million in
HY2005 to RM9.6 million in HY2006.
Income Tax Expense
Our income tax expense increased by approximately RM0.5 million or 125.0% from RM0.4 million in
HY2005 to RM0.9 million in HY2006 due mainly to an increase in the profit before taxation.
Profit for the Year
Our profit for the year increased by approximately RM2.6 million or 43.3% from RM6.0 million in
HY2005 to RM8.6 million in HY2006.
FY2004 vs FY2005
Revenue
Our revenue increased by approximately RM64.8 million or 47.3% from RM136.9 million in FY2004 to
RM201.7 million in FY2005 due to overall increase in revenue from all the product segments except for
the expanded polystyrene products segment.
The increase in revenue of approximately RM49.9 million or 52.6% from RM94.8 million in FY2004 to
RM144.7 million in FY2005 from thermoformed products was due mainly to increased sales to the data
storage and semiconductor industries in Thailand and the PRC. The increase in revenue from precision
injection moulded plastic products of approximately RM14.1 million or 282.0% from RM5.0 million in
FY2004 to RM19.1 million in FY2005 was due mainly to increased sales to the data storage industry.
67
Revenue from embossed carrier tapes, extruded plastic sheets and profiles products increased by
approximately RM0.2 million or 1.5% from RM13.6 million in FY2004 to RM13.8 million in FY2005 as
a result of higher sales of embossed carrier tapes to customers in the semiconductor industry.
Revenue from flexographic printing plates products increased by approximately RM0.7 million or 8.3%
from RM8.4 million in FY2004 to RM9.1 million in FY2005 due mainly to increased sales to customers
in the electronics and electrical industry.
The decline in revenue of approximately RM0.3 million from RM14.2 million in FY2004 to RM13.9
million in FY2005 from expanded polystyrene products was due mainly to lower demand from our
customers in the consumer electronics and electrical industry.
Our revenue from the consumer electronics and electrical industry increased by approximately RM11.6
million or 24.8% from RM46.7 million in FY2004 to RM58.3 million in FY2005 due mainly to increased
sales to the PRC. Although actual revenue increased from RM46.7 million in FY2004 to RM58.3 million
in FY2005, our revenue contribution from the consumer electronics and electrical industry decreased
from 34.1% in FY2004 to 28.9% in FY2005 due mainly to higher revenue contribution from the
semiconductor industry which increased from 30.0% in FY2004 to 36.8% in FY2005. Our revenue from
the semiconductor industry increased by approximately RM33.2 million or 81.0% from RM41.0 million
in FY2004 to RM74.2 million in FY2005 due mainly to capturing the sales of new models in the
semiconductor industry which led to higher sales of the thermoformed products and carrier tapes.
Although our revenue from Malaysia increased by approximately RM4.7 million or 6.5% from RM71.8
million in FY2004 to RM76.5 million in FY2005 due mainly to increased sales from our thermoformed
products segment, our revenue contribution from Malaysia decreased from 52.4% in FY2004 to 37.9%
in FY2005. The revenue from Singapore decreased by approximately RM1.9 million or 14.3% from
RM13.3 million in FY2004 to RM11.4 million in FY2005 and revenue contribution from Singapore
decreased from 9.7% in FY2004 to 5.7% in FY2005. The decrease in revenue and revenue contribution
from Singapore was due mainly to the decrease in sales to Seagate in Singapore which has moved the
production of some of its products to Thailand. The decrease in revenue contribution from Malaysia and
Singapore more than made up by the increases in revenue and revenue contribution from the PRC and
other regions. The increase in revenue and revenue contribution from the PRC was due mainly to
increased sales to our major customers who introduced several new models in FY2005. The increase
in revenue and revenue contribution from other regions was due to higher sales from one of our
Vietnam subsidiaries, Texpack (Vietnam).
Cost of Sales
Our cost of sales increased by approximately RM49.2 million or 48.0% from RM102.4 million in FY2004
to RM151.6 million in FY2005 in tandem with our increase in revenue. Our raw materials cost increased
as a percentage of our cost of sales from 73.0% in FY2004 to 74.1% in FY2005 due mainly to an
increase in crude oil prices in FY2005 which led to an increase in prices of our raw materials which are
derivatives of crude oil.
Gross Profit Margin
Our gross profit margins in FY2004 and FY2005 were approximately 25.2% and 24.8% respectively.
Although we faced pricing pressure from customers in the data storage, semiconductor, consumer
electronics and electrical and telecommunications industries and an increase in the cost of raw
materials, we maintained our gross margin through optimising material usage, lowering labour cost
from headcount control and lowering factory overheads per unit from higher utilisation of capacity.
68
Our other operating income increased by approximately RM3.6 million or 92.3% from RM3.9 million in
FY2004 to RM7.5 million in FY2005. This increase was due mainly to an increase in scrap sales
resulting from higher production volume and an increase in the sundry income as a result of an increase
in income for the design and fabrication of moulds led by a higher number of new products launched
by our customers in FY2005.
Our distribution expenses increased by approximately RM7.5 million or 107.1% from RM7.0 million in
FY2004 to RM14.5 million in FY2005. This increase was due mainly to an increase in distribution and
logistics costs of RM3.8 million as a result of our higher sales and from delivering our products to one
of our customers located further away from our production facilities in the PRC. In addition, we also
incurred an increase of RM2.2 million in marketing expenses which includes retainer fees and sales
commissions paid to our sales agents in the US and Japan and an increase in salaries and bonus of
RM0.9 million to reward our marketing staff for their performance in FY2005, an increase of RM0.2
million for the upkeep of motor vehicles and increases in some other miscellaneous expenses.
Our administrative expenses increased by approximately RM3.4 million or 15.4% from RM22.1 million
in FY2004 to RM25.5 million in FY2005. This increase was due mainly to an increase of RM1.7 million
in salaries and bonuses paid to staff for their performances in FY2005, a RM1.2 million increase in
director fees paid as a result of the Company’s performance in FY2005 and full year consolidation of
research and development costs and administrative and operating costs related to Polymer Research
Centre in FY2004 and Texpolymers in FY2005, which increased from RM0.4 million in FY2004 to
RM1.7 million in FY2005.
Our other operating expenses decreased by approximately RM0.3 million or 33.3% from RM0.9 million
in FY2004 to RM0.6 million in FY2005 as there was a one-off write off of costs of an aborted project
in FY2004.
Finance Costs
Our finance costs increased by approximately RM0.4 million or 9.3% from RM4.3 million in FY2004 to
RM4.7 million in FY2005. This increase was due mainly to higher borrowings for increased working
capital requirements and higher interest costs due to rising interest rates.
Our profit before taxation increased by approximately RM8.2 million or 200.0% from RM4.1 million in
FY2004 to RM12.3 million in FY2005.
Income Tax Expense
Our income tax expense decreased by approximately RM0.5 million or 38.5% from RM1.3 million in
69
Profit for the Year
Our profit for the year increased by approximately RM8.7 million or 310.7% from RM2.8 million in
FY2003 vs FY2004
Revenue
Our revenue increased by approximately RM5.4 million or 4.1% from RM131.5 million in FY2003 to
RM136.9 million in FY2004 due to an increase in revenue from thermoformed products and expanded
polystyrene products. The increase in revenue from the thermoformed products of approximately
RM7.2 million or 8.2% from RM87.6 million in FY2003 to RM94.8 million in FY2004 was led by
increased sales to one of our major customers which changed its packaging for one of its major
products to our clamshell packaging and as a result, the revenue and revenue contribution from
Malaysia also increased by approximately RM10.0 million or 16.2% from RM61.8 million in FY2003 to
RM71.8 million in FY2004 and from 47.0% in FY2003 to 52.4% in FY2004 respectively. Expanded
polystyrene products segment recorded an increase in revenue of approximately RM2.2 million or
18.3% from RM12.0 million in FY2003 to RM14.2 million in FY2004 due mainly to full year contribution
from Texpack (Vietnam) which commenced operations towards the end of FY2003.
Precision injection moulded plastic products, embossed carrier tapes and extruded plastic sheets and
profiles and flexographic printing plates recorded decreases in revenue. The decrease in revenue from
the precision injection moulded plastic products of approximately RM2.6 million or 34.2% from RM7.6
million in FY2003 to RM5.0 million in FY2004 was due mainly to the decrease in sales to the data
storage industry as a result of a delay in the launch of new products by one of our key customers from
the data storage industry which also led to a decrease in revenue and revenue contribution from the
data storage industry of approximately RM14.5 million or 23.2% from RM62.4 million in FY2003 to
RM47.9 million in FY2004 and from 47.5% in FY2003 to 35.0% in FY2004, respectively, and lower
revenue and revenue contribution from Thailand of approximately RM8.8 million or 21.9% from RM40.2
million in FY2003 to RM31.4 million in FY2004 and from 30.6% in FY2003 to 23.0% in FY2004,
respectively. Revenue from embossed carrier tapes, extruded plastic sheets and profiles decreased by
approximately RM0.8 million or 5.6% from RM14.4 million in FY2003 to RM13.6 million in FY2004 due
mainly to lower sales from an extruded plastic sheets customer and the loss of one carrier tape
customer. The decrease in revenue from flexographic printing plates of approximately RM0.7 million or
7.7% from RM9.1 million in FY2003 to RM8.4 million in FY2004 was due to reduction in selling prices
as a result of increased competition.
The increase in revenue from the PRC of approximately RM2.2 million or 18.2% from RM12.1 million
in FY2003 to RM14.3 million in FY2004 was due mainly to higher sales to customers in the PRC. The
increase in revenue and revenue contribution from Singapore of approximately RM1.7 million or 14.7%
from RM11.6 million in FY2003 to RM13.3 million in FY2004 and from 8.8% in FY2003 to 9.7% in
FY2004, respectively, was due to increased sales from thermoformed products to one of our major data
storage customers which launched one of its new products in the second half of FY2004.
Cost of Sales
Our cost of sales increased by approximately RM9.9 million or 10.7% from RM92.5 million in FY2003
to RM102.4 million in FY2004. This increase was due mainly to an increase in raw materials cost as
a result of an increase in crude oil prices in FY2004 which led to an increase in prices for all crude
oil-derivative products. The raw materials cost increased by approximately RM6.1 million or 8.9% from
RM68.6 million in FY2003 to RM74.7 million in FY2004. In addition, our production labour cost
70
increased by approximately RM1.3 million or 11.2% from RM11.6 million in FY2003 to RM12.9 million
in FY2004 due mainly to the recruitment of additional workers to fulfil increased sales orders received
at the end of FY2004. Our production overheads also increased by approximately RM2.5 million or
20.3% from RM12.3 million in FY2003 to RM14.8 million in FY2004 due to higher depreciation incurred
as a result of new machines purchased in FY2004.
Gross Profit Margin
Our gross profit margin in FY2003 and FY2004 was approximately 29.7% and 25.2%, respectively. This
decrease was due mainly to the increase in cost of raw materials and higher factory overheads.
Our other operating income decreased by approximately RM0.3 million or 7.1% from RM4.2 million in
FY2003 to RM3.9 million in FY2004. This decrease was due mainly to a decrease in the sundry income
as a result of a decrease in income from the design and fabrication of moulds.
Our distribution expenses accounted for approximately RM7.0 million in both FY2003 and FY2004.
There was a decrease in distribution and logistics cost of approximately RM0.3 million in FY2004 due
to lower distribution and logistics costs incurred by Texpack as a result of higher sales to one of its major
customers located near its production facilities in Penang, Malaysia, and a decrease of approximately
RM0.1 million in miscellaneous expenses. However, the decreases in distribution and logistics costs
and miscellaneous expenses were offset by equivalent increases in expenses related to marketing,
salaries, bonuses and staff related expenses and travelling expenses in FY2004.
Our administrative expenses decreased by approximately RM2.4 million or 9.8% from RM24.5 million
in FY2003 to RM22.1 million in FY2004 due mainly to a decrease in staff bonuses and director fees of
approximately RM0.8 million as a result of the lower profitability recorded for FY2004, a decrease of
approximately RM0.2 million in expenses related to lab testing expenses incurred by the Polymer
Research Centre, a decrease of approximately RM1.2 million in corporate management fees payable
to Texcorp which was revised from 2.0% of revenue in FY2003 to 1.0% of revenue from FY2004
onwards for all our subsidiaries in Malaysia except for Eye Graphic. Please refer to “Interested Person
Transactions and Conflicts of Interests” of this Prospectus for further details on the corporate
management fees.
Our other operating expenses increased by approximately RM0.1 million or 12.5% from RM0.8 million
in FY2003 to RM0.9 million in FY2004 due to write off of the costs of an aborted project in FY2004.
Finance Costs
Our finance costs increased by approximately RM0.8 million or 22.9% from RM3.5 million in FY2003
to RM4.3 million in FY2004. This increase was due mainly to a full year interest payment on the term
loan which was converted from a RM27.9 million revolving credit facility in the middle of FY2003. The
term loan bears an interest rate of 7.0% per annum whilst the interest rate for our revolving credit facility
was between 0.75% per annum and 1.75% per annum above lender’s base lending rate of 6.0% per
annum. The RM27.9 million of our revolving credit facility was used to finance the acquisition of TEP
and Texpack (KL) in July 2002.
71
Our profit before taxation decreased by approximately RM3.3 million or 44.6% from RM7.4 million in
Income Tax Expense
Our income tax expense decreased by approximately RM0.6 million or 31.6% from RM1.9 million in
Profit for the Year
Profit after taxation decreased by approximately RM2.7 million or 49.1% from RM5.5 million in FY2003
to RM2.8 million in FY2004.
REVIEW OF FINANCIAL POSITION
Non-Current Assets
As at 31 December 2005, we had non-current assets of approximately RM84.6 million which comprise
mainly property, plant and equipment of RM77.7 million, intangible assets of RM5.8 million, other
non-current assets of RM0.1 million and deferred tax assets of approximately RM1.0 million.
Our intangible assets comprise goodwill on consolidation arising from the acquisition of Texpack
(Johor) and computer software. Other non-current assets comprise club memberships and quoted
equity securities available for sale.
As at 30 June 2006, our non-current assets remained relatively unchanged at approximately RM84.2
million.
Current Assets
As at 31 December 2005, we had current assets of approximately RM78.4 million which comprise
inventories of RM20.9 million, trade and other receivables of RM48.7 million and cash and bank
balances of RM8.8 million.
Our inventories of RM20.9 million comprise raw materials, work-in-progress, finished goods,
consumables and goods-in-transit of RM12.4 million, RM1.1 million, RM5.9 million, RM0.2 million and
RM1.3 million, respectively.
Our trade and other receivables of RM48.7 million comprise trade receivables, allowance for
impairment of trade receivables, deposits, prepayments, amounts due from related parties, tax
recoverable and other receivables of RM42.7 million, RM0.3 million, RM0.5 million, RM2.9 million,
RM0.8 million, RM0.5 million and RM1.6 million respectively.
Our trade amounts due from related parties of RM0.7 million relates to sale of our products to these
related corporations and a non-trade amount due from TRB of RM0.1 million which had since been fully
repaid as at 15 February 2006. Further, there is an amount due from related corporations of RM22,000
which had since been fully repaid as at 15 February 2006. As at the Latest Practicable Date, all debts
owing to the Group by its substantial shareholders and other companies controlled by such substantial
shareholders have been settled.
72
As at 30 June 2006, our current assets of approximately RM87.6 million comprise inventories of
RM25.5 million, trade and other receivables of RM53.2 million and cash and bank balances of RM8.9
million.
Non-Current Liabilities
As at 31 December 2005, our non-current liabilities of approximately RM30.5 million comprise other
payables of RM16.0 million which consists of mainly an amount due to TRB of RM15.4 million relating
to the long term portion of an amount borrowed from TRB to refinance a term loan which we had drawn
down in FY2003 (Please refer to “Interested Person Transactions and Conflicts of Interests” of this
Prospectus for more details of this loan) and the long term portion of provision for retirement benefit of
RM0.7 million, the long term portion of bank loans used to finance the expansion of our production
capacity of RM10.9 million and finance lease liabilities and deferred tax liabilities of RM3.6 million.
We had non-current liabilities of approximately RM29.5 million as at 30 June 2006 which comprise
other payables of RM16.1 million, interest-bearing liabilities of RM9.5 million and deferred tax liabilities
of RM3.9 million.
Current Liabilities
As at 31 December 2005, our current liabilities of approximately RM97.3 million comprise trade and
other payables of RM45.9 million, interest-bearing liabilities of RM49.5 million and current tax payable
of RM1.9 million.
Our trade and other payables of RM45.9 million comprise trade payables of RM19.2 million, accrued
operating expenses of RM10.0 million, fixed assets creditors of RM2.1 million, amount due to related
parties of RM14.5 million and current portion of provision for retirement benefit of RM62,000.
Amount due to related parties comprise both trade and non-trade amounts to related parties. Our trade
amount due to related parties amounted to approximately RM5.5 million, of which RM4.7 million was
due to related corporations arising from raw materials purchases from Texchem Material and other
balances due to Sanko Kasei for work that we sub-contracted to. The non-trade amount due to related
parties comprise the current portion of the term loan from TRB which we described above of RM4.4
million, dividends payable to TRB of RM2.5 million, an amount due to TRB of RM1.5 million for the
listing expenses TRB paid on our behalf for our previous listing exercise, an amount due to TRB of
RM0.4 million which consists mainly of expenses paid on our behalf by TRB and interest payable for
the term loan from TRB.
The balance of the amount due to related parties relate to insurance, security services and
management fees payable to related companies within the Texcorp Group.
Our interest-bearing liabilities of RM49.5 million which are repayable within a year relate mainly to trade
financing obtained such as bankers’ acceptances, revolving credit facilities, trust receipts and
promissory notes amounting to RM42.3 million. The balance of the interest-bearing liabilities are bank
overdrafts, current portion of bank loans and finance lease liabilities.
As at 30 June 2006, our current liabilities of approximately RM98.2 million comprise trade and other
payables of RM39.0 million, interest-bearing liabilities of RM58.0 million and current tax payable of
RM1.2 million.
73
Total Equity
As at 31 December 2005, total equity was approximately RM35.2 million.
As at 30 June 2006, our share capital remained unchanged and our reserves was approximately
RM21.5 million.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital Expenditure
Our capital expenditure for the relevant periods is as follows:
<
(RM’000)
FY2003
Audited
FY2004
>
FY2005
Unaudited
HY2006
Leasehold Properties
−
−
−
−
Freehold Properties
−
417
−
−
1,112
2,273
1,971
410
418
676
317
1,058
11,147
13,331
10,617
3,196
2,823
2,289
2,414
1,354
15,500
18,986
15,319
6,018
Building Improvements
Capital Expenditure in progress
Plant and Machinery and Factory Equipment
Others
Total
Our capital expenditure from 1 July 2006 to the Latest Practicable Date was approximately RM2.0
million, comprising building improvements, plant and machinery and factory equipment, computers,
moulds and motor vehicles.
We have invested in manufacturing plant and equipment to upgrade and enhance our production
capabilities and product range in our effort to minimise delivery lead-time, to provide our customers with
more cost-effective solutions and to support increasing sales. We intend to use the net proceeds from
the Invitation to purchase equipment to increase our production capacity and upgrade the production
facilities at our various production sites, to strengthen our research and development, and design
capabilities and working capital requirements as further described in “Business — Future Plans” of this
Prospectus.
Capital Commitments
As at the Latest Practicable Date, our capital commitments amounted to RM1.7 million, mainly in
respect of plant and machinery and factory equipment for our facilities located in Malaysia and Thailand
which will be financed from cash generated from our operations and bank borrowings.
Our capital commitments as at the Latest Practicable Date are as follow:
RM’000
Contracted but not provided for
1,713
Authorised but not contracted for
−
Total
1,713
Save as disclosed above, we do not have any other material capital commitments as at the Latest
Practicable Date.
74
As at the Latest Practicable Date, the Group had commitments for future minimum lease payments
amounting to RM5.1 million under non-cancellable operating leases. Our operating leases as at the
Latest Practicable Date are as follow:
RM’000
Within 1 year
1,222
After 1 year but within 5 years
2,793
After 5 years
1,083
LIQUIDITY AND CAPITAL RESOURCES
Our growth and operations have been funded through a combination of shareholders’ equity, internal
funds generated from operations and borrowings from financial institutions and our holding company,
TRB. Our principal use of cash has been for capital expenditure, working capital requirements and
repayment of bank borrowings and finance expenses.
As at 31 December 2005, we had outstanding borrowings of RM60.4 million, of which RM49.5 million
is due within one year and RM10.9 million is due after one year. The borrowings were drawn against
our aggregate unsecured credit lines of RM120.5 million.
The short-term borrowings comprise bank overdraft of RM2.9 million, bankers’ acceptances of RM22.2
million, revolving credit facilities of RM18.9 million, trust receipts of RM0.4 million, promissory notes of
RM0.7 million, bank loans of RM3.9 million and finance leases of RM0.5 million. These were largely
trade financing which we obtained to meet our working capital needs and the current portion of our
long-term loans.
The amounts due to TRB of RM19.7 million, of which RM4.4 million is due within a year, were for the
purpose of refinancing our term loan which was used to finance our acquisition of TEP and Texpack
(KL) in FY2002.
As at 30 June 2006, we had outstanding borrowings of RM67.4 million, of which RM58.0 million is due
within one year and RM9.4 million is due after one year.
The short-term borrowings comprise bank overdrafts of RM4.4 million, bankers’ acceptances of
RM27.3 million, revolving credit facilities of RM19.1 million, trust receipts of RM1.9 million, bank loans
of RM4.8 million and finance leases of RM0.5 million. These were largely trade financing which we
obtained to meet our working capital needs and the current portion of our long-term loans.
The term loans bear an interest rate of between 0.75 per cent per annum and 1.75 per cent per annum
above cost of funds or lenders’ base lending rate, and will mature between February 2008 and
November 2009. The bank overdrafts utilised by our various subsidiaries in Malaysia bear interest rates
ranging between 0.75 per cent per annum and 1.75 per cent per annum above lenders’ base lending
rate whilst the bankers’ acceptances bears commission of between 0.5 per cent per annum and 1.75
per cent per annum above cost of funds. The revolving credit facilities bears interest rates ranging
between 0.75 per cent per annum and 1.75 per cent per annum above cost of funds whilst the trust
receipts bear interest rates ranging between 0.5 per cent per annum and 1.75 per cent per annum
above cost of funds or lenders’ base lending rate. The banking facilities are secured against the
corporate guarantee from our holding company, TRB. The amount due to TRB bears a fixed interest
rate of 7.0% per annum.
75
As at the Latest Practicable Date, we had banking facilities and finance leases of approximately
RM147.6 million in aggregate, of which RM68.7 million was utilised. The amount due to TRB was
RM17.6 million as at the Latest Practicable Date.
Based on our total equity of RM35.2 million as at 31 December 2005 and RM44.1 million as at 30 June
2006, the gearing ratio of our Group was 1.5 times and 1.3 times respectively. We have been able to
service our loan payment commitments on a timely basis in each of the three financial years ended 31
December 2003, 2004 and 2005 and in the six months ended 30 June 2006.
As at 31 December 2005, 30 June 2006 and the Latest Practicable Date, our holding company, TRB
provided guarantees for our banking facilities amounting to RM152.6 million, RM161.4 million and
RM185.3 million, respectively. Subject to the approval of the relevant financial institutions, we will be
seeking the release of TRB’s obligations under these guarantees subsequent to the Invitation. As a
result, the terms and conditions of these banking facilities may have to be re-negotiated and revised.
Our Directors believe that any revision to the terms and conditions to these banking facilities are
unlikely to materially and adversely affect our operations. However, in the event that the revision in the
terms and conditions of our banking facilities (including the quantum of such banking facilities) would
adversely affect our operations, TRB would continue to provide such necessary guarantees for the
same banking facilities. Please refer to “Interested Person Transactions and Conflicts of Interests” of
this Prospectus for further details.
Based on our existing banking facilities, operating cash flows and our present cash position, our
Directors are of the opinion that, as at the date of lodgement of this Prospectus, we have sufficient
working capital to satisfy our present requirements.
The following table provides a summary of our cash flows for FY2005 and HY2006:
Audited
FY2005
Unaudited
HY2006
Cashflow from operating activities
34,113
5,318
Cashflow from investing activities
(12,854)
(4,949)
Cashflow from financing activities
(19,138)
(1,861)
2,121
(1,492)
(RM’000)
Net increase/(decrease) in cash and cash equivalents
Cashflows from Operating Activities
Cash generated from our operations is mainly from the sale of our products to our customers. Our main
use of cash has been for the purchase of raw materials, payment of staff related expenses and our
working capital requirements. In FY2005, our operating profit before working capital changes was
approximately RM29.7 million. After adjusting for a decrease in inventories of RM4.6 million and an
increase in trade and other payables of RM10.0 million which more than offset an increase in trade and
other receivables of RM8.9 million, our cash generated from operations amounted to RM35.4 million.
The decrease in inventories was due to an improvement in our procurement process and the increase
in trade and other receivables was due to our higher sales in FY2005. The increase in trade and other
payables were due mainly to increase in purchases to meet increased sales.
76
In HY2006, our operating profit before working capital changes was approximately RM18.4 million.
After adjusting for an increase in inventories of RM4.4 million, a decrease in trade and other payables
of RM5.0 million and an increase in trade and other receivables of RM2.5 million, our cash generated
from operations amounted to RM6.5 million.
The increase in inventories was due mainly to an increase in the holding period of raw materials to cater
for orders from customers for delivery in the second half of 2006 and the increase in trade and other
receivables was due to higher sales from March to June 2006.
The decrease in trade and other payables was due mainly to a decrease in the average payment
period.
Cashflow from Investing Activities
Cashflow used in investing activities in FY2005 of approximately RM12.9 million was used mainly for
the purchase of property, plant and equipment and intangible assets aggregating approximately
RM13.3 million. This was offset by proceeds from disposal of property, plant and equipment amounting
to RM0.4 million.
Cashflow used in investing activities in HY2006 of approximately RM4.9 million was used mainly for the
purchase of property, plant and equipment and intangible assets aggregating approximately RM5.5
million. This was offset by proceeds from disposal of property, plant and equipment amounting to
approximately RM0.6 million.
Cashflow from Financing Activities
In addition to the cashflow from operating activities, our Group has generally financed our cashflow
requirement mainly through shareholder and bank loans.
In FY2005, we recorded cashflow used in financing activities of approximately RM19.1 million due
mainly to net repayment of bank borrowings of RM30.5 million, payment of interest of RM4.5 million and
payment of dividends of RM2.6 million which were offset by the loan from TRB amounting to RM19.1
million.
In HY2006, we recorded cashflow used in financing activities of approximately RM1.9 million due
mainly to repayment of bank loans of RM2.5 million, payment of dividends of RM2.5 million, payment
of interest of RM2.6 million and payment of listing expenses of RM1.7 million which were offset by
proceeds from bank loans and net drawdown of other bank borrowings of RM7.7 million and advances
from TRB of RM0.1 million.
FOREIGN EXCHANGE EXPOSURE
We have operations in Malaysia, Thailand, Vietnam and the PRC and our operating expenses incurred
in the respective countries are denominated in the currencies of those countries. Our receipts are partly
denominated in USD and partly in the local currency in which our products are sold. Our purchases of
raw materials are denominated in USD, Japanese Yen, Singapore dollar, RMB, RM, Thai Baht and
Vietnamese Dong.
To the extent that our revenue, cost of sales and expenses are not naturally matched in the same
currency and to the extent that there are timing differences between collections and payments, we may
be exposed to adverse fluctuations of various currencies against the RM. We currently do not have a
formal hedging policy in place. However, going forward, if there are major currency fluctuations, we will
consider putting a hedging policy in place.
77
Our net foreign currency exchange gains recorded in the profit and loss account for the last three
financial years ended 31 December 2003, 2004 and 2005 and six months ended 30 June 2006 were
as follows:
FY2003
Foreign exchange gains (net) (RM’000)
FY2004
FY2005
HY2006
534
571
1,085
96
Percentage of revenue
0.4%
0.4%
0.5%
0.1%
Percentage of profit before taxation
7.2%
13.8%
8.8%
1.0%
The financial statements of our subsidiaries in Malaysia, Thailand, Vietnam and the PRC are currently
prepared in their respective functional currencies. For preparation of our Group’s consolidated financial
statements, we translated the financial statements of these subsidiaries to RM. Assets, liabilities and
equity items other than the net profit or loss for the current period are translated at the rates of
exchange prevailing at the balance sheet date. Income and expense items were translated at exchange
rate prevailing at the respective dates of the transactions. The resultant exchange differences are
recognised directly in equity. Our Group’s foreign currency translation loss on the translation of the
financial statements of foreign operations, which were recorded as part of shareholder’s equity, as at
31 December 2005 and as at 30 June 2006 are as follow:
FY2005
Foreign currency translation loss, net (RM’000)
Percentage of total equity
HY2006
308
5
0.9%
0.01%
CREDIT POLICY
We normally grant our customers credit terms ranging from 30 days to 60 days. The actual credit terms
granted to a customer depends on our assessment of the customer’s credit worthiness and the
customer’s conduct of its account. Upon our customers’ request, we may extend the credit terms
granted, but this is based on case-by-case reviews.
We generally receive payments between 50 days and 80 days after delivery of products to our
customers, depending on the credit terms granted to our customers and the processing dates prepared
by our customers.
We have established internal credit control procedures and policies. A new customer is required to
submit a credit application form for our management’s evaluation. Among the credit evaluation
procedures performed is market checking and if necessary a Companies Commission of Malaysia
search will be conducted.
We have set guidelines for the approval of credit limits by authorised personnel.
A monthly credit meeting is held between the sales department and finance department to review the
reasons for debts outstanding beyond the agreed credit period and sales in excess of the credit limit.
During such credit meetings, we will agree on the steps to be taken in respect of such outstanding debts
and sales in excess of the credit limit.
As at 31 December 2005 and 30 June 2006, there were no significant concentrations of credit risk
except for the balance due from one major customer amounting to approximately 14.6% and 14.3% of
our total trade receivables as at the respective dates. The maximum exposure to credit risk for the
Group is represented by the carrying amount of each financial asset on the balance sheet.
78
Average Collection Days
Our average collection days for FY2005 and HY2006 were as follows:
FY2005
HY2006
77
74
Average collection days
There were no significant long outstanding debts noted as at 31 December 2005 and 30 June 2006.
Impairment of receivables are made when required on a case by case basis.
FY2005
HY2006
311
737
Impairment of trade receivables (RM’000)
INVENTORY POLICY
Our inventory comprises finished goods, work-in-progress and raw materials. Our inventory level is
determined principally by our customer orders, sales forecasts and production requirements. For firm
order contracts, we will generally maintain adequate inventory to satisfy production needs. In the event
of cancellation of firm order contracts, the customers will be fully liable for the inventory maintained to
satisfy the order. For blanket order contracts, our customers generally provide us with a rolling forecast
against the blanket order. Depending on the pre-agreed term, the first two weeks to three months of
each rolling forecast typically constitutes a firm purchase order commitment by these customers for any
finished goods manufactured by us. In addition, these customers are also liable for all work-in-progress
for an agreed period of the rolling forecast.
We monitor our inventory ageing through inventory cycle counts and review our inventory level in
tandem with our sales prospects. We also perform full inventory counts for all inventories at the end of
December for each year.
Our average inventory turnover days in FY2005 and in HY2006 were as follow:
Average inventory turnover days
79
FY2005
HY2006
50
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BUSINESS
HISTORY AND DEVELOPMENT OF OUR GROUP
Our Company was incorporated in Singapore on 27 August 2003 and was converted to a public limited
company on 10 September 2004. Our Company is a subsidiary of TRB. TRB is listed on the mainboard
of the Bursa Malaysia and its business comprises four main divisions: namely, its industrial division
which trades in industrial chemicals, plastic raw materials, dyestuffs and textile auxiliaries; its food
division which engages in the manufacturing and processing of sea food products; its packaging
division which undertakes the manufacturing of specialised plastic packaging products; and its family
care division which manufactures family care products and engages in the trading of consumer
products.
Our Group is involved in the manufacturing of plastic packaging products. Our history may be traced
to the initial establishment of Texpack in 1979.
Our Malaysian Operations
Texpack
Texpack, one of our significant subsidiaries in terms of its contributions to Group revenues, was
incorporated as Malaysian Fine Chemical Industries Sdn. Bhd. on 18 January 1979. Texpack changed
its name to Consumer Plastics Sdn. Bhd. on 12 November 1983 and was subsequently transferred to
Texcorp in December 1984. Texpack was subsequently transferred to Fumakilla in September 1986 for
approximately two years before it was transferred back to Texcorp in June 1988. It remained a
wholly-owned subsidiary of Texcorp until March 1989 when Utsui Co., Ltd was invited by Texcorp to be
a plastic thermoforming technology partner and shareholder in Texpack. As a result, Texpack changed
its name to Utsui Consumer Plastics Sdn. Bhd. on 8 March 1989.
In May 1990, JSP Corporation, Japan, another plastic thermoforming technology partner, also became
a shareholder of Texpack. In June 1994, Utsui Co. Ltd. sold its entire shareholding interest to Texcorp.
Rapro Pack, another plastic thermoforming technology partner, acquired a shareholding interest in
Texpack in August 1994. In September 1994, Yutaka Yamanaka, the owner of Yamanaka Kiko Co. Ltd.,
one of our thermoforming machines suppliers took up a relatively small shareholding in Texpack.
In May 1995, Texpack assumed the name Texchem-Pack (M) Sdn. Bhd. and subsequently in December
1995, Texpack became a wholly-owned subsidiary of TRB when TRB bought over all the shares in
Texpack from Texcorp, JSP Corporation, Japan, Rapro Pack and Yutaka Yamanaka.
Texpack converted to a public company and assumed its present name on 7 May 2002.
TEP
On 31 December 1979, TEP was incorporated under the name Malaysian Engineering Plastics Sdn.
Bhd. In April 1981, TRB (then known as Texchem Trading Sdn. Berhad) used TEP as a vehicle for a
joint venture with Penang Development Corporation and a technology partner, Riken Vinyl Industry Co.,
Ltd as its shareholders. TEP’s initial business was the extrusion of PVC handle bars for portable radio
cassette players, components for rechargeable batteries and IC shipping tubes for companies in the
electronics industry based in Malaysia and Singapore.
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BUSINESS
In 1981, TRB divested its shareholding interest in TEP to Texcorp and a raw material supplier,
Mitsubishi Corporation. During the mid-1980s, TEP expanded its operations to include the manufacture
of air conditioning gaskets, vinyl tubes and other profile products by extrusion process. In 1995, these
operations were further expanded to include precision injection moulding processes for both heat and
non-heat proof hard conductive IC trays, shipping combs and plastic reels for the semiconductor and
data storage industries.
In 1996, TEP’s capabilities were expanded to include thermoforming of embossed carrier tapes for
semiconductors, connectors and other related products.
Between 1993 to 2001, Riken Vinyl Industry Co., Ltd, Mitsubishi Corporation and Penang Development
Corporation divested their entire shareholding interest in TEP to Texcorp, resulting in TEP being a
wholly-owned subsidiary of Texcorp. TEP assumed its present name on 3 June 1997. In May 2002, TEP
was transferred from Texcorp to Texpack as part of a restructuring of the packaging division of the TRB
Group. TEP is one of our significant subsidiaries in terms of its contributions to Group revenues.
Texpack (KL)
On 6 April 1989, Texpack (KL) was incorporated under the name Izutex Sdn. Bhd. as a joint venture
company between TRB and Izumi Corporation to manufacture and sell expanded polystyrene products
in Malaysia. In November 1989, Sekisui Plastics Co., Ltd., a raw material supplier, acquired a
shareholding interest in Texpack (KL). In July 1996, Izumi Corporation sold its entire shareholding
interest in Texpack (KL) to Texchem Holdings Sdn. Bhd. Shortly thereafter, there were a series of
transfers of shares of Texpack (KL) pursuant to which Texcorp and Business Acumen Sdn. Bhd. (a
subsidiary of Texcorp) became shareholders of Texpack (KL) owning an aggregate 20% equity interest.
In late 1999, Texpack (KL) introduced Hiple Ace Triple Wall heavy-duty corrugated paper packaging
products to the market.
In March 2002, Sekisui Plastics Co., Ltd. sold all its shares to Texpack. In May 2002, Texpack (KL)
became a wholly-owned subsidiary of Texpack when Texpack acquired the shareholdings of all the
other shareholders of Texpack (KL). Texpack (KL) changed its name from Izutex Sdn. Bhd. and
assumed its present name in May 2003.
Texpack (Johor)
Texpack (Johor) was incorporated as PKG Plastics Technology Sdn. Bhd. on 2 August 1993. In March
1996, Texcorp acquired an 80% stake in Texpack (Johor). Its present name was adopted on 3 March
1999. Texpack (Johor) was then involved in the provision of packaging solutions for the handling and
shipping of sensitive, fragile or precision components for the data storage industry. This strategic
acquisition allowed us to obtain the necessary expertise and resources to move up the value chain and
enter into the data storage industry. Since then, Texpack (Johor)’s customer base has expanded to
include customers from the semiconductor, consumer electronics and electrical, data storage,
telecommunications and other related industries. It also services our Group’s customers in Southern
Peninsula Malaysia, Singapore and Batam.
Over the period of slightly more than a year, Texcorp acquired the remaining stake in Texpack (Johor)
and became its holding company on 3 June 1997. In January 2000, Texpack (Johor) was acquired by
and became a wholly-owned subsidiary of Texpack.
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BUSINESS
Texpolymers
Texpolymers was established in view of the increased importance that we place on the development of
raw materials for our packaging products. Texpolymers was incorporated on 10 January 2005 to carry
out activities relating to the development and manufacturing of proprietary materials and customised
compounds such as specialised resins and specialised plastic sheets for the internal needs of our
Group as well as for external customers who may require such materials and/or compounds.
Previously, some of such research and development activities were carried out by our Polymer
Research Centre, which was established in March 2001 at the premises of Texpack in Penang.
Eye Graphic
Eye Graphic was incorporated on 22 October 1990 as a joint venture company between Texcorp and
Eye Corporate Planning Co., Ltd. (“Eye Corporate Planning”), an independent third party. In December
2004, Eye Graphic became a subsidiary of TRB when Texcorp sold its entire shareholding in Eye
Graphic to TRB. Subsequently and pursuant to the Restructuring Exercise (please refer to
“Restructuring Exercise” of this Prospectus for further information), TRB sold its entire shareholding in
Eye Graphic to our Company in December 2005 and consequently, Eye Graphic became our
subsidiary.
Eye Graphic (Vietnam), a wholly-owned subsidiary of Eye Graphic, was incorporated on 28 April 2000
in Vietnam. Both Eye Graphic and Eye Graphic (Vietnam) are in the business of trading, designing and
manufacturing flexographic printing plates for, inter alia, the consumer electrical and electronics and
flexographic industry.
Establishment of Our Overseas Operations
Although the core of our operations remains in Malaysia, in line with our business strategy to maintain
close proximity to our major customers’ operations, we have expanded overseas to Thailand, the PRC
and Vietnam to support our customers who have set up operations there.
Texpack (Thailand), one of our significant subsidiaries in terms of its contributions to Group revenues,
was established in Bangkok, Thailand, on 6 October 1997 under the name PKG-Pack (Thailand) Co.,
Ltd, marking Texpack’s expansion of the packaging business to Thailand. It subsequently assumed its
present name on 19 March 1999. Texpack (Thailand) supports our customers in the consumer
electronics and electrical, data storage and telecommunications industries who have set up operations
in Thailand by supplying them with thermoformed plastic trays.
Texpack incorporated Texpack (Philippines) in December 1999 to cater to the growing demand for
thermoformed packaging products in the Philippines. The decision of some of Texpack (Philippines)’s
customers to relocate their operations from the Philippines to the PRC severely affected the profitability
of Texpack (Philippines). In view of this and the uncertain economic environment in the Philippines,
Texpack (Philippines) was subsequently transferred to TRB in April 2002.
In May 2002, we established Texpack (Wuxi), located in the Jiangsu province of the PRC, at the request
of one of our major customers. This signalled the expansion of Texpack’s business into China. It is
principally engaged in the manufacture of thermoformed packaging products and precision injection
moulded parts and trays to support and serve our multinational customers with operations in the PRC.
Texpack (Wuxi) is one of our significant subsidiaries in terms of its contributions to Group revenues.
In October 2002, we obtained the investment licence for the establishment of Texpack (Vietnam). It is
principally engaged in the production and distribution of expanded polystyrene parts for packaging
finished products and components for room air-conditioners, thermoformed packaging parts and the
provision of design services for packaging products.
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BUSINESS
Application to List on the Bursa Malaysia
In May 2002, the TRB Group restructured its subsidiaries in its packaging division prior to applying for
a listing of the plastics packaging group on the Bursa Malaysia. This resulted in Texpack becoming the
holding company for the various operating subsidiaries (the “Proposed Malaysian Listco”). Our
application to list the Proposed Malaysian Listco on the Bursa Malaysia was rejected by the Malaysian
Securities Commission (the “Malaysian SC”) in November 2002 for several reasons, including the
following:
•
there was a substantial decrease in the turnover and profit before tax of the Proposed Malaysian
Listco for the year ended 31 December 2001. The Malaysian SC also considered the financial
performance for the nine months ended 30 September 2002 as low;
•
there was a substantial deviation between the actual results of TRB (the holding company of the
Proposed Malaysian Listco) for FY2001 and the profit forecast for FY2001 which was prepared by
TRB for the purposes of its application to the Malaysian SC for, inter alia, the transfer of its listing
from the second board to the main board of Bursa Malaysia; and
•
the business of the Proposed Malaysian Listco depended on computer chips, semiconductors and
electronic products, for which the world’s demand had fallen by approximately 40% in 2001.
However, the Proposed Malaysian Listco managed to achieve approximately 98% of its profit forecast
for FY2002 and an appeal to the Malaysian SC was made in 12 March 2003 against the aforesaid
rejection. The Malaysian SC however rejected the appeal citing several reasons, including:
•
the financial position of the Proposed Malaysian Listco showed a declining trend for FY2001 and
FY2002;
•
the Malaysian SC reiterated that in connection with, inter alia, the transfer of the listing of TRB
from the second board to the main board of the Bursa Malaysia, as discussed above, there was
a substantial deviation between the profit forecast and the actual financial performance of TRB for
FY2001 (for which TRB was reprimanded by the Malaysian SC); and
•
the financial results of the Proposed Malaysian Listco did not satisfy the chain listing rule of the
Bursa Malaysia which required TRB to have an aggregate profit after tax (“PAT”) of not less than
RM30 million for the previous five financial years ended FY2002. The English translation of the
relevant extract of the letter from the Malaysian SC citing this reason is as follows:
“In this regard, should the adjustments for the initial set-up costs and brand building
expenses of RM 4.495 million not be made, the aggregate PAT of TRB Group for the
financial years from 1998 to 2002 will only be RM 26.281 million (based on the assumption
that the financial performance of the [Proposed Malaysian Listco] Group be excluded and
financial performance of the [Fumakilla] Group be taken into account for the said financial
years). This is far lower than the requirement for the chain listing which requires the listed
holding company to show an aggregate PAT of not less than RM30 million.”
The chain listing rules in Malaysia have been amended since the said rejection by the Malaysian SC
and the above reason cited by the Malaysian SC is now no longer applicable. Our Directors believe that
despite the earlier unsuccessful application to list on the Bursa Malaysia, the prospects of our Group
are good. Please see “Business — Prospects” of this Prospectus for a more detailed description of our
future prospects.
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BUSINESS
manufacturing technology. We have integrated manufacturing process capability with multi-site
and sale of a variety of plastic packaging products, ranging from thermoformed trays, precision injection
moulded products, embossed carrier tapes, extruded sheets and profiles, expanded polystyrene
products to flexographic printing plates used for the printing of designs and artwork on a variety of
packaging products. We provide integrated manufacturing services ranging from design and product
development, prototyping and mould fabrication to cater to the different needs of our customers. Our
packaging products are manufactured utilising four main processes, namely thermoforming, precision
injection moulding, extrusion and expanded polystyrene moulding.
Our customers are mainly from the semiconductor, consumer electronics and electrical, data storage
and telecommunications industries. Some of our customers are major players in their respective
industries, for example, Seagate, Sony and Solectron. We work closely with some of our customers in
the development of the packaging of their products and our involvement typically begins from the initial
design stage up to commercial production.
Currently, we have production facilities in Thailand, the PRC, Vietnam and various parts of Malaysia.
Most of our production facilities are equipped with design centres utilising CAD/CAM software and CNC
machines, allowing us to offer three-dimensional visualisation capabilities, prototyping and product
design and mould fabrication to our customers. We also have clean room and washing facilities for the
cleaning and packing of our products where required.
In keeping with our customer-centric philosophy in the provision of our services, we have established
a Group Business Development division and a Group Manufacturing Technology division to spearhead
our marketing and technology efforts. Our Group Business Development division has full charge of key
customer accounts and is responsible for the development of business plans and new products in close
consultation with our customers. Our Group Manufacturing Technology division has overall charge of
our Group’s key manufacturing technologies and processes. It is responsible for the advancement of
our manufacturing processes and machinery, and product and systems technologies, through the
acquisition of new technical knowhow. We believe that adopting a group-level focus for these two key
areas will enhance our position as a leading packaging solutions provider with multi-site production
facilities.
Together with the Group Manufacturing Technology division and the Group Business Development
division, our business is supported by the Group Finance division and the Group Business
Administration division. The following is a diagrammatic representation of this group reporting function:
President
Group
Manufacturing
Technology
Division
Group Business
Development
Division
Group Finance
Division
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Group Business
Administration
Division
BUSINESS
Our Value-Add to Our Customers
As a leading packaging solutions provider in Southeast Asia with a strong emphasis on design and
manufacturing technology, we provide the following capabilities and facilities to our customers.
Design Facilities
We utilise CAD/CAM software for the design of our products, enabling our design team to carry out its
functions in a fully computerised environment. These facilities allow our customers to visualise our
products in a three-dimensional format without having to build an actual model. Adjustments and
modifications to the designs of our packaging products can be made rapidly, even as the designs for
our customers’ products are being fine-tuned, thereby shortening the time required for commercial
production of our packaging products.
Design Consultancy
We provide a total packaging design service for our customers’ products and are able to provide design
input at any stage of the product development cycle, including the initial design consultation stage. This
allows us to value-add by providing design input on the aesthetics, functionality and manufacturability
of the plastic packaging products. We also provide recommendations and feedback to our customers
on display, logistics and marketing considerations for their products and incorporate them into our
packaging designs where applicable.
Mould Fabrication Capabilities
We also have mould fabrication capabilities to complement our design capabilities. We have the
technical capability to fabricate moulds for all our thermoformed products manufacturing processes.
We have CNC facilities for the fabrication of moulds. This process involves downloading the mould
designs from the CAD software and manufacturing instructions from the CAM software into the CNC
machines which will automatically fabricate the mould. The mould designs for our customers are
centralised and are stored in secure fire-protected facilities.
We also offer soft tool fabrication. Soft tool fabrication refers to the process of fabricating prototype
moulds for our customers which are used mainly in the prequalification process for the production of
thermoformed samples. By using soft tool fabrication, we generally take between one to two days to
produce a mould, thereby shortening the lead time required to produce the finished product which
would normally take a week or more. Overall, the soft tool fabrication process results in a shorter
time-to-market from design to product. The soft tool fabrication process also allows us to reduce the
total product development cost.
Polymer Development
Through Texpolymers, we are able to develop proprietary materials, provide customised compounds,
develop cost effective polymers and offer a greater variety of packaging materials to our customers with
a view to vertically integrating our existing operations to stay ahead of the competition. Through our
customer driven research and development efforts, we have developed new polymer compounds to
improve the quality of our products and have introduced more sophisticated and functionally effective
materials in our production.
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Clean Room Facilities
We also provide clean room facilities as required by some of our customers. These are located at our
production facilities in Johor, Penang and Ayutthaya. Our production facilities in Ayutthaya and Johor
are capable of maintaining a Class 100 environment for the cleaning and packing of our products. Class
100 is a standard of measurement for an environment where there are less than 100 particles per cubic
metre of air. Tray cleaning is performed with deionised water and packed in a controlled environment
to prevent contamination and to maintain the cleanliness standards required by our customers.
Our Products
Our products include thermoformed packaging products, precision injection moulded packaging,
extruded products, expanded polystyrene products as well as flexographic printing plates. Our products
are used in a variety of packaging functions, ranging from precision comb and hood parts for packing
highly-sensitive hard disk drive components, to thermoformed clamshells for packaging a variety of
consumer electronics and electrical goods. As part of our vertical integration, we also have polymer
compounding capability and manufacture extruded sheets which are used as raw materials for our
thermoformed packaging products.
A description of some of our products is set out below:
Product description
Application/final products
Industry
Thermoformed packaging
products
Clamshells, blister packs and
packaging trays
Semiconductor, consumer
electronics and electrical, data
storage and telecommunications
Precision injection moulded
products
IC trays, shipping hoods and
combs, plastic reels and other
precision moulded parts
Semiconductor and data storage
Embossed carrier tapes
Semiconductor components
packaging
Semiconductor and
telecommunications
Extruded sheets
Raw material for thermoformed
packaging products
Data storage and consumer
electronics
Extruded profiles
IC tubes, air conditioning gaskets,
vinyl tubes and other profile
products
Semiconductor and consumer
electronics and electrical
Expanded polystyrene moulded
products
Protective packaging, components
in air conditioners, insulation
structures, insulated concrete form
building system
Consumer electronics and
electrical, air conditioning and
housing
Flexographic printing plates
Flexographic printing plates for
printing
Flexographic printing and flexible
packaging
Film
Film for flexographic and offset
printing
Flexographic printing
Compounded polymers
Raw material for extruded sheets
and precision injection moulded
parts
Data storage and consumer
electronics and electrical
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Our Manufacturing Processes
Thermoforming
The thermoforming process produces plastic trays and clamshells from plastic sheets in roll form. The
key processes utilised in producing these plastic trays are heating, forming and punching. Certain
products may require cleaning with deionised water.
The plastic sheet is firstly heated and then vacuum-formed with the use of moulds to attain the required
shapes and sizes. The final process includes trimming of the formed parts into the required precise
dimensions. Deionised water is then used to clean the trays if required.
For tray cleaning, the individual tray is placed onto the conveyor of the tray cleaning machine where the
conveyor moves the trays through a series of deionised water sprays. Subsequently, the trays are
carried through hot air blowers for drying. These are then packed into clean bags to meet the
customers’ cleanliness requirements. Clean room environments are particularly important to some of
our customers who require the trays to be contamination-free.
Raw Material
Heating
Forming
Denotes optional stage
Packing
Punching/
Trimming
Deionised
Water Cleaning
Inspection
Drying
Precision Injection Moulding
Injection Moulded Tray
Disk Drive Precision Hood and Comb
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In the precision injection moulding process, the plastic raw material is pre-loaded into a material bin
prior to the injection process. An autoloader delivers the raw material into the injection machine hopper.
The raw material is then melted and thereafter injected under high pressure into the mould. The molten
polymer is then allowed to solidify and cool before being removed from the moulds. If required, the
precision injection moulded parts are cleaned with deionised water and dried with hot air blowers. The
finished products are then packed for delivery after the essential inspection.
Raw Material
Packing
Dehumidifying
Moulding
Inspection
Washing and drying
Carrier Tape Embossing/Forming
Embossed Carrier Tape
Carrier tapes are mainly used for the transportation of miniaturised IC and connectors and are
produced from extruded sheets. The process involves feeding the extruded sheet (usually of 12 to 44
mm in width) into the thermoforming or embossing machine. The extruded sheet is heated before being
formed and embossed into the required pocket shapes and dimensions through a continuous process.
Holes are punched onto the edges of the formed tape. The end product is then rolled into reels and
packed for shipment to our customers after the required inspection.
Raw Material
Forming/
Embossing
Heating
Packing
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Hole
Punching
Inspection
BUSINESS
Extrusion
Sheet Extrusion
Extruded Sheet
Extruded sheets are the raw material used in the production of thermoformed packaging products. For
the production of extrusion sheets, plastic resin or compound is fed into the extrusion machine. The
resin or compound then undergoes kneading and melting. Subsequently, the molten polymer is shaped
into sheet form through the extrusion die and then cooled. Both edges of the polymer sheet are then
trimmed. The tension of the sheet is controlled before it is wound into roll form. Critical criteria required
by our customers include ESD, mechanical and aesthetic properties.
Raw Material
Packing
Extruding
Trimming
Inspection
Winding
Profile Extrusion
Extrusion Shipping Tubes
Extrusion Profile
The profile extrusion process comprises primary and secondary processes. The primary process
involves making precision tubes or profiles while the secondary process involves printing, antistatic
dipping, pin insertion and packing.
In the primary process, the raw material is loaded into the extruder for kneading and melting before
being extruded out through a heated die, which cools and forms the molten plastic into the desired
shape and dimension. The solidified tube is slowly pulled out from the cooling tank by a pulling device
for a subsequent cutting process which will then cut the tubes into pre-specified lengths. Holes are also
punched at both ends of the cut tubes for pin insertions if required.
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In the secondary process, product information is printed using an offline printing process and if
required, the tube will be coated with antistatic chemicals and subsequently, pins or stoppers will be
inserted into the tubes. The products are required to go through necessary inspections prior to packing
for delivery to customers.
Primary Process
Raw Material
Extruding
Cooling
Cutting
Silk Screen
Printing
Punching
Anti-Static
Dipping
End Stopper/
Pin Insertion
Outgoing
Inspection
Secondary
Process
Packing
Expanded Polystyrene Moulding
Common packaging parts for television
EPS moulded parts attach to
corrugated carton tray
Automotive air conditioning condensing
unit insulator
HIPS laminated drain pan
for room airconditioner
This packaging is mainly used for the packing of consumer electronics and electrical appliances,
structural insulation and components for air-conditioners. The raw materials are firstly pre-expanded
using superheated steam in a batch pre-expander to the desired expansion ratio and subsequently
conditioned in the silos for aging. The aged pre-expanded materials are then fed to a moulding machine
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with a dedicated tooling where steam is used to further expand the materials within the mould cavities
to shape it into the required dimension. Parts are then dried in the oven before they are inspected and
finally packed into plastic bags or carton boxes as required.
Raw Material
Aging of Pre-expanded
Material
Pre-expansion
Packing
Inspection
Moulding
Drying
Compounded Polymers
Plastic compounds may include blends of two or more homogeneous polymers and polymers filled with
particulate solids and various ingredients.
Raw materials are fed into an extruder; where they are mixed and melted at high temperature. The
molten plastics (polymers) will be pressurised and then pumped out from a die in the form of strands.
These polymer strands are then sent through a water bath for cooling.
After cooling, the polymer strands will be dried through a dryer to remove the excessive water.
Subsequently the dried polymer strands are sent through a cutting machine (pelletiser) and are cut into
granulate form (pellets). Pellets will be packed in bulk bags for down-stream processes.
Raw Material
Extruder
Cooling
Packing
Pelletising
Drying
Quality
Inspection
If extruded sheets made from compounded polymers are required, the compounded polymer is
subjected to the sheet extrusion process as further described under “Business — Our Manufacturing
Processes” of this Prospectus.
The process for the manufacturing of flexographic printing plates involves two main stages. The first
consists of the preparation of the artwork, which involves conceptualising and designing the image to
be printed based on the customer’s instructions on the general presentation of the packaging of the
product and the information to be printed on the packaging. The information to be printed is dependent
to a large degree on the technical specifications of the customer’s product. Once the design of the
packaging is determined, the artwork is scanned and assembled with the use of special computer
software. A proof of the image is then produced and sent to the customer for final approval.
The second stage begins by sending the approved digital image to the film department where a film
negative is produced. Photopolymer sheets are then exposed to the film negative to form the printing
image. The exposed area of photopolymer sheet becomes insoluble through a polymerisation reaction
which is initiated by ultraviolet light. The unexposed area of photopolymer that is not polymerised is
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removed to produce a relief printing plate through the washout process. Once the washout process is
completed, the photopolymer plate is sent for drying to evaporate the solvents absorbed during the
washout process. Following this, the plate is sent for treatment before the finished plate is exposed
again to complete the polymerisation to achieve maximum durability. The finished plate is finally
checked for accuracy, print uniformity and surface quality (gallery proof).
Artwork/Image
Polymerisation
Film Negative
Washout
Drying
Packing
Gallery Proof
Second Exposure
Treatment
QUALITY AND RELIABILITY ASSURANCE
We are committed to maintaining high levels of quality and reliability assurance with respect to our
products. Our packaging products have to meet stringent material properties relating to cleanliness and
electrostatic conductivity to avoid contamination and damage caused by electrostatic discharge to the
components packed in them. Accordingly, our customers require appropriate standards of quality
control for our products prior to qualifying us as a supplier.
Quality Control
Quality control is conducted at various stages of our manufacturing process. There are principally three
stages of quality control. The first is the incoming quality control on the raw materials used for our
production, the second is the in-process quality control during the production stage and the last is the
outgoing quality control which is carried out on the final products.
In the first stage, the incoming raw materials are checked to ensure that all such incoming raw materials
conform to specified requirements such as dimensions, aesthetics, cleanliness and ESD properties
before processing or use in production. In the second stage, products being processed are subject to
in-process quality control inspections at appropriate points during processing. In the final stage, the
finished products undergo final inspection to ensure that they conform to customers’ requirements and
specifications, for instance, critical dimensions, aesthetics and cleanliness before the final products are
shipped to the customers.
Quality Certification
In terms of quality certification, Texpack (KL), TEP and Texpack attained the ISO 9002 Quality
Management System award in 1996 from SIRIM, which is the national organisation of standardisation
and quality in Malaysia. Texpack (Johor) also attained the ISO 9002 Quality Management System
award in 1999. These were subsequently upgraded to ISO 9001:2000. In January 2001, Texpack
achieved the ISO 14001:1997 certification for its environmental management system. More recently,
Sony awarded Texpack, Texpack (KL) and Texpack (Wuxi) the Sony Green Partnership, which is a
tie-up to ensure the production of environmentally conscious products. Eye Graphic has also had
success in terms of quality certification, as it was the first company in the flexographic printing industry
to achieve the ISO 9001:2000 Quality Management System award in 2002.
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Six-Sigma
Six-sigma is a structured approach to quality improvement based on five key steps, namely, define,
measure, analyse, improve, and control. Six-sigma provides a systematic, effective way to look at the
problem, using qualitative and statistical methods to analyse and identify a way to reduce process
variations. As a data-driven program, six-sigma works to build quality improvement skills in all parts of
a company. It is designed to analyse work, understand problems and identify better control methods to
reduce mistakes in achieving a target of 3.4 DPPM (which stands for defective parts per million), a near
zero defect and process capability.
As part of our commitment to high standards of quality control, we have implemented the six-sigma
methodology on a Group-wide basis except for Eye Graphic and Eye Graphic (Vietnam).
As at the Latest Practicable Date, 29 of our employees have been trained under the six-sigma
methodology.
AWARDS AND CERTIFICATION
As an endorsement of the quality of our products and services, we have been conferred the following
awards and certifications:
Company
Award
Date
TEP
Dock to Stock Certification presented by Texas Instruments for
meeting Texas Instruments’ Dock to Stock Certification
requirements
1994
TEP
ISO 9002:2000 conferred by SIRIM
1996
TEP
TEP upgraded Quality Management System to ISO 9001:2000
2002
TEP
Achievement Awards presented by RH Murphy in recognition of
quality and total performance
1998, 1999, 2000
TEP
TEP’s employees were awarded certificates by Seagate in
recognition of their achievement under the six sigma programme
2001
TEP
MS ISO 14001:2004 Environmental Management System by
SIRIM
2005
Texpack
Autonomous Quality Control Approval by Sony Electronics
Malaysia for excellence in quality management system and good
quality result
1995
Texpack
ISO 9002 conferred by SIRIM
1996
Texpack
Sony Audio Penang (M) Sdn. Bhd. presented a Certificate of
Appreciation to Texpack in recognition of their outstanding
performance in quality, delivery and cost in parts delivered
1996
Texpack
NPC Productivity Award conferred by National Productivity
Corporation in recognition of Texpack’s efforts in implementing
productivity improvement programmes and productivity
measurement activities
1999
Texpack
Best Supplier Award by Sony for excellence in cost, quality and
delivery
2000
Texpack
ISO 14001:1997 Environmental Management System
2001
Texpack
Flextronics Technology (Shah Alam) Sdn. Bhd. awarded Best
Performing Supplier to Texpack
2001
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Company
Award
Date
Texpack
Award presented by Seagate Technology in recognition and
appreciation of Texpack’s continuous support and contribution
2001, 2002
Texpack
Texpack upgraded Quality Management System to ISO 9001:2000
2002
Texpack
Sony Green Partnership for production of environmentally
conscious products
2003
Texpack
Award presented by the Japan Federation of printing industries for
best packaging design under the consumer electronics category
2005
Texpack (KL)
Productivity Improvement Award from Hitachi Aircon Product
Malaysia. This award was given to Texpack (KL) in recognition of
engineering initiatives that increased productivity and reduced
costs
1992, 1993
Texpack (KL)
AQCA certificate from Sony (Autonomous quality rating allowing
us to supply “ship to shore”)
1992
Texpack (KL)
Quality Improvement Award from Hitachi Aircon Product Malaysia.
This award was given to Texpack (KL) in recognition of
engineering initiatives that reduced rejection rates and costs
1995, 1999
Texpack (KL)
Silver Award from JVC Electronic Malaysia for excellence inservice support
1993
Texpack (KL)
Supplier Satisfaction Activity from Matsushita Aircon Group. An
award for Texpack (KL)’s engineering input
1995, 1996
Texpack (KL)
Best Quality Award from Hitachi Aircon Product Malaysia. An
award for zero line defects
1996, 2000
Texpack (KL)
Gold Award for packaging from Sony Bangi. An award for zero line
defects
1996
Texpack (KL)
ISO 9002 Quality Management System from SIRIM
1998
Texpack (KL)
Texpack (KL) upgraded Quality Management System to ISO
9001:2000
2001
Texpack (KL)
Special Effort Award from Matsushita Aircon Group. An award for
outstanding engineering efforts for cost reduction initiatives
1999
Texpack (KL)
Sony Green Partnership for production of environmentally
conscious products
2003
Texpack (Johor)
ISO 9002: 1994 Quality System from SIRIM
1999
Texpack (Johor)
Iomega Certified Supplier award
1999
Texpack (Johor)
ISO 9001: 2000 Quality Management System from SIRIM
2002
Texpack (Thailand)
ISO 9001: 2000 Quality Management System from the Anglo
Japanese American Registrars Inc. (AJA)
2002
Eye Graphic
ISO 9001: 2000 Quality Management System from BM Trada
2002
Texpack (Wuxi)
Sony Green Partnership by Sony Electronics (Wuxi) Co., Ltd.
2003
Texpack (Wuxi)
ISO 9001: 2000 Quality Management System from the United
Kingdom Accreditation Service (UKAS)
2003
Texpolymers
ISO 9001: 2000 Quality Management System conferred by SIRIM
2005
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CUSTOMERS AND MARKETS
For FY2005, we derived approximately 37.9%, 24.9%, 22.0% and 5.7% of our revenue from customers
in Malaysia, Thailand, the PRC and Singapore respectively, with the remaining being derived from
countries such as Japan, Vietnam, Philippines, Indonesia, Korea, Taiwan, UK and US (the “Remaining
Regions”). For HY2006, we derived approximately 32.1%, 25.3%, 21.0% and 6.8% from customers in
Malaysia, Thailand, the PRC and Singapore respectively, with the balance being derived from the
Remaining Regions. Our products are mainly sold to multinational corporations such as Seagate, Sony
and Solectron which export their final products worldwide. Seagate is in the data storage industry, Sony
is in the consumer electronics and electrical industry and Solectron is an electronics manufacturing
services provider. We sell mostly thermoformed trays and precision injection moulded trays to these
customers.
The following are our customers whose purchases constituted 5% or more of our sales in FY2003,
FY2004, FY2005 and HY2006:
Percentage of total sales (%)(1)
FY2003
FY2004
FY2005
HY2006
Name of Customers
Seagate
22.5
17.2
8.8
12.0
Solectron
13.1
20.9
15.4
11.1
–
1.6
10.9
7.8
–
–
2.6
6.3
8.2
6.5
6.2
5.1
6.5
7.2
2.8
3.4
Nidec
Hutchinson
Mektec
(2)
Sony
Note:
(1)
The above figures are percentages of total sales for the respective financial period. A decrease in one FY compared to the
previous may not necessarily represent a decrease in the absolute amount of sales to that particular customer.
(2)
Mektec, a company based in Japan and part of the Nippon Metron Global group of companies, manufactures flexible printed
circuit boards for use in the data storage and consumer electronics and electrical industries.
Our sales to Seagate decreased in FY2004 as Seagate delayed in the introduction of certain product
lines due to unfavourable market conditions at that time. Although our overall business derived from
Seagate increased in FY2005, a portion of the sales in connection with the increase in business was
channelled through certain of Seagate’s contract manufacturers and thus not reflected in direct sales
to Seagate.
Our sales to Solectron increased in FY2004 due mainly to the increased demand of Solectron’s
products from one of Solectron’s customers. Although, the absolute quantum of sales to Solectron
increased in FY2005, the percentage of our sales to Solectron in that year decreased due to the overall
increase in the total revenue of our Group.
The increase in our sales to Nidec in FY2005 was due to an increase in sales of thermoformed products
as a result of new products introduced by Nidec. Nidec, a company incorporated in Japan and listed on
the New York Stock Exchange, is one of the world’s largest producers of spindle motors for the hard
disk drive industry.
In HY2006, the increase in our sales of injection moulded trays to Hutchinson was due to new products
introduced by Hutchinson. Hutchinson, a company based in the US, is one of the world’s leading
producers for suspension assemblies in the hard disk drive industry.
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The decrease in sales to Sony in FY2005 was due mainly to lower demand for some of Sony’s products
lines.
To the best of our Directors’ knowledge, as at the date of this Prospectus, we are not aware of any
information or arrangement which would lead to a cessation or termination of our relationships with any
of our current major customers.
None of our Directors or substantial shareholders has any interest, direct or indirect, in any of our major
customers listed above.
SUPPLIERS AND RAW MATERIALS
The raw materials that we use are sourced locally and overseas. To ensure competitive pricing and
reliability of supply, we source our raw materials from a pool of suppliers with established business
relationships with our Group. Our principal suppliers have been supplying raw materials to us for at
least four years. To minimise dependence on any one particular supplier, efforts are made to ensure
that each type of raw material is sourced from several suppliers. Our thermoforming process utilises
extruded sheets, some of which we produce in-house, as raw material. This also decreases our
dependence on third party suppliers to a certain extent. Apart from extruded plastic sheets, we use
various types of plastic resins as the principal raw material in our manufacturing processes.
It is usual for some of our customers to designate the grade of the plastic film or resin to be used and/or
the suppliers from whom we are to purchase such plastic film (or resin). There are limited suppliers for
certain grades of plastic film or resin. For instance, we have had to purchase certain grades of extruded
sheet from a single supplier which accounted for approximately 26.7%, 34.4%, 33.0% and 30.1% of our
total purchases for FY2003, FY2004, FY2005 and HY2006, respectively. Please refer to “Risk Factors”
of this Prospectus for more details on the risk factors relating to our raw material supplies.
The following are our suppliers whose sales constituted 5% or more of our purchases in FY2003,
FY2004, FY2005 and HY2006:
Name of Suppliers
Percentage of total purchases (%)
FY2003
FY2004
FY2005
HY2006
Texchem Materials Sdn. Bhd.(1)
RTP Company (S) Pte. Ltd. (“RTP”)
26.7
34.4
33.0
30.1
3.5
2.4
6.4
9.3
Note:
(1)
TRB, our Controlling Shareholder, owns the entire issued and paid up share capital of Texchem Materials.
We purchase extruded sheets from Texchem Materials that are produced by the Klockner group of
companies, which we require as raw material for products that we manufacture for one of our major
customers. RTP is a supplier of polycarbonate compound which we use as raw material in the
manufacture of products for one of our major customers.
Save as disclosed above and in “Risk Factors” of this Prospectus, we believe that we are not dependent
on any single supplier for our raw materials. The raw materials supplied by our major suppliers are
readily available in the market and can be easily sourced from other alternative suppliers. We have not
entered into any long-term supply contracts for the purchase of our raw materials as we prefer to have
the flexibility of buying from any supplier who is able to supply raw materials of the required quality at
competitive prices.
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Save as disclosed above, none of our Directors or substantial shareholders has any interest, direct or
indirect, in any of our major suppliers listed above. For further discussion of the relationship between
us and Texchem Materials, please refer to “Interested Person Transactions and Conflicts of Interests”
of this Prospectus.
MARKETING AND DISTRIBUTION
As our business is technology based, we employ front-end marketing to work closely with our key
customers in the development of their products which require our packaging products and expertise. To
this end, we have established a strategic accounts management methodology to identify our key
customers who are serviced by our Group Business Development and Group Manufacturing
Technology divisions. This strategy provides two-fold benefits by firstly, enhancing our working
relationships with these customers and secondly, improving the design and performance, as well as
time-to-market of our products. Our Group Manufacturing Technology division has overall charge of our
Group’s key manufacturing technologies and processes, thereby ensuring consistent implementation
throughout our entire Group. This is an important factor in our ability to offer multi-site production
facilities which is an essential component of our marketing strategy. As part of our aim to be an
integrated-technology packaging solutions provider, we also develop new polymer compounds through
Texpolymers (that have enhanced properties or are more cost-efficient) as may be required by our
customers.
Although our management and marketing teams place great emphasis on the semiconductor,
consumer electronics and electrical, data storage and telecommunications industries, we also intend to
expand into the automotive and medical industries. We take a proactive approach to marketing by
conducting market research on the various industries, identifying the key players and their products,
their packaging requirements and how our products can serve them. Once we have identified the
products which we can provide, we then conduct internal feasibility studies to determine how we can
add value to the products currently used by leveraging on our technology and design expertise.
We have developed strategic relationships with certain parties that enable us to improve our
technological capabilities as well as assist in our efforts to market and distribute our products. For
example, we have been in collaboration with companies based in the US such as Merrill’s Packaging,
Inc. (“Merrill’s”) and Precision Forming, LLC, which are established companies that have expertise in
the business of thermoforming and precision thermoforming respectively. These companies assist us
by marketing our products to their customers whilst providing us with their technical know-how and
design capabilities. In return, we pay a sales commission based on a percentage of sales or profit for
the products marketed by them. We have also established an arrangement with a precision injection
moulded components design and marketing company based in the US, the terms of which are similar
to those under our agreements with our other strategic partners.
We leverage on the close relationships with our customers to obtain referrals to the other suppliers in
their supply chains which may require our products. These customers may also specify in their
agreements with these suppliers that they are required to buy their raw materials or packaging from us.
We also believe in cultivating enduring business relationships and being a supplier of choice to our
major customers. We believe that this may be achieved by consistently delivering products that meet
customers’ specifications in a timely manner, competitive pricing of our products and being responsive
to our customers’ needs. Our distribution strategy ensures that we are able to respond to our customers
in a timely manner, as our facilities are located in close proximity to our customers’ operations and each
facility is adequately equipped to handle the relevant production requirements.
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Our sales network has a broad regional coverage. We have sales offices in various parts of Malaysia,
Thailand, Vietnam and the PRC, being areas in which our major customers have operations.
INTELLECTUAL PROPERTY
The nature of our business generally does not require any brand differentiation and thus we do not
usually market our products under any particular trademark or logo. We do, however, print our name
and/or our logo on some of our products. Our Group and the TRB Group use the same logo design. Our
Group has entered into a licence arrangement with Texcorp pursuant to which Texcorp has permitted
us (for a nominal consideration of S$1.00) to use the TRB Group’s logo for as long as our Company is
a subsidiary of TRB. The use of the logo extends to our subsidiaries and related corporations.
Although we do not believe that our operational success will depend to any significant extent on our
ability to develop unique intellectual property, we have applied for the following patents:
Company
Place of Application
Description of Patent
Status
Texpack
US
Tray for storing semiconductor chips
Granted(1)
Texpack
US
A tray for semiconductor packaging
Granted(2)
Texpack
Taiwan
Granted(3)
Texpack
Malaysia
Filed/Pending(4)
Texpack
Thailand
Filed/Pending(5)
Note:
(1)
Duration of patent is 20 years from 1 March 2001.
(2)
Duration of patent is 14 years from 21 May 2002.
(3)
Duration of patent is 20 years from 21 September 2002.
(4)
The patent application was filed on 1 December 2000 and is expected to be granted within two to three years from the Latest
Practicable Date.
(5)
The patent application was filed on 3 May 2001 and is expected to be granted within four to six years from the Latest
Practicable Date.
In addition, we also utilise certain industrial designs, the details of which are set out below:
Description of Industrial design
Date of Grant/Renewal
of Certificate of
Registration
Expiry Date
Malaysia
23 November 2005
31 March 2010
Texpack
Malaysia
23 November 2005
9 December 2010
TEP
Malaysia
A tray
11 August 2005
29 July 2010
Company
Place of
Application
Texpack
In our manufacturing processes, we utilise certain licences from our strategic partners. Please refer to
“Business — Marketing and Distribution” and “Business — Research and Development” of this
Prospectus for further information.
Where appropriate, we will continue to use patent and other relevant intellectual property laws to
protect our intellectual property rights. Where we are aware of intellectual property rights of others that
may pertain to or affect our business, we will attempt to either avoid processes protected by such rights,
cross-licence or otherwise obtain the rights to use such intellectual property.
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RESEARCH AND DEVELOPMENT
We place substantial emphasis on the area of research and development in relation to the design of our
products, development of new products and the enhancement of our existing products as we believe
that our continued success depends to a significant extent on maintaining or even improving our
technological capabilities.
Our primary focus in the area of technological development is the continuous development of new
products and designs in consultation with our customers. Each packaging production facility has its
own design team to handle their specific local requirements. In addition, we have a central design
centre located at the premises of Texpack in Penang, Malaysia to oversee Group-wide projects and to
provide technical support for more complicated designs. We also undertake substantial efforts to learn
and develop new thermoforming, expanded polystyrene moulding and precision injection moulding
processes.
As part of our efforts to improve our expertise, we have entered into strategic alliances with certain
parties to complement our business development activities and our own research and development
efforts so as to enhance our competitiveness. Through these alliances, we have gained access to new
business opportunities as well as enhanced our technological capabilities. For example, we have a
technical collaboration with Rapro Pack, a company based in Japan primarily engaged in the design,
manufacture, mass production and sale of vacuum formed packaging products. This collaboration
involves sending our engineers to Rapro Pack’s premises in Japan for training and in return, we pay
Rapro Pack a fixed technical fee. Our technology partnership started in 1994 when Rapro Pack became
a shareholder of Texpack. Rapro Pack subsequently divested its shares in Texpack in 1995 when TRB
bought over Texpack (Please refer to “Business — History and Development of our Group” for further
details). Rapro Pack is also a minority shareholder in TRB, our Controlling Shareholder, with a
shareholding interest of less than 1%.
More recently, we entered into a technical assistance agreement with Daiichi Kasei Co., Ltd. (“Daiichi
Kasei”), a company based in Japan and engaged in the business of plastic injection moulding. This
arrangement involves Daiichi Kasei sending technical personnel to Texpack (Thailand) and TEP to
provide the necessary assistance for the improvement of our precision injection and tooling technology.
In return, we pay Daiichi Kasei a fee based on a percentage of the sales of Texpack (Thailand) and TEP.
We established our Polymer Research Centre in March 2001 at the premises of Texpack in Penang,
Malaysia to undertake research and development activities in relation to plastic polymers to be used as
raw materials for our plastic packaging products. Such research and development activities have since
been transferred to Texpolymers, following its establishment in January 2005. The establishment of
Texpolymers is a reflection of the increasing importance that we place on the development of
customised raw materials for our packaging products. Please refer to “Business — History and
Development of Our Group” of this Prospectus for further details of the establishment of Texpolymers.
As part of our drive to innovate, we also have technical collaborations with the University of Akron in
the US and with Professor Masao Sumita of the Tokyo Institute of Technology for research and
development in the area of packaging materials. These collaborations involve Texpolymers sponsoring
research programmes in return for an exclusive licence to develop and exploit any discovery made
under such programmes in consideration of a stipulated rate of royalty. Please refer to “Interested
Person Transactions and Conflicts of Interests — Past Interested Person Transactions — Assignment
of research agreements to and reimbursement of research and development costs by TRB” of this
Prospectus for further information.
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In addition to our in-house design and development centre, we have mould fabrication capabilities. We
maintain CNC facilities with centralised document control and all mould designs for our customers are
centralised and stored in secure fire protected facilities. We also offer soft tool fabrication which
facilitates important prequalification for many customers. These soft tools are faster to produce but are
less durable than normal tooling and are used mainly as a prequalification tool for the production of
samples. An initial trial run of the product using the soft tool can produce a few hundred pieces which
is sufficient for the customer to ensure the proper functioning of the product and to distribute to the
customer’s end users for sampling purposes.
The use of CAD/CAM software and CNC machines to fabricate such moulds offer manufacturing
advantages over the traditional method as it requires a shorter lead time, less cost to manufacture and
ensures the consistency of the replica mould.
Our spending on research activities in FY2003, FY2004, FY2005 and HY2006 amounted to
approximately RM955,000, RM861,000, RM2,214,000 and RM1,002,000 respectively, representing
0.7%, 0.6%, 1.1% and 0.9% of our revenue for the respective financial periods.
STAFF TRAINING
We believe in providing our employees with the necessary training to ensure that they are equipped
with the right set of skills for proper job performance. For instance, we provide on-the-job training for
our employees to familiarise them with our work requirements. We also provide our employees with
human resource training. These courses cover areas ranging from technical to management and
supervisory skills.
We also send our technical staff on external courses relating to materials properties, product design,
process control and other relevant subjects which are held in Japan or the US.
COMPETITION
We believe that we face competition mainly from several large foreign companies (some of which have
manufacturing plants in Asia) and some small and medium sized local companies involved in the
plastics packaging industry. Some of these manufacturers have fundamentally similar capabilities and
compete with us on key attributes which include manufacturing competency, reliability and quality of
products and services, pricing, time-to-market and available production capacity.
We believe that the following are our main competitors:
•
Prent (Malaysia) Sdn. Bhd.;
•
Vitalo Packaging International; and
•
Peak International Limited;
(including their subsidiaries, affiliates and other related companies, as the case may be).
We believe that the primary elements of competition in our industry includes factors such as technology,
quality, pricing, responsiveness, service as well as proximity to our customer’s production facilities.
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COMPETITIVE STRENGTHS
We believe that we possess the following strengths that benefit our customers and differentiate us from
our competitors:
We are an integrated technology packaging solutions provider with multi-site production
facilities
Being vertically integrated, we incorporate various elements including material customisation,
packaging design, mould fabrication, high volume manufacturing, inventory management, quality
assurance, just-in-time delivery and even recycling in the provision of our customised packaging
solutions. Our vertical integration also extends to producing extruded plastic sheets, which is the raw
material for thermoforming products, as well as customised compounded polymers (which are the basic
raw materials for the production of extruded plastic sheets).
We believe that our ability to provide a full range of packaging related services and products results in
shorter lead-times between the design stage and the production stage for our customers. It also
reduces logistics problems for our customers arising from the use of multiple suppliers, thereby
allowing our customers to reduce their costs and the time-to-market for their products.
With our multi-site production facilities located in Malaysia, Thailand, the PRC and Vietnam, we are
able to shorten our delivery times and provide just-in-time delivery by being located in close proximity
to our major customers’ operations. This allows us to be responsive to our customer needs whilst
allowing them to benefit from reduced logistics and transportation charges.
We currently have ten production facilities in the region. If one production facility is unable to meet its
production demands, the others can increase production, acting as a buffer. Hence, we are able to
minimise any slippage in our delivery schedules. Our production resources give us the ability to handle
and execute high volume orders.
We are committed to high standards of service and quality
One of the key elements of our commitment to service is our policy of maintaining close proximity to our
customers’ operations to better serve them. This is best reflected in the location of our production
facilities and in our strategy of remaining close to our customers (further described under “Business —
Business Strategy” of this Prospectus).
With our commitment to service and quality and our years of experience in servicing our customers in
the semiconductor, consumer electronics and electrical, data storage and telecommunications
industries, and our familiarity with our major customers, we believe that we have established a
reputation as a specialist in the provision of packaging solutions. To the best of our knowledge, we are
among the few industry players in this region who are directly involved in the initial design stages for
various customer product development projects. Through our early involvement in these projects,
which can take up to one year from conceptualisation to mould acceptance and commencement of
commercial production, we have been able to strengthen our relationships with our customers and
improve our competitive position as a key supplier vis-à-vis other industry players.
To further enhance our relationships with our key customers, we have established our Group Business
Development and Group Manufacturing Technology divisions to better service our key customers. Our
Group Business Development division has full charge of key customer accounts and is responsible for
the development of business plans and new products in close consultation with our customers and is
thus able to respond quickly to customer needs and conceptualise comprehensive solutions. Our
Group Manufacturing Technology division has overall charge of our Group’s key manufacturing
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technology and processes, thereby ensuring consistent implementation throughout our entire Group
and allowing our products to be produced in a timely and cost-efficient manner without compromising
our quality standards.
Our commitment to quality has also led to accreditations from SIRIM and other certifications of quality
from our customers. We have also received numerous awards for service and quality from our
customers. Please see the sections “Business — Quality and Reliability Assurance” and “Business —
Awards and Certification” of this Prospectus for further details.
We have advanced design and mould fabrication capabilities
We use 3D CAD/CAM software and CNC facilities for our product design. These facilities allow the
customer to visualise our products in a three-dimensional format without having to build an actual
model. In addition, adjustments and modifications to the designs of our packaging products can be
made rapidly, even as the designs for our customers’ products are being fine-tuned. This significantly
shortens the entire product design process, which, we believe, gives the customer confidence in our
products and capabilities. Members of our design team have between three and ten years of
experience.
Our in-house design and development centre has worked closely with key customers to develop a
number of products:
•
hard disk drive clamshells to protect the assembled disk drive;
•
head stack assembly tray for our customers from the data storage industry;
•
transparent clamshells for audio products;
•
flex circuit trays and bracket trays for customers in the data storage industry; and
•
trays for cleaning, shipping and substrates packaging.
We are focused on technology advancement and research and development
Through our customer driven research and development efforts, we are developing new polymer
compounds to improve the quality of our products. Please see “Business — Research and
Development” and “Business — Marketing and Distribution” of this Prospectus for further details.
Our emphasis on technology also extends to the area of process improvement. Through our internal
developmental efforts, we have developed processes that have increased cost-efficiencies and added
flexibility with respect to our manufacturing capabilities. This has allowed us to keep to our delivery
schedules, execute high volume orders and ramp up production of new products quickly.
We have a strong management team
We believe that our management team has the relevant experience and professional skills to lead the
Group through future challenges. Our management team is led by our Executive Chairman, Dato’ Seri
Fumihiko Konishi, who is responsible for the overall business strategy of our Group. His entrepreneurial
qualities and determination have played an important role in the growth of the TRB Group from its
humble beginnings in the early 1970s to a diversified manufacturing and trading group today. He is ably
assisted by our Deputy Chairman and Chief Executive Officer, Lee Siew Khee, Jeffrey, who has more
than 20 years of experience in the field of marketing, particularly in the sale of plastics and chemicals,
and our President and Chief Operating Officer, Yap Kee Keong, who has a wealth of experience in the
sales, marketing and distribution of industrial raw materials, as well as relevant experience in the
electronics packaging manufacturing sector.
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Dato’ Seri Fumihiko Konishi, Mr Lee and Mr Yap are supported by an experienced and professional
team. Please see “Management” of this Prospectus for details of their qualifications and experience.
GOVERNMENT REGULATIONS
The main regulations governing the operations of our factories in Malaysia, Vietnam, Thailand and the
PRC are described below.
We have obtained the necessary business licences for our day-to-day operations. Save as disclosed
under “Risk Factors” of this Prospectus and below, we are not subject to any special legislation or
regulatory controls in the countries in which we operate which has a material effect on our business
operations, other than those generally applicable to companies and businesses in such countries.
Malaysia
Environmental requirements in Malaysia
The Environmental Quality Act, 1974 of Malaysia (“EQA”) and the regulations and orders made
thereunder are legislation relating to the prevention, abatement, control of pollution and enhancement
of the environment in Malaysia. The EQA provides inter alia, that no person shall unless licensed under
the EQA, emit or discharge any environmentally hazardous substances, pollutants or wastes into the
environment in contravention of acceptable conditions. The Director General of Environmental Quality
has been appointed to administer the EQA and any regulations and orders made thereunder.
Securities requirements in Malaysia
As at the Latest Practicable Date, pursuant to the Guideline on the Acquisition of Interests, Mergers and
Take-overs by Local and Foreign Interests issued by the FIC (the “FIC Guidelines”), the prior approval
of the FIC is generally required, inter alia, for any proposed acquisition of 15% or more of the voting
rights by any one foreign interest or proposed acquisition by any associated or non-associated group
of foreign interests in the aggregate of 30% or more of the voting right of a Malaysian company or
business. A foreign interest includes companies or institutions incorporated outside Malaysia.
Foreign Participation in Distributive Trade in Malaysia
Pursuant to the Guidelines on Foreign Participation in the Distributive Trade Services in Malaysia (“the
CDT Guidelines”), with effect from 1 December 2004, all proposals for foreign involvement in the
distributive trade in Malaysia must obtain the approval of the Committee on Distributive Trade (“CDT”),
Ministry of Domestic Trade and Consumer Affairs (“MDTCA”). Distributive traders include
manufacturers and suppliers who distribute their products in the domestic market. Pursuant to these
guidelines, such a manufacturing company which distributes its products in the domestic market must
be locally incorporated and this entity will be subjected to the rules and conditions laid down in the CDT
Guidelines. No CDT approval was obtained by the Company in its acquisition of the Malaysian
subsidiaries. However, like the FIC Guidelines, the CDT Guidelines does not have the force of law (as
it is not legislation passed by the Malaysian parliament or regulations under any existing laws) and does
not impose any penalty for non-compliance.
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Consequences of Non-Compliance of the FIC Guidelines and CDT Guidelines
Although the FIC Guidelines and CDT Guidelines do not have the force of law (as they are not
legislation passed by the Malaysian parliament or regulations under any existing laws) and do not
impose any penalty for non-compliance, there are indirect sanctions that the FIC and CDT can impose.
For example, the FIC and CDT could persuade local authorities (such as the immigration department
or the local town council) not to grant to companies who are not in compliance with the FIC Guidelines
or CDT Guidelines, licences or permits that may be required under Malaysian law relating to the
operations of the company.
MITI Licences
Pursuant to the Industrial Co-ordination Act 1975 of Malaysia, persons involved in any manufacturing
activity in Malaysia must obtain a licence from the Ministry of International Trade and Industry (“MITI”)
to engage in such manufacturing activity if the manufacturing company’s shareholders’ funds is RM2.5
million or above or if it employs 75 or more full time employees.
The MITI may, in its discretion, having regard to the national economic, social objectives and promotion
of the orderly development of manufacturing activities in Malaysia, impose certain conditions for the
issuance of the manufacturing licence and non-compliance with such conditions may result in the
manufacturing licence being revoked. As at the Latest Practicable Date, any acquisition of interest in
a company issued with a manufacturing licence by the MITI is exempted from the FIC Guidelines. Such
acquisition only requires the prior approval of the MITI or the notification to the MITI of any sale of
shares in such a company as the case may be and does not require the approval of the FIC.
Our Malaysian subsidiaries hold various licences granted by the MITI for the manufacture of our
products. These licences are subject to various conditions, including the requirement that TRB
maintains an effective interest of 51% or more in each of the share capital of four of our Malaysian
subsidiaries, namely Texpack, TEP, Texpack (KL) and Texpack (Johor) whereas the manufacturing
licences granted to Texpolymers and Eye Graphic stipulate that the MITI must be notified in the event
of any sale of shares in such companies.
Vietnam
While Vietnam has recently opened up its economy, the political, regulatory and economic outlook for
businesses and investors in Vietnam is not certain. The Vietnam government is still in the process of
developing its legal system, so as to meet the needs of investors and to encourage foreign investment.
Being aware of the importance of foreign direct investment for the industrialisation of Vietnam, in order
to attract foreign direct investment, the National Assembly of Vietnam initially passed the Law on
Foreign Investment in December 1987, which was subsequently revised four times in 1990, 1992, 1996
and 2000. Recently, the new Law on Investment in Vietnam came into effect on 1 July 2006, to replace
the previous Law on Foreign Investment. The Government of Vietnam is in the process of issuing
detailed guidelines on the implementation of the said new Law on Investment of Vietnam. Any future
changes to governmental guidelines, laws or regulations or the introduction of new regulations
governing foreign ownership could also affect our investments in our Vietnam subsidiaries, which may
affect the operations and profitability of our Group.
Furthermore, precedents on the interpretation, implementation and enforcement of Vietnam laws and
regulations are limited. Accordingly, the outcome of dispute resolution may not be as consistent or
predictable as in the other more developed jurisdictions and it may be difficult to obtain swift and
equitable enforcement of the laws in Vietnam or to obtain enforcement of judgement by a court of
another jurisdiction.
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Foreign ownership requirements in Vietnam
Texpack (Vietnam) and Eye Graphic (Vietnam) are currently subsidiaries of our Company. As the
Vietnam government is still in the process of developing its legal system, any future changes to
governmental guidelines, laws or regulations or the introduction of new regulations governing foreign
ownership may affect our equity interests in Texpack (Vietnam) and Eye Graphic (Vietnam). In the event
that we are required to dilute our equity interests in both of the companies, the profitability of our Group
may be affected. However, according to the new Law on Investment (effective from 1 July 2006), if a
newly promulgated law or policy adversely affects the lawful benefits enjoyed by an investor prior to the
date of effectiveness of such law or policy, the investor shall be guaranteed to enjoy incentives the
same as the investment certificates or there shall be resolution by one or a number of all of the following
methods: (a) continuation of enjoyment of benefits and incentives; (b) there shall be a deduction of the
loss from taxable income; (c) there shall be a change of the operational objective of the project; or (d)
consideration shall be given to paying compensation in necessary circumstances.
Foreign exchange control in Vietnam
Currently, there is no restriction on repatriation of dividends from Texpack (Vietnam) and Eye Graphic
(Vietnam) provided that the dividends are remitted in foreign currencies, except that any payments in
foreign currencies overseas will be subject to clearance by banks in Vietnam (who will normally require
supporting documents and evidence proving that Vietnam tax liabilities, if any, on the payments have
been settled). However, we cannot provide any assurance that the Vietnamese authorities will not
impose restrictions on the convertibility of the Dong. Should the Vietnamese government tighten or
otherwise adversely change the foreign exchange rules or exchange rate, our earnings, cash flow and
ability to pay dividends could be affected. Please refer to “Exchange Controls” of this Prospectus for
more details.
The PRC
Government Approval on Foreign Investment
Under PRC law, the approval of various government authorities are required to be obtained for the
incorporation of Texpack (Wuxi), and to enable it to commence business. In this regard, the
establishment of Texpack (Wuxi) was approved by the PRC government on 15 May 2002. The requisite
business licence was issued by the Administration of Industry and Commerce on 29 May 2002.
Registration with Relevant Government Authorities
In addition to the abovementioned approvals, Texpack (Wuxi) has obtained all necessary certificates
from various government authorities required for the conduct of their business and operations in the
PRC.
We are required to comply with the relevant PRC environmental protection laws and regulations such
as the Environmental Protection Law of the PRC, Water Pollution Prevention Law of the PRC, Air
Pollution Prevention Law of the PRC, Solid Waste Pollution Prevention Law of the PRC, Regulations
on Noise Pollution Prevention of the PRC, and other local regulations. Such laws and regulations set
out the standards for disposal of residuals, waste water, gas and noise pollution.
The environmental protection departments of local governments shall have the authority to conduct
environmental supervision and management and to make on-site inspection on the work units within
their jurisdictions. The work units being inspected shall truthfully report the situation and provide
necessary information to these government departments.
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Thailand
Texpack (Thailand) has been granted four permits by the Board of Investment of Thailand (“BOI”) that
allow it to enjoy certain fiscal and non-fiscal incentives. These privileges include (a) the right to bring
into Thailand such number of foreign nationals as skilled workers or specialists and their spouses and
dependants at such times as stipulated by the BOI, (b) the right to own land in Thailand as BOI deems
appropriate, (c) an exemption from payment of import duties on machinery as approved by BOI, (d) an
exemption from corporate income tax on net profits derived from the promoted activities, namely the
manufacture of thermo-vacuum forming trays for a period of seven years from the date Texpack
(Thailand) earns income from such operations. If losses are incurred during the above exemption
period, Texpack (Thailand) will be allowed to deduct such losses from the net profits accrued for five
years after the expiry of the exemption period for tax purposes, (e) the right to exclude dividends
derived from the Promoted Business from the computation of income tax during the exemption period,
(f) exemption of import duties on raw materials and essential materials imported specifically for
production for the purposes of export, such exemption to apply for one year since the first date of
import, (g) exemption of import duties on items which Texpack (Thailand) imports for export, such
exemption to apply for one year from the date of first import, (h) the first five percent increase in export
income will be deductible during the first 10 years that Texpack (Thailand) generates income, and (i)
permission to remit foreign currencies out of Thailand.
Please see Appendix G for the English translations of the text of the four permits granted by the BOI
to Texpack (Thailand) for a full description of the privileges enjoyed by Texpack (Thailand) as well as
the conditions attached to these permits.
As at the date hereof, to the best of the knowledge and belief of our Directors, we have complied with
the various conditions attached to the permits and licences we have obtained for our operations.
PROPERTIES AND FIXED ASSETS
Properties
We own the following properties:
Total land
area (sq ft)
Gross
built-up
area (sq ft)
Title/Location
Use of Property
Tenure
Lot No. P.T. 2945 HS(D) 14896 (previously
known as HS(D) 3239), Mukim 11, Daerah
Seberang Perai Tengah Negeri Pulau
Pinang together with a factory erected
thereon bearing address No. 1465 Mukim
11, Lorong Perusahaan Maju 6
Fasa 4, Kawasan Perindustrian Perai,
13600 Perai, Pulau Pinang, Malaysia
Office, factory and
warehouse
Leasehold 60 years
(expiring 29 June
2052)(1)
172,478
76,980
HS(D) 132492, PT 58 Section 23, Town of
Shah Alam, District of Petaling, Selangor
together with a factory erected thereon
bearing address No. 1 Persiaran
Perusahaan, Seksyen 23, 40000 Shah
Alam, Selangor Darul Ehsan, Malaysia
Office, factory and
warehouse
Leasehold 99 years
(expiring 30 May
2098)(1)
167,713
76,338
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Title/Location
Use of Property
Tenure
HS (D) 12569 (previously known as 6956)
Lot 1241, Mukim 12, District of Barat Daya,
Penang together with a factory erected
thereon located at Part of Lot 1241, Phase
III Bayan Lepas Free Industrial Zone 11900
Penang, Malaysia
Office, factory and
warehouse
Leasehold 60 years
(expiring 27 August
2041)(1)
Geran 73049 Lot No. 64323 (previously
held under title HS(D)218101, PTD111478)
Mukim Plentong, District of Johor Bahru,
Johor Darul Ta’zim, together with a factory
building erected thereon bearing address
No. 3, Jalan Mutiara 7 Taman Perindustrian
Plentong 81750 Masai Johor Darul Takzim,
Malaysia
Office, factory and
warehouse
Freehold(1)
Strata Title: PN 2208/M3/4/223 and PN
2208/M3/4/210, Lot 5797, Mukim 11,
Seberang Perai Tengah, Negeri Pulau
Pinang for 2 units of flats which bear the
address of Block F107, Units No: 4–2 &
4–15, Jalan Pelangi 2, Taman Pelangi
13600 Perai, Penang, Malaysia
Residential(2)
Leasehold 99 years
(expiring 22 April
2092)(1)
HS(M) 1393, Lot 6040, Mukim 11 of
Seberang Perai Tengah, State of Pulau
Pinang with a factory building erected
thereon bearing address at 5, Lorong
Perusahaan Maju 11, Taman Perusahan
Pelangi, 13600 Prai, Pulau Pinang, Malaysia
Office and factory
Freehold(1)
Total land
area (sq ft)
Gross
built-up
area (sq ft)
164,524
60,132
42,184
31,800
N.A.
11,550
700 each
6,678
Notes:
(1)
The above properties are free from encumbrances.
(2)
These apartments were originally acquired to serve as accommodation for our foreign workers but are currently rented out
to third parties.
107
BUSINESS
We currently lease the following properties:
Title/Location
Use of Property
Annual Rental
Area
Tenure
Lessor
250/1 Moo 2, Bangpa-In
Industrial Estate, Ayutthaya
Province, Thailand
Office and factory
THB1,140,000
3,728 sq m
(land)/1,500
sq m (factory
office)
19.5 months
from 1 June
2005
Ticon Industrial
Connection Public
Company Limited
28/6 Moo 9 (Building 2),
Chiangraknoi Sub-district,
Bangpa-In District,
Ayutthaya, Thailand
Warehouse
THB518,400
1,920 sq m
36 months
from
1 September
2005
Ms Nonglak
Suphaibunphiph-at
249 Moo 2, Bangpa-In
Industrial Estate, Ayutthaya
Province, Thailand
Office and factory
THB756,000
2,560 sq m
(land)/1,125
sq m (factory
office)
19.5 months
from 1 June
2005
Ticon Industrial
Connection Public
Company Limited
28/6 Moo 9, (Building 3)
Chiangraknoi Sub-district,
Bangpa-In district,
Ayutthaya Province,
Thailand
Warehouse
THB165,888
768 sq m
24 months
from
16 March
2006 to
15 March
2008
Ms Nonglak
Suphaibunphiphat
District A, Wangzhuang
Industrial Park 2, Wuxi
National High-Tech
Zone, Wuxi, Jiangsu,
PRC
Premises office,
factory and
warehouse
RMB484,012.80
3,361.2 sq m
3 years from
1 April 2006
to 31 March
2009
Wuxi New Zone
Wang Zhuang
Gaotian Resident
Committee
No. 28–71, ChangJiang
Nan-Lu, Wangzhuang
Industrial Park 2, Wuxi
National High-Tech
Zone, Wuxi, Jiangsu,
PRC
Office, factory and
warehouse
RMB556,416
3,312 sq m
5 years from
1 July 2005
Wuxi New Zone
Wang Zhuang
Guojia Bridge
Resident
Committee
243-243B (Unit 116)
Hoang Van Thu Street, Tan
Binh District, Ho Chi Minh
City, Vietnam
Office
USD680 per month
inclusive of VAT,
maintenance and
service charges
28.7 sq m
1 year from
1 October
2006
Tecasin
Km 92, Road No. 5, Hung
Vuong Ward, Hong Bang
District, Hai Phong City,
North Vietnam
Office, factory and
warehouse
USD1,163.20 per
284.40 sq m
month from 2004 to
2007, USD1,365.12 per
month from 2008 to
2010 and USD1,564.20
per month from 2011
onwards (exclusive of
10% VAT)
10 years
from
1 October
2004
Royal Security
Service Company
No 26 Road 3A, Bien Hoa,
Bien Hoa Industrial Zone
2, Dong Nai Province,
Vietnam
Office, factory and
warehouse
USD2,741.60 per
month from January
2003 to December
2005 and USD3,576
per month from
January 2006 onwards
(exclusive of 10% VAT)
10 years
from 10 April
2003
Corporation for
the development
of Bien Hoa
Industrial Zone
(Sonadezi Bien
Hoa)
108
4,211 sq m
(land)/1,192
sq m (builtup)
BUSINESS
Title/Location
Use of Property
Annual Rental
Area
Tenure
Lessor
No 28 Road 3A, Bien Hoa,
Bien Hoa Industrial Zone
II, Long Binh Ward, Bien
Hoa Town, Dong Nai
Province, Vietnam
Office, factory and
warehouse
USD2,547.71 per
month from April 2000
to December 2003 and
USD3,323.10 per
month from January
2004 onwards
(inclusive of 10% VAT)
2,640 sq m
(land)/1,007
sq m (builtup)
15 years
from
7 December
2000
Corporation for
the development
of Bien Hoa
Industrial Zone
(Sonadezi Bien
Hoa)
No 6 & 6A, Jalan Tampoi
7/4 Kawasan Perusahaan
Tampoi, 81200 Johor
Bahru, Johor Darul Takzim,
Malaysia
Sales Office
RM7,920
250 sq ft
2 years
commencing
1 January
2005
Texchem Materials
Sdn. Bhd.
Lot 808 & 809, Jalan
Subang 5, Off Persiaran
Subang, Taman
Perindustrian Subang,
47500 Subang Jaya,
Selangor Darul Ehsan,
Malaysia
Sales Office
RM16,461
426 sq ft
3 years
commencing
1 January
2005
Texchem
Corporation Sdn.
Bhd.
Xi He Garden, 91–1902,
Dacheng Road, Chong An
District, Wuxi, Jiangsu,
PRC
Residential(1)
RMB120,000
148.52 sq m
1 year from
1 August
2006
Dai Gui Nan
31A Jalan Rotan Bakau,
Taman Ria, Plentong
81750, Johor, Johor Bahru,
Malaysia
Residential
RM6,000
1,540 sq ft
3 years from
1 July 2005
Lee Heng Yak
No. 19A Jalan Rotan
Bakau Taman Ria,
Plentong, 81750, Johor
Bahru, Johor, Malaysia
Residential
RM8,400
2,065 sq ft
1 year from
1 February
2006
Plentong Lienhuat
Building Materials
Sdn. Bhd.
No 9 Solok Kampung Jawa
Dua, Bandar Bayan Baru,
Residential
RM10,200
1,400 sq ft
1 year from
1 January
2006
Wong Saik Kong
& Wong Saik
Hoong
243-243B (Unit 126)
City, Vietnam
Residential
USD1,320 per month
inclusive of VAT,
maintenance and
service charges
70.29 sq m
1 year from
1 August
2006
Tecasin
243-243B (Unit 419)
City, Vietnam
Residential(2)
USD560 per month
inclusive of VAT,
maintenance and
service charges
31.7 sq m
1 year from
17 July 2006
Tecasin
No. 27, Jalan 25/50A,
Taman Sri Muda, 40400
Shah Alam, Selangor,
Malaysia
Residential
RM9,000
1,200 sq ft
(built-up)
2 years from
1 August
2005
Daljit Singh a/l
Sajhan Singh
Block M5-2-6, Pangsapuri,
Lorong Mahsuri 12, 11950
Bayan Baru, Penang,
Malaysia
Residential
RM7,800
934 sq ft
1 year from
9 September
2006
Ng Siew Fong
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BUSINESS
Title/Location
Use of Property
Annual Rental
Area
Tenure
Lessor
Block M4-4-5, Lorong
Mahsuri 12, 11950 Bayan
Baru, Penang, Malaysia
Residential
RM7,200
934 sq ft
1 year from
9 April 2006
Thum Oi Yoke
Yin Ren Garden, 1002001, Jiefang West Road,
Chong An District, Wuxi,
Jiangsu, PRC
Residential(3)
RMB92,400
123.96 sq m
1 year from
15 February
2006
Li Sa
Notes:
(1)
The staff apartments were rented as accommodation for expatriates who are stationed in Wuxi, Jiangsu in the PRC.
(2)
The service apartment is rented as accommodation for two expatriate employees.
(3)
The tenancy agreement provides that upon expiry, the term is automatically renewed for two years unless terminated by
either party giving six months notice of termination.
To the best of our Directors’ knowledge, there are no regulatory requirements or environmental issues
that may materially affect our utilisation of the above properties and sites.
Insurance Coverage
Our properties, fixed assets and inventories are insured against accidental physical loss or damage
occasioned by fire. We are also covered by insurance policies for risks such as burglary. Our Directors
believe that the coverage from such insurance policies is adequate for our existing operations.
Production Facilities
Our production facilities are located in Penang, Selangor and Johor in Malaysia, in Ayutthaya, Thailand,
in Wuxi, the PRC and Dong Nai Province in Vietnam. Please see “Business — Properties and Fixed
Assets” of this Prospectus for further details on our production facilities.
As at the Latest Practicable Date, we have:
•
40 thermoforming production lines with a total production capacity of approximately 11,625 tonnes
of thermoforming products per annum;
•
2 sheet extrusion production lines with a total production capacity of approximately 2,400 tonnes
of extrusion products per annum;
•
23 precision injection moulding production lines with a total production capacity of approximately
15,700,000 million shots per annum;
•
27 tube/profile extrusion production lines with a total production capacity of approximately 1,340
tonnes per annum;
•
9 embossed carrier tape production lines with a total production capacity of approximately
5,930,000 metres per annum;
•
26 expanded polystyrene shape-moulding lines with a total production capacity of approximately
1,812 metric tonnes per annum;
•
1 compounding line with a total production capacity of approximately 1,900 tonnes of materials
per annum;
•
4 flexo plating lines with a total production capacity of approximately 44,150,000 cm2 per annum;
and
•
6 film lines with a total production capacity of approximately 127,860,000 cm2 per annum.
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BUSINESS
Production Capacity and Output
The details of our estimated maximum production capacity for FY2003, FY2004, FY2005 and HY2006
of our Group are as follows:
FY2003
(1)
FY2005
HY2006
2,400
2,400
2,400
1,200
8,000,000
12,150,000
14,700,000
7,850,000
1,100
1,340
1,340
670
3,500,000
4,260,000
5,930,000
2,965,000
Thermoforming products (tonnes)
8,250
9,850
11,350
5,675
Expanded Polystyrene (tonnes)
1,668
1,668
1,668
834
Compounded products (tonnes)
−
1,900
1,900
950
Flexo Plating (cm2)
35,570,000
35,570,000
44,150,000
22,075,000
Film (cm2)(2)
63,620,000
67,620,000
102,240,000
63,930,000
(tonnes)
FY2004
Precision injection moulding (number of shots)
Tubes Extrusion (tonnes)
Carrier Tape (metre)
The estimated production capacity is measured by aggregating the monthly production capacity for
each of our production lines and is computed based on 26 operational days a month and the number
of hours per production day which may vary from facility to facility and the number of production
equipment in use as at the end of each financial period.
Our Group adopts a policy of redeploying machines from factories with excess capacity to other
factories to reduce under-utilisation.
The details of the output for FY2003, FY2004, FY2005 and HY2006 of our Group are as follows:
FY2003
Extruded Plastic Sheets (tonnes)
FY2004
FY2005
HY2006
1,655
1,070
1,282
652
2,716,886
3,040,587
7,074,859
7,427,450
929
1,025
1,264,442
2,735,634
4,694,473
2,004,391
Thermoforming products (tonnes)
6,628
5,788
9,000
3,616
Expanded Polystyrene (tonnes)
1,109
970
870
402
−
42
267
167
28,403,806
31,002,615
31,101,052
20,028,907
44,488,475
49,263,198
51,326,553
29,999,366
Precision injection moulding
(number of shots)
(3)
Tubes Extrusion (tonnes)
Carrier Tape (metre)
(4)
Compounded products (tonnes)(5)
2
Flexo Plating (cm )
2
Film (cm )
731(6)
381
Notes:
(1)
Mainly for internal consumption for the manufacture of our thermoforming products.
(2)
The increase in capacity was due to the installation of 2 film lines in FY2005.
(3)
The increase in output from FY2004 to FY2005 was due to the addition of four precision injection moulding machines in
FY2005.
(4)
The increase in output from FY2004 to FY2005 was due to the increase in production hours per day from 16 to 24.
(5)
Our compounding machines were only installed in FY2004 and production commenced in the 4th quarter of FY2004.
(6)
The decrease in output from FY2004 to FY2005 was due to decreased sales of tube extrusion products during the said
period.
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BUSINESS
Utilisation Rates
The details of our estimated utilisation rates for FY2003, FY2004, FY2005 and HY2006 of our Group
are as follows:
FY2003
FY2004
FY2005
HY2006
69%
45%
53%
54%
Precision Injection Moulding
34%
25%
48%
95%
Tubes Extrusion(1)
84%
76%
55%
57%
Carrier Tape
36%
64%
79%
68%
Thermoforming Products
80%
59%
79%
64%
Expanded Polystyrene
66%
58%
52%
48%
−
2%
14%
18%
Flexo Plating
80%
87%
70%
91%
Film
70%
73%
50%
47%
Compounded Products(2)
Notes:
(1)
The decrease in the utilisation rate from FY2004 to FY2005 was due to decreased sales of tube extrusion products during
the said period.
(2)
Our compounding machines were only installed in FY2004 and production commenced in the 4th quarter of FY2004, that
has led to a low utilisation rate. Furthermore, utilisation has remained low as one of the two compounding machines is
dedicated to research and development activities.
The utilisation rate is calculated by dividing the actual annual output for each production line by its
estimated maximum production capacity.
We will be using part of the proceeds from the Invitation to purchase additional machines as we are
constantly upgrading our manufacturing capabilities with the latest technology and building in additional
capacity to meet the increasing demands of our existing and potential customers at the relevant
locations. Please refer to “Use of Proceeds from the Invitation and Expenses Incurred” and “Business
— Future Plans” of this Prospectus.
EMPLOYEES
As at 30 June 2006, we had 1,053 full-time employees of whom approximately 22% were management/
professional/executive personnel, 22% were technical and supervisory personnel, 8% were clerical
personnel, and 48% were general workers. As at 30 June 2006, 68 of our employees are members of
the National Union of Petroleum and Chemical Industry Workers in Malaysia (the “NUPCIW”). The
terms and conditions of employment of these employees are provided for under a collective bargaining
agreement dated 4 March 2004 entered into between Texpack and the NUPCIW, which contains
provisions that relate to, amongst other things, minimum wages, leave entitlements and medical
benefits. The term of the agreement is until 31 October 2006 but remains in force thereafter until
superseded by a new agreement. We believe that our management enjoys a cordial and harmonious
working relationship with our employees and we have not encountered any strikes or disruptions with
our employees. We had an average of 84 and 118 temporary employees for our most recent completed
financial year ended 31 December 2005 and for the six months ended 30 June 2006, respectively.
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BUSINESS
The table below shows the breakdown of our full-time employees by activity as at 31 December 2003,
2004 and 2005 and 30 June 2006:
<
31 December
2003
As at
31 December
31 December
2004
2005
>
30 June
2006
Activity
Management/Professional/Executive(1)
Technical and Supervisory
(2)
Clerical(3)
General workers
(4)
Total
224
231
250
228
185
171
193
233
76
62
83
80
440
484
521
512
925
948
1,047
1,053
Notes:
(1)
Includes personnel of supervisory levels and above.
(2)
Includes assistant supervisors and technicians.
(3)
Includes clerks and administrative staff.
(4)
Includes operators, gardeners, cleaners.
The table below shows the breakdown of our full-time employees by geographical region as at 31
December 2003, 2004 and 2005 and 30 June 2006:
<
31 December
2003
As at
31 December
31 December
2004
2005
>
30 June
2006
Geographical Region
Malaysia
707
661
689
665
Thailand
84
93
109
133
The PRC
88
117
142
140
Vietnam
46
77
107
115
925
948
1,047
1,053
Total
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BUSINESS
BUSINESS STRATEGY
Our objective is to become a leading integrated technology packaging solutions provider in Asia
catering to major players in the semiconductor, consumer electronics and electrical, data storage and
telecommunications industries. We will continually evaluate strategies to fulfil the evolving needs of our
customers and to remain competitive. The following are the principal components of our strategy:
Focus on the semiconductor, consumer electronics and electrical, data storage and
Although our customers in the semiconductor, consumer electronics and electrical, data storage and
telecommunications industries already contribute significantly to our revenue, we believe that these
industries continue to offer potential growth opportunities. We aim to market our products and services
to the other significant players in these industries who are not currently our customers. We believe that
there is also an increasing demand for such products due to the increasing affluence of consumers in
the region. We note that as a result of increased competition and the need for product differentiation,
there is now greater emphasis on aesthetics in the design and manufacture of consumer electronics
and electrical products and telecommunications products, resulting in higher expectations and more
stringent requirements in packaging. We believe that we are well positioned to capitalise on these
trends by leveraging on our technological capabilities such as our design and mould fabrication
facilities and on our one-stop integrated service capability.
In addition to these main industries, we intend to expand into the automotive and medical industries as
we believe these industries are less cyclical and the profit margins are more attractive. We also see
potential in packaging solutions for products that use or incorporate liquid crystal displays in their
product designs, such as high-resolution mobile phones. We will attempt to exploit opportunities in
these markets at the appropriate time. For more information about our business strategy in these areas,
please see the section “Business — Marketing and Distribution” of this Prospectus for further details.
Remain close to our customers
One of our key strategies is to remain close to our customers so that we can respond to their needs
quickly and facilitate the prompt delivery of their products. The establishment of our overseas
production facilities was largely driven by the expansion of our customers’ manufacturing facilities to
these regions. We intend to continue with this strategy for the foreseeable future. Our strategy is to
follow any relocation by our major customers to lower cost production regions like the PRC and other
lower cost countries in Asia.
Our management and engineers work closely with our customers and visit them regularly to keep in
touch with their latest developments and plans. This allows us to participate in the initial design stages
of our customers’ products which enhances our ability to design our products in keeping with our
customers’ requirements. We believe that this has enabled our customers to introduce new models or
products to the market rapidly.
In addition to the above, we have also established our Group Business Development and Group
Manufacturing Technology divisions, in our efforts to provide better service to our key customers.
Through these divisions, we will be able to focus our efforts on delivering innovative and
comprehensive packaging solutions as well as supporting our key customers with respect to their
technical requirements and product needs. This strategy will enable us to channel our resources
effectively and better exploit business opportunities.
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BUSINESS
Our close contact with our customers enables us to continually update them of our capabilities and to
determine the technology that will best suit their needs. As a result of this close contact, we are also
able to successfully innovate and develop new manufacturing processes to provide solutions for our
customers and to keep in touch with their upgrading, expansion and development plans. We believe
that this not only facilitates relationship-building, but also decreases delivery timing and minimises
logistics difficulties.
Improving our technological capabilities
We believe that the ability to offer new packaging solutions and polymers to our customers is critical in
attracting and retaining customers as well as in securing customers from new industries. In order to
maintain our competitive edge, we need to continually improve our design and technological
capabilities as well as to develop new polymers to expand the range of products and services that we
offer to our customers. Please refer to “Business — Research and Development” of this Prospectus for
further details. We also believe that we need to constantly improve our manufacturing processes to
achieve greater cost efficiency and to be able to offer quality products in order to retain our existing
customers and to attract new ones.
In addition to our research and development efforts, we will leverage on our strategic collaborations
with other companies to gain access to new technologies and production processes. Please refer to
“Business — Marketing and Distribution” of this Prospectus for further details.
PROSPECTS
We have observed that there is an increasing trend for many of our customers to move their
manufacturing facilities to regions in various parts of Asia with lower costs of production. We believe
that having operations in these lower cost regions where our customers are located in or intending to
relocate to, places us in a position to benefit from this relocation trend as well as reduces our cost of
production.
We expect that, in the medium to long-term, growth in the semiconductor, consumer electronics and
electrical, data storage and telecommunications industries will be driven by the developing countries in
Asia particularly the PRC, Thailand and Vietnam due mainly to the size and economic potential of these
markets. We believe that the consumer electronics and electrical industry and telecommunications
markets have benefited from and will continue to grow due to rising disposable incomes. We have
observed that many multinational corporations, including our existing customers Seagate and Sony,
have established or are in the process of establishing new manufacturing operations in the PRC to take
advantage of the lower cost of production and the growing demand for their products.
We also believe that the data storage industry will continue to grow with new applications in the
audio-visual industry, which merges information technology with entertainment. New television sets are
being built with hard disk drives (possibly replacing video cassette recorders and video compact disc
players) and new generation game boxes with hard disk-drives are being introduced by industry
players.
We will continue to explore opportunities to broaden our customer base and to reduce our dependence
on the semiconductor, consumer electronics and electrical, data storage and telecommunications
industries which we believe are cyclical in nature by leveraging on our core competency in providing
packaging solutions. The Group manufactures a wide range of plastic packaging products. The
machine and equipment of our Group are multi-functional and can be used to produce other plastic
packaging products. Our Group is therefore keen to enter into other industries which require plastic
packaging products, for example, the automotive and medical industries, to broaden our customer
base.
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BUSINESS
Trend Information
The revenue that is derived from our products declines with the product’s life cycle. Historically, the
selling price of our products typically declines at approximately 5% to 10% over their life cycles.
However, this effect is normally compensated by the introduction of new products. Accordingly, we will
record lower revenues if there is any delay in the launch of new products by our customers even though
we are selling the same volume of products. Please refer to “Risk Factors — Risks Related to our
Business” in this Prospectus. Notwithstanding the aforementioned, we expect the prices of our
products to be fairly stable in the near term save for our products that may be affected by fluctuations
in the prices of its raw materials.
Our raw materials are petrochemical based and some of their prices tend to fluctuate in tandem with
the oil prices. We note that the oil prices have been fairly volatile in the past three years. In general,
for the last three financial years, our raw materials prices for thermoformed and precision injection
moulded products have been steadily increasing as they are mostly specialty products and raw material
prices for expanded polystyrene products have been volatile. However, we have been able to increase
prices for some of our products to offset the increases in the prices of our raw material and/or switch
to a cheaper alternative of raw material.
Saved as disclosed in this Prospectus, our Directors are not aware of any other known recent trends
in production, sales and inventory, costs and selling prices of our products 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 Prospectus to be not necessarily indicative of our future operating results
or financial condition.
FUTURE PLANS
Expand and upgrade our manufacturing facilities
To cater to our expected business and production requirements, we plan to expand and upgrade our
production facilities in Malaysia, Thailand and in the PRC. This will be funded by the proceeds from the
Invitation. Please refer to the section “Use of Proceeds from the Invitation and Expenses Incurred” of
this Prospectus.
The expansion and upgrading of our facilities as detailed below will increase our thermoforming,
precision injection and carrier tape capacity by approximately 21.9%, 12.7% and 56.3% respectively.
The factory refurbishment and upgrading of our facilities is necessary to increase capacity and also
improve quality control. We have begun the process of expansion and upgrading and plan to complete
it by December 2007. Thereafter, we will from time to time and in accordance with our requirements
continue to expand and upgrade our manufacturing facilities.
Estimated Expenditure
Estimated Completion Date
Ten thermoforming and/or punching
machines
Approximately RM6.6 million
December 2007
Four precision injection machines
December 2007
Two carrier tape machine
December 2007
One profile extrusion machine
December 2006
Factory refurbishment & upgrading
December 2007
The above expenditure and the estimated commencement/completion dates are only estimates and
may be subject to change due to unforeseen future circumstances or events or changes in market
conditions.
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BUSINESS
Strengthen our research and development capabilities
In order to keep pace with advancements in technology and changing customer requirements and in
line with our emphasis with respect to polymer development, we intend to enhance our research and
development capabilities by equipping Texpolymers with clean room facilities and analytical testing
equipment necessary for our research and development activities. This is to, inter alia, enable us to
develop new polymers compounds and materials that have special characteristics in line with the
development of trends in the data storage, telecommunications, semiconductor and consumer
electronics and electrical industries, such as the ability to withstand high temperatures. The amount of
approximately RM2.9 million for these plans will be funded by the proceeds from the Invitation. We also
plan to recruit more engineers for our research and development team and enter into other technical
collaborations with universities to increase our technological know-how and capabilities relating to the
design and development of innovative products. For this purpose, we intend to allocate RM1.8 million
from the proceeds from the Invitation. Please refer to “Use of Proceeds from the Invitation and
Expenses Incurred” of this Prospectus.
Strengthen our design capabilities
To maintain our position as a leading packaging solutions provider, capable of delivering value-added
services to our customer, we intend to enhance our design capabilities by acquiring software and
hardware and hiring additional design engineers with the aim of improving the design services that we
offer our customers. To this end, we plan to spend approximately RM1.3 million on the acquisition of
design software and hardware and on the hiring of engineers that will be deployed at our central design
facility in Penang, Malaysia as well as at our design labs located in our production facilities across
Malaysia and in Thailand, the PRC and Vietnam. Please refer to “Use of Proceeds from the Invitation
and Expenses Incurred” of this Prospectus.
We intend to grow our business through the development of new products and through the expansion
of our customer base in the industries that we currently serve and in other industries that are less
cyclical.
We believe that there is an increasing demand for medical services due to demographic factors such
as an ageing population and the increasing threats of new viruses and diseases. This is likely to lead
to more research development activities in the fields of medicine and biotechnology. We are also seeing
an increase in the manufacturing of medical products and equipment in countries in which we have
production facilities. Accordingly, we see more opportunities for us to develop packaging products for
customers in the medical industry. We are currently working with our technology partner, Merrill’s, to
develop such products.
We believe that there is potential for growth in the automotive industry in Asia, especially for precision
injection moulded products and components. As such, we are exploring opportunities in the automotive
industry in Thailand and plan to identify suitable strategic technology partners with which to enter into
agreements with a view to developing such new products for this market.
In addition to the above, we expect rising demand for products that use or incorporate liquid crystal
displays (“LCD”) into the overall product design. We plan to develop products with the assistance of
technology partners with a view of developing our market reach to include the LCD market.
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BUSINESS
Seek growth through acquisitions, joint ventures and strategic alliances
We intend to grow our Group by seeking new opportunities that will bring economies of scale to our
existing operations and enhance shareholder value. In particular, we plan to acquire the remaining 49%
stake in the share capital of Eye Graphic (the “Remaining EG Shares”) on terms that are beneficial to
our Company and our Shareholders (please refer to “Restructuring” of this Prospectus for further
information on Eye Graphic). In addition to the aforementioned, we will attempt to identify new
investments and acquisitions to expand or diversify our product base. We will also identify potential
strategic alliances or joint ventures in existing or new markets we are interested in to further expand our
business.
Had the Company acquired the Remaining EG Shares on 1 January 2003, our Group’s net profit after
tax attributable to ordinary shareholders would have been RM5.5 million, RM2.8 million, RM11.5 million
and RM8.6 million, after adding back minority interest of RM538,000, RM469,000, RM442,000 and
RM283,000 for FY2003, FY2004, FY2005 and HY2006 respectively.
As the proposed acquisition of the Remaining EG Shares (the “Proposed Acquisition”) is subject to,
inter alia, the relevant parties agreeing on the consideration payable, no person shall rely on the
information set out in above in relation to the Proposed Acquisition or in any other part of this
Prospectus in connection with the Proposed Acquisition. The Proposed Acquisition will be subject to,
inter alia, the rules of the SGX-ST Listing Manual and details of the Proposed Acquisition will be
disclosed at the appropriate time (if necessary) and in accordance with the requirements of Chapter 10
of the SGX-ST Listing Manual.
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MANAGEMENT
DIRECTORS
Our Board is entrusted with the responsibility for the overall management of our Group. Our Directors’
particulars are as follows:
Name
Age
Address
Designation
Dato’ Seri Fumihiko Konishi
62
Villa Primavera, 51, Jalan Jesselton
Executive Chairman
51
No 9 Tingkat Pantai Miami,
11100 Batu Ferringhi, Penang,
Malaysia
Deputy Chairman, Chief
Executive Officer
Yap Kee Keong
42
68 Changkat Bukit Gambier II,
11700 Gelugor, Penang
President, Chief
Operating Officer
Lee Chin
57
20 Dunearn Road #13-02
Dunearn Gardens, Singapore 309422
Non-Executive Director
Tony Tan Choon Keat
57
46 Coronation Road West #09-03,
Astrid Meadows, Singapore 269262
Independent Director
Koji Miura
57
70 Bayshore Road, #13-07 Costa Del
Sol, Singapore 469987
Kim Seah Teck Kim
52
59 Dyson Road, Singapore 309396
Lim Siang Kai
50
26-A Jalan Haji Alias,
Singapore 268527
Information on the areas of responsibility and working experiences of our Directors is set out below:
Dato’ Seri Fumihiko Konishi, DGPN, DSPN, DJN is the Executive Chairman of our Company and was
appointed as a Director on 26 September 2003. He is responsible for our overall business strategy. He
is also the Chairman and Chief Executive Officer of TRB, a Malaysian public company listed on the
Bursa Malaysia and our Controlling Shareholder. He is the founder of the TRB Group. He has been
domiciled in Malaysia for over 30 years. Dato’ Seri Fumihiko Konishi’s entrepreneurial qualities and
determination have played an important role in the growth of the TRB Group from its humble beginnings
in the early 1970s to a diversified manufacturing, services and trading group today. Besides being
actively involved in the business, Dato’ Seri Fumihiko Konishi is also instrumental in bringing and
promoting many other Japanese joint-venture groups to Penang and the rest of Malaysia. In recognition
of such efforts, he was granted permanent residency status by the Malaysian government in 1990. In
1991, he was bestowed the Darjah Johan Negeri by the Governor of Penang, the Darjah Setia
Pangkuan Negeri in 1994 and the Darjah Gemilang Pangkuan Negeri in 2000, which are public service
awards. In 2001, he was bestowed an honorary fellowship by the Limkokwing Institute of Creative
Technology. He also sits on the boards of directors of several corporations within the TRB Group. Dato’
Seri Fumihiko Konishi obtained a Bachelor of Pharmacy degree from the Tokyo University of Pharmacy
and Life Sciences.
Lee Siew Khee, Jeffrey is the Deputy Chairman of our Board and Chief Executive Office of our
Company. He was appointed to our Board on 26 September 2003 and is currently the Chairman of
Texpack. He is responsible for overseeing and approving the key business decisions of our Company.
He is also the President and Chief Operating Officer of TRB, responsible for overseeing overall
management and executing the strategic business plans of TRB. He joined TRB after his graduation in
1979 and was promoted to the position of Marketing Director in 1986. He has wide experience in the
field of marketing, particularly in the sale of plastics and chemicals. He was promoted to Managing
119
MANAGEMENT
Director of TRB on September 1993. He also sits on the boards of directors of several corporations
within the TRB Group. Mr Jeffrey Lee holds a Bachelor of Science degree (Hons) in Chemistry from the
University of Malaya.
Yap Kee Keong is the President and Chief Operating Officer of our Company. He was appointed to our
Board on 1 January 2005. He is currently also President and Chief Operating Officer of Texpack. He
was appointed as a director of Texpack in January 1999 and then promoted to Executive Vice President
in July 2004 and his present position in January 2005. He oversees the overall management and
operations of our Company and is also a Non-Executive Director of TRB, the Controlling Shareholder
of our Company. He joined TRB as a Sales Executive in 1988. He has about 18 years of experience
in the sales, marketing and distribution of industrial raw materials and has also been actively involved
in the electronics packaging manufacturing sector. He was appointed as a director of Texchem
Materials (a wholly-owned subsidiary of TRB) in November 1999 and then re-designated as Executive
Director in January 2003. He has since resigned as Executive Director and remains as a non-executive
director of Texchem Materials since July 2004. He graduated with a Bachelor of Science (Hons) degree
in Physics from the University of Malaya in 1988 and he holds a Master of Business Administration
degree from the University of Portsmouth, UK.
Lee Chin is our Non-Executive Director and was appointed to our Board on 1 January 2006. He was
previously the Executive Director of Texpack (Johor) and currently the Managing Director and Chief
Executive Officer of Texchem Singapore, a wholly-owned subsidiary of TRB, our Controlling
Shareholder. He is in charge of the general and overall management of Texchem Singapore and has
more than 25 years of experience in the trading of industrial materials. He joined TRB in 1979 and was
promoted to Branch Manager in charge of branch operations in Johor Bahru in July 1982. He was
appointed as a Director of TRB in 1987. During the restructuring of the TRB Group, he resigned as
Director of TRB and was appointed as Executive Director of Texchem Materials in March 2001. He
retired from Texchem Materials in 2004. Mr Lee graduated with a Bachelor of Science degree from the
Nanyang University of Singapore in 1976.
Tony Tan Choon Keat is one of our Independent Directors and was appointed to our Board on 6
September 2004. Mr Tony Tan started his career in 1972 as a Senior Officer in the Federal Industrial
Development Authority, Malaysia. He then joined Negara Properties Sdn. Bhd. and IGB Sdn. Bhd. as
a Business Manager. In 1979, he founded Parkway Properties Pte Ltd which subsequently became
Parkway Holdings Ltd. Parkway Holdings Ltd is currently one of the largest private healthcare groups
in the region, comprising hospitals such as Mount Elizabeth Hospital and the Gleneagles hospitals in
countries including Singapore, Malaysia and India. Mr Tan has retired as Managing Director of Parkway
Holdings Ltd. Mr Tan has a Bachelor of Science (Chem. Eng. Hons) degree from the University of
Surrey, UK. He also obtained a Masters in Business Administration from the University of California
Berkeley, US, in 1975.
Koji Miura is one of our Independent Directors and was appointed to our Board on 6 September 2004.
Mr Koji Miura is currently the founder and Managing Director of Miura & Associates Management
Consultants Pte Ltd, which is a consultant firm providing services to companies seeking to invest or
expand in the ASEAN region. Prior to that, he worked as a Japanese Consultant in the Japanese
Practice Department of Peat Marwick between 1986 to 1989. He started his career with Sato Kogyo Co.
Ltd, a Japanese company listed in Japan. Mr Koji Miura currently sits on the boards of several
corporations, including Azeus Systems Holdings Ltd., a company listed on the Main Board of the
SGX-ST. He has a degree in Business Administration from the University of Aoyama Gakuin, Tokyo,
Japan.
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MANAGEMENT
Kim Seah Teck Kim is one of our Independent Directors and was appointed to our Board on 6
September 2004. He started his career in 1977 as a full-time academic at the National University of
Singapore (NUS). He was Vice-Dean of the Faculty of Law when he left to enter private practice as a
partner in Shook Lin & Bok, Singapore in 1989. In 1998, he left Shook Lin & Bok to become a founding
partner of A. Ang, Seah & Hoe. Mr Seah is currently legal adviser to the Association of Banks in
Singapore and to the Finance Houses Association of Singapore. He is also a certified mediator of the
Singapore Mediation Centre and a member of the Panel of Experts appointed by the International
Chambers of Commerce, Paris, under its DOCDEX Rules. He graduated from the University of
Singapore with a LL.B. (Hons) degree in 1977. He then obtained his LL.M. degree from Harvard Law
School in 1978 and was admitted as an Advocate & Solicitor of the Supreme Court of Singapore in
1979.
Lim Siang Kai is one of our Independent Directors and was appointed to our Board on 22 August 2006.
Mr Lim is currently the executive director of Golden 21 Investment Holdings Ltd, a company listed in
Hong Kong. In addition, he is the Chairman and independent director of ISDN Holdings Ltd and an
independent director of Natural Cool Holdings Limited, both of which are public companies listed in
Singapore. Mr Lim started his career in 1981 as a bank officer at United Overseas Bank (“UOB”). He
later joined NZI Merchant Bank (Singapore) Limited in 1984 as assistant director of corporate banking
where he was in charge of overall management and planning of the operations of the credit and
marketing, investment and private banking unit for the South-East Asian region. In 1988, Mr Lim joined
Kingvic Securities Investment Consulting Enterprise as its president (“Kingvic”). Kingvic was registered
with the Securities and Futures Commission of the Republic of China as an authorised securities
investment consultant to provide research, analysis or advice on matters related to securities
investment. From 1993 to 1994, Mr Lim was president of Chronicle Securities Investment Trust Co.,
Ltd. (now known as Polaris Investment Securities Trust Co., Ltd), a fund management company
established by Kingvic. Mr Lim worked at Dexia Banque Internationale A Luxembourg in Hong Kong,
as chief representative between 1994 and 1996 and was responsible for its private banking, capital
markets, fund management and custody services activities in Northern Asia. In 1996, Mr Lim joined
UOB as general manager of its branch in Xiamen and was in charge of China Banking operations. In
2001, he was relocated to the UOB’s head office corporate banking division in Singapore. For the years
2002 to 2003, Mr Lim was a consultant to Societe Generale’s branch in Singapore. He has a Bachelor
of Arts and a Bachelor of Social Science (Honours) from the National University of Singapore that he
obtained in 1980 and 1981 respectively. He also has a Masters of Arts in Economics from the University
of Canterbury, New Zealand that he obtained in 1984.
Dato’ Seri Fumihiko Konishi is the Chairman and Chief Executive Officer of TRB, our Controlling
Shareholder — for further details on TRB, please refer to “Principal Shareholders” of this Prospectus.
Mr Jeffrey Lee is the President and Chief Operating Officer of TRB. The abovenamed Directors are also
directors of several corporations within the TRB Group. Mr Yuma Konishi (please refer to Management
— Senior Management”) is the son of Dato’ Seri Fumihiko Konishi. Except as disclosed herein, none
of our Directors and Executive Officers are related to each other or any of our substantial shareholders;
and to the best of our Directors’ knowledge and belief, there are no arrangements or understandings
with any of our substantial shareholders, customers, suppliers, or any other person, pursuant to which
any of our Directors or Executive Officers were appointed.
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MANAGEMENT
SENIOR MANAGEMENT
Our day-to-day operations are largely handled by our experienced and qualified Executive Officers.
Their particulars are as follows:
Name
Age
Address
Designation
Teo See Keong
49
4S, Lorong Delima 3, Island Glades,
Managing Director, Texpack
Ooi Ghee Teong
43
60-Q, Jalan Choong Lye Hock, Tanjung
Tokong, 10470 Penang, Malaysia
General Manager, TEP
Songpol Ratanasuwan
50
99/190, Soi 13, Pruksachat
Ramkamheng Road, Saphansoung
District, Bangkok 10240, Thailand
Managing Director and Chief
Operations Officer, Texpack
(Thailand)
Ngiam Meng Hock(1)
48
Xihe Yuan Block 91 Unit 1902 Xian Qian
Xilu, Wuxi Jiangsu Province P.C.
214001, PRC
Deputy Managing Director,
Texpack (Wuxi)
Chan Weng Kong
41
15 Lorong Gemilang Jaya 2, Taman
Gemilang Jaya, 14000 Bukit Mertajam,
Penang, Malaysia
Group Manufacturing
Technology Director
Toh Kulchornchan
43
482 Nonsri Road, Nonsri, Yannawa
Bangkok, Thailand
Deputy Managing Director,
Texpack (Thailand)
Victor Liew Wai Tuck
32
Room 126, TECASIN, 243-243B, Hoang
Van Thu Street Tan Binh District, Ho Chi
Minh City, Vietnam
Assistant General Manager,
Member of Board of
Management, Texpack
(Vietnam) and Eye Graphic
(Vietnam)
Lam Kim Goon
35
63 Medan Fettes, Fettes Park 11200
Tanjong Bungah, Pulau Pinang, Malaysia
Head of Group Finance,
Texpack
Low Chee Min
48
No 2 Jalan BU 2/9, Bandar Utama
47800, Petaling Jaya, Selangor,
Malaysia
Senior General Manager,
Texpack (KL)
Yuma Konishi
28
1-3-1-808, Ettchujima. Koto-ku, Tokyo
135, Japan
Business Development and
Research Director,
Texpolymers
Ho Wei Min
41
16 Lorong Murni 19, Taman Desa Murni,
Sungei Dua, 13800 Butterworth, Pulau
Pinang, Malaysia
Assistant General Manager
and Director, Eye Graphic
Notes:
(1)
Ngiam Meng Hock’s full name is Ngiam Men Hock @ Ngiam Meng Hock.
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MANAGEMENT
Information on the areas of responsibility and working experience of our Executive Officers is set out
below:
Teo See Keong is the Managing Director of Texpack. He joined our Group as the General Manager of
Texpack in August 1992. He was later appointed as a director of Texpack in February 1995 and was
subsequently promoted to the position of Deputy Managing Director in 1996. He has about 22 years of
experience in the manufacturing business having worked in Hewlett Packard (S) Pte. Ltd. and Hewlett
Packard (M) Sdn. Bhd. from 1983 to 1985 and 1985 to 1992, respectively. Mr Teo See Keong graduated
from the University of Liverpool, UK, with a Bachelor of Mechanical Engineering with Management
degree (Honours) in 1981. He is also a member of the Malaysian Institute of Management.
Ooi Ghee Teong is the General Manager of TEP and is in charge of the overall management of TEP.
Prior to joining the Group, he was with San Yong Enterprise Sdn. Bhd. as a General Manager from
October 1999 to June 2005. In 1996, he joined Sportma Corporation Bhd as a Group Financial
Controller until 1999. He is a fellow member of the Association of Chartered Certified Accountants, UK
and the Malaysian Institute of Taxation. He is also qualified as a Chartered Accountant of the Malaysian
Institute of Accountants.
Songpol Ratanasuwan is the Managing Director and Chief Operations Officer of Texpack (Thailand).
He is presently responsible for the day-to-day manufacturing operations of Texpack (Thailand). He was
with Sansiri Public Company Limited as a Senior Vice President (Project Development) from 1992 to
1995 before joining Univentures Public Company Limited as the Managing Director and Director from
1995 to 1997. In 1997, he was appointed as the Managing Director of Siamese Tyre Company Limited
until 1998. He was with the Soon Hua Seng Group of companies between 1998 and 2000 before joining
Texchem Consumers (Thailand) Ltd, a related company of Texpack Group in 2000 as a General
Manager (Corporate Affairs), Bangkok office, Thailand. He was promoted to Executive Director of
Texpack (Thailand) in 2001. He graduated with a Bachelor of Accounting degree from Bangkok
University and has a Master of Business Administration degree in the Angelo State University, Texas,
US.
Ngiam Meng Hock, is the Deputy Managing Director of Texpack (Wuxi). He is in charge of the
operations and business development of Texpack (Wuxi). He started his career with Intel Technology
Sdn. Bhd. as a Senior Quality Engineer before joining Trim Technologies (M) Sdn. Bhd. in 1990 as a
Quality Assurance Manager. In 1997, he joined Texpack as a General Manager before joining Texpack
(Thailand) in 1999. He was then with Texpack (Johor) until 2002 prior to his appointment as General
Manager of Texpack (Wuxi) in March 2003 and was subsequently promoted to the position of Director
and Deputy Managing Director in January 2005 and January 2006 respectively. He graduated with a
Bachelor of Science (Honours) Engineering with Business Studies degree from Sheffield Hallem
University, Sheffield, England in 1983.
Chan Weng Kong is our Group Manufacturing Technology Director and Acting General Manager of
Texpack (Johor). His responsibilities include overseeing the business, manufacturing, administration
and financial aspects of Texpack (Johor). He started his career with Sony Electronics (M) Sdn. Bhd. in
1989 as a Design Engineer and held various positions including Manufacturing Engineering Manager
before he joined Texpack in 2000. Currently, he is also a member of the Corporate Affairs Committee
of TRB, the Controlling Shareholder of our Company. He graduated with a first class honours in
Bachelor of Mechanical Engineering degree from the University of Malaya.
Toh Kulchornchan is the Deputy Managing Director of Texpack (Thailand). His responsibilities include
day-to-day operations, development of new models, procurement of raw materials and sales. He was
previously with Fonderie Oceane Society Anonyme Co., Ltd. as a Production Manager in 1989 until
1996. He then held various positions, including Assistant Section Manager, Assembly Manager and
Engineering Manager, when he was with Toshiba (Thailand) Co., Ltd. from February 1996 to July 2001.
He then joined the Group in 2001. He graduated with a Bachelor of Chemical Engineering degree in
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MANAGEMENT
1986 from King Mongkut’s Institute of Technology Thonbury and a Master of Business Administration
degree in Management Science and Operations in 1994 from the University of Memphis, Tennessee,
US.
Victor Liew Wai Tuck is the Assistant General Manager as well as a member of the Board of
Management of both Texpack (Vietnam) and Eye Graphic (Vietnam). He was appointed to the above
positions in January 2005 and January 2004, respectively. Prior to that, he was the Operations
Manager for Texpack (Vietnam) and Eye Graphic (Vietnam) in July 2003 and August 2000, respectively.
Presently, he is responsible for the day-to-day operations, sales and marketing for the operations in
Texpack (Vietnam) and Eye Graphic (Vietnam). He was with Central Malaya Press Sdn. Bhd. as
Machine Minder from December 1991 to August 1994. He then joined Kodak (Malaysia) Sdn. Bhd. as
a Technical Sales Executive from March 1996 to September 1997 before joining Heidelberg (M) Sdn.
Bhd. (formerly known as EAC Graphics Sdn. Bhd.) as an Area Sales Manager from October 1997 to
August 2000. He graduated with a Higher National Diploma in Offset Lithographic Printing from London
College of Printing & Distributive Trades with distinction in the UK in 1995.
Lam Kim Goon is the Head of our Group Finance department and has overall charge of our Group’s
finance and accounting matters. He joined our Group in August 2005. Prior to joining us, he was the
Group Finance Manager of Texcorp where he was in charge of the financials matters for the TRB Group
of companies. He started his career as an audit assistant with Arthur Andersen & Co in 1994 and
subsequently joined Ernst & Young in 2002 before leaving as an Audit Manager in 2003. During his time
with Arthur Andersen & Co and Ernst and Young, Mr Lam was involved in, inter alia, listing exercises
as well as statutory audits of several listed and unlisted companies, including Malaysian subsidiaries
of multi-national corporations and companies in Singapore and was thus able to gain a significant
amount of experience in various accounting standards including the Singapore Financial Reporting
Standards and US GAAP. He graduated with a Bachelor of Business degree from Deakin University,
Australia.
Low Chee Min is the Senior General Manager of Texpack (KL) and is in charge of its overall operations.
Prior to joining our group, he was with Markaids (M) Sdn. Bhd. as a Marketing Director from 2004 to
2005. From 2000 to 2003, Mr Low was with Tri-wall (M) Sdn. Bhd. as a General Director. Prior to that,
he was with Paragon Union Berhad from 1996 to 1999. He graduated with a Bachelor of Economics
(Accounting) degree in 1981 and a Post Graduate Diploma in Computer Science in 1982 from La Trobe
University of Australia.
Yuma Konishi was appointed as Business Development and Research Director of Texpolymers in
2005. His responsibilities include developing international business and research collaborations with
overseas business partners and universities. He also oversees our Company’s research and
development activities in relation to plastic polymers and is in charge of the business development and
marketing of Texpolymers’ products. Mr Konishi graduated with a Bachelor of Science degree in 2001
from Nihon University of Japan and a Master of Science degree in Polymer Engineering in 2004 from
The University of Akron, US.
Ho Wei Min is a Director and the Assistant General Manager of Eye Graphic. His responsibilities
include overseeing daily operations and sales activities, managing profitability, future development and
long-term sustainability. He started his career as a Sales Executive with TRB in 1991 and was later
promoted to Senior Sales Executive and Assistant Area Sales Manager in 1994 and 1995 respectively.
He was then with Eye Graphic in 1998 as an Assistant Area Sales Manager and subsequently promoted
to Sales Manager in 1999. He became the Operations Manager in 2001 and then promoted to his
present position in 2004. Currently, he is also a member of the Corporate Affairs Committee of TRB, the
controlling shareholder of our company. He graduated with a Doctor of Dental Medicine degree in 1985
from Centro Escolar University, Manila, Philippines.
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MANAGEMENT
COMPENSATION
The compensation paid to our Directors and our Executive Officers for services rendered to our Group
on an individual basis in remuneration bands during FY2004 and FY2005, and an estimate of the
compensation payable for FY2006 are as follows:
Names
FY2004(1)
FY2005(1)
FY2006(1)
A
A
B
A
A
A
Directors
Dato’ Seri Fumihiko Konishi(2)
(2)(4)
(3)(4)
A
B
B
Lee Chin(2)
−
−
A
Tony Tan Choon Keat
−
−
A
Koji Miura
−
−
A
Kim Seah Teck Kim
−
−
A
Lim Siang Kai
−
−
A
A
B
B
−
A
A
A
A
A
Yap Kee Keong
Executive Officers
Teo See Keong(2)
Ooi Ghee Teong
Songpol Ratanasuwan
(2)
Ngiam Meng Hock
−
A
A
(2)
A
A
A
(2)
A
A
A
A
A
A
Lam Kim Goon
−
A
A
Low Chee Min
−
−
A
Yuma Konishi
−
A
A
(2)
A
A
A
Chan Weng Kong
Toh Kulchornchan
Ho Wei Min
Notes:
(1)
Band A = up to S$250,000.
Band B = above S$250,000 and up to S$500,000.
(2)
All the above non-Independent Directors and the following Executive Officers: Teo See Keong, Songpol Ratanasuwan,
Chan Weng Kong, Toh Kulchornchan and Ho Wei Min are covered by the Retirement and Resignation Scheme by virtue of
their directorships in the subsidiaries. For the purposes of the above table, we have not taken into account the amounts set
aside under the Retirement and Resignation Scheme to these persons.
(3)
Mr Yap Kee Keong does not receive any form of remuneration from TRB, save for his director’s fee for his role as
Non-Executive Director of TRB (please refer to “Management — Directors” of this Prospectus).
(4)
The remuneration of each of Mr Lee Siew Kee, Jeffrey and Mr Yap Kee Keong was determined according to their respective
terms of employment with Texpack (please refer to “Management — Service Agreements” of this Prospectus) and will be
subject to the purview of our Remuneration Committee after our admission to the Official List of the SGX-ST.
Except as disclosed below under “Retirement and Resignation Scheme” and “Keyman Scheme”, we
have not set aside or accrued amounts to provide for pension, retirement or similar benefits.
125
MANAGEMENT
Retirement and Resignation Scheme
A Retirement and Resignation Scheme has been established for the directors of our subsidiaries (but
not our Company) pursuant to which benefits may be payable upon cessation of services as a director
whether by retirement or resignation. Alternatively, the board of the relevant subsidiary has the
discretion to pay the whole or part of the benefits accrued to each director at the end of every ten years
of service. The benefits payable, which is determined with reference to the shareholders’ funds
(amongst other things) of the relevant company for the preceding financial period, are spelt out in the
Retirement and Resignation Scheme and deemed to accrue from year to year. Any payment in
connection therewith shall be determined by the boards of directors of the respective subsidiaries in
their absolute discretion and where necessary, all payments to be made under the Retirement and
Resignation Scheme shall be subject to the final approval of the shareholders of the respective
subsidiaries and/or our Company. Our Independent Directors do not participate in the Retirement and
Resignation Scheme. The sums we have set aside for payments made under this scheme to our
Directors and our Executive Officers described above as at 30 June 2006 are as follows:
Eye
Graphic
Amount payable by company (RM’000)
Texpack Texpack
Texpack
Texpack
TEP
(KL)
(Johor) Texpolymers (Thailand)
−
45
−
84
13
4
57
22
75
−
11
−
4
−
Yap Kee Keong
7
68
18
6
9
6
6
Teo See Keong
−
27
2
−
1
−
43
Songpol Ratanasuwan
−
−
−
−
−
−
44
Chan Weng Kong
−
30
6
−
−
2
−
Toh Kulchornchan
−
−
−
−
−
−
22
Yuma Konishi
−
−
−
−
−
4
−
Ho Wei Min
3
−
−
−
−
−
−
Further details of the Retirement and Resignation Scheme (including the rules thereof) are set out in
Appendix B of this Prospectus.
As at the Latest Practicable Date, an aggregate sum of approximately RM786,000 has been provided
for the payment of benefits under the Retirement and Resignation Scheme.
Keyman Scheme
The TRB Group has also instituted a keyman scheme (the “Keyman Scheme”) for key executives of its
subsidiaries pursuant to which certain payments would be made to the executive or the members of his
immediate family of death gratuity upon death, disablement benefit upon permanent disablement or
retirement benefit upon retirement at age 60 for executives holding the appointment of Executive
Chairman, Chairman and/or President and at age 55 for other positions. Under this scheme, selected
key executives enter into an agreement with the companies they are employed by, which sets out the
terms of the Keyman Scheme. Such executives are selected based on their merit and performance and
upon recommendation by the chief executive (of the particular subsidiary) and with final approval by the
board of the particular subsidiary.
We have insured our liabilities under the Keyman Scheme. Our Group, through the relevant
subsidiaries, has entered into separate keyman agreements (the “Keyman Agreements”) with each of
Yap Kee Keong and Teo See Keong (together with Dato’ Seri Fumihiko Konishi, the “Key Employees”).
126
MANAGEMENT
Dato’ Seri Fumihiko Konishi has entered into a similar Keyman Agreement with TRB. The Keyman
Agreements are effective for the respective terms of employment of each of the Key Employees and
will terminate only when their terms of employment end. Each Key Employee will continue to enjoy the
benefits of his Keyman Agreement as long as he remains in a position within our Group.
The Keyman Agreements provide that the immediate family of the Key Employees (i.e. the wife/widow
of the Key Employee, his children or his parents) will be paid a gratuity upon the death or permanent
disablement of the Key Employee. The minimum amounts payable in the event of the death or
permanent disability of each of the Key Employees are set out in the table below. This death and
disability benefit is independent of and in addition to the Group’s existing group personal accident
insurance policy which is provided to all its employees.
The Keyman Agreements also provide for retirement and pre-retirement benefits. The retirement age
for Dato’ Seri Fumihiko Konishi and Yap Kee Keong is 60 while the retirement age for Teo See Keong
is 55. Upon reaching their respective ages of retirement, each Key Employee will be entitled to a lump
sum retirement benefit in the amounts as set out in the table below.
In the event that Yap Kee Keong opts for premature retirement before the age of 60 but after the age
of 55, he will be paid a retirement benefit of RM250,000 provided he gives Texpack 12 clear calendar
months’ notice. If any of the other Key Employees are forced into premature retirement before their
respective retirement ages due to health reasons, their retirement benefits shall be solely at the
discretion of their respective companies.
All benefits under the Keyman Agreements are to be paid as soon as practicable in the event of death
or permanent disability or within three months of the date of retirement or in the case of premature
retirement on any date at the discretion of the particular subsidiary, as the case may be.
The insurance premiums to cover benefits payable pursuant to Dato’ Seri Fumihiko Konishi’s Keyman
Agreement were charged out to various subsidiaries of the TRB Group on a cost-sharing basis.
However, beginning 1 September 2004, our Group has stopped paying such insurance premiums,
although Dato’ Seri Fumihiko Konishi is still entitled to the benefits set out in the table below. This
arrangement constitutes an interested person transaction, further details of which are set out under
“Interested Person Transactions and Conflicts of Interests — Existing and Future Interested Person
Transactions” of this Prospectus. The costs of the insurance premiums for the provision of benefits
under the Keyman Scheme to the above executives were RM10,277, RM11,263, RM26,052 and
RM27,540 in FY2003, FY2004, FY2005 and from 1 January 2006 to the Latest Practicable Date
respectively.
The benefits payable to these Executive Directors and Executive Officers are set out below:
Amount of Benefit Payable (RM)
Upon death or
Upon Retirement
Upon premature
permanent disablement
retirement
1,500,000
750,000(1)
Yap Kee Keong
1,000,000
500,000
At the discretion of Texpack
(before the age of 55)
Teo See Keong
500,000
250,000
At the discretion of Texpack
At the discretion of TRB
Note:
(1)
Dato’ Seri Fumihiko Konishi has been paid an amount of approximately RM93,260 (out of the RM750,000 payable) upon
the maturity of one of the insurance policies that was entered into pursuant to his Keyman Agreement. However, our Group
has since stopped paying the insurance premiums for the policies as mentioned above.
127
MANAGEMENT
SERVICE AGREEMENTS
There are no existing or proposed service agreements between us or our subsidiaries and any of our
Directors which provide for benefits upon termination of employment.
Directors
Our Executive Chairman, Dato’ Seri Fumihiko Konishi, has not entered into any service agreement or
letter of appointment with our Group or the TRB Group. Previously, he did not receive a salary directly
from our Group. Please refer to “Interested Person Transactions and Conflicts of Interests” of this
Prospectus. However, we have paid his salary as an Executive Director beginning FY2004.
Our Deputy Chairman and Chief Executive Officer, Mr Lee Siew Khee, Jeffrey, has not entered into any
service agreement with our Group, but has previously executed a letter of appointment with Texpack.
The letter of appointment sets out the terms of his employment with Texpack. His employment may be
terminated by either party giving six months’ notice. In addition to his monthly salary, he is also entitled
to a variable annual bonus.
Our President and Chief Operating Officer, Yap Kee Keong, has not entered into any service agreement
with our Group, but has previously executed a letter of appointment with Texpack. The letter of
appointment sets out the terms of his employment with Texpack. His employment may be terminated
by either party giving six months’ notice. In addition to his monthly salary, he is also entitled to a variable
annual bonus and the use of a company car.
Executive Officers
Each of our Executive Officers is a party to a letter of appointment which sets forth compensation and
related terms of that person’s employment, such as annual leave and grounds of termination, etc. All
of those persons are employed until an appropriate termination notice is given, or payment in lieu of
notice is given, by either party. In addition to their monthly salaries and variable annual bonuses,
Executive Officers appointed to General Manager positions and above are also entitled to the use of
a company car.
Our Executive Directors and Executive Officers are entitled to such other benefits (for example, country
club memberships) in accordance with our human resource policy, as may be determined from time to
time.
CORPORATE GOVERNANCE
Our Directors recognise the importance of good corporate governance and in offering high standards
of accountability to our Shareholders. We have therefore set up the following committees:
Remuneration Committee
Our Remuneration Committee comprises Kim Seah Teck Kim, Tony Tan Choon Keat and Lee Chin, with
Kim Seah Teck Kim as chairman. Our Remuneration Committee will recommend to our Board a
remuneration framework for our Directors and Executive Officers, and determine specific remuneration
packages for each Executive Director. The recommendations of our Remuneration Committee will be
submitted for endorsement by the Board. All aspects of remuneration, including but not limited to the
benefits payable under the Retirement and Resignation Scheme, Directors’ fees, salaries, allowances,
bonuses, options and benefits-in-kind will be considered by our Remuneration Committee. Each
member of the Remuneration Committee shall abstain from voting on any resolutions in respect of his
own remuneration package.
128
MANAGEMENT
Nominating Committee
Our Nominating Committee comprises Tony Tan Choon Keat, Koji Miura and Lee Chin, with Tony Tan
Choon Keat as the chairman. Our Nominating Committee will be responsible for (i) the re-nomination
of our Directors having regard to the Director’s contribution and performance, (ii) determining annually
whether or not a Director is independent and (iii) deciding whether or not a Director is able to and has
been adequately carrying out his duties as a director. Our Nominating Committee will, subject to the
approval of our Board, decide how our Board’s performance is to be evaluated and propose objective
performance criteria which address how our Board has enhanced long-term shareholder value. The
performance evaluation will also include consideration of our Company’s share price performance over
a 5-year period vis-à-vis the Singapore Straits Times Index and a benchmark index of our industry
peers. 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 by 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.
Audit Committee
Our Audit Committee consists of five members of the Board. The members are Lim Siang Kai
(Chairman of the Audit Committee), Kim Seah Teck Kim, Lee Chin, Koji Miura and Tony Tan Choon
Keat. Except for Lee Chin, they are the Independent Directors and they will meet periodically to:
(i)
review the audit plans and reports of our Company’s internal and external independent auditors;
(ii)
review the financial statements of our Company before submission to the Directors and
Shareholders;
(iii)
review and evaluate the independence and performance of the external auditors;
(iv) review and approve interested person transactions, if any, falling within the scope of Chapter 9 of
the SGX-ST Listing Manual on a biannual basis;
(v)
review any potential conflicts of interest and to ensure that procedures for resolving such conflicts
are sufficient and strictly adhered to by the Company;
(vi) review the Company’s foreign exchange exposure and the procedures to manage its foreign
currency risk;
(vii) review the effectiveness and adequacy of internal accounting and financial control procedures. In
this regard, our auditors will be engaged to assist our Audit Committee; and
(viii) review the biannual reports prepared by the management of our Company based on its risk
management framework to evaluate the adequacy of the Company’s business risk management
process.
Apart from the above functions, our Audit Committee will also commission and review the findings of
internal investigations into matters where there is any suspected fraud or irregularity, or failure of
internal controls, or infringement of any law, rule or regulation which has or is likely to have a material
impact on our Company’s operating results or financial position. Each member of our Audit Committee
will abstain from voting in respect of matters in which he is interested.
129
MANAGEMENT
External Consultants
As part of our efforts to ensure good corporate governance, we will appoint an external consultant on
accounting matters. The external consultant will be appointed from an established accounting firm with
audit experience of listed companies in Singapore. The scope of work for the external consultant will
cover:
(i)
advising our Group on compliance with Singapore accounting standards;
(ii)
advising our Group on compliance with the corporate statutory requirements of Singapore; and
(iii)
advising our Group on ways to further strengthen our existing internal control system in view of
our status as a listed company in Singapore.
Board Practices
Our Board of Directors will consist of not less than two Directors. Our Directors do not currently have
a fixed term of office. At each annual general meeting, one-third of the Directors for the time being (or,
if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire
from office by rotation. A retiring Director shall be eligible for re-election. The Directors to retire in every
year shall be those who have been longest in office since their last re-election or appointment. All
Directors shall retire from office at least once every three years.
130
MANAGEMENT
MANAGEMENT REPORTING STRUCTURE
Board of Directors
Executive Chairman
Deputy Chairman,
Chief Executive Officer
Yap Kee Keong
President, Chief Operating Officer
131
Lam Kim Goon
Head of Group Finance
Texpack
Teo See Keong
Managing
Director
Texpack
(Johor)
Chan Weng
Kong
Acting General
Manager
Texpack (KL)
Low Chee Min
Senior General
Manager
TEP
Ooi Ghee
Teong
General
Manager
Texpolymers
Yuma Konishi
Business
Development
and Research
Director
Texpack
(Thailand)
Songpol
Ratanasuwan
Managing
Director
Texpack
(Wuxi)
Ngiam Meng
Hock
Deputy
Managing
Director
Texpack
(Vietnam)
Victor Liew
Assistant
General
Manager
Eye Graphic
Ho Wei Min
Assistant
General
Manager
Eye Graphic
(Vietnam)
Victor Liew
Assistant
General
Manager
Toh
Kulchornchan
Deputy
Managing
Director
Our Deputy Chairman and Chief Executive Officer, Mr Lee Siew Khee, Jeffrey is our top executive and who is in turn accountable to our Board. Dato’ Seri Fumihiko
Konishi is the Executive Chairman of our Board.
PRINCIPAL SHAREHOLDERS
OWNERSHIP STRUCTURE
The shareholders of our Company and their respective shareholdings immediately before and after the
Invitation are set out below:
Before the Invitation
Direct Interest
Deemed Interest
Number
Number
of Shares
%
of Shares
%
After the Invitation
Direct Interest
Deemed Interest
Number
Number
of Shares
%
of Shares
%
Directors
Dato’ Seri Fumihiko
Konishi(1)
–
–
89,550,000
100.0
–
–
89,550,000
75.0
–
–
–
–
–
–
–
–
Yap Kee Keong
–
–
–
–
–
–
–
–
Lee Chin
–
–
–
–
–
–
–
–
Tony Tan Choon Keat
–
–
–
–
–
–
–
–
Koji Miura
–
–
–
–
–
–
–
–
Kim Seah Teck Kim
–
–
–
–
–
–
–
–
Lim Siang Kai
–
–
–
–
–
–
–
–
Substantial shareholders
Texchem Resources Bhd.(1)
89,550,000
100.0
–
–
89,550,000
75.0
–
–
Texchem Holdings Sdn.
Bhd.(1),(2)
–
–
89,550,000
100.0
–
–
89,550,000
75.0
Public
–
–
29,850,000
25.0
89,550,000
100.0
119,400,000
100.0
Total
Notes:
(1)
Texchem Holdings has approximately 33.0% direct interest in the share capital of TRB and is thus deemed, for the purposes
of Section 4 of the Securities and Futures Act, to be interested in TRB’s shareholding in our Company. In addition, Dato’ Seri
Fumihiko Konishi holds the entire share capital of Texchem Holdings save for 20 shares held by his wife, and, accordingly,
is also deemed, for the purposes of Section 4 of the Securities and Futures Act, to be interested in TRB’s shareholding in
our Company. One of our Executive Officers, Mr Yuma Konishi, is the son of Dato’ Seri Fumihiko Konishi.
(2)
Texcorp owns directly approximately 16.9% of TRB’s issued share capital and Introplus Sdn. Bhd. (in members’ voluntary
liquidation) owns approximately 15.3% of Texcorp’s issued share capital. As such neither Texcorp nor Introplus Sdn. Bhd.
(in members’ voluntary liquidation) are deemed to be interested in TRB’s shareholding in our Company for the purposes of
Section 4 of the Securities and Futures Act.
Mr Kim Lin Khon, Mark and Mr Kwok Fook Thin each initially held one ordinary share of $1.00 each in
the capital of our Company in trust for TRB for the purposes of our Company’s incorporation, which
shares have since been transferred to TRB. Accordingly, there were no significant changes in the
percentage of ownership of our Directors and substantial shareholders in our Company from its
incorporation until the Latest Practicable Date.
Save as disclosed above, there are no relationships among our Directors and substantial shareholders.
The Shares held by our Directors and substantial shareholders do not have different voting rights from
other Shareholders of the Company.
There is no known arrangement, the operation of which, may, at a subsequent date, result in a change
in the control of our Company.
There are no Shares that are held by or on behalf of our Company or by our subsidiaries.
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PRINCIPAL SHAREHOLDERS
PRINCIPAL SHAREHOLDER
TRB is our Controlling Shareholder and owns our Company’s entire issued share capital prior to the
Invitation. TRB is listed on the mainboard of the Bursa Malaysia and its business can be divided into
four main divisions, namely, its industrial division which trades in industrial chemicals, plastic raw
materials, dyestuffs and textile auxiliaries; its food division which engages in the manufacturing and
processing of food products; its packaging division which undertakes the manufacturing of specialised
plastic packaging products; and its family care division which manufactures family care products and
engages in the trading of consumer products.
Immediately after the completion of the Invitation, TRB will continue to hold 75.0% of our issued share
capital. Through its shareholding, TRB will be able to exercise a controlling influence over our
Company, including determining the outcome on matters submitted to shareholders for approval, for
instance matters relating to mergers or other business combinations, the acquisition or disposition of
assets, our access to the capital markets, the payment of dividends and any change of control of our
Company, and even the reduction of capital. In these and other situations, various conflicts of interests
between TRB and our other shareholders could arise. Please see “Risk Factors” of this Prospectus for
further details.
MORATORIUM
To demonstrate its commitment to our Company, TRB, who will hold 89,550,000 Shares representing
75.0% of our Company’s post-Invitation issued share capital, has given an undertaking to DBS Bank,
not to dispose of or transfer any part of its shareholding in our Company for a period of six months from
the date of our admission to the Official List of the SGX-ST.
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INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS
PAST INTERESTED PERSON TRANSACTIONS
Transactions between our Group and any interested persons (namely, our Directors, our Chief
Executive Officer or any of our Controlling Shareholders, or the associates of such persons) are
generally known as interested person transactions. Save as disclosed under “Restructuring Exercise”
of this Prospectus and under “Management — Service Agreements” of this Prospectus, the discussion
below sets out the material interested person transactions entered into by our Group within the past
three financial years ended 31 December 2005 and up to the Latest Practicable Date.
Purchase of machinery and computers from TRB
Texpack (Wuxi) and Texpack (Johor) both purchased thermoforming machinery from TRB in early
March 2003 for RM283,100 and RM123,738, respectively. Texpack (Wuxi) also purchased computers
from TRB in May 2003 for RM6,587. The machinery and computers originally belonged to Texpack
(Philippines) (previously a subsidiary of TRB, and which were not purchased when Amtes Corporation
bought over Texpack (Philippines) from TRB). The purchases were made at the net book value of the
machinery and the computers carried in the accounts of Texpack (Philippines), which were less than the
respective market values of the items. This was a one-off transaction and is not expected to recur in
the future.
Rental of Wisma Texchem by Texpack and TEP from Texcorp
Texpack and TEP used certain premises in Wisma Texchem in Selangor, Malaysia (the “Wisma
Premises”) as their regional head office and warehousing centre. The Wisma Premises were owned by
Texcorp, an associated company of TRB. The rent was derived on a cost-sharing basis based on the
actual floor space used by Texpack and TEP. This transaction was on an arm’s length basis. Texpack
moved out of the premises in late 2003 and TEP also moved out of the premises on 1 April 2004. Eye
Graphic continues to occupy a part of the Wisma Premises (please refer to “Interested Person
Transactions and Conflicts of Interests — Existing and Future Interested Person Transactions” for
further details).The rent paid by us to Texcorp in respect of Texpack and TEP for FY2003 and FY2004
was RM20,239 and RM1,835, respectively.
Provision of corporate guarantees by Texcorp
Eye Graphic was previously a subsidiary of Texcorp (please refer to “Business — History and
Development of Our Group” of this Prospectus for further details). From time to time, Texcorp provided
corporate guarantees for the banking facilities extended to Eye Graphic and in return charged a fee for
the provision of such guarantees based on 1% of the amount being guaranteed. The amount of fees
paid to Texcorp in FY2003, FY2004 and FY2005 in respect of the provision of such guarantees were
RM23,853, RM23,367 and RM15,074 respectively. With effect from 1 January 2006, all such
guarantees will be provided by TRB instead. Please refer to “Interested Person Transactions and
Conflicts of Interests — Existing and Future Interested Persons Transactions” of this Prospectus for
further information.
Rental of Villa Primavera
Villa Primavera is a residential property situated in Penang owned by Texchem Holdings, our
Controlling Shareholder. Texchem Holdings is in turn owned by Dato’ Seri Fumihiko Konishi and his
wife. Besides being rented by Dato’ Seri Fumihiko Konishi from Texchem Holdings as his residence,
Villa Primavera is also used for business entertainment and business functions by the TRB Group,
including our Group. We paid rent to Texchem Holdings for the use of Villa Primavera. The amount of
rent is pre-determined and shared amongst the companies that are expected to use the villa on an
annual basis. This is normally determined based on a third party valuation of the property.
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Save for the amounts paid by Eye Graphic, which became our subsidiary in December 2005 (please
refer to “Restructuring Exercise” in this Prospectus for further information), we paid an aggregate
amount of RM187,000 in rent to Texchem Holdings in FY2003. The amount paid by Eye Graphic in rent
to Texchem Holdings for each of FY2003, FY2004 and FY2005 was RM12,000. These transactions
were entered into on an arm’s length basis.
It was an established practice of our Group to conduct our business entertainment at Villa Primavera.
Our customers, to a certain extent, have become accustomed to this practice. However, we have
discontinued this arrangement with effect from 1 January 2006.
Use of car belonging to Texcorp
We previously used a company car owned by Texcorp. For the use of the car, we bore the entire
depreciation and running costs of the car prior to FY2003. In FY2003, the running cost of the car which
was borne by us amounted to RM1,500. Subsequently, in December 2003, Texcorp sold the company
car (at market value) to Seapack Food Sdn. Bhd. (“Seapack Food”), a subsidiary of Texcorp. As we had
previously borne the depreciation, Texcorp paid us the proceeds from the sale of the car amounting to
RM160,000 which was determined based on the prevailing market value of the car. This was an arm’s
length transaction. This was a one-off transaction that is not expected to recur in the future.
Rental and subsequent purchase of company car from Fumakilla
In FY2003, Texpack (KL) rented a Volvo from Fumakilla, a subsidiary of TRB, our Controlling
Shareholder. The car was rented for the use of one of our ex-directors. The aggregate rent paid by us
amounted to RM36,000 for FY2003. The car was deemed surplus to the requirements of Fumakilla. The
rental price was derived from the prevailing market value of the car based on quotes obtained from car
dealers. On 13 October 2003, Fumakilla sold the car to Texpack (KL) for a consideration of RM95,000
which was determined based on the prevailing market value of the car. This was an arm’s length
transaction. This was a one-off transaction that is not expected to recur in the future.
Rental of company car to Fumakilla
Texpack (KL) owns a Mercedes which it rented to Fumakilla in FY2003. The aggregate rent paid to us
by Fumakilla amounted to RM72,000 for FY2003. The car was deemed surplus to the requirements of
Texpack (KL). The rental price was derived from the prevailing market value of the car based on quotes
obtained from car dealers. This transaction was a one-off transaction and will not continue in the future
as the car has been sold to Fumakilla in October 2003 for a consideration of approximately RM215,000,
which was determined based on the prevailing market value of the car. This was an arm’s length
transaction.
Purchase of car from Texchem Consumers Sdn. Bhd.
In July 2005, Texpack purchased a Mercedes from Texchem Consumers Sdn. Bhd. (“Texchem
Consumers”), a wholly-owned subsidiary of TRB. The car was purchased for the use of one of our
Executive Directors, Yap Kee Keong. The consideration for the car was RM220,000, which was
determined based on the prevailing market value of the car. This was a one-off transaction entered into
on an arm’s length basis and is not expected to recur in future.
Sale of car to Texchem Consumers Sdn. Bhd.
TEP had owned a Mercedes, which was used by TEP’s former executive director, who has since retired
in 2005. The car was deemed surplus to the requirements of TEP. In September 2005, the car was sold
135
to Texchem Consumers, a wholly-owned subsidiary of TRB, for a consideration of RM205,000, which
was determined based on the prevailing market value of the car. This was a one-off transaction entered
into on an arm’s length basis and is not expected to recur in future.
Payment of storage charges by TEP to Texchem Materials
Texchem Materials is a wholly-owned subsidiary of TRB and holds a special licence to store chemicals.
TEP paid Texchem Materials administrative fees to store some of its chemicals amounting to RM600
and RM350 in FY2003 and FY2004, respectively. There was no transaction in FY2005.
In the event that the future storage of any of our chemicals requires a special licence, we may again
enter into a similar arrangement with Texchem Materials. Any such future arrangements will be entered
into in accordance with the guidelines described under “Interested Person Transactions and Conflicts
of Interests — Shareholders’ Mandate — Review Procedures for All Other Interested Person
Transactions Not Covered by the Shareholders’ Mandate” of this Prospectus and Chapter 9 of the
SGX-ST Listing Manual so as to ensure that these transactions shall not be on terms which are less
favourable than if they were transacted with a non-interested person.
Sale of transformer to Texpack (Vietnam)
In August 2003, Technopia Vietnam Pte. Ltd. (“Technopia Vietnam”) sold a transformer to Texpack
(Vietnam) for RM5,297. Technopia Vietnam is a wholly-owned subsidiary of Fumakilla. The transaction
was carried out on an arm’s length basis. This transaction is not expected to recur as it was a one-off
transaction.
Sale of club membership to Seapack Food
In December 2003, Texpack sold two club memberships at market value to Seapack Food for
RM95,000. Seapack Food is a subsidiary of Texcorp. This was an arm’s length transaction. This
transaction is not expected to recur as it was a one-off transaction.
Sale of hydraulic cutting machine to Technopia (Thailand) Limited
On 16 January 2004, Texpack (Thailand) sold a hydraulic cutting machine to Technopia (Thailand)
Limited (“Technopia (Thailand)”) for RM11,176. Technopia (Thailand) is a subsidiary of Fumakilla. The
consideration for the transaction was at net book value of the machine and this is not expected to recur
as it was a one-off transaction. This was an arm’s length transaction.
Sale of artwork to Technopia Vietnam
On 26 May 2006, Eye Graphic (Vietnam) sold artwork to Technopia Vietnam for RM1,559. Technopia
Vietnam is a subsidiary of Fumakilla. This was an arm’s length transaction. This is not expected to recur
as it was a one-off transaction.
Assignment of research agreements to and reimbursement of research and development costs
by TRB
On 25 March 2003, Texpack entered into two separate research agreements with Professor Masao
Sumita of the Tokyo Institute of Technology and the University of Akron (including the University of
Akron Research Foundation) in the US for the research and development of new types of ESD
packaging material (the “Research Agreements”). Under the Research Agreements, Texpack will
sponsor the research programmes in return for an exclusive licence to develop and exploit any
discovery made under the programmes in consideration of a stipulated rate of royalty. As the nature of
136
the research was of greater benefit for commercial exploitation to TRB, given the different nature of
businesses of our Group and TRB, it was decided that TRB should sponsor the research programmes.
As such, TRB reimbursed the costs of sponsorship for FY2003 (which had been paid by Texpack)
amounting to RM617,799. No costs were borne by Texpack for FY2004. To formalise this arrangement,
Texpack executed deeds of assignment, assigning the benefits and obligations of the Research
Agreements to TRB with effect from December 2003 for a nominal sum of RM1.00. The Research
Agreements were assigned back to Texpack in January 2005 and subsequently assigned to
Texpolymers in July 2005, in view of the Company’s increased emphasis on polymer development. No
further reimbursements in respect of the Research Agreements will recur.
Indemnity by TRB in favour of our Company
TRB executed a deed of indemnity in favour of our Company in March 2006. Pursuant to this deed, TRB
agreed to indemnify our Company in respect of any losses that our Company may sustain arising from
the non-compliance by TRB of the requirement to maintain its effective interest of 51% in our Malaysian
subsidiaries (save for Eye Graphic and Texpolymers). Please refer to the section “Risk Factors — Risks
relating to Malaysia” of this Prospectus for further information.
Payment of management fees by Texpack (Thailand)
Texchem Consumers (Thailand) Ltd. (“Texchem Consumers (Thailand)”), a subsidiary of Fumakilla
provided management services to our Group, including accounting, human resource, public affairs,
investor relations, legal, corporate secretarial and planning services to Texpack (Thailand) on a cost
reimbursement basis. The management fees paid to Texchem Consumers (Thailand) for FY2003
amounted to RM51,821. This was an arm’s length transaction. Beginning FY2004, we stopped such
transactions with Texchem Consumers (Thailand) as we established our own support office.
Payment of forwarding and haulage charges to Texchem Materials
Texchem Materials acted as a forwarding and handling agent for us and we paid a service charge to
Texchem Materials for the provision of such services. This service charge was determined based on
market rates for equivalent services. We used Texchem Materials as it was able to obtain bulk
discounts for freight and shipping rates. The service charge paid to Texchem Materials for FY2003 and
FY2004 was RM61,916 and RM71,866 respectively. These transactions were at arm’s length and have
ceased in October 2004 and since then, we have been using Texchem Food Sdn. Bhd. (“Texchem
Food”) for such services. Please refer to “Interested Person Transactions and Conflicts of Interests —
Existing and Future Interested Person Transactions” of this Prospectus for further information.
Sale of goods to and payment of commission to Texchem Singapore
Texchem Singapore is a company specialising in the trading of plastics resins, plastic products and
chemicals for the Singapore and Vietnam markets and is a wholly-owned subsidiary of TRB. We used
Texchem Singapore as our sales and marketing agent to market our products in Singapore. In this
respect, we sold precision injection moulded packaging products to Texchem Singapore who in turn
onsold these goods to its customers (at the same price). Pursuant to this arrangement (which was
effective 1 January 2000), Texchem Singapore will earn a commission amounting to approximately five
per cent of the selling prices of the products. The sales commission percentage was commercially
agreed upon between the relevant parties and on an arm’s length basis. This arrangement was
formalised by way of a sales commission agreement that was entered into by TEP and Texchem
Singapore in October 2003. This agreement was terminated in September 2005 and such payments of
sales commissions to Texchem Singapore will not continue in the future. The amounts of our sales to
Texchem Singapore for FY2003, FY2004, FY2005 were RM1,657,868, RM1,503,839 and RM459,743,
137
respectively and the commission paid to Texchem Singapore for FY2003, FY2004 and FY2005 were
RM99,830, RM79,535 and RM23,486, respectively.
Payment of warehouse and forklift handling charges to Texchem Singapore
TEP used Texchem Singapore as its sales and marketing agent to market its products in Singapore. As
part of our business operations, TEP warehoused goods in transit in Singapore from time to time. The
warehouse space used by TEP is owned by Texchem Singapore and it paid a warehouse charge per
month for the usage which was determined from time to time based on the actual volume used or 40
cubic metres whichever is higher. Subsequently, TEP entered into a one-year agreement with Texchem
Singapore in respect of the use of the warehouse space with effect from 9 October 2003. Pursuant to
this agreement, the warehouse charges were calculated based on a monthly charge of S$12.00 per
cubic metre per month or S$480 per month whichever is higher. Further Texchem Singapore charged
a minimum of S$480 per month even if the warehouse space was not utilised. TEP also paid Texchem
Singapore forklift handling services at the rate of S$1.00 per loading per cubic metre. The amount of
warehouse charges and forklift handling charges paid to Texchem Singapore for FY2003, FY2004 and
FY2005 were RM23,608, RM13,040 and RM6,734, respectively. The said agreement was terminated
in June 2005 and we do not intend to continue with this arrangement with Texchem Singapore.
Payment of listing expenses by the Company to TRB
In FY2004, TRB absorbed 50% of the listing expenses previously incurred amounting to RM1,414,409.
Such a transaction has not since recurred and all expenses related to the Invitation will be borne by the
Company with effect from 1 January 2005. Please refer to “Use of Proceeds from the Invitation and
Expenses Incurred” of this Prospectus for further information.
Interest amounts paid by Eye Graphic to the Texcorp Group
From time to time, the Texcorp Group provided advances to Eye Graphic on which interest was charged
at between 4.6% per annum and 6.5% per annum for FY2003 and between 4.6% per annum and 4.8%
per annum for FY2004 based on the average of the rate charged on Eye Graphic’s existing overdraft
facilities and either (i) the fixed deposit rates (where the relevant company within the Texcorp Group has
excess funds to fund the advance) or (ii) the cost of funds of the relevant company within the Texcorp
Group that provided the advance (where the relevant company within the Texcorp Group has drawn
down on its banking facilities to fund the advance). The interest paid by Eye Graphic for FY2003 and
FY2004 was RM7,464 and RM5,890 respectively. All such advances have been repaid and such
transactions have ceased from FY2005 onwards.
Interest amounts paid by Eye Graphic to Texchem Malaysia Sdn. Berhad
Texchem Malaysia Sdn. Berhad (“Texchem Malaysia”), a subsidiary of Texchem Materials, provided
advances from time to time to Eye Graphic in FY2005, on which interest was charged at between 5.5%
per annum and 7.3% per annum based on the average of the rate charged on Eye Graphic’s existing
overdraft facilities and the cost of funds of Texchem Malaysia. The interest paid by Eye Graphic for
FY2005 amounted to RM20,086 and such transaction have ceased with effect from 1 January 2006.
Interest amounts paid by TRB to TEP
From time to time, TEP provided advances to TRB on which interest was charged at between 7.0% per
annum and 7.65% per annum based on the rate charged on TEP’s existing overdraft facilities. In
December 2003, the outstanding debt amounting to RM1,700,000 owing by TRB to TEP was
transferred to Texpack (the “Transferred Debt”) that partially offset Group debts owing from Texpack to
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TRB (the “Shareholder’s Loan”). The remaining Shareholder’s Loan of RM7,000,000 was capitalised
on 30 August 2004 (please refer to the section “Share Capital” of this Prospectus for further information)
and TRB paid TEP interest amounts on the Transferred Debt calculated based on an interest rate of
7.0% per annum, being the applicable rate charged on TEP’s overdraft facilities, for the period
beginning 1 January 2004 and up to 30 August 2004. The interest paid by TRB to TEP amounted to
RM86,287 and RM63,440 for FY2003 and FY2004, respectively.
Allocation of costs and expenses related to Dato’ Seri Fumihiko Konishi’s employment with TRB
and the maintenance of his office by Texcorp
As previously mentioned, we are the packaging division of TRB. In addition to being one of our
Executive Directors, Dato’ Seri Fumihiko Konishi also devotes his management time to the other
business divisions of TRB. As such, certain costs and expenses related to the employment of Dato’ Seri
Fumihiko Konishi by TRB and borne directly by it are allocated to the various business divisions of TRB
on an annual basis. Dato’ Seri Fumihiko Konishi’s office (including his secretary and other
administrative staff) is maintained by TRB and Texcorp and the costs and expenses related to such
maintenance are allocated amongst the various business divisions of TRB and Texcorp in the same
manner. This allocation is made prior to the start of every financial year and on the basis of an estimate
of the management time Dato’ Seri Fumihiko Konishi is expected to devote to the various business
divisions of TRB and Texcorp for the coming financial year. These costs and expenses comprise mainly
his salary (including the provision of a car and driver), the insurance premiums payable in respect of
his Keyman Agreement as further described under “Management — Compensation” of this Prospectus
and other staff and miscellaneous costs related to the maintenance of his office.
Dato’ Seri Fumihiko Konishi is a key member of our management team and his contribution to the
management of our Group as an Executive Director is set out in “Business — Competitive Strengths”
of this Prospectus. As he did not otherwise draw a salary from our Group, our Directors believe that
such allocation of costs and expenses was a fair and reasonable arrangement with TRB. This allocation
of the insurance premium was calculated by taking the average of the proportions our Group’s annual
turnover bears against the TRB Group’s annual turnover and our Group’s profit before tax against the
TRB Group’s profit before tax for the preceding financial year and applying it for the current financial
year. Beginning FY2004, we have paid Dato’ Seri Fumihiko Konishi’s salary as an Executive Director
directly to him instead of through TRB.
The allocation of costs and expenses related to the maintenance of Dato’ Seri Fumihiko Konishi’s office
and his employment with TRB and the insurance premiums payable in respect of his Keyman
Agreement attributable to the Group for FY2003 amounted to RM822,351. Save for certain
miscellaneous expenses relating to the maintenance of Dato’ Seri Fumihiko Konishi’s office, we
discontinued with the aforementioned arrangement. The miscellaneous expenses paid by the Group for
FY2004 and FY2005 amounted to RM4,970 and RM4,671 respectively. No such transactions will recur
with effect from 1 January 2006.
EXISTING AND FUTURE INTERESTED PERSON TRANSACTIONS
We are part of the TRB Group and we operate its business relating to the manufacture and sale of
plastic packaging materials. We anticipate that we will continue to have transactions of a revenue or
trading nature or those necessary for our day-to-day operations with the other members of the TRB
Group.
139
Texcorp is an associated company of TRB, our Controlling Shareholder. Texcorp functions as the
investment and management services arm of TRB and provides certain management services to the
TRB Group. Texcorp also has certain subsidiaries which provide specialised services on commercial
terms. We also share certain pooled resources with the TRB Group and Texcorp. We anticipate that we
will continue to have transactions of a revenue or trading nature or those necessary for our day-to-day
operations with the TRB Group and Texcorp and its subsidiaries.
Our transactions with the TRB Group and Texcorp and its subsidiaries can generally be classified into
2 categories:
(1)
Sale and purchase of products or services; and
(2)
Provision of corporate services and/or reimbursement of costs for shared resources.
Sale and Purchase of Products or Services
Purchase of raw materials from Texchem Materials
Texchem Materials is a wholly-owned subsidiary of TRB and is a major distributor for a wide variety of
plastic resins and extruded plastic sheets in Malaysia. It is also a principal agent for certain types and
grades of resins that some of our customers have specified to be used as raw materials, in particular,
extruded plastic sheets supplied by the Klockner group of companies (“Klockner”). We purchase these
extruded plastic sheets exclusively from Texchem Materials as they are highly customised products.
Typically, our customers will have obtained indicative prices of these extruded plastic sheets from
Klockner. We will then use these indicative prices as a guide when purchasing such raw materials from
Texchem Materials. Our purchases from Texchem Materials for the past three financial years ended 31
December 2005 and up to the Latest Practicable Date comprised mostly such products. We believe that
we have, through Texchem Materials, established a good working relationship with Klockner. Please
see the section “Business — Suppliers and Raw Materials” of this Prospectus for further details. The
aggregate amounts of such purchases for FY2003, FY2004, FY2005 and for the period beginning 1
January 2006 to the Latest Practicable Date were RM21,543,879, RM27,308,865, RM40,357,526 and
RM27,206,684, respectively. The amount paid for FY2003 includes sales commission paid amounting
to RM13,327 in respect of purchases in January 2003. We subsequently stopped paying such sales
commission as our sales commission agreement with Texchem Materials expired in January 2003.
We intend to continue purchasing some of our raw materials from Texchem Materials for the reasons
explained above.
Payment of forwarding and haulage charges to Texchem Food
Texchem Food is a subsidiary of TRB, and Texchem Food has been acting as a forwarding and
handling agent for us after we ceased using Texchem Materials for such services in FY2004 (please
refer to “Payment of forwarding charges to Texchem Materials” of this Prospectus for further
information). We substituted Texchem Materials for Texchem Food due to the latter having received
International Procurement Centre status that is granted by the Malaysian Industrial Development
Authority, which affords Texchem Food certain tax incentives, and also due to its ability to obtain
competitive freight and shipping rates. For the provision of such services, we pay Texchem Food a
service charge that is determined based on market rates for equivalent services. The service charge
paid to Texchem Food for FY2004, FY2005 and for the period beginning 1 January 2006 to the Latest
Practicable Date were RM20,260, RM51,762 and RM23,171, respectively. We intend to continue with
such transactions.
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Payment of security charges to Guardman Security Services Sdn. Bhd.
We engage Guardman Security Services Sdn. Bhd. (“Guardman Security”), a wholly-owned subsidiary
of Texcorp, to provide security services for our production facilities located in Malaysia pursuant to
separate agreements entered into between our Malaysian subsidiaries, namely Texpack, TEP, Texpack
(KL), Texpack (Johor) and Guardman Security in September 2003 and between Eye Graphic and
Guardman Security in February 2006. Pursuant to these agreements, Guardman Security will provide
static security services to man and guard premises used by our Malaysian subsidiaries. These services
are provided at the rate of RM1,900 per guard per month. The rate shall be reviewed from time to time
taking into consideration, inter alia, the prevailing market situation. The rates charged by Guardman
Security are comparable to market rates, taking into account the quality of services provided by
Guardman Security. The amount of the security charges paid to Guardman Security for FY2003,
FY2004, FY2005 and for the period beginning 1 January 2006 to the Latest Practicable Date were
RM437,453, RM437,400, RM437,400 and RM309,825, respectively.
Payment of insurance premiums to Texchem Risk Management Sdn. Bhd.
We obtain insurance cover in relation to our operations through Texchem Risk Management Sdn. Bhd.
(“Texrisk”), a wholly-owned subsidiary of Texcorp, an insurance agent representing Mitsui Sumitomo
Insurance (Malaysia) Bhd, Hong Leong Assurance Berhad and Great Eastern Life Assurance
(Malaysia) Berhad. In Malaysia, the relevant regulatory authority fixes the commission rates payable by
the insurance companies to their insurance agents and the premiums chargeable by the insurance
companies for most of the types of insurance acquired. The premiums we pay are at commercial rates
and on an arm’s length basis. We believe that obtaining our insurance coverage through Texrisk will
allow us to obtain more competitive rates through bulk discounts. The amount of premiums paid for
FY2003, FY2004, FY2005 and for the period beginning 1 January 2006 to the Latest Practicable Date
were RM842,569, RM872,041, RM863,906 and RM817,479, respectively.
As Texrisk acts as an agent and is paid a commission from the abovementioned financial institutions,
it is not the beneficiary of the insurance premiums and neither is it the underwriter to our insurance
policies. As such, we do not deem these transactions to be interested person transactions. However,
to the extent that these transactions with Texrisk are deemed to be interested person transactions and
therefore subject to compliance with the relevant requirements of Chapter 9 of the SGX-ST Listing
Manual, future transactions of this nature with Texrisk will be subject to review by our Audit Committee.
Such review shall be in accordance with the review procedures set out under “Interested Person
Transactions and Conflicts of Interests — Review Procedures for All Other Interested Person
Transactions Not Covered by the Shareholders’ Mandate” of this Prospectus, to ensure that they are
carried out on normal commercial terms which will not be prejudicial to the interests of the Company
and its minority shareholders.
Sales of products to our interested persons
In the ordinary course of our business, we sell thermoformed trays to Sanko Kasei, Seapack Food and
Sushi Kin Sdn. Bhd. (“Sushi Kin”). Sanko Kasei and Sushi Kin are subsidiaries of TRB whilst Seapack
Food is a subsidiary of Texcorp. Accordingly, transactions between us and the above companies are
interested person transactions.
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We consider our transactions with Sanko Kasei, Seapack Food and Sushi Kin to be commercially
viable. Our past transactions were conducted at arm’s length and on commercial terms. The sale of our
thermoformed trays to Sanko Kasei, Seapack Food and Sushi Kin are recurring interested person
transactions and are expected to continue because of the goodwill and relationship which has
developed between us and the above interested persons over the years. The sales to Sanko Kasei,
Seapack Food and Sushi Kin for the past three financial years ended 31 December 2005 and for the
period beginning 1 January 2006 to the Latest Practicable Date are set out in the table below.
Aggregate value (RM)
FY2003
FY2004
FY2005
1 January 2006
to the Latest
Practicable Date
7,134
50,305
116,734
55,866
Seapack Food
40,074
35,660
30,480
30,390
Sushi Kin
38,556
34,083
61,989
40,091
Sales made to
Sanko Kasei
Provision of services by Sanko Kasei
In the ordinary course of our business, TEP engages Sanko Kasei to provide manufacturing services
related to plastic injection moulding when required to fulfill our orders. These transactions, which are
on commercial terms and at arm’s length basis, involve Sanko Kasei manufacturing precision injection
moulded products, using raw materials that are supplied by us. We do not engage third party service
providers as we believe that our arrangement with Sanko Kasei allows us to better control the quality
of our products, maintain the confidentiality of the products being manufactured and protect our
manufacturing know-how. Although the costs of engaging Sanko Kasei are marginally higher than our
equivalent manufacturing costs, we will only engage Sanko Kasei where we do not have sufficient
capacity on hand to fulfill our orders. As such, we believe engaging Sanko Kasei for the provision of
these services is beneficial for our Group as part of our overall strategy in managing our production
capacity. The amounts charged by Sanko Kasei for the provision of such services for FY2005 and for
the period beginning 1 January 2006 to the Latest Practicable Date amounted to RM162,273 and
RM910,463 respectively. There were no transactions in FY2003 and FY2004.
Pursuant to Rule 920(2) of the SGX-ST Listing Manual, our Company may treat a general mandate as
having been obtained from our shareholders for us to enter into future interested person transactions
if the information required by Rule 920(1)(b) is included in this Prospectus. We have obtained a
shareholders’ mandate for the above category of interested person transactions. As at the date of this
Prospectus, such transactions comprise the following: purchase of raw material from Texchem
Materials, payment of forwarding charges to Texchem Food, payment of security charges to Guardman
Security, sale of our products to Sanko Kasei, Seapack Food and Sushi Kin and the provision of
services by Sanko Kasei. Please refer to “Interested Person Transactions and Conflicts of Interests —
Shareholders’ Mandate” of this Prospectus for further details.
Provision of Corporate Services and/or Reimbursement of Costs for Shared Resources
Provision of corporate guarantees by TRB
As we are part of the TRB Group, TRB provides corporate guarantees for our banking facilities. The
table below sets out the relevant details of the aggregate facilities secured by the corporate guarantees
for the Texpack Group.
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Bank
Amount
Guaranteed
(RM’000)
Outstanding Amount as at
Latest Practicable Date
(RM’000)(10)
Range of Interest Rates Above
Base Lending Rate or Cost of
Funds (% per annum)(11)
32,804
17,142
0.75 to 1.00
39,726
15,686
1.00 to 1.75
57,130
11,424
1.0 to 1.75
HSBC(1)
MBB
(2)
CIMB(3)
(4)
–
5,091
0.75
(5)
10,050
9,107
0.75 to 1.25
(6)
19,717
5,955
–4.5 to 1.5
HLB(7)
7,000
2,473
0.75
18,500
–
0.75
367
269
–
185,294
67,147
–
BCB(L)
SBB
RHB
SCB
(8)
Vietcom Bank
(9)
Total
Notes:
(1)
HSBC Bank Malaysia Berhad.
(2)
Malayan Banking Berhad.
(3)
CIMB Bank Berhad (formerly known as Bumiputra-Commerce Bank Berhad).
(4)
CIMB Bank (L) Limited (formerly known as Bumiputra-Commerce Bank (L) Limited).
(5)
Southern Bank Berhad.
(6)
RHB Bank Berhad.
(7)
Hong Leong Bank Berhad.
(8)
Standard Chartered Bank Malaysia Berhad.
(9)
Bank for Foreign Trade of Vietnam.
(10) The outstanding amounts include bank guarantees amounting to RM1,403,000.
(11) The range of interest rates does not include facilities with fixed rates or bank guarantee commissions.
We intend to seek the release of the abovementioned corporate guarantees upon our admission to the
Official List of the SGX-ST. In the event that the release of such guarantees would result in the variation
of the terms of such banking facilities so as to adversely affect our operations and financial
performance, TRB would continue to provide such guarantees and charge fees to be pegged at no
more than the prevailing commission rates charged by Malaysian commercial banks for the provision
of bank guarantees on the amount of the facilities that have been utilised beginning FY2005.
Loan and interest amounts payable to TRB
The outstanding amount of RM23,940,000 under a term loan extended by CIMB Bank Berhad (formerly
known as Bumiputra-Commerce Bank Berhad) in July 2003 (the “CIMB Loan”) to Texpack to convert
and settle amounts outstanding under a revolving credit facility secured in April 2002 was fully repaid
by TRB in April 2005. Pursuant to an agreement dated 8 April 2005 between TRB and Texpack (the
“Shareholders’ Agreement”) in relation to the amounts payable to TRB for the repayment of the CIMB
Loan (the “TRB Loan”), Texpack will repay the TRB Loan in 11 semi-annual instalments with the first
instalment of RM2,000,000 due on 30 June 2005 and the remaining 10 instalments of RM2,194,000
each to be paid commencing on 31 December 2005. In accordance with the Shareholders’ Agreement,
the interest under the TRB Loan will be serviced in monthly arrears. The total amount of interest
expense, calculated at a rate of 7% per annum being the then applicable interest rate under the CIMB
Loan, paid by Texpack to TRB in FY2005 and for the period beginning 1 January 2006 up to the Latest
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Practicable Date was RM1,072,783 and RM895,201 respectively. As at the Latest Practicable Date,
RM17,552,000 and RM50,492 of the TRB Loan and the interest payable under the TRB Loan
respectively remains outstanding and due to TRB.
Payment of management fees to Texcorp
Texcorp is an associated company of TRB and Texcorp functions as the investment and management
services arm of TRB. Texcorp provides management services to our Group, including accounting/
financial analysis, human resource, IT services, public affairs, investor relations, legal, corporate
secretarial and planning services to Texpack, Texpack (KL), TEP, Texpack (Johor), Texpolymers and
Eye Graphic. Prior to 2004, Texcorp charged a management fee based on two per cent of the net
monthly sales of Texpack, Texpack (KL), TEP, Texpack (Johor) and Eye Graphic for the provision of
these services. Save for Eye Graphic, this charge was reduced to one per cent in 2004. Texcorp has
charged a standard management fee based on one per cent of net monthly sales from 2005 onwards
for Texpack, Texpack (KL), TEP, Texpack (Johor) and Texpolymers and from 2006 onwards for Eye
Graphic. Beginning 1 January 2006, Texcorp has provided us with similar management services to all
of our subsidiaries based outside of Malaysia, namely Texpack (Thailand), Texpack (Vietnam), Texpack
(Wuxi) and Eye Graphic (Vietnam). Texcorp has charged us a retainer fee of RM24,000 per month with
effect from 1 January 2006 for the provision of management services to these subsidiaries (on a
cost-reimbursement basis). The aforementioned fee structure in respect of management services
provided by Texcorp is also used by Texcorp vis-à-vis the other members of the TRB Group where such
services are required. Please refer to the section “Interested Person Transactions and Conflicts of
Interests — Past Interested Person Transactions — Payment of management fees by Texpack
(Thailand)”.
We believe that this arrangement is beneficial to us as there are costs savings and synergies to us
which stem from the pooling and sharing of Texcorp’s professional management resources and
professional specialist services. In addition, the familiarity of Texcorp’s personnel with our Group’s
business, history, functions and administration enables them to carry out such functions more
efficiently. We also believe that the management fees that are based on net monthly sales as
mentioned above are on normal commercial terms and are not prejudicial to our minority shareholders
as there is a correlation between the sales generated and the amount of management services required
by our respective subsidiaries. The amount of management fees paid to Texcorp for FY2003, FY2004,
FY2005 and for the period beginning 1 January 2006 to the Latest Practicable Date were RM2,131,137,
RM952,638, RM1,236,662 and RM1,255,147, respectively. In FY2004, we obtained a set-off
amounting to approximately RM0.2 million from Texcorp as a result of the secondment of Mr Tan Peng
Lam from Texcorp to our Group from April 2004 to December 2004 for the purpose of assisting us in
the areas of accounting and finance. With the appointment of Mr Lam Kim Goon as Head of Group
Finance in August 2005, we do not expect such secondments in the future.
We intend to continue with this arrangement with Texcorp as we will otherwise incur significant costs
and expenses to set up alternative infrastructure as well as hire the necessary personnel to provide the
management services currently being provided by Texcorp and this arrangement provides us with
significant costs savings from being able to share pooled resources. Although such services may be
obtained from third party sources or, upon the establishment of suitable administrative infrastructure,
be provided inhouse, we have performed our internal costing and budgeting estimates, relying (where
appropriate) on independent third party quotes for the provision of equivalent services and believe that
the management fee charged by Texcorp is reasonable. Furthermore, the fees payable by our
subsidiaries in respect of the management and/or retainer fees as mentioned above will be subjected
to a cap calculated at 115% of the annual sales estimates for the relevant subsidiaries that are
determined during our internal reviews conducted at the beginning of each financial year and any
payments in excess of such a cap shall be at the discretion of our Head of Group Finance subject to
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the approval of our Audit Committee to ensure that the interests of our minority shareholders are not
prejudiced. In the event that the Audit Committee approves the payment in excess of the cap, the basis
of such approval shall be disclosed in the Company’s annual report. On 22 October 2003, Texpack,
TEP, Texpack (KL) and Texpack (Johor) entered into separate agreements with Texcorp in relation to
the provision of such management services and Eye Graphic and Texpolymers entered into similar
agreements with Texcorp on 1 February 1996 and 1 July 2005 respectively (collectively, the
“Management Services Agreements”). Each Management Services Agreement is for a period of one
year and is automatically renewed on a yearly basis unless six months’ notice is given by either party,
save for the Management Services Agreement in respect of Eye Graphic which will be in force unless
terminated by either party giving two months’ notice. The Management Services Agreements formalise
our current arrangement. Prior to the renewal of each Management Services Agreement, we will
undertake an annual review to ascertain if the management fee charged by Texcorp is reasonable and
at arm’s length, taking into account the cost of establishing a department to undertake these services
provided by Texcorp.
Reimbursement of IT maintenance charges to Texcorp
This refers to the sharing of maintenance costs of IT hardware and software by Texpack, TEP, Texpack
(Johor), Texpack KL and Eye Graphic on a cost reimbursement basis. The computer systems utilised
by Texpack, TEP, Texpack (Johor), Texpack (KL) and Eye Graphic are part of the TRB Group’s network,
the maintenance costs of which are borne directly by Texcorp. Although such systems are part of the
TRB Group’s network, access to such systems is limited to the relevant personnel of the Texpack
Group. These costs are shared by the TRB Group based on the actual number of computer terminals
and software licencees utilised by the individual members of the TRB Group. Texpack and TEP ceased
using the computer systems above from 1 January 2004 onwards and hence contributed its shares of
the maintenance costs up to FY2003. The amounts paid to Texcorp in respect of the sharing of
maintenance costs of IT hardware and software for FY2003, FY2004, FY2005 and for the period
beginning 1 January 2006 to the Latest Practicable Date were RM146,292, RM14,868, RM26,077 and
RM23,911, respectively. Prior to FY2004, these costs also included the allocation of depreciation costs
of the IT hardware, which has been fully depreciated by the end of FY2003. We intend to continue with
this arrangement with Texcorp as we believe that this arrangement provides us with significant costs
savings from being able to share pooled IT resources.
Rental of Wisma Texchem by Eye Graphic from Texcorp
Eye Graphic rents part of the Wisma Premises as a sales office. The rent paid by us to Texcorp for
FY2003, FY2004, FY2005 and for the period beginning 1 January 2006 to the Latest Practicable Date
was RM13,533, RM10,343, RM16,461 and RM11,662, respectively. The rent was derived on a
cost-sharing basis based on the actual space used by Eye Graphic (please refer to “Interested Person
Transactions and Conflicts of Interests — Past Interested Person Transactions — Rental of Wisma
Texchem by Texpack and TEP from Texcorp”). Pursuant to the tenancy agreement dated 12 April 2002,
the supplemental agreements dated 15 April 2002 and 8 December 2003 respectively and the renewal
letter dated 31 January 2005, the renewed term of the lease for the Wisma Premises is for a period
beginning 1 January 2005 and ending 31 December 2007 (please refer to the section “Business —
Properties and Fixed Assets” of this Prospectus for further details). We intend to continue with this
arrangement with Texcorp as the rates charged are comparable to normal commercial rates.
Rental of office space from Texchem Materials
Eye Graphic rents part of an office area owned by Texchem Materials located in Johor Bahru, Malaysia
(the “Premises”). The Premises have an area of 250 sq ft and are used as a sales office. The aggregate
rent paid by Eye Graphic to Texchem Materials for FY2003, FY2004, FY2005 and for the period
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beginning 1 January 2006 to the Latest Practicable Date was RM7,259, RM7,920, RM7,920 and
RM5,610 respectively. Pursuant to the tenancy agreement dated 20 August 2002 and the renewal letter
dated 31 December 2004, the renewed term for the lease of the Premises is for a period beginning 1
January 2005 and ending 31 December 2006 (please refer to the section “Business — Properties and
Fixed Assets” of this Prospectus for further details) and may be renewed for a further two years on such
further terms and conditions as may be mutually agreed between the parties. We intend to continue
with this arrangement with Texchem Materials as the rates charged are comparable to normal
commercial rates.
Payment of storage charges by Eye Graphic to Texchem Materials
Eye Graphic made use of general storage space made available by Texchem Materials for its trading
goods and paid an administrative fee amounting to RM1,200 in FY2005 and RM850 for the period
beginning 1 January 2006 up to the Latest Practiable Date. We intend to continue with this arrangement
with Texchem Materials as the rates charged are comparable to commercial rates. There were no
transactions in FY2003 and FY2004.
We have obtained a shareholders’ mandate for the above category of interested person transactions.
As at the date of lodgement of this Prospectus, such transactions comprise the following: provision of
corporate guarantees by TRB, loan and interest amounts payable to TRB, payment of management
fees to Texcorp, reimbursement of IT charges to Texcorp, rental of Wisma Texchem by Eye Graphic
from Texcorp, rental of office space from Texchem Materials and payment of storage charges by Eye
Graphic to Texchem Materials. Please see “Interested Person Transactions and Conflicts of Interests
— Shareholders’ Mandate” of this Prospectus for further details.
SHAREHOLDERS’ MANDATE
We anticipate that we would, in the ordinary course of business, enter into certain transactions with our
interested persons. It is likely that such transactions will occur with some degree of frequency and could
arise at any time and from time to time. Such transactions include, but are not limited to the transactions
described below.
Chapter 9 of the SGX-ST Listing Manual allows a listed company to obtain a mandate from its
shareholders for recurrent interested person transactions which are of a revenue or trading nature or
for those necessary for its day-to-day operations. However, these transactions may not include the
purchase or sale of assets, undertakings or businesses.
In view of the time-sensitive nature of commercial transactions, it would be advantageous for us to
obtain a shareholders’ mandate to enter into certain interested person transactions in our normal
course of business, provided that all such transactions are carried out on normal commercial terms and
are not prejudicial to the interests of our Company and its minority shareholders. The mandate will
eliminate, among others, the need for us to convene separate general meetings on each occasion to
seek our shareholders’ approval as and when potential transactions with interested persons arise. This
will reduce substantially the administrative time, inconvenience and expenses associated with the
convening of such meetings, without compromising our corporate objectives and adversely affecting
our business opportunities.
Pursuant to Rule 920(2) of the SGX-ST Listing Manual, our Company may treat a general mandate as
having been obtained from our shareholders for us to enter into certain categories of interested person
transactions with the classes of interested persons set out below, if the information required by Rule
920(1)(b) is included in the Prospectus (the “Shareholders’ Mandate”). The information required by
Rule 920(1)(b) is as follows:
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(i)
the class of interested persons with which the entity at risk will be transacting;
(ii)
the nature of the transactions contemplated under the mandate;
(iii)
the rationale for, and benefit to, the entity at risk;
(iv) the methods or procedures for determining transaction prices;
(v)
the independent financial adviser’s opinion on whether the methods or procedures in (iv) are
sufficient to ensure that the transactions will be carried out on normal commercial terms and will
not be prejudicial to the interests of the issuer and its minority shareholders;
(vi) an opinion from the audit committee if it takes a different view to the independent financial adviser;
and
(vii) a statement from the issuer that it will obtain a fresh mandate from shareholders if the methods
or procedures in (iv) become inappropriate.
The Shareholders’ Mandate will be effective until the earlier of the following: (i) our first annual general
meeting following our admission to the Official List of the SGX-ST; or (ii) the first anniversary of the date
of our admission to the Official List of the SGX-ST. Thereafter, we will seek the approval of our
shareholders for a renewal of the Shareholders’ Mandate at each subsequent annual general meeting.
In accordance with Rule 920(1)(h)(viii) of the SGX-ST Listing Manual, interested persons and their
associates shall abstain from voting on resolutions approving interested person transactions involving
themselves and our Group. Furthermore, such interested persons shall not act as proxies in relation to
such resolutions unless voting instructions have been given by the particular shareholder.
Transactions with interested persons which do not fall within the ambit of the Shareholders’ Mandate
shall be subject to the relevant provisions of Chapter 9 of the SGX-ST Listing Manual.
Classes of Interested Persons
The Shareholders’ Mandate will apply to our Group’s interested person transactions with:
(a)
Texchem Materials;
(b)
Texchem Food;
(c)
Guardman Security;
(d)
Sanko Kasei;
(e)
Seapack Food;
(f)
Sushi Kin;
(g)
TRB; and
(h)
Texcorp
(collectively, the “Interested Persons” and each an “Interested Person”).
Categories of Interested Person Transactions
The interested person transactions with the Interested Persons that will be covered by the
Shareholders Mandate (the “Interested Person Transactions”) and the rationale for and the benefits to
be derived therefrom are set out below.
(a)
Sale and purchase of products and services
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This relates to the sale of our products to the Interested Persons and the purchase of raw
materials, other supplies and services by our Group from the Interested Persons. Our Directors
are of the view that it will be beneficial for us to continue selling our products to the Interested
Persons, especially since such transactions are to be entered into on normal commercial terms
and on an arm’s length basis. Such transactions will be an additional revenue source to our
Group, on top of sales to unrelated third parties. In relation to the purchase of raw materials, other
supplies and services from the Interested Persons, our Directors are of the view that it is in the
interests of our Group to continue such purchases as the Interested Persons will be additional
sources of such products and services. There are also intangible benefits to be derived from
continuing with such purchases. For instance, Texchem Materials is a distributor for a wide variety
of plastic resins and extruded plastic sheets. It is also an agent for certain types and grades of
resins that some of our customers specify to be used as raw materials. They also purchase
extruded plastic sheets from one of our suppliers on our behalf. Texchem Materials has been one
of our major suppliers since the commencement of our operations. Accordingly, our Directors
believe that there are intangible benefits from continuing with this arrangement pursuant to the
goodwill built up between the parties over the years. These intangible benefits include expertise
in inventory management and shipping and timely delivery of raw materials to our Group.
(b)
Provision of corporate services and/or reimbursement of costs for shared resources
This relates to the corporate management and support services provided by the Interested
Persons to our Group in various areas. From time to time, certain members of the TRB Group
provide services to members of the Group. Our Directors believe that as the Interested Persons
are more familiar with our Group’s business, history, functions and administration (as compared
to unrelated third parties), the Interested Persons will be able to provide such services efficiently
and achieve better synergy. By having access to such management and support services, our
Directors believe that our Group will derive operational and financial leverage in its dealings with
third parties. Through such support and services, our Group would also enjoy sharing of
resources and economies of scale, and eliminate duplication of effort.
This category also relates to the reimbursement of costs for the sharing of resources with the
Interested Persons. The TRB Group shares pooled resources (including management and IT
resources) and allocates the costs of such resources to the users. Such allocation is made on the
bases that have been disclosed in the description of such transactions above under “Interested
Person Transactions and Conflicts of Interests — Existing and Future Interested Person
Transactions” of this Prospectus. We will reimburse the relevant Interested Persons for our
allocated portion of such costs. Our Directors are of the view that it is in the interests of our Group
to continue such transactions as we enjoy economies of scale in having access to such pooled
resources.
Rationale for and Benefits of the Shareholders’ Mandate
The Interested Person Transactions are entered into or to be entered into by our Group in its ordinary
course of business or are necessary for our day-to-day operations. They are recurring transactions
which are likely to occur with some degree of frequency and arise at any time and from time to time.
Our Directors are of the view that it will be beneficial to us to transact or continue to transact with the
Interested Persons for the reasons set out in the descriptions of each type of transaction above.
The Shareholders’ Mandate and the renewal of the Shareholders’ Mandate on an annual basis will
eliminate the need to convene separate general meetings from time to time to seek shareholders’
approval as and when potential interested person transactions with the Interested Persons arise,
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thereby reducing substantially, the administrative time and expenses in convening such meetings,
without compromising the corporate objectives and adversely affecting the business opportunities
available to us.
The Shareholders’ Mandate is intended to facilitate transactions in our normal course of business which
are transacted from time to time with the Interested Persons, provided that they are carried out on
normal commercial terms and are not prejudicial to our Company and our minority shareholders.
Disclosure will be made in our annual report of the aggregate value of the Interested Person
Transactions conducted pursuant to the Shareholders’ Mandate during the current financial year, and
in the annual reports for the subsequent financial years during which a Shareholders’ Mandate is in
force.
Review Procedures for Mandated Transactions with Interested Persons
To ensure that the mandated transactions with Interested Persons are undertaken on normal
commercial terms, not prejudicial to our Company and our minority shareholders and are consistent
with our Group’s normal business practices and policies, the following review procedures will be
implemented by us.
Our Group has internal control systems to ensure that transactions with interested persons of our
Company (including the Interested Persons) are undertaken at arm’s length and on commercial terms,
and will not be prejudicial to the interests of our Company and its minority shareholders.
(a)
Sale and purchase of products and services
There are procedures established by our Group to ensure that the sale and purchase of products
and services to and from the Interested Persons are undertaken on an arm’s length basis
consistent with our normal business practices and policies and which are carried out on normal
commercial terms not prejudicial to the interests of our Company and its minority shareholders.
In relation to any transaction proposed to be carried out with the Interested Persons for the sale
and purchase of products and services, such transactions shall be made at our prevailing
rates/prices or the prevailing rates/prices of the Interested Person (as the case may be) and
carried out on normal commercial terms that are not more favourable to the relevant Interested
Persons than those extended to unrelated third persons and such transactions will not be
prejudicial to the interests of our Company or its minority shareholders.
When purchasing raw materials, supplies and services (including forwarding charges to Texchem
Materials) from the Interested Persons, at least two other quotations from non-interested persons
will be obtained (where available) for comparison to ensure that the interests of our minority
shareholders are not disadvantaged. The purchase price shall not be higher than the most
competitive price or fee of the two other quotations from non-interested persons. In determining
the most competitive price or fee, all pertinent factors, including but not limited to quality, delivery
time and track record will be taken into consideration.
When the non-interested person competitive quotes are unavailable due to the nature of the
product to be purchased, for example, if there are no unrelated third party vendors selling a similar
type of product, where relevant, the purchase price paid shall not be higher than the price that was
advised by our customers in their product specification document given when we were appointed
by them as a qualified supplier. Where the above procedure is not relevant, the senior
management staff within our Group (other than the Interested Persons and their associates) will
determine whether the price and terms offered by the Interested Persons are fair and reasonable,
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on normal commercial terms and not prejudicial to the interests of our Company and its minority
shareholders based on our normal business practices, policies and margins.
When selling our products and/or services to the Interested Persons, we will take into account the
prices and terms of at least two other recent successful sales of the same or similar products
and/or services to non-interested persons. The price of our sales to the Interested Persons shall
not be lower than the lowest sale price of such sales to non-interested persons, after taking into
consideration all pertinent factors, including but not limited to quality, delivery time and track
record.
Where prevailing sale prices are unavailable, the senior management staff within our Group (other
than the Interested Persons and their associates) will determine whether the price and terms
offered to the Interested Persons are fair and reasonable, on normal commercial terms and not
prejudicial to the interests of our Company and its minority shareholders based on our normal
business practices, policies and margins.
(b)
Provision of corporate services and/or reimbursement of costs for shared resources
Our Group will satisfy itself that the actual fees paid or payable for the corporate management and
support services and other services provided by the Interested Persons shall be on an arm’s
length basis and on normal commercial terms not prejudicial to the interests of our Company and
its minority shareholders.
We will, on an annual basis, review the costs of obtaining such services provided by the Interested
Persons. In particular, in respect of:
Provision of corporate guarantees by TRB
We will compare the fees charged by TRB for the provision of such guarantees against the fee
quotations of at least two Malaysian commercial banks for the provision of bank guarantees on the
amount of the facilities that have been utilised.
Loan and interest payable to TRB
When obtaining an inter-company loan from an Interested Person, at least two other quotations from
Malaysian commercial banks for the provision of such loans will be obtained (where available) for
comparison. The Group will ensure that the terms and conditions of the loan offered by/to the Interested
Person shall not be worse off than the most competitive rate of the two other quotations from the
Malaysian commercial banks if such loans were to be provided by such banks.
Payment of management fees to Texcorp
We will compare the fees payable to Texcorp against our internal costing and budgeting estimates
prepared by non-interested persons for establishing equivalent administrative infrastructure or securing
equivalent services provided by other non-interested persons or a combination of both. Where the
actual sales of our subsidiaries exceeds the budgeted sales determined at our internal reviews
conducted at the beginning of each financial year (the “Budgeted Sales”), our Head of Group Finance
may, at his discretion, make a recommendation to the Audit Committee, giving reasons to justify
payments in excess of the cap on management fees (115% of Budgeted Sales), taking into account any
extra management services provided by Texcorp in connection with the higher than budgeted sales of
the relevant subsidiary.
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Reimbursement of IT maintenance charges to Texcorp
We will compare the costs allocated by Texcorp to our Group based on our Group’s actual number of
computer terminals and software licencees against the costs of obtaining similar IT hardware and
software maintenance services from at least two other non-interested persons.
We will undertake such review using quotes obtained from non-interested persons and other relevant
data (including expected salaries and associated costs of hiring personnel) where applicable. All
relevant documentation will be tabled to the Audit Committee for its review on a bi-annual basis. If, upon
such review, we are of the view that the fees paid or payable for such services are not commercially
viable or otherwise reasonable, we will attempt to renegotiate such fees or, failing the satisfactory
resolution of such negotiation, cease such transactions, including terminating the relevant agreements
in accordance with their terms.
Review Procedures for All Other Interested Person Transactions Not Covered by the
Shareholders’ Mandate
Our Audit Committee will review all other existing and future interested person transactions not subject
to the Shareholders’ Mandate to ensure that they are carried out on normal commercial terms and are
not prejudicial to the interests of our Company and its minority shareholders. They will adopt the
following procedures when reviewing such interested person transactions:
(i)
When purchasing items from or engaging the services of an interested person, two other
quotations from non-interested persons will be obtained (where available) for comparison to
ensure that the interest of minority Shareholders are not disadvantaged. The purchase price or
fee for services shall not be higher than the most competitive price or fee of the two other
quotations from non-interested persons. In determining the most competitive price or fee, all
pertinent factors, including but not limited to quality, delivery time and track record will be taken
into consideration;
(ii)
When selling items or supplying services to an interested person, the price and terms of at least
two other successful sales of a similar nature to non-interested persons will be used in
comparison to ensure that the interests of our minority Shareholders are not disadvantaged. The
sale price or fee for the supply of services shall not be lower than the lowest sale or fee of the two
other successful transactions with non-interested persons; and
(iii)
When renting properties from or to an interested person, our Directors shall take appropriate steps
to ensure that such rent is commensurate with the prevailing market rates, including adopting
measures such as making relevant inquiries with landlords of similar property and obtaining
necessary report or reviews published by property agents (including an independent valuation
report by a property valuer, where considered appropriate). The amount payable shall be based
on the most competitive market rental rate of similar property in terms of size and location, based
on the results of the relevant inquiries.
Transactions falling within the above categories, if any, will be reviewed at least every six months by
our Audit Committee to ensure that they are carried out on normal commercial terms and in accordance
with the procedures outlined above. All relevant non-quantitative factors will also be taken into account.
Such review includes the examination of the transaction and its supporting documents or such other
data deemed necessary by our Audit Committee. Our Audit Committee may request for any additional
information pertaining to the transaction under review from independent sources, advisers or valuers
as they deem fit. In the event that a member of the Audit Committee is interested in any interested
person transaction, he will abstain from reviewing that particular transaction.
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In addition, other future recurrent interested person transactions not subject to the Shareholders’
Mandate will be subject to Shareholders’ approval regardless of the value of such transactions. Our
Company will take appropriate steps to seek such approval in accordance with all relevant provisions
of Chapter 9 of the SGX-ST Listing Manual prior to undertaking such transactions.
Additional Control and Verification Procedures to be Undertaken by the Audit Committee
In addition, the following review procedures will also be implemented by us:
(i)
transactions which are less than or equal to S$500,000 in value will be reviewed and approved
by a senior management personnel of our Company as approved by the Audit Committee, except
in cases where he is one of the parties to or has an interest (whether directly or indirectly) in the
transaction. In such cases, the transaction will be reviewed and approved by the Audit Committee
and our Board; and
(ii)
transactions exceeding S$500,000 in value will be reviewed and approved by the Audit
Committee and by the Board.
Our Group has also implemented the following procedures for the identification of interested persons
and the recording of all our interested person transactions:
(a)
our senior management will maintain a list of our Directors and Controlling Shareholders (which
is to be updated immediately if there are any changes), and disclose the list to relevant personnel
(such as those in charge of procurement functions and other key executives) to enable
identification of interested persons. The master list of interested persons which is maintained shall
be reviewed at least annually;
(b)
our senior management will also obtain signed letters of confirmation from key management
personnel, substantial shareholders and our Directors on an annual basis as to their interests in
any transaction with our Group;
(c)
our senior management will compile and review all our interested person transactions prior to
submission to the Audit Committee. Subsidiaries would be required to inform our senior
management of any significant upcoming transactions with interested persons to facilitate timely
announcements and/or the obtaining of shareholders’ approval, where necessary;
(d)
personnel in charge of procurement are required to prepare information relating to sales and
purchases which constitute interested person transactions, which must then be submitted to our
senior management for review prior to submission to the Audit Committee. Such information must
comprise:
(i)
forecast value of the transactions; and
(ii)
analysis of cost, benefit and risks involved in the transactions;
(e)
the review of interested person transactions is to be conducted by our senior management, and
shall comprise the comparison of the interested person transactions arrangement with industry
practice and other customers;
(f)
the rationale for and analysis of interested person transactions shall be documented and filed in
a register of interested person transactions (the “Interested Person Transactions Register”); and
(g)
our Audit Committee would be responsible for reviewing our interested person transactions on an
annual basis and examining the adequacy of its internal controls. The outcome of such review
shall be documented and filed in the Interested Person Transactions Register.
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In addition, our Board of Directors will also ensure that all disclosure, approval and other requirements
on interested person transactions, including those required by prevailing legislation, the SGX-ST
Listing Manual and relevant accounting standards, are complied with. The annual internal audit plan
shall incorporate a review of all interested person transactions entered into pursuant to the
Shareholders’ Mandate.
In the event that a member of the Board or a member of the Audit Committee (where applicable) is
interested in any interested person transaction, he will abstain from reviewing that particular
transaction.
Our Audit Committee and our Board shall review the internal audit reports to ascertain that the
guidelines and procedures established to monitor interested person transactions have been complied
with. In addition, our Audit Committee shall also review from time to time such guidelines and
procedures to determine if they are adequate and/or commercially practicable in ensuring that
transactions between us and our interested persons are conducted on normal commercial terms.
Further, if during these periodic reviews by our Audit Committee, it is of the view that the guidelines and
procedures as stated above are inappropriate or not sufficient to ensure that the mandated Interested
Person Transactions will be on normal commercial terms and will not be prejudicial to our Company and
our minority shareholders, we will (pursuant to Rule 920(1)(b)(iv) and (vii) of the SGX-ST Listing
Manual) revert to our shareholders for a fresh mandate based on new guidelines and procedures for
transactions with the Interested Persons.
Our Audit Committee and our Board shall have overall responsibility for the determination of the review
procedures with the authority to sub-delegate to individuals or committees within the Company as they
deem appropriate.
Our Audit Committee is of the view that the methods and procedures for determining transaction prices,
as set out above, are sufficient to ensure that our Group’s transactions with the Interested Persons are
on normal commercial terms which will not be prejudicial to the interests of the Company and its
minority shareholders.
In arriving at their opinion as to whether the methods and procedures for determining transaction prices
under the proposed Shareholders’ Mandate are sufficient to ensure that the Interested Person
Transactions will be carried out on normal commercial terms and will not be prejudicial to the interests
of the Company and its minority Shareholders, the Audit Committee has considered the rationale for
and benefits of the Shareholders’ Mandate, the review procedures adopted for the Interested Person
Transactions and the role of the Audit Committee, and is of the opinion that the such methods and
procedures under the Shareholders’ Mandate, as set out under “Interested Person Transactions and
Conflicts of Interests — Shareholders’ Mandate” of the Prospectus, if adhered to, are sufficient to
ensure that such transactions are carried out on normal commercial terms and will not be prejudicial to
the interests of the Company and its minority Shareholders.
Opinion of the Independent Financial Adviser
Deloitte & Touche Corporate Finance Pte Ltd (“DTCF”) was appointed as the independent financial
adviser pursuant to Rule 920(1)(b)(iv) of the SGX-ST Listing Manual, to opine on whether the methods
or procedures for determining transaction prices in respect of the interested person transactions that
are the subject of the Shareholders’ Mandate, as set out above, are sufficient to ensure that our Group’s
transactions with the Interested Persons are on normal commercial terms and which will not be
prejudicial to the interests of the Company and its minority shareholders. In arriving at their opinion as
to whether the methods or procedures for determining transaction prices under the Shareholders’
Mandate are sufficient to ensure that the transactions will be carried out on normal commercial terms
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and will not be prejudicial to the interests of the Company and its minority shareholders, DTCF has
considered the rationale for and benefits of the Interested Person Transactions, the review procedures
adopted for the Interested Person Transactions and the role and opinion of the Audit Committee in this
regard, and is of the opinion that the methods or procedures for determining transaction prices under
the Shareholders’ Mandate, as set out under “Interested Person Transactions and Conflicts of Interests
— Shareholders’ Mandate” of the Prospectus, if adhered to, are sufficient to ensure that such
transactions are carried out on normal commercial terms and will not be prejudicial to the interests of
the Company and its minority Shareholders. Please refer to “Appendix F — Letter from the Independent
Financial Adviser to the Independent Directors of Texchem-Pack Holdings (S) Ltd.” of this Prospectus
for further details.
POTENTIAL CONFLICT OF INTERESTS
Sanko Kasei is a subsidiary of TRB and is engaged in the manufacture and sale of plastic engineering
precision parts. Our Executive Chairman, Dato’ Seri Fumihiko Konishi, has a controlling (indirect) equity
interest in TRB (please refer to “Principal Shareholders — Ownership Structure” in this Prospectus for
further information), as well as being our Controlling Shareholder. He also sits on the board of Sanko
Kasei as the Adviser. In his capacity as Adviser, Dato’ Seri Fumihiko Konishi does not participate in the
day-to-day management and operations of Sanko Kasei. Our President and Chief Operating Officer,
Yap Kee Keong, is currently a non-executive director of Sanko Kasei and is not involved in the
day-to-day management of Sanko Kasei.
Although Sanko Kasei is engaged in a similar business industry of our Group and also utilises the
precision injection moulding manufacturing process, it is a manufacturer of plastic components for the
consumer electronics and electrical industry whereas our focus is on the manufacture and sale of
plastic packaging products for the semiconductor and data storage industry. As an illustration, Sanko
Kasei manufactures plastic components such as the “play” button of a discman whereas we
manufacture the clamshells for packaging Discmans. Our customer focus is thus dissimilar as we
provide different services. Notwithstanding the aforementioned, we engage Sanko Kasei from time to
time to manufacture certain plastic packaging products. Please refer to “Interested Person
Transactions and Conflicts of Interests — Existing and Future Interested Person Transactions —
Provision of Services by Sanko Kasei” of this Prospectus for further information.
Save as disclosed above and to the best of our knowledge, we are not aware of any previous
circumstance whereby we were competing directly or indirectly with Sanko Kasei.
In addition, Sanko Kasei has undertaken to our Group that it shall not, and shall procure that its
nominees, subsidiaries and related parties shall not, carry on or be engaged or interested in a capacity
which competes with the business of our Group, or solicit the custom of any person who is or has been
a customer of our Group for the purpose of offering goods or services to such customer in relation to
a business similar to or competing with the business of our Group.
In the light of the above, our Directors believe that there is no material conflict of interests.
Save as disclosed in “Interested Person Transactions and Conflicts of Interests” above, during the past
three financial years ended 31 December 2005 and up to the Latest Practicable Date:
(a)
none of our Directors or Controlling Shareholders or any of their associates has had any interest,
direct or indirect, in any material transactions to which we were or are a party;
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(b)
none of our Directors or Controlling Shareholders or any of their associates has any interest,
direct or indirect, in any entity carrying on the same business or carrying on a similar trade as us;
and
(c)
none of our Directors or Controlling Shareholders or any of their associates has any interest,
direct or indirect, in any enterprise or company that is our customer or supplier of goods or
services.
In the event that a material conflict of interest arises in the future between the TRB Group and our
Group, any Director who holds directorships in both the relevant member of the TRB Group and our
Group shall abstain from voting in respect of any such transaction or matter. In such matters, the
quorum shall exclude such Directors.
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DESCRIPTION OF ORDINARY SHARES
The following statements are brief summaries of our capital structure and the more important rights and
privileges of our shareholders as conferred by the laws of Singapore and our Articles of Association
(“Articles”). These statements summarise the material provisions of our Articles but are qualified in
entirety by reference to our Articles, a copy of which will be available for inspection at our offices during
normal business hours for a period of six months from the date of registration of this Prospectus.
Shares
We have only one class of shares, namely, our Shares, which have identical rights in all respects and
rank equally with one another. Our Articles provide that we may issue shares of a different class with
preferential, deferred, qualified or special rights, privileges or conditions as our Directors may think fit
and may issue preference shares which are, or at our option are, redeemable, subject to certain
limitations.
As at the date of this Prospectus, 89,550,000 Shares have been issued and fully paid. All of our Shares
are in registered form. We may, subject to the provisions of the Companies Act and the listing rules of
the SGX-ST, purchase our own Shares. However, we may not, except in circumstances permitted by
the Companies Act, grant any financial assistance for the acquisition or proposed acquisition of our
Shares.
New Shares
New Shares may only be issued with the prior approval of our shareholders in a general meeting. The
aggregate number of Shares to be issued pursuant to such approval may not exceed 50% (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 the then existing
shareholders of our Company shall not exceed 20% (or such other limit as may be prescribed by the
SGX-ST) of our issued share capital for the time being. The approval, if granted, will lapse at the
conclusion of the annual general meeting following the date on which the approval was granted unless
otherwise revoked or varied by shareholders in a 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 Directors who may allot and issue the same with such rights
and restrictions as they may think fit.
Shareholders
Only persons who are registered on our register of shareholders 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 our Shares, are recognised as our shareholders. We 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. We may close our register of shareholders for any time or times
if we provide the Accounting and Corporate Regulatory Authority in Singapore with at least 14 days’
notice and the SGX-ST at least 10 clear Market Days’ notice. However, the register may not be closed
for more than 30 days in aggregate in any calendar year. We typically close the register to determine
our shareholders’ entitlement to receive dividends and other distributions.
Transfer of Shares
There is no restriction on the transfer of fully paid Shares except where required by law or the listing
rules or the rules or by-laws of SGX-ST. Our Directors may decline to register any transfer of Shares
which are not fully paid or Shares on which we have a lien. Shares may be transferred by a duly signed
instrument of transfer in a form approved by SGX-ST. Our Directors may also decline to register any
instrument of transfer unless, among other things, it has been duly stamped and is presented for
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registration together with the share certificate and such other evidence of title as they may require. We
will replace lost or destroyed certificates for Shares if we are properly notified and the applicant pays
a fee which will not exceed $2 and furnishes any evidence and indemnity that our Directors may
require.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Directors may convene an
extraordinary general meeting whenever it thinks fit and must do so if our shareholders representing not
less than 10% of the total voting rights of all our shareholders request in writing that such a meeting be
held. In addition, two or more of our shareholders holding not less than 10% of our issued share capital
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% of the votes cast at the meeting, is necessary
for certain matters under Singapore law, including voluntary winding up, amendments to our
Memorandum of Association and our Articles, a change of our corporate name and a reduction in our
share capital or capital redemption reserve fund. We 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 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 and, in the case of special business, the general
nature of that business.
Voting Rights
A holder of our ordinary Shares is entitled to attend, speak and vote at any general meeting, in person
or by proxy. A proxy does not need to be a shareholder. A person who holds ordinary Shares through
the CDP 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 or more shareholders must be
present in person or by proxy to constitute a quorum at any general meeting. Under our Articles, on a
show of hands, every shareholder present in person or by proxy shall have one vote and on a poll,
every shareholder present in person or by proxy shall have one vote for every Share which he holds
or represents. A poll may be demanded in certain circumstances, including, by the chairman of the
meeting, by any shareholder present in person or by proxy and representing not less than 10% of the
total voting rights of all shareholders having the right to attend and vote at the meeting (excluding
treasury shares as defined under the Companies Act) or by not less than five shareholders present in
person or by proxy and entitled to vote. In the case of an equality of votes, whether on a show of hands
or on a poll, the chairman of the meeting shall be entitled to a casting vote.
Dividends
We may, by ordinary resolution of our shareholders, declare dividends at a general meeting, but we
may not pay dividends in excess of the amount recommended by our Board. We must pay all dividends
out of our profits, however, we may capitalise any sum standing to the credit of any of our Company’s
reserve account or other distributable reserves or any sum standing to the credit of the profit and loss
account and apply it to pay dividends, if such dividends are satisfied by the issue of Share to our
Shareholders; all dividends are paid pro-rata amongst our shareholders in proportion to the amount
paid-up on each shareholder’s Shares, 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 us to
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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.
Bonus and Rights Issue
Our Board may, with the approval of our shareholders at a general meeting, capitalise any reserves or
profits (including profits or moneys carried and standing to any reserve or other distributable reserve)
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 we are listed.
Takeovers
Under the Singapore Code on Take-overs and Mergers (the “Take-over Code’’) issued by the Authority
pursuant to Section 321 of the Securities and Futures Act, any person acquiring an interest, either on
his own or together with persons acting in concert with him, in 30% or more of our voting shares must
extend a takeover offer for the remaining voting shares in accordance with the provisions of the
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 persons acting or presumed to be acting in concert with him, between
30% and 50% of the voting shares acquires additional voting shares representing more than 1% of the
voting shares in any six-month period.
Liquidation or Other Return of Capital
If we are 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 us against 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 judgement 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. We may not indemnify our Directors and officers against any
liability which by law would otherwise attach to them in respect of any negligence, default, breach of
duty or breach of trust of which they may be guilty in relation to us.
Limitations on Rights to Hold or Vote Shares
Except as described in “Voting Rights” and “Takeovers” above, there are no limitations imposed by
Singapore law or by our Articles on the rights of non-resident shareholders to hold or vote ordinary
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 of our shareholders, as they think fit to remedy any of the following situations where:
(a)
our affairs are being conducted or the powers of our Directors are being exercised in a manner
oppressive to, or in disregard of the interests of, one or more of the shareholders; or
158
(b)
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 or
more of our shareholders, including the applicant.
Singapore courts have a 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, the Singapore
courts may:
(a)
direct or prohibit any act or cancel or vary any transaction or resolution;
(b)
regulate the conduct of our affairs in the future;
(c)
authorise civil proceedings to be brought in our name, or on our behalf, by a person or persons
and on such terms as the court may direct;
(d)
provide for the purchase of a minority shareholder’s shares by our other shareholders or by us
and, in the case of a purchase of shares by us, a corresponding reduction of our share capital;
(e)
in the case of a purchase of shares by the company, provide for a reduction accordingly of the
company’s capital; or
(f)
provide that we be wound up.
Treasury Shares
Our Articles of Association expressly permits our Company to purchase or acquire shares or stocks of
our Company and to hold such shares or stocks (or any of them) as treasury shares in accordance with
requirements of Section 76 of the Companies Act. Our Company may make a purchase or acquisition
of our own shares (i) on a securities exchange if the purchase or acquisition has been authorised in
advance by our Company in general meeting; or (ii) otherwise than on a securities exchange if the
purchase or acquisition is made in accordance with an equal access scheme authorised in advance by
our company in general meeting. The aggregate number of ordinary Shares held as treasury shares
shall not at any time exceed 10% of the total number of Shares of our Company at that time. Any excess
shares shall be disposed or cancelled before the end of a period of six months beginning with the day
on which that contravention of limit occurs, or such further period as the Registrar may allow. Where
ordinary Shares or stocks are held as treasury shares by our Company through purchase or acquisition
by our Company, our Company shall be entered in the register as the member holding those shares or
stocks.
Our Company shall not exercise any right in respect of the treasury shares and any purported exercise
of such a right is void. Such rights include any right to attend or vote at meetings and our Company shall
be treated as having no right to vote and the treasury shares shall be treated as having no voting rights.
In addition, no dividend may be paid, and no other distribution (whether in cash or otherwise) of our
Company’s assets (including any distribution of assets to members on a winding up) may be made, to
our Company in respect of the treasury shares. However, this would not prevent an allotment of shares
as fully paid bonus shares in respect of the treasury shares or the subdivision or consolidation of any
treasury share into treasury share of a smaller amount, if the total value of the treasury shares after the
subdivision or consolidation is the same as the total value of the treasury share before the subdivision
or consolidation, as the case may be.
Where shares are held as treasury shares, our Company may at any time (i) sell the shares (or any of
them) for cash; (ii) transfer the shares (or any of them) for the purposes of or pursuant to an employees’
share scheme; (iii) transfer the shares (or any of them) as consideration for the acquisition of shares
in or assets of another company or assets of a person; or (iv) cancel the shares (or any of them).
159
EXCHANGE CONTROLS
The following is a description of the exchange controls existing in the jurisdictions in which our Group
operates which may affect the repatriation of capital and the remittance of profits by or to our Company.
Malaysia
We currently have several subsidiaries in Malaysia. The Controller of Foreign Exchange who is also the
Governor of the Central Bank of Malaysia (“the Controller”) has further liberalised the foreign exchange
administration rules in Malaysia with effect from 1 April 2005. According to the Bank Negara Malaysia’s
Circular dated 1 April 2005 on General Payments, a resident is permitted to make payment of profits,
dividends, fees, rental and royalty to a non-resident without registering the same with the Controller or
obtaining the Controller’s prior permission. However, a payment declaration form is required by
remitting banks for all payments above the equivalent of RM50,000.
Payments for investment abroad exceeding the equivalent of RM50,000 by Malaysian residents still
requires to be registered with the Controller.
PRC
Major reforms have been introduced in the foreign exchange control system of the PRC since 1993.
The People’s Bank of China (“PBOC”), with the authorisation of the State Council, issued on 28
December 1993 the Notice on the Further Reform of the Foreign Exchange Control System and on 26
March 1994, the Provisional Regulations on the Settlement, Sale and Payment of Foreign Exchange
which came into effect on 1 January 1994 and 1 April 1994 (the Provisional Regulations on the
Settlement, Sale and Payment of Foreign Exchange dated 26 March 1994 has since been abolished)
respectively. On 29 January 1996, the State Council promulgated the PRC Foreign Exchange
Administration Regulations which took effect on 1 April 1996 and were revised on 14 January 1997. On
20 June 1996, the PBOC issued the Administration Regulations on the Settlement Sale and Payment
of Foreign Exchange, which took effect on 1 July 1996. On 25 October 1998, the PBOC and the State
Administration of Foreign Exchange (“SAFE’’) issued a Joint Announcement on Abolishment of Foreign
Exchange Swap Business which stated that from 1 December 1998, all foreign exchange transactions
for foreign-invested enterprises may only be conducted through the designated bank system of
settlement and sale of foreign exchange.
These regulations contain detailed provisions regulating the holding, sale and purchase of foreign
exchange by individuals, enterprises, economic bodies and social organisations in the PRC. Under the
new regulations, the previous dual exchange rate system for Renminbi was abolished and a unified
floating exchange rate system based largely on supply and demand was introduced. The People’s
Bank of China, having regard to the trading prices between Renminbi and major foreign currencies on
the inter-bank foreign exchange market, publishes on each bank business day the Renminbi exchange
rates against major foreign currencies.
In general, all organisations and individuals within the PRC, including foreign investment enterprises,
are required to remit their foreign exchange earnings to the PRC. In relation to the PRC enterprises,
their recurrent foreign exchange earnings are generally required to be sold to designated foreign
exchange banks unless specifically approved otherwise. Foreign investment enterprises (including
sino-foreign equity joint ventures and sino-foreign co-operative enterprises as well as wholly foreign
owned enterprises or WFOE), on the other hand, are permitted to retain a certain percentage of their
recurrent foreign exchange earnings (which is determined by SAFE or its local branch on a
case-to-case basis) and the sums retained may be deposited into foreign exchange bank accounts
maintained with designated foreign exchange banks.
160
EXCHANGE CONTROLS
Capital foreign exchange earnings must be deposited into foreign exchange bank accounts maintained
with designated foreign exchange banks and can generally be retained in such accounts. At present,
control on the purchase of foreign exchange for trade-related payments is being relaxed. Enterprises
which require foreign exchange for their current activities such as trading activities and payment of staff
remuneration may purchase foreign exchange from designated foreign exchange banks, subject to the
production of relevant supporting documents without the need for any prior approvals of the SAFE,
although large foreign transactions may be subject to the SAFE verifications.
In addition, where an enterprise requires any foreign exchange for the payment of dividends that are
payable in foreign currencies under applicable regulations, such as the distribution of profits by a
foreign investment enterprise to its foreign investment party, then, subject to the due payment of tax on
such dividends, the amount required may be withdrawn from funds in foreign exchange accounts
maintained with designated foreign exchange banks, and where the amount of the funds in foreign
exchange is insufficient, the enterprise may purchase additional foreign exchange from designated
foreign exchange banks upon written application and the presentation of the Foreign Investment
Enterprise Foreign Exchange Registration Certificate, resolutions of our Directors on the profit
distribution plan of that enterprise, verification report, audit report and tax payment documents.
Despite the relaxation of foreign exchange control over current account transactions, the approval of
the SAFE is still required before a PRC enterprise may borrow a loan in foreign currency or provide any
foreign exchange guarantee or make any investment outside of the PRC or enter into any other capital
account transaction involving the purchase of foreign exchange, except as otherwise provided by the
PRC regulations. In addition, under certain notices promulgated by the PBOC in 1998, all the PRC
borrowers of foreign exchange loans are not permitted to purchase foreign currencies with RMB to
prepay such borrowings. However, according to a notice published by PBOC and the SAFE on 19
September 2001, a PRC borrower is allowed to purchase foreign currencies with RMB to prepay
onshore foreign exchange loans.
When conducting actual foreign exchange transactions, the designated foreign exchange banks may,
based on the exchange rate published by the People’s Bank of China and subject to certain limits,
determine the applicable exchange rate.
The China Foreign Exchange Trading Centre (“CFETC”’) was formally established and came into
operation on 1 January 1994. CFETC has set up a computerised network with sub-centres in several
major cities, thereby forming an interbank market in which designated PRC banks can trade in foreign
exchange and settle their foreign currency obligations. Prior to 1 December 1998, enterprises with
foreign investment may at their own choice enter into exchange transactions through the Swap Centre
(a statutory foreign exchange transaction institution engaging in foreign exchange business under the
direction and administration of the State Administration of Foreign Exchange) or through designated
PRC banks. From 1 December 1998 onwards, exchange transactions will have to be conducted
through designated foreign exchange banks. CFETC is restricted to conducting foreign exchange
transactions between banks and RMB inter-bank lending between financial institutions.
161
EXCHANGE CONTROLS
Vietnam
Exchange controls in Vietnam are governed by the State Bank of Vietnam. Only authorised banks are
allowed to undertake transactions in foreign currency. Foreign funds and the profits made are subject
to the following rules:
(a)
(b)
Borrowing, repayment, provisions and recovery of foreign loans:
(i)
The Government and organisations authorised by the State and the Government shall
conduct borrowings and the repayment of loans on the basis of the national strategy on
foreign loans and the overall limit on foreign loans approved by the Prime Minister of the
Government annually;
(ii)
Residents being Vietnamese economic organisations, foreign invested enterprises and
credit institutions shall, upon borrowing and repayment of foreign loans or provisions and
recovery of foreign loans (on the principle of self-borrowing and self repayment under the
laws in Vietnam), register with and submit reports on status of the loans with the State Bank
of Vietnam in accordance with applicable regulations on control of foreign loans; and
(iii)
Transfer of funds for the purpose of borrowing, repayment, provisions and recovery of
foreign loans by Vietnamese economic organisations, foreign invested enterprises and
credit institutions in Vietnam shall be carried out through authorised banks upon registration.
Direct Investment and profit remittance:
(i)
The remittance of investment capital in foreign currency into Vietnam and the remittance of
principal investment capital and profits and the payment of loan interest and other lawful
revenue to overseas countries must be effected via foreign currency accounts opened at
authorised credit institutions;
(ii)
Lawful revenue in Vietnamese dong shall be permitted to be converted into foreign currency
for remittance abroad via authorised credit institutions; and
(iii)
Economic organisations with foreign owned capital shall submit reports on implementation
of the invested capital and remittance of profits to their home countries to the State Bank of
Vietnam.
The above rules are based on the following laws and regulations
(i)
Law on Investment dated 29 November 2005 passed by the National Assembly;
(ii)
Ordinance No. 28/2005/PL-UBTVQH11 dated 13 December 2005 on foreign exchange control;
(iii)
Decree No 63/1998/ND-CP on foreign exchange control issued by the government on 17 August
1998 which was added and amended by Decree No 05/2001ND-CP dated 17 January 2001 and
Decree No. 131/2005/ND-CP dated 18 November 2005;
(iv) Circular No 01/1999/TTNHNN7 of the State Bank of Vietnam providing guidance on implementing
Decree No 63/1998/ND-CP dated 16 April 1999:
(v)
Circular 04/2001/TT-NHNN issued by the State Bank of Vietnam providing guidance on foreign
exchange control in foreign invested enterprises and business co-operation contracts dated 18
May 2001; and
(vi) Circular No. 24/2001/TT-NHNN dated 18 May 2001, guiding foreign exchange control with respect
to enterprises with foreign owned capital and foreign parties in business co-operation contracts.
162
EXCHANGE CONTROLS
Thailand
In accordance with the Exchange Controls Act of Thailand, foreign funds and profits made from
Thailand are subject to the following:
(a)
the remittance of dividends or other proceeds are not subject to any exchange control
requirements;
(b)
however, for the remittance of foreign currencies in an amount equivalent to US$20,000 or more,
the Bank of Thailand requires that documentary evidence be furnished to the remitting bank to
establish the legitimacy of the transaction; and
(c)
furthermore, for the purchase of foreign currencies in an amount equivalent to US$20,000 or more
for any purpose, the Bank of Thailand requires that documentary evidence be furnished to the
remitting banks to establish the legitimacy of the transaction.
In addition, dividends declared are generally subject to a withholding tax rate of 10%. However, when
our dividends are derived from income earned from BOI incentive activities, those dividends are not
subject to the normal withholding tax.
163
TAXATION
The following is a discussion of certain tax matters arising under the current tax laws in Singapore and
is not intended to be and does not constitute legal or tax advice. While this discussion is considered to
be a correct interpretation of existing laws in force as at the date of this Prospectus, no assurance can
be given that courts or fiscal authorities responsible for the administration of such laws will agree with
this interpretation or that changes in such laws will not occur. The discussion is limited to a general
description of certain tax consequences in Singapore with respect to ownership of our Shares by
Singapore investors, and does not purport to be a comprehensive nor exhaustive description of all of
the tax considerations that may be relevant to a decision to purchase our Shares. Prospective investors
should consult their tax advisers regarding Singapore tax and other tax consequences of owning and
disposing our Shares. This description is based on laws, regulations and interpretations now in effect
and available as of the date of this Prospectus. The laws, regulations and interpretations and the
relevant tax authorities or courts could later disagree with the explanations or conclusions set out
below. It is emphasised that neither our Company, our Directors, the Manager, the Underwriter,
the Placement Agent nor any other persons involved in the Invitation accepts responsibility for
any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of
our Shares.
Singapore Taxation
General
Singapore resident taxpayers, both corporates and individuals, are subject to Singapore income tax on
income accruing in or derived from Singapore, and subject to certain exceptions, on foreign income
received or deemed to be received in Singapore.
Foreign-sourced income in the form of dividends, branch profits and services income received or
deemed to be received in Singapore by all tax resident taxpayers on or after 1 June 2003 will be exempt
from tax if certain prescribed conditions are met.
All foreign-sourced income received in Singapore by Singapore tax resident, except where such
income is received through a partnership, are exempt from tax with effect from the Year of Assessment
2005. In addition, certain Singapore sourced investment income derived by individuals on or after 1
January 2004 are also exempt from tax.
A company will be regarded as being resident in Singapore if the control and management of its
business is exercised in Singapore. An individual will be regarded as being resident in Singapore in a
year of assessment if, in the preceding year, he was physically present in Singapore or exercised
employment in Singapore (other than as a Director of a company) for 183 days or more, or if he resides
in Singapore.
Non-Singapore resident corporate taxpayers are subject to Singapore income tax on income that is
accrued in or derived from Singapore, and with certain exceptions, on foreign income received in
Singapore. Non-Singapore resident individuals, subject to certain exceptions, are subject to Singapore
income tax only on income accruing in or derived from Singapore.
The corporate tax rate in Singapore is currently 20% with certain exemptions for the first S$100,000 of
chargeable income. The above tax exemption does not apply to Singapore franked dividends received
by companies.
164
TAXATION
For a Singapore tax resident individual, the tax rate will vary according to the individual’s circumstances
but is subject to a maximum rate of 22%. The Minister for Finance in his 2005 Budget Statement
announced that the top individual tax rate will be lowered to 20 per cent in two steps: first from 22% to
21% in Year of Assessment 2006 (ie. calendar year 2005) and then to 20% in Year of Assessment 2007
(ie. calendar year 2006). The marginal tax rates for all the other income brackets will also be reduced
whilst the income bands remain unchanged. The proposal has yet to be promulgated as law.
Dividend Distributions
Singapore adopted the one-tier corporate tax system with effect from 1 January 2003. Under the
one-tier corporate tax system, the tax payable on normal chargeable income by Singapore companies,
whether tax resident in Singapore or not, would constitute a final tax. Dividends payable by companies
on the one-tier corporate tax system would be tax exempt in the hands of its shareholders. Such
dividends are referred to as tax exempt (one-tier) dividends.
Where a Singapore tax resident company has income that is exempt from tax or subject to tax at
concessionary tax rates or has received foreign income which may be tax exempt (if certain prescribed
conditions are met) or relieved from Singapore income tax due to the availability of foreign tax credits,
the company may pay tax exempt dividends (known as normal exempt dividends) out of such income.
Normal exempt dividends paid to shareholders of ordinary shares are free from Singapore tax in the
hands of the shareholders, whether resident or non-resident for Singapore tax purposes. In the case
of a company which is on one-tier corporate tax system, such a company can pay tax exempt (one-tier)
dividends (instead of normal exempt dividends) out of their exempt profits to shareholders. The tax
exempt (one-tier) dividends paid on shares, including those of a preferential nature, are tax exempt in
the hands of these shareholders.
There is no withholding tax on dividends paid to non-Singapore tax resident shareholders. Foreign
shareholders are advised to consult their own tax advisors in respect of the tax laws of their respective
countries of residence and the applicability of any double taxation agreement that their country of
residence may have with Singapore.
Gains on Disposal of Ordinary Shares
Singapore does not impose tax on capital gains. However, there are no specific laws or regulations
which deal with the characterisation of capital gains. Hence, gains arising from the disposal of ordinary
shares are not taxable in Singapore unless the seller is regarded as having derived gains of an income
nature in Singapore, in which case, the disposal profits would be taxable as trading income.
Stamp Duty
No stamp duty is payable on the allotment or holding of our Shares. Stamp duty is payable on the
instrument of transfer of our Shares at the rate of $0.20 for every $100 or any part thereof, computed
on the consideration of the transfer, or market value, of our Shares, whichever is higher.
The stamp duty is borne by the purchaser, unless otherwise agreed. No stamp duty is payable if no
instrument of transfer is executed or the instrument of transfer is executed outside Singapore. However,
stamp duty may be payable if the instrument of transfer which is executed outside Singapore is
received in Singapore.
The above stamp duty is not applicable to electronic transfers of the ordinary shares through the CDP
system.
165
TAXATION
Goods and Services Tax (“GST”)
The sale of the Shares by a GST-registered investor belonging in Singapore through an SGX-ST
member or to another person belonging in Singapore is an exempt sale not subject to GST. Generally,
any GST directly or indirectly incurred by the GST-registered investor in respect of this exempt sale will
become an additional cost to the investor.
Where the Shares are sold by a GST-registered investor to a person belonging outside Singapore, 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 or furtherance of a business may be
recoverable from the Comptroller of GST.
Services such as brokerage, handling and clearing services rendered by a GST-registered person to
an investor belonging in Singapore in connection with the investor’s purchase, sale or holding of the
Shares will be subject to GST at the current rate of 5%. Similar services rendered to an investor
belonging outside Singapore would generally be subject to GST at zero-rate.
Estate Duty
Singapore estate duty is imposed on the value of immovable property situated in Singapore owned by
an individual who was at the time of death not domiciled in Singapore, subject to specific exemption
limits. Movable assets of an individual who at the time of death was not domiciled in Singapore are
exempt from estate duty irrespective of where such movable properties are located.
Singapore estate duty is imposed on the value of immovable property situated in Singapore and on
movable property, wherever it may be situated, owned by an individual who was at the time of death
domiciled in Singapore, subject to specific exemption limits.
Singapore estate duty is payable to the extent that the value of Shares aggregated with other dutiable
assets in Singapore exceeds $600,000. Unless other exemptions apply to other assets, for example,
the separate exemption limit for residential properties, any excess beyond $600,000 will be taxed at 5%
on the first $12,000,000 of the individual’s Singapore dutiable assets and any excess over $12,000,000
will be taxed at 10%.
Prospective purchasers of the Shares who are individuals, whether or not domiciled in Singapore,
should consult their own tax advisors regarding the Singapore estate duty consequences of their
ownership of our Shares.
166
CLEARANCE AND SETTLEMENT
Upon listing and quotation on the SGX-ST, our Shares will be traded under the book-entry settlement
system of the CDP, and all dealings in and transactions of the Shares through the SGX-ST will be
effected in accordance with the terms and conditions for the operation of Securities Accounts with the
CDP, as amended from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf
of persons who maintain, either directly or through Depository Agents, Securities Accounts with CDP.
Persons named as direct securities account holders and depository agents in the depository register
maintained by the CDP, rather than CDP itself, will be treated, under our Articles of Association and the
Companies Act, as members of the Company in respect of the number of Shares credited to their
respective securities accounts.
Persons holding the Shares in securities account 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 SGX-ST, although
they will be prima facie evidence of title and may be transferred in accordance with our Articles of
Association. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each
withdrawal of more than 1,000 Shares is payable upon withdrawing the Shares from the book-entry
settlement system and obtaining physical share certificates. In addition, a fee of S$2.00 or such other
amount as our Directors may decide, is payable to the share registrar for each share certificate issued
and a stamp duty of S$10.00 is also payable where our Shares are withdrawn in the name of the person
withdrawing our Shares or S$0.20 per S$100.00 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 SGX-ST 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$20.00 is payable upon
the deposit of each instrument of transfer with CDP. The above fee may be subject to such changes as
may be in accordance with CDP’s prevailing policies or the current tax policies that may be in force in
Singapore from time to time.
Transactions in the Shares under the book-entry settlement system will be reflected by the seller’s
securities account being debited with the number of Shares sold and the buyer’s securities account
being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for
the Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.05 percent
of the transaction value subject to a maximum of S$200 per transaction. The clearing fee, instrument
of transfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax
of five percent.
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on
CDP on a scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST 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.
167
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1.
The present and past directorships (held in the five years preceding the date of this Prospectus)
of each of our Directors, other than those held in our Company, in other companies are set out
below:
Name
Present Directorships
Past Directorships
Yap Kee Keong
Group Companies
Other Companies
Texchem Engineering Plastics
Sdn. Bhd.
Texchem-Pack (M) Bhd
Texchem-Pack (Thailand) Co.,
Ltd.
Nil
Group Companies
Other Companies
Texchem Resources Bhd
Malaysian Precision Plastics Sdn.
Bhd. (dissolved)
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Myanmar Texchem Limited
PT Technopia Jakarta
PT Technopia Lever
PT Texchem Indonesia
Sea Master Trading Co Sdn. Bhd.
Seapack Food Sdn. Bhd.
Texchem Malaysia Sdn Berhad
Texchem Materials (Thailand) Ltd
Texchem Risk Management Sdn.
Bhd.
Texchem Singapore Private
Limited
Texchem Trading (Wuxi) Co., Ltd.
Ojitex Holdings Sdn. Bhd.
Ojitex Haiphong Co., Ltd.
Ojitex (Vietnam) Co., Ltd.
Izutex (North) Sdn. Bhd.
(dissolved)
Lee Siew Khee,
Jeffrey
168
Name
Past Directorships
Dato’ Seri Fumihiko
Konishi
Group Companies
Group Companies
Ltd.
Sdn. Bhd.
Other Companies
Other Companies
A.S.K Andaman Limited
Fumakilla Malaysia Berhad
Introplus Sdn. Bhd. (In member’s
voluntary liquidation)
Miraku Sdn. Bhd.
Myanmar Sea Master Company
Limited
Myanmar Texchem Limited
Myanmar Texcorp Limited
Ocean Pioneer Food Sdn. Bhd.
PT Texchem Indonesia
PT Technopia Jakarta
PT Technopia Lever
Sea Master Trading Co Sdn. Bhd.
Seapack Food Sdn. Bhd.
Seapack Italia S.r.l.
Sushi Kin Sdn. Bhd.
Sushi King (Thailand) Ltd
Technopia (Bangladesh) Pvt Ltd
Technopia (Thailand) Ltd
Technopia Vietnam Pte Ltd
Texchem Consumers (Thailand)
Ltd
Texchem Consumers Sdn. Bhd.
Texchem Food Sdn. Bhd.
Texchem Materials (Thailand) Ltd
Limited
Texchem Trading (Wuxi) Co., Ltd.
La Primavera Sdn. Bhd.
Ojitex Holdings Sdn. Bhd.
Sea Master Produce Sdn. Bhd.
Texchem Risk Management Sdn.
Bhd.
Texchem Consumers (East
Malaysia) Sdn. Bhd. (in
member’s voluntary winding up)
169
Name
Past Directorships
Lee Chin
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Limited
Technopia Singapore Pte Ltd
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Hasetrale Holdings Pte Ltd
IGB Corporation Berhad
International Nursing School Pte.
Ltd.
Island Hospital Sdn. Bhd.
Tan Kim Yeow Sdn. Bhd.
TKY Enterprises Sdn. Bhd.
Wah Seong Enterprise Sdn. Bhd.
Wah Seong Holdings Pte Ltd
Wah Seong (M) Trading Co. Sdn.
Bhd.
Napier Properties Pte. Ltd.
Network Intelligence Pte. Ltd.
Well-Life Pte. Ltd. (formerly
known as Positive Aging Pte.
Ltd.)
TKY Investment Pte. Ltd.
Santrixity Pte. Ltd.
Semicaps Corporation Pte Ltd
Airport Systems Rochester, Inc.
Aspac USA, Inc.
Avidcrown Limited
Blendkirk Limited
Duncan Gleneagles Hospitals Ltd.
Eady Investments Pte. Ltd.
(dissolved — members’
voluntary winding up)
Executive Health Screeners Pte.
Ltd.
Fantasy Line Limited
Gleneagles Hospital (Kuala
Lumpur) Sdn. Bhd.
Gleneagles Hospital Limited
Gleneagles Hospital (UK) Ltd
Gleneagles International GP Pte.
Ltd.
Gleneagles International Hospitals
(Langka) Ltd.
Gleneagles Maritime Medical
Centre Pte. Ltd.
Gleneagles Medical Centre (Kuala
Lumpur) Sdn. Bhd.
Harborview Corporation Limited
No. I
Harborview Corporation Limited
No. II
Harborview Marina, Inc.
IGI Limited (In liquidation —
members’ voluntary winding up)
Tony Tan Choon
Keat
170
Name
Past Directorships
Lee Hing Development Ltd.
Lee Hing Investment Co., Ltd.
Medechain Pte Ltd (dissolved —
members’ voluntary winding up)
Medi-Rad Associates Ltd
Micasa Investments (S) Pte Ltd
Modern Way Limited
Mount Elizabeth Hospital Ltd.
Parkway Holdings Limited
Parkway Laboratory Services Ltd.
Parkway Panama Ltd, Inc.
Parkway Swirnow, Inc.
Pier 500, Inc.
Pulau Pinang Clinic Sdn. Bhd.
PKWY/Swimow Airways, Inc.
Rubin Private Limited (dissolved
— members’ voluntary winding
up)
Rylands Investments Pte. Ltd.
Sentosa Development Corporation
Silverlink Holdings Limited
The Shenton Medical Group Pte.
Ltd.
Thermal International Limited
Validhill Limited
Wrexham Investments, Inc.
Koji Miura
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Asiatica Turn Key Projects Pte Ltd
Asoka Singapore (Pte) Ltd
Azeus Systems Holdings Ltd.
Beatle Pte Ltd
Chofu Corporation of Tokyo Pte.
Ltd.
Cyber Firm Singapore Pte. Ltd.
Evolutional Material Pte. Ltd.
Gold Pole Limited
Good Will Hunting Singapore Pte,
Ltd.
Altiris Singapore Pte Ltd
Asahi Chemical Research Lab (S)
Pte Ltd
Auto Parts Meisei Pte Ltd
(dissolved — creditors’
Benaim (Singapore) Pte Ltd
Beta Business Consultancy Pte
Ltd (dissolved — creditors’
Bukom Oilfield Equipment
Leasing Pte Ltd
171
Name
Past Directorships
Herbalceutical (S) Pte. Ltd.
Marcial Singapore Pte. Ltd.
Maxonherbs Pte. Ltd.
Miura & Associates Management
Consultants Pte Ltd
M Janson Trading (S) Pte. Ltd.
Oxyfresh (S) Pte Ltd
Red Box Overseas Pte Ltd
Richway Intelligence Trading &
Technology Pte. Ltd.
Sedgwick Richardson (SEA) Pte
Limited
Sematic Singapore Pte Ltd
Sowa Industries Limited
Sunmoon Pte. Ltd.
Tristar-Asia Pacific Pte Limited
Tung Chee Investments Pte. Ltd.
Bukom Oilfield Services
(Singapore) Pte Ltd
Carrington Pte. Limited
Charmson International Trading
Pte Ltd (dissolved —
compulsory winding up
(insolvency))
Earnson Management (HK) Pte
Limited.
Earnson Management (S) Pte.
Ltd.
Ebabyasia.com Pte Ltd (dissolved
— members’ voluntary winding
up)
Eluci Singapore Pte Ltd
Genie Investment Pte Ltd
(dissolved — creditors’
Gorford (Singapore) Services Pte
Ltd (dissolved — compulsory
winding up (insolvency))
Human Resources &
Management Services
Consulting Asia Pacific Pte. Ltd.
J.Wave International Pte Ltd
Kankyo International Pte. Ltd.
Kingslake Holdings Pte Ltd
(struck off)
Life Up Singapore Pte. Ltd.
(formerly known as Daiichi
Shokai (S) Pte Ltd)
Mahk Optics (S) Pte Ltd
Memtek Products (SEA) Pte Ltd
(struck off)
Montavista Software Singapore
Pte Ltd
Nasel Express (S) Pte Ltd (struck
off)
Nitsuko Communications Systems
Pte Ltd (dissolved — members’
Resort Poresia (Singapore) Pte
Ltd
172
Name
Past Directorships
Sanyo Merchant Bank Ltd
Shunji Matsuo Pte Ltd
Skyline Golf Pte. Ltd. (gazetted to
be struck off)
Sun Spexs Pte Ltd
Totoku (Singapore) Pte Ltd
Towa Systems Pte Ltd
Tuvalu International Maritime
Authority Pte. Ltd (gazetted to
be struck off)
T.S. Optics (S) Pte. Ltd. (struck
off)
With Trading & Services Pte. Ltd.
(struck off)
Yong Hua Manufacturing &
Trading Pte Ltd
Kim Seah Teck Kim
Lim Siang Kai
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
ACS (International) (a public
company limited by guarantee)
Anglo-Chinese School
(International) Pte. Ltd.
Johore Lumbering Company Sdn
Berhad
Oldham Enterprises Pte Ltd
Sophia Mansions Pte Ltd
Newpine Ltd.
1st Software Corporation Ltd.
(formerly known as iSoftel
Limited)
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Golden 21 Investment Holdings
Ltd
Haojey Technofibre Limited
Haojey Technofibre (China) Pte.
Ltd.
ISDN Holdings Limited
Natural Cool Holdings Limited
Caramel Investment Pte Ltd
(struck off)
Garden Field Development Pte
Ltd (struck off)
Garden Field Investment (S) Pte
Ltd (struck off)
I-Markets Management Ltd
RNA Holdings Ltd
Wise Guard Enterprises Ltd
173
2.
The present and past directorships (held in the five years preceding the date of this Prospectus)
of each of our Executive Officers, other than those held in our Company, in other companies are
set out below:
Name
Past Directorships
Teo See Keong
Group Companies
Group Companies
Ltd.
Sdn. Bhd.
Nil
Other Companies
Other Companies
Nil
Texchem-Pack (Penang) Sdn.
Bhd. (dissolved)
Group Companies
Group Companies
Ltd.
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Sdn. Bhd.
Nil
Other Companies
Other Companies
Nil
Nil
Songpol
Ratanasuwan
Ooi Ghee Teong
Ngiam Meng Hock
Chan Weng Kong
174
Name
Past Directorships
Toh Kulchornchan
Group Companies
Group Companies
Ltd.
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Texchem-Pack (Vietnam) Co.,
Ltd.
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Ivy Assent Sdn. Bhd.
Global Roaming Communications
Sdn. Bhd.
Insatible Success Sdn. Bhd.
(struck-off)
Chembell Massaging Sdn. Bhd.
(struck-off)
Chembell Communication Sdn.
Bhd. (struck-off)
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Nil
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Nil
Nil
Lam Kim Goon
Yuma Konishi
Ho Wei Min
Low Chee Min
175
3.
Except as disclosed below, none of the Directors or Executive Officers or Controlling Shareholder:
(a)
has at any time during the last 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 2 years from the date he
ceased to be a partner;
(b)
has at any time during the last 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 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 judgement against him;
(d)
has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or
dishonesty 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 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 pending criminal
proceedings of which he is aware) for such breach;
(f)
has at any time during the last 10 years, had judgement entered against him in any civil
proceedings in Singapore or elsewhere involving the 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, or 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 been convicted in Singapore or elsewhere of any offence in connection with the
formation or management of any entity or business trust;
(h)
has been disqualified from acting as a director or any equivalent person of any entity
(including the trustee of a business trust), or from taking part in any way directly or indirectly
in the management of any entity or business trust;
(i)
has been the subject of any order, judgement 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;
(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
176
(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)
4.
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,
exchange, professional body or governmental agency, whether in Singapore or elsewhere.
On 8 July 1996 Fumakilla obtained approval for listing on the second board of the Bursa Malaysia
(then known as Kuala Lumpur Stock Exchange) from the Malaysian Securities Commission (the
“Malaysian SC”). However, the listing approval was revoked on 28 November 1996 by the
Malaysian SC on account of an alleged non-compliance/contravention under Section 32B of the
Securities Commission Act, 1993. Dato’ Seri Fumihiko Konishi, Tuan Haji Man bin Haji Mat and
Dato’ Zainol Abidin bin Dato Haji Salleh were censured by the Malaysian SC and the Malaysian
SC stated that it would not consider any corporate exercises involving Dato’ Seri Fumihiko Konishi
for a period of three years from 28 November 1996. The Malaysian SC also stated that it would
not consider any corporate exercises involving Tuan Haji Man bin Haji Mat and Dato’ Zainol Abidin
bin Dato Haji Salleh for a period of one year from 28 November 1996. The three year sanction
period has been complied with and Dato’ Seri Fumihiko Konishi was subsequently involved in
various corporate exercises including the transfer of TRB from the second board to the main
board of the Bursa Malaysia (then known as Kuala Lumpur Stock Exchange) and the conditional
voluntary offer by TRB to acquire the entire issued and paid-up share capital of Fumakilla.
Koji Miura
Mr Koji Miura was named as a defendant in a civil suit (suit no. 653 of 2005/P) that commenced
in September 2005, in relation to, inter alia, allegations of conspiracy with respect to his
involvement in the business of Earnson Management (S) Pte. Ltd. (“EMS”). Mr Koji Miura denied
all allegations of conspiracy and maintained that he did not take part in the operations of EMS and
was its nominee director. On 17 October 2006, the High Court of Singapore dismissed the
plaintiff’s action with costs ordered to be paid to Mr Koji Miura.
SHARE CAPITAL
5.
As at the Latest Practicable Date, to the best of the knowledge of our Directors, our Directors are
not aware of any arrangements, the operation of which may at a subsequent date result in the
change of control of our Company.
MEMORANDUM AND ARTICLES OF ASSOCIATION
6.
Memorandum of Association and Registration Number
Our Company’s constitution is its Memorandum and Articles of Association. The registration
number with which our Company was incorporated with is 200308296H. The Memorandum of
Association of the Company states, among other things, that the liability of members of the
Company is limited. The objects of the Company are set out in full in Clause 3 of the Memorandum
of Association which is available for inspection at our registered office as stated in the section
“General and Statutory Information — Documents Available for Inspection” of this Prospectus.
177
7.
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 as mentioned under “General and Statutory
Information — Documents Available for Inspection” of this Prospectus.
Directors
(a)
Ability of interested Directors to vote
A Director shall not vote in respect of any contract or proposed contract or arrangement or
any other proposal whatsoever in which he has any personal material interest, directly or
indirectly. A Director shall be counted in the quorum at a meeting in relation to any resolution
on which he is debarred from voting.
(b)
Remuneration
The ordinary fees of our Directors shall from time to time be determined by an ordinary
resolution of our Company and shall not be increased except pursuant to an ordinary
resolution passed at a general meeting where notice of the proposed increase shall have
been given in the notice convening the general meeting. Our Directors may repay to any
Director all such reasonable expenses as he may incur in attending and returning from
meetings of our Directors or of any committee of our Directors or general meetings or
otherwise in or about the business of our Company.
Any Director who holds any executive office, or who serves on any committee of the
Directors, or who otherwise performs services which in the opinion of the Directors are
outside the scope of ordinary duties of a Director, may be paid such extra remuneration by
way of salary, commission or otherwise as our Directors may determine. The fees in the case
of a Director other than an Executive Director shall be payable by a fixed sum and shall not
at any time be by commission on or a percentage of the profits or turnover, and no Director
whether an Executive Director or otherwise shall be remunerated by a commission on or a
percentage of turnover.
(c)
Borrowing
Subject to the Companies Act, our Directors may exercise all the powers of our Company to
borrow money, to mortgage or charge its undertaking, property and uncalled capital and to
issue debentures and other securities, whether outright or as collateral security for any debt,
liability or obligation of our Company or of any third party.
(d)
Retirement Age Limit
There is no retirement age limit for Directors but the Companies Act provides that a Director
shall not be of or over the age of 70 at the date of his appointment, unless he is appointed
or re-appointed as a Director or authorised to continue in office as a Director 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 our Articles.
178
Share Rights and Restrictions
Our Company currently has one class of shares, namely, ordinary shares. Under the Companies
Act, only persons who are registered on our register of members are recognised as our
Shareholders. Notwithstanding the foregoing, the Companies Act also provides that Depositors
whose Securities Accounts are credited with Shares will be deemed to be our shareholders.
(a)
Dividends and distribution
We may, by ordinary resolution, declare dividends at a general meeting, but we may not pay
dividends in excess of the amount recommended by our Board of Directors. All dividends we
declare must be paid out of our profits; however, we may capitalise our reserve account or
other distributable reserve or any sum standing to the credit of the profit and loss account
and apply it to pay dividends, if such dividends are satisfied by the issue of shares to our
shareholders. Our Board of Directors 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 shareholder’s shares, unless the rights attaching
to an issue of any Share provide otherwise. All dividends or bonuses unclaimed after having
been declared may be invested or otherwise made use of by our Board of Directors for the
benefit of our Company. All dividends or bonuses unclaimed for six years after having been
declared may be forfeited by our Board of Directors and shall revert to our Company.
Our Board of Directors may retain any dividends or other moneys payable on or in respect
of a Share upon 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 shareholder is entitled to attend, speak and vote at any general meeting in person or by
proxy and a shareholder may appoint not more than two proxies to attend and vote at the
same general meeting. A proxy need not be a shareholder. A shareholder who is a Depositor
will only be entitled to vote at a general meeting as a shareholder if his name appears on the
Depository Register 48 hours before the time of the relevant general meeting. Except as
otherwise provided in our Articles, two or more shareholders must be present to constitute
a quorum at any general meeting. Under our Articles, on a show of hands, every shareholder
present in person or by proxy shall have one vote and on a poll, every shareholder present
in person or by proxy shall have one vote for every Share which he holds or represents. A
poll may be demanded in certain circumstances, including, by the chairman of the meeting,
by any shareholder present in person or by proxy and representing not less than 10% of the
total voting rights (excluding treasury shares as defined under the Companies Act) of all
shareholders having the right to attend and vote at the meeting or by not less than five
shareholders present in person or by proxy and entitled to vote. In the case of an equality
of votes, whether on a show of hands or on a poll, the chairman of the meeting shall be
entitled to a casting vote.
Change in capital
Under the Companies Act, changes in the capital structure of our Company (for example, an
increase, a consolidation or a sub-division of our share capital) require shareholder approval at
general meetings which require a minimum period of 14 days’ notice with resolutions being
passed by a simple majority. However, we are required to obtain our shareholders’ consent by way
of a special resolution for any reduction of our share capital or other undistributable reserve,
subject to the conditions prescribed by law.
179
A resolution shall be an “ordinary resolution” when it has been passed by a simple majority of the
votes cast by our shareholders at a general meeting held in accordance with our Articles and of
which not less than 14 days’ notice has been duly given. A resolution shall be a “special resolution”
when it has been passed by a majority of three-fourths of the votes cast by our shareholders at
a general meeting of which not less than 21 days’ notice, specifying (without prejudice to the
power contained in our Articles to amend the same) the intention to propose the resolution as a
special resolution, has been duly given.
Variation of rights of existing shares or classes of shares
Subject to the Companies Act, if at any time our share capital is divided into different classes of
shares, all or any of the special rights attached to any class (unless otherwise provided for by the
terms of issue of the shares of that class) may, subject to the provisions of the Companies Act,
be varied or abrogated either with the consent in writing of the holders of not less than
three-fourths of the total voting rights of the issued shares of that class or with the sanction of a
special resolution passed at a separate general meeting of the holders of the shares of that class.
To every such separate general meeting, all the provisions of these Articles relating to general
meetings and to the proceedings thereat shall mutatis mutandis apply, except that the necessary
quorum shall be not less than two persons holding or representing by proxy at least one-third of
the total voting rights of the issued shares of that class, and that any holder of shares of the class
present in person or by proxy may demand a poll and that every such holder shall on a poll have
one vote for every share of that class held by him. These provisions will also apply to the variation
or abrogation of the special rights attached to the shares of any class as if each group of shares
of the class differently treated formed a separate class the special rights whereof are to be varied.
The relevant provisions under our Articles do not impose more significant conditions than the
Companies Act in this regard.
Limitations on shareholders regarded as non-residents of Singapore
There are no limitations on the rights of our shareholders who are regarded as non-residents of
Singapore to hold or vote their shares. However, the Singapore Code on Take-overs and Mergers
(the “Take-over Code”) issued by the Authority pursuant to Section 321 of the Securities and
Futures Act prescribes certain situations whereby a person who, either on his own or together with
persons acting in concert (as defined in the Take-over Code) with him, must make a mandatory
take-over offer for our Shares.
MATERIAL CONTRACTS
8.
The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by our Company and our subsidiaries within the two years preceding the date
of lodgement of this Prospectus and are or may be material:
(i)
the Deed of Assignment between Texpack and TRB dated 26 May 2004 pursuant to which
Texpack assigned to TRB the benefits and obligations of the Master Research Agreement
dated 25 March 2003 made between Texpack and Professor Masao Sumita;
(ii)
the Deed of Assignment between Texpack and TRB dated 26 May 2004 pursuant to which
Texpack assigned to TRB the benefits and obligations of the Master Research Agreement
dated 25 March 2003 made between Texpack, the University of Akron and the University of
Akron Research Foundation;
180
(iii)
the Deed of Assignment between TRB and Texpack dated 31 December 2004 pursuant to
which TRB assigned to Texpack the benefits and obligations of the Master Research
Agreement dated 25 March 2003 made between Texpack and Professor Masao Sumita;
(iv) the Deed of Assignment between TRB and Texpack dated 31 December 2004 pursuant to
which TRB assigned to Texpack the benefits and obligations of the Master Research
Agreement dated 25 March 2003 made between Texpack, the University of Akron and the
University of Akron Research Foundation;
(v)
the Deed of Assignment between Texpack and Texpolymers dated 1 July 2005 pursuant to
which Texpack assigned to Texpolymers the benefits and obligations of the Master Research
Agreement dated 25 March 2003 made between Texpack and Professor Masao Sumita;
(vi) the Deed of Assignment between Texpack and Texpolymers dated 1 July 2005 pursuant to
which Texpack assigned to Texpolymers the benefits and obligations of the Master Research
Agreement dated 25 March 2003 made between Texpack, the University of Akron and the
University of Akron Research Foundation;
(vii) the Share Sale Agreement between Texpack Holdings and TRB dated 22 December 2005
for the acquisition of 1,020,000 ordinary shares of RM1.00 each in Eye Graphic by Texpack
Holdings for a cash consideration of RM3,274,000, further details of which are set out under
“Restructuring Exercise” of this Prospectus; and
(viii) the Deed of Undertaking and Indemnity (the “Deed”) between TRB and each of Texpack
Holdings, Texpack, Texpack (KL), TEP and Texpack (Johor) dated 27 March 2006 pursuant
to which TRB undertakes to comply with the equity conditions attached to the manufacturing
licences of each of Texpack, Texpack (KL), TEP and Texpack (Johor) (collectively referred
to as the “Texchem Subsidiaries”), failing which TRB shall indemnify Texpack Holdings and
the Texchem Subsidiaries according to the terms and the conditions of the Deed.
LITIGATION
9.
Neither our Company nor any of our subsidiaries is engaged in any legal or arbitration
proceedings as plaintiff or defendant, 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 Prospectus a material effect on the financial position or the profitability of our Company.
MISCELLANEOUS
10. There has been no previous issue of Shares by our Company or offer for sale of our Shares to the
public within the two years preceding the date of this Prospectus.
11.
There have been no public takeover offers by third parties in respect of our Shares or by us in
respect of other companies’ shares or units of a business trust which have occurred between 1
January 2005 and the Latest Practicable Date.
12. Save as disclosed under “Plan of Distribution and Underwriting” of this Prospectus, no
commission, discount or brokerage has been paid or other special terms granted within the two
years preceding the date of this Prospectus or is payable to any Director, promoter, expert,
proposed director or any other person for subscribing 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.
181
13. No expert is interested, directly or indirectly, in the promotion of, or in any property or assets which
have, within the two years preceding the date of this Prospectus, 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.
14. Application moneys 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 DBS Bank (the “Receiving Bank”). Any refund of all or part of the application
moneys to unsuccessful or partially successful applicants will be made without any interest or any
share of revenues or any other benefit arising therefrom.
15. Save as disclosed in this Prospectus, our Directors are not aware of any relevant material
information including trading factors or risks which are unlikely to be known or anticipated by the
general public and which could materially affect the profits of our Company and our subsidiaries.
16. Save as disclosed under “Risk Factors”, “Capitalisation and Indebtedness”, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”, “Business —
Prospects” and “Business — Future Plans” of this Prospectus, 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 Group’s 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
materially affected the amount of reported income from operations; and
(d)
known trends or uncertainties that have had or that we reasonably expect will have a
material favourable or unfavourable impact on revenues or operating income.
17. We currently have no intention of changing our auditors after the listing of our Company on the
SGX-ST.
18. Save as disclosed in this Prospectus under “Use of Proceeds from the Invitation and Expenses
Incurred”, no property has been purchased or acquired or proposed to be purchased or acquired
by our Company or our subsidiaries which is to be paid for wholly or partly out of the proceeds of
the Invitation or the purchase or acquisition of which has not been completed at the date of the
issue of this Prospectus other than property in respect of which the contract for the purchase or
acquisition whereof was entered into in our ordinary course of business or in the ordinary course
of business of our subsidiaries, such contract not being made in contemplation of the Invitation nor
the Invitation in consequence of the contract.
19. Save as disclosed under “Subsequent Events” in the Independent Auditors’ Report in relation to
the Audited Consolidated Financial Statements and in the Unaudited Consolidated Interim
Financial Statements of our Company in this Prospectus, our Directors are not aware of any event
which has occurred since 31 December 2005 which may have a material effect on the Audited
Consolidated Financial Statements and on the Unaudited Consolidated Interim Financial
Statements of our Company.
182
20. 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, our subsidiaries or has a material
economic interest whether direct or indirect, in our Company, including an interest in the success
of the Invitation.
CONSENTS
21. Deloitte & Touche Corporate Finance Pte Ltd, as the independent financial adviser to the
Independent Directors, has given and has not before the registration of this Prospectus,
withdrawn its written consent to the issue of this Prospectus with the inclusion herein of its name
and its letter addressed to the Independent Directors set out in Appendix F of this Prospectus in
the form and context in which it appears in this Prospectus and to act in such capacity in relation
to this Prospectus.
22. The Reporting Accountants and Auditors have given and have not before the registration of the
Prospectus withdrawn their written consent to the issue of this Prospectus with the inclusion
herein of their letter in relation to the Audited Consolidated Financial Statements and the
Unaudited Consolidated Interim Financial Statements of our Company in the form and context in
which they are included and references to their name in the form and context in which it appears
in this Prospectus and to act in such capacity in relation to this Prospectus.
23. DBS Bank has given and has not before the registration of this Prospectus withdrawn its written
consent to being named in this Prospectus as the Manager, the Underwriter and the Placement
Agent.
24. Each of the Manager, the Underwriter, the Placement Agent, the Receiving Bank, the Solicitors to
the Invitation, the Solicitors to the Manager, Underwriter and Placement Agent, the Legal Advisers
to the Company on Malaysian Law, the Legal Advisers to the Company on PRC Law, the Legal
Advisers to the Company on Thai Law, the Legal Advisers to the Company on Vietnamese Law,
the Share Registrar and Share Transfer Office and the Principal Bankers do not make, or purport
to make, any statement in this Prospectus or any statement upon which a statement in this
Prospectus is based and, to the maximum extent permitted by law, expressly disclaim and take
no responsibility for any liability to any person which is based on, or arises out of, the statements,
information or opinions in this Prospectus.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS
25. This Prospectus has been seen and approved by our Directors and they individually and
collectively accept full responsibility for the accuracy of the information given herein and confirm,
having made all reasonable enquiries, that to the best of their knowledge and belief, the facts
stated and the opinions expressed herein are fair and accurate in all material respects as of the
date hereof and there are no material facts the omission of which would make any statements in
this Prospectus misleading and that this Prospectus constitutes full and true disclosure of all
material facts about the Invitation and our Group.
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DOCUMENTS AVAILABLE FOR INSPECTION
26. The following documents or copies thereof may be inspected at our registered office at 9 Raffles
Place #32-00 Republic Plaza Singapore 048619 during normal business hours for a period of six
months from the date of registration of this Prospectus:
(i)
the Memorandum and Articles of Association of our Company;
(ii)
the letters of consent referred to in paragraphs 21 to 23 under “General and Statutory
Information” of this Prospectus;
(iii)
the material contracts referred to in paragraph 8 under “General and Statutory Information”
of this Prospectus;
(iv) the Report from the Reporting Accountants in relation to the audited consolidated financial
statements of our Company and its subsidiaries for FY2003, FY2004 and FY2005;
(v)
the Review Report from the Reporting Accountants in relation to the unaudited consolidated
interim financial statements of our Company and its subsidiaries for the six months ended
30 June 2006; and
(vi) the letters of appointments of Dato’ Seri Fumihiko Konishi, Lee Siew Khee, Jeffrey and Yap
Kee Keong, referred to under “Management — Service Agreements” of this Prospectus.
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APPENDIX A: TERMS AND CONDITIONS AND PROCEDURES FOR
APPLICATION AND ACCEPTANCE
Applications are invited for the subscription of the New Shares at the Issue Price, subject to the
following terms and conditions:–
1.
YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES AND INTEGRAL
MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF NEW SHARES
WILL BE REJECTED.
2.
Your application for the Offer Shares may be made by way of the printed WHITE Offer Shares
Application Forms or through Automated Teller Machines (“ATMs”) belonging to the Participating
Banks (“ATM Electronic Application”) or through the Internet banking (“IB”) websites of the
relevant Participating Banks (“Internet Electronic Application”)
Application for Internet Placement Shares (also referred to as “Internet Electronic Application”)
may only be made by way of an Internet Electronic Application through the Internet website of
DBS Vickers Securities Online (Singapore) Pte Ltd (“DBS Vickers Online”) at
“www.dbsvonline.com” if you have an internet trading account with DBS Vickers Online. Internet
Electronic Applications, both through the IB websites of the relevant Participating Banks and the
Internet website of DBS Vickers Online, shall together with ATM Electronic Applications, be
referred to as “Electronic Applications”.
Applications for Placement Shares (other than Internet Placement Shares) may only be made by
way of the printed BLUE Placement Shares Application Forms.
YOU MAY NOT USE YOUR CPF FUNDS TO APPLY FOR THE NEW SHARES.
3.
You (being other than an approved nominee company) are allowed to submit ONLY one
application in your own name for:–
(a)
(b)
the Offer Shares by any one of the following:–
•
Offer Shares Application Form;
•
ATM Electronic Application; or
•
Internet Electronic Application; or
the Placement Shares by any one of the following:–
•
Placement Shares Application Form; or
•
Internet Electronic Application.
If more than one application is submitted for either the Offer Shares or Placement Shares,
such separate applications shall be deemed to be multiple applications and shall be
rejected.
If you have made an application for the Placement Shares, you should not make any
application for the Offer Shares and vice versa. Such separate applications shall be
deemed to be multiple applications and shall be rejected.
Joint or multiple applications will be rejected. Persons submitting or procuring submissions of
multiple share applications (whether for Offer Shares, Placement Shares or both Offer Shares and
Placement Shares) may be deemed to have committed an offence under the Penal Code, Chapter
224 of Singapore and the Securities and Futures Act, Chapter 289 of Singapore and such
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applications may be referred to the relevant authorities for investigation. Multiple applications or
those appearing to be or suspected of being multiple applications will be liable to be rejected at
the discretion of our Company.
4.
We will not accept applications from any person under the age of 21 years, undischarged
bankrupts, sole-proprietorships, partnerships, non-corporate bodies, joint Securities Account
holders of CDP and applicants whose addresses (furnished in their printed Application Forms or,
in the case of Electronic Applications, contained in the records of the relevant Participating Banks
or DBS Vickers Online, as the case may be) bear post office box numbers. No persons acting or
purporting to act on behalf of a deceased person is allowed to apply under the Securities Account
with CDP in the deceased name at the time of application.
In addition, applicants who wish to subscribe for the Placement Shares through the website of
DBS Vickers Online:
(a)
must not be corporations, sole-proprietorships, partnerships, or any other business entity;
(b)
must be at least 21 years old;
(c)
must not be undischarged bankrupts;
(d)
must apply for the Placement Shares in Singapore;
(e)
must have a mailing address in Singapore; and
(f)
must be customers who maintain trading accounts with DBS Vickers Online.
5.
We will not recognise the existence of a trust. Any application by a trustee or trustees must be
made in his/their own name(s) and without qualification or, where the application is made by way
of a printed Application Form by a nominee, in the name(s) of an approved nominee company or
approved nominee companies, in each case, in compliance with paragraph 6 below.
6.
WE WILL ONLY ACCEPT NOMINEE APPLICATIONS FROM APPROVED NOMINEE
COMPANIES. Approved nominee companies are defined as banks, merchant banks, finance
companies, insurance companies, licensed securities dealers in Singapore and nominee
companies controlled by them. Applications made by nominees other than approved nominee
companies will 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 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 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 may be rejected if your particulars
such as name, NRIC/passport number, nationality, permanent residence status and CDP
Securities Account number provided in your Application Form, or in the case of an Electronic
Application, contained in the records of the relevant Participating Bank or DBS Vickers Online at
the time of your Electronic Application, as the case may be, differ from those particulars in your
Securities Account as maintained by CDP. If you have more than one 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 or DBS Vickers
Online, 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 will be sent to your address last registered with CDP.
9.
Our Company reserves the right to reject any application which does not conform strictly to the
instructions set out in the Application Forms and this Prospectus or which does not comply with
the instructions for Electronic Applications or with the terms and conditions of this Prospectus or
in the case of an application by way of an Application Form, which is illegible, incomplete,
incorrectly completed or which is accompanied by an improperly drawn up or improper form of
remittance.
10. Our Company further reserves 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 the Electronic Applications or the terms and conditions of this
Prospectus, 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.
11.
Our Company reserves 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 we will not entertain any enquiry
and/or correspondence on the decision of our Company except in respect of applications which
have been balloted but subsequently rejected where the reasons for such rejection will be
provided to the Applicant. This right applies to applications made by way of Application Forms and
by way of Electronic Applications. In deciding the basis of allotment, our Company will give due
consideration to the desirability of alloting New Shares to a reasonable number of applicants with
a view to establishing an adequate market for the Shares.
12. Share certificates will be registered in the name of CDP or its nominee 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, a statement of account stating that your Securities Account has been
credited with the number of New Shares allotted to you. This will be the only acknowledgement
of application monies received and is not an acknowledgement by our Company. 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 or transfer of the New Shares allotted to
you. This authorisation applies to applications made by way of printed Application Forms and by
way of Electronic Applications.
13. In the event that our Company lodges a supplementary or replacement prospectus (“Relevant
Document”) pursuant to the Securities and Futures Act or any applicable legislation in force from
time to time prior to the close of the Invitation, and the New Shares have not been issued, we will
(as required by law) at our Company’s sole and absolute discretion either:–
(a)
within two 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; or
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(b)
within 7 days of the lodgement of the Relevant Document give you a copy of the Relevant
Document and provide you with an option to withdrawn your application; or
(c)
deem your application as withdrawn and cancelled and refund your application monies
(without interest or any share of revenue or other benefit arising therefrom) to you within 7
days from the lodgement of the Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 13(a) and (b) above to
withdraw his application shall, within 14 days from the date of lodgement of the Relevant
Document, notify us whereupon we shall, within 7 days from the receipt of such notification, return
all monies in respect of such application (without interest or any share of revenue or other benefit
arising therefrom).
In the event that the New Shares have already been issued at the time of the lodgement of the
Relevant Document but trading has not commenced, we will (as required by law) either:–
(i)
within two days (excluding 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 us the New 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; or
(ii)
within 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 New Shares which you do not wish
to retain title in; or
(iii)
deem the issue as void and refund your payment for the New Shares (without interest or any
share of revenue or other benefit arising therefrom) within 7 days from the lodgement of the
Relevant Document.
Any applicant who wishes to exercise his option under paragraphs 13(i) and (ii) above to return
the New Shares issued to him shall, within 14 days from the date of lodgement of the Relevant
Document, notify us of this and return all documents, if any, purporting to be evidence of title of
those New Shares, whereupon we shall, within 7 days from the receipt of such notification and
documents, pay to him all monies paid by him for the New Shares without interest or any share
of revenue or other benefit arising therefrom and at his own risk, and the New Shares issued to
him shall be deemed to be void.
Additional terms and instructions applicable upon the lodgement of the supplementary or
replacement prospectus, including instructions on how you can exercise the option to withdraw,
may be found in such supplementary or replacement prospectus.
14
In the event of an under-subscription for Offer Shares as at the close of the Application List, that
number of Offer Shares not subscribed for shall be made available to satisfy excess applications
for Placement Shares to the extent 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 not subscribed for shall be made available to satisfy excess
applications for Offer Shares to the extent that there is an over-subscription for Offer Shares as
at the close of the Application List.
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In the event of an under-subscription for Internet Placement Shares to be applied for through the
website of DBS Vickers Online as at the close of the Application List, that number of Internet
Placement Shares not subscribed for shall be made available to satisfy applications for Placement
Shares by way of Placement Shares Application Forms to the extent that there is an
oversubscription for such Placement Shares as at the close of the Application List or to satisfy
excess 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/or
Placement Shares (including Internet 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, in consultation with DBS Bank,
and approved by the SGX-ST.
15. You irrevocably authorise CDP to disclose the outcome of your application, including the number
of New Shares allotted to you pursuant to your application, to the Company, the Manager, the
Underwriter, the Placement Agent, DBS Vickers Online and any other parties so authorised by
CDP, the Company, the Manager, the Underwriter and/or the Placement Agent.
16. By completing and delivering an Application Form and, in the case of an ATM Electronic
Application, by pressing the “Enter” or “OK” or “Confirm” or “Yes” key or any other relevant key on
the ATM or in the case of an Internet Electronic Application, by clicking “Submit” or “Continue” or
“Yes” or “Confirm” or any other button on the IB website of the relevant Participating Bank or the
website of DBS Vickers Online in accordance with the provisions herein, you:–
(a)
irrevocably offer, agree and undertake to subscribe for the number of New Shares specified
in your application (or such smaller number for which the application is accepted) at the
Issue Price for each New Share and agree that you will accept such New Shares as may be
allotted to you, in each case on the terms of, and subject to the conditions set out in, this
Prospectus and the Memorandum and Articles of Association of the Company;
(b)
agree that in the event of any inconsistency between the terms and conditions for application
set out in this Prospectus and those set out in the website of DBS Vickers Online, or the IB
websites or ATMs of the relevant Participating Banks, the terms and conditions set out in this
Prospectus shall prevail;
(c)
agree that the aggregate Issue Price for the New Shares applied for is due and payable to
the Company 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 in determining whether
to accept your application and/or whether to allot any New Shares to you; and
(e)
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 Company, the
Manager, the Underwriter and/or the Placement Agent will infringe any such laws as a result
of the acceptance of your application.
17. Our acceptance of applications will be conditional upon, inter alia, our Company being satisfied
that:–
(a)
permission has been granted by the SGX-ST to deal in, and for quotation of, all our existing
Shares and the New Shares, on the Official List of the SGX-ST;
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(b)
the Management and Underwriting Agreement, and the Placement Agreement referred to in
the section entitled “ Plan of Distribution and Underwriting” of this Prospectus have become
unconditional and have not been terminated; and
(c)
the Monetary Authority of Singapore (the “Authority”) has not served a stop order which
directs that no or no further shares to which this Prospectus relates be allotted or issued
(“Stop Order”).
18. In the event that a Stop Order in respect of the New Shares is served by the Authority or other
competent authority, and:–
(a)
the New Shares have not been issued, we will (as required by law) deem all applications to
be withdrawn and cancelled and our Company shall refund the application monies (without
interest or any share of revenue or other benefit arising therefrom) to you within 14 days of
the date of the Stop Order; or
(b)
if the New Shares have already been issued but trading has not commenced, the issue
will(as required by law) be deemed void and we will refund your payment for the New Shares
(without interest or any share of revenue or other benefit arising therefrom) to you within 14
days from the date of the Stop Order.
This shall not apply where only an interim Stop Order has been served.
19
In the event that an interim Stop Order in respect of the New Shares is served by the Authority or
other competent authority, no Invitation Shares shall be issued to you until the Authority revokes
the interim Stop Order.
20
The Authority is not able to serve a Stop Order in respect of the New Shares if the New Shares
have been issued and listed on the SGX-ST and trading in them has commenced.
21. We will not hold any application in reserve.
22. We will not allot or allocate any Shares on the basis of this Prospectus later than six months after
the date of registration of this Prospectus by the Authority.
23. Additional terms and conditions for applications by way of printed Application Forms are set out
in the section entitled “Additional Terms and Conditions for Applications Using Printed Application
Forms” on pages A-7 and A-10 of this Prospectus.
24. Additional terms and conditions for applications by way of Electronic Applications are set out in the
section entitled “Additional Terms and Conditions For Electronic Applications” on pages A-11 and
A-21 of this Prospectus.
25. Any reference to “you” or the “Applicant” in this section shall include an individual, a corporation,
an approved nominee company and trustee applying for the Offer Shares by way of a printed
Application Form or by way of an Electronic Application and a person applying for Placement
Shares (including Internet Placement Shares) by way of a printed Placement Shares Application
Form or by way of an Electronic Application.
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ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION
FORMS
Applications by way of Application Forms shall be made on and subject to the terms and
conditions of this Prospectus, 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” on pages A-1 to A-6 of this Prospectus,
as well as the Memorandum and Articles of Association of our Company.
1.
Your application for Offer Shares must be made using the WHITE Offer Shares Application Forms
and WHITE official envelopes “A” and “B”, accompanying and forming part of this Prospectus.
Application for Placement Shares (other than Internet Placement Shares) by way of Application
Forms must be made using the BLUE Placement Shares Application Forms, accompanying and
forming part of this Prospectus.
We draw your attention to the detailed instructions contained in the respective Application Forms
and this Prospectus for the completion of the Application Forms which must be carefully followed.
Our Company reserves the right to reject applications which do not conform strictly to the
instructions set out in the Application Forms and this Prospectus or to the terms and
conditions of this Prospectus or which are illegible, incomplete, incorrectly completed or
which are accompanied by improperly drawn remittances.
2.
Your Application Form must be completed in English. Please type or write clearly in ink using
BLOCK LETTERS.
3.
You must complete all spaces in the Application Form except those under the heading “FOR
OFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.” 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 corporations, in your full names as registered with a competent authority. If you are not
an 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. If you are a
corporate Applicant and your application is successful, a copy of your Memorandum and Articles
of Association or equivalent constitutive documents must be lodged with our Company’s Share
Registrar and Share Transfer Office. Our Company reserves 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.
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6.
You (whether 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 a
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 have an interest in
the aggregate of more than 50 per cent. 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 New 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 per cent. of the issued share capital of or interests
in such corporation.
7.
You may apply for New Shares using only cash. Each application must be accompanied by a cash
remittance in Singapore currency for the full amount payable, in respect of the number of New
Shares applied for, in the form of a BANKER’S DRAFT or CASHIER’S ORDER drawn on a bank
in Singapore, made out in favour of “TEXPACK SHARE ISSUE ACCOUNT” crossed “A/C PAYEE
ONLY” 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. REMITTANCES BEARING “NOT TRANSFERABLE” OR “NON
TRANSFERABLE” CROSSINGS WILL BE REJECTED.
No acknowledgement of receipt will be issued by our Company or the Manager for applications
or 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 within 24 hours of the balloting
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 Market 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 the application monies have been received in the designated share issue account.
9.
Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the
meanings assigned to them in this Prospectus.
10. By completing and delivering the Application Form, you agree that:–
(a)
(b)
in consideration of our Company having distributed the Application Form to you and
agreeing to close the Application List at 12.00 noon on 31 October 2006 or such other time
or date as our Directors may, in consultation with the Manager, decide and by completing
and delivering this Application Form:–
(i)
your application is irrevocable; and
(ii)
your remittance will be honoured on first presentation and that any monies returnable
may be held pending clearance of your payment without interest or any share of
revenue or other benefit arising therefrom;
all applications, acceptances or 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;
A-8
(c)
in respect of the New Shares for which your application has been received and not rejected,
acceptance of your application shall be constituted by written notification by or on behalf of
our Company and not otherwise, notwithstanding any remittance being presented for
payment by or on behalf of our Company;
(d)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application;
(e)
reliance is placed solely on the information contained in this Prospectus and neither our
Company, the Manager, the Underwriter, the Placement Agent nor any other person involved
in the Invitation shall have any liability for any information not so contained;
(f)
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, SGX-ST, CDP, SCCS, our Company, the Manager, the Underwriter
and the Placement Agent;
(g)
you irrevocably agree and undertake to subscribe for the number of New Shares applied for
as stated in the Application Form or any smaller number of such New Shares that may be
allotted to you in respect of your application. In the event that our Company decides to allot
any smaller number of New Shares or not to allot any New Shares to you, you agree to
accept such decision as final; and
(h)
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
ortransfer of the New Shares that may be allotted to you.
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”.
2.
You must:–
(a)
enclose the WHITE Offer Shares Application Form, duly completed and signed, together
with your correct remittance in accordance with the terms and conditions of this Prospectus,
in the WHITE official envelope “A” provided;
(b)
in appropriate spaces on the WHITE official envelope “A”:–
(i)
write your name and address;
(ii)
state the number of Offer Shares applied for;
(iii)
tick the relevant box to indicate the form of payment; and
(iv) (where the application is despatched by ordinary post) affix adequate Singapore
postage;
(c)
SEAL THE WHITE OFFICIAL ENVELOPE “A”;
(d)
write, in the special box provided on the larger WHITE official envelope “B” addressed to
DBS Bank Ltd, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore 068809, the
number of Offer Shares you have applied for; and
(e)
insert WHITE official envelope “A” into WHITE official envelope “B”, seal WHITE official
envelope “B”, affix adequate Singapore postage on WHITE official envelope “B” (if
despatching by ordinary post) and thereafter DESPATCH BY ORDINARY POST OR
A-9
DELIVER BY HAND the documents at your own risk to DBS Bank Ltd, 6 Shenton Way,
#36-01 DBS Building Tower One, Singapore 068809, so as to arrive by 12:00 noon on 31
October 2006 or such other time or date as our Directors may, in consultation with the
Manager, decide. Courier services or registered post must NOT be used.
3.
Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly
drawn remittances or which are not honoured upon their first presentation are liable to be rejected.
4.
ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
Applications for Placement Shares (other than Internet Placement Shares)
1.
Your application for Placement Shares (other than Internet Placement Shares) must be made
using the BLUE Placement Shares Application Forms.
2.
The completed and signed BLUE Placement Shares Application Form and your remittance, in
accordance with the terms and conditions of the Prospectus, for the full amount payable in respect
of the number of Placement Shares applied for with your name, CDP Securities Account number
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 DBS Bank Ltd, 6 Shenton Way, #36-01 DBS
Building Tower One, Singapore 068809, for the attention of Equity Capital Markets, to arrive by
12:00 noon on 31 October 2006 or such other time or date as our Directors may, in consultation
with the Manager, decide. Courier services or registered post must NOT be used. No
acknowledgement 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 which are not honoured upon their first presentation may be rejected.
4.
ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of
receipt will be issued for any application or remittance received.
5.
Alternatively, you may remit your application monies by electronic transfer to the account of DBS
Bank Ltd, Shenton Way Branch, Current Account Number 003-710183-4 in favour of
“TEXPACK SHARE ISSUE ACCOUNT” for the number of Placement Shares applied for by 12:00
noon on 31 October 2006. Applicants who remit their application monies via electronic transfer
should send a copy of the telegraphic transfer advice slip to DBS Bank Ltd, 6 Shenton Way,
#36-01 DBS Building Tower One, Singapore 068809, for the attention of Equity Capital
Markets, to arrive by 12:00 noon on 31 October 2006, or such other time or date as our Directors
may, in consultation with the Manager, decide.
A-10
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 in the case of Internet Electronic Applications on the IB website screens
of the relevant Participating Banks and the website screens of DBS Vickers Online (the “Steps”).
Currently, DBS Bank and UOB Group are the only Participating Banks through which the Internet
Electronic Applications may be made. For illustration purposes, the procedures for Electronic
Applications for Offer Shares through ATMs and the IB website of DBS Bank are set out in the “Steps
for ATM Electronic Applications for Offer Shares through ATMs of DBS Bank (including POSB)” and the
“Steps for Internet Electronic Applications for Offer Shares through the IB website of DBS Bank”
beginning on page A-19 of this Prospectus. The procedures for Electronic Applications for Placement
Shares through the website of DBS Vickers Online are set out in the “Steps for Internet Electronic
Applications for Placement Shares through the website of DBS Vickers Online” on pages A-20 and A-21
of this Prospectus. Please read carefully the terms and conditions of this Prospectus, the Steps and the
terms and conditions for Electronic Applications set out below carefully before making an Electronic
Application. Any reference to “you” or the “Applicant” in these 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, or an application for Placement Shares
through the website of DBS Vickers Online.
The Steps set out the actions that you must take at ATMs or the IB website of DBS Bank or the website
of DBS Vickers Online to complete an Electronic Application. The actions that you must take at the
ATMs or the IB websites of the other Participating Banks are set out on the ATM screens or the IB
website screens of the relevant Participating Banks.
If you are making an ATM Electronic Application, you must have an existing bank account with and be
an ATM cardholder of one of the Participating Banks before you can make an Electronic Application at
the ATMs of the relevant Participating Banks. An ATM card issued by one Participating Bank cannot be
used to apply for the New Shares at an ATM belonging to other 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 ATM Electronic Application. The Transaction
Record is for your retention and should not be submitted with any printed Application Form.
You must ensure that you enter your own CDP Securities Account number when using the ATM
card issued to you in your own name. If you fail to use your own ATM card or do not key in your
own CDP 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 CDP
Securities Account number when using the ATM card issued to you in your own name. Using
your own CDP Securities Account number with an ATM card which is not issued to you in your
own name will render your Electronic Application liable to be rejected.
If you are making an Internet Electronic Application, you must have an existing bank account with
and/or a User Identification (“User ID”) and a Personal Identification Number (“PIN”) given by the
relevant participating Bank or DBS Vickers Online, in the case of you applying for Placement Shares
through the website of DBS Vickers Online.
If you are making an Internet Electronic Application, you must ensure that the mailing address of your
account selected for the application is in Singapore and you must declare that the application is being
made in Singapore. In this connection, you will be asked to declare that you are in Singapore at the time
when you make the application. Otherwise, your application is liable to be rejected. Upon completion
of your Internet Electronic Application through the IB website of DBS Bank, there will be an on-screen
A-11
confirmation (“Confirmation Screen”) of the application which can be printed by you for your record.
This printed record of the Confirmation Screen is for your retention and should not be submitted with
any printed Application Form.
Your Electronic Application shall be made on the terms and subject to the conditions of this Prospectus,
including but not limited to, the terms and conditions appearing below and those set out under the
section entitled “TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND
ACCEPTANCE” on pages A-1 and A-6 of this Prospectus, as well as the Memorandum and Articles of
Association of our Company.
1.
2.
In connection with your Electronic Application for the Offer Shares or Internet Placement Shares,
you are required to confirm statements to the following effect in the course of activating the
Electronic Application:–
(a)
that you have received a copy of this Prospectus (in the case of ATM Electronic Applications
only) and have read, understood and agreed to all the terms and conditions of application
for the Offer Shares or Placement Shares and this Prospectus 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 resident status, CDP Securities Account number, and share
application amount (the “Relevant Particulars”) from your account with the relevant
Participating Bank or DBS Vickers Online, as the case may be, to our Share Registrar,
SGXST, CDP, SCCS, our Company, the Manager, the Underwriter and the Placement Agent
(the “Relevant Parties”); and
(c)
that this is your only application for the Offer Shares or Placement Shares (including Internet
Placement Shares), as the case may be, and it is made in your name and at your own risk.
Your application will not be successfully completed and cannot be recorded as a completed
transaction unless you press the “Enter” or “OK” or “Confirm” or “Yes” 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 Internet screen. By doing so, you shall be treated as signifying your
confirmation of each of the above three statements. In respect of statement 1(b) above, your
confirmation, by pressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key
or by clicking ‘’Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant
button, shall signify and shall be treated 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 that Participating Bank or DBS Vickers Online, as the case
may be, of the Relevant Particulars of your account(s) with that Participating Bank or DBS
Vickers Online to the Relevant Parties.
By making an Electronic Application you confirm that you are not applying for Offer Share
or Placement 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 shall make
only one Electronic Application and shall not make any other application for Offer Share or
Placement Shares whether at the ATMs of any Participating Bank or the IB websites of the
relevant Participating Banks or the website of DBS Vickers Online, as the case may be, or
on the Application Forms. Where you have made an application for New Shares on an
Application Form, you shall not make an Electronic Application for New Shares and vice
versa.
A-12
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 such Electronic Application will not be completed. Any Electronic Application made
at the ATM or IB website of the relevant Participating Bank which does not conform strictly to the
instructions set out in this Prospectus or on the screens of the ATM or 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 Offer
Shares, using only cash by authorising such Participating Bank to deduct the full amount
payable from your account with such Participating Bank. If you make an application to
subscribe for Internet Placement Shares through the website of DBS Vickers Online, you
must have sufficient funds in your nominated Automatic Payment account with an
Automatic Payment Facility (direct debit/credit authorisation or “GIRO”) with DBS Vickers
Online. Your application will be rejected if there are insufficient funds in your account for
DBS Vickers Online to deduct the full amount payable from your account for your
application.
4.
You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares
or Placement Shares, as the case may be, applied for as stated on the Transaction Record or the
Confirmation Screen or any lesser number of such Offer Shares or Placement Shares that may
be allotted to you in respect of your Electronic Application. In the event that our Company decides
to allot any lesser number of such Offer Shares or Placement Shares or not to allot any Offer
Shares or Placement 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 “OK” or
‘’Confirm” or “Yes” 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 Internet screen) of the number of Offer
Shares or Placement Shares applied for shall signify and shall be treated as your acceptance of
the number of Offer Shares or Placement Shares that may be allotted to you and your agreement
to be bound by the Memorandum and Articles of Association of our Company. You also irrevocably
authorize CDP to complete and sign on your behalf as transferee or renouncee any instrument of
transfer and/or other documents required for the issue or transfer of the New Shares that may be
allotted to you.
5.
We will not keep any application in reserve. Where your Electronic Application is unsuccessful, the
full amount of the application monies will be refunded (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 or if you have applied for the Internet Placement Shares through DBS Vickers
Online, by ordinary post or such other means as DBS Vickers Online may agree with you, at your
risk within 24 hours of the balloting provided that the remittance in respect of such application
which has not been presented for payment or other processes has 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 (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 or if you have applied
for the Internet Placement Shares through DBS Vickers Online, by ordinary post or such
other means as DBS Vickers Online may agree with you, at your own risk, within 14 Market
Days after the close of the Application List provided that the remittance in respect of such
A-13
application which has been presented for payment or other processes has been honoured
and the application monies have been received in the designated share issue account.
Responsibility for timely refund of application monies from unsuccessful or partially successful
Electronic Applications lies solely with the respective Participating Banks and with DBS Vickers
Online (as the case may be). Therefore, you are strongly advised to consult your Participating
Bank or DBS Vickers Online as to the status of your Electronic Application and/or the refund of any
money to you from your unsuccessful or partially successful Electronic Application, to determine
the exact number of Shares allotted to you before trading the Shares on the SGX-ST. None of the
SGX-ST, the CDP, the SCCS, the Participating Banks, DBS Vickers Online, our Company, the
Manager, the Underwriter and the 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.
If your Electronic Application is unsuccessful, no notification will be sent by the relevant
Participating Bank or DBS Vickers Online.
It is expected that successful applicants who applied for Internet Placement Shares through the
website of DBS Vickers Online will be notified of the results of their applications through the
website of DBS Vickers Online no later than the evening of the day immediately prior to the
commencement of trading of the Shares on the SGX-ST.
6.
Applicants who make ATM Electronic Applications for Offer Shares through the ATMs of the
following banks may check the provisional results of their ATM Electronic Applications as follows:–
Service
expected from
Bank
Telephone
Other Channels
Operating Hours
DBS Bank
1800-339 6666
(for POSB
account holders)
Internet Banking
www.dbs.com(1)
24 hours a day
Evening of the
balloting day
1800-111 1111
(for DBS account
holders)
OCBC
1800-363 3333
ATM/Internet Banking/
Phone Banking(2)
24 hours a day
Evening of the
balloting day
UOB Group
1800-222 2121
ATM (Other
Transactions — “IPO
Enquiry”)
24 hours a day
Evening of the
balloting day
www.uobgroup.com(1),(3)
Notes:
(1)
Applicants who have made Internet Electronic Applications through the IB websites of DBS Bank or UOB Group may
check the results of their applications through the same channels listed in the table above in relation to ATM
Electronic Applications made at the ATM of DBS Bank or UOB Group.
(2)
Applicants who have made Electronic Applications through the ATMs of OCBC Bank may check the result of their
applications through OCBC Personal Internet Banking, OCBC ATMs or OCBC Phone Banking services.
(3)
Applicants who have made Electronic Application through the ATMs or the IB website of the UOB Group may check
the results of their applications through UOB Personal Internet Banking, UOB ATMs or UOB Phone Banking services.
A-14
7.
Electronic Applications shall close at 12:00 noon on 31 October 2006 or such other time
and date as our Directors may, in consultation with the Manager, decide. All Internet
Electronic Applications must be received by 12:00 noon on 31 October 2006. Subject to
paragraph 9 below, an Internet Electronic Application is deemed to be received when it enters the
designated information system of the relevant Participating Bank or DBS Vickers Online, as the
case may be.
8.
You are deemed to have irrevocably requested and authorised our Company to:–
9.
(a)
register the Offer Shares or Placement Shares, as the case may be, allotted 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 or if you have applied
for the Internet Placement Shares through DBS Vickers Online, by ordinary post or such
other means as DBS Vickers Online may agree with you, at your risk, within 24 hours of the
balloting PROVIDED THAT the remittance in respect of such application which has been
presented for payment or such other processes has been honoured and application monies
received in the designated share issue account; and
(d)
return or refund (without interest or any share of revenue or other benefit arising therefrom)
the balance of the application monies, should your Electronic Application be accepted in part
only, by automatically crediting your bank account with your Participating Bank or if you have
applied for the Internet Placement Shares through DBS Vickers Online, by ordinary post or
such other means as DBS Vickers Online may agree with you, at your risk, within 14 Market
Days after the close of the Application List PROVIDED THAT the remittance in respect of
such application which has been presented for payment or such other processes has been
honoured and application monies received in the designated share issue account
You irrevocably agree and acknowledge that your Electronic Application is subject to risks of
electrical, electronic, technical and computer-related faults and breakdown, fires, acts of God and
other events beyond the control of the Participating Banks, DBS Vickers Online, our Company
and the Manager, and if in any such event our Company, the Manager, DBS Vickers Online 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, the Manager, DBS Vickers Online and/or the relevant Participating Bank for Offer
Shares or Placement Shares, as the case may be, applied for or for any compensation, loss or
damage.
10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be
made in his own name and without qualification. Our Company will reject any application by any
person acting as nominee.
11.
All your particulars in the records of your Participating Bank or DBS Vickers Online at the time you
make your Electronic Application shall be deemed to be true and correct and your Participating
Bank, DBS Vickers Online and any other Relevant Parties shall be entitled to rely on the accuracy
thereof. If there has been any change in your particulars after making your Electronic Application,
you shall promptly notify your Participating Bank or DBS Vickers Online (as the case may be).
A-15
12. You should ensure that your personal particulars as recorded by both CDP and the relevant
Participating Bank or DBS Vickers Online (as the case may be) 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 will be sent to
your address last registered with CDP.
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 and DBS Vickers Online acting as agents of our Company, at the
ATMs and the IB websites of the relevant Participating Banks and at the website of DBS
Vickers Online:–
(i)
your Electronic Application is irrevocable; and
(ii)
your Electronic Application, the acceptance by our Company 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)
none of our Company, the Manager, CDP, the Participating Banks or DBS Vickers Online
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 due to breakdowns or
failure of transmission, delivery or communication facilities or any risks referred to in
paragraph 9 above or to any cause beyond their respective controls;
(c)
in respect of the Offer Shares or the Placement Shares, as the case may be, for which 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;
(d)
you will not be entitled to exercise any remedy for rescission for misrepresentation at any
time after acceptance of your application; and
(e)
reliance is placed solely on information contained in this Prospectus and that none of our
Company, the Manager, the Underwriter, the Placement Agent nor any other person involved
in the Invitation shall have any liability for any information not so contained.
A-16
Steps for ATM Electronic Applications for Offer Shares through ATMs of DBS Bank (including
POSB)
Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Bank.
For illustration purposes, the steps for making an ATM Electronic Application through a DBS Bank or
POSB ATM are shown below. Certain words appearing on the screen are in abbreviated form (“A/c”,
“amt”, “appln”, “&”, “I/C”, “SGX” and “No.” refer to “Account”, “amount”, “application”, “and”, “NRIC”,
“SGX-ST” and “Number” respectively). Instructions for ATM Electronic Applicationson the ATM screens
of Participating Banks (other than DBS Bank (including POSB)), may differ slightly from those
represented below.
Steps
1.
Insert your personal DBS Bank or POSB ATM card.
2.
Enter your Personal Identification Number.
3.
Select “CASHCARD & MORE SERVICES”.
4.
Select “ESA-IPO SHARE/INVESTMENTS”.
5.
Select “ELECTRONIC SECURITY APPLN (IPOS/BOND/ST-NOTES/SECURITIES)”.
6.
Read and understand the following statements which will appear on the screen:–
7.
•
THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR
ACCOMPANIED BY, A COPY OF THE PROSPECTUS/OFFER INFORMATION
STATEMENT/DOCUMENT OR PROFILE STATEMENT (AND IF APPLICABLE, A COPY OF
THE REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/OFFER INFORMATION
STATEMENT/DOCUMENT OR PROFILE STATEMENT) WHICH CAN BE OBTAINED
FROM ANY DBS/POSB BRANCH IN SINGAPORE AND, WHERE APPLICABLE, THE
VARIOUS PARTICIPATING BANKS DURING BANKING HOURS, SUBJECT TO
AVAILABILITY.
•
(IN THE CASE OF SECURITIES OFERING THAT IS SUBJECT TO A PROSPECTUS/
OFFER INFORMATION STATEMENT/DOCUMENT REGISTERD WITH THE MONETARY
AUTHORITY OF SINGAPORE) ANYONE WISHING TO ACQUIRE THESE SECURITIES
(OR UNITS OF SECURITIES) SHOULD READ THE PROSPECTUS/OFFER
INFORMATION
STATEMENT/DOCUMENT
OR
PROFILE
STATEMENT
(AS
SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORE SUBMITTING HIS
APPLICATION WHICH WILL NEED TO BE MADE IN THE MANNER SET OUT IN THE
PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT OR PROFILE
STATEMENT (AS SUPPLEMENTED OR REPLACED, IF APPLICABLE). A COPY OF THE
STATEMENT, AND IF APPLICABLE, A COPY OF THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT
OR PROFILE STATEMENT HAS BEEN LODGED WITH AND REGISTERED BY THE
MONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY FOR
ITS OR THEIR CONTENTS.
•
Press the “ENTER” key to confirm that you have read and understood.
Select “TEXPACK” to display details.
A-17
8.
9.
Press the “ENTER” key to acknowledge:–
•
YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF APPLICATION AND
(WHERE APPLICABLE) THE PROSPECTUS, OFFER INFORMATION STATEMENT,
DOCUMENT, PROFILE STATEMENT, REPLACEMENT OR SUPPLEMENTARY
STATEMENT, NOTICE AND/OR CIRCULAR.
•
YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NUMBER, ADDRESS,
NATIONALITY, CDP SECURITIES ACCOUNT NUMBER, CPF INVESTMENT ACCOUNT
NUMBER AND SECURITY APPLICATION AMOUNT FROM YOUR BANK ACCOUNT(S) TO
SHARE REGISTRARS, SGX, SCCS, CDP, CPF AND THE ISSUER.
•
FOR FIXED AND MAXIMUM PRICE SECURITIES APPLICATION, THIS IS YOUR ONLY
APPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWN RISK.
•
THE MAXIMUM PRICE FOR EACH SECURITY IS PAYABLE IN FULL ON APPLICATION
AND SUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.
•
FOR TENDER SECURITIES APPLICATION, THIS IS YOUR ONLY APPLICATION AT THE
SELECTED TENDER PRICE AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWN
RISK.
•
YOU ARE NOT A US PERSON AS REFERRED TO IN (WHERE APPLICABLE) THE
PROSPECTUS, OFFER INFORMATION STATEMENT, DOCUMENT, PROFILE
STATEMENT,
REPLACEMENT
OR
SUPPLEMENTARY
PROSPECTUS/OFFER
INFORMATION STATEMENT/DOCUMENT/PROFILE STATEMENT, NOTICE AND/OR
CIRCULAR.
Select your nationality.
10. Select your payment method.
11.
Select the DBS Bank account (AutoSave/Current/Savings/Savings Plus) or the POSB account
(current/savings) from which to debit your application monies.
12. Enter the number of securities you wish to apply for using cash.
13. Enter or confirm (if your CDP Securities Account number has already been stored in the DBS
Bank’s records) your own 12-digit CDP Securities Account number. (Note: This step will be
omitted automatically if your CDP Securities Account Number has already been stored in DBS
Bank’s record.)
14. Check the details of your securities application, your CDP Securities Account number, number of
securities and application amount on the screen and press the “ENTER” key to confirm your
application.
15. Remove the Transaction Record for your reference and retention only.
A-18
Steps for Internet Electronic Applications for Offer Shares through the IB website of DBS Bank
For illustrative purposes, the steps for making an Internet Electronic Application through the DBS Bank
IB website is shown below. Certain words appearing on the screen are in abbreviated form (“A/C”,
“amt”, “&”, “I/C”, “SGX” and “No.” refer to “Account”, “amount”, “and”, “NRIC”, “SGX-ST” and “Number”
respectively).
Steps
1.
Click on to DBS Bank website (www.dbs.com)
2.
Login to Internet banking.
3.
Enter your User ID and PIN.
4.
Select “Electronic Security Application (ESA)”.
5.
Click “Yes” to proceed and to warrant, inter alia, that you are currently in Singapore, you have
observed and complied with all applicable laws and regulations and that your mailing address for
DBS Internet Banking is in Singapore and that you are not a U.S. person (as such term is defined
in Regulation S under the United Securities Act of 1933, amended).
6.
Select your country of residence and click “I confirm”.
7.
Click on “TEXPACK” and click “Submit”.
8.
Click “I Confirm” to confirm, inter alia,:
(a)
You have read, understood and agreed to all terms of this application and the Prospectus/
Document or Profile Statement and if applicable, the Supplementary or Replacement
Prospectus/Document or Profile Statement.
(b)
You consent to disclose your name, I/C or Passport number, address, nationality, CDP
Securities Account number, CPF Investment Account number (if applicable) and securities
application amount from your DBS/POSB Account(s) to registrars of securities, SGX, SCCS,
CDP, CPF Board and issuer/vendor(s).
(c)
You are not a US Person (as such term is defined in Regulation S under the United States
Securities Act of 1933, as amended).
(d)
You understand that the securities mentioned herein have not been and will not be
registered under the U.S. Securities Act of 1933 as amended (the “U.S. Securities Act”) or
the securities laws of any State of the United States and may not be offered or sold in the
United States or to, or for the account or benefit of any “U.S. person” (as defined in
Regulation S under the U.S. Securities Act) except pursuant to an exemption from or in a
transaction subject to, the registration requirements of the U.S. Securities Act and applicable
State security laws. There will be no public offer of the securities mentioned herein in the
United States. Any failure to comply with this restriction may constitute a violation of the
United States securities laws.
(e)
This application is made in your own name and at your own risk.
(f)
For FIXED/MAX price securities application, this is your only application. For TENDER price
securities application, this is your only application at the selected tender price.
A-19
9.
Fill in details for share application and click “Submit”.
10. Check the details of your securities application, your NRIC or passport number and click “OK” to
confirm your application.
11.
Print Confirmation Screen (optional) for your reference & retention only.
Steps for Internet Electronic Applications for Placement Shares through the website of DBS
Vickers Online
For illustrative purposes, the steps for making an application through the website of DBS Vickers Online
is shown below:–
Steps
1.
Access the website at www.dbsvonline.com.
2.
Login with user ID and password.
3.
Click on IPO Centre hyperlink to go to the IPO Section.
4.
Click on the IPO issue hyperlink.
5.
Click “Yes” to represent and warrant that, inter alia, that you are in Singapore, you have observed
and complied with all applicable laws and regulations, you have a mailing address in Singapore,
you have read, understood and agreed to the “APPLICATION TERMS AND CONDITIONS” and
the “GENERAL TERMS AND DISCLAIMERS” and you are not a U.S. Person (as such term is
defined in Regulation S under the United States Securities Act of 1933, as amended).
6.
Confirm the IPO applying for and its details by clicking on the “Next” button.
7.
Click “Yes, I have read the above terms and conditions and wish to subscribe” and click “Submit”
to confirm, inter alia:–
(a)
You have read, and agreed to the terms and conditions set out in the Prospectus/Document
or Profile Statement including the notes and instructions for the completion of this
Application Form and that this application has been made in accordance with the
Prospectus/Document or Profile Statement and such notes and instructions.
(b)
You have read and understood the disclaimers.
(c)
You have read, understood and agreed to the “APPLICATION TERMS AND CONDITIONS”
and the “GENERAL TERMS AND DISCLAIMERS”.
(d)
You consent to the disclosure of your name, NRIC or passport number, address, nationality
and permanent resident status, CDP Securities Account number, CPF Investment Account
number (as applicable) and share application amount from your account with DBS Vickers
Online to the Share Registrar, SCCS, SGX-ST, CDP, CPF (if applicable), Issuer and the
Manager.
(e)
This application is your only application for the Shares and it is made in your own name and
at your own risk.
(f)
This application is made in Singapore.
A-20
(g)
You understand that these are not deposits or other obligations of or guaranteed or insured
by DBS Vickers Online and are subject to investment risks, including the possible loss of the
principal amount invested.
(h)
You declare that (a) you are not under 21 years of age, (b) you are not a corporation, sole
proprietorship, partnership, or any other business entity, (c) you are not an undisclosed
bankrupt, (d) you are in Singapore, (e) you have a mailing address in Singapore and (f) you
are not a US Person (within the meaning of Regulation S under the United States Securities
Act of 1933, as amended).
8.
Fill in amount of share applied for and preferred payment mode, then click “Submit”.
9.
Check and verify details of your share application and your personal particulars on the screen.
10. Enter your password and click “Submit” to continue.
11.
Click on “Application Status” to check your IPO application details.
12. Print page for your reference and retention only.
A-21
This page has been intentionally left blank.
APPENDIX B: RETIREMENT AND RESIGNATION SCHEME FOR DIRECTORS
We have established a Retirement and Resignation Scheme for the directors of our subsidiaries (but
not our Company) pursuant to which benefits may be payable upon cessation of services as a director
whether by retirement or resignation. Alternatively, the board of the relevant subsidiary has the
discretion to pay the whole or part of the benefits accrued to each director at the end of every ten years
of service. The benefits payable are spelt out in the Retirement and Resignation Scheme and deemed
to accrue from year to year. Any payment in connection therewith shall be determined by the boards of
directors of the respective subsidiaries in their absolute discretion. Our Independent Directors do not
participate in the Retirement and Resignation Scheme.
The following are the draft rules of the Retirement and Resignation Scheme to be adopted by our
subsidiaries.
RULES OF THE DIRECTORS’ RETIREMENT AND RESIGNATION SCHEME
1.
Name of the Scheme
This scheme shall be called the “Directors’ Retirement and Resignation Scheme” (“the Scheme”).
2.
3.
Definitions
“Board”
The board of directors for the time being of the Company.
“Director”
An executive, non-executive or working director of the Company
“Company”
[Name of Company]
“RM”
Ringgit Malaysia
Objectives
The Scheme is an incentive scheme to reward and motivate the Directors with the ultimate
objective of increasing efficiency, productivity and profitability of the Company.
4.
Eligibility
4.1. Only Directors of the Company are eligible for the Scheme.
4.2 Subject to Rule 7, any Director holding two or more offices in the Company, such as
Chairman and Managing Director, shall be entitled to only one set of benefits with respect
to that Company, pegged at the highest benefit.
4.3 Directors must hold office in the Company for more than 6 consecutive months from the date
of his/her appointment or re-appointment, as the case may be, in order to qualify for any
benefits under the Scheme. A Director who holds office for 6 consecutive months or less
from the date of his/her appointment or re-appointment, as the case may be, is not entitled
to any benefits under the Scheme.
5.
Operation of the Scheme
5.1 Subject to Rules 4 and 7, each Director is entitled to the benefits set out in Annex A.
5.2 For the purposes of the Scheme, subject to Rule 5.3, the year of service will begin from the
date which the Director is appointed or re-appointed to the office, as the case may be.
B-1
5.3 For directors appointed before the first increase in the capital of the Company, the
calculation of benefits shall commence from the date of the first increase in the capital of the
Company. For Directors appointed after such first increase in the capital of the Company, the
calculation of benefits shall begin from their respective dates of appointment or reappointment, as the case may be.
5.4 Subject to the approval of the shareholders of the Company at a general meeting, the
applicable class as set out in Annex A, to determine the applicable benefit under the
Scheme, for each financial year (‘said Financial Year’) will be based on the shareholders’
funds of the Company as shown in the Company’s annual audited accounts for the financial
period immediately preceding the said Financial Year or such other financial year as may be
approved by the shareholders of the Company and shall take effect on 1 January of the said
Financial Year or such other date as may be approved by the shareholders of the Company.
5.5 In the event of any change in appointment, change in the applicable class as set out in
Annex A of the Company, cessation of service by a Director and cessation of business of the
Company, for the purpose of calculation of length of service, any period of more than 6
months shall be rounded up to a year and any period of 6 months or less shall be ignored
in such calculation.
5.6 For the avoidance of doubt and for illustration, if a Director has held office since 30 June
2000, he would be deemed to have served three years if he resigns on 31 August 2003 but
would be deemed to have served four years if he resigns on 1 January 2004.
5.7 For avoidance of doubt and for illustration, when the length of service is rounded up to a year
as set out in Rule 5.5 or to determine the applicable class for the calculation of the benefits
in any year of service, the applicable class for that year in question shall be the class in
which the period of at least 6 months falls in.
For example, if a Managing Director has held office since 30 May 2000, he would be deemed
to have served four years if he resigns as a Director on 30 December 2003. If the applicable
class for the year 2000 is Class B, years 2001 to 2002 is Class A and the year 2003 is Class
A1, the applicable class for the purposes of the calculation of benefits will be as follows:
*
Service dates
Period of Service
Applicable Class
Amount payable
(RM)
30 May 2000 to
29 May 2001
1 year
B
6,000
30 May 2001 to
29 May 2003
2 years
A
2 × 12,000
30 May 2003 to
30 December 2003
1 year*
A1
18,000
Total
4 years
–
48,000
rounded up to one year pursuant to Rule 5.5
B-2
6.
Termination of Benefits
In the event of the cessation of business of the Company, the benefits under the Scheme shall
cease to accrue for the Company. Any benefits accrued up to the date on which the Company
ceases business shall be paid to the Directors, subject to Rule 7. The Board shall have full and
absolute discretion in determining the date the Company shall be deemed to have ceased
business in the event of any ambiguity.
7.
Discretion of the Board
7.1 Notwithstanding any rules herein, the payment to any Director or ex-Director under this
Scheme shall be determined by the Board at their absolute discretion.
7.2 The Board may, in its absolute discretion, pay the whole or any part of the benefits accrued
to each Director at the end of every 10 years of continuous service. Upon the resignation or
retirement of each Director, all benefits accrued under the Scheme, less any payments
made previously under the Scheme, may be payable to the Director, subject always to Rule
7.1. Such payment may be made as soon as practicable.
7.3 The Board may, in its absolute discretion, pay to any Director or his next-of-kin any benefits
accrued under the Scheme if the Director shall cease to hold office due to death or any other
reason.
7.4 A Director shall not be involved in the deliberation relating to and the approval of any
payment to be made to him under this Scheme.
8.
Miscellaneous
8.1 Where necessary, all payments to be made under this Scheme shall be subject to the final
approval of the shareholders of the Company and/or its holding company and/or its ultimate
holding company.
8.2 Notwithstanding anything else in this Scheme, every payment under this Scheme shall be
subject to the condition precedent that such payment would not 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 any relevant country, and any payment made in breach of such
condition shall be void ab initio and the Director shall not have any claim whatsoever against
the Company.
8.3 It shall be a condition for the participation of any Director under this Scheme that the Scheme
shall not confer on any Director or ex-Director (as the case may be) any legal or equitable
right against the Company or any of its affiliates directly or indirectly or give rise to any cause
of action at law or in equity against the Company and/or any its affiliates.
B-3
ANNEX A: SCHEME OF PAYMENT OF BENEFITS
Benefits payable per year of service
Class
Shareholders’
fund of
Company
(RM)
Executive Chairman/
Chairman/Executive Adviser/
Chief Executive Officer/Chief
Operating Officer/President/
Executive Vice President/Vice
President/Managing Director/
Deputy Managing Director
(RM)
Executive Director
/Working Director
(RM)
Non Executive
Director
(RM)
A3
Above
100,000,000
30,000
20,000
10,000
A2
50,000,001–
100,000,000
24,000
16,000
8,000
A1
25,000,001–
50,000,000
18,000
12,000
6,000
A
10,000,001–
25,000,000
12,000
8,000
4,000
B
5,000,001–
10,000,000
6,000
4,000
2,000
C
5,000,000 or
below
3,000
2,000
1,000
By way of illustration only, if a managing director retires after 10 years of service where the Company
has graduated for every year from class C to class A3 and remaining in class A3 from the 7th year
onwards, he would be entitled (subject to the approval of the relevant of directors) to the following
benefits on his retirement:
Year
Class
1
C
3,000
2
B
6,000
3
A
12,000
4
A1
18,000
5
A2
24,000
6
A3
30,000
7
A3
30,000
8
A3
30,000
9
A3
30,000
10*
A3
30,000
TOTAL
Eligibility (RM)
213,000
B-4
APPENDIX C: THE REPORT FROM THE REPORTING ACCOUNTANTS IN
RELATION TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
OF TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS SUBSIDIARIES
FOR THE YEARS ENDED 31 DECEMBER 2003, 2004 AND 2005
AND ITS SUBSIDIARIES
REGISTRATION NUMBER. 200308296H
Financial Statements
Years ended 31 December 2003, 2004 and 2005
Financial Statements Index
Page Number
Independent Auditors’ Report
Balance Sheets
Consolidated Profit and Loss Accounts
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Financial Statements
C-1
C-2
C-3
C-4
C-5
C-7
INDEPENDENT AUDITORS’ REPORT
28 September 2006
The Board of Directors
9 Raffles Place
#32-00 Republic Plaza
Singapore 048619
Dear Sirs
We have audited the accompanying financial statements of Texchem-Pack Holdings (S) Ltd. for the
years ended 31 December 2003, 2004 and 2005 as set out on pages C-2 to C-53. These financial
statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by the directors, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements of the Group present fairly, in all material respects,
the state of affairs of the Group as at 31 December 2003, 2004 and 2005 and of the results, changes
in equity and cash flows of the Group for the years ended 31 December 2003, 2004 and 2005 in
accordance with Singapore Financial Reporting Standards.
This report has been prepared for inclusion in the Prospectus to be issued by Texchem-Pack Holdings
(S) Ltd. No audited financial statements of the Company or its subsidiaries have been prepared for any
period subsequent to 31 December 2005.
Yours faithfully
KPMG
Singapore
KPMG
Malaysia
Tan Yee Peng
Partner-in-charge
Ooi Kok Seng
Partner-in-charge
C-1
TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS SUBSIDIARIES
BALANCE SHEETS
AS AT 31 DECEMBER 2003, 2004 AND 2005
Note
2003
RM’000
31 December
2004
RM’000
2005
RM’000
3
4
5
6
66,055
5,829
115
−
75,452
5,772
119
172
77,736
5,741
119
1,035
71,999
81,515
84,631
22,053
32,703
7,331
25,783
40,742
6,354
20,942
48,719
8,760
62,087
72,879
78,421
134,086
154,394
163,052
20,674
8,429
20,674
7,011
20,674
12,909
Minority interests
29,103
1,478
27,685
1,487
33,583
1,644
Total equity
30,581
29,172
35,227
659
34,791
3,988
538
32,480
4,178
16,046
10,945
3,561
39,438
37,196
30,552
18,624
45,219
224
28,812
58,078
1,136
45,853
49,483
1,937
64,067
88,026
97,273
Total liabilities
103,505
125,222
127,825
134,086
154,394
163,052
Non-current assets
Intangible assets
Deferred tax assets
Current assets
Inventories
7
8
10
Total assets
Share capital
Reserves
11
12
Other payables
13
14
6
Current liabilities
Current tax payable
13
14
The accompanying notes form an integral part of these financial statements.
C-2
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
YEARS ENDED 31 DECEMBER 2003, 2004 AND 2005
31 December
Note
2003
2004
2005
RM’000
RM’000
RM’000
Revenue
131,546
136,914
201,726
Cost of sales
(92,490)
(102,388)
(151,640)
Gross profit
39,056
34,526
50,086
4,183
3,924
7,535
(7,017)
(6,969)
(14,472)
(24,516)
(22,138)
(25,549)
(769)
(936)
(614)
(3,512)
(4,269)
(4,675)
12,311
Other operating expenses
Finance costs
15
7,425
4,138
Income tax expense
17
(1,885)
(1,328)
5,540
2,810
11,519
5,002
2,341
11,077
538
469
442
5,540
2,810
11,519
5.59
2.61
12.37
Profit for the year
(792)
Attributable to:
Minority interests
Profit for the year
Earnings per share (sen) — basic and diluted
18
C-3
APPENDIX C: THE REPORT FROM THE REPORTING ACCOUNTANTS IN RELATION TO THE AUDITED
CONSOLIDATED FINANCIAL STATEMENTS OF TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS SUBSIDIARIES FOR
THE YEARS ENDED 31 DECEMBER 2003, 2004 AND 2005
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
At 1 January 2003
Profit for the year
Translation differences relating to financial statements of
foreign subsidiaries
Share
capital
RM’000
20,674
–
Statutory
reserve
RM’000
287
–
Revaluation
reserve
RM’000
3,148
–
Currency
translation Accumulated
reserve
profits
RM’000
RM’000
(532)
2,027
–
5,002
Total
attributable
to equity
holders of
the parent
RM’000
25,604
5,002
Minority
interests
RM’000
1,338
538
C-4
–
–
–
678
–
678
Total recognised income and expense for the year
–
–
–
678
5,002
5,680
507
6,187
Tax exempt interim dividends
Transfer to statutory reserve
–
–
–
569
–
–
–
–
(2,181)
(569)
(2,181)
–
(367)
–
(2,548)
–
20,674
–
856
–
3,148
–
146
–
4,279
2,341
29,103
2,341
–
–
–
335
–
335
–
–
–
335
2,341
2,676
432
3,108
–
–
–
–
(4,094)
(4,094)
(423)
(4,517)
20,674
–
856
–
3,148
–
481
–
2,526
11,077
27,685
11,077
–
–
–
(789)
–
–
–
–
(789)
11,077
10,288
439
10,727
Transfer to statutory reserve
–
–
102
–
–
–
(102)
(4,390)
–
(4,390)
–
(282)
–
(4,672)
20,674
958
3,148
9,111
33,583
At 31 December 2003
Profit for the year
At 31 December 2004
Profit for the year
At 31 December 2005
–
–
(308)
(789)
(31)
Total
RM’000
26,942
5,540
1,478
469
(37)
1,487
442
(3)
1,644
647
30,581
2,810
298
29,172
11,519
(792)
35,227
CONSOLIDATED STATEMENTS OF CASH FLOWS
31 December
2003
2004
2005
RM’000
RM’000
RM’000
7,425
4,138
12,311
3,512
4,269
4,675
Operating activities
Adjustments for:
Finance costs
Interest income
(67)
Provision for retirement benefits
Depreciation of property, plant and equipment
Amortisation of intangible assets
Gain on disposal of property, plant and equipment
Property, plant and equipment written off
(5)
(11)
273
160
223
8,033
9,288
11,674
495
634
273
(399)
(287)
(143)
228
–
651
19,500
18,197
29,653
Inventories
(7,275)
(3,579)
4,613
(6,207)
(8,849)
(8,936)
3,996
8,187
10,048
Cash generated from operations
10,014
13,956
35,378
Income taxes paid
(1,595)
(457)
(979)
(252)
(496)
(286)
Operating profit before working capital changes
Changes in working capital:
Retirement benefits paid
Cash flows from operating activities
8,167
13,003
34,113
67
5
11
Investing activities
Interest received
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of property, plant and equipment
Cash flows from investing activities
(14,207)
(18,060)
(13,063)
(245)
(577)
(242)
718
877
440
(13,667)
(17,755)
C-5
(12,854)
CONSOLIDATED STATEMENTS OF CASH FLOWS
31 December
Note
2003
2004
2005
RM’000
RM’000
RM’000
Interest paid
(3,512)
(4,269)
(4,545)
Repayment of bank loans
(2,175)
(7,896)
(29,828)
Proceeds from bank loans
36,906
6,535
3,445
(17,914)
11,943
(4,096)
(2,548)
(4,050)
(2,610)
(526)
(537)
(639)
Financing activities
(Repayment)/Drawdown of other bank borrowings,
net
Dividends paid
Repayment of finance lease liabilities
Advances from holding company
Cash flows from financing activities
Net (decrease)/increase in cash and cash
equivalents
(4,824)
2,475
19,135
5,407
4,201
(19,138)
(93)
Cash and cash equivalents at beginning of the year
4,636
Effect of exchange rate changes on balances held
in foreign currency
(109)
Cash and cash equivalents at end of the year
10
4,434
(551)
4,434
(93)
3,790
C-6
2,121
3,790
(18)
5,893
NOTES TO THE FINANCIAL STATEMENTS
These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the directors on 28 September 2006.
1.
Background and Basis of Preparation
These financial statements have been prepared for inclusion in the Prospectus of Texchem-Pack
Holdings (S) Ltd. (the “Company” or “Texpack Holdings”) in connection with the invitation by the
Company.
(a)
Domicile and Activities
The Company was incorporated in the Republic of Singapore on 27 August 2003 and has its
registered office at 9 Raffles Place, #32-00 Republic Plaza, Singapore 048619. On 10 September
2004, the Company changed its name from Texchem-Pack Holdings (S) Pte Ltd to Texchem-Pack
Holdings (S) Ltd.
The principal activities of the Company are those relating to investment holding.
The immediate and ultimate holding company during the financial years was Texchem Resources
Bhd (“TRB”), incorporated in Malaysia and listed on the Main Board of the Bursa Malaysia
Securities Berhad.
(b)
The Restructuring Exercise
(i)
Incorporation of Texpack Holdings
On 27 August 2003, Texpack Holdings was incorporated in the Republic of Singapore with
an authorised share capital of S$100,000,000 divided into 100,000,000 ordinary shares of
S$1 each. The purpose of incorporating Texpack Holdings was to form a holding company
to hold the companies which would form the Group.
At the date of incorporation, 2 ordinary shares of S$1 each were issued at par for cash.
(ii)
Disposal of Texchem-Pack (Penang) Sdn. Bhd. (“Texpack (Penang)”)
On 8 September 2003, TRB and Texchem-Pack (M) Bhd. (“Texpack”) entered into a
conditional share sale agreement pursuant to which TRB will acquire all the issued and paid
up ordinary shares in Texpack (Penang), an inactive company and Texpack’s wholly-owned
subsidiary for a cash consideration of RM15,000. The consideration was arrived at on a
willing-buyer-willing-seller basis and based on the unaudited net tangible assets of Texpack
(Penang) as at 30 June 2003.
C-7
(iii)
Capitalisation of loan from TRB
On 30 August 2004, Texpack’s share capital was increased from 18,000,000 ordinary shares
of RM1.00 each to 25,000,000 ordinary shares of RM1.00 each through the capitalisation of
the loan of RM7,000,000 from TRB.
(iv) Acquisition of the share capital of Texpack
On 6 September 2004, the Company acquired all the issued and paid-up capital of Texpack
comprising 25,000,000 ordinary shares of RM1.00 each from TRB by way of a share swap,
involving the allotment and issue of 7,499,998 new ordinary shares of S$1.00 each.
(v)
Incorporation of Texchem Polymers Sdn. Bhd. (“Texpolymers”)
On 10 January 2005, the Company incorporated a wholly-owned subsidiary, Texpolymers,
in Malaysia.
(vi) Acquisition of Eye Graphic Sdn. Bhd. (“Eye Graphic”) and its subsidiary
On 22 December 2005, TRB and the Company entered into a conditional share sale
agreement pursuant to which the Company will acquire 1,020,000 ordinary shares
representing 51% of the issued and paid-up share capital of Eye Graphic from TRB, for a
consideration of RM3,274,000. The consideration was satisfied by the allotment and issue
of 1,455,000 new ordinary shares of S$1.00 each in the Company.
Upon completion of the above Restructuring Exercise, the Company has the following
subsidiaries:
Name of Company
Principal Activities
Date and Place of
Incorporation/
Business
Effective Equity
held by the Group
— 31 December —
(“Texpack”) and its
subsidiaries:–
2003
%
2004
%
2005
%
Manufacture and sale of
thermoformed packaging
products and extruded
plastic sheets, and
investment holding
18 January 1979,
Malaysia
100
100
100
Texchem-Pack (Johor) Sdn.
Bhd. (“Texpack (Johor)”)
products
2 August 1993,
Malaysia
100
100
100
Ltd. (“Texpack (Thailand)”)
products and precision
injection moulded trays/
parts and mould and
tooling
6 October 1997,
Thailand
100
100
100
C-8
Name of Company
Principal Activities
Date and Place of
Incorporation/
Business
Effective Equity
held by the Group
— 31 December —
2003
%
2004
%
2005
%
Sdn. Bhd. (“TEP”)
shipping rails, profiles and
precision injection
moulded trays/parts and
embossed carrier tapes
31 December 1979,
Malaysia
100
100
100
(“Texpack (KL)”) and its
subsidiary:
expanded polystyrene
products, heavy-duty triple
wall corrugated carton
products and
products, and investment
holding
6 April 1989,
Malaysia
100
100
100
expanded polystyrene
products and heavy-duty
triple wall corrugated
carton products and
parts and provision of
packaging product design
services
29 October 2002,
Vietnam
100
100
100
products and precision
injection moulded trays/
parts
29 May 2002,
People’s Republic
of China
100
100
100
Trade, design,
manufacture and sale of
flexo photopolymer
printing plates and
investment holding
22 October 1990,
Malaysia
51
51
51
Design, manufacture and
sale of flexographic
printing plates
28 April 2000,
Vietnam
51
51
51
extruded plastic sheets
and polymer compounds
and providing consultation
services
10 January 2005,
Malaysia
–
–
100
Texchem-Pack (Vietnam) Co.,
Ltd. (“Texpack (Vietnam)”)
(“Texpack (Wuxi)”)
Eye Graphic Sdn. Bhd. (“Eye
Graphic”) and its subsidiary:
(“Eye Graphic (Vietnam)”)
(“Texpolymers”)
C-9
(c)
Auditors
The following firms of Certified Public Accountants are the auditors of the statutory audited
financial statements of the companies in the Group as of and for the three financial years ended
31 December 2003, 2004 and 2005:
Name of Company
Auditors/Professional Bodies
Financial Year/Period
KPMG
Institute of Certified Public
Accountants of Singapore
For the financial years ended
31 December 2004 and 2005
KPMG
Malaysian Institute of
Accountants
31 December 2003, 2004 and
2005
KPMG
Accountants
2005
Texchem-Pack (Thailand) Co., Ltd.
KPMG Phoomchai Audit Ltd.
The Institute of Certified
Accountants and Auditors of
Thailand
2005
Sdn. Bhd.
KPMG
Accountants
2005
KPMG
Accountants
2005
KPMG Limited
The Accounting Policy
Department, Ministry of Finance
For the financial period from
date of incorporation to 31
December 2003 and years
ended 31 December 2004 and
2005
Jiangsu Fangzheng Certified
Public Accountants
The Chinese Institute of Public
Accountants
date of incorporation to 31
December 2003
Wuxi Dazhong Certified Public
Accountants Co., Ltd
The Chinese Institute of Public
Accountants
C-10
Name of Company
Auditors/Professional Bodies
Financial Year/Period
Horwath
Accountants
KPMG
Accountants
For the financial year ended
31 December 2005
KPMG Limited
The Accounting Policy
Department, Ministry of Finance
2005
KPMG
Accountants
date of incorporation to
31 December 2005
The statutory audited financial statements of the subsidiaries as of and for financial years ended
31 December 2003, 2004 and 2005 were not subject to any qualifications, modifications or
disclaimers.
For the purpose of inclusion in the consolidated financial statements, the financial statements of
Texchem-Pack (Wuxi) Co., Ltd. for the years ended 31 December 2003, 2004 and 2005, have
been prepared in accordance with Singapore Financial Reporting Standards and audited by
KPMG Singapore in accordance with Singapore Standards on Auditing.
2.
Summary of Significant Accounting Policies
2.1 Basis of preparation
The financial statements are prepared in accordance with Singapore Financial Reporting
Standards (FRS) including related Interpretations promulgated by the Council on Corporate
Disclosure and Governance.
In 2005, the Company adopted the following new/revised FRSs which are relevant to its
operations:
FRS 1 (revised)
Presentation of Financial Statements
FRS 2 (revised)
Inventories
FRS 8 (revised)
Accounting Policies, Changes in Accounting Estimates and Errors
FRS 10 (revised)
Events After the Balance Sheet Date
FRS 16 (revised)
Property, Plant and Equipment
FRS 17 (revised)
Leases
FRS 21 (revised)
The Effects of Changes in Foreign Exchange Rates
FRS 24 (revised)
Related Party Disclosures
C-11
FRS 27 (revised)
Consolidated and Separate Financial Statements
FRS 32 (revised)
Financial Instruments: Disclosure and Presentation
FRS 33 (revised)
Earnings Per Share
FRS 36 (revised)
Impairment of Assets
FRS 38 (revised)
Intangible Assets
FRS 39
Financial Instruments: Recognition and Measurement
FRS 103
Business Combinations
The effects of adopting the new/revised FRSs in 2005 are set out in Note 19.
The financial statements are presented in Ringgit Malaysia (“RM”) and rounded to the
nearest thousand, unless stated otherwise. They are prepared on the historical cost basis
except for certain financial assets and financial liabilities which are stated at fair value.
The preparation of financial statements in conformity with FRSs requires management to
make judgements, estimates and assumptions that affect the application of policies and
reported amounts of assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis of making the
judgements about carrying amounts of assets and liabilities that are not readily apparent
from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised, if the
revision affects only that period, or in the period of the revision and future periods, if the
revisions affects both current and future periods.
2.2 Functional currency
The functional currency of the Company is RM as the directors are of the opinion that RM
reflects the economic substance of the underlying events and circumstances relevant to the
Company.
2.3 Consolidation
Subsidiaries are companies controlled by the Company. Control exists when the Company
has the power, directly or indirectly, to govern the financial and operating policies of a
company so as to obtain benefits from its activities.
Investments in subsidiaries are stated in the Company’s balance sheet at cost less
impairment losses. The financial statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that control ceases.
C-12
Restructuring of companies under common control
For acquisition of subsidiaries under common control, the identifiable assets and liabilities
were accounted for at their historical costs, in a manner similar to the pooling-of-interests
method of consolidation.
For such acquisitions accounted for in a manner similar to the pooling-of-interests method
of consolidation, the prior year figures of the Group have been restated to include the
balances relating to these common control related companies.
The acquisitions of Texpack and Eye Graphic were accounted for using the pooling-ofinterests method of consolidation.
2.4 Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated at foreign exchange rates ruling at the
dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are translated into RM at foreign exchange rate ruling at that date.
Foreign exchange differences arising from translation are recognised in the profit and loss
account. Non-monetary assets and liabilities measured at cost in a foreign currency are
translated using exchange rates at the date of the transaction. Non-monetary assets and
liabilities measured at fair value in foreign currencies are translated to RM at foreign
exchange rates ruling at the dates the fair value was determined.
Net investment in a foreign operation
Exchange differences arising from monetary items that in substance form part of the
Company’s net investment in a foreign operation, are recognised in the Company’s profit
and loss account. Such exchange differences are reclassified to equity in the consolidated
financial statements only when the loan is denominated in either the functional currency of
the Company or the foreign operation. Deferred exchange differences are released to the
profit and loss account upon disposal of the investment.
C-13
Foreign operations
Assets and liabilities of foreign operations, including goodwill and fair value adjustments
arising on the acquisition of foreign operations, are translated to RM for consolidation at the
rates of exchange ruling at the balance sheet date. Revenues and expenses of foreign
operations are translated at exchange rates ruling at the dates of the transactions. Exchange
differences arising on translation are recognised directly in equity. On disposal, accumulated
translation differences are recognised in the consolidated profit and loss account as part of
the gain or loss on sale.
2.5 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and
impairment losses.
Property, plant and equipment acquired through finance leases are capitalised at the lower
of its fair value and the present value of the minimum lease payments at the inception of the
lease, less accumulated depreciation and impairment losses. Lease payments are
apportioned between finance charges and reductions of the lease liability so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance charges are
charged directly against the profit and loss account. Capitalised leased assets are
depreciated over the shorter of the economic useful life of the asset and the lease term.
No depreciation is provided on freehold land and capital expenditure-in-progress.
Depreciation is provided on a straight-line basis so as to write off items of property, plant and
equipment, and major components that are accounted for separately, over their estimated
useful lives as follows:
Leasehold land
Remaining leasehold period
Leasehold buildings
Shorter of remaining leasehold period or 50 years
Buildings
50 years
Building improvements
5–10 years
Plant and machinery and other
equipment
2–10 years
Furniture, fittings and equipment
5–10 years
Motor vehicles
5–6 years
In accordance with Singapore Financial Reporting Standards, FRS 16 on Property, Plant
and Equipment, the Group has adopted the transitional provisions not to revalue the
property, plant and equipment stated at valuation on a periodic basis as the Group has
revalued its leasehold land and buildings only once in 1994.
The useful lives and residual values, if not insignificant, are reassessed annually.
C-14
2.6 Intangible assets
Goodwill
Goodwill in a business combination represents the excess of the cost of acquisition over the
fair value of the Group’s share of the identifiable net assets acquired. Goodwill is stated at
cost less impairment losses. Goodwill on the acquisition of subsidiaries is presented as
intangible assets.
Goodwill is tested for impairment on an annual basis as described in Note 2.11.
Other intangible assets
Intangible assets arising on acquisition are stated at cost, based on the fair values at the
date of acquisition, less accumulated amortisation and impairment losses. Intangible assets,
other than goodwill on consolidation, are amortised and recognised in the profit and loss
account on a straight-line basis over their estimated useful lives of 3 years.
2.7 Investments in debt and equity securities
Financial instruments held for trading are classified as current assets and are stated at fair
value, with any resultant gain or loss recognised in the profit and loss account.
Where the Group has the positive intent and ability to hold debt securities to maturity, they
are stated at amortised cost less impairment losses.
Other financial instruments held by the Group are classified as being available-for-sale and
are stated at fair value, with any resultant gain or loss being recognised directly in equity.
The exceptions are impairment losses and foreign exchange gains and losses on monetary
items such as debt securities, which are recognised in the profit and loss account. When
these investments are derecognised, the cumulative gain or loss previously recognised
directly in equity is recognised in the profit and loss account. Where these investments are
interest-bearing, interest calculated using the effective interest method is recognised in the
profit and loss account.
The fair value of financial instruments classified as held-for-trading and available-for-sale is
determined as the quoted bid price at the balance sheet date.
Financial instruments classified as held-for-trading or available-for-sale investments are
recognised by the Group on the date it commits to purchase the investments, and
derecognised on the date a sale is committed.
C-15
2.8 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using
the first-in-first-out cost formula and comprises 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.
2.9 Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method, less allowance for impairment.
2.10 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and bank deposits. For the purpose of
the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts
which are repayable on demand and which form an integral part of the Group’s cash
management.
2.11 Impairment
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to
determine whether there is any indication of impairment. If any such indication exists, the
assets’ recoverable amounts are estimated. An impairment loss is recognised whenever the
carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The
impairment loss is charged to the profit and loss account unless it reverses a previous
revaluation, credited to equity, in which case it is charged to equity.
Goodwill is tested for impairment annually and as and when indicators of impairment are
identified.
Impairment losses recognised in respect of cash-generating units are allocated first to
reduce the carrying amount of any goodwill allocated to cash-generating units (group of
units) and then, to reduce the carrying amount of the other assets in the unit (group of units)
on a pro rata basis.
When a decline in the fair value of an available-for-sale financial asset has been recognised
directly in equity and there is objective evidence that the value of the asset is impaired, the
cumulative loss that had been recognised directly in equity is recognised in the profit and
loss account even though the financial asset has not been derecognised. The amount of the
cumulative loss that is recognised in the profit and loss account is the difference between the
acquisition cost and current fair value, less any impairment loss on that financial asset
previously recognised in the profit and loss account.
C-16
Calculation of recoverable amount
The recoverable amount of the Group’s investments in held-to-maturity securities and
receivables carried at amortised cost is calculated as the present value of estimated future
cash flows, discounted at the original effective interest rate (i.e. the effective interest rate
computed at initial recognition of these financial assets). Receivables with a short duration
are not discounted.
The recoverable amount of other assets is the greater of their net selling price and 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 an asset that does not generate
largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.
Reversals of impairment
An impairment loss in respect of a held-to-maturity security or receivable carried at
amortised cost is reversed if the subsequent increase in recoverable amount can be related
objectively to an event occurring after the impairment loss was recognised.
An impairment loss in respect of an investment in an equity instrument classified as
available-for-sale is not reversed through the profit and loss account. If the fair value of a
debt instrument classified as available-for-sale increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in the
profit and loss account, the impairment loss shall be reversed, with the amount of the
reversal recognised in the profit and loss account.
An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. However, an impairment loss in respect of goodwill is not
reversed.
An impairment loss is reversed only to the extent that the asset’s 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.
2.12 Liabilities and interest-bearing liabilities
Trade and other payables are recognised initially at fair value. Interest-bearing liabilities are
recognised initially at fair value less attributable transaction costs.
Subsequent to initial recognition, trade and other payables and interest-bearing liabilities are
stated at amortised cost with any difference between cost and redemption value, being
recognised in the profit and loss account over the period of the borrowings on an effective
interest basis.
C-17
2.13 Employee benefits
The Group’s net obligation in respect of retirement benefits is the amount of future benefits
that employees have earned in return for their service in the current and prior periods. The
obligation is calculated using the projected unit credit method and is discounted at an
appropriate discount rate to determine its present value.
Defined contribution plans
Obligations for contributions to defined contribution plans are recognised as an expense in
the profit and loss account as incurred.
2.14 Deferred tax
Deferred tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Temporary differences are not recognised for goodwill not deductible for tax
purposes and for the initial recognition of assets or liabilities that affect neither accounting
nor taxable profit. The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities, using tax rates
enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries
except where the timing of the reversal of the temporary difference can be controlled and it
is probable that the temporary difference will not be reversed in the foreseeable future.
2.15 Revenue recognition
Goods sold and services provided
Revenue is recognised when the significant risks and rewards of ownership have been
transferred to the buyer. Revenue excludes goods and services taxes or other sales taxes
and is arrived at after deduction of trade discounts. No revenue is recognised if there are
significant uncertainties regarding recovery of the consideration due, associated costs or the
possible return of goods.
Interest income
Interest income is accrued on a time-apportioned basis.
C-18
Rental income
Rental income receivable under operating leases is recognised in the profit and loss account
on a straight-line basis over the term of the lease.
2.16 Operating leases
Where the Group has the use of assets under operating leases, payments made under the
leases are recognised in the profit and loss account on a straight-line basis over the term of
the lease.
2.17 Research and development costs
Research expense is charged to the profit and loss account as and when incurred.
2.18 Finance costs
Interest expense and similar charges are expensed in the profit and loss account in the
period in which they are incurred, except to the extent that they are capitalised as being
directly attributable to the acquisition, construction or production of an asset which
necessarily takes a substantial period of time to prepare for its intended use or sale. The
interest component of finance lease payments is recognised in the profit and loss account
using the effective interest rate method.
C-19
3.
Property, Plant and Equipment
Plant and
machinery and
other
equipment
Furniture,
fittings and
equipment
Motor
vehicles
Capital
expenditurein-progress
Total
RM’000
RM’000
256
418
–
(677)
101,962
15,500
(2,427)
–
Leasehold
land
Leasehold
buildings
Freehold
land
Buildings
Building
improvements
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
At 1 January 2003
Additions
Disposals
Transfers/Reclassification
Translation differences on
consolidation
7,669
–
–
–
16,566
–
–
–
2,510
–
–
–
3,121
–
–
–
3,016
1,112
(229)
368
57,000
11,147
(1,143)
144
7,661
1,631
(228)
165
4,163
1,192
(827)
–
–
–
–
–
–
415
92
33
3
543
At 31 December 2003
7,669
16,566
2,510
3,121
4,267
67,563
9,321
4,561
–
115,578
At 1 January 2004
Additions
Disposals
consolidation
7,669
–
–
–
16,566
–
–
–
2,510
–
–
–
3,121
417
–
–
4,267
2,273
–
85
67,563
13,331
(1,310)
–
9,321
1,280
(30)
–
4,561
1,009
(1,013)
–
–
–
–
–
At 31 December 2004
7,669
16,566
2,510
3,538
At 1 January 2005
Additions
Disposals
consolidation
7,669
–
–
–
16,566
–
–
–
2,510
–
–
–
3,538
–
–
–
–
–
–
–
At 31 December 2005
7,669
16,566
2,510
3,538
Cost
C-20
(1)
–
676
–
(85)
115,578
18,986
(2,353)
–
330
64
26
21
440
6,624
79,914
10,635
4,583
612
132,651
6,624
1,971
–
737
79,914
10,617
(2,343)
–
10,635
1,075
(554)
–
4,583
1,339
(434)
–
612
317
–
(737)
132,651
15,319
(3,331)
–
(885)
(63)
(32)
(82)
9,250
87,303
11,093
5,456
3
195
(1,059)
143,580
Plant and
machinery and
other
equipment
Furniture,
fittings and
equipment
Motor
vehicles
Capital
Total
Leasehold
land
Leasehold
buildings
Freehold
land
Buildings
Building
improvements
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
At 1 January 2003
Depreciation charge for the
year
Disposals
consolidation
1,127
3,363
–
272
1,150
30,284
4,531
2,375
–
43,102
104
–
317
–
–
–
62
–
67
–
5,691
(1,116)
1,129
(214)
663
(582)
–
–
8,033
(1,912)
–
–
–
–
–
205
73
22
–
300
At 31 December 2003
1,231
3,680
–
334
1,217
35,064
5,519
2,478
–
49,523
At 1 January 2004
year
Disposals
consolidation
1,231
3,680
–
334
1,217
35,064
5,519
2,478
–
49,523
104
–
317
–
–
–
66
–
157
–
752
(859)
–
–
9,288
(1,804)
–
–
–
–
–
133
45
14
–
192
At 31 December 2004
1,335
3,997
–
400
1,374
41,000
6,708
2,385
–
57,199
At 1 January 2005
year
Disposals
consolidation
1,335
3,997
–
400
1,374
41,000
6,708
2,385
–
57,199
104
–
317
–
–
–
71
–
1,273
–
8,060
(1,562)
1,009
(537)
840
(288)
–
–
11,674
(2,387)
–
–
–
–
(531)
(41)
(15)
–
(642)
At 31 December 2005
1,439
4,314
–
471
Accumulated depreciation
C-21
(55)
2,592
6,731
(928)
46,967
1,161
(17)
7,139
2,922
–
65,844
Plant and
machinery and
other
equipment
Furniture,
fittings and
equipment
Motor
vehicles
Capital
Total
C-22
Leasehold
land
Leasehold
buildings
Freehold
land
Buildings
Building
improvements
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Carrying amount
At 1 January 2003
6,542
13,203
2,510
2,849
1,866
26,716
3,130
1,788
256
58,860
At 31 December 2003
6,438
12,886
2,510
2,787
3,050
32,499
3,802
2,083
–
66,055
At 1 January 2004
6,438
12,886
2,510
2,787
3,050
32,499
3,802
2,083
–
66,055
31 December 2004
6,334
12,569
2,510
3,138
5,250
38,914
3,927
2,198
612
75,452
At 1 January 2005
6,334
12,569
2,510
3,138
5,250
38,914
3,927
2,198
612
75,452
31 December 2005
6,230
12,252
2,510
3,067
6,658
40,336
3,954
2,534
195
77,736
The carrying amount of leasehold land and leasehold buildings of the Group were stated at valuation carried out in 1994. The revaluation were done on a
one-off basis and accordingly, the transitional provision in FRS 16 was adopted to continue with its existing policy of stating the leasehold land and leasehold
buildings at cost.
The carrying amount of leasehold land and leasehold buildings of the Group would have been RM6,640,000 (2004: RM6,743,000, 2003: RM6,879,000) had
the leasehold land and leasehold buildings been carried at cost less accumulated depreciation.
The carrying amount of property, plant and equipment of the Group includes amounts totalling RM1,643,000 (2004: RM1,644,000, 2003: RM1,342,000) in
respect of motor vehicles held under finance leases.
During the year, the Group acquired property, plant and equipment with an aggregate cost of RM15,319,000 (2004: RM18,986,000, 2003: RM15,500,000)
of which RM876,000 (2004: RM738,000, 2003: RM750,000) was acquired under finance leases.
4.
Intangible Assets
Goodwill
RM’000
Computer
software
RM’000
Total
RM’000
Cost
At 1 January 2003
Additions
7,265
–
769
245
8,034
245
At 31 December 2003
7,265
1,014
8,279
At 1 January 2004
Additions
7,265
–
1,014
577
8,279
577
At 31 December 2004
7,265
1,591
8,856
At 1 January 2005
Effects of adopting FRS 103
7,265
(2,420)
1,591
–
8,856
(2,420)
At 1 January 2005, restated
Additions
4,845
–
1,591
242
6,436
242
At 31 December 2005
4,845
1,833
6,678
At 1 January 2003
Amortisation charge for the year
1,694
363
261
132
1,955
495
At 31 December 2003
2,057
393
2,450
At 1 January 2004
2,057
363
393
271
2,450
634
At 31 December 2004
2,420
664
3,084
2,420
(2,420)
664
–
3,084
(2,420)
Accumulated amortisation
At 1 January 2005
Effects of adopting FRS 103
–
–
664
273
664
273
At 31 December 2005
–
937
937
At 1 January 2003
5,571
508
6,079
At 31 December 2003
5,208
621
5,829
At 1 January 2004
5,208
621
5,829
At 31 December 2004
4,845
927
5,772
4,845
927
5,772
At 31 December 2005
4,845
896
5,741
Carrying amount
C-23
5.
Other Assets
31 December
2003
RM’000
Quoted equity securities available-for-sale
Club membership, at cost
6.
2004
RM’000
2005
RM’000
2
2
2
113
117
117
115
119
119
Deferred Tax
Movements in deferred tax assets and liabilities (prior to offsetting of balances) during the year are
as follows:
At
1 January
2003
RM’000
Charged/
(credited) to
profit and
loss account
(Note 17)
RM’000
At
31 December
2003
RM’000
4,056
329
4,385
Deferred tax assets
Provision
(458)
Net tax liabilities
61
(397)
3,598
390
3,988
At 1 January
2004
RM’000
Charged/
(credited) to
profit and
loss account
(Note 17)
RM’000
At 31
December
2004
RM’000
4,385
398
4,783
Deferred tax assets
Provision
Other items
Tax value of loss carry-forward
Net tax liabilities
(397)
–
–
77
(285)
(172)
(320)
(285)
(172)
(397)
(380)
(777)
3,988
C-24
18
4,006
Charged/
(credited) to
profit and
loss account
(Note 17)
RM’000
At
1 January
2005
RM’000
At
31 December
2005
RM’000
4,783
(769)
4,014
Deferred tax assets
Provision
Other items
Tax value of loss carry-forward
Net tax liabilities
(320)
(285)
(172)
(212)
271
(770)
(532)
(14)
(942)
(777)
(711)
(1,488)
4,006
(1,480)
2,526
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when the deferred taxes relate to the same
taxation authority.
The amounts determined after appropriate offsetting are included in the balance sheet as follows:
31 December
2003
RM’000
2004
RM’000
3,988
4,178
Deferred tax assets
–
(172)
2005
RM’000
3,561
(1,035)
The following temporary differences have not been recognised:
31 December
2003
RM’000
Deductible temporary differences
(3,130)
Tax losses
C-25
2004
RM’000
2005
RM’000
–
–
3,635
931
1,145
505
931
1,145
The tax losses and deductible temporary differences are subject to agreement by the tax
authorities and compliance with tax regulations in the respective countries in which certain
subsidiaries operate. Deferred tax assets have not been recognised in respect of these items
because it is not probable that future taxable profit will be available against which the Group can
utilise the benefits.
7.
Inventories
31 December
2003
RM’000
2004
RM’000
2005
RM’000
14,717
17,464
12,459
At cost
Raw materials
Work-in-progress
1,147
998
1,117
Finished goods
5,600
6,635
5,943
Consumables
138
125
156
Goods-in-transit
450
441
1,258
22,052
25,663
20,933
Raw materials
–
–
7
Finished goods
1
120
2
22,053
25,783
20,942
At net realisable value:
The cost of inventories recognised as expenses and included in “Cost of sales” amounted to
RM112,240,000 (2004: RM74,728,000, 2003: RM68,632,000)
C-26
8.
Trade and Other Receivables
Note
Trade receivables
Impairment of trade receivables
2003
RM’000
31 December
2004
RM’000
2005
RM’000
25,455
34,369
42,699
(323)
Net receivables
Deposits
Prepayments
Amounts due from related parties
9
Tax recoverable
Other receivables
(364)
(311)
25,132
34,005
42,388
122
156
528
3,042
3,417
2,857
2,202
1,500
792
948
1,007
526
1,257
657
1,628
32,703
40,742
48,719
The Group’s primary exposure to credit risk arises through its trade receivables. Concentration of
credit risk relating to trade receivables is limited due to the Group’s many varied customers. The
Group’s historical experience in the collection of accounts receivable falls within the recorded
allowances. Due to these factors, management believes that no additional credit risk beyond the
amounts provided for collection losses is inherent in the Group’s trade receivables.
9.
Amounts due from/(to) Related Parties
31 December
2003
RM’000
2004
RM’000
2005
RM’000
Current assets
Holding company
— mainly non-trade
1,320
111
86
Related corporations
— mainly trade
680
472
706
Companies in which a director has substantial financial
interests
— mainly trade
202
917
–
2,202
1,500
792
C-27
31 December
2003
RM’000
2004
RM’000
2005
RM’000
Current liabilities
Holding company
— loan
—
non-trade
Related corporations
— mainly trade
Companies in which a director has substantial financial
interests
— mainly trade
–
–
4,388
1,154
2,889
4,446
1,154
2,889
8,834
1,727
3,548
5,485
142
484
150
3,023
6,921
14,469
–
–
15,358
Holding company
— long-term loan
In May 2002, the Group obtained a loan from holding company of RM7,000,000. On 30 August
2004, the loan was capitalised as share capital of Texpack (see Note 1 on Restructuring
Exercise). In applying the pooling-of-interests method of consolidation, the loan was deemed to
have been capitalised as share capital as at the beginning of the financial periods (see Note 11).
The loan due to holding company as at 31 December 2005 is unsecured and bears interest at 7%
per annum. The loan is repayable in 11 instalments over 5 years commencing from June 2005.
10. Cash and Cash Equivalents
Note
Bank overdrafts
14
C-28
2003
RM’000
31 December
2004
RM’000
2005
RM’000
7,331
6,354
8,760
(2,897)
(2,564)
(2,867)
4,434
3,790
5,893
11.
Share Capital
31 December
Share capital
2003
RM’000
2004
RM’000
2005
RM’000
20,674
20,674
20,674
The Company was incorporated on 27 August 2003 with an authorised share capital of
S$100,000,000 comprising 100,000,000 ordinary shares of S$1.00 each. At the date of
incorporation, 2 subscribers’ shares of S$1.00 each fully paid were issued at par for cash.
On 6 September 2004, additional 7,499,998 ordinary shares of S$1.00 each were issued and
credited as fully paid as part of the Restructuring Exercise.
On 29 December 2005, additional 1,455,000 ordinary shares of S$1.00 each were issued and
credited as fully paid as part of the Restructuring Exercise.
Share capital of the Company for 2003 and 2004 represents the aggregate share capital issued
in exchange of the shares in Texpack and Eye Graphic, accounted for using the pooling-ofinterests method of consolidation.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company. All shares rank equally with regard
to the Company’s residual assets.
12. Reserves
Note
2003
RM’000
31 December
2004
RM’000
2005
RM’000
Statutory reserve
(i)
856
856
958
Revaluation reserve
(ii)
3,148
3,148
3,148
Currency translation reserve
(iii)
146
481
4,279
2,526
9,111
8,429
7,011
12,909
Accumulated profits
C-29
(308)
(i)
Statutory reserve
Statutory reserve comprises accumulated profits transferred by Texpack (Thailand) and
Texpack (Wuxi) as required by the local legislations. Texpack (Thailand) is required to
appropriate not less than 5% of its profits after taxation, as determined under the Thai
Accounting Standards, to the statutory reserve until the reserve balance reaches 10% of the
authorised share capital. This statutory reserve is non-distributable.
Texpack (Wuxi) is required to appropriate not less than 10% of the profit arrived at in
accordance with the People’s Republic of China (PRC) accounting principles and relevant
financial regulations for each year to a general reserve until the reserve balance reaches
50% of the registered capital.
(ii)
Revaluation reserve
The revaluation reserve comprises surpluses arising from the revaluation of leasehold land
and leasehold buildings (refer to Note 3).
(iii)
Currency translation reserve
The currency translation reserve comprises foreign exchange differences arising from the
translation of the financial statements of the foreign operations whose functional currencies
are different from the functional currency of the Company.
13. Trade and Other Payables
2003
RM’000
31 December
2004
RM’000
2005
RM’000
Trade payables
9,351
14,601
19,199
Accrued operating expenses
5,193
6,256
9,994
561
748
2,129
3,023
6,921
14,469
496
286
62
18,624
28,812
45,853
–
–
15,358
659
538
688
659
538
16,046
Note
Current
Fixed assets creditors
Amounts due to related parties
9
Non-current
Amounts due to related parties
9
C-30
14. Interest-Bearing Liabilities
31 December
Note
2003
RM’000
2004
RM’000
2005
RM’000
–
1,046
1,096
34,277
30,794
8,970
514
640
879
34,791
32,480
10,945
Unsecured
Promissory notes
Bank loans
Finance lease liabilities
Current liabilities
Unsecured
Bank overdrafts
2,897
2,564
2,867
Bankers’ acceptances
10
22,357
27,182
22,192
Revolving credit
12,400
17,420
18,946
–
1,426
404
792
418
736
6,367
8,578
3,863
406
490
475
45,219
58,078
49,483
80,010
90,558
60,428
Trust receipts
Promissory notes
Bank loans
Total borrowings
Maturity of liabilities (excluding finance lease liabilities):
31 December
2003
RM’000
2004
RM’000
2005
RM’000
Within 1 year
44,813
57,588
49,008
After 1 year but within 5 years
34,277
31,840
10,066
79,090
89,428
59,074
The bank overdrafts, bankers’ acceptances, revolving credit and bank loans are guaranteed by
the holding company.
In 2003 and 2004, bank overdrafts, bankers’ acceptances, revolving credit and bank loans
amounting to RM2,765,000 and RM2,684,000 respectively were guaranteed by Texchem
Corporation Sdn. Bhd., a related party.
C-31
At the date of the balance sheets, the Group has obligations under finance leases that are payable as follows:
31 December 2003
Principal
Interest
Payments
RM’000
RM’000
RM’000
31 December 2004
Principal
Interest
Payments
RM’000
RM’000
RM’000
31 December 2005
Principal
Interest
Payments
RM’000
RM’000
RM’000
C-32
Current liabilities
Repayable within 1 year
406
55
461
490
68
558
475
59
534
514
76
590
640
83
723
879
106
985
920
131
1,051
1,130
151
1,281
1,354
165
1,519
Repayable after 1 year but within 5 years
Effective interest rates and repricing/maturing analysis
Fixed interest rate
maturing
Effective
interest rate
%
Floating
interest
RM’000
within
1 year
RM’000
in 1 to
5 year
RM’000
Total
RM’000
2003
Bank loans
3.35 – 7.65
39,744
600
300
40,644
Bank overdrafts
6.80 – 7.37
2,897
–
–
2,897
2.80 – 3.67
22,357
–
–
22,357
Revolving credit
2.80 – 4.51
12,400
–
–
12,400
3.90 – 10.00
–
406
514
920
4.00
792
–
–
792
78,190
1,006
814
80,010
4.60 – 10.10
39,072
300
–
39,372
Bank overdrafts
7.00 – 7.25
2,564
–
–
2,564
2.80 – 3.62
27,182
–
–
27,182
Revolving credit
3.42 – 3.50
17,420
–
–
17,420
1.70 – 9.50
–
490
640
1,130
4.60 – 10.10
1,426
–
–
1,426
6.75
1,464
–
–
1,464
89,128
790
640
90,558
5.53–7.50
11,583
500
750
12,833
7.25
2,867
–
–
2,867
3.32–4.78
22,192
–
–
22,192
Revolving credit
4.13–9.55
18,946
–
–
18,946
1.75–6.09
–
475
879
1,354
Trust receipts
6.96
404
–
–
404
Promissory notes
6.70
1,832
–
–
1,832
57,824
975
1,629
60,428
Promissory notes
2004
Bank loans
Trust receipts
Promissory notes
2005
Bank loans
Bank overdrafts
C-33
15. Profit Before Taxation
The following items have been included in arriving at profit before taxation:
31 December
2003
RM’000
2004
RM’000
2005
RM’000
Exchange gain
(534)
(571)
(1,085)
Rental income
(83)
(6)
(58)
(399)
(287)
(143)
(67)
(5)
(11)
Interest income
Staff costs
Contributions to defined contribution plans included in staff
costs
26,441
23,836
30,950
1,687
1,801
1,893
228
–
651
Operating lease expense
935
1,358
1,788
Research expense
955
861
2,214
Provision for retirement benefits included in staff costs
273
(Reversal)/Allowance of inventories
160
223
(134)
898
237
41
(53)
–
Impairment/(Reversal of impairment) of trade receivables
Interest paid and payable to:
—
banks
3,505
4,263
3,539
—
holding company
–
–
1,073
—
related corporations
–
–
63
—
companies in which a director has substantial
financial interest
7
6
–
16. Key Management Personnel Compensation
The key management personnel compensation included in staff costs are as follows:
31 December
Short-term employee benefits
Post-employment benefits
C-34
2003
RM’000
2004
RM’000
2005
RM’000
3,548
3,338
5,297
273
160
223
3,821
3,498
5,520
17. Income Taxes
31 December
2003
RM’000
2004
RM’000
2005
RM’000
1,473
1,645
2,324
Current tax expense
Current year
Under/(Over) provided in prior years
22
(335)
1,495
1,310
390
39
(52)
2,272
Deferred tax expense
Movements in temporary differences
Overprovided in prior years
–
(21)
(1,333)
(147)
390
18
1,885
1,328
792
7,425
4,138
12,311
Income tax using Malaysia tax rate
2,079
1,159
3,447
111
494
1,221
661
Income tax expense
(1,480)
Reconciliation of effective tax rate
Effects of different tax rates in other countries
(81)
Expenses not deductible for tax purposes
1,440
Tax incentives
(1,845)
Temporary differences not recognised
Under/(Over) provided in prior years
Others
(818)
(3,584)
141
119
60
22
(356)
(199)
129
(108)
(87)
1,885
1,328
792
The subsidiaries in Malaysia are subject to income tax of 28% on their taxable profits.
The subsidiaries in Vietnam are subject to income tax of 15% on their taxable profits. Texpack
(Vietnam) is however entitled to tax concessions whereby the profit for the first three profit making
financial years is exempted from income tax and the profit for the subsequent seven financial
years is taxed at 50% of the prevailing tax rate. Texpack (Vietnam) has yet to commence its first
profit making year.
C-35
Texpack (Thailand) is entitled to tax exemption for a period of seven years on its taxable profits
derived from the sale of thermoformed packaging products and precision injection moulded
trays/parts and a period of eight years of its taxable profits derived from the sale of mould and
tooling. These tax exemption periods commenced from 2003 to 2005 and will expire between
2010 to 2012.
The subsidiary in China is entitled to tax concessions whereby the profit for the first two profit
making financial years is exempted from income tax and the profit for the subsequent three
financial years is taxed at 50% of the prevailing tax rate. Texpack (Wuxi) commenced its tax
exemption year in 2005.
No provision for Singapore profit tax has been made as the Company did not derive any
significant taxable profit in Singapore since its incorporation.
18. Earnings Per Share
31 December
2003
RM’000
2004
RM’000
2005
RM’000
5,002
2,341
11,077
Basic and diluted earnings per share is based on:
Net profit attributable to ordinary shareholders
31 December
Weighted average number of ordinary shares outstanding
during the year
2003
No. of
shares
(’000)
2004
No. of
shares
(’000)
2005
No. of
shares
(’000)
89,550
89,550
89,550
In calculating the earnings per share for each of the years ended 31 December 2003, 2004 and
2005, the weighted average number of shares is adjusted for the “share split” as though it took
effect on 1 January 2003 (see Note 24).
C-36
19. Changes in Accounting Policies
The accounting policies set out in Note 2 have been applied in preparing the consolidated
financial statements for the years ended 31 December 2003, 2004 and 2005.
The changes in accounting policies arising from the adoption of FRS 103 Business Combination,
FRS 36 (revised) Impairment of Assets and FRS 38 (revised) Intangible Assets are summarised
below:
FRS 103 Business Combinations, FRS 36 (revised) Impairment of Assets and FRS 38
(revised) Intangible Assets
The adoption of FRS 103, FRS 36 (revised) and FRS 38 (revised) has resulted in a change in the
accounting policy for goodwill.
Goodwill is stated at cost less accumulated impairment losses and is no longer amortised.
Instead, goodwill impairment is tested annually, or when circumstances change, indicating that
goodwill might be impaired.
Had there not been a change in accounting policy, the net profit attributable to shareholders for
the financial year ended 31 December 2005 would decrease by RM363,000 for goodwill
amortisation which otherwise would be charged to the profit and loss account.
20. Commitments
31 December
2003
RM’000
2004
RM’000
2005
RM’000
4,269
1,061
978
Capital commitments:
—
contracted but not provided for
C-37
At the date of the balance sheet, the Group has commitments for future minimum lease payments
under non-cancellable operating leases as follows:
31 December
2003
RM’000
2004
RM’000
2005
RM’000
Payable:
—
within 1 year
1,161
1,162
1,635
—
after 1 year but within 5 years
2,005
2,282
2,691
—
after 5 years
1,659
2,027
1,640
4,825
5,471
5,966
At 31 December 2005, the operating leases are as follows:
(i)
Texpack (Thailand) entered into a rental agreement for warehouse for a period of 3 years on
1 September 2005. It also entered into a rental agreement for office, factory and warehouse
for a period of 19.5 months from 1 June 2005.
(ii)
Texpack (Wuxi) leased its office, factory and warehouse from the Wangzhuang Government,
Wuxi New Zone for a period of 5 years beginning 1 July 2005.
(iii)
Texpack (Vietnam) entered into a 10 year rental agreement for office, factory and warehouse
space beginning 10 April 2002.
(iv) Eye Graphic (Vietnam) entered into a 10 year rental agreement for office space beginning
1 October 2004.
(v)
Texpack, Texpack (KL), Texpack (Wuxi), TEP, Texpack (Johor), and Texpack (Vietnam)
entered into several rental agreements for management staff for periods ranging from one
to two years, renewable at existing or revised market rates.
21. Significant Related Party Transactions
For the purposes of these financial statements, parties are considered to be related to the Group
if the Group has the ability, directly or indirectly, to control the party or exercise significant
influence over the party in making financial and operating decisions, or vice versa, or where the
Group and the party are subject to common control or common significant influence. Related
parties may be individuals or other entities.
C-38
In addition to the related party information disclosed elsewhere in the financial statements, there
were the following significant transactions which were carried out with related parties in the
normal course of business on terms agreed between the parties:
31 December
Note
2003
RM’000
2004
RM’000
2005
RM’000
Related Corporations
(a)
(b)
Recurring transactions
Forwarding charges
(i)
62
92
52
Purchase of raw materials
(ii)
21,544
27,309
40,358
Rental expense
(iii)
67
21
16
Sale of goods
(iv)
1,658
1,540
639
Corporate guarantee fee
(v)
–
–
9
Subcontract fees
(vi)
–
–
162
Interest expense
(vii)
−
–
1,136
Management fee expense
(viii)
52
–
–
Purchase of machinery
(ix)
412
–
–
Non-recurring transactions
Purchase of motor vehicle
(x)
95
–
220
Rental income
(xi)
72
–
–
Sale of motor vehicle
(xii)
215
–
205
Sales commission expense
(xiii)
113
80
23
Allocated head office cost
(xiv)
681
1
5
Sale of machinery
(xv)
–
11
–
Interest income
(xvi)
86
63
–
Listing expenses
(xvii)
−
1,414
–
Reimbursement of research and
development costs
(xviii)
618
–
–
Purchase of computer
(xix)
7
−
−
C-39
Note:
(i)
Forwarding charges
Forwarding charges were paid for forwarding and handling services rendered to the
Group by Texchem Materials Sdn. Bhd. (“Texchem Materials”) and Texchem Food Sdn.
Bhd. (“Texchem Food”). Both Texchem Materials and Texchem Food are subsidiaries of
TRB.
(ii)
The Group purchased raw materials from Texchem Materials.
(iii)
Rental expense
Rental expenses were paid to Fumakilla Malaysia Berhad (“Fumakilla”), a subsidiary of
TRB, for rental of a vehicle in 2003.
Rental charges were also paid to Texchem Singapore Private Limited (“Texchem
Singapore”) and Texchem Materials for warehousing, office and storage space.
Texchem Singapore is a subsidiary of TRB.
(iv)
Sale of goods
The Group sold its finished goods to other subsidiaries of TRB.
(v)
Corporate guarantee fee was paid to TRB for provision of corporate guarantee for Eye
Graphic’s banking facilities in 2005.
Save as disclosed above, there is no consideration paid for corporate guarantee issued
by TRB for banking facilities utilised by the Group.
(vi)
Subcontract fees
Subcontract fees were paid to Sanko Kasei (M) Sdn. Bhd., a subsidiary of TRB, for
processing work performed.
(vii)
Interest expense
Interest was paid to TRB and Texchem Malaysia Sdn Berhad at 5.48% to 7.25% per
annum on advances provided to the Group. Interest was also paid to Texchem Materials
for amounts outstanding beyond the credit terms.
Texchem Malaysia Sdn Berhad is a subsidiary of TRB.
C-40
(viii)
Management fee expense
Management fee expense in 2003 relates to legal and secretarial services rendered by
Texchem Consumers (Thailand) Ltd, a subsidiary of TRB, to the Group.
(ix)
Purchase of machinery
In 2003, the Group purchased thermoforming machinery and transformer from TRB and
Technopia Vietnam Pte Ltd (“Technopia Vietnam”) respectively.
Technopia Vietnam is a subsidiary of TRB.
(x)
Purchase of motor vehicle
The Group purchased a motor vehicle from Fumakilla during 2003 and a motor vehicle
from Texchem Consumers Sdn. Bhd. (“Texchem Consumers”) during 2005.
Texchem Consumers is a subsidiary of TRB.
(xi)
Rental income
Rental income was received in respect of the rental of a motor vehicle to Fumakilla in
2003.
(xii)
The Group sold a motor vehicle to Fumakilla during 2003 and a motor vehicle to Texchem
Consumers during 2005.
(xiii)
Sales commission was paid to Texchem Singapore on all sales secured through Texchem
Singapore between 2000 and September 2005. In 2003, sales commission was also paid
to Texchem Materials.
(xiv)
Allocated head office cost in 2003 relates to the Group’s share of expenses arising from
Dato’ Seri Fumihiko Konishi’s office. With effect from 2004, Dato’ Seri Fumihiko Konishi
entered into a service agreement with the Group and the head office ceased to charge
such cost to the Group. Allocated head office cost in 2004 and 2005 relates to
miscellaneous expenses recovered from the Group.
(xv)
Sale of machinery
The Group sold a hydraulic cutting machine to Technopia (Thailand) Ltd.
C-41
(xvi)
Interest income
In March 2003, TEP utilised its banking facilities and on-loan the amount to TRB. Interest
income was charged to TRB based on the interest charges incurred by TEP on the
banking facilities. Such interest income was directly offset against the finance costs of the
Group.
(xvii)
Listing expenses
In 2004, TRB absorbed 50% of the listing expenses amounting to RM1,414,000 incurred
by the Group.
(xviii) Reimbursement of research and development costs
Research and development expenses incurred by the Group, in respect of the research
and development of new types of electrostatic discharge packaging material entered into
with Professor Masao Sumita of the Tokyo Institute of Technology and the University of
Akron in the United States, were reimbursed by TRB.
(xix)
Purchase of computer
This relates to the purchase of a computer from TRB.
31 December
Note
2003
RM’000
2004
RM’000
2005
RM’000
Related Parties
(a)
(b)
Corporate management fee
(i)
2,131
953
1,237
Information services expense
(ii)
146
15
26
Insurance expense
(iii)
843
872
864
Rental expense
(iv)
233
24
28
Sale of goods
(v)
1,608
1,034
1,287
Security charges
(vi)
437
437
437
Purchase of goods
(vii)
33
62
8
Data transfer charges
(viii)
250
174
17
Royalty expense
(ix)
118
115
107
(x)
24
23
15
(xi)
142
4
–
(xii)
160
–
–
Sale of club memberships
(xiii)
95
–
–
Interest expense
(xiv)
7
6
–
C-42
Note:
(i)
Corporate management fees were paid for management services, including finance,
human resources, information technology services and legal and secretarial services,
rendered by Texchem Corporation Sdn. Bhd. (“Texcorp”).
(ii)
Information services expenses were paid for provision of information technology
hardware and software by Texcorp.
(iii)
Insurance expense
Texchem Risk Management Sdn. Bhd. (“Texrisk”), a subsidiary of Texcorp, acted as an
insurance agent for the Group and sourced insurance coverage for the Group’s
operations. Premiums paid to Texrisk were based on commercial rates and determined on
an arm’s length basis.
(iv)
Rental expense
Rental expenses were paid to Texchem Holdings Sdn. Bhd. (“THSB”), a company
wholly-owned by a director and substantial shareholder of TRB, and Texcorp for the use
of Villa Primavera and rental of warehouse and office space respectively.
With effect from December 2003, the Group, excluding Eye Graphic, ceased to pay for the
use of Villa Primavera. Eye Graphic paid an annual rent of RM12,000 for the use of Villa
Primavera.
(v)
Sale of goods
The Group sold its finished goods to companies related to Texcorp and the minority
shareholder of Eye Graphic.
(vi)
Security charges
Security charges were paid to Guardman Security Services Sdn. Bhd. (“Guardman
Security”), a wholly-owned subsidiary of Texcorp, for security services rendered.
(vii)
Purchase of goods
The Group purchased raw materials from the minority shareholder of Eye Graphic.
(viii)
Data transfer charges were paid to the minority shareholder of Eye Graphic for artwork
design data provided.
C-43
(ix)
Royalty expense
Royalties were paid to the minority shareholder of Eye Graphic for use of their intellectual
property rights.
(x)
Corporate guarantee fee was paid to Texcorp for provision of corporate guarantee for Eye
Graphic’s banking facilities.
(xi)
Allocated head office cost in 2003 relates to the Group’s share of expenses arising from
Dato’ Seri Fumihiko Konishi’s office at Texcorp. With effect from 2004, Dato’ Seri Fumihiko
Konishi entered into a service agreement with the Group and the head office ceased to
charge such cost to the Group. Allocated head office cost in 2004 relates to miscellaneous
expenses recovered from the Group.
(xii)
In December 2003, Texcorp sold a car which was used by Texpack and which the
depreciation expense and running costs were borne by Texpack. Texcorp allocated
Texpack its equivalent share of the gain on disposal of the car.
(xiii)
Sale of club memberships
In December 2003, Texpack sold two of its club memberships to Seapack Food Sdn. Bhd.
at their respective market values.
(xiv)
Interest expense
Interest was paid to Texcorp group of companies at 4.6% to 6.5% per annum on advances
provided to the Group.
22. Financial Instruments
Risk management is integral to the whole business of the Group. The Group has a system of
controls in place to create an acceptable balance between the cost of risks occurring and the cost
of managing the risks. The management continually monitors the Group’s risk management
process to ensure that an appropriate balance between risk and control is achieved.
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty
to settle its financial and contractual obligations to the Group, as and when they fall due.
Management has a credit policy in place and exposure to credit risk is monitored on an ongoing
basis. Credit evaluations are performed on customers requiring credit facilities.
C-44
At the balance sheet dates, there were no significant concentrations of credit risk except for the
balance due from one major customer amounting to 14.6% (2004: 21.3%, 2003: 26.9%) of total
trade receivables of the Group.
Liquidity risk
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed
adequate by management to finance the Group’s operations and to mitigate the effects of
fluctuations in cash flows. The net current liabilities as at 31 December 2003, 2004 and 2005 as
shown in the financial statements reflect management’s intention to continue to utilise short term
bank loans to take advantage of the lower interest rates of short term borrowings having regard
to the operating environment and expected cash flow of the Group. The credit facilities are
regularly reviewed by the directors to ensure that they meet the objectives of the Group.
Foreign currency risk
The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated
in currencies other than RM. The currencies giving rise to this risk are primarily the US dollar, Thai
Baht, Chinese Renminbi and Singapore dollar.
Interest rate risk
The Group’s exposure to changes in interest rates relates primarily to the Group’s interest earning
financial assets and interest-bearing financial liabilities. Interest rate risk is managed by the Group
on an on-going basis with the primary objective of limiting the extent to which net interest expense
could be affected by an adverse movement in interest rates. The Group does not use derivative
financial instruments to hedge its debt obligations.
Estimating the fair values
Securities
Fair value is based on quoted market prices at the balance sheet date without any deduction for
transaction costs.
Interest-bearing loans and borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows.
Other financial assets and liabilities
The notional amounts of financial assets and liabilities with a maturity of less than one year
(including trade and other receivables, cash and cash equivalents, and trade and other payables)
are assumed to approximate their fair values. All other financial assets and liabilities are
discounted to determine their fair values.
C-45
Interest rates used in determining fair values
The Group uses the prevailing market interest rates applicable to the respective financial
instruments as of 31 December to discount the financial instruments. The interest rates used are
as follows:
Loan from holding company
Unsecured term loans
2003
%
2004
%
2005
%
–
–
7.20
7.00
7.00
7.25
The aggregate net fair values of recognised financial assets and financial liabilities which are not
carried at fair value in the balance sheet at 31 December are represented in the following table:
2003
Fair
Carrying
value
amount
RM’000
RM’000
2004
Fair
Carrying
value
amount
RM’000
RM’000
2005
Fair
Carrying
value
amount
RM’000
RM’000
Group
Financial liabilities
Loan from holding company
Unsecured term loans
–
–
–
–
19,746
19,338
900
894
300
298
1,250
1,227
900
894
300
298
20,996
20,565
Unrecognised gain
(6)
(2)
(431)
Unrecognised financial instruments
2003
Fair
Notional
value
amount
RM’000
RM’000
Forward foreign exchange
contracts
4,028
4,000
C-46
2004
Fair
Notional
value
amount
RM’000
RM’000
1,519
1,517
2005
Fair
Notional
value
amount
RM’000
RM’000
–
–
23. Segment Reporting
Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the
Group’s management and internal reporting structure.
Business Segments
The Group comprises the following main business segments:–
C-47
Thermoformed
Precision injection moulding
Expanded polystyrene
Sheet/profile extrusion
:
:
:
:
:
Manufacture and sale of thermoformed packaging products
Manufacture and sale of precision injection moulded trays/parts
Manufacture and sale of expanded polystyrene products
Design, manufacture and sale of flexographic printing plates
Manufacture and sale of sheet/profile extrusion products
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise corporate assets and expenses, interest income, finance costs and related assets and liabilities
Thermoformed
products
RM’000
Precision
injection
moulded
plastic
products
RM’000
Expanded
polystyrene
products
RM’000
Flexographic
printing
plates
RM’000
Sheet/
profile
extrusion
RM’000
Revenue and expenses
Revenue from external customers
Inter-segment revenue
87,624
–
7,635
–
12,030
–
9,063
–
Total revenue
87,624
7,635
12,030
9,063
Others
RM’000
Inter
segment
elimination
RM’000
Consolidated
RM’000
11,811
16,073
3,383
–
–
(16,073)
131,546
–
27,884
3,383
(16,073)
131,546
Year ended 31 December 2003
Thermoformed
products
RM’000
Segment results
10,344
Precision
injection
moulded
plastic
products
RM’000
(532)
Expanded
polystyrene
products
RM’000
(161)
Flexographic
printing
plates
RM’000
1,634
Sheet/
profile
extrusion
RM’000
85
Others
RM’000
(433)
Inter
segment
elimination
RM’000
Consolidated
RM’000
–
10,937
C-48
Finance costs
Income tax expense
(3,512)
(1,885)
Profit for the year
Assets and liabilities
Segment assets
5,540
82,673
15,853
16,767
7,214
8,216
2,415
–
Unallocated assets
133,138
948
134,086
Segment liabilities
Unallocated liabilities
10,632
2,243
3,864
1,220
768
556
–
19,283
84,222
103,505
Other segment information
Capital expenditure
9,921
2,124
962
723
1,895
120
–
15,745
Depreciation of property, plant and
equipment
4,235
1,188
850
556
954
250
–
8,033
450
5
–
39
1
–
–
495
Thermoformed
products
RM’000
Precision
injection
moulded
plastic
products
RM’000
Expanded
polystyrene
products
RM’000
Flexographic
printing
plates
RM’000
Sheet/
profile
extrusion
RM’000
Total revenue from external customers
94,825
–
4,959
–
14,235
–
8,437
–
Total revenue
94,825
4,959
14,235
9,610
(1,462)
(1,209)
Others
RM’000
Inter
segment
elimination
RM’000
Consolidated
RM’000
11,301
11,070
3,157
–
–
(11,070)
136,914
–
8,437
22,371
3,157
(11,070)
136,914
1,324
620
C-49
Segment results
(476)
–
Finance costs
Income tax expense
Profit for the year
Segment assets
Unallocated assets
8,407
(4,269)
(1,328)
2,810
98,611
17,089
18,473
7,813
9,135
2,094
–
153,215
1,179
154,394
Segment liabilities
20,684
1,673
4,969
491
865
668
–
29,350
95,872
125,222
Thermoformed
products
RM’000
Precision
injection
moulded
plastic
products
RM’000
Expanded
polystyrene
products
RM’000
Flexographic
printing
plates
RM’000
Sheet/
profile
extrusion
RM’000
Others
RM’000
Inter
segment
elimination
RM’000
Consolidated
RM’000
C-50
Capital expenditure
8,775
3,300
1,532
1,408
4,426
122
–
19,563
equipment
4,248
1,573
1,196
621
1,364
286
–
9,288
536
10
–
85
3
–
–
634
Total revenue from external customers
144,694
–
19,068
–
13,929
–
9,086
–
10,223
15,959
4,726
–
–
(15,959)
201,726
–
Total revenue
144,694
19,068
13,929
9,086
26,182
4,726
(15,959)
201,726
23,207
(2,232)
Segment results
(951)
1,331
(247)
(249)
–
20,859
Unallocated expenses
Finance costs
Income tax expense
(3,873)
(4,675)
(792)
Profit for the year
11,519
C-51
Segment assets
Unallocated assets
Thermoformed
products
RM’000
Precision
injection
moulded
plastic
products
RM’000
Expanded
polystyrene
products
RM’000
Flexographic
printing
plates
RM’000
Sheet/
profile
extrusion
RM’000
Others
RM’000
Inter
segment
elimination
RM’000
95,651
25,221
18,032
7,340
13,522
1,725
–
Consolidated
RM’000
161,491
1,561
163,052
Segment liabilities
30,012
4,919
4,275
1,184
998
765
–
42,153
85,672
127,825
Capital expenditure
7,929
5,947
388
381
630
286
–
15,561
equipment
6,431
1,963
1,260
810
940
270
–
11,674
116
21
1
133
2
–
–
273
Geographical Segments
Malaysia is the major market for thermoformed, precision injection moulded plastic and expanded
polystyrene products. Thailand is a major market for thermoformed and precision injection
moulded plastic products. People’s Republic of China is a major market for thermoformed
products.
In presenting information on the basis of geographical segments, segment revenue is based on
the geographical location of customers. Segment assets are based on the geographical location
of the assets.
Malaysia
RM’000
Thailand
RM’000
People’s
Republic
of China
RM’000
Revenue from external
customers
61,800
40,203
12,098
11,624
5,821
131,546
Segment assets
97,365
18,473
12,931
–
4,369
133,138
6,491
4,976
2,497
–
1,781
15,745
71,785
31,444
14,312
13,340
6,033
136,914
108,963
24,742
14,090
–
5,420
153,215
12,627
3,109
2,544
–
1,283
19,563
76,481
50,185
44,386
11,416
19,258
201,726
107,397
25,677
22,949
–
5,468
161,491
8,513
6,280
646
–
122
15,561
Singapore
RM’000
Others
RM’000
Consolidated
RM’000
Year ended
31 December 2003
Capital expenditure
Year ended
31 December 2004
customers
Segment assets
Capital expenditure
Year ended
31 December 2005
customers
Segment assets
Capital expenditure
C-52
24. Subsequent Events
Subsequent to the financial year, pursuant to resolutions passed on 26 September 2006, our
Shareholders approved, inter alia, the following:
(a)
the subdivision of every one ordinary share in the issued and paid-up share capital of our
(b)
the issue of the New Shares pursuant to the Invitation which when fully paid, allotted and
issued, will rank pari passu in all respect with the existing issued Shares;
(c)
the adoption of a new set of Articles of Association;
(d)
that, pursuant to Article 133 and Section 161 of the Companies Act, our Directors be
authorised to: (i) allot and issue shares in our Company; and (ii) issue convertible securities
and any shares in our Company pursuant to the conversion of such convertible securities,
(whether by way of rights, bonus or otherwise) at any time and from time to time upon such
terms and conditions whether for cash or otherwise with such rights and restrictions and for
such purposes and to such persons as our Directors shall in their absolute discretion deem
fit, provided that the aggregate number of such shares to be issued pursuant to such
authority shall not exceed 50 per cent of the post-Invitation issued share capital of our
Company and that the aggregate number of shares to be issued other than on a pro-rata
basis to the then existing shareholders of our Company shall not exceed 20 per cent of the
post-Invitation issued share capital of our Company, and, unless revoked or varied by our
Company in general meeting, such authority shall take effect from the date of listing of our
Shares on the SGX-ST and shall continue to be in force until the conclusion of the next
annual general meeting of our Company or the date by which the next annual general
Listing Manual, “post-Invitation issued share capital” shall mean the enlarged issued and
paid-up share capital of our Company after the completion of the Invitation, after adjusting
for: (i) new shares arising from the conversion or exercise of any convertible securities; (ii)
new shares arising from the exercise of share options or the vesting of share awards
outstanding or subsisting at the time such authority is given, provided the options or awards
were granted in compliance with the SGX-ST Listing Manual; and (iii) any subsequent
consolidation or sub-division of shares.
C-53
APPENDIX D: THE REVIEW REPORT FROM THE REPORTING ACCOUNTANTS
IN RELATION TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS OF TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS SUBSIDIARIES
FOR THE SIX MONTHS ENDED 30 JUNE 2006
REGISTRATION NUMBER: 200308296H
Unaudited Interim Financial Statements
for the Six Months ended
30 June 2006
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION
28 September 2006
The Board of Directors
9 Raffles Place
#32-00 Republic Plaza
Singapore 048619
Dear Sirs
Introduction
We have reviewed the accompanying condensed balance sheet of Texchem-Pack Holdings (S) Ltd. as
at 30 June 2006 and the related condensed profit and loss, changes in equity and cash flows for the
six months period then ended, and a summary of significant accounting policies and other explanatory
notes as set out on pages D-2 to D-13. Management is responsible for the preparation and presentation
of this interim financial information in accordance with the Singapore Financial Reporting Standards.
Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the Singapore Standard on Review Engagements 2410,
“Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review
of interim financial information consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Singapore Standards on
Auditing and consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying interim financial statements does not present fairly, in all material respects, the financial
position of the entity as at 30 June 2006, and of its financial performance, changes in equity and cash
flows for the six months period then ended in accordance with Singapore Financial Reporting
Standards.
This report has been prepared for inclusion in the prospectus of Texchem-Pack Holdings (S) Ltd. to be
issued in connection with the initial public offering of the shares of the Company.
Yours faithfully
KPMG
Singapore
KPMG
Malaysia
Tan Yee Peng
Partner-in-charge
Ooi Kok Seng
Partner-in-charge
D-1
UNAUDITED CONSOLIDATED BALANCE SHEET
SIX MONTHS ENDED 30 JUNE 2006
As at
30 June
2006
RM’000
As at
31 December
2005
RM’000
77,568
5,719
119
821
77,736
5,741
119
1,035
84,227
84,631
25,462
53,236
8,906
20,942
48,719
8,760
87,604
78,421
171,831
163,052
Share capital
Reserves
20,674
21,548
20,674
12,909
Minority interests
42,222
1,923
33,583
1,644
Total equity
44,145
35,227
16,087
9,435
3,939
16,046
10,945
3,561
29,461
30,552
38,967
58,014
1,244
45,853
49,483
1,937
98,225
97,273
Total liabilities
127,686
127,825
171,831
163,052
Non-current assets
Intangible assets
Deferred tax assets
Current assets
Inventories
Total assets
Other payables
Current liabilities
Current tax payable
D-2
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
Six months
ended
30 June
2006
RM’000
Six months
ended
30 June
2005
RM’000
Revenue
113,297
99,142
Cost of sales
(81,435)
(74,287)
Gross profit
31,862
24,855
3,704
2,956
Finance costs
Income tax expense
(8,607)
(5,400)
(14,829)
(13,435)
(2,580)
(2,546)
9,550
6,430
(931)
Profit for the period
(402)
8,619
6,028
8,336
5,701
283
327
8,619
6,028
9.31
6.37
Attributable to:
Minority interests
Earnings per share (sen) - basic and diluted
D-3
APPENDIX D: THE REVIEW REPORT FROM THE REPORTING ACCOUNTANTS IN RELATION TO THE UNAUDITED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF TEXCHEM-PACK HOLDINGS (S) LTD. AND ITS SUBSIDIARIES FOR
THE SIX MONTHS ENDED 30 JUNE 2006
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total
attributable
to equity
holders of
the parent
RM’000
Minority
interests
RM’000
Total
RM’000
Share
capital
RM’000
Statutory
reserve
RM’000
Revaluation
reserve
RM’000
Currency
translation
reserve
RM’000
At 1 January 2005
20,674
856
3,148
481
2,526
27,685
1,487
29,172
–
5,701
5,701
327
6,028
Accumulated
profits
RM’000
D-4
–
–
–
Translation differences relating to financial
statements of foreign subsidiaries
–
–
–
(811)
–
Total recognised income and expense for the
period
–
–
–
(811)
5,701
4,890
327
5,217
Transfer from statutory reserve
–
302
–
–
–
(302)
–
–
(811)
–
(811)
At 30 June 2005
20,674
554
3,148
(330)
8,529
32,575
1,814
34,389
At 1 January 2006
20,674
958
3,148
(308)
9,111
33,583
1,644
35,227
–
–
–
–
8,336
8,336
283
8,619
Translation differences relating to financial
statements of foreign subsidiaries
–
–
–
303
–
303
Total recognised income and expense for the
period
–
–
–
303
8,336
8,639
279
8,918
20,674
958
3,148
17,447
42,222
1,923
44,145
At 30 June 2006
(5)
(4)
299
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months
ended
30 June 2006
RM’000
Six months
ended
30 June 2005
RM’000
9,550
6,430
2,580
123
6,180
192
(314)
40
2,546
98
6,337
110
(80)
–
Operating activities
Adjustments for:
Finance costs
Depreciation of property, plant and equipment
Operating profit before working capital changes
18,351
15,441
Changes in working capital:
Inventories
(4,395)
(2,522)
(4,954)
(206)
(8,302)
3,313
Cash generated from operations
Income taxes paid
Retirement benefits paid
6,480
(1,094)
(68)
10,246
(445)
(251)
5,318
9,550
Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of property, plant and equipment
(5,399)
(170)
620
(5,488)
–
160
Cash flows from investing activities
(4,949)
(5,328)
Payment of listing expenses
Interest paid
Dividends paid
Repayment of bank loans
Proceeds from bank loans
Drawdown/(Repayment) of other bank borrowings, net
Repayment of finance lease liabilities
Net change in advances from holding company
(1,728)
(2,580)
(2,531)
(2,535)
957
6,717
(290)
129
–
(2,546)
(484)
(5,082)
4,026
(3,034)
(192)
(1,081)
Cash flows from financing activities
(1,861)
(8,393)
Cash flows from operating activities
Investing activities
Financing activities
D-5
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months
ended
30 June 2006
RM’000
(1,492)
Net decrease in cash and cash equivalents
Six months
ended
30 June 2005
RM’000
(4,171)
Cash and cash equivalents at beginning of the period
Effect of exchange rate changes on balances held in foreign currency
5,893
48
3,790
(111)
Cash and cash equivalents at end of the period
4,449
(492)
Cash and cash equivalents at end of the period comprise of:
Bank overdrafts
8,906
(4,457)
4,449
D-6
3,576
(4,068)
(492)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
These notes form an integral part of the interim financial statements.
The interim financial statements were authorised for issued by the directors on 28 September 2006.
1.
Background and Basis of Preparation
These interim financial statements have been prepared for the inclusion in the Prospectus of
Texchem-Pack Holdings (S) Ltd. (the “Company”) in connection with the invitation by the
Company.
The immediate and ultimate holding company during the financial period was Texchem Resources
Bhd (“TRB”), incorporated in Malaysia and listed on the Main Board of the Bursa Malaysia
Securities Berhad.
The interim consolidated financial statements of the Company and its subsidiaries (“the Group”)
have been prepared on a condensed basis in accordance with Singapore Financial Reporting
Standard FRS 34 Interim Financial Reporting, issued by the Council on Corporate Disclosure and
Governance.
The interim consolidated financial statements, which do not include the full disclosures of the type
normally included in a complete set of financial statements, are to be read in conjunction with the
last issued financial statements as at 31 December 2005.
Accounting policies and methods of computation used in the interim financial statements are
consistent with those applied in the financial statements for the year ended 31 December 2005.
2.
Seasonal Operations
The Group’s businesses are not affected significantly by seasonal or cyclical factors during the
financial year.
3.
Unusual Items
During the period ended 30 June 2006, there were no unusual items affecting the Group or the
Company.
4.
Dividends
Since the end of the last financial year, the Company has paid the second interim dividend of
RM2,531,000 (2005: RM484,000), in respect of the previous year as disclosed in the financial
statements as at 31 December 2005.
D-7
5.
Segmental Information
Business segments
Six months
ended
30 June 2006
RM’000
Six months
ended
30 June 2005
RM’000
Thermoformed products
72,839
71,696
Precision injection moulded plastic products
20,580
7,188
Expanded polystyrene products
6,735
7,848
5,689
4,898
12,895
12,734
2,268
2,233
(7,709)
(7,455)
Revenue
Other operations
Elimination
Total revenue
113,297
99,142
Thermoformed products
9,906
9,053
Precision injection moulded plastic products
1,660
Segment results
Expanded polystyrene products
459
400
778
920
(135)
(250)
(65)
(25)
(473)
(681)
Other operations
Elimination
Total segment results
6.
(441)
12,130
8,976
As at
30 June
2006
RM’000
As at
31 December
2005
RM’000
1,491
978
Commitments
Capital commitments:
— contracted but not provided for
D-8
At the date of the balance sheet, the Group has commitments for future minimum lease payments
under non-cancellable operating leases as follows:
Payable:
— within 1 year
— after 1 year but within 5 years
— after 5 years
7.
As at
30 June
2006
RM’000
As at
31 December
2005
RM’000
1,475
2,934
1,133
1,635
2,691
1,640
5,542
5,966
Significant Related Party Transactions
For the purposes of these financial statements, parties are considered to be related to the Group
if the Group has the ability, directly or indirectly, to control the party or exercise significant
influence over the party in making financial and operating decisions, or vice versa, or where the
Group and the party are subject to common control or common significant influence. Related
parties may be individuals or other entities.
In addition to the related party information disclosed elsewhere in the financial statements, there
were the following significant transactions which were carried out with related parties in the
normal course of business on terms agreed between the parties:
Six months
ended
30 June 2006
RM’000
Six months
ended
30 June 2005
RM’000
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
19
20,157
5
64
756
731
–
36
25,296
11
515
–
315
2
(viii)
(ix)
–
–
23
2
Note
Related Corporations
(a)
Forwarding charges
Rental expense
Sale of goods
Subcontract fees
Interest expense
(b)
D-9
Note:
(i)
Forwarding charges
Forwarding charges were paid for forwarding and handling services rendered to the Group
by Texchem Food Sdn. Bhd. (“Texchem Food”), a subsidiary of TRB.
(ii)
The Group purchased raw materials from Texchem Materials Sdn. Bhd. (“Texchem
Materials”), a subsidiary of TRB.
(iii) Rental expense
Rental charges also paid to Texchem Singapore Private Limited (“Texchem Singapore”), a
subsidiary of TRB, and Texchem Materials for warehousing, office and storage space.
(iv) Sale of goods
The Group sold its finished goods to other subsidiaries of TRB.
(v)
Subcontract fees
Subcontract fees were paid to Sanko Kasei (M) Sdn. Bhd., a subsidiary of TRB, for
processing work performed.
(vi) Interest expense
Interest was paid to TRB at 7.00% (2005: 7.00%) per annum on advances provided to the
Group and for amounts due to Texchem Materials that remained outstanding beyond the
credit terms given.
In 2005, interest was also paid to Texchem Malaysia Sdn Berhad, a subsidiary of TRB, at
7.25% per annum on advances provided to the Group.
(vii) Corporate guarantee fee
Corporate guarantee fee was paid to TRB for provision of corporate guarantee for Eye
Graphic Sdn. Bhd.’s (“Eye Graphic”) banking facilities in 2005.
Save as disclosed above, there is no consideration paid for corporate guarantee issued by
TRB for banking facilities utilised by the Group.
D-10
(Viii) Sales commission expense
Sales commission was paid to Texchem Singapore on all sales secured through Texchem
Singapore.
The commission ceased as of September 2005.
(ix) Allocated head office cost
Allocated head office cost in 2005 relates to miscellaneous expenses recovered from the
Group.
Note
Six months
ended
30 June 2006
RM’000
Six months
ended
30 June 2005
RM’000
Related Parties
(a)
(i)
871
613
(ii)
18
14
Insurance expense
(iii)
724
609
Rental expense
(iv)
8
14
Sale of goods
(v)
910
478
Security charges
(vi)
219
219
Purchase of goods
(vii)
5
–
(viii)
13
4
(ix)
70
61
(x)
–
10
Royalty expense
(b)
Note:
(i)
Corporate management fees were paid for management services, including finance, human
resources, information technology services and legal and secretarial services, rendered by
Texchem Corporation Sdn. Bhd. (“Texcorp”).
D-11
(ii)
Information services expenses were paid for provision of information technology hardware
and software by Texcorp.
(iii) Insurance expense
Texchem Risk Management Sdn. Bhd. (“Texrisk”), a subsidiary of Texcorp, acted as an
insurance agent for the Group and sourced insurance coverage for the Group’s operations.
Premiums paid to Texrisk were based on commercial rates and determined on an arm’s
length basis.
(iv) Rental expense
Rental expenses were paid to Texchem Holdings Sdn. Bhd. (“THSB”), a company
wholly-owned by a director and substantial shareholder of TRB, and Texcorp for the use of
Villa Primavera and rental of warehouse and office space respectively.
With effect from January 2006, the Group ceased to pay for the use of Villa Primavera.
(v)
Sale of goods
The Group sold its finished goods to companies related to Texcorp and the minority
shareholder of Eye Graphic.
(vi) Security charges
Security charges were paid to Guardman Security Services Sdn. Bhd. (“Guardman
Security”), a wholly-owned subsidiary of Texcorp, for security services rendered.
(vii) Purchase of goods
The Group purchased raw materials from the minority shareholder of Eye Graphic.
(viii) Data transfer charges
Data transfer charges were paid to the minority shareholder of Eye Graphic for artwork
design data provided.
(ix) Royalty expense
Royalties were paid to the minority shareholder of Eye Graphic for use of their intellectual
property rights.
D-12
(x)
8.
Corporate guarantee fee was paid to Texcorp for provision of corporate guarantee for Eye
Graphic’s banking facilities.
Subsequent Events
Subsequent to the financial period:
Dividends
The Company declared an interim tax exempt dividend at 34.6 sen per share, amounting to
RM3,098,000, in respect of the current financial year.
Shares
Pursuant to resolutions passed on 26 September 2006, our Shareholders approved, inter alia, the
following:
(a) the subdivision of every one ordinary share in the issued and paid-up share capital of our
(b) the issue of the New Shares pursuant to the Invitation which when fully paid, allotted and
issued, will rank pari passu in all respect with the existing issued Shares;
(c) the adoption of a new set of Articles of Association;
(d)
that, pursuant to Article 133 and Section 161 of the Companies Act, our Directors be
authorised to: (i) allot and issue shares in our Company; and (ii) issue convertible securities
and any shares in our Company pursuant to the conversion of such convertible securities,
(whether by way of rights, bonus or otherwise) at any time and from time to time upon such
terms and conditions whether for cash or otherwise with such rights and restrictions and for
such purposes and to such persons as our Directors shall in their absolute discretion deem
fit, provided that the aggregate number of such shares to be issued pursuant to such
authority shall not exceed 50 per cent of the post-Invitation issued share capital of our
Company and that the aggregate number of shares to be issued other than on a pro-rata
basis to the then existing shareholders of our Company shall not exceed 20 per cent of the
post-Invitation issued share capital of our Company, and, unless revoked or varied by our
Company in general meeting, such authority shall take effect from the date of listing of our
Shares on the SGX-ST and shall continue to be in force until the conclusion of the next
annual general meeting of our Company or the date by which the next annual general
Listing Manual, “post-Invitation issued share capital” shall mean the enlarged issued and
paid-up share capital of our Company after the completion of the Invitation, after adjusting
for: (i) new shares arising from the conversion or exercise of any convertible securities; (ii)
new shares arising from the exercise of share options or the vesting of share awards
outstanding or subsisting at the time such authority is given, provided the options or awards
were granted in compliance with the SGX-ST Listing Manual; and (iii) any subsequent
consolidation or sub-division of shares.
D-13
APPENDIX E: TRB AND ITS SUBSIDIARIES
TEXCHEM RESOURCES BHD.
Texchem Materials
Sdn. Bhd.
Texchem Resources
Bhd. – 100%
Texchem Consumers
Sdn. Bhd.
Texchem Resources
Bhd. – 100%
Texchem
Consumers
(East Malaysia)
Sdn. Bhd.*
Texchem Singapore
Private Limited
Texchem Materials Sdn.
Bhd. – 100%
Myanmar
Texchem Limited
Texchem Consumers
Sdn. Bhd. – 100%
Texchem Materials
Sdn. Bhd. – 100%
Texchem
Consumers
(Cambodia) Ltd.
Fumakilla Malaysia
Berhad – 53.13%
Texchem Consumers
Sdn. Bhd. – 46.87%
Texchem Materials
(Thailand) Ltd.
Texchem Materials
Sdn. Bhd. – 100%
Texchem Malaysia
Sdn. Berhad
Texchem
Resources Bhd. – 85.42%
Minority Shareholders – 14.58%
Texchem Materials
Sdn. Bhd. – 100%
Texchem Trading
(Wuxi) Co., Ltd.
Texchem-Pack
(M) Bhd.
Texchem-Pack
Holdings (S) Ltd. – 100%
Texchem-Pack
(Thailand) Co., Ltd.
Texchem-Pack (M) Bhd. – 100%
Texchem-Pack
(Johor) Sdn. Bhd.
Texchem Food Sdn. Bhd. – 67.11%
Paolo Carozzi – 32.89%
Texchem
Engineering
Plastics Sdn. Bhd.
Texchem Resources
Bhd. – 100%
Texchem-Pack
(KL) Sdn. Bhd.
Texchem Resources Bhd. – 51%
Sanko Kasei Co., Ltd. – 40%
Mitsubishi Corporation Japan – 9%
Texchem-Pack
(Vietnam) Co., Ltd.
Texchem-Pack (KL) Sdn. Bhd. – 100%
Texchem-Pack
(Wuxi) Co., Ltd.
E-1
Technopia
(Thailand) Ltd.
Fumakilla Malaysia
Berhad – 95.9%
Surin Upatkoon – 4.1%
Ting Tai Industries
(Malaysia)
Sdn. Berhad
Eye Graphic Sdn. Bhd. – 100%
Sea Master Trading
Co. Sdn. Bhd. – 91.72%
Minority Shareholders – 8.28%
Sanko Kasei (M)
Sdn. Bhd.
Fumakilla Malaysia Berhad – 100%
Eye Graphic
(Vietnam) Co., Ltd.
Myanmar Sea
Master Company
Limited
Sushi Kin Sdn. Bhd.
Technopia
Vietnam Pte. Ltd.
Texchem-Pack
Holdings (S) Ltd. – 51%
Eye Corporate
Planning Co. Ltd. – 49%
Texchem Food
Sdn. Bhd. – 100%
Texchem Materials
Sdn. Bhd. – 100%
Fumakilla Japan – 10.29%
Texchem Resources Bhd. – 87.27%
Other Shareholders – 2.44%
Eye Graphic Sdn.
Bhd.
Sea Master
Trading Co.
Sdn. Bhd.
Seapack Italia
S.r.l.
Texchem Resources
Bhd. – 75%
Texchem-Pack
Holdings (S) Ltd. –100%
Mascot Industries
Company Limited – 10.0%
Texchem Food
Sdn. Bhd. – 90.0%
Ocean Pioneer
Food Sdn. Bhd.
*Member’s Voluntary
Winding up
Fumakilla Malaysia
Berhad
Texchem
Polymers Sdn. Bhd.
A.S.K. Andaman
Limited
Sea Master Trading
Co. Sdn. Bhd. – 100%
Texchem Materials
Sdn. Bhd. – 100%
PT. Texchem
Indonesia
Texchem-Pack
Holdings (S) Ltd.
Texchem Food
Sdn. Bhd.
Blood Protection
Company (Malaysia)
Sdn. Bhd.
Ting Tai Industries
(Malaysia) Sdn. Berhad –100%
Myanmar Texcorp
Limited
Blood Protection Company
(Malaysia) Sdn. Bhd. –100%
Zenith Enterprises
Sdn. Berhad*
Blood Protection Company
(Malaysia) Sdn. Bhd. –100%
Texchem
Consumers
(Cambodia) Ltd.
Fumakilla Malaysia
Berhad – 53.13%
Texchem Consumers
Sdn. Bhd. – 46.87%
Texchem
Consumers
(Thailand) Ltd.
APPENDIX F: LETTER FROM THE INDEPENDENT FINANCIAL ADVISER TO THE
INDEPENDENT DIRECTORS OF TEXCHEM-PACK HOLDINGS (S) LTD.
25 October 2006
The Independent Directors
Republic Plaza
Singapore 048619
Dear Sirs,
1.
INTRODUCTION
This letter has been prepared for inclusion in the prospectus (the “Prospectus”) to be issued in
relation to the initial public offering of Texchem-Pack Holdings (S) Ltd. (“Texpack Holdings” or the
“Company”) on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Unless otherwise
defined, all terms defined in the Prospectus have the same meanings in this letter.
Under Chapter 9 of the listing manual of the SGX-ST (the “SGX-ST Listing Manual”), an issuer
may seek a general mandate from shareholders for recurrent transactions of a revenue or trading
nature or those necessary for its day-to-day operations. Transactions conducted under such a
general mandate are not subject to the thresholds under Chapter 9 of the SGX-ST Listing Manual,
which requires shareholders’ approval and/or an immediate announcement in respect of the
transaction if the value of the transaction is equal to or exceeds certain thresholds.
The Directors envisage that in the normal course of business of the Company and its subsidiaries
(collectively, the “Group”), transactions involving the sale, purchase, provision or supply of
services and/or products between the Group and interested persons as set out on pages 147 and
148 of the Prospectus (the “Interested Person Transactions”), will occur from time to time. As
such, the Directors are seeking a shareholders’ mandate (the “Shareholders’ Mandate”) so that
the Group may enter, in its normal course of business, into the Interested Person Transactions
with the classes of interested persons as set out on page 147 of the Prospectus (the “Interested
Persons”), provided that such transactions are made on normal commercial terms and are not
prejudicial to the interests of the Company and its minority shareholders (“Minority
Shareholders”).
2.
TERMS OF REFERENCE
Deloitte & Touche Corporate Finance Pte Ltd (“DTCF”) has, in accordance with the requirements
of Chapter 9 of the SGX-ST Listing Manual, been appointed as the independent financial adviser
to the Independent Directors to opine as to whether the methods or procedures for determining
the transaction prices of the Interested Person Transactions in connection with the proposed
Shareholders’ Mandate, as set out on pages 146 to 154 of this Prospectus, are sufficient to ensure
that the transactions will be carried out on normal commercial terms and will not be prejudicial to
the interests of the Company and its Minority Shareholders.
F-1
We have not been involved, whether directly or indirectly, in any aspect of the discussions on the
scope of the proposed Shareholders’ Mandate and the categories of the Interested Person
Transactions. We have also not been involved in the deliberations leading up to the decision by
the Directors to obtain the Shareholders’ Mandate or the methods or procedures proposed to be
adopted by the Group to ensure that the Interested Person Transactions will be carried out on
normal commercial terms and will not be prejudicial to the interests of the Company and its
Minority Shareholders.
In providing our opinion, we have held discussions with certain of the Directors and the
management of the Company. We have not independently verified information furnished by such
Directors and management of the Company nor any representation or assurance made by them
(whether written or verbal). Accordingly, we do not, whether expressly or implied, warrant or
accept responsibility for the accuracy, completeness and/or adequacy of such information, facts,
representations or assurances. Nevertheless, the Directors have confirmed to us that, to the best
of their knowledge and belief, the information provided to us (whether written or verbal) by
themselves and by the management of the Company, as well as the information contained in the
Prospectus, constitutes a full and true disclosure in all respects of all facts relating to the
Shareholders’ Mandate and that there is no information the omission of which would make any of
the information contained herein or in the Prospectus inaccurate, incomplete or misleading in any
respect. We have made reasonable enquiries and used our judgment in assessing such
information and have found no reason to doubt the reliability of such information. We have further
assumed that all statements of fact, belief, opinion and intention made by the Directors in the
Prospectus have been made after due and careful enquiry.
We were also not required or authorised to obtain, and we have not obtained, any quotation or
transaction price from third parties for the sale, purchase, provision or supply of services and/or
products similar to those which are to be covered by the Shareholders’ Mandate, and therefore
are not able to, and will not, compare the transactions with similar transactions with third parties.
We have not evaluated and have not been requested to opine on, and we do not express any
opinion on, the strategic or commercial merits or the risks of the Interested Person Transactions,
the Shareholders’ Mandate or the prospects or earnings potential of the Company, and such
evaluation shall remain the responsibility of the Directors. As such, we do not warrant or make any
representation in relation to the merits of the Interested Person Transactions and the
Shareholders’ Mandate. Our terms of engagement do not require us to conduct, and we have not
conducted, a comprehensive review of the business, operations and financial condition of the
Group. We have neither conducted an audit of the Interested Person Transactions nor do we
warrant the implementation of the methods or procedures for determining the transaction prices
in relation to the Interested Person Transactions by the Group.
Our opinion as set forth in this letter is based on prevailing market, economic, industry, monetary
and other applicable conditions, our analysis of the information provided in the Prospectus as well
as information provided to us by the Directors and by the management of the Company as of the
Latest Practicable Date. Accordingly, our opinion does not take into account any event, condition
or information which occurs after the Latest Practicable Date. We assume no responsibility to
update, revise or reaffirm our opinion in the light of any subsequent development after the Latest
Practicable Date that may affect our opinion contained herein.
Our opinion in relation to the Shareholders’ Mandate should be considered in the context
of the entirety of this letter and of the Prospectus.
F-2
3.
EVALUATION OF
TRANSACTIONS
THE
REVIEW
PROCEDURES
FOR
INTERESTED
PERSON
In arriving at our opinion as to whether the methods or procedures for determining the transaction
prices of the Interested Person Transactions are sufficient to ensure that the Interested Person
Transactions will be carried out on normal commercial terms and will not be prejudicial to the
interests of the Company and its Minority Shareholders, we have taken into consideration the
following:
4.
(i)
the Interested Person Transactions as set out on pages 147 and 148 of the Prospectus;
(ii)
the methods and review procedures for the Interested Person Transactions as set out under
the headings “Review Procedures for Mandated Transactions with Interested Persons” on
pages 149 to 151 and “Additional Control and Verification Procedures to be Undertaken by
the Audit Committee” on pages 152 and 153 of the Prospectus; and
(iii)
the rationale for and benefits of the Shareholders’ Mandate as set out on pages 148 and 149
of the Prospectus.
OUR CONCLUSION
Based on our evaluation of the methods or procedures to be used for determining the transaction
prices for the Interested Person Transactions and subject to the qualifications made in this letter,
we are of the opinion that the methods or procedures for determining transaction prices for the
Interested Person Transactions as set out on pages 147 and 148 of the Prospectus, if adhered to,
are sufficient to ensure that the Interested Person Transactions will be carried out on normal
commercial terms and will not be prejudicial to the interests of the Company and its Minority
Shareholders.
We have prepared this letter for the use of the Independent Directors of the Company in their
consideration of the Shareholders’ Mandate. Any recommendation made by the Independent
Directors shall remain their sole responsibility. Neither the Company nor the Directors may
reproduce, disseminate or quote this letter (or any part thereof) for any purpose at any time and
in any manner without our prior written consent.
Our opinion should not be relied on as an indication of the merits of the Interested Person
Transactions, the Invitation, the Group or the Shares to any potential investor of the Company nor
a recommendation to any future shareholder of the Company as to how such shareholder should
vote on the renewal of the Shareholders’ Mandate, if such is obtained for the Interested Person
Transactions in the future. As each potential investor and future shareholder of the Company may
have different investment objectives and considerations, they should seek appropriate
professional advice that is tailored to their circumstances.
This letter is governed by, and construed in accordance with, the laws of Singapore, and is strictly
limited to the matters stated herein and does not apply by implication to any other matter.
Yours faithfully,
Deloitte & Touche Corporate Finance Pte Ltd
Jeff Pirie
Director
F-3
APPENDIX G: ENGLISH TRANSLATIONS OF THE PERMITS ISSUED BY THE
BOARD OF INVESTMENT OF THAILAND TO TEXPACK (THAILAND)
PROMOTION CERTIFICATE
BOARD OF INVESTMENT (“BOI”)
No. 1705/2540
The Board of Investment, by virtue of the Investment Promotion Act 1977, hereby issues this Promotion
Certificate to:
PKG-Pack (Thailand) Co., Ltd
Registration no. 1228/2540, on 6 October, 1997
With its office located at 250/1, Moo 2, Bangpa-In Industrial Estate,Tambol Klongjik Amphur Bangpa-In,
Ayudhaya Province 13160
To certify that the company is granted investment promotion in the business of manufacturing
thermo-vacuum forming plastic trays in Category 6.12- manufacture of plastic products or plastic coats
with such rights and benefits and compliance with such conditions as follows:
Rights and Benefits
The promoted person shall be granted the rights as follows:
1.
Under Section 25, the promoted person shall be granted permission to bring into the Kingdom
foreign nationals who are skilled workers, experts, and their spouses and dependents in such
numbers and for such periods of time permitted to stay in the Kingdom as the BOI may deem
appropriate.
2.
Under Section 26, foreign nationals who are skilled workers or experts and who are permitted to
stay in the Kingdom under Section 25 shall be granted a work permit for a specific position
approved by the BOI for the period of permitted stay in the Kingdom.
3.
Under Section 27, the promoted person shall be permitted to own land to such an extent as the
BOI deems appropriate.
4.
Under Section 29, the promoted person shall be granted such a reduction by one half of the import
duties on the machinery as approved by the BOI for the machinery manufactured since 1993,
except items of machinery with import duties lower than 10 percent will not be granted a reduction.
5.
Under Section 31, paragraph one, the promoted person shall be granted exemption of corporation
tax on the net profit derived from the promoted activity for a period of seven years from the date
income is first derived from such activity.
Under paragraph three, the income on which the computation of the net profit derived from the
activity referred to under paragraph one is to be based shall include income from the sale of
by-products, that is, scraps or waste materials derived from the production processes.
Under paragraph four, in the case where the loss has been incurred during the period of receiving
exemption of corporation tax under paragraph one, the promoted person shall be granted
permission to deduct such annual loss from the net profits accrued after the expiration of the
period of exemption of corporation tax for a period of not more than five years from the expiry date
of such period, and he may choose to deduct from the net profits of any one year or several years.
G-1
6.
Under Section 34, dividends derived from the promoted activity granted an exemption of
corporation tax under Section 31 shall be exempted from computation of taxable income
throughout the period the promoted person receives the exemption of corporation tax.
7.
Under Section 36 (1), exemption of import duties on the raw and essential materials imported for
use in production for export shall be granted for a period of one year from the date of the first
import.
8.
Under Section 36 (2), exemption of import duties on items which the promoted person imports for
re-export shall be granted for a period of one year from the date of the first import.
9.
Under Section 36 (4), for the first 10 years after the company generates operating income, 5
percent of the increase in export income from the previous year is deductible, provided that the
income derived from export for any particular year is not less than the average income derived
from export for the previous 3 years, with the exception of the first 2 years.
10. Under Section 37, the company is granted permission to take or remit money in a foreign currency
out of Thailand.
Effective from 23 July, 2003, the date on which the grant of the promotion was approved by the
BOI.
Conditions
In exercising the abovementioned rights and benefits, the company is required to comply with the
conditions relating to such rights and benefits and other conditions as follows:
1.
The land ownership permitted by the BOI must be used only for the operation of the promoted
activity unless the BOI permits otherwise in writing.
2.
The company shall not use or allow the skilled workers or experts who are foreign nationals and
who are permitted to be brought by the company into the country for the purposes of the promoted
activity to carry on other occupations or perform any other duty other than that of the positions
approved by the BOI. Upon the termination of such skilled workers or experts from their positions,
the company shall notify the BOI within 15 days from the date of such termination.
3.
The machines used for the promoted activity must be efficient and modern unless otherwise
permitted by the BOI, and
3.1 The machines granted a reduction in import duty must be imported by 14 November 1999
unless an extension is sought and granted by the BOI.
3.2 Within one year from the end of the importation period, the company must submit a list of
machinery seeking a reduction of import duty in the forms and in accordance with the
procedures and conditions prescribed by the BOI. Upon the expiration of the one-year
period, the BOI will withdraw the rights and benefits of the reduction in import duty from the
machinery in respect of the bank guarantee.
3.3 The machinery which have been granted reduction of import duties shall be used only in the
promoted activities specified in the promotion certificate, unless otherwise approved by the
BOI.
G-2
3.4 The above approved machinery must not be mortgaged, sold, transferred, rented or used by
any other persons, unless approval is granted by the BOI.
4.
The raw materials and essential materials enjoying the exemption or reduction in import duty must
be used specifically only in the promoted activity. Disposal of such raw materials and essential
materials or use in any other activities must be approved by the BOI.
5.
The construction of the plant and the purchase of machinery must commence 6 months from the
date of issue of the promotion certificate. A report of the commencement of such works and
supporting evidence must be submitted to the BOI.
6.
The company must be in full operation within 30 months from the date of issue of the promotion
certificate.
7.
The company must give written notice to the BOI not less than 15 days prior to the
commencement of operations for the BOI’s inspection and approval for the commencement of
operations.
8.
Upon commencement of operations, a report on the results and operations of the company must
be submitted to the BOI as follows:
9.
8.1
Whenever there is a change in the proportion of shareholdings between the Thai nationals
and foreign nationals, and in the foreign nationals’ shareholding;
8.2
Financial results and operational results, in the form prescribed by the BOI, to be reported
every year on or before 30 June of the following year;
8.3
Performance of skilled workers and experts who are foreign nationals permitted to enter
Thailand in accordance with the investment promotion laws in relation to the progress of
their training, in accordance with the forms and procedures prescribed by the BOI.
8.4
Other matters as prescribed by the BOI from time to time.
The company is required to adopt preventive measures against causing any hazards, nuisance
or detrimental effects to the environment. Such measures have to be certified by the Ministry of
Industry or an institution of the relevant government agencies.
10. The company must comply with any safety related laws and measures of Thailand;
11.
Any stoppage of operations for a period of more than two months requires the written approval of
the BOI;
12. The company must allow the BOI to conduct inspections of its facilities;
13. The company must have a registered capital of no less than THB20,000,000 which must be fully
paid up before operations can commence;
14. The company must comply with the following list of operational conditions:
14.1 The company must engage in the manufacture of thermoformed plastic trays;
14.2 The company must maintain a production capacity of 30,000,000 pieces (5,400 tons). The
company must operate 24 hours per day and 365 days per year;
14.3 The company’s manufacturing process must be approved by the BOI;
G-3
14.4 The company must export its products at not less than 80% of the FOB price per year;
14.5 Thai nationals must be trained to replace the foreign skilled workers and experts within the
period stipulated by the BOI; and
14.6 The size of the investment, excluding cost of land and working capital, must not be less
than THB1,000,000, otherwise all rights and benefits will be revoked.
15. The income-expense account for the promoted business must be prepared separately from any
other business for the purpose of calculating the net profits exempted from corporate income tax;
16. The product quality shall conform to an international standard, and if an announcement of
standard definition is made, the company must attempt to obtain the industrial products license
from the Thai Board of Industrial Products Standards;
17. The factory must be situated in Bangpa-In Industrial Estate, Ayudhaya Province and is not allowed
to be established in any prohibited area described in the town plan announced by the Provincial
authority unless prior permission is obtained from the Thai Ministry of Industry or other related
government authorities. The factory shall not be transferred to any other location without the prior
approval of the BOI within 15 years from the date of operation; and
18. The BOI must be notified of any subsequent changes in the company’s address. All documents,
notifications and orders sent by the BOI to the last registered address are deemed to have been
duly received by the company.
Issued on November 14, 1997
(Mr Staporn Kavitanondh)
Permanent Secretary
Board of Investment Promotion
G-4
No. 1489(2)/2546
Certificate to:
Texchem-Pack (Thailand) Company Limited
Registered as a limited company, registration no. 1228/2540, on 6 October, 1997.
With its office located at 250/1, Village No. 2, Bangpa-In Industrial Estate, Sorayut Road, Klong-Jig
Sub-district, Bangpa-In District, Phra Nakhon Si Ayutthaya Province 13160.
To certify that it has been granted investment promotion in the business of manufacturing thermovacuum forming plastic trays, moulds and mould parts. Type 4.2 — business of manufacturing
machinery and equipment and Type 6.9 — business of manufacturing plastic or plastic-coated
products.
Whereby it shall be granted the rights and benefits and shall comply with the conditions as follows:
Rights and Benefits
1.
Under Section 25, the promoted person shall be granted permission to bring into Thailand foreign
nationals who are skilled workers, experts, and their spouses and dependents in such numbers
and for such periods of time permitted to stay in Thailand as the Board may deem appropriate.
2.
stay in Thailand under Section 25 shall be granted a work permit for a specific position approved
by the Board for the period of permitted stay in Thailand.
3.
Board deems appropriate.
4.
Under Section 28, the promoted person shall be granted exemption from payment of import duties
on machinery as approved by the BOI for the manufacture of moulds and mould parts, for the
machinery manufactured since 1993.
5.
duties on the machinery as approved by the Board for the machinery manufactured since 1993,
except items of machinery with import duties lower than 10 percent will not be granted a reduction
for the manufacture of thermo-vacuum forming plastic trays.
6.
tax on the net profit derived from the promoted activity amounting in aggregate to not exceeding
100 percent of the investments, exclusive of the cost of land and working capital, for a period of
seven years for the manufacture of thermo-vacuum forming trays and for a period of eight years
for the manufacture of molds and mold parts, from the date income is first derived from such
activity.
G-5
7.
8.
import.
9.
10. Under Section 37, permission to take or remit out of Thailand money in a foreign currency shall
be granted.
Effective from 23rd July, 2003, the date on which the grant of the promotion was approved by the
Board
Conditions
The promoted person shall have to comply with the general conditions and conditions specific to the
project as follows:
General Conditions
1.
In the event the rights under Sections 25 and 26 are obtained, the promoted person shall not use
or allow the skilled workers or experts who are foreign nationals and who are permitted to be
brought by the promoted person into the country for the purposes of the promoted activity to carry
on other occupations or perform any other duty other than that of the position approved by the
Board, and upon retirement of any skilled workers or experts from the positions, the promoted
person shall have to so notify the BOI within 15 days from the date of their retirement.
Training of the Thai nationals must be accelerated and support given to enable them to perform
the work under the promoted project in place of the skilled workers or experts who are foreign
nationals within the time specified.
Performance of the skilled workers or experts who are foreign nationals and who are permitted to
enter the country, as to how much they have trained the Thai nationals to gain knowledge and
skills, must be reported in forms and according to the procedures prescribed by the BOI.
2.
In the event the right under Section 27 is obtained, the land permitted must be used only for the
operation of the promoted activity.
G-6
3.
In the event the right under Section 28 or 29 is obtained, the promoted person shall act as follows:
3.1
In the event a guarantee is provided for the machinery, documents listing the machinery on
which the exemption from or reduction of the import duties is applied for shall be submitted
to the BOI in forms and according to the procedures and conditions prescribed by the BOI
for approval within one year from the date of termination of the importing period. After the
expiration of the one-year period, the Board will withdraw the rights and benefits of the
exemption from or reduction of the import duties on the machinery in respect of only the
items imported and remaining in the course of use of the bank guarantee as surety for the
import duties.
3.2
The machinery on which the exemption from or reduction of the import duties has been
approved shall be used only in the activity under the promotion certificate.
3.3
The promoted person shall not mortgage, dispose of, transfer, let or allow other persons to
use the machinery on which the exemption from or reduction of the import duties has been
granted.
3.3.1 In the case where the promoted person has been permitted to mortgage the
machinery and where the mortgage thereof is foreclosed, he shall so notify the BOI
within 15 days from the date the Court accepts the claim; and if the mortgagee is
unable to pay in full taxes and duties on the machinery of which the mortgage has
been foreclosed pursuant to Section 42 of the Investment Promotion Act 1977, the
promoted person shall be liable for paying the taxes and duties on the machinery in
full in accordance with the customs tariff law.
3.3.2 In the event of being permitted to transfer the machinery for the purpose of
execution of a leasing or hire purchase agreement, the promoted person shall
comply with the criteria, conditions and procedures prescribed by the BOI.
4.
In the event the right under Section 36 (1) is obtained, such raw and essential materials must be
for use specifically in producing, mixing or assembling products for export and only in the
promoted activity.
5.
The implementation of the project must be notified to the BOI on the expiration of one year and
two years from the date of issue of the promotion certificate.
6.
Upon commencement of the operation, the following results of the implementation of the project
and the operation shall be reported to the BOI:
6.1
Every change (if any) in the proportion of shareholding between the Thai nationals and
foreign nationals, and in the foreign nationals’ shareholding;
6.2
Financial standing and results of the operation, in forms prescribed by the BOI, to be
reported every year on or before 31st July of the following year;
6.3
Other matters to be reported from time to time in forms and within the period of time
prescribed by the BOI.
7.
A preventive and control system approved by the government agencies concerned shall be made
available and used lest harmful effects be produced on the quality of the environment or danger
or trouble and annoyance caused to the neighbours.
8.
Other pertinent laws shall be complied with.
G-7
9.
A stoppage of the operation for more than two months must be permitted by the BOI.
10. Convenience in the inspection shall be offered to the authority.
11.
The production or service processes must be in accordance with the project proposed and
approved.
12. The quality of the products produced or assembled shall meet the universal standard, and if the
notification specifying the standard according to the law concerning the industrial standards has
been issued, action shall be taken to secure the Industrial Standard Board’s permit to exhibit the
mark of standard.
13. Notice of change of domicile of the promoted person, together with the certificate of the Ministry
of Commerce, shall be given to the BOI. Otherwise, the domicile shall be deemed to remain as
it has last been notified to the BOI, and documents, notifications, or orders sent from the BOI to
the domicile so notified shall be deemed to be duly received.
Conditions Specific to the Project
1.
The machinery used in the promoted activity must be new.
1.1
In the event the use of old machinery is permitted, the machinery on which the exemption
from or reduction of the import duties is granted must be manufactured since 1993. Its
efficiency must be certified by a reliable institute and approved by the BOI.
1.2
The machinery on which the exemption from or reduction of the import duties is granted
shall be imported on or before 9th March, 2006.
1.3
Approval for the list of machinery before the exercise of the rights and benefits of the
exemption from or reduction of the import duties on the machinery must be applied for in
forms and according to the procedures prescribed by the BOI.
2.
The undertaking shall be completed and made ready for the commencement of the operation
within a period of not more than 36 months from the date of issue of the promotion certificate,
provided not less than 15-day prior written notice thereof shall be given to the BOI for the purpose
of making an inspection prior to the commencement of the operation.
3.
The registered capital shall not be less than THB60,000,000 and shall be fully paid up prior to the
date of the commencement of the operation.
4.
The essence of the promoted project shall be implemented in respect of the following matters:
5.
4.1
Type of product: thermo-vacuum forming plastic trays, molds and mold parts
4.2
Size of business, with the production capacity as follows:
Thermo-vacuum forming plastic trays: approx. 28,000,000 pieces/year (5,040 tons)
Molds: approx. 720 pieces/year
Mold parts: approx. 2,400 pieces/year
(working hours: 24 hours/day, 365days/year)
By-products: scraps or waste materials derived from the production processes
The size of investment (exclusive of the cost of land and working capital) shall not be less than
THB2,000,000.
G-8
6.
The revenue and expenditure account of the promoted activity shall be kept separately from other
activities, whether promoted or not, for the purposes of computing the net profits exempted from
corporation tax under Section 31.
7.
An application for the exercise of the rights and benefits of the exemption from corporation tax and
a report on the operation results audited by a certified public accountant shall be submitted to the
BOI for approval within 120 days from the ending date of the accounting period for the purpose
of application for the rights and benefits of the exemption from corporation tax of the relevant
accounting period.
8.
The value of corporation tax exempted under Section 31, paragraphs one and three does not
exceed THB47,741,000. It will be adjusted according to the amount of investments exclusive of
the actual cost of land and working capital on the date of the commencement of the operation
under the promoted project.
9.
Steps shall be taken to secure a certificate of quality in accordance with ISO 9000 or other
equivalent international standards within two years from the date of the commencement of the
operation. If it is not possible to take such action within the said period of time, the rights and
benefits with respect to the exemption from corporation tax will be revoked for a period of 1 year.
10. The factory shall be set up in the Bang Pa-in Industrial Estate, Changwat Phra Nakhon Si
Ayutthaya, which is an industrial estate applying for promotion before 1st August, 2000, provided
that the site of the factory shall not be in the restricted zone under the notification on the
comprehensive city plan of the province, and its setting-up shall also be permitted by the Ministry
of Industry or the government agencies concerned. Within a period of fifteen years from the date
of the commencement of the operation, the factory may not be relocated to another locality.
The promoted person shall comply with the conditions contained in the promotion certificate or in
the permit. In the event of a violation thereof or failure to comply therewith, the rights and benefits
may be withdrawn in whole or in part, and the annexes shall be deemed to constitute a part of the
promotion certificate.
In the event amendments to the rights, alterations to the conditions or other amendments are
made, the promoted person shall produce this promotion certificate to the BOI for the purpose of
such amendments or alterations.
Effective from 23rd July, 2003
Given on 9th September, 2003
(Seal of the Office of the Board of Investment)
(Signature) Chutaphon Lamphasara
(Mrs. Chutaphon Lamphasara)
Deputy Secretary-General
Acting for and on behalf of
Secretary-General of the Board of Investment
G-9
No. 1558(2)/2546
Certificate to:
Registered as a limited company, registration no. 1228/2540, on 6 October, 1997
With its office located at 250/1, Village No. 2, Bangpa-In Industrial Estate, Sorayut Road, Klong-Jig
Sub-district, Bangpa-In District, Phra Nakhon Si Ayutthaya Province 13160.
To exhibit that it has been granted investment promotion in the business of manufacturing plastic
products and plastic parts Type 6.9 — business of manufacturing plastic or plastic-coated products
Rights and Benefits
1.
Under Section 25, the promoted person shall be granted permission to bring into Thailand foreign
nationals who are skilled workers, experts, and their spouses and dependents in such numbers
and for such periods of time permitted to stay in the Thailand as the BOI may deem appropriate.
2.
stay in Thailand under Section 25 shall be granted a work permit for a specific position approved
by the BOI for the period of permitted stay in Thailand.
3.
BOI deems appropriate.
4.
duties on the machinery as approved by the BOI, except items of machinery with import duties
lower than 10 percent will not be granted a reduction.
5.
100 percent of the investments, exclusive of the cost of land and working capital, for a period of
seven years from the date income is first derived from such activity. Under paragraph three, the
income on which the computation of the net profit derived from the activity referred to under
paragraph one is to be based shall include income from the sale of by-products, that is, scraps or
waste materials derived from the production processes. Under paragraph four, in the case where
the loss has been incurred during the period of receiving exemption of corporation tax under
paragraph one, the promoted person shall be granted permission to deduct such annual loss from
the net profits accrued after the expiration of the period of exemption of corporation tax for a
period of not more than five years from the expiry date of such period, and he may choose to
deduct from the net profits of any one year or several years.
G-10
6.
7.
import.
8.
9.
Under Section 37, permission to take or remit out of Thailand money in a foreign currency shall
be granted. Effective from 3rd September, 2003, the date on which the grant of the promotion was
approved by the BOI.
Conditions
project as follows:
General Conditions
1.
BOI, and upon retirement of any skilled workers or experts from the positions, the promoted
person shall have to so notify the BOI within 15 days from the date of their retirement. Training of
the Thai nationals must be accelerated and support given to enable them to perform the work
under the promoted project in place of the skilled workers or experts who are foreign nationals
within the time specified. Performance of the skilled workers or experts who are foreign nationals
and who are permitted to enter the country, as to how much they have trained the Thai nationals
to gain knowledge and skills, must be reported in forms and according to the procedures
2.
3.
3.1
expiration of the one-year period, the BOI will withdraw the rights and benefits of the
import duties.
3.2
G-11
3.3
granted.
been foreclosed pursuant to Section 42 of the Investment Promotion Act 1977, the
promoted person shall be liable for paying the taxes and duties on the machinery in
full in accordance with the customs tariff law.
4.
promoted activity.
5.
The implementation of the project must be notified to the BOI on the expiration of one year and
two years from the date of issue of the promotion certificate.
6.
6.1
Every change, if any, in the proportion of shareholding between the Thai nationals and
6.2
6.3
7.
8.
9.
11.
approved.
mark of standard.
G-12
1.
1.1
shall be imported on or before 7th April, 2006.
1.2
2.
within a period of not more than 36 months from the date of issue of the promotion certificate,
provided not less than 15-day prior written notice thereof shall be given to the BOI for the purpose
of making an inspection prior to the commencement of the operation.
3.
The registered capital shall not be less than THB60,000,000 and shall be fully paid up prior to the
date of the commencement of the operation.
4.
4.1
Type of product: plastic products and plastic parts, such as, packaging and components,
etc.
4.2
Size of business: production capacity for the plastic products and plastic parts, such as,
packaging and components, etc. Approx. 22,737,900 pieces/year (approx. 2,287 tons)
(working hours: 24 hours/day, 365days/year) By-products: scraps or waste materials
derived from the production processes.
5.
THB1,000,000.
6.
7.
Office for approval within 120 days from the ending date of the accounting period for the purpose
of application for the rights and benefits of the exemption from corporation tax of the relevant
accounting period.
8.
exceed THB121,173,000. It will be adjusted according to the amount of investments exclusive of
G-13
9.
equivalent international standards within two years from the date of the commencement of the
benefits with respect to the exemption from corporation tax will be revoked for a period of one
year.
10. The factory shall be set up in the Bang Pa-in Industrial Estate, Changwat Phra Nakhon Si
Ayutthaya, which is an industrial estate applying for promotion before 1st August, B.E. 2543 (A.D.
2000), provided that the site of the factory shall not be in the restricted zone under the notification
on the comprehensive city plan of the province, and its setting-up shall also be permitted by the
Ministry of Industry or the government agencies concerned. Within a period of fifteen years from
the date of the commencement of the operation, the factory may not be relocated to another
locality.
The promoted person shall comply with the conditions contained in the promotion certificate or in the
permit. In the event of a violation thereof or failure to comply therewith, the rights and benefits may be
withdrawn in whole or in part, and the annexes shall be deemed to constitute a part of the promotion
certificate.
In the event amendments to the rights, alterations to the conditions or other amendments are made, the
promoted person shall produce this promotion certificate to the BOI for the purpose of such
amendments or alterations.
Effective from 3rd September, 2003
Given on 7th October, 2003
(Signature) Somphong Wanapha
(Mr. Somphong Wanapha)
Secretary-General
Board of Investment
G-14
BOARD OF INVESTMENT (BOI)
1653(2)/2548
The Board of Investment, by virtue of the Investment Promotion Act B.E. 2520 (A.D. 1977), hereby
issues this Promotion Certificate to:
Registered as a limited company, registration no. 1228/2540, on 6th October, B.E. 2540 (A.D. 1997)
With its office located at 250/1, Village No. 2, Bangpa-In Industrial Estate, Udom Sorayut Road,
Klong-Jig Sub-district, Bangpa-In District, Phra Nakhon Si Ayutthaya Province 13160
To exhibit that it has been granted investment promotion in the business of manufacturing thermovacuum forming plastic trays, molds and mold parts.
Type 4.2 — business of manufacturing machinery and equipment and Type 6.9 — business of
manufacturing plastic or plastic-coated products
Rights and Benefits
1.
Under Section 25, the promoted person shall be granted permission to bring into the Kingdom
foreign nationals who are skilled workers, experts, and their spouses and dependents in such
numbers and for such periods of time permitted to stay in the Kingdom as the Board may deem
appropriate.
2.
stay in the Kingdom under Section 25 shall be granted a work permit for a specific position
approved by the Board for the period of permitted stay in the Kingdom.
3.
Board deems appropriate.
4.
Under Section 28, the promoted person shall be granted exemption from payment of import duties
on machinery as approved by the Board for the manufacture of molds and mold parts, for the
machinery manufactured since B.E. 2538 (A.D. 1995).
5.
100 percent of the investments, exclusive of the cost of land and working capital, for a period
of seven years for the manufacture of thermo-vacuum forming trays and for a period of eight
years for the manufacture of molds and mold parts, from the date income is first derived from
such activity.
G-15
6.
7.
import.
8.
9.
Under Section 37, permission to take or remit out of the Kingdom money in a foreign currency
shall be granted.
Effective from 28th June, B.E. 2548 (A.D. 2005), the date on which the grant of the promotion was
approved by the Board
Conditions
project as follows:
General Conditions
1.
Board, and upon retirement of any skilled workers or experts from the positions, the promoted
person shall have to so notify the BOI within 15 days from the date of their retirement.
Training of the Thai nationals must be accelerated and support given to enable them to perform
the work under the promoted project in place of the skilled workers or experts who are foreign
nationals within the time specified.
Performance of the skilled workers or experts who are foreign nationals and who are permitted to
enter the country, as to how much they have trained the Thai nationals to gain knowledge and
skills, must be reported in forms and according to the procedures prescribed by the BOI.
2.
G-16
3.
3.1
expiration of the one-year period, the Board will withdraw the rights and benefits of the
import duties.
3.2
3.3
granted.
been foreclosed pursuant to Section 42 of the Investment Promotion Act B.E. 2520
(A.D. 1977), the promoted person shall be liable for paying the taxes and duties on
the machinery in full in accordance with the customs tariff law.
4.
promoted activity.
5.
A confirmation of the implementation of the project must be notified to the BOI on the expiration
of 6 months, 1 year and 2 years from the date of issue of the promotion certificate.
6.
6.1
Every change, if any, in the proportion of shareholding between the Thai nationals and
6.2
6.3
7.
8.
G-17
9.
11.
approved.
mark of standard.
1.
1.1
In the event the use of old machinery is permitted, the machinery on which the exemption
from or reduction of the import duties is granted must be manufactured since B.E. 2538
(A.D. 1995). Its efficiency must be certified by a reliable institute and approved by the BOI.
1.2
shall be imported on or before 18th January, B.E. 2551 (A.D. 2008).
1.3
2.
within a period of not more than 36 months from the date of issue of the promotion certificate, and
a request for the commencement of the operation must be notified in a form determined by the
BOI.
3.
The registered capital shall not be less than sixty million baht and shall be fully paid up prior to
the date of the commencement of the operation.
4.
4.1
Type of product: thermo-vacuum forming plastic trays, molds and mold parts
4.2
Size of business, with the production capacity as follows:
—
—
—
Thermo-vacuum forming plastic trays: approx. 31,755,000 pieces/year (or 3,230 tons)
Molds: approx. 720 pieces/year
Mold parts: approx. 2,400 pieces/year
(working hours: 24 hours/day, 365days/year)
By-products: scraps or waste materials derived from the production processes
5.
two million baht.
G-18
6.
7.
BOI for approval within one hundred and twenty days from the ending date of the accounting
period for the purpose of application for the rights and benefits of the exemption from corporation
tax of the relevant accounting period.
8.
exceed 63,680,000 baht. It will be adjusted according to the amount of investments exclusive of
9.
equivalent international standards within 2 years from the date of the commencement of the
benefits with respect to the exemption from corporation tax will be revoked for a period of 1 year.
10. The factory shall be set up in the Bang Pa-in Industrial Estate, Phra Nakhon Si Ayutthaya
Province, provided that the site of the factory shall not be in the restricted zone under the
notification on the comprehensive city plan of the province, and its setting-up shall also be
permitted by the Ministry of Industry or the government agencies concerned. Within a period of
fifteen years from the date of the commencement of the operation, the factory may not be
relocated to another locality.
The promoted person shall comply with the conditions contained in the promotion certificate or in the
permit. In the event of a violation thereof or failure to comply therewith, the rights and benefits may be
withdrawn in whole or in part, and the annexes shall be deemed to constitute a part of the promotion
certificate.
In the event amendments to the rights, alterations to the conditions or other amendments are made, the
promoted person shall produce this promotion certificate to the BOI for the purpose of such
amendments or alterations.
Effective from 28th June, B.E. 2548 (A.D. 2005)
Given on 18th July, B.E. 2548 (A.D. 2005)
(Signature) Hiranya Suchinai
(Mrs. Hiranya Suchinai)
Deputy Secretary-General
Acting for and on behalf of
Secretary-General of the Board of Investment
G-19
technology
New Shares.
advice if in doubt.
(a)
(i)
T (604) 229-6000
F (604) 229-1430
integrated

25 October 2006 - National University of Singapore

Transcription

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