SMJ INTERNATIONAL HOLDINGS LTD.

(Incorporated in the Republic of Singapore on 31 December 2013)

(Company Registration Number: 201334844E)
OFFER DOCUMENT
DATED 20 JUNE 2014
(Registered by the Singapore Exchange Securities
Trading Limited acting as agent on behalf of the
Monetary Authority of Singapore on 20 June 2014)
This document is important. If you are in any doubt
as to the action you should take, you should consult
your legal, nancial, tax, or other professional adviser(s).
Hong Leong Finance Limited (the Sponsor) has made an application
to the Singapore Exchange Securities Trading Limited (the SGX-ST)
for permission to deal in, and for quotation of, all the ordinary shares
(the Shares) in the capital of SMJ International Holdings Ltd. (the
Company) already issued (including the Vendor Shares (as defned
herein)) and the new Shares (the New Shares) which are the subject
of the Placement (as defned herein) on Catalist. The dealing in and
quotation of the Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when
compared with larger or more established companies listed on the
SGX-ST Main Board. In particular, companies may list on Catalist without
a track record of proftability and there is no assurance that there will
be a liquid market in the shares or units of shares traded on Catalist.
You should be aware of the risks of investing in such companies and
should make the decision to invest only after careful consideration and,
if appropriate, consultation with your professional adviser(s).
This Placement is made in or accompanied by this Offer Document that
has been registered by the SGX-ST acting as agent on behalf of the
Monetary Authority of Singapore (the Authority). We have not lodged
or registered this Offer Document in any other jurisdiction.
Neither the Authority nor the SGX-ST has examined or approved
the contents of this Offer Document. Neither the Authority nor the
SGX-ST assumes any responsibility for the contents of this Offer
Document, including the correctness of any of the statements or
opinions made or reports contained in this Offer Document. The
SGX-ST does not normally review the application for admission but
relies on the Sponsor confrming that the Company is suitable to be
listed on Catalist and complies with the rules of the SGX-ST Listing
Manual (as defned herein). Neither the Authority nor the SGX-ST has,
in any way, considered the merits of the Shares or units of Shares being
offered for investment.
The registration of this Offer Document by the SGX-ST does not imply
that the Securities and Futures Act (Chapter 289) of Singapore, or
any other legal or regulatory requirements, or requirements under the
SGX-STs listing rules, have been complied with.
Acceptance of applications will be conditional upon the issue of the New
Shares and the listing and quotation of all our existing issued Shares
(including the Vendor Shares) and the New Shares on Catalist. Monies
paid in respect of any application accepted will be returned to you at
your own risk, without interest or any share of revenue or other beneft
arising therefrom, if the admission and listing do not proceed, and you
will not have any claims against us, and the Sponsor, Issue Manager and
Placement Agent (as defned herein)
After the expiration of six months from the date of registration of this
Offer Document, no person shall make an offer of securities, or allot,
issue or sell any securities, on the basis of this Offer Document; and no
offcer or equivalent person or promoter of the Company will authorise
or permit the offer of any securities or the allotment, issue or sale of any
securities, on the basis of this Offer Document.
Investing in the Shares involves risks which are described in the
RISK FACTORS section of this Offer Document.
Placement of 20,240,000 Shares comprising
14,000,000 New Shares and 6,240,000 Vendor Shares
at S$0.28 for each Share,
payable in full on application.
Sponsor, Issue Manager and Placement Agent
HONG LEONG FINANCE LIMITED
(Incorporated in the Republic of Singapore)
(Company Registration Number: 196100003D)
One of the leading premier carpet specialists serving the commercial and institutional sectors in Asia
Sell and distribute globally a wide range of premier carpets marketed under proprietary SMJ brand
Appointed supplier for Shaw Contract Group* range of carpets in Singapore
Established reputation and track record of more than 25 years
WIDE CARPET SELECTION AND SHORT
TURNAROUND TIME
A large warehouse occupying 42,614 sqf
to stock a wide variety of carpet tiles and
broadloom carpets
80 designs of carpets in up to 400 different
colours
Real-time inventory management system
reduces turnaround time (next working day
for local and within seven working days for
overseas)
STRONG MANAGEMENT TEAM ASSISTED BY
EXPERIENCED SALES AND PROJECT TEAMS
CEO, Deputy CEO and COO have 55 years of
cumulative experience in carpet industry
Management, sales and project teams have
deep knowledge of products
Management also attends overseas trade
fairs and product training conducted by Shaw
Industries regularly
PROPRIETARY SMJ BRAND OF CARPETS
WELL-RECOGNISED IN SINGAPORE AND
OVERSEAS
SMJ brand marketed since 1996 and export
markets developed for more than 15 years
COMPETITIVE STRENGTHS
Well-recognised for quality and reliability
Overseas markets served by global distribution
network of more than 260 distributors in over 20
countries
LONG STANDING RELATIONSHIP WITH SHAW
INDUSTRIES
Appointed authorised supplier for high-end
Shaw Contract Group of carpets since 1992
Regular joint promotional and marketing efforts
for new carpet launches with Shaw Industries
Leverage on training and technical knowledge
provided by Shaw Industries which enhances
competitive position
STRONG WORKING RELATIONSHIP WITH
THIRD PARTY MANUFACTURERS
Strong working relationships (Over a period of
5-13 years) with third party manufacturers that
manufacture SMJ branded carpets
Able to supply good quality carpets at
competitive cost
Third party manufacturers research and
development teams support development of
new concepts and ideas of carpets
ABOUT SMJ INTERNATIONAL HOLDINGS LTD.
*US brand by Shaw Industries - a member of Berkshire Hathaway Inc.
WAREHOUSE
OCCUPYING
PROSPECTS
EXPANDING AND STRENGTHENING GEOGRAPHICAL
COVERAGE
Serve potential overseas customers in Contract Sales business
Maximise potential by growing our distribution networks
EXPANDING PRODUCT RANGE AND SERVICES
THROUGH ACQUISITIONS, JOINT VENTURES AND/OR
STRATEGIC ALLIANCES
Explore opportunities in other products and services
New products and services can leverage on existing sales and
distribution network
Explore other suitable acquisitions and joint ventures
IMPROVING INVENTORY MANAGEMENT SYSTEM AND
LOGISTICS SUPPORT TO CATER FOR EXPANDING
PRODUCT RANGE
Monitor and manage inventory effciently with expanded range
of products offered
Expand feet of delivery trucks to ensure the ability to fulfll
customers orders is not compromised
STATE OF ECONOMIES
IN SINGAPORE AND
SOUTHEAST ASIA
REGION
Dependent on perceived
economic conditions
Spending budget
of businesses and
organisations will remain
relatively constant
compared to past years
CONTINUOUS SUPPLY
OF COMMERCIAL
SPACE IN SINGAPORE
Based on frst half 2014
Government Land Sales
Programme, sites can
yield up to 193,000 sqm
gross foor area:
- Confrm list: 5,000
sqm foor area
- Reserve list: 188,000
sqm foor area
Various opportunities
arising from commercial
developments
Pipeline supply of
commercial space
coupled with general
optimism on global
growth would translate
into positive impact
POTENTIAL IN
EXPORT MARKETS
Expanding and
strengthening
geographical coverage
will drive growth of sales
of proprietary SMJ
brand of carpets
Exported to overseas
markets through global
distribution networks
Recognise market
potential
- Intend to grow
distribution network
into new emerging
markets such as
Myanmar
BUSINESS STRATEGIES AND FUTURE PLANS
TO BECOME A ONE-STOP OFFICE
FURNISHING SOLUTION PROVIDER
IN THE REGION
23.6
22.0
2.7
PROPOSED DIVIDENDS
We intend to recommend and
distribute dividends of 30% of our
prot after tax to our shareholders
for FY2014 and FY2015
FINANCIAL HIGHLIGHTS
S$million
0
2
4
6
8
10
12
14
0
5
10
15
20
25
30
Revenue
PAT
Net Margins
FY2013 FY2013
24.1
2.4
2.7
FY 2011 FY 2012 FY 2013
Net margin %
1
CONTENTS
PAGE
CORPORATE INFORMATION ............................................................................................................ 4
DEFINITIONS ...................................................................................................................................... 5
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ..................................... 11
SELLING RESTRICTIONS ................................................................................................................. 13
DETAILS OF THE PLACEMENT
LISTING ON CATALIST.................................................................................................................. 14
INDICATIVE TIMETABLE FOR LISTING ....................................................................................... 18
OFFER DOCUMENT SUMMARY
OVERVIEW OF OUR GROUP ....................................................................................................... 19
FINANCIAL HIGHLIGHTS .............................................................................................................. 20
THE PLACEMENT .............................................................................................................................. 22
PLAN OF DISTRIBUTION .................................................................................................................. 23
USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED ............................. 24
MANAGEMENT AND PLACEMENT ARRANGEMENTS .................................................................. 26
RISK FACTORS .................................................................................................................................. 28
ISSUE STATISTICS ............................................................................................................................ 37
DILUTION ............................................................................................................................................ 39
CAPITALISATION AND INDEBTEDNESS ......................................................................................... 41
DIVIDEND POLICY ............................................................................................................................. 43
SUMMARY OF OUR FINANCIAL INFORMATION ............................................................................ 44
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION
OVERVIEW .................................................................................................................................... 46
REVIEW OF PAST PERFORMANCE ............................................................................................ 49
REVIEW OF BALANCE SHEET .................................................................................................... 52
LIQUIDITY AND CAPITAL RESOURCES ...................................................................................... 53
CAPITAL EXPENDITURES, DIVESTMENTS, COMMITMENTS AND CONTINGENT
LIABILITIES .................................................................................................................................... 57
SEASONALITY .............................................................................................................................. 58
INFLATION ..................................................................................................................................... 58
FOREIGN EXCHANGE EXPOSURE ............................................................................................. 58
SIGNIFICANT ACCOUNTING POLICY CHANGES ...................................................................... 59
2
CONTENTS
GENERAL INFORMATION ON OUR GROUP
SHARE CAPITAL ........................................................................................................................... 60
RESTRUCTURING EXERCISE ..................................................................................................... 62
GROUP STRUCTURE ................................................................................................................... 63
OUR SUBSIDIARY ......................................................................................................................... 63
SHAREHOLDERS .......................................................................................................................... 64
VENDORS ...................................................................................................................................... 65
MORATORIUM ............................................................................................................................... 66
HISTORY ............................................................................................................................................. 67
BUSINESS
BUSINESS OVERVIEW ................................................................................................................. 70
OUR PRODUCTS AND BUSINESS PROCESS ............................................................................ 72
SALES AND MARKETING ............................................................................................................. 74
QUALITY ASSURANCE ................................................................................................................. 76
PRODUCT WARRANTY AND AFTER SALES SERVICE ............................................................. 76
MAJOR CUSTOMERS ................................................................................................................... 76
MAJOR SUPPLIERS ...................................................................................................................... 77
CREDIT MANAGEMENT ............................................................................................................... 79
RESEARCH AND DEVELOPMENT .............................................................................................. 80
INTELLECTUAL PROPERTY ........................................................................................................ 80
INVENTORY MANAGEMENT ........................................................................................................ 81
LICENCES, PERMITS, APPROVALS AND CERTIFICATIONS ..................................................... 82
PRODUCTION FACILITY ............................................................................................................... 83
PROPERTIES AND FIXED ASSETS ............................................................................................. 83
STAFF TRAINING .......................................................................................................................... 84
INSURANCE .................................................................................................................................. 84
CORPORATE SOCIAL RESPONSIBILITY .................................................................................... 85
COMPETITION .............................................................................................................................. 85
COMPETITIVE STRENGTHS ........................................................................................................ 85
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
PROSPECTS ................................................................................................................................. 87
TREND INFORMATION ................................................................................................................. 88
ORDER BOOK .............................................................................................................................. 89
BUSINESS STRATEGIES AND FUTURE PLANS ......................................................................... 89
GOVERNMENT REGULATIONS ........................................................................................................ 91
EXCHANGE CONTROLS ................................................................................................................... 95
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
MANAGEMENT REPORTING STRUCTURE ................................................................................ 96
DIRECTORS .................................................................................................................................. 97
EXECUTIVE OFFICERS ................................................................................................................ 100
STAFF ............................................................................................................................................ 101
3
CONTENTS
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES .... 102
SERVICE AGREEMENTS .............................................................................................................. 103
CORPORATE GOVERNANCE ....................................................................................................... 104
BOARD PRACTICES ..................................................................................................................... 107
INTERESTED PERSON TRANSACTIONS
PAST TRANSACTIONS ................................................................................................................. 108
PRESENT AND ON-GOING TRANSACTIONS ............................................................................. 108
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS ................. 109
POTENTIAL CONFLICTS OF INTERESTS
INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES .. 111
INTERESTS OF EXPERTS ........................................................................................................... 111
INTERESTS OF SPONSOR, ISSUE MANAGER AND PLACEMENT AGENT ............................. 111
CLEARANCE AND SETTLEMENT .................................................................................................... 112
GENERAL AND STATUTORY INFORMATION .................................................................................. 113
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT ON THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2011, 2012
AND 2013 ............................................................................................................................................ A-1
APPENDIX B
SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR COMPANY ........... B-1
APPENDIX C
DESCRIPTION OF OUR SHARES ..................................................................................................... C-1
APPENDIX D
TAXATION ........................................................................................................................................... D-1
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS ................................................. E-1
4
CORPORATE INFORMATION
BOARD OF DIRECTORS : Ho DOrville Raymond (Independent Non-Executive
Chairman)
Ho Pei Yuen Rena (Executive Director and Chief
Executive Ofcer)
Ho Wan Jing, Nellie (Executive Director and Deputy
Chief Executive Ofcer)
Lee Lay Choo (Executive Director and Chief Operating
Ofcer)
Ng Tiang Hwa (Independent Director)
Chow Wen Kwan Marcus (Independent Director)

COMPANY SECRETARIES : Wee Woon Hong, LLB (Hons)
Yao Enci Eunice, LLB (Hons)

REGISTERED OFFICE AND PRINCIPAL : 31 Jurong Port Road
PLACE OF BUSINESS #02-20 Jurong Logistics Hub
Singapore 619115

SHARE REGISTRAR AND SHARE : Boardroom Corporate & Advisory Services Pte. Ltd.
TRANSFER OFFICE 50 Rafes Place
#32-01 Singapore Land Tower
Singapore 048623

SPONSOR, ISSUE MANAGER AND : Hong Leong Finance Limited
PLACEMENT AGENT 16 Rafes Quay
#01-05 Hong Leong Building
Singapore 048581

INDEPENDENT AND REPORTING : Nexia TS Public Accounting Corporation
AUDITORS Public Accountants and Chartered Accountants
100 Beach Road
#30-00 Shaw Tower
Singapore 189702
Director-in-charge: Philip Tan Jing Choon (A member of
the Institute of Singapore Chartered Accountants)

SOLICITORS TO THE PLACEMENT : Opal Lawyers LLC
30 Rafes Place
#19-04 Chevron House
Singapore 048622

RECEIVING BANKER : Oversea-Chinese Banking Corporation Limited
65 Chulia Street
OCBC Centre
Singapore 049513

PRINCIPAL BANKER : Oversea-Chinese Banking Corporation Limited
65 Chulia Street
OCBC Centre
Singapore 049513

VENDORS : Lui Oi Kheng
18A Parkstone Road
Singapore 437675

Tay Twan Lee
c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
5
DEFINITIONS
In this Offer Document and the accompanying Application Forms, unless the context otherwise requires,
the following denitions apply throughout where the context so admits:-
Companies within our Group
Company : SMJ International Holdings Ltd.

Group : Our Company and our subsidiary

SMJ Furnishings : SMJ Furnishings (S) Pte Ltd
Other Corporations and Agencies
Authority : The Monetary Authority of Singapore

BCA : Building and Construction Authority

CDP : The Central Depository (Pte) Limited

Formosa FCFC : Formosa FCFC Carpet Corporation

IRAS : Inland Revenue Authority of Singapore

ISO : International Organisation for Standardisation

MOM : Ministry of Manpower

SCCS : Securities Clearing & Computer Services (Pte) Ltd

SGX-ST : Singapore Exchange Securities Trading Limited

Shanghai Jia Nai Rong : Shanghai Jia Nai Rong Industry and Commerce Development Co.,
Ltd

Shaw Industries : Shaw Industries, Inc.

SMJ Malaysia : SMJ Furnishings (M) Sdn. Bhd.

SMJ Philippines : SMJ Furnishings Philippines Inc.

Sponsor, Issue Manager, : Hong Leong Finance Limited
Placement Agent or HLF

Taiwan Formosa Group : Formosa Plastics Corporation and its subsidiaries

Voxor : Voxor Industrial Park Co., Ltd. (formerly known as Jiangxi Huateng
Carpet Industrial Park Co., Ltd.)

Weihai Shanhua : Weihai Shanhua Premier Carpets Co Ltd
General
Application Forms : The printed application forms to be used for the purpose of the
Placement and which form part of this Offer Document

Application List : The list of applications for the subscription and/or purchase of the
Placement Shares

6
DEFINITIONS
Articles of Association : The articles of association of our Company

Associate : (a) in relation to any director, CEO, substantial shareholder or
controlling shareholder (being an individual) means:-
(i) his immediate family;
(ii) the trustees of any trust of which he or his immediate
family is a beneciary or, in the case of a discretionary
trust, is a discretionary object; or
(iii) any company in which he and his immediate family
together (directly or indirectly) have an interest of 30%
or more of the aggregate of the nominal amount of all
the voting shares;
(b) in relation to a substantial shareholder or a controlling
shareholder (being a company) means any other company
which is its subsidiary or holding company or is a fellow
subsidiary of any such holding company or one in the equity
of which it and/or such other company or companies taken
together (directly or indirectly) have an interest of 30% or
more

Associated Company : In relation to a corporation, means:-
(a) any corporation in which the corporation or its subsidiary has,
or the corporation and its subsidiary together have, a direct
interest of not less than 20% but not more than 50% of the
aggregate of the nominal amount of all the voting shares; or
(b) any corporation, other than a subsidiary of the corporation
or a corporation which is an associated company by virtue
of paragraph (a), the policies of which the corporation or its
subsidiary, or the corporation together with its subsidiary, is
able to control or inuence materially

Audit Committee : The audit committee of our Company as at the date of this Offer
Document, unless otherwise stated

Audited Combined Financial : The Independent and Reporting Auditors Report on the Audited
Statements Combined Financial Statements for the Financial Years Ended 31
December 2011, 2012 and 2013 as set out in Appendix A of this
Offer Document
Board or Board of Directors : The board of Directors of our Company as at the date of this Offer
Document, unless otherwise stated

business trust : Has the same meaning as in Section 2 of the Business Trusts Act
(Chapter 31A) of Singapore

Catalist : The sponsor-supervised listing platform of the SGX-ST

Catalist Rules : Any or all of the rules in the Section B: Rules of Catalist of the
Listing Manual of the SGX-ST, as may be amended, varied or
supplemented from time to time

CEO : Chief Executive Ofcer

7
DEFINITIONS
CFO : Chief Financial Ofcer

Companies Act : The Companies Act (Chapter 50) of Singapore, as may be
amended, varied or supplemented from time to time

Contract Sales : This refers to the source of revenue stream arising mainly from
sales to property developers, contractors, established business
owners or interior design consultants, which involve the supply and
installation of carpets usually for ofces, convention halls, hotels,
cinemas, hospitals and institutions

Controlling Shareholder : A person who has an interest in our Shares of an aggregate of not
less than 15% of the total votes attached to all our Shares, or in fact
exercises control over our Company
COO : Chief Operating Ofcer

CPF : Central Provident Fund

Directors : The directors of our Company as at the date of this Offer Document,
unless otherwise stated

Distribution Sales : This refers to the source of revenue stream arising mainly from
sales to carpet dealers and carpet installers on a wholesale basis

DPS : Dividend per Share

entity : Includes a corporation, an unincorporated association, a partnership
and the government of any state, but does not include a trust

EPS : Earnings per Share

Executive Directors : The executive Directors of our Company as at the date of this Offer
Document, unless otherwise stated

Executive Ofcers : The executive ofcers of our Group as at the date of this Offer
Document, unless otherwise stated

FY : Financial year ended or ending 31 December, as the case may be

GST : Goods and Services Tax

Independent Directors : The non-executive independent Directors of our Company as at the
date of this Offer Document, unless otherwise stated

Latest Practicable Date : 26 May 2014, being the latest practicable date prior to the
lodgement of this Offer Document with the SGX-ST acting as agent
on behalf of the Authority

Listing Manual : The listing manual of the SGX-ST, as may be amended, varied or
supplemented from time to time

Market Day : A day on which the SGX-ST is open for trading in securities

MNCs : Multi-national corporations

NAV : Net assets value

8
DEFINITIONS
New Shares : The 14,000,000 new Shares for which our Company invites
applications to subscribe, pursuant to the Placement, subject to and
on the terms and conditions of this Offer Document

Nominating Committee : The nominating committee of our Company as at the date of this
Offer Document, unless otherwise stated

Non-Executive Director : The non-executive Director of our Company (including Independent
Directors) as at the date of this Offer Document, unless otherwise
stated

NTA : Net tangible assets (after non-controlling interests)

Offer Document : This offer document dated 20 June 2014 issued by our Company in
respect of the Placement

PAT : Prot after tax

PBT : Prot before tax

PER : Price earnings ratio

periods under review : The period which comprises FY2011, FY2012 and FY2013

Placement : The placement by the Placement Agent of the Placement Shares
on behalf of our Company and the Vendors for subscription and/or
purchase at the Placement Price, subject to and on the terms and
conditions of this Offer Document

Placement Price : S$0.28 for each Placement Share

Placement Shares : The 20,240,000 Placement Shares which are the subject of the
Placement comprising 14,000,000 New Shares and 6,240,000
Vendor Shares

PRC : The Peoples Republic of China, excluding Hong Kong Special
Administrative Region and Macau Special Administrative Region for
the purposes of this Offer Document

Remuneration Committee : The remuneration committee of our Company as at the date of this
Offer Document, unless otherwise stated

Restructuring Exercise : The corporate restructuring exercise undertaken in connection with
the Placement, which is described in the Restructuring Exercise
section of this Offer Document

Securities Account : The securities account maintained by a Depositor with CDP, but
does not include a securities sub-account

Service Agreements : The service agreements entered into between our Company and our
Executive Directors, Rena Ho, Nellie Ho and Lee Lay Choo, which
are described in the Service Agreements section of this Offer
Document

SFA : The Securities and Futures Act (Chapter 289) of Singapore, as may
be amended, varied or supplemented from time to time

SGXNET : The corporate announcement system maintained by the SGX-ST for
the submission of announcements by listed companies

9
DEFINITIONS
Shareholders : Registered holders of Shares, except where the registered holder is
CDP, the term Shareholders shall, in relation to such Shares, mean
the Depositors whose Securities Accounts are credited with Shares

Shares : Ordinary shares in the capital of our Company

Sub-Division : The sub-division of 200 Shares in the capital of our Company into
64,000,000 Shares which is described in the Share Capital section
of this Offer Document

Substantial Shareholder : A person who has an interest in the Shares, total votes attached
to which is not less than 5.0% of the total votes attached to all the
voting shares in our Company

USA : United States of America

Vendors : Lui Oi Kheng and Tay Twan Lee

Vendor Shares : The 6,240,000 Shares owned by the Vendors for which the Vendors
invite applications to purchase on the terms and subject to the
conditions set out in this Offer Document
Currencies, Units and Others
S$ and cents : Singapore dollar and cent, respectively

US$ : United States dollar

sq ft : Square feet

sq m : Square metre

% : Percentage

nm : Not meaningful
The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to
them respectively in Section 130A of the Companies Act.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders and
vice versa. References to persons shall include corporations.
Any reference in this Offer Document and/or the Application Forms to any statute or enactment is a
reference to that statute or enactment as for the time being amended or re-enacted. Any word dened
under the Companies Act, the SFA or any statutory modication thereof and used in this Offer Document
and the Application Forms shall, where applicable, have the meaning ascribed to it under the Companies
Act, the SFA or any statutory modication thereof, as the case may be.
Any reference in this Offer Document and/or the Application Forms to Shares being allotted and/or
allocated to an applicant includes allotment and/or allocation to CDP for the account of that applicant.
Any reference to a time of day in this Offer Document and/or the Application Forms shall be a reference
to Singapore time, unless otherwise stated.
Any reference to we, us, our, ourselves or their other grammatical variations thereof in this Offer
Document is a reference to our Company, our Group or any member of our Group as the context
requires.
10
DEFINITIONS
Any discrepancies in the tables included herein between the listed amounts and the total thereof are due
to rounding. Accordingly, gures shown as totals in certain tables may not be an arithmetic aggregation of
the gures which precede them.
Any reference to Peter Ho in this Offer Document is a reference to Ho Siew Yee, Peter.
Any reference to Rena Ho in this Offer Document is a reference to Ho Pei Yuen Rena.
Any reference to Nellie Ho in this Offer Document is a reference to Ho Wan Jing, Nellie.
11
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements contained in this Offer Document, statements made in press releases and oral statements
that may be made by us or our Directors, Executive Ofcers or employees acting on our or the Vendors
behalf that are not statements of historical fact, constitute forward-looking statements. You can identify
some of these forward-looking statements by terms such as expects, believes, plans, intends,
estimates, anticipates, may, will, would and could or similar words. However, you should note
that these words are not the exclusive means of identifying forward-looking statements. All statements
regarding our expected nancial position, business strategies, plans and prospects are forward-looking
statements.
These forward-looking statements, including without limitation, statements as to:-
(a) our revenue and protability;
(b) expected growth in demand;
(c) expected industry trends;
(d) anticipated expansion plans; and
(e) other matters discussed in this Offer Document regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expected, expressed or implied by these
forward-looking statements. These risks, uncertainties and other factors include, among others:-
(a) changes in political, social, economic and stock or securities market conditions and the regulatory
environment in the countries in which we conduct business;
(b) changes in currency exchange or interest rates;
(c) our anticipated growth strategies and expected growth;
(d) changes in the availability and prices of products we sell;
(e) changes in customer preference;
(f) changes in competitive conditions and our ability to compete under these conditions;
(g) changes in our future capital needs and the availability of nancing and capital to fund these needs;
(h) the factors which are described in the Risk Factors section of this Offer Document; and
(i) other factors beyond our control.
All forward-looking statements made by or attributable to us, or persons acting on our or the Vendors
behalf, contained in this Offer Document are expressly qualied in their entirety by such factors.
Given the risks and uncertainties that may cause our actual future results, performance or achievements
to be materially different from those expected, expressed or implied by the forward-looking statements in
this Offer Document, we advise you not to place undue reliance on those statements which apply only
as at the date of this Offer Document. Neither our Company, the Vendors, the Sponsor, Issue Manager
and Placement Agent nor any other person represents or warrants to you that our actual future results,
performance or achievements will be as discussed in those statements. Further, our Company, the
Vendors, the Sponsor, Issue Manager and Placement Agent disclaim any responsibility to update any of
those forward-looking statements to reect future developments, events or circumstances for any reason,
even if new information becomes available or other events occur in the future.
12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We are, however, subject to the provisions of the SFA and the Catalist Rules regarding corporate
disclosure. In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered
but before the close of the Placement, we become aware of (a) a false or misleading statement in this
Offer Document; (b) an omission from this Offer Document of any information that should have been
included in it under Section 243 of the SFA; or (c) a new circumstance has arisen since the Offer
Document was lodged with the SGX-ST acting as agent on behalf of the Authority and would have been
required by Section 243 of the SFA to be included in this Offer Document, if it had arisen before this
Offer Document was lodged, and that is materially adverse from the point of view of an investor, we (and
on behalf of the Vendors) may, in consultation with the Sponsor, Issue Manager and Placement Agent,
lodge a supplementary or replacement offer document with the SGX-ST acting as agent on behalf of the
Authority.
13
SELLING RESTRICTIONS
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for and/or
purchase the Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful
or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation.
No action has been or will be taken under the requirements of the legislation or regulations of, or of
the legal or regulatory requirements of any jurisdiction, except for the lodgement and/or registration of
this Offer Document in Singapore in order to permit a public offering of the Placement Shares and the
public distribution of this Offer Document in Singapore. The distribution of this Offer Document and the
offering of the Placement Shares in certain jurisdictions may be restricted by the relevant laws in such
jurisdictions. Persons who may come into possession of this Offer Document are required by us, the
Vendors, the Sponsor, Issue Manager and Placement Agent to inform themselves about, and to observe
and comply with, any such restrictions at their own expense and without liability to us, the Vendors, the
Sponsor, Issue Manager and Placement Agent.
Persons to whom a copy of this Offer Document has been issued shall not circulate to any other
person, reproduce or otherwise distribute this Offer Document or any information herein for any purpose
whatsoever nor permit or cause the same to occur.
14
DETAILS OF THE PLACEMENT
LISTING ON CATALIST
The Sponsor has made an application to the SGX-ST for permission to deal in, and for quotation of, all
our existing issued Shares already issued (including the Vendor Shares) and the New Shares which are
the subject of the Placement on Catalist. The dealing in, and quotation for, our Shares (including the
Vendor Shares) and the New Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more
established companies listed on the Main Board of the SGX-ST. In particular, companies may list on
Catalist without a track record of protability and there is no assurance that there will be a liquid market
in the shares or units of shares traded on Catalist. Applicants should be aware of the risks of investing
in such companies and should make the decision to invest only after careful consideration and, if
appropriate, consultation with their professional adviser(s).
The Placement is made in or accompanied by this Offer Document that has been registered by the SGX-
ST acting as agent on behalf of the Authority. We have not lodged or registered this Offer Document in
any other jurisdiction.
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document.
Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document,
including the correctness of any of the statements or opinions made or reports contained in this Offer
Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor
conrming that our Company is suitable to be listed on Catalist and complies with the Catalist Rules.
Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares being offered
for investment.
The registration of this Offer Document by the SGX-ST acting as agent on behalf of the Authority does
not imply that the SFA, or any other legal or regulatory requirements, or requirements under the SGX-
STs listing rules, has been complied with.
Acceptance of applications will be conditional upon the issue of New Shares and the listing and quotation
of all our existing issued Shares (including the Vendor Shares) and the New Shares. Monies paid in
respect of any application accepted will be returned to you at your own risk, without interest or any share
of revenue or other benet arising therefrom, if the admission and listing do not proceed, and you will not
have any claims against us, the Vendors, the Sponsor, Issue Manager and Placement Agent.
After the expiration of six months from the date of registration of this Offer Document, no person shall
make an offer of securities, or allot, issue or sell any of our Shares, on the basis of this Offer Document;
and no ofcer or equivalent person or promoter of our Company will authorise or permit the offer of any
of our Shares or the allotment, issue or sale of our Shares, on the basis of this Offer Document.
We are subject to the provisions of the SFA and the Catalist Rules regarding corporate disclosure. In
particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but before the
close of the Placement, we become aware of:-
(a) a false or misleading statement in this Offer Document;
(b) an omission from this Offer Document of any information that should have been included in it under
Section 243 of the SFA; or
(c) a new circumstance that has arisen since this Offer Document was lodged which would have been
required by Section 243 of the SFA to be included in this Offer Document, if it had arisen before
this Offer Document was lodged,
and that is materially adverse from the point of view of an investor, we (and on behalf of the Vendors)
may lodge a supplementary or replacement offer document pursuant to Section 241 of the SFA.
15
DETAILS OF THE PLACEMENT
Where prior to the lodgement of the supplementary or replacement offer document, applications have
been made under this Offer Document to subscribe for and/or purchase the Placement Shares and:-
(a) where the Placement Shares have not been issued and/or transferred to the applicants, we (and on
behalf of the Vendors) shall either:-
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants notice in
writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants
with an option to withdraw their applications, and take all reasonable steps to make available
within a reasonable period the supplementary or replacement offer document to the
applicants who have indicated they wish to obtain, or who have arranged to receive, a copy
of the supplementary or replacement offer document;
(ii) within seven days from the date of lodgement of the supplementary or replacement offer
document, give the applicants the supplementary or replacement offer document, as the
case may be, and provide the applicants with an option to withdraw their applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications shall be
deemed to have been withdrawn and cancelled, and we (and on behalf of the Vendors)
shall, within seven days from the date of lodgement of the supplementary or replacement
offer document, return the applicants all monies the applicants have paid on account of their
applications for the Placement Shares; or
(b) where the Placement Shares have been issued and/or transferred to the applicants, we and the
Vendors shall either:-
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants notice in
writing of how to obtain, or arrange to receive, a copy of the same and provide the applicants
with an option to return to us and/or the Vendors the Placement Shares which they do not
wish to retain title in, and take all reasonable steps to make available within a reasonable
period the supplementary or replacement offer document to the applicants who have
indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary
or replacement offer document;
(ii) within seven days from the date of lodgement of the supplementary or replacement offer
document, give the applicants the supplementary or replacement offer document, as the
case may be, and provide the applicants with an option to return to us and/or the Vendors
the Placement Shares which they do not wish to retain title in; or
(iii) treat the issue and/or transfer of the Placement Shares as void, in which case the issue and/
or transfer shall be deemed void and we (and on behalf of the Vendors) shall within seven
days from the date of lodgement of the supplementary or replacement offer document, return
the applicants all monies the applicants have paid on account of their applications for the
Placement Shares.
An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) to withdraw his application
shall, within 14 days from the date of lodgement of the supplementary or replacement offer document,
notify us of this, whereupon we (and on behalf of the Vendors) shall, within seven days from the receipt of
such notication, return to him all monies paid by him on account of his application for those Placement
Shares.
16
DETAILS OF THE PLACEMENT
An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the Placement
Shares issued and/or transferred to him shall, within 14 days from the date of lodgement of the
supplementary or replacement offer document, notify us of this and return all documents, if any,
purporting to be evidence of title to those Placement Shares, to us, whereupon we (and on behalf of the
Vendors) shall, within seven days from the receipt of such notication and documents, if any, return to
him all monies paid by him for those Placement Shares, and the issue and/or transfer of those Placement
Shares shall be deemed to be void.
Pursuant to Section 242 of the SFA, the Authority may, in certain circumstances issue a stop order
(the Stop Order) to our Company, directing that no or no further Shares to which this Offer Document
relates, be allotted or issued or transferred. Such circumstances will include a situation where this Offer
Document (i) contains any statement or matter which, in the Authoritys opinion, is false or misleading
(ii) omits any information that should have been included in it under the SFA, or (iii) does not, in the
Authoritys opinion, comply with the requirements of the SFA.
In the event that the Authority issues a Stop Order and applications to subscribe for and/or purchase the
Placement Shares have been made prior to the Stop Order, then:-
(a) where the Placement Shares have not been issued and/or transferred to the applicants, the
applications for the Placement Shares shall be deemed to have been withdrawn and cancelled and
our Company (and on behalf of the Vendors) shall, within 14 days from the date of the Stop Order,
return the applicants all monies the applicants have paid on account of their applications for the
Placement Shares; or
(b) where the Placement Shares have been issued and/or transferred to the applicants, the issue and/
or transfer of the Placement Shares shall be deemed to be void and our Company (and on behalf
of the Vendors) shall, (i) if no documents purporting to evidence title to those Placement Shares
have been issued and/or transferred to the applicants, within seven days from the date of the Stop
Order, return the applicants all monies the applicants have paid on account of their applications for
the Placement Shares, or (ii) if documents purporting to evidence title to those Placement Shares
have been issued and/or transferred to the applicants, within seven days from the date of the Stop
Order, inform the applicants to return such documents to our Company within 14 days from that
date and within seven days from the date of receipt of such documents or the date of the Stop
Order, whichever is the later, return the applicants all monies the applicants have paid on account
of their applications for the Placement Shares.
Where monies are to be returned to applicants for the Placement Shares, it shall be paid to the
applicants without any interest or share of revenue or benet arising therefrom at the applicants own
risk, and the applicants will not have any claim against our Company, the Vendors, the Sponsor, Issue
Manager and Placement Agent.
This Offer Document has been seen and approved by our Directors and the Vendors, and they
individually and collectively accept full responsibility for the accuracy of the information given in this Offer
Document and conrm, having made all reasonable enquiries, that to the best of their knowledge and
belief, (i) the facts stated and the opinions, intentions and expectations expressed in this Offer Document
are true, fair and accurate and not misleading in all material respects as at the date of this Offer
Document, (ii) there are no material facts the omission of which would make any statement in this Offer
Document misleading, and (iii) this Offer Document constitutes a full and true disclosure of all material
facts about the Placement, our Group and our Shares.
Neither our Company, the Vendors, the Sponsor, Issue Manager, and Placement Agent nor any other
parties involved in the Placement is making any representation to any person regarding the legality
of an investment in our Shares by such person under any investment or other laws or regulations. No
information in this Offer Document should be considered as being business, legal or tax advice regarding
an investment in our Shares. Each prospective investor should consult his own legal, nancial, tax or
other professional adviser regarding an investment in our Shares.
17
DETAILS OF THE PLACEMENT
The Placement Shares are offered for subscription and/or purchase solely on the basis of the information
contained and the representations made in this Offer Document.
No person has been or is authorised to give any information or to make any representation not contained
in this Offer Document in connection with the Placement and, if given or made, such information or
representation must not be relied upon as having been authorised by us, the Vendors, the Sponsor, Issue
Manager and Placement Agent. Neither the delivery of this Offer Document and the Application Forms
nor any document relating to the Placement shall, under any circumstances, constitute a continuing
representation or create any suggestion or implication that there has been no change in the affairs of our
Company or our subsidiary or in any statements of fact or information contained in this Offer Document
since the date of this Offer Document. Where such changes occur and are material or are required to be
disclosed by law, we will promptly make an announcement of the same to the SGX-ST and if required
under the SFA, a supplementary or replacement offer document will be issued and made available to the
public after a copy thereof has been lodged with the SGX-ST acting as agent on behalf of the Authority.
All applicants should take note of any such announcement, and/or supplementary or replacement offer
document and, upon the release of such an announcement, and/or supplementary or replacement offer
document, shall be deemed to have notice of such changes.
Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promise
or representation as to the future performance or policies of our Company or our subsidiary.
This Offer Document has been prepared solely for the purpose of the Placement and may not be relied
upon by any persons other than the applicants in connection with their applications for the Placement
Shares or for any other purpose.
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for and/
or purchase the Placement Shares in any jurisdiction in which such offer, solicitation or invitation
is unlawful or is not authorised or to any person to whom it is unlawful to make such offer,
solicitation or invitation.
Copies of this Offer Document may be obtained on request, subject to availability, during ofce hours
from:-
HONG LEONG FINANCE LIMITED
16 Rafes Quay
#01-05 Hong Leong Building
Singapore 048581
An electronic copy of this Offer Document is also available on the SGX-ST website at http://www.sgx.com.
The Application List will open immediately upon registration of this Offer Document by the
SGX-ST acting as agent of the Authority and will remain open until 12.00 noon on 25 June 2014 or
for such further period or periods as our Directors and the Vendors may, in consultation with the
Sponsor, Issue Manager and Placement Agent, in their absolute discretion decide, subject to any
limitation under all applicable laws. In the event a supplementary or replacement offer document
is lodged with the SGX-ST acting as agent on behalf of the Authority, the Application List will
remain open for at least 14 days after the lodgement of the supplementary or replacement offer
document.
Details of the procedures for applications to subscribe for and/or purchase the Placement Shares are set
out in Appendix E of this Offer Document.
18
DETAILS OF THE PLACEMENT
INDICATIVE TIMETABLE FOR LISTING
An indicative timetable is set out below for your reference:-
Indicative Date and Time Event
25 June 2014, 12.00 noon Close of Application List
30 June 2014, 9.00 a.m. Commence trading on a ready basis
3 July 2014 Settlement date for all trades done on a ready basis
The above timetable is only indicative as it assumes that the date of closing of the Application List is
25 June 2014, the date of admission of our Company to Catalist is 30 June 2014, the SGX-STs
shareholding spread requirement will be complied with and the New Shares will be issued and fully paid-
up prior to 30 June 2014.
The Placement will be open from 20 June 2014 (immediately upon registration of this Offer Document) to
12.00 noon on 25 June 2014.
The above timetable and procedures may be subject to such modication as the SGX-ST may in its
discretion decide, including the commencement date of trading on a ready basis.
In the event of any changes in the closure of the Application List or the time period during which the
Placement is open, we will publicly announce the same:-
(i) through a SGXNET announcement to be posted on the internet at the SGX-ST website http://www.
sgx.com; and
(ii) in major English language newspaper(s) in Singapore.
We will provide details of the results of the Placement (including the level of subscription for the
Placement Shares), as soon as practicable after the closure of the Application List through the channels
described in (i) and (ii) above.
We reserve the right to reject or accept, in whole or in part, or to scale down or ballot any application for
the Placement Shares, without assigning any reason therefor, and no enquiry and/or correspondence on
our decision will be entertained. In deciding the basis of allotment and/or allocation, due consideration will
be given to the desirability of allotting and/or allocating the Placement Shares to a reasonable number of
applicants with a view to establish an adequate market for our Shares.
Investors should consult the SGX-ST announcement of the ready trading date on the internet (at
the SGX-ST website http://www.sgx.com) or newspapers, or check with their brokers on the date
on which trading on a ready basis will commence.
19
OFFER DOCUMENT SUMMARY
The information contained in this summary is derived from and should be read in conjunction with the
full text of this Offer Document. As it is a summary, it does not contain all the information that potential
investors should consider before investing in the Shares of our Company. Potential investors should read
this entire Offer Document carefully, especially the matters set out in the Risk Factors section of this
Offer Document, before deciding to invest in our Shares.
OVERVIEW OF OUR GROUP
Our Company was incorporated in Singapore on 31 December 2013 under the Companies Act as a
private company limited by shares under the name of SMJ International Holdings Pte. Ltd.. On 28 May
2014, our Company was converted into a public company limited by shares and our name was changed
to SMJ International Holdings Ltd..
Our Business
We specialise in the sale and distribution of a wide range of premier carpets marketed under our
proprietary SMJ brand through our global distribution networks of more than 260 carpet dealers, carpet
importers and carpet installation companies in over 20 countries mainly in Asia. In addition, we are
appointed by Shaw Industries as the authorised supplier for its Shaw Contract Group range of carpets
in Singapore. Shaw Contract Group is an American brand of carpets which offers both carpet tiles and
broadloom carpets in different designs and colours appealing to the segment of the market which seeks
for higher end range of carpets and has a higher spending budget.
Our customers include Apple South Asia Pte. Ltd., The Hong Kong and Shanghai Banking Corporation
Limited, DBS Bank Ltd., Obayashi Corporation and Cisco System (USA) Pte Ltd. Please refer to the
Our Products and Business Process Our Carpet Supply and Installation Projects section of this Offer
Document for the details of projects completed for such customers.
Our Directors believe that we are one of the leading premier carpet specialists serving the commercial
and institutional sectors in Asia with an established reputation and track record of more than 25 years.
Over the years, we have built a good reputation based on our service quality, efciency, reliability and
competitive pricing.
We are differentiated from our competitors as we maintain a ready supply of carpets in a variety of
designs and colours in our Singapore warehouse for sale to our customers. Our carpet stocks comprise
both carpet tiles and broadloom carpets. This enables us to full our customers requirements without
incurring the usual time needed for production and shipment of such carpets from overseas. At the Latest
Practicable Date, our Singapore warehouse maintains approximately 80 different designs of carpets in up
to 400 different colours.
At the Latest Practicable Date, we collaborate with ve regular third party carpet manufacturers operating
in the PRC and Taiwan, which will produce both carpet tiles and broadloom carpets according to our
requested designs, colours and specications and are marketed for sale under our proprietary SMJ
brand.
Further details are set out in the Business Overview section of this Offer Document.
Our Competitive Strengths
Our Directors believe our competitive strengths are as follows:-
Abilities to provide wide selection of carpets and full customers order within short turnaround time
Strong management team assisted by experienced sales and project teams with deep product
knowledge
Our proprietary SMJ brand of carpets is well-recognised in Singapore and overseas, supported by
global distribution network of more than 260 distributors in over 20 countries
20
OFFER DOCUMENT SUMMARY
Long standing relationship with our major supplier, Shaw Industries
Strong working relationship with third party carpet manufacturers
Further details are set out in the Competitive Strengths section of this Offer Document.
Our Business Strategies and Future Plans
Our business strategies and future plans are as follows:
Expanding and strengthening our geographical coverage
Expanding our product range and services through acquisitions, joint ventures and/or strategic
alliances
Improving our inventory management system and logistics support to cater for our expanding
product range
Further details are set out in the Business Strategies and Future Plans section of this Offer Document.
Where you can nd us
Both our principal place of business and registered ofce are located at 31 Jurong Port Road, #02-20
Jurong Logistics Hub, Singapore 619115. Our telephone and facsimile numbers are (65) 6261 1212 and
(65) 6261 6512 respectively. Our Company Registration Number is 201334844E. Our internet address
is www.smjf.com.sg. Information contained in our website does not constitute part of this Offer
Document.
FINANCIAL HIGHLIGHTS
You should read the following summary nancial information in conjunction with the full text of this Offer
Document, including the Audited Combined Financial Statements and the Managements Discussion and
Analysis of Results of Operations and Financial Position section of this Offer Document.
Selected items from the Combined Statements of Comprehensive Income
(1)
Audited
(S$000) FY2011 FY2012 FY2013
Revenue 24,088 23,614 22,026
PBT 3,122 2,806 3,226
PAT 2,655 2,395 2,732
EPS (cents)
(2)
4.15 3.74 4.27
EPS (fully diluted) (cents)
(3)
3.40 3.07 3.50
Selected items from the Combined Balance Sheet
(4)
Audited
(S$000)
As at
31 December 2013
Current assets 16,470
Non-current assets 1,079
Current liabilities 5,327
Non-current liabilities 9
Total equity 12,213
NTA per Share (cents)
(5)
19.08
21
OFFER DOCUMENT SUMMARY
Notes:-
(1) Our combined statements of comprehensive income for the periods under review have been prepared on the basis that our
Group had been in existence throughout the periods under review.
(2) For comparative purposes, EPS for the periods under review have been computed based on the PAT and our pre-Placement
share capital of 64,000,000 Shares.
(3) For comparative purposes, EPS for the periods under review have been computed based on the PAT and our post-Placement
share capital of 78,000,000 Shares.
(4) Our combined balance sheet as at 31 December 2013 has been prepared on the basis that our Group has been in existence
on this date.
(5) The NTA per Share as at 31 December 2013 has been computed based on our pre-Placement share capital of 64,000,000
Shares.
22
THE PLACEMENT
Issue size : 20,240,000 Placement Shares comprising 14,000,000 New Shares
and 6,240,000 Vendor Shares. The New Shares, which form part of
the Placement, will, upon issue and allotment, rank pari passu in all
respects with the existing issued Shares.
Placement Price : S$0.28 for each Placement Share.
The Placement : The Placement comprises an offering by the Placement Agent on
behalf of our Company and the Vendors of 20,240,000 Placement
Shares at the Placement Price by way of placement, subject to and
on the terms and conditions of this Offer Document.
Purpose of the Placement : Our Directors believe that the listing of our Company and the
quotation of our Shares on Catalist will enhance our public image
locally and internationally and enable us to tap the capital markets
to fund our business growth. The Placement will also provide
members of the public, our business associates and employees,
and others who have contributed to the success of our Group with
an opportunity to participate in the equity of our Company.
Listing status : Our Shares will be quoted on Catalist in Singapore dollars, subject
to admission of our Company to Catalist and permission for dealing
in, and for quotation of, our Shares being granted by the SGX-ST.
Risk factors : Investing in our Shares involves risks which are described in the
Risk Factors section of this Offer Document.
23
PLAN OF DISTRIBUTION
The Placement Price is determined by us and the Vendors in consultation with the Sponsor, Issue
Manager and Placement Agent after taking into consideration, inter alia, prevailing market conditions and
estimated market demand for the Placement Shares determined through a book-building process. The
Placement Price is the same for all the Placement Shares and is payable in full on application.
Placement Shares
Application for the Placement Shares may only be made by way of Placement Shares Application
Forms. The terms, conditions and procedures for applications are described in Appendix E of this Offer
Document.
Subscribers and/or purchasers of Placement Shares may be required to pay a brokerage of up to 1.0%
of the Placement Price (plus GST thereon, if applicable) to the Placement Agent or any sub-placement
agent that may be appointed by the Placement Agent.
None of our Directors or Substantial Shareholders intends to subscribe for and/or purchase the
Placement Shares in the Placement. None of the members of our Companys management or employees
intends to subscribe for and/or purchase more than 5.0% of the Placement Shares in the Placement.
To the best of our knowledge and belief, we are not aware of any person who intends to subscribe for
and/or purchase more than 5.0% of the Placement Shares. However, through a book-building process to
assess market demand for our Shares, there may be person(s) who may indicate his interest to subscribe
for and/or purchase more than 5.0% of the Placement Shares. If such person(s) were to make an
application for more than 5.0% of the Placement Shares pursuant to the Placement and are subsequently
allotted and/or allocated such number of Shares, we will make the necessary announcements at
the appropriate time. The nal allotment and/or allocation of Shares will be in accordance with the
shareholding spread and distribution guidelines as set out in the Catalist Rules.
No Shares shall be allotted and/or allocated on the basis of this Offer Document later than six months
after the date of registration of this Offer Document by the SGX-ST acting as agent on behalf of the
Authority.
24
USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED
The net proceeds raised from the Placement (comprising the New Shares and the Vendor Shares), after
deducting the estimated expenses in relation to the Placement of approximately S$1.6 million, will be
approximately S$4.1 million. We will not receive any of the proceeds from the Vendor Shares sold by
the Vendors in the Placement. The net proceeds attributable to the Vendors from the sale of the Vendor
Shares, after deducting the Vendors share of the estimated expenses of approximately S$35,000, will be
approximately S$1.7 million.
The net proceeds to be raised by our Company from the issue of the New Shares, after deducting our
share of the estimated expenses of approximately S$1.5 million, are approximately S$2.4 million.
The allocation of each principal intended use of proceeds and the estimated listing expenses is set out
below:-
S$000
As a Percentage of
Gross Proceeds
from the Placement
(%)
Use of proceeds
Business expansion through acquisitions, joint ventures and/or
strategic alliances 1,500 38.3
Improving inventory management system and logistics support 340 8.7
Marketing and business development 250 6.3
General working capital 313 8.0
Net proceeds 2,403 61.3
Expenses to be borne by our Company
(1)
Listing and processing fees 34 0.9
Professional fees and expenses
(2)
1,235 31.5
Placement commission and brokerage 78 2.0
Miscellaneous expenses 170 4.3
Gross proceeds from the issue of New Shares 3,920 100.0
Notes:-
(1) Of the total estimated listing expenses to be borne by our Company of approximately S$1.5 million, approximately S$1.4
million will be capitalised against share capital and the balance of the estimated listing expenses will be charged to prot or
loss.
(2) This includes the sponsor fee, audit fee, legal fee and consultancy fee.
Save for the placement commission and brokerage which will be borne by our Company and the Vendors
in proportion in which the number of Placement Shares offered by each of them bears to the total number
of Placement Shares, all other listing expenses will be borne by our Company.
In the reasonable opinion of our Directors, there is no minimum amount which must be raised from the
Placement.
Please refer to the Business Strategies and Future Plans section of this Offer Document for further
details on our future plans.
Pending the deployment of the net proceeds as aforesaid, the funds will be placed in short-term deposits
with nancial institutions and/or used to invest in short-term money market instruments as our Directors
may deem appropriate.
25
USE OF PROCEEDS FROM THE PLACEMENT AND EXPENSES INCURRED
We will make periodic announcements on the use of the net proceeds from the issue of the New Shares
as and when the funds are materially disbursed, and provide a status report on the use of the proceeds
in our annual report.
In the event that any part of our proposed uses of the net proceeds from the issue of the New Shares
does not materialise or proceed as planned, our Directors will carefully evaluate the situation and may
reallocate the intended funding to other purposes and/or hold such funds on short-term deposits for so
long as our Directors deem it to be in the interest of our Company and our Shareholders, taken as a
whole. Any change in the use of the net proceeds will be subject to the Catalist Rules and appropriate
announcements will be made by our Company on SGXNET.
26
MANAGEMENT AND PLACEMENT ARRANGEMENTS
Pursuant to a full sponsorship and management agreement dated 20 June 2014 (the Management
Agreement) entered into between our Company, the Vendors and HLF, our Company and the Vendors
have appointed HLF as introducing sponsor to manage the Placement and HLF will receive a fee from
our Company for such services rendered in connection with the Placement.
Pursuant to the placement agreement dated 20 June 2014 (the Placement Agreement) entered into
between our Company, the Vendors and HLF as the Placement Agent, HLF has agreed to subscribe for
and/or purchase, or procure subscribers and/or purchasers for the Placement Shares at the Placement
Price for a placement commission of 2.0% of the aggregate Placement Price for the total number of
Placement Shares, payable by our Company and the Vendors in the proportion in which the Placement
Shares are offered by our Company and the Vendors. HLF may, at its absolute discretion, appoint one or
more sub-placement agents for the Placement Shares.
Subscribers and/or purchasers of the Placement Shares may be required to pay a brokerage of up
to 1.0% of the Placement Price (plus GST thereon, if applicable) to the Placement Agent or any sub-
placement agent that may be appointed by the Placement Agent.
Save as aforesaid, no commission, discount or brokerage, has been paid or other special terms granted
by our Company within the two years preceding the date of this Offer Document 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 and
our subsidiary.
If there shall have been, since the date of the Management Agreement and prior to the close of the
Application List:-
(a) any breach of the warranties or undertakings by our Company or the Vendors in the Management
Agreement which comes to the knowledge of HLF; or
(b) any occurrence of certain specied events which comes to the knowledge of HLF; or
(c) any adverse change, or any development involving a prospective adverse change, in the condition
(nancial or otherwise) of our Company or of our Group as a whole; or
(d) any introduction or prospective introduction of or any change or prospective change in any
legislation, regulation, order, policy, rule, guideline or directive in Singapore or elsewhere (whether
or not having the force of law) and including, without limitation, any directive or request issued by
the Authority, the Securities Industry Council of Singapore or the SGX-ST or relevant authorities
elsewhere, in the interpretation or application thereof by any court, government body, regulatory
authority or other competent authority in Singapore or elsewhere; or
(e) any change, or any development involving a prospective change, in local, national or international
nancial (including stock market, foreign exchange market, inter-bank market or interest rates or
money market), political, industrial, economic, legal or monetary conditions, taxation or exchange
controls (including without limitation, the imposition of any moratorium, suspension or restriction
on trading in securities generally on the SGX-ST due to exceptional nancial circumstances
or otherwise, adverse changes in foreign exchange controls in Singapore and overseas or any
combination of any such changes or developments or crisis, or any deterioration of any such
conditions); or
(f) any imminent threat or occurrence of any local, national or international outbreak or escalation
of hostilities, insurrection, terrorist attacks or armed conict (whether or not involving nancial
markets) in any jurisdiction; or
(g) any regional or local outbreak of disease that may have an adverse effect on the nancial markets;
or
(h) any other occurrence of any nature whatsoever,
27
MANAGEMENT AND PLACEMENT ARRANGEMENTS
which has resulted or is in the reasonable opinion of the Sponsor likely to result in a material adverse
uctuation or material adverse conditions in the stock market in Singapore or overseas; or is likely to
materially prejudice the success of the Placement; or it becoming impracticable, inadvisable, inexpedient
or uncommercial to proceed with any of the transactions contemplated under the Management
Agreement or the Placement; or the business, trading position, operations or prospects of our Group
being materially and adversely effected; results or is likely to result in the issue of a notice of refusal to
an admission of our Company to Catalist by the SGX-ST to the Sponsor at any point prior to listing of
our Shares; or makes it uncommercial or otherwise contrary to or outside the usual commercial practices
in Singapore for the Sponsor to observe or perform or be obliged to observe or perform the terms of the
Management Agreement, the Sponsor may at any time prior to the close of the Application List rescind or
terminate the Management Agreement.
The Sponsor may terminate the Management Agreement if:-
(a) at any time up to the close of the Application List, a notice of refusal to an admission to Catalist is
issued by the SGX-ST to the Sponsor; or
(b) at any time after the registration of this Offer Document with the SGX-ST but before the close of
the Application List, our Company (and on behalf of the Vendors) fails and/or neglects to lodge a
supplementary or replacement offer document (as the case may be) if we become aware of:-
(i) a false or misleading statement in this Offer Document;
(ii) an omission from this Offer Document of any information that should have been included in it
under the SFA; or
(iii) a new circumstance that has arisen since this Offer Document was lodged with the SGX-ST
acting as agent on behalf of the Authority and would have been required by the SFA to be
included in this Offer Document if it had arisen before this Offer Document was lodged,
that is materially adverse from the point of view of an investor; or
(c) the Shares have not been admitted to Catalist on or before 30 June 2014 (or such other date as
our Company, the Vendors and the Sponsor may agree).
The obligations under the Placement Agreement are conditional upon the Management Agreement not
being determined or rescinded pursuant to the provisions of the Management Agreement. In the case
of the non-fullment of any of the conditions in the Management Agreement or the release or discharge
of the Sponsor from its obligations under or pursuant to the Management Agreement, the Placement
Agreement shall be terminated and the parties shall be released from their respective obligations under
the Placement Agreement.
In the event that the Management Agreement and/or the Placement Agreement is terminated, our
Directors and the Vendors reserve the right, at their absolute discretion, to cancel the Placement.
Save as disclosed above, we and the Vendors do not have any material relationship with the Sponsor,
Issue Manager and Placement Agent.
28
RISK FACTORS
Prospective investors should carefully consider and evaluate each of the following risk factors and all
other information contained in this Offer Document before deciding to invest in our Shares. To the best
of our Directors and the Vendors knowledge and belief, all risk factors which are material to investors
in making an informed judgement of our Group have been set out below. If any of the following
considerations, uncertainties or material risks develop into actual events, our business, nancial position
and/or results of operations could be materially and adversely affected. In such cases, the trading price of
our Shares could decline due to any of these considerations, uncertainties or material risks, and investors
may lose all or part of their investment in our Shares.
This Offer Document also contains forward-looking statements having direct and/or indirect implications
on our future performance. Our actual results may differ materially from those anticipated by these
forward-looking statements due to certain factors, including the risks and uncertainties faced by us, as
described below and elsewhere in this Offer Document .
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We may be affected by the loss of distributorship for Shaw Contract Group brand
Our Group is the authorised supplier for the Shaw Contract Group brand of carpets in Singapore since
1992. The sales of Shaw Contract Group brand of carpets accounted for 17.9%, 30.8% and 24.3% of
our total inventory sold for FY2011, FY2012 and FY2013 respectively while our purchases of carpets
under the Shaw Contract Group brand accounted for 25.0%, 42.9% and 28.7% of our total purchases
for FY2011, FY2012 and FY2013 respectively. Our rights to supply Shaw Contract Group brand of
carpets are granted by Shaw Industries who is one of our major suppliers and information of our Groups
purchases from Shaw Industries is set out in the Major Suppliers section of this Offer Document. There
is no assurance that Shaw Industries would continue to appoint our Group as its authorised supplier
in Singapore in the future. In the event such rights to supply Shaw Contract Group brand of carpets
are terminated and we are not able to nd suitable or timely replacements, our business and nancial
performance will be adversely affected.
Our business is dependent on the goodwill in our proprietary SMJ brand and third party brand
Our business is dependent on the goodwill of our proprietary SMJ brand, as well as, the third party
Shaw Contract Group brand. Maintaining our reputation for supplying good quality carpets is important
to enable us to maintain our existing customer base and increase our new customers. Any negative
publicity and/or any failure to maintain our reputation and the goodwill associated with these brands that
we market and sell carpets under may tarnish the goodwill and the commercial value of our proprietary
SMJ brand name which we have established with our customers. This may materially and adversely
affect our business and nancial performance. In addition, it is possible that our competitors may
distribute products or adopt trade names that are similar to ours and our suppliers notwithstanding that
our and our suppliers trademarks have been registered in Singapore. Please refer to the Intellectual
Property section of this Offer Document for further details of our trademark. It is also possible that we or
our suppliers may not be able to completely prevent an infringement of our or our suppliers intellectual
property rights. In any of such events, the goodwill generated by our or our suppliers brand name may be
eroded and our business will be adversely affected.
We may be adversely affected if there is a mismatch between our inventory acquisition and our
expected market demand
The nature of our business requires us to invest in and keep a substantial and varied stock of carpets
in order to meet the needs of our diverse customer base at short notice. Our customers requirements
are difcult to predict and are not made in accordance with any xed or long term contracts. As at 31
December 2013, the total cost of our inventory is approximately S$5.0 million, which accounted for
approximately 30.6% of our current assets. At the Latest Practicable Date, our Singapore warehouse
maintains approximately 80 different designs of carpets in up to 400 different colours. Over the periods
under review, our stock turnover period ranged from 137 to 152 days in our warehouse. The longer
our stock remains unsold, the higher our holding costs of inventory. If we fail to anticipate the needs of
our customers accurately or if we manage our inventory levels inefciently, we may accumulate large
amounts of slow moving inventory. Further, any mismanagement of inventory may lead to cash ow
29
RISK FACTORS
shortages while any mismanagement of freight and transportation costs incurred for the purchase and
sale of inventory may lead to higher cost of purchase of inventories and thereby negatively impacting our
business, protability and nancial position.
We have written off slow moving inventories of approximately S$58,000 as at FY2013. Our revenue
depends largely on the range and variety of carpets that we are able to offer our customers. Customers
preferences for particular designs of carpets may change and may result in different market trends
emerging. Some of our carpets may be subject to impairment over the years in the event of changes
in consumer preferences and trends in the designs which render certain range of our carpet stocks to
be obsolete or lacking in appeal to consumers. As a result of such events, our nancial position and
performance will be adversely affected.
Our business and nancial performance will be affected by any increase in rental charges or the
failure to procure the renewal of existing lease
Currently, our ofce, showroom and warehouse are housed in leased premises. The total rental expenses
of our Group which include the rental and service charges for our ofce, showroom and warehouse
amounted to S$792,066, S$930,588 and S$1,022,956 in FY2011, FY2012 and FY2013 respectively.
The tenure of our lease for our ofce, showroom and warehouse will expire on 31 March 2015 with an
option to renew for a further term of three years at revised terms to be mutually agreed. We generally
commence negotiations for a new lease about six months prior to the expiry of the existing lease. The
new lease agreement is usually signed within one month of the expiry of the existing lease. Upon the
expiry of such lease, the lessor has the right to review and alter the terms and conditions of the lease.
We face the risk of increase in rental charges or the inability to renew the lease on terms and conditions
which are favourable to us. Any increase in the rental charges or changes in terms and conditions that
are unfavourable to us would inevitably increase our operating expenses, thus affecting our protability.
In addition, failure to procure the renewal of lease or premature termination of the lease by the lessor
in accordance with the termination clauses of the existing lease agreement may result in losses and
disruptions to our business, and our nancial performance will be adversely affected.
We may be affected by economic downturns, reduction in renovation and furnishings spending
budget and uncertain global economic outlook
The industry that we operate in has historically been subject to the spending budget of businesses and
organisations as well as cyclical economic downturns which affect the continuous supply of commercial
space in Singapore, thereby negatively impacting our sales, gross margins and protability. Our business
is therefore dependent on such supply of commercial space in Singapore and spending budget for
renovations and furnishings as our products are mainly used in the ofce and commercial space. An
economic slowdown would generally lead to a decrease in the supply of commercial space and number
of renovation and furnishings projects, which we rely on for our sales. Revenue from our Contract Sales
business accounted for 45.4%, 46.0% and 43.0% of our revenue in FY2011, FY2012 and FY2013
respectively. As we have not entered into long term contracts with any of our customers, in the event of
a contraction in the supply of commercial space in Singapore or slowdown in renovation and furnishing
activities of the ofce and commercial space, our business and nancial performance will be adversely
affected.
Generally, consumers may also be reluctant to spend on renovation or furnishings if they lack condence
in the economy. There is no assurance that consumer spending will remain buoyant or that demand
for our carpets will remain at current level. Specically, consumer spending is affected by a number
of factors, including actual and perceived economic conditions, ination, unemployment rate, demand
for better quality of work environment, interest rates, and availability of credit in the markets where our
carpets are sold. Any signicant and adverse change to the aforesaid factors could reduce the level of
consumer spending and hence, demand for our carpets.
Due to uncertainties in the global markets, it is difcult to predict how our markets and businesses may
be affected by the global markets, in particular our Distribution Sales which are carried out through
our network of more than 260 carpet dealers, carpet importers and carpet installation companies in
Singapore and over 20 countries mainly in Asia. Accordingly, these situations could potentially present
risks to our Company, including an increase in interest expenses on our bank borrowings or reduction of
30
RISK FACTORS
the amount of banking facilities currently available to us, thereby materially and adversely affecting our
business operations and future nancial performance. Given the uncertainties as to the future economic
outlook, there is no assurance that we will be able to maintain or continue to grow our revenue and
prots, or that we will be able to react promptly to any change in economic conditions. In the event that
we fail to react promptly to the changing economic conditions, our performance and protability could be
adversely affected.
We are dependent on key personnel for our continued success
Our success to date has been largely attributable to the efforts of our key management led by our
Executive Directors, namely Rena Ho, Nellie Ho and Lee Lay Choo who are supported by our Executive
Ofcers and experienced sales and project teams. Each of our Executive Directors has more than 10
years of experience in the carpet industry. Our continued success is dependent to a large extent, on our
ability to retain the services of our management team, who are responsible for our day-to-day operations
and the implementation of the business strategy and corporate development of our Group as well as our
experienced sales and project teams with deep product knowledge. The loss of the services of any of our
key personnel without suitable replacements may have an adverse impact on our business operations
and the future growth of our Group. Please refer to the Directors, Executive Ofcers and Staff section of
this Offer Document for details of the qualications and working experience of our management team.
Failure to keep abreast of changes in consumer preferences will adversely affect sales
The demand for carpet is susceptible to changes in consumer preferences and trends in the design of
carpet, or other substitute materials or stones. Such changes in demand or preference are difcult to
predict accurately. Our continued growth and success are dependent on our ability to launch new range
of carpets with unique designs at competitive prices, as well as the popularity of and customer demand
for our carpets. Shifts in customer preferences away from our range of carpet will affect our business and
protability. Our business and nancial performance will be adversely affected in the event that we are
unable to respond promptly and appropriately to the changing requirements of our customers or if our
carpet design or styles do not satisfy changing consumer preferences.
We rely on third party carpet manufacturers for our products
We collaborate with ve regular third party carpet manufacturers in the PRC and Taiwan to produce all
our carpets marketed under our proprietary SMJ brand. The use of third party carpet manufacturers
to produce carpets for our sale does not guarantee products of acceptable quality as we do not have
direct control over the manufacturing process. In addition, there can be no assurance that there will not
be a disruption in the supply of products from these manufacturers, and in the event of such disruption,
we may not be able to source for suitable alternative manufacturers on a timely basis. The failure of any
third party carpet manufacturers to perform or the loss of any third party carpet manufacturers whom we
generally do not enter into long term or exclusive agreements could have a material adverse effect on our
business and nancial performance.
We are exposed to foreign exchange transaction risks
Our revenue is predominantly denominated in S$ which constituted approximately 71.5%, 76.5% and
74.6% of our revenue for FY2011, FY2012 and FY2013 respectively. Our purchases are predominantly
denominated in US$ which constituted approximately 99.2%, 97.4% and 99.4% of our purchases for
FY2011, FY2012 and FY2013 respectively. Purchases made in US$ include carpet tiles and broadloom
carpets under the Shaw Carpet Group brand and our third party carpet manufacturers. Foreign
exchange risks arise mainly from a mismatch between the currency of our sales and the currency of our
purchases. We may suffer foreign currency losses if there are signicant adverse uctuations in currency
exchange rates between the time of our purchases and payments in foreign currencies and the time of
our sales and receipts. This may adversely affect our nancial results. In FY2011 and FY2012, our net
foreign exchange gains were approximately S$1,000 and S$126,000 respectively while in FY2013, our
net foreign exchange losses were approximately S$45,000. We do not currently have any formal policy for
hedging against foreign exchange exposure. Please refer to the Foreign Exchange Exposure section of
this Offer Document for further details.
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RISK FACTORS
We may be subject to legal suits if we infringe third party intellectual property rights
We market and sell carpets under our proprietary brand known as SMJ and a third party brand known
as Shaw Contract Group. If these brands or their products carry designs that are similar or identical
to registered trademarks belonging to any other third party whom we may not be aware of, we may be
sued for infringement of their trademarks. Even if the trademarks or designs were not registered, we
may still be liable under an action for passing off if these third parties are able to prove their interests in
such trademarks or designs. Generally, we may not have recourse against our suppliers, its distributors
or suppliers in claims for infringement of intellectual property rights. If we are being sued for trademark
infringement or in an action of passing off, we may be liable for damages and incur legal costs, which if
substantial, will have an adverse effect on our nancial performance.
We may be unable to retain the loyalty of our end-users or secure new projects
Our high performance carpet typically has a product life cycle of approximately 10 years. There is no
assurance that our end-users will remain as repeat customers when replacing their existing carpet after
the carpet is worn out or damaged. As we are operating in a highly competitive industry, there is no
assurance that we would be able to retain the loyalty of our end-users and ensure that they will continue
to support and use our products. In the event that we are not able to retain the loyalty of our end-users,
our business and performance may be adversely affected.
It is crucial for the continued success of our business that we manage to continuously secure new
projects of a high value since most of our Contract Sales are project-based. We typically source for
our projects through requests for quotation and referrals from our customers who are satised with our
products and services. Generally, we maintain regular contacts with architects and designers who are
instrumental in recommending our products to their end-users in the course of their design and selection
of suppliers and sub-contractors during their renovation and furnishings projects. Notwithstanding so,
there is no assurance that our Group will be able to secure new and lucrative projects on a regular basis
through our participation in tenders or our customers will continue to refer new projects to us. In addition,
our resources are limited and we will not be able to participate in tenders for projects which may generate
lucrative prot margins if we do not have the capacity to undertake the work. If we are unable to secure
new and lucrative projects, our business and nancial performance will be materially and adversely
affected.
We are exposed to uctuations in prices of raw materials
The main raw materials used in the manufacture of carpets are nylon and polypropylene bres. The
prices of these raw materials, being petroleum-based, will increase when there is an increase in crude
oil prices. As such, any major upward trend in the prices of such raw materials would increase the costs
of our inventory and correspondingly increase the amount of working capital required for our business.
In the event that such increase in prices results in a substantial increase in working capital, and we are
unable to fund such increase, our business and nancial performance will be adversely affected.
Our business may be affected by competition with existing industry players and new entrants
We operate in a highly competitive industry and our success depends to a large extent on our ability
to compete effectively against other players within the industry and respond in an effective and timely
manner to cope with changing market conditions and trends. There is no assurance that we will be
able to compete effectively with existing industry players or new entrants. Should our existing or new
competitors offer products and services similar to ours at a lower cost or engage in aggressive pricing
in order to increase or gain market share, our revenue may decline if we are not able to match such
lower pricing. As a result, such competitive pressures could result in a negative impact on our pricing
(thus eroding our prot margins), erode our market share or make it more difcult for us to achieve
any signicant market penetration. In the event we are unable to compete effectively with our existing
and future competitors and adapt quickly to changing market conditions and trends, our business and
nancial performance will be adversely affected. Please refer to the Competition section of this Offer
Document for further details of our competitors.
32
RISK FACTORS
Disputes, claims and variation orders can erode our Groups protability
We may be involved from time to time in disputes with various parties in the course of our business.
These parties include suppliers, sub-contractors and other partners. These disputes may lead to legal
and other proceedings which may incur substantial costs to the extent that we are unable to recover such
costs from our suppliers, sub-contractors and other partners, and the diversion of our managements
resources and attention. During the course of a project, the project owner may request our Group to
perform additional works which are not specied in the original contract or to carry out variations to the
specications stipulated in the original contract. At times, the parties may agree that variation orders be
performed before the costs for such additional works are nalised between the parties. Hence, the nal
values of such variation orders may be subject to dispute by the project owner. Our Groups earnings will
be adversely affected if we are required to bear any part of the variation costs.
We will be liable to pay liquidated damages in the event of delay in the completion of projects
Our Group may be liable to pay liquidated damages in the event of any delays in the completion of a
project within the specied date of completion as provided in the contract. The quantum of liquidated
damages payable is normally stated in the contracts. However, our Group would not be liable for
liquidated damages and may be granted an extension of completion time if the delay is caused by
external factors that are beyond our control. While we have the right to claim against our suppliers, sub-
contractors and other partners should the delay in the completion of the project be attributable to their
fault, there is no assurance that we can make such claim successfully. There can be no assurance that
there will not be any delays in existing and future projects which we undertake resulting in the payment
of liquidated damages to the extent that we are unable to recover such costs from our suppliers, sub-
contractors and other partners which could have a material impact on our nancial performance and
nancial condition.
We may require additional funding for our future growth
Although we have identied our future growth plans as set out in the Business Strategies and Future
Plans section of this Offer Document, the proceeds from the Placement may not be sufcient to cover
the estimated costs to implement all these plans. Under such circumstance, we may need to obtain debt
or equity nancing to implement these growth opportunities. Additional debt and/or equity nancing may
result in dilution to our Shareholders. If such nancing does not generate a commensurate increase in
earnings, our EPS will be diluted, and this could lead to a decline in our Share price.
Additional debt nancing may, apart from increasing interest expense and gearing, result in all or any of
the following:-
limit our ability to pay dividends;
increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash ows from operations to payments on our
debt, thereby reducing the availability of our cash ows to fund capital expenditure, working capital
and other requirements; and/or
limit our exibility in planning for, or reacting to, changes in our business and our industry.
There is no assurance that we will be able to obtain additional debt and/or nancing on terms that are
acceptable to us or at all. Any inability to secure additional debt and/or nancing may materially and
adversely affect our business, implementation of our business strategies and future plans and results of
operations.
33
RISK FACTORS
There is no assurance that our expansion plans will be successful
In order to grow our business, we intend to expand in accordance with our future plans as set out in
the Business Strategies and Future Plans section of this Offer Document, which include expanding
our business through acquisitions, joint ventures and/or strategic alliances in businesses that are
complementary to our business. Participation in strategic alliances, acquisitions, or joint ventures similarly
involves risks, including but not limited to, difculties in integrating management, operations, services,
products and personnel. The successful integration of such growth strategies depends on our ability to
identify suitable partners and the successful integration of operations. There can be no assurance that we
will be able to execute such growth strategies successfully. Should any of the aforesaid events occur, our
protability may be adversely affected.
We are exposed to credit risks of our customers
Our nancial position and protability is dependent on the credit-worthiness of our customers. If there
are any unforeseen circumstances affecting our customers ability or willingness to pay our fees, we may
experience defaults in payment which will adversely affect our nancial position and protability. Please
refer to the Credit Management section of this Offer Document for more details.
We may be affected by major or sustained disruptions to our operations
In the event of any major or sustained disruptions or any outbreak of re, ood or any other natural
disasters which results in signicant damage to our premises, our operations may be adversely affected.
For instance, in the event that our ofce and warehouse experience downtime, we may not be able to
deliver the required goods to our customers. In such an event, the condence of our customers may drop
and our business and nancial position may be adversely affected.
Our business is dependent on the services of our sub-contractors
We engage sub-contractors to provide installation works for our Contract Sales projects. These sub-
contractors are selected based on, inter alia, our past working experience with them, and their
competitiveness in terms of pricing, quality and ability to meet the stipulated timelines. We cannot ensure
that the services rendered by these sub-contractors will be satisfactory or that they will continue to meet
our requirements for quality. In the event of any loss or damage which arises from the default of the sub-
contractors engaged by us, we will nevertheless be liable for our sub-contractors default. Furthermore,
these sub-contractors may experience nancial or other difculties that may affect their ability to carry out
the work for which they contracted for, thus delaying the completion of or failing to complete our Contract
Sales projects, resulting in additional costs to us or exposing us to the risk of liquidated damages. Any
of these factors could have a material adverse effect on our business, nancial condition and operating
results.
We may face rising labour costs and labour shortage
Our ability to meet our labour requirements may be subject to numerous external factors, including
the availability of a sufcient number of suitable persons in the relevant job segment, prevailing labour
costs including wage rates and applicable levies, demographics, and health and insurance costs.
In addition, any changes to the labour laws in Singapore in the form of stricter qualifying criteria and
salary thresholds for foreign workers, and increases in foreign worker levies and foreign workers
accommodation costs may result in an increase in our labour-related costs.
Our growth plans may require us to hire new employees in the future. As we face competition for labour,
we may have to increase wages and employee benets to attract and retain qualied personnel or
risk considerable employee turnover. If we are unable to hire, train and retain qualied employees at a
reasonable cost, we may be unable to execute our growth strategy and our business, nancial position
and results of operations may be adversely affected.
34
RISK FACTORS
Potential loss of L4 status
Our Group is registered with BCA as a L4 contractor under the workhead of SY06 - Finishing and
Building Products which allows our Group to tender for public sector contracts of up to S$6.5 million. To
maintain our Groups existing L4 status, our Group has to, among other requirements, maintain a track
record of S$2.5 million (contract value of awarded projects) for the past three years. In the event that the
L4 status cannot be maintained, our Group will not be able to tender for public sector contracts of value
up to S$6.5 million. This will have an adverse impact on our Groups nancial performance.
Our insurance coverage may not be adequate
We maintain workmens or work injury compensation insurance, public liability insurance and re
insurance. We also maintain insurance policies which cover personal accident, hospitalisation and
surgery for our employees. We have also taken up keyman insurance for our Executive Directors and
Business Director. However, in the event that the amount of such claims exceed the coverage of the
insurance policies which we have taken up, we may be liable for shortfalls of the amounts claimed.
We are not insured against business interruption. If such events were to occur, our business, nancial
performance and nancial position may be materially and adversely affected. Please refer to the
Insurance section of this Offer Document for further details.
We may be affected by an outbreak of communicable diseases
In recent years, the outbreak of various communicable diseases such as the recent cases of Middle
East Respiratory Syndrome reported in the Arabian Peninsula and the avian inuenza have resulted in
global economic and social uncertainties. The occurrence of such events may result in us reducing our
marketing efforts in the affected countries which may in turn have an adverse impact on our revenue.
In addition, as we obtain most of our products from overseas suppliers, if the manufacturing facilities or
employees of our suppliers are affected by any of the aforesaid events, it may interrupt the supply of our
products, thereby causing our business and nancial performance to be adversely affected.
Terrorist attacks, armed conicts and increased hostilities could adversely affect our nancial
performance
Terrorist attacks, armed conicts, increased hostilities and other acts of violence or war around the world
may adversely affect the regional and global nancial markets. The occurrence of any of these events
may result in a loss of business condence, which could potentially lead to an economic recession and
have an adverse effect on our business, results of operations and nancial condition. There can be no
guarantee that social and civil disturbances will not occur in the future and on a wider scale, or that any
such disturbances will not, directly or indirectly materially and adversely affect our business, results of
operations and nancial condition.
RISKS RELATING TO INVESTMENT IN OUR SHARES
Investments in securities quoted on Catalist involve a higher degree of risk and can be less liquid
than shares quoted on the Main Board of the SGX-ST
We have made an application for our Shares to be admitted to Catalist, a listing platform primarily
designed for fast growing and emerging or smaller companies (to which a higher investment risk tends to
be attached as compared to larger or more established companies). An investment in shares quoted on
Catalist may carry a higher risk than an investment in shares quoted on the Main Board of the SGX-ST.
Pursuant to the Catalist Rules, we are required to, among other things, retain a sponsor at all times after
our admission to Catalist. In particular, unless approved by the SGX-ST, the Sponsor must act as our
continuing sponsor for at least three years after the admission of our Company to Catalist. In addition, we
may be delisted in the event that we do not have a sponsor for more than three continuous months. There
is no guarantee that following the expiration of the three-year period, the Sponsor will continue to act as
our sponsor or that we are able to nd a replacement sponsor within the three-month period. Should such
risks materialise, we may be delisted.
35
RISK FACTORS
Future sales or issuance of our Shares could materially and adversely affect our Share price
Any future sale of our Shares can have a downward pressure on our Share price. The sale of a
signicant amount of Shares in the public market after the Placement, or the perception that such sales
may occur, could adversely affect the market price of our Shares. These factors also affect our ability to
sell additional equity securities. Except as otherwise described in the Moratorium section of this Offer
Document, there are no restrictions imposed on our Substantial Shareholders in relation to disposal of
their shareholdings.
Our Controlling Shareholders will retain signicant control over our Group after the Placement
which will allow them to inuence the outcome of matters submitted to Shareholders for approval
Upon the completion of the Placement, our Controlling Shareholders, namely Lui Oi Kheng, Rena Ho and
Nellie Ho, will collectively own approximately 69.9% of our Companys post-Placement share capital. As
a result, they will be able to exercise signicant inuence over matters requiring Shareholders approval,
including the election of directors and the approval of signicant corporate transactions. Our Controlling
Shareholders will also effectively have veto power with respect to any Shareholders action or approval
requiring a majority vote except where they are required by the Catalist Rules or other applicable
regulations to abstain from voting. Such concentration of ownership may also have the effect of delaying,
preventing or deterring a change in control of our Group which may benet the Shareholders.
There is no prior market for our Shares and the Placement may not result in an active or liquid
market for our Shares
Prior to this Placement, there has been no public market for our Shares. Although we have made an
application to the SGX-ST to list our Shares on Catalist, there is no assurance that an active trading
market for our Shares will develop or if developed, be sustained after the Placement. There is also no
assurance that the market price for our Shares will not decline below the Placement Price. The market
price of our Shares could be subject to signicant uctuations as investors sentiments may be affected
by external factors such as the outbreak of war, escalation of hostilities or outbreak of infectious
diseases (whether in Singapore or elsewhere). Other factors including the liquidity of our Shares in the
market, differences between our actual nancial or operating results and those expected by investors
and analysts, the general market conditions and broad market uctuations may also result in signicant
uctuations in the market price of our Shares.
We may experience uctuations in our operating results
We may experience uctuations in our operating results caused by any factor which is beyond our control.
Hence, our Groups operating results in a particular period may uctuate in comparison to an earlier
comparable period, which may not fall within the expectations of stock market analysts or investors. This
in turn could have an impact on the trading price of our Shares. Our past operating results may not be
indicative of our future nancial performance.
Our Share price may uctuate following the Placement
The market price of our Shares may uctuate signicantly and rapidly in response to, inter alia, the
following factors, some of which are beyond our control:-
(a) variations in our operating results;
(b) changes in securities analysts recommendations, perceptions or estimates of our nancial
performance;
(c) changes in market valuations and share prices of companies with business similar to that of our
Company that may be listed in Singapore;
(d) announcements by us of signicant acquisitions, strategic alliances or joint ventures;
(e) uctuations in stock market prices and volume;
36
RISK FACTORS
(f) our involvement in material litigation;
(g) additions or departures of key personnel;
(h) success or failure of our management in implementing business and growth strategies; and
(i) changes in conditions affecting the industry, the general economic conditions or stock market
sentiments or other events or factors.
New investors will incur immediate dilution and may experience further dilution
Our Placement Price of 28.00 cents per Share is substantially higher than our NTA per Share of 18.73
cents (based on the NTA as referred to in the Dilution section of this Offer Document and as adjusted
for the net proceeds from the issue of New Shares). If we were liquidated immediately following the
Placement, each investor subscribing for and/or purchasing the Placement Shares would receive less
than the price he paid for the Shares. Please refer to the Dilution section of this Offer Document for
further details.
Negative publicity may materially and adversely affect the price of our Shares
Negative publicity involving our Group, any of the Directors or Substantial Shareholders of our Company
may materially and adversely affect the market perception or the share performance of our Company,
whether or not it is justied. Some examples are unsuccessful attempts in joint ventures, takeovers or
involvement in insolvency proceedings.
The actual performance of our Company may differ materially from the forward-looking
statements in this Offer Document
This Offer Document contains forward-looking statements, which are based on a number of assumptions
which are subject to signicant uncertainties and contingencies, many of which are outside our
control. Furthermore, our revenue and nancial performance are dependent on a number of external
factors, including demand for our services which may decrease for various reasons, such as increased
competition within the industry or changes in applicable laws and regulations. We cannot assure you that
these assumptions will be realised and our actual performance will be as projected.
We may not be able to pay dividends in the future
Our ability to declare dividends to our Shareholders will depend on our future nancial performance
and distributable reserves of our Company, which, in turn, depends on us successfully implementing
our strategies and on nancial, competitive, regulatory, technical and other factors, general economic
conditions, demand for and selling prices of our services and other factors specic to our industry or
specic projects, many of which are beyond our control. As such, there is no assurance that our
Company will be able to pay dividends to our Shareholders after the completion of the Placement,
including the Proposed Dividends as dened and described in the Dividend Policy section of this Offer
Document. In the event that any company in our Group enters into any loan agreements in the future,
covenants therein may also limit when and how much dividends we can declare and pay.
Foreign Shareholders may not be able to participate in future rights issue or certain other equity
issues of our Shares
In the event that we elect to conduct a rights issue or certain other equity issues, we may be subject to
regulatory procedures to be followed in making such rights available to our existing Shareholders or in
disposing of such rights for the benet of such Shareholders and making the net proceeds available to
them. Accordingly, as a result of such regulatory constraints, foreign holders of our Shares may be unable
to participate in future offerings of our Shares and may experience dilution of their shareholdings.
37
ISSUE STATISTICS
PLACEMENT PRICE 28.00 cents
NTA
NTA per Share based on the audited combined balance sheet of our Group as at
31 December 2013:-
(a) before adjusting for the estimated net proceeds from the issue of the New
Shares and based on our Companys pre-Placement share capital of
64,000,000 Shares
19.08 cents
(b) after adjusting for the estimated net proceeds from the issue of the New
Shares and based on our Companys post-Placement share capital of
78,000,000 Shares
18.73 cents
Premium of Placement Price over the NTA per Share based on the audited
combined balance sheet of our Group as at 31 December 2013:-
(a) before adjusting for the estimated net proceeds from the issue of the New
Shares and based on our Companys pre-Placement share capital of
64,000,000 Shares
46.75%
(b) after adjusting for the estimated net proceeds from the issue of the New
Shares and based on our Companys post-Placement share capital of
78,000,000 Shares
49.49%
Dividends
Historical DPS based on the special interim dividends in the audited combined
nancial statements of our Group for FY2013
(1)
and the pre-Placement share
capital of 64,000,000 Shares
4.69 cents
Historical DPS based on the net PAT in the audited combined statement of
comprehensive income of our Group for FY2013 and the pre-Placement share
capital of 64,000,000 Shares, assuming that the recommendation to distribute
30.0% of our PAT attributable to Shareholders and the Service Agreements had
been in place from the beginning of FY2013
1.16 cents
EPS
Historical net EPS of our Group for FY2013 based on our Companys pre-
Placement share capital of 64,000,000 Shares
4.27 cents
Historical net EPS of our Group for FY2013 based on our Companys pre-
Placement share capital of 64,000,000 Shares, assuming that the Service
Agreements had been in place from the beginning of FY2013
3.87 cents
PER
Historical PER based on the historical net EPS of our Group for FY2013 and our
Companys pre-Placement share capital of 64,000,000 Shares
6.56 times
Historical PER based on the historical net EPS of our Group for FY2013,
assuming that the Service Agreements had been in place from the beginning of
FY2013
7.24 times
38
ISSUE STATISTICS
Net Cash Flow from Operations
(2)

Historical net cash ow from operations per Share for FY2013 based on our
Companys pre-Placement share capital of 64,000,000 Shares
3.42 cents
Historical net cash ow from operations per Share for FY2013 based on our
Companys pre-Placement share capital of 64,000,000 Shares, assuming that the
Service Agreements had been in place from the beginning of FY2013
3.02 cents
Price to Net Cash Flow from Operations Ratio
Placement Price to historical net cash ow from operations per Share for FY2013
based on our Companys pre-Placement share capital of 64,000,000 Shares
8.19 times
Placement Price to historical net cash ow from operations per Share for
FY2013, assuming that the Service Agreements had been in place from the
beginning of FY2013
9.27 times
Market Capitalisation
Our market capitalisation based on the Placement Price and our Companys
post-Placement share capital of 78,000,000 Shares
S$21.84 million
Notes:-
(1) Save for the special interim dividends, there was no nal dividend declared by our Company in respect of FY2013. Please
refer to the Dividend Policy section of this Offer Document for further details.
(2) Net cash ow from operations is dened as net cash generated from operating activities as referred to in the Audited
Combined Financial Statements set out in Appendix A of this Offer Document.
39
DILUTION
Dilution is the amount by which the Placement Price to be paid by investors for our Placement Shares
(New Investors) exceeds the NTA per Share immediately after the Placement. Our audited NTA per
Share as at 31 December 2013 before adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Companys pre-Placement share capital of 64,000,000 Shares, was 19.08
cents.
Taking into account the 14,000,000 New Shares at the Placement Price in connection with the
Placement, our NTA per Share after adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Companys post-Placement share capital of 78,000,000 Shares, would
be 18.73 cents. This represents an immediate decrease in NTA per Share of 0.35 cents to our existing
Shareholders and an immediate dilution in NTA per Share of 9.27 cents to our New Investors.
The following table illustrat es such dilution on a per Share basis as at 31 December 2013:-
Cents
Placement Price 28.00
NTA per Share as at 31 December 2013 19.08
Decrease in NTA per Share attributable to existing Shareholders 0.35
NTA per Share after the Placement
(1)
18.73
Dilution in NTA per Share to New Investors 9.27
Note:-
(1) The computed NTA per Share after the Placement does not take into account our actual nancial performance from 1
January 2014. Depending on our actual nancial results, our NTA per Share may be higher or lower than the above computed
NTA.
The following table shows the average effective cost per Share paid by our existing Shareholders for
Shares acquired by them during the period of three years prior to the date of lodgement of this Offer
Document and the price per Share to be paid by our New Investors pursuant to the Placement:-
Number of Shares
Acquired
Total
Consideration
Average Effective
Cost per Share
(S$) (cents)
Existing Shareholders
Lui Oi Kheng
(1),(4)
33,600,000 1,750,055
(5)
5.21
Rena Ho
(1),(2)
12,800,000 700,020 5.47
Nellie Ho
(1),(2),(3)
12,800,000 700,020 5.47
Lee Lay Choo 3,200,000 888,000
(6)
27.75
Tay Twan Lee
(3),(4)
1,600,000 5 nm
New Investors 14,000,000 3,920,000 28.00
Notes:-
(1) Lui Oi Kheng is the mother of Rena Ho and Nellie Ho.
(2) Rena Ho and Nellie Ho are sisters.
(3) Tay Twan Lee is the spouse of Nellie Ho.
(4) Lui Oi Kheng and Tay Twan Lee are selling 4,640,000 and 1,600,000 Vendor Shares, respectively. Please refer to the
Vendors section of this Offer Document for further details.
40
DILUTION
(5) In August 2013, 1,400,000 ordinary shares in the share capital of SMJ Furnishings were transmitted to our Controlling
Shareholder, Lui Oi Kheng following the demise of our late founder, Peter Ho, pursuant to the provisions of his Will. The total
consideration for arriving at the effective cost per Share includes the sum of all consideration paid by the late Peter Ho and
Lui Oi Kheng for 1,750,000 ordinary shares in the share capital of SMJ Furnishings.
(6) In February 2014, our Controlling Shareholder, Lui Oi Kheng sold 350,000 ordinary shares in the share capital of SMJ
Furnishings to our Executive Director and COO, Lee Lay Choo at the price of S$888,000 which was agreed upon on a willing-
buyer-willing-seller basis and fully paid.
Save as disclosed above and in the Restructuring Exercise and Share Capital sections of this Offer
Document, none of our Directors, Substantial Shareholders or their Associates has acquired any Shares
during the period of three years prior to the date of lodgement of this Offer Document.
41
CAPITALISATION AND INDEBTEDNESS
The following table shows the cash and cash equivalents as well as capitalisation and indebtedness of
our Group as at 30 April 2014:-
(a) based on the unaudited combined statements of nancial position of our Group as at 30 April 2014;
and
(b) as adjusted for the net proceeds from the issue of the New Shares.
You should read this in conjunction with the Audited Combined Financial Statements and the
Managements Discussion and Analysis of Results of Operations and Financial Position section of this
Offer Document.
As at 30 April 2014
(S$000) Actual
As adjusted for the
net proceeds from
the issue of the
New Shares
Cash and cash equivalents 4,477 6,880
Indebtedness
Current
- secured and guaranteed 1,685 1,685
- secured and non-guaranteed
- unsecured and guaranteed
- unsecured and non-guaranteed
1,685 1,685
Non-current
- secured and guaranteed
- secured and non-guaranteed
- unsecured and guaranteed
- unsecured and non-guaranteed

Total indebtedness 1,685 1,685
Total shareholders equity 12,811 15,214
Total capitalisation and indebtedness 14,496 16,899
There were no material changes in our total capitalisation and indebtedness from 30 April 2014 to the
Latest Practicable Date, save for the scheduled monthly repayments of our borrowings (trust receipts)
and changes in our retained earnings arising from the day-to-day operations in the ordinary course of
business.
42
CAPITALISATION AND INDEBTEDNESS
Borrowings
Details of our borrowings and indebtedness as at 31 December 2013 are as follows:-
Financial
Institution
Type of
Facilities
Amount of
Facilities
Granted
Amount
Utilised /
Owing
Amount
Unutilised
Securities
(S$000) (S$000) (S$000)
Oversea-Chinese
Banking
Corporation
Limited
Overdraft
Letter of credit
(including trust
receipts, draft loans,
shipping guarantee/
airway bills and
bankers guarantee)
Foreign exchange
forward contract
1,800
5,000
3,000

3,195

1,800
1,805
3,000
(i) Deed of guarantee
and indemnity for
S$7,350,000 from
Lui Oi Kheng,
Rena Ho, Nellie Ho
and Lee Lay Choo
(ii) Open legal mortgage
over the properties
held by Lui Oi Kheng
at No. 151 Chin Swee
Road, #07-11 and
#07-13 Manhattan
House, Singapore
169876
Total 9,800 3,195 6,605
As at 31 December 2013, we had outstanding trade nance amounts relating to trust receipts with
Oversea-Chinese Banking Corporation Limited of approximately S$2.48 million and included in the total
amount utilised/owing, there were letters of guarantee issued of approximately S$0.72 million. Please
refer to the Capital Expenditures, Divestments, Commitments and Contingent Liabilities section of this
Offer Document for more details.
The effective interest rate charged by the nancial institution for the trust receipts facilities was at 2.5%
plus Singapore Interbank Offered Rate per annum or such other rate as the nancial institution may from
time to time determine. The commission for the letters of guarantee was at 0.7% per annum.
To the best of our Directors knowledge, as at the Latest Practicable Date, 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 nancial position and results or business operations, or the investments by our
Shareholders.
Save as aforesaid and as disclosed in the Liquidity and Capital Resources section of this Offer
Document, our Group does not have any material unused sources of liquidity.
Please refer to the Interested Person Transactions section of this Offer Document for more details of the
guarantees provided by our Executive Directors and Controlling Shareholder.
43
DIVIDEND POLICY
Our subsidiary, SMJ Furnishings had declared a one-tier tax-exempt nal dividend amounting to
S$525,000 and S$1,000,000 in respect of FY2011 and FY2012 respectively, to its then shareholders.
It had further declared a one-tier tax-exempt special interim dividend of S$3,000,000 in aggregate in
respect of FY2013 to its then shareholders. Save for the special interim dividend, there was no nal
dividend declared by our subsidiary, SMJ Furnishings, in respect of FY2013.
Save as disclosed above, no dividends has been declared or paid by our Company or subsidiary during
the periods under review.
We do not have a xed dividend policy. However, we intend to recommend and distribute dividends of
30% of our PAT to Shareholders for FY2014 and FY2015 (Proposed Dividends), subject to the factors
outlined below. Investors should note that the foregoing statement on the Proposed Dividends is merely
a statement of our present intention and shall not constitute a legal binding obligation of our Company
or legally binding statement in respect of our future dividends which may be subject to modication
(including reduction or non-declaration thereof) in our Directors sole and absolute discretion. Investors
should not treat the Proposed Dividends as an indication of our Groups future dividend policy. No
inference should or can be made from any of the foregoing statements as to our actual future protability
or ability to pay dividends. The form, frequency and amount of future dividends on our Shares will depend
on our earnings, nancial position, results of operations, cash ow, capital needs, the terms of the
borrowing arrangements (if any), plans for expansion and other factors which our Directors may deem
appropriate (the Dividend Factors).
Subject to our Articles of Association and in accordance with the Companies Act, our Company may
declare an annual nal dividend subject to the approval of our Shareholders in a general meeting but no
dividend or distribution shall be declared in excess of the amount recommended by our Directors. Subject
to our Articles of Association and in accordance with the Companies Act, our Directors may also from
time to time declare an interim dividend without the approval of our Shareholders. Our Company must
pay all dividends out of our prots. For information relating to taxes payable on dividends, please refer to
the Taxation section in Appendix D of this Offer Document.
All dividends are paid pro-rata among the Shareholders in proportion to the amount paid up on each
Shareholders Shares, unless the rights attaching to an issue of any Share provides otherwise.
Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable to a
Shareholder whose name is entered in the Depository Register shall, to the extent of payment made to
CDP, discharge our Company from any liability to that Shareholder in respect of that payment.
The amount of dividends declared and paid by us should not be taken as an indication of the dividends
payable in the future. No inference shall or can be made from any of the foregoing statements as to our
actual future protability or ability to pay dividends in any of the periods discussed. There can be no
assurance that dividends will be paid in the future or of the amount or timing of any dividends that will
be paid in the future. The form, frequency and amount of future dividends will depend on the Dividend
Factors.
44
SUMMARY OF OUR FINANCIAL INFORMATION
The following selected nancial information should be read in conjunction with the full text of this Offer
Document, including the Audited Combined Financial Statements set out in Appendix A of this Offer
Document.
Combined Statements of Comprehensive Income
(1)
Audited
(S$000) FY2011 FY2012 FY2013
Revenue 24,088 23,614 22,026
Other income/(losses) - net 1 164 (11)
Changes in inventories (478) (629) (111)
Expenses
- Purchases of inventories (14,009) (13,873) (12,625)
- Depreciation (73) (58) (52)
- Employee compensation (2,236) (2,379) (2,259)
- Finance (35) (31) (57)
- Freight and transportation (1,342) (1,308) (670)
- Installation (958) (804) (798)
- Other (1,836) (1,890) (2,217)
Total expenses (20,967) (20,972) (18,789)
Prot before income tax 3,122 2,806 3,226
Income tax expense (467) (411) (494)
Total comprehensive income, representing net prot 2,655 2,395 2,732
Total comprehensive income attributable to:
Equity holders of the Company 2,655 2,395 2,732
EPS (cents)
(2)
4.15 3.74 4.27
(4)
EPS (fully diluted) (cents)
(3)
3.40 3.07 3.50
(4)
Notes:-
(1) Our combined statements of comprehensive income for the periods under review have been prepared on the basis that our
Group had been in existence throughout the periods under review.
(2) For comparative purposes, EPS for the periods under review have been computed based on the PAT and our pre-Placement
share capital of 64,000,000 Shares.
(3) For comparative purposes, EPS for the periods under review have been computed based on the PAT and our post-Placement
share capital of 78,000,000 Shares.
(4) Had the Service Agreements been in place with effect from 1 January 2013, the PAT for FY2013 would have been
approximately S$2,478,000, and the EPS and EPS (fully diluted) would be 3.87 cents and 3.18 cents, respectively.
45
SUMMARY OF OUR FINANCIAL INFORMATION
Combined Balance Sheet
(1)
(S$000)
Audited
As at 31
December 2013
ASSETS
Current assets
Cash and cash equivalents 5,475
Trade and other receivables 5,960
Inventories 5,035
16,470
Non-current assets
Investment property 1,047
Property, plant and equipment 32
1,079
Total assets 17,549
LIABILITIES
Current liabilities
Trade and other payables 2,193
Current income tax liabilities 654
Borrowings 2,480
5,327
Non-current liability
Deferred income tax liabilities 9
Total liabilities 5,336
NET ASSETS 12,213
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital 3,500
Retained prots 8,713
Total equity 12,213
NTA per Share (cents)
(2)
19.08
Notes:-
(1) Our combined balance sheet as at 31 December 2013 has been prepared on the basis that our Group has been in existence
on this date.
(2) The NTA per Share as at 31 December 2013 has been computed based on our pre-Placement share capital of 64,000,000
Shares.
46
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
The following discussion of our results of operations and nancial position has been prepared by our
management and should be read in conjunction with the Audited Combined Financial Statements. This
discussion contains forward-looking statements that involve risks and uncertainties. Our actual results
may differ signicantly from those projected in the forward-looking statements. Factors that might cause
future results to differ signicantly from those projected in the forward-looking statements include, but
are not limited to, those discussed below and elsewhere in this Offer Document, particularly in the Risk
Factors section of this Offer Document. Under no circumstances should the inclusion of such forward-
looking statements herein be regarded as a representation, warranty or prediction with respect to the
accuracy of the underlying assumptions by our Company, the Vendors, the Sponsor, Issue Manager,
and Placement Agent or any other person. Investors are cautioned not to place undue reliance on these
forward-looking statements that speak only as at the date hereof. Please refer to the Cautionary Note
Regarding Forward-Looking Statements section of this Offer Document for further details.
OVERVIEW
We specialise in the sale and distribution of a wide range of premier carpets marketed under our
proprietary SMJ brand through our global distribution networks of more than 260 carpet dealers, carpet
importers and carpet installation companies in over 20 countries mainly in Asia. In addition, we are
appointed by Shaw Industries as the authorised supplier for its Shaw Contract Group range of carpets
in Singapore. Shaw Contract Group is an American brand of carpets which offers both carpet tiles and
broadloom carpets in different designs and colours appealing to the segment of the market which seeks
for higher end range of carpets and has a higher spending budget.
Our customers include Apple South Asia Pte. Ltd., The Hong Kong and Shanghai Banking Corporation
Limited, DBS Bank Ltd., Obayashi Corporation and Cisco System (USA) Pte Ltd. Please refer to the
Our Products and Business Process Our Carpet Supply and Installation Projects section of this Offer
Document for the details of projects completed for such customers.
Our Directors believe that we are one of the leading premier carpet specialists serving the commercial
and institutional sectors in Asia with an established reputation and track record of more than 25 years.
Over the years, we have built a good reputation based on our service quality, efciency, reliability and
competitive pricing.
We are differentiated from our competitors as we maintain a ready supply of carpets in a variety of
designs and colours in our Singapore warehouse for sale to our customers. Our carpet stocks comprise
both carpet tiles and broadloom carpets. This enables us to full our customers requirements without
incurring the usual time needed for production and shipment of such carpets from overseas. At the Latest
Practicable Date, our Singapore warehouse maintains approximately 80 different designs of carpets in up
to 400 different colours.
At the Latest Practicable Date, we collaborate with ve regular third party carpet manufacturers operating
in the PRC and Taiwan, which will produce both carpet tiles and broadloom carpets according to our
requested designs, colours and specications and are marketed for sale under our proprietary SMJ
brand.
Please refer to the Business Overview section of this Offer Document for further details.
Revenue
Our revenue is categorised into:-
(a) Distribution Sales; and
(b) Contract Sales.
47
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Distribution Sales are mainly sales to carpet dealers and carpet installers on wholesale basis. Contract
Sales are mainly sales to property developers, contractors, established business owners or interior
design consultants, which involve the supply and installation of carpets usually for ofces, convention
halls, hotels, cinemas, hospitals and institutions.
Revenue from Distribution Sales accounted for 54.6%, 54.0% and 57.0% of our revenue in FY2011,
FY2012 and FY2013 respectively whereas Contract Sales accounted for 45.4%, 46.0% and 43.0% of our
revenue in FY2011, FY2012 and FY2013 respectively.
Distribution Sales were generated by our sales and marketing personnel, as well as, from enquiries from
recurring and new customers. Typically, our Contract Sales were either awarded directly by customers or
through invitation to tender from property developers, contractors, established business owners or interior
design consultants.
Revenue from Distribution Sales is recognised upon delivery to and acceptance by our customers when
signicant risks, rewards and control have been transferred. As for Contract Sales which involves the
supply and installation of carpets, revenue is recognised only upon delivery of the carpets and completion
of the installation.
Our revenue for the periods under review is denominated in either Singapore dollar or United States
dollar.
The major factors that affect our revenue include:-
(a) state of the economies in Singapore and Southeast Asia region;
(b) continuous supply of commercial space in Singapore;
(c) potential in export markets and the general economic climate which our customers operate in;
(d) maintain a high level of carpet stocks collection in wide variety of colours and designs;
(e) ability to full customers order within a short turnaround time;
(f) strong management team assisted by experienced sales and project teams with deep product
knowledge; and
(g) our ability to maintain good working relationships with our suppliers and customers.
Other income/(losses) - net
Other income comprised net gains/(losses) on foreign currency translation, government grants and
recovered bad debts previously written off.
Changes in inventories
This represents the changes in the level of inventories held by us at the end of each nancial year.
Purchases of inventories
Purchases of inventories are mainly the cost of purchase of carpets and carpet accessories from our
suppliers.
Factors affecting our cost of purchase of inventories include:-
(a) our ability to source and purchase quality carpets at competitive prices to meet our customers
demands;
(b) our ability to maintain good working relationships with our suppliers;
48
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
(c) the uctuations of currency exchange rate between United States dollar and Singapore dollar; and
(d) our ability to implement inventory management control and manage the freight and transportation
cost, nance cost and logistic cost.
Depreciation expense
Depreciation expense relates to the depreciation of property, plant and equipment over the assets useful
lives.
Employee compensation
Employee compensation comprises salaries, commission, allowances and bonuses, CPF contributions,
foreign worker levies, medical and other welfare benets accorded to the employees (including the
Directors).
The main factors affecting our employee compensation are the supply and demand of experienced
employees, changes in Singapores labour policies and regulations such as CPF contributions and foreign
workers levies and quotas, and overall Singapore wages market trend.
Finance expense
Finance expense relates to the interest paid to a nancial institution for trust receipts.
Freight and transportation expense
Freight and transportation expense relates to the freight charges, handling charges, carriage and
transportation charges incurred for the purchase and sale of inventories during the nancial year.
Installation expense
Installation expense relates to expenses incurred for the installation of carpets for our Contract Sales. We
maintain close working relationship with several installation contractors and their rates are agreed upon
prior to installation.
Other operating expenses
Other operating expenses comprise mainly rental expenses, selling and marketing expenses and general
and administrative expenses.
Selling and marketing expenses relate to the marketing and promotion of our products whereas general
and administrative expenses relate to insurance, repair and maintenance of our ofce, warehouse
premises and equipment, utilities and professional fees.
Income tax expense
Income tax expense comprises mainly tax charges provided in respect of the assessable prots. The
statutory income tax rate for Singapore was 17.0% during FY2011, FY2012 and FY2013.
Deferred income tax is provided on all timing differences arising from the tax bases of assets and
liabilities and their carrying amounts in the nancial statements including, inter alia, the timing differences
between depreciation and capital allowance for qualifying property, plant and equipment.
49
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Our Groups overall effective tax rates for FY2011, FY2012 and FY2013 were as follows:-
(S$000) FY2011 FY2012 FY2013
Income tax expense 467 411 494
Prot before income tax 3,122 2,806 3,226
Effective income tax rate 15.0% 14.6% 15.3%
Prevailing statutory income tax rate 17.0% 17.0% 17.0%
The effective income tax rates under the periods under review were lower than the prevailing statutory
income tax rate of 17.0% mainly due to Singapore income tax exemptions.
REVIEW OF PAST PERFORMANCE
FY2011 FY2012 FY2013
S$000 % S$000 % S$000 %
Distribution Sales 13,141 54.6% 12,761 54.0% 12,560 57.0%
Contract Sales 10,947 45.4% 10,853 46.0% 9,466 43.0%
Total Revenue 24,088 100% 23,614 100% 22,026 100%
Geographically, our sales were generated from customers based in Singapore as well as overseas
customers. The breakdown of revenue by geographical percentage is as follows:-
FY2011 FY2012 FY2013
Distribution Sales
- Singapore 17.0% 16.5% 17.5%
- Malaysia 9.1% 12.8% 13.7%
- Indonesia 8.4% 7.2% 9.6%
- Philippines 6.1% 6.8% 9.2%
- Brunei 1.3% 1.5% 1.4%
- Saudi Arabia 0.4% 2.9% 1.4%
- Brazil 6.5% 1.7% nm
- Other countries 5.8% 4.6% 4.2%
54.6% 54.0% 57.0%
Contract Sales
- Singapore 45.4% 46.0% 43.0%
Total 100% 100% 100%
Our proprietary SMJ brand carpet sales accounted for 82.1%, 69.2% and 75.7% of the inventory sold
for FY2011, FY2012 and FY2013 respectively whereas third party brand sales accounted for 17.9%,
30.8% and 24.3% of the inventory sold for FY2011, FY2012 and FY2013 respectively.
FY2011 vs FY2012
Revenue
Our revenue decreased by approximately S$0.5 million or 2.0%, from S$24.1 million in FY2011 to S$23.6
million in FY2012. This was mainly due to the decrease in Distribution Sales and Contract Sales of S$0.4
million and S$0.1 million respectively.
50
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Distribution Sales to Brazil decreased from 6.5% in FY2011 to 1.7% in FY2012 because of a reduction
in demand in Brazil for SMJs carpets and competition from local suppliers. However, the drop has been
partially mitigated by an increase in Distribution Sales to countries like Malaysia and Saudi Arabia in
FY2012. Distributors in Malaysia and Saudi Arabia have secured major projects, thus leading to an
increase in sales. Sales revenue for Indonesia fell slightly from 8.4% in FY2011 to 7.2% in FY2012 due to
lesser projects secured by our distributors. Distribution Sales to other countries also decreased from 5.8%
in FY2011 to 4.6% in FY2012 due to reduction in market demand.
In FY2011, notable Contract Sales projects completed involved our customers such as Apple South Asia
Pte. Ltd. and The Hong Kong and Shanghai Banking Corporation Limited whereas in FY2012 we have
completed projects for our customers, DBS Bank Ltd., Obayashi Corporation and Cisco System (USA)
Pte Ltd. Please refer to the Our Products and Business Process Our Carpet Supply and Installation
Projects section of this Offer Document for the details of projects completed for such customers.
Other income/(losses) - net
Other income increased by approximately S$163,000, from S$1,000 in FY2011 to S$164,000 in FY2012.
The increase was mainly due to the foreign currency exchange translation gain made from the favourable
uctuations of the United States dollar exchange rate against Singapore dollar, government grants
received and recovery of certain bad debts previously written off.
Changes in inventories
The level of inventories decreased by approximately S$0.6 million or 2.7% of the total revenue of FY2012.
This was mainly due to inventory management control within the guidelines of an in-house inventory level.
Purchases of inventories
Purchases of inventories decreased by S$0.1 million or 1.0%, from S$14.0 million in FY2011 to S$13.9
million in FY2012. This was mainly due to inventory management control within the guidelines of an in-
house inventory level in which we manage our stocking program and indent inventory items.
The decrease in purchases of inventories was also in line with the decrease in revenue. Purchases of
inventories comprised purchases of carpets and carpet accessories from our suppliers.
Depreciation expense
Depreciation expense remained relatively stable at S$73,000 in FY2011 and S$58,000 in FY2012.
Employee compensation
Employee compensation increased by approximately S$0.1 million or 6.4%, from S$2.2 million in FY2011
to S$2.4 million in FY2012. This was mainly due to the increase in the CPF contribution rate effective only
in the last quarter of FY2011. Our headcount remained fairly constant in both FY2011 and FY2012.
Finance expense
Finance expense remained stable at approximately S$35,000 in FY2011 and S$31,000 in FY2012.
Finance expense relates to the interest paid to a nancial institution for trade nance facility.
Freight and transportation expense
Freight and transportation expense remained relatively stable at approximately S$1.3 million for both
FY2011 and FY2012.
Installation expense
Installation expense decreased by approximately S$0.2 million or 16.0%, from S$1.0 million in FY2011 to
S$0.8 million in FY2012. This was mainly due to lower installation rates secured with carpet installation
contractors for certain high value contracts.
51
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Other operating expenses
Other operating expenses increased slightly by approximately S$54,000 or 2.9%, from S$1.8 million in
FY2011 to S$1.9 million in FY2012. This was mainly due to the increase in our rental expenses as a
result of higher rental rate upon signing of the new lease in FY2012 of S$0.2 million which was offset by
the decrease in bad debts written off in FY2012 of S$0.1 million.
Prot before income tax
As a result of the above, prot before income tax decreased by approximately S$0.3 million or 10.1%,
from S$3.1 million in FY2011 to S$2.8 million in FY2012.
FY2012 vs FY2013
Revenue
Revenue decreased by approximately S$1.6 million or 6.7%, from S$23.6 million in FY2012 to S$22.0
million in FY2013. This was mainly due to the drop in Contract Sales and Distribution Sales of S$1.4
million and S$0.2 million respectively in FY2013, where in FY2012 we completed more high value
contracts as compared to FY2013. In FY2013, notable Contract Sales projects completed involved our
customers such as Apple South Asia Pte. Ltd. and Singapore Economic Development Board.
Distribution Sales to Brazil decreased from 1.7% in FY2012 to an insignicant percentage in FY2013
due to the reduction in demand in Brazil for SMJs carpets and competition from local suppliers. The
decrease in Distribution Sales to Saudi Arabia from 2.9% in FY2012 to 1.4% in FY2013 was also due to
reduction in demand in Saudi Arabia for our products. However, Distribution Sales to Malaysia, Indonesia
and Philippines increased in FY2013 as compared to FY2012 due to our distributors in those countries
having secured major projects.
Other income/(losses) - net
Other income decreased by approximately S$175,000 or 106.7%, from S$164,000 in FY2012 to net loss
of S$11,000 in FY2013. The decrease was mainly due to the foreign currency exchange translation loss
made from the unfavourable uctuations of the United States dollar exchange rate against the Singapore
dollar, government grants received in FY2012 and recovery of certain bad debts previously written off
recovered in FY2012.
Changes in inventories
The level of inventories decreased by approximately S$0.1 million or 0.5% of the total revenue of FY2013.
This was mainly due to inventory management control to keep inventory level within the guidelines of an
in-house inventory level. The Company also beneted from a shorter lead time between ordering and
receiving goods from a major supplier due to the relocation of manufacturing facilities of the supplier,
allowing the Company to hold less stock, yet still retaining their competitive strength in quick turnaround
time for orders received.
Purchases of inventories
Purchases of inventories decreased by S$1.3 million or 9.0%, from S$13.9 million in FY2012 to S$12.6
million in FY2013. This was mainly due to inventory management control within the guidelines of an in-
house inventory level in which we manage our stocking program and indent inventory items.
The decrease in purchases of inventories was also in line with the decrease in revenue. Purchases of
inventories comprised purchases of carpets and carpet accessories from our suppliers.
Depreciation expense
Depreciation expense remained stable at S$58,000 in FY2012 and S$52,000 in FY2013.
52
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Employee compensation
Employee compensation decreased by approximately S$0.1 million or 5.0%, from S$2.4 million in
FY2012 to S$2.3 million in FY2013. This was mainly due to the net effect of the wages of our late founder
no longer being included in the Groups payroll and the increase in wages of the employees.
Finance expense
Finance expense increased by approximately S$26,000 or 83.9%, from S$31,000 in FY2012 to S$57,000
in FY2013.
Freight and transportation expense
Freight and transportation expense decreased by approximately S$0.6 million or 48.8%, from S$1.3
million in FY2012 to S$0.7 million in FY2013. This was mainly due to lower freight expense as a result
of the decrease in purchases of inventories, lower transportation expense incurred due to improved
co-ordination of local deliveries of products to job sites and changes in the delivery terms of overseas
customers.
Installation expense
Installation expense remained relatively stable at approximately S$0.8 million for both FY2012 and
FY2013, despite the decrease in Contract Sales. This was mainly due to higher rates per project being
secured and paid to the installers in FY2013, which was the result of smaller deals done in FY2013.
Other operating expenses
Other operating expenses increased by S$0.3 million or 17.3%, from S$1.9 million in FY2012 to S$2.2
million in FY2013. This was mainly due to the increase in transportation expenses, consultancy fees,
rentals, advertisement, motor vehicles repair and maintenance.
Prot before income tax
As a result of the foregoing, prot before income tax increased in FY2013 by S$0.4 million or 15.0%, from
S$2.8 million in FY2012 to S$3.2 million in FY2013.
REVIEW OF BALANCE SHEET
Non-current assets
As at 31 December 2013
Our non-current assets comprise an investment property, computers, furniture and ttings, motor vehicles
and ofce equipment. The investment property of S$1.0 million is a freehold strata title condominium
(Skyline Residences) which is under construction as at the Latest Practicable Date, with the estimated
delivery date of vacant possession at no later than 1 October 2015.
As at 31 December 2013, our non-current assets amounted to S$1.1 million, representing 6.1% of our
total assets of S$17.5 million.
Current assets
As at 31 December 2013
Our current assets amounted to approximately S$16.5 million, representing 93.9% of our total assets of
S$17.5 million and comprised the following:-
(i) Trade and other receivables of approximately S$6.0 million, representing 36.2% of our current
assets, which comprised mainly trade receivables of S$5.3 million, advances to employees of
S$14,000, recoverable deposits of S$17,000 and prepayments to suppliers and deferred initial
public offering professional expenses of S$0.6 million;
53
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
(ii) Cash and cash equivalents of approximately S$5.5 million, representing 33.2% of our current
assets; and
(iii) Inventories of approximately S$5.0 million, representing 30.6% of our current assets, which
comprised carpets and carpet accessories.
Non-current liabilities
As at 31 December 2013
Our only non-current liability component is deferred income tax liability of S$9,000.
Current liabilities
As at 31 December 2013
Our current liabilities amounted to approximately S$5.3 million, representing 99.8% of our total liabilities
of S$5.3 million and comprised the following:-
(i) Borrowings of approximately S$2.5 million, representing 46.5% of our current liabilities, which
comprised trust receipts from a nancial institution for purchases of inventories nanced by trade
nancing facility and has a credit term of up to 120 days;
(ii) Trade and other payables of approximately S$2.2 million, representing 41.2% of our current
liabilities, which comprised mainly trade payables of S$1.3 million relating to purchase of carpets
from our suppliers, accruals for operating expenses of S$0.7 million relating mainly to accrued
employees compensation and installation charges and other payables of S$0.2 million in respect of
GST payable; and
(iii) Current income tax payables of approximately S$0.6 million, representing 12.3% of our current
liabilities relating to GST payable.
Please refer to the Capitalisation and Indebtedness section of this Offer Document for more details on
our trust receipts.
Capital and reserves
As at 31 December 2013
Our capital and reserves comprise share capital and retained prots. Share capital remained constant at
S$3.5 million while the movements in retained prots were attributable to the prot after income tax and
dividend declared for the nancial year.
LIQUIDITY AND CAPITAL RESOURCES
Our operations have been funded through a combination of shareholders equity (share capital and
retained prots) and net cash generated from operating activities. Our principal uses of cash have been
for working capital requirements, capital and investment expenditures.
As at 31 December 2013, our shareholders equity amounted to S$12.2 million, our net current assets
amounted to S$11.1 million and our net current ratio (dened as current assets divided by current
liabilities) was 3.1 times.
As at the Latest Practicable Date, our unused sources of liquidity comprise S$4.5 million in net
cash surplus and S$7.3 million of unused banking facilities. Please refer to the Capitalisation and
Indebtedness section of this Offer Document for more details on our banking facilities.
54
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Our Directors are of the reasonable opinion that, as at the date of lodgement of this Offer Document,
after taking into consideration our present cash position and cash generated from our operations, the
working capital available to us as at the date of lodgement of this Offer Document is sufcient for present
requirements and for at least 12 months after the listing of our Company on Catalist.
The Sponsor is of the reasonable opinion, that after having made due and careful enquiry and after
taking into account the cash ows generated from our Groups operations and existing cash and cash
equivalents, the working capital available to our Group as at the date of lodgement of this Offer Document
is sufcient for present requirements and for at least 12 months after the listing of our Company on
Catalist.
We set out below a summary of our Groups net cash ows for FY2011, FY2012 and FY2013. The
following net cash ow summary should be read in conjunction with the full text of this Offer Document,
including the Audited Combined Financial Statements set out in Appendix A of this Offer Document.
Audited
FY2011 FY2012 FY2013
S$000 S$000 S$000
Net cash generated from operating activities 2,594 2,422 2,186
Net cash used in investing activities (784) (327) (6)
Net cash generated from/(used in) nancing activities 400 (1,678) (1,596)
Net increase in cash and cash equivalents 2,210 417 584
Cash and cash equivalents at the beginning of the nancial year 2,264 4,474 4,891
Cash and cash equivalents at the end of the nancial year 4,474 4,891 5,475
FY2011
Net cash generated from operating activities
In FY2011, we generated a net cash inow of S$3.2 million from operating activities before changes in
working capital.
Our net working capital outow amounted to approximately S$0.2 million. The net working capital outow
was mainly due to a decrease in trade and other payables of S$0.8 million as a result of faster repayment
of amounts due to suppliers.
This was partially mitigated by the following:-
(i) A decrease in inventories of S$0.5 million arising mainly from the improvement of management of
the inventory level; and
(ii) A decrease in trade and other receivables of S$0.1 million arising from faster collection of amounts
due from customers.
In FY2011, we paid income tax of approximately S$0.4 million.
Overall, our net cash ows from operating activities in FY2011 amounted to approximately S$2.6 million.
Net cash used in investing activities
The net cash used in investing activities was mainly due to the progressive payments made to the
developer of our investment property during the year.
55
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
Net cash from nancing activities
The net cash generated from nancing activities was mainly due to the drawdown of S$11.1 million and
the repayment of S$10.2 million from trust receipts with a nancial institution. This was offset by the
payment of dividends to shareholders of S$0.5 million in June 2011.
Please refer to the Capitalisation and Indebtedness section of this Offer Document for more details on
our trust receipts.
Net increase in cash and bank balances
At the end of FY2011, we recorded a net increase in cash and cash equivalents of S$2.2 million which
resulted in our nancial year end balance of cash and cash equivalents increasing to S$4.5 million.
FY2012
Net cash generated from operating activities
In FY2012, we generated a net cash inow of S$2.9 million from operating activities before changes in
working capital.
Our net working capital outow was of a negligible amount. The net working capital outow was mainly
due to:-
(i) A decrease in trade and other payables of S$0.6 million arising from faster repayment of amounts
due to suppliers; and
(ii) An increase in trade and other receivables of S$6,000 arising from slower settlements in amounts
due from customers.
This was partially mitigated by a decrease in inventories of S$0.6 million arising mainly from the
improvement in management of the inventory level.
In FY2012, we paid income tax of approximately S$0.5 million.
Overall, our net cash ows from operating activities in FY2012 amounted to approximately S$2.4 million.
Net cash used in investing activities
The net cash used in investing activities was mainly due to the progressive payments made to the
developer of our investment property during the year.
Net cash used in nancing activities
The net cash used in nancing activities was mainly due to the drawdown of S$8.5 million and the
repayment of S$9.7 million from trust receipts with a nancial institution, and the payment of dividends to
shareholders of S$0.5 million which occurred over two periods in August and December 2012.
Please refer to the Capitalisation and Indebtedness section of this Offer Document for more details on
our trust receipts.
Net increase in cash and cash equivalents
At the end of FY2012, we recorded a net increase in cash and cash equivalents of S$0.4 million which
resulted in our nancial year end balance of cash and cash equivalents increasing to S$4.9 million.
56
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
FY2013
Net cash from operating activities
In FY2013, we generated a net cash inow of S$3.3 million from operating activities before changes in
working capital.
Our net working capital outow amounted to approximately S$0.8 million. The net working capital outow
was mainly due to:-
(i) An increase in trade and other receivables of S$0.7 million arising from slower settlement in
amounts due from customers; and
(ii) A decrease in trade and other payables of S$0.2 million arising from faster repayment of amounts
due to suppliers.
This was partially mitigated by a decrease in inventories of S$0.1 million arising mainly from the
improvement in management of the inventory level.
In FY2013, we paid income tax of approximately S$0.3 million.
Overall, our net cash ows from operating activities in FY2013 amounted to approximately S$2.2 million.
Net cash from investing activities
The net cash used in investing activities was due to the purchase of property, plant and equipment during
the year.
Net cash from nancing activities
The net cash used in nancing activities was mainly due to the drawdown of S$9.5 million and the
repayment of S$7.5 million from trust receipts with a nancial institution and the result of payment of
dividends to shareholders of S$3.6 million in December 2013.
Please refer to the Capitalisation and Indebtedness section of this Offer Document for more details on
our trust receipts.
Net increase in cash and bank balances
At the end of FY2013, we recorded a net increase in cash and cash equivalents of S$0.6 million which
resulted in our nancial year end balance of cash and cash equivalents increasing to S$5.5 million.
57
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
CAPITAL EXPENDITURES, DIVESTMENTS, COMMITMENTS AND CONTINGENT LIABILITIES
Capital Expenditures and Divestments
Expenditures
Our capital and investment expenditures, divestments, commitments and contingent liabilities for the
periods under review and from 1 January 2014 to the Latest Practicable Date are as follows:-
FY2011 FY2012 FY2013
1 January
2014 to
Latest
Practicable
Date
S$000 S$000 S$000 S$000
Capital expenditures
Computers 55 7 2 6
Furniture and ttings 1
Motor vehicles
Ofce equipment 1 1 3
56 8 6 6
Investment expenditure
Investment property
(1)
728 319 319
Note:-
(1) Pursuant to the sales and purchase agreement dated 11 August 2011, SMJ Furnishings has acquired a unit of freehold
property known as Skyline Residences at the purchase price of S$3,189,000. The property is still under construction as at the
Latest Practicable Date and is scheduled to be completed no later than 1 October 2015.
Divestments
There were no capital or investment divestments during the periods under review. There were only fully
depreciated computers and ofce equipment which were written off in FY2011 as they were no longer in
use.
Capital Commitments
Investment property commitment
As at the Latest Practicable Date, the outstanding progress payments commitment to the developer of
the freehold property known as Skyline Residences was S$1,913,000 expected to be paid in FY2014 and
FY2015 according to the sale and purchase agreement dated 11 August 2011.
A summary of all payments and outstanding amount payable in respect of the investment property can be
found in the table below:-
Skyline Residences S$000
Total cost of investment 3,279
(1)
Total amount paid as at the Latest Practicable Date 1,366
Amount outstanding 1,913
Note:-
(1) This includes the purchase price and stamp duty.
58
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
We intend to nance the investment property commitment by internally generated funds.
Save as disclosed above, as at the Latest Practicable Date, we do not have other material capital or
investment commitment.
Operating Lease Commitment
As at 31 December 2013 and the Latest Practicable Date, we have operating lease payment
commitments as follows:-
As at
31 December 2013
As at Latest
Practicable Date
S$000 S$000
No later than one year 991 821
Later than one year but not later than ve years 245
1,236 821
Our operating lease commitments relate to rentals and service charges payable to the landlord of our
ofce, warehouse and workers accommodation.
Please refer to the Properties and Fixed Assets section of this Offer Document for more details on our
operating lease commitments in respect of our operating leases for premises.
We intend to nance the payments of the operating lease commitments by internally generated funds.
Contingent liabilities
As at the Latest Practicable Date, the contingent liabilities in respect of letters of guarantee given
to customers, our landlord and tax authorities in respect of contracts secured and services rendered
amounted to approximately S$0.5 million.
SEASONALITY
We generally do not experience any seasonality in the course of our business.
INFLATION
The performance of our Group was not materially impacted by ination for FY2011, FY2012 and FY2013.
FOREIGN EXCHANGE EXPOSURE
Our reporting and functional currency is Singapore dollar as we transact predominantly in Singapore
dollar. Other than Singapore dollar, we also transact in United States dollar mainly in export sales and
import purchases.
Transactions in a currency other than the functional currency (foreign currency) are translated into
the functional currency using the exchange rates at the dates of the transactions. Currency translation
differences from the settlement of such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at the closing rate at the balance sheet date are recognised
in prot or loss.
59
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
For FY2011, FY2012 and FY2013, the percentage of sales and purchases denominated in the various
currencies are set out below:-
FY2011 FY2012 FY2013
% of sales denominated in
US$ 28.5 23.5 25.4
S$ 71.5 76.5 74.6
100.0 100.0 100.0
FY2011 FY2012 FY2013
% of purchases denominated in
US$ 99.2 97.4 99.4
S$ 0.8 2.6 0.6
100.0 100.0 100.0
We recorded currency translation gains/(losses) - net in the periods under review as follows:-
FY2011 FY2012 FY2013
S$000 S$000 S$000
Currency translation gains/(losses) - net 1 126 (45)
As a percentage of revenue nm 0.5% (0.2)%
As a percentage of prot before income tax nm 4.5% (1.4)%
We will be exposed to adverse uctuations of the United States dollar against the Singapore dollar to the
extent that our sales, purchases and purchases related expenses amounts are not matched in the same
currency and the timing differences between invoicing and collections and/or payments. Such adverse
uctuations will adversely impact our protability. Please refer to the Risk Factors We are exposed to
foreign exchange transaction risks section of this Offer Document for more details.
Currently we do not have any hedging policy with respect to the foreign currency exchange exposure as
our Board is of the opinion that the exposure is insignicant and manageable. In the event that the risk
becomes signicant in the future, we will monitor closely and will consider hedging any material foreign
exchange currency exposure should the need arise. Should the need arise, we may hedge our signicant
foreign currency denominated transactions in the future after taking into account the foreign currency
exchange exposure, the exposure period and the hedging costs.
As at the Latest Practicable Date, we have a foreign exchange forward contract facility of S$3.0 million
that is unutilised. Please refer to the Capitalisation and Indebtedness - Borrowings section of this Offer
Document for more details.
SIGNIFICANT ACCOUNTING POLICY CHANGES
There has been no signicant change in the accounting policies of our Group in the periods under review.
Please refer to the Audited Combined Financial Statements for details of our Groups accounting policies.
60
GENERAL INFORMATION ON OUR GROUP
SHARE CAPITAL
Our Company was incorporated in Singapore on 31 December 2013 under the Companies Act as a
private company limited by shares under the name of SMJ International Holdings Pte. Ltd.. On 28 May
2014, our Company was converted into a public company limited by shares and our name was changed
to SMJ International Holdings Ltd..
As at the date of incorporation, the issued and paid-up share capital of our Company was S$100
comprising 100 Shares which were held by Lui Oi Kheng, Rena Ho, Nellie Ho and Tay Twan Lee in the
proportion of 55 Shares, 20 Shares, 20 Shares and 5 Shares respectively.
Pursuant to extraordinary general meetings held on 26 May 2014 and 2 June 2014, our then
Shareholders approved, inter alia, the following:-
(a) the allotment and issue of 100 Shares in the share capital of our Company pursuant to the
Restructuring Exercise;
(b) the sub-division of 200 Shares in the issued and paid-up capital of our Company into 64,000,000
Shares;
(c) the conversion of our Company into a public company limited by shares and the consequential
change of our name to SMJ International Holdings Ltd.;
(d) the adoption of a new set of Articles of Association;
(e) the issue of the New Shares pursuant to the Placement, which when allotted, issued and fully paid,
will rank pari passu in all respects with the existing issued Shares;
(f) the approval of the listing and quotation of all the issued Shares (including the Vendor Shares and
the New Shares to be allotted and issued pursuant to the Placement) on Catalist; and
(g) the authorisation for our Directors, pursuant to Section 161 of the Companies Act and the Catalist
Rules to: (a)(i) issue (in addition to the New Shares) new Shares whether by way of rights, bonus
or otherwise; and/or (ii) make or grant offers, agreements or options (collectively Instruments)
that might or would require new Shares to be issued, including but not limited to the creation and
issue of (as well as adjustments to) options, warrants, debentures or other instruments convertible
into new Shares, at any time and upon such terms and conditions and for such purposes and to
such persons as the Directors may in their absolute discretion deem t; and (b) (notwithstanding
this authorisation conferred may have ceased to be in force) issue new Shares in pursuance of any
Instruments made or granted by the Directors while this authorisation was in force, provided that:-
(1) the aggregate number of new Shares (including new Shares to be issued in pursuance
of the Instruments, made or granted pursuant to this authorisation) and Instruments
to be issued pursuant to this authorisation shall not exceed 100% of the total number of
issued Shares (excluding treasury shares) in the capital of the Company (as calculated in
accordance with sub-paragraph (2) below), of which the aggregate number of new Shares
to be issued (including new Shares to be issued pursuant to the Instruments) other than
on a pro rata basis to existing Shareholders shall not exceed 50% of the total number of
issued Shares (excluding treasury shares) in the capital of the Company (as calculated in
accordance with sub-paragraph (2) below);
(2) (subject to such calculation as may be prescribed by the SGX-ST) for the purpose of
determining the aggregate number of new Shares (including new Shares to be issued
pursuant to the Instruments) that may be issued under sub-paragraph (1) above, the
percentage of new Shares that may be issued shall be based on the post-Placement issued
share capital of our Company (excluding treasury shares), after adjusting for: (a) new Shares
arising from the conversion or exercise of the Instruments or any convertible securities; (b)
61
GENERAL INFORMATION ON OUR GROUP
new Shares arising from exercising share options or vesting of share awards outstanding
and subsisting at the time of the passing of this authority; and (c) any subsequent bonus
issue, consolidation or subdivision of Shares; and
(3) unless revoked or varied by the Company in a general meeting, such authority shall continue
in force until (i) the conclusion of the next Annual General Meeting of the Company or (ii)
the date by which the next Annual General Meeting of the Company is required by law to be
held, whichever is earlier.
As at the date of this Offer Document, our Company has only one class of shares, being ordinary shares.
The rights and privileges of our Shares are stated in our Articles of Association. There is no founder,
management or deferred shares. No person has been, or is entitled to be, given an option to subscribe
for or purchase any securities of our Company or our subsidiary.
As at the date of this Offer Document, the issued and paid-up share capital of our Company is
S$3,500,100 comprising 64,000,000 Shares. Upon the allotment and issue of the New Shares which
are the subject of the Placement, the resultant issued and paid-up share capital of our Company will be
S$7,420,100 comprising 78,000,000 Shares.
Details of the changes in the issued and paid-up share capital of our Company since incorporation and
immediately after the Placement are as follows:-
Number of Shares
Resultant Issued and
Paid-up Share Capital
(S$)
Issued and paid-up Shares as at our incorporation 100 100
Issue of Shares pursuant to the Restructuring Exercise 100 3,500,100
Sub-Division 64,000,000 3,500,100
Pre-Placement issued and paid-up share capital 64,000,000 3,500,100
Issue of New Shares pursuant to the Placement 14,000,000 3,920,000
(1)
Post-Placement issued and paid-up share capital 78,000,000 7,420,100
(2)
Notes:-
(1) Based on the gross proceeds from the issue of the New Shares pursuant to the Placement.
(2) Before taking into account the capitalisation of approximately S$1.4 million being a portion of the expenses incurred in
relation to the Placement.
The Shareholders equity of our Company as at the date of incorporation (being 31 December 2013), as
adjusted for the Restructuring Exercise and after the Placement is set out below:-
As at the Date of
Incorporation
After Adjusting for the
Restructuring Exercise After the Placement
(S$) (S$) (S$)
Shareholders equity
Share capital 100 3,500,100 6,020,100
Accumulated prots
Total Shareholders equity 100 3,500,100 6,020,100
62
GENERAL INFORMATION ON OUR GROUP
Sale of shares in SMJ Furnishings by Lui Oi Kheng to Lee Lay Choo
On 20 February 2014, our Controlling Shareholder, Lui Oi Kheng sold 350,000 ordinary shares in the
share capital of SMJ Furnishings to our Executive Director and COO, Lee Lay Choo at the price of
S$888,000 which was agreed upon on a willing-buyer-willing-seller basis and fully paid. The shareholders
of SMJ Furnishings following such share sale were as follows:-
Name Number of Shares
Shareholding
(%)
Lui Oi Kheng 1,750,000 50.0%
Rena Ho 700,000 20.0%
Nellie Ho 700,000 20.0%
Lee Lay Choo 350,000 10.0%
Total 3,500,000 100.0%
RESTRUCTURING EXERCISE
We undertook the following Restructuring Exercise to streamline and rationalise our Group structure in
connection with the Placement:-
(a) Incorporation of our Company
Our Company was incorporated in Singapore on 31 December 2013 under the Companies Act as
a private company limited by shares with an issued and paid-up share capital of $100 comprising
100 Shares (before the Sub-Division) held by Lui Oi Kheng (55 Shares), Rena Ho (20 Shares),
Nellie Ho (20 Shares) and Tay Twan Lee (5 Shares).
(b) Acquisition of SMJ Furnishings by our Company
Pursuant to a restructuring agreement dated 16 May 2014 (the Restructuring Agreement)
entered into between our Company and the then shareholders of SMJ Furnishings, namely
Lui Oi Kheng (50%), Rena Ho (20%), Nellie Ho (20%) and Lee Lay Choo (10%), our Company
acquired the entire issued and paid-up share capital of SMJ Furnishings for a consideration of
S$3,500,000, which was determined based on the amount of issued and paid-up share capital of
SMJ Furnishings as at 16 May 2014. The consideration was satised by the allotment and issue
of 100 new Shares (before the Sub-Division) credited as fully paid, by our Company to the then
shareholders of SMJ Furnishings as follows:-
Name Number of Shares
Consideration
(S$)
Lui Oi Kheng 50 1,750,000
Rena Ho 20 700,000
Nellie Ho 20 700,000
Lee Lay Choo 10 350,000
Total 100 3,500,000
Upon the completion of the Restructuring Agreement, SMJ Furnishings became our wholly-owned
subsidiary.
63
GENERAL INFORMATION ON OUR GROUP
The resultant shareholding in our Company (after taking into account the 100 Shares held by Lui
Oi Kheng, Rena Ho, Nellie Ho and Tay Twan Lee) before the Sub-Division was as follows:-
Name Number of Shares
Shareholding
(%)
Lui Oi Kheng 105 52.5
Rena Ho 40 20.0
Nellie Ho 40 20.0
Lee Lay Choo 10 5.0
Tay Twan Lee 5 2.5
Total 200 100.0
(c) Sub-Division
On 2 June 2014, our Shareholders approved the sub-division of 200 Shares in the capital of our
Company into 64,000,000 Shares.
Following the completion of the Sub-Division, the shareholders of our Company were as follows:-
Name Number of Shares
Shareholding
(%)
Lui Oi Kheng 33,600,000 52.5
Rena Ho 12,800,000 20.0
Nellie Ho 12,800,000 20.0
Lee Lay Choo 3,200,000 5.0
Tay Twan Lee 1,600,000 2.5
Total 64,000,000 100.0

GROUP STRUCTURE
Our Group structure as at the date of this Offer Document is as follows:-
Company
(Incorporated in Singapore)
100%
SMJ Furnishings
(Incorporated in Singapore)
OUR SUBSIDIARY
The details of our subsidiary as at the date of this Offer Document are as follows:-
Name
Date and Place
of Incorporation
Principal Place
of Business
and Principal
Activity
Issued and
Paid-up Share
Capital
Equity
Interest
Held by Our
Company
SMJ Furnishings 12 February 1988
Singapore
Supply and installation
of carpet tiles and
broadloom carpets
S$3,500,000 100%
Our subsidiary is not listed on any stock exchange. We do not have any associated companies.
64
GENERAL INFORMATION ON OUR GROUP
SHAREHOLDERS
Our Shareholders and their respective shareholdings immediately before and after the Placement are set
out below:-
Before the Placement After the Placement
Direct Interest Deemed Interest Direct Interest Deemed Interest
Number of
Shares %
Number of
Shares %
Number of
Shares %
Number of
Shares %
Directors
Ho DOrville Raymond
Rena Ho
(1),(2)
12,800,000 20.0 12,800,000 16.4
Nellie Ho
(1),(2),(3)
12,800,000 20.0 1,600,000 2.5 12,800,000 16.4
Lee Lay Choo 3,200,000 5.0 3,200,000 4.1
Ng Tiang Hwa
Chow Wen Kwan Marcus
Substantial Shareholder
Lui Oi Kheng
(2)
33,600,000 52.5 28,960,000 37.1
Shareholder holding
less than 5%
Tay Twan Lee
(3)
1,600,000 2.5
Public 20,240,000 25.9
Total 64,000,000 100.0 78,000,000 100.0
(4)
Notes:-
(1) Rena Ho and Nellie Ho are sisters.
(2) Lui Oi Kheng is the mother of Rena Ho and Nellie Ho.
(3) Tay Twan Lee is our Executive Ofcer and is the spouse of our Executive Director, Nellie Ho. Nellie Ho is deemed to be
interested in the Shares held by Tay Twan Lee.
(4) The total shareholding percentage does not add up to 100.0%. The discrepancy between the listed amounts and the total
thereof is due to rounding.

Save as disclosed above, there are no other relationships among our Directors and Substantial
Shareholders.
The Shares held by our Directors and Substantial Shareholders do not carry different voting rights from
the New Shares which are the subject of the Placement.
Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severally
or jointly, by any person or government.
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 has not been any public take-over offer by a third party in respect of our Shares or by our
Company in respect of shares of another corporation or units of a business trust which has occurred
between 1 January 2013 and the Latest Practicable Date.
65
GENERAL INFORMATION ON OUR GROUP
Signicant Changes in the Percentage of Ownership
The signicant changes in the percentage of ownership of our Company held by our Directors and
Substantial Shareholders since 31 December 2013, being the date of incorporation of our Company and
up to the Latest Practicable Date (assuming the Sub-Division has been completed) are as follows:-
As at date of incorporation
As at Latest Practicable Date
(Assuming the Sub-Division has been
completed)
Direct Interest Deemed Interest Direct Interest Deemed Interest
Number of
Shares %
Number of
Shares %
Number of
Shares %
Number of
Shares %
Directors
Ho DOrville Raymond
Rena Ho
(1),(2)
20 20.0 12,800,000 20.0
Nellie Ho
(1),(2),(3)
20 20.0 5 5.0 12,800,000 20.0 1,600,000 2.5
Lee Lay Choo 3,200,000 5.0
Ng Tiang Hwa
Chow Wen Kwan Marcus
Substantial Shareholder
Lui Oi Kheng
(2)
55 55.0 33,600,000 52.5
Notes:-
(1) Rena Ho and Nellie Ho are sisters.
(2) Lui Oi Kheng is the mother of Rena Ho and Nellie Ho.
(3) Nellie Ho is deemed to be interested in the Shares held by her spouse, Tay Twan Lee.
VENDORS
The name of the Vendors and the number of Vendor Shares which the Vendors will offer pursuant to the
Placement are set out below:-
Shares held immediately
before the Placement
Vendor Shares offered pursuant
to the Placement
Shares held immediately
after the Placement
Number of
Shares
% of pre-
Placement
share
capital
Number of
Shares
% of pre-
Placement
share
capital
% of post-
Placement
share
capital
Number of
Shares
% of post-
Placement
share
capital
Lui Oi Kheng
(1)
33,600,000 52.5 4,640,000 7.3 5.9 28,960,000 37.1
Tay Twan Lee
(2)
1,600,000 2.5 1,600,000 2.5 2.1
Notes:-
(1) Lui Oi Kheng is the mother of our Executive Directors, Rena Ho and Nellie Ho.
(2) Tay Twan Lee is our Executive Ofcer and is the spouse of our Executive Director, Nellie Ho.
66
GENERAL INFORMATION ON OUR GROUP
MORATORIUM
Our Controlling Shareholders, namely Lui Oi Kheng, Rena Ho and Nellie Ho, who hold an aggregate of
54,560,000 Shares (representing 69.9% of our Companys issued share capital after the Placement),
have each undertaken not to, directly or indirectly, sell, contract to sell, offer, realise, transfer, assign,
pledge, grant any option to purchase, grant any security over, encumber or otherwise dispose of, any part
of their respective shareholdings in the share capital of our Company immediately after the Placement
(adjusted for any bonus issue or sub-division of Shares) for a period of six months commencing from the
date of admission of our Company to Catalist, and for a period of six months thereafter, not to, directly
or indirectly, sell, contract to sell, offer, realise, transfer, assign, pledge, grant any option to purchase,
grant any security over, encumber or otherwise dispose of, more than 50.0% of their respective original
shareholdings in our Company.
Our shareholder, Lee Lay Choo who holds 3,200,000 Shares (representing 4.1% of our Companys
issued share capital after the Placement), has also undertaken not to, directly or indirectly, sell, contract
to sell, offer, realise, transfer, assign, pledge, grant any option to purchase, grant any security over,
encumber or otherwise dispose of, any part of her shareholding in the share capital of our Company
immediately after the Placement (adjusted for any bonus issue or sub-division of Shares) for a period of
12 months commencing from the date of admission of our Company to Catalist.
67
HISTORY
OUR HISTORY
Our Company was incorporated in Singapore under the Companies Act on 31 December 2013 under
the name of SMJ International Holdings Pte. Ltd. as a private company limited by shares. In preparation
for our listing, we undertook the Restructuring Exercise whereby our Company acquired the entire
shareholding interests in SMJ Furnishings and became the holding company of our Group. On 28 May
2014, our Company was converted to a public limited company with our name being changed to SMJ
International Holdings Ltd.. Please refer to the Restructuring Exercise section of this Offer Document for
further details.
Our history can be traced back to 12 February 1988 when our late founder, Peter Ho founded the
business to specialise in the supply and installation of carpet tiles and broadloom carpets in Singapore
under our subsidiary, SMJ Furnishings. SMJ Furnishings was set up as a private company limited by
shares under the Companies Act. Around the same time, SMJ Furnishings also supplied carpets to
customers based in Malaysia and Indonesia.
In the early years after the set up of SMJ Furnishings, our late founder had observed that as Singapores
economy develops, there would be a strong demand for good quality premier carpet tiles as the ofce
and business environment becomes more sophisticated. To ensure that we are able to introduce and
supply a suitable range of premier carpet tiles to our customers, we started sending our representatives
to attend international carpet trade shows and fairs in the USA and Europe where we acquired
knowledge of upcoming trends in carpet tile designs and innovation.
In 1992, after we have managed to establish ourselves as a signicant player in the local market for the
supply of carpets, we were appointed by Shaw Industries (a member of Berkshire Hathaway Inc.) as
its authorised supplier in Singapore. Our rst unit of rented warehouse was then located at 30 Jurong
Port Road, Jalan Buroh Warehouse Complex. Due to the high demand for our products, we gradually
expanded our warehousing space over the years and eventually consolidated our warehousing needs to
a single and larger warehouse facility at 31 Jurong Port Road, Jurong Logistics Hub with a oor area of
approximately 42,614 sq ft, which we continued to use until now.
In 1994, SMJ Furnishings received our Major Exporter Scheme status from the IRAS due to the high
volume of export sales conducted by our Group. Please refer to the Government Regulations section of
this Offer Document for further details on our Major Exporter Scheme status.
In 1996, we embarked on our corporate branding exercise where we selected a few designs of carpet
tiles from third party carpet manufacturers and sold them under our proprietary SMJ brand. Since then,
we have been marketing our proprietary SMJ brand as a brand of premier carpet. As part of our efforts
to improve quality management processes, we obtained ISO 9000 certication from the Productivity and
Standards Board in the same year. Currently, we no longer have such certication as we did not renew
it subsequent to the expiry of the last valid certication. We obtained the bizSAFE Level 1 certication in
2010 and bizSAFE Level 3 certication in 2012.
As part of our late founders succession plan, our Executive Directors, namely Rena Ho and Nellie Ho,
joined our Group in 1997 and 1999 respectively. Rena Ho started with sales administration and co-
ordination for the local market, whereas Nellie Ho started with similar functions for the export market
dealing with overseas customers. In 2002, Rena Ho and Nellie Ho were both appointed as executive
directors of SMJ Furnishings to oversee the entire business of our Group under the guidance of our late
founder.
In 1999, our late founder saw the market potential for premier carpet tiles in the neighbouring region as it
began to recover from the Asian nancial crisis where businesses around the region regained condence.
We began to actively develop our export sales business in Indonesia, followed by Malaysia. To penetrate
deeper into these export markets, we attended overseas trade fairs and actively promoted and marketed
our carpets to overseas carpet dealers, carpet importers and carpet installation companies which import
higher quality carpets for domestic consumption of their local markets.
68
HISTORY
In 2000, we started another new initiative which led to the further expansion of our Group. We observed
that there are some Asia based carpet manufacturers which are able to produce good quality carpet
at competitive rates but lack sufcient branding to reach a larger market base. Our Group saw that
as the opportunity to expand our proprietary SMJ brand and ventured into engaging Formosa
Chemicals & Fibre Corporation, a member of the Taiwan Formosa Group, to manufacture carpets for
our sale under our proprietary SMJ brand. Since then, we have gradually increased the export of
carpets to the overseas markets under our proprietary SMJ brand. By working with third party carpet
manufacturers, we were able to direct and control the manufacture of carpets based on designs and
colours conceptualised by us according to our knowledge of the market trends and consumer needs as
we market and sell our carpets. More importantly, working directly with third party carpet manufacturers
has helped to lower our cost of sales, which in turn translates into cost savings for our customers in their
purchase of high quality carpets. By 2008, we have further expanded our export business by working with
four other third party carpet manufacturers on a regular basis.
In 2000, as part of our expansion plan to extend our reach to new export markets for our proprietary
SMJ brand of carpets beyond our main export markets in Indonesia and Malaysia, our Group carried
out an internal reorganisation exercise to rationalise and streamline our business activities, pursuant to
which our sales department was re-organised into two business units to derive revenue from the different
sources, namely: (i) Distribution Sales (from both local and overseas markets); and (ii) Contract Sales
(from local market). Our services for installation of carpets are only available to our customers under the
Contract Sales. With such reorganisation, we are able to allocate more nancial and human resources
to place more focus on expanding into new export markets efciently. Through our efforts to expand our
export sales globally, we have penetrated into new markets and exported our proprietary SMJ brand of
carpets to Hong Kong, Philippines, Cambodia, India, Sri Lanka, Vietnam, Taiwan, Thailand, PRC, Brazil,
Uruguay, Korea, Chile, Saudi Arabia, Australia and United Kingdom by the year of 2010.
In 2001, to accommodate the expansion in the size of our business and the increase in our staff strength,
we consolidated and re-located our head ofce, corporate showroom and warehouse facility (with a oor
area of approximately 47,727 sq ft) to 31 Jurong Port Road, Jurong Logistics Hub.
Our Group was upgraded to Grade L4 by the BCA under the workhead of SY06 - Finishing and Building
Products since 2012, which allows us to tender for Singapore public sector projects with a contract value
of up to S$6.5 million. This has enabled us to secure larger contract value projects for our business in
Contract Sales.
With Rena Ho, Nellie Ho and Lee Lay Choo having gradually taken over the entire management and
operations of our Group, our late founder scaled back his daily involvement in our business operations in
2012, with Rena Ho taking over the overall management of our Group.
Our Group recognised the market potential in emerging countries such as Myanmar. In 2013, we made
our rst foray to Myanmar by making our rst distribution sales to supply 60,300 sq ft of carpets for
installation in a hospitality project in Myanmar.
Since our establishment in 1988, our Group has grown to become one of the largest premier carpet
specialists in Asia. We have developed an established global distribution network into various countries
which include our main export markets in Malaysia, Indonesia, Philippines, Hong Kong, PRC, Taiwan,
Korea, Thailand, Vietnam, Brunei, India, Sri Lanka, United Arab Emirates, Saudi Arabia, Maldives,
Brazil, Uruguay, Chile, Australia, Kuwait and United Kingdom. We have also leveraged on the vast
geographical coverage of our export markets to promote the brand recognition for our proprietary SMJ
brand of carpets through regular networking with key overseas customers during overseas tradeshows
and functions, as well as providing constant updates on new launches of products marketed under our
proprietary SMJ brand.
Through our emphasis on quality products and services, we have positioned ourselves as a premier
69
HISTORY
carpet specialist in Asia supplying high quality carpets. Our corporate clients today include private and
government ofces, business premises, educational institutions, banks, hospitals and hotels. Please refer
to the Business Overview section of this Offer Document for further details. We were ranked as one of
the top 500 small medium enterprises by DP Information Group and had been awarded the Singapore
SME 500 and Singapore SME 1000 recognitions for nine consecutive years, since 2006 to 2014.
Please refer to the Awards section of this Offer Document for further details.
AWARDS
Over the years, our subsidiary, SMJ Furnishings and late founder, Peter Ho, have received the following
awards from various organisations:-
Award / Accreditation Year Awarded by
Singapore SME 500 2006 to 2010 DP Information Group
Singapore SME 1000 2011 to 2014 DP Information Group
Singapore Entrepreneurs Award 2013 Peter Ho 2013 Asia 1 Enrich Group Pte Ltd
70
BUSINESS
BUSINESS OVERVIEW
We specialise in the sale and distribution of a wide range of premier carpets through our global
distribution network of more than 260 carpet dealers, carpet importers and carpet installation companies
in Singapore and over 20 countries mainly in Asia. Our Directors believe that we are one of the leading
premier carpet specialists serving the commercial and institutional sectors in Asia with an established
reputation and track record of more than 25 years. Over the years, we have built a good reputation based
on our service quality, efciency, reliability and competitive pricing.
We are differentiated from our competitors as we maintain a ready supply of carpets in a variety of
designs and colours in our Singapore warehouse for sale to our customers. Our carpet stocks comprise
both carpet tiles and broadloom carpets. This enables us to full our customers requirements without
incurring the usual time needed for production and shipment of such carpets from overseas. At the Latest
Practicable Date, our Singapore warehouse maintains approximately 80 different designs of carpets in up
to 400 different colours.
We sell and distribute our proprietary SMJ brand of carpets both in Singapore and overseas markets.
At the Latest Practicable Date, we collaborate with ve regular third party carpet manufacturers operating
in the PRC and Taiwan, which will produce both carpet tiles and broadloom carpets according to our
requested designs, colours and specications and are marketed for sale under our proprietary SMJ
brand. In addition, we are appointed by Shaw Industries as the authorised supplier for its Shaw Contract
Group range of carpets in Singapore. Shaw Contract Group is an American brand of carpets which
offers both carpet tiles and broadloom carpets in different designs and colours. These products appeal
to the segment of the market which seeks for higher end range of carpets and has a higher spending
budget. Although we have not entered into a written agreement with Shaw Industries, based on the
working relationship and arrangement between Shaw Industries and our Group, our Directors believe
that SMJ Furnishings is currently the exclusive supplier for the Shaw Contract Group range of carpets in
Singapore.
We place advance orders and import carpets under both our proprietary SMJ brand and third party
Shaw Contract Group brand, taking into account the prevailing market trends to maintain our stock
levels in anticipation of market demands. This is our competitive edge as we can full an order within the
next day instead of having to wait for several weeks for production of carpets and shipment from their
country of manufacture, especially if these carpets required by our customers are found amongst the
stocks in our Singapore warehouse. We are also able to cater to customers requirements for carpets with
customised designs and colours to meet their needs in terms of corporate colours, logos or other design
preferences.
We are able to supply carpets which have been certied as environmentally friendly products with
green label certication. This is to meet the increasing trend of projects requiring green and eco-friendly
products in line with the government initiatives to promote green or resource efcient buildings in
Singapore.
Our head ofce and corporate showroom are located in Singapore at 31 Jurong Port Road, #02-
20 Jurong Logistics Hub, Singapore 619115. We have a centralised warehousing facility located at 31
Jurong Port Road, #01-25/26/27/28/29/30 Jurong Logistics Hub, Singapore 619115 with a oor area of
approximately 42,614 sq ft.
We derive our revenue mainly from the following two different sources of revenue streams:-
(a) Distribution Sales
In our Distribution Sales business, we sell and distribute mainly carpets under our proprietary
brand known as SMJ in Singapore and to overseas markets through our global distribution
networks in more than 20 countries mainly in Asia. These overseas markets include Malaysia,
Indonesia, Philippines, Hong Kong, PRC, Taiwan, Korea, Thailand, Vietnam, Brunei, India, Sri
Lanka, United Arab Emirates, Saudi Arabia, Maldives, Brazil, Uruguay, Chile, Australia, Kuwait and
United Kingdom.
71
BUSINESS
Our customers in our Distribution Sales business are mainly carpet dealers, carpet importers and
carpet installation companies which will make bulk purchases of carpets on a wholesale basis.
They will in turn sell and distribute them primarily to a wide range of end-users in the commercial
and institutional sectors including banks, hotels, ofces and other premises.
Purchase orders of carpets are sent by our overseas customers to our Singapore ofce and
stocks are then drawn from our Singapore warehouse for delivery and shipment to our overseas
customers. Due to the wide variety of our carpet stocks in different designs and colours and our
ability to full orders within a short turnaround time without the need to wait for the manufacturing
process (if the stocks are available in our Singapore warehouse), we gain a competitive edge
over our peers in the marketplace. When overseas customers place orders with us, they will have
the exibility of selecting a varied range of designs and colours in different quantities among our
available carpet stocks which are loaded into the same container for shipment to them, thereby
maximising the efciency and shipment charges involved in each transaction.
Due to our high volume of sales overseas, we were awarded the Major Exporter Scheme status.
Please refer to the Government Regulations section of this Offer Document for further details on
our Major Exporter Scheme status.
Revenue from our Distribution Sales business accounted for approximately 54.6%, 54.0% and
57.0% of our total revenue in FY2011, FY2012 and FY2013 respectively.
(b) Contract Sales
We are a one-stop premier carpet specialist for the Singapore market as we provide consultancy
services by assisting our customers with the selection of suitable designs and colours at their
project planning stage, after which we will procure, supply and deliver these carpets to the project
sites, and will provide project management work by handling the installation of these carpets on
site at their request.
We supply carpets under both our proprietary SMJ brand and third party Shaw Contract Group
brand as part of the renovation and oor furnishing works required for either existing or new
buildings in the commercial and institutional sectors under our business for Contract Sales. These
commercial and institutional sectors include private and government ofces, business premises,
educational institutions, banks, hospitals and hotels. At the Latest Practicable Date, we do not
supply carpets for residential use due to the small scale of such projects.
Our customers for the Contract Sales business are typically property developers of commercial
buildings, professional rms such as architecture, interior design and renovation rms, and owners
or tenants of commercial spaces. At the request of our customers, we also provide installation
services for renovation projects carried out in Singapore. We outsource our installation work to
third party carpet installation companies which work with us on a regular basis. For such projects,
we will assign a project manager to handle and monitor the order to delivery and installation of the
carpets.
Revenue from our Contract Sales business accounted for approximately 45.4%, 46.0% and 43.0%
of our total revenue in FY2011, FY2012 and FY2013 respectively.
72
BUSINESS
OUR PRODUCTS AND BUSINESS PROCESS
Our Products
We sell and distribute carpets under our proprietary brand known as SMJ and the third party American
brand known as Shaw Contract Group in a variety of designs and colours. At the Latest Practicable
Date, our Singapore warehouse maintains approximately 80 different designs of carpets in up to 400
different colours.
We engage third party carpet manufacturers operating in the PRC and Taiwan to produce our
proprietary SMJ brand of carpets, whereas the Shaw Contract Group brand of carpets is produced
by Shaw Industries. At the Latest Practicable Date, we collaborate with ve regular third party carpet
manufacturers operating in the PRC and Taiwan, which will produce both carpet tiles and broadloom
carpets according to our requested designs, colours and specications under our proprietary SMJ
brand. In addition, we are appointed by Shaw Industries as the authorised supplier for its Shaw Contract
Group brand of carpets in Singapore which offers both carpet tiles and broadloom carpets in different
designs and colours. These products appeal to the segment of the market which seeks for higher end
range of carpets and has a higher spending budget. To the best of our Directors knowledge, Shaw
Industries is one of the largest carpet manufacturers in the world and is a subsidiary of Berkshire
Hathaway Inc., whose headquarters is based in the USA. Please refer to the Major Suppliers section of
this Offer Document for further details about Shaw Industries.
The carpets that we sell and distribute comprise both carpet tiles and broadloom carpets, which are
made of either nylon or polypropylene bre. Broadloom carpets are carpets that are tufted on a very wide
loom, whereas carpet tiles are pieces of carpets that come in square tiles of generally 50 centimetres
each side. There are mainly two types of yarns, being nylon and polypropylene, used in the carpet
industry. Nylon carpets are generally more widely used as they have excellent wear characteristics.
Polypropylene carpets are less durable compared to nylon carpets and are catered for end-users which
have a lower budget. Most of the carpets that we sell and distribute are higher quality carpets, thus
enabling us to market our Group as a premier carpet specialist.
Carpets are commonly used as a preferred oor covering and furnishing for commercial use for the
following reasons, inter alia:-
(a) It provides acoustic effect and helps to reduce noise in the enclosed areas, which is suitable for
public and the ofce environment in the nancial institutions, hotels, airports and hospitals.
(b) It can be easily installed, maintained and replaced.
(c) It is available in a variety of choices in terms of designs and colours. It is convenient for users as it
allows under cabling access for installation of electrical power points.
We are able to supply carpets which have been certied as environmentally friendly products with
green label certication. This is to meet the increasing trend of projects requiring green and eco-friendly
products in line with the government initiatives to promote green or resource efcient buildings in
Singapore. To meet the environmentally friendly requirements, the carpets and the adhesives used on
them must, inter alia, have low emissions of volatile organic compounds (commonly known as VOC) to
help improve indoor air quality, which is in turn determined by the raw materials (such as the bres, dyes
and colorants) used in the manufacture of such carpets.
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Our Carpet Supply and Installation Projects
We have been awarded contracts for the supply and installation of carpets for the following notable
projects in respect of our Contract Sales business in Singapore in the last three nancial years ended 31
December 2013:-
Customer Project Location
Year of
Completion
Area
(sq ft)
Apple South Asia Pte. Ltd. Ofce at No. 7 Ang Mo Kio Street 64 2011 97,920
Apple South Asia Pte. Ltd. Ofce at No. 12 Ang Mo Kio Street 64 2011 14,736
The Hong Kong and Shanghai
Banking Corporation Limited
Ofce at HSBC Building at 21 Collyer
Quay
2011 128,190
DBS Bank Ltd. Ofce at Marina Bay Financial Centre
Tower 3 at 12 Marina Boulevard (whole
building except Level 4)
2012 503,776
Cisco System (USA) Pte Ltd Office at UE Biz Hub at 8 Changi
Business Park, Levels 3 to 6
2012 100,965
Cisco System (USA) Pte Ltd Office at UE Biz Hub at 8 Changi
Busi ness Park, Level s 3 to 6
(maintenance stock)
2012 6,097
Obayashi Corporation Office cum manufacturing plant of
Halliburton Completion Tools Mfg Pte Ltd
at 11 Tuas South Avenue 12
2012 218,455
Singapore Pools (Private) Limited Ofce at 210 Middle Road, Levels 1 and
7 to 12
2012 64,671
Apple South Asia Pte. Ltd. Ofce at No. 7 Ang Mo Kio Street 64 2012 24,000
Apple South Asia Pte. Ltd. Ofce at No. 7 Ang Mo Kio Street 64 2012 8,016
DB & B Pte Ltd Ofce of Solvay Asia Pacic Pte Ltd at
Amnios at No. 1 Biopolis Drive, Levels 3,
4 and 5
2013 37,112
Apple South Asia Pte. Ltd. Ofce at No. 7 Ang Mo Kio Street 64 2013 43,728
Cisco System (USA) Pte Ltd Office at UE Biz Hub at 8 Changi
Business Park, Level 7
2013 7,044
Singapore Economic Development
Board
Ofce at Rafes City Tower at 252 North
Bridge Road, Levels 18, 20, 21, 22, 23,
25, 26 and 27
2013 69,984
In each of the above projects, we were involved in the project planning stage assisting in the selection of
suitable colour and design of carpets as oor furnishing, as well as, supply and the installation of carpets
at the project sites.
Our Business Process
Distribution Sales
We do not have any long term supply or distribution agreements with our customers in our Distribution
Sales business, which are mainly carpet dealers, carpet importers and carpet installation companies in
Singapore and overseas. Our customers usually place their orders for carpets based on their needs and
demand from their respective markets from time to time. Where the end-users of our customers have
specic requirements for the carpets that they intend to purchase, our experienced sales and marketing
team will provide assistance to them in placing orders for suitable designs, colours and quantity in light of
their specications. We will deliver the carpets after receipt of our customers written conrmation of their
purchase orders. We do not provide installation services for carpets sold under the Distribution Sales.
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Contract Sales
A diagrammatic depiction of the business process for our project business is as follows:-
Sourcing for Project
Award of Project
Project Planning
Project Execution
Project Completion
Sourcing for Project
We typically source for our projects through requests for quotation and referrals from our customer. Upon
request, we provide a competitive quote and professional advice on product performance and layout
of installation. We are also able to assist in the visualisation of the application of selected carpet and
furnishing.
Award of Project
Upon award of project, we shall provide detailed design drawings to assist in visualisation of the layout of
the carpet tiles, including estimating the quantity required for the various proposed designs.
Project Planning
A project manager will be assigned to oversee the project and make logistics arrangement in accordance
with the agreed installation timeline.
Project Execution
Our in-house team shall coordinate with our experienced installer to ensure the execution of project in
accordance with the contractual requirements and quality control.
Project Completion
Our team will jointly inspect the project with the customer upon completion to ensure customers
satisfaction.
SALES AND MARKETING
Our team in the sales and marketing department is organised into local and export sales. The local sales
and marketing department is headed by Rena Ho, whereas the export sales and marketing department
is led by Nellie Ho. Our Business Director, Tay Twan Lee, manages the business development and
execution of marketing strategies for the assigned markets and projects according to the prevailing needs
of the Group from time to time. As at the Latest Practicable Date, our sales and marketing department
comprised 10 staffs. The sales and marketing staffs are responsible for cultivating existing and developing
new customers, managing the distribution network, as well as the collection of trade receivables as this is
a factor in determining the amount of commission payable to them.
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In respect of the business under our Distribution Sales, all of our sales are carried out through our
network of more than 260 carpet dealers, carpet importers and carpet installation companies in
Singapore and over 20 countries mainly in Asia. Through market surveys, internet research and referrals,
we identify suitable carpet dealers, carpet importers and carpet installation companies who can sell our
products in their respective town or county of a certain overseas jurisdiction. We assist some of our key
overseas customers by providing them with support on the technical aspects of our products as they pitch
for new sales from their end-users.
In respect of our business under Contract Sales, we maintain regular contacts with architects and
designers who are instrumental in recommending our products to their end-users in the course of their
design and selection of suppliers and sub-contractors during their renovation and furnishings projects. We
participate in new product launches which are organised by our principal, Shaw Industries, to promote
their carpets under Shaw Contract Group brand. These launches take place around once a year in
Singapore and/or overseas, which provide a networking platform and sales and marketing opportunity for
us to develop our existing and potential customers. Some of these new product launches held by Shaw
Industries are set out below:-
Year Name of Event Country
2010 Sustainable Evolution Singapore
2011 The Edge Designers Night Singapore
2012 Design is Brave Singapore
2013 Neocon USA
We attend carpet and interior furnishing trade fairs and exhibitions held overseas in places such as the
PRC, the United Kingdom and Germany. These events provide a networking platform and sales and
marketing opportunity for us where we tap on to renew our relationships with existing customers and
explore potential customers. Sometimes, to promote and market carpets under our proprietary SMJ
brand in the overseas market, we participate as one of the exhibitors by showcasing the carpets tiles and
broadloom carpets that we supply in overseas trade fairs, exhibitions and conventions. Some of the trade
fairs and exhibitions we have participated in include National Floor Show held in United Kingdom in
2009 and Domotex Hannover held in Germany in 2010.
We constantly evaluate the market trends affecting the supply and demand of carpets in our target
markets in Asia. We also monitor the type of fabric, design and colour used by manufacturers and
suppliers from the USA. In addition, our sales and marketing team will gather feedback from interior
designers and architects from time to time to nd out the latest market trends affecting interior furnishing.
Such feedback will help our management in assessing prevailing market trends and demands and
planning for our inventory stocking programme and new product launch.
Whenever we launch a new range of carpets under our proprietary SMJ brand, we will update our
regular customers, including those operating overseas, on the unique features and specications of such
carpets. As we introduce and launch around eight to 12 new products over three to four times a year, this
gives us ample opportunity to market and promote our proprietary SMJ brand of carpets particularly to
the Asian buyers of carpets, and to maintain our business relationship with them on a regular basis.
At the Latest Practicable Date, our carpets mainly under our proprietary SMJ brand are exported to the
overseas markets through our global distribution networks in more than 20 countries mainly in Asia, such
as Malaysia, Indonesia, Philippines, Hong Kong, PRC, Taiwan, Korea, Thailand, Vietnam, Brunei, India,
Sri Lanka, United Arab Emirates, Saudi Arabia, Maldives, Brazil, Uruguay, Chile, Australia, Kuwait and
United Kingdom.
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BUSINESS
QUALITY ASSURANCE
We strive to provide good quality carpets and services in order to meet our customers expectations. To
this end, we have implemented a quality management system which our Executive Director and COO,
Lee Lay Choo is responsible for.
To ensure the quality of the products that we supply, our Group also checks that our third party carpet
manufacturers have proven track records in the production of high quality carpets. We will visit their
factories in their home countries regularly to ensure that our third party carpet manufacturers conform to
their production processes.
In order to ensure that we maintain the supply of good quality carpets on a consistent basis, our logistics
department will conduct review and inspection of the incoming products for quality, specications and
defects in accordance to the requirements stated in the purchase contracts. Any product that fails our
incoming inspection will be rejected and returned to our manufacturers for replacement or rectication. If
faulty inventory is not returned due to shipping costs, our third party carpet manufacturer will provide a
discount or credit note for our next order instead. Prior to delivery of the products to our customers, our
logistics department performs outgoing inspection to ensure that products with the required specications
and quantities are packed and delivered to our customers.
There has not been any product return of a signicant value during the periods under review.
PRODUCT WARRANTY AND AFTER SALES SERVICE
All carpets supplied by us under the Shaw Contract Group brand have manufacturers warranty from
Shaw Industries. Most of the carpets manufactured by third party carpet manufacturers are also backed
with the relevant manufacturers warranty for products manufactured by them. These warranties include
dimensional stability and limited wear resistance.
As an after sales service, our team will assist our customers to register their particulars and project
details with the relevant manufacturers, so that they can lodge their claims with the manufacturers
should any issue arise over the carpets purchased by them. In addition, we will assist our customers in
processing their claims with the manufacturers should there be a potential claim on the manufacturers
warranty due to manufacturing defects found in the carpets purchased by them.
To the best of our knowledge, there has not been any claim on product warranty of a signicant value
during the periods under review.
MAJOR CUSTOMERS
We set out below a list of our major customers which accounted for 5.0% or more of our revenue during
the periods under review:-
Major customer Revenue source
Percentage of total revenue (%)
FY2011 FY2012 FY2013
Sonne Furnishing group
(1)
Distribution Sales 7.3 10.9 13.4
SMJ Philippines
(2)
Distribution Sales 6.1 6.8 9.2
PT Inniti Hominoff Solusindo Distribution Sales 8.4 7.2 4.4
DBS Bank Ltd. Contract Sales 7.1 0.0
Verona Importacoes e Exportacoes Ltda. Distribution Sales 6.5 1.7 0.0
Notes:-
(1) This comprises sales to Sonne Furnishing Sdn Bhd and Sonne Furnishing (a sole-proprietor).
(2) Prior to an internal restructuring in 2013, SMJ Philippines traded with us under the company name of Carpet Makers &
Design Inc. We combine the percentage of sales derived from Carpet Makers & Design Inc and SMJ Philippines as a single
major customer for illustration purposes.
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Revenue generated by each customer varies from year to year as the nature of our business is primarily
project-based, and is subject to the value of the projects which we secure from them and time taken to
complete such projects. We may not be able to secure similar projects in terms of size and scope with the
same customer in subsequent years. Our customers under the Distribution Sales experience the same
nature of business which is primarily project-based.
For Sonne Furnishing group, the increase in purchases over the periods under review were mainly due
to the awards of major projects, such as refurbishing of a major bank, an institution and an airport, which
led to the uptrend in sales.
The purchases of SMJ Philippines increased 2.5% in FY2013 as it secured more projects compared
to FY2012. Pursuant to the licence agreement made between our Group and SMJ Philippines, SMJ
Philippines will continue to purchase our products and market our proprietary SMJ brand. Please refer
to the Intellectual Property section of this Offer Document for more information on the licence agreement
made between our Group and SMJ Philippines.
PT Inniti Hominoff Solusindo experienced a decreased proportion of purchases from 7.2% in FY2012
to 4.4% in FY2013 as it secured less projects in FY2013. Given the wide geographical coverage in
Indonesia, we have also appointed other Indonesian dealers for the distribution of our carpets in
Indonesia in order to diversify our exposure to PT Inniti Hominoff Solusindo for our exports to Indonesia.
Our Group completed a project for DBS Bank Ltd. in FY2012. The project was non-recurring in nature,
resulting in little revenue from DBS Bank Ltd. in FY2013.
Verona Importacoes e Exportacoes Ltda saw a decrease in purchase from 6.5% in FY2011 to 0.0% in
FY2013 due to the reduction in demand in Brazil for our carpets and competition from local suppliers.
We do not typically enter into long term agreements with our customers.
To the best of their knowledge, our Directors are not aware of any information or arrangement which
would lead to a cessation or termination of our current relationship with any of our major customers.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their respective
Associates has any interest, direct or indirect, in any of the above major customers.
For the last three nancial years ended 31 December 2013 and up to the Latest Practicable Date, there
has been no claim against us for failure to meet delivery schedules.
MAJOR SUPPLIERS
We purchase our carpets mainly from our regular suppliers. We do not enter into long term or exclusive
agreements with our regular suppliers. As such, we retain the exibility to evaluate and select new
suppliers, based on their ability to provide us with the highest quality products at the most competitive
pricing.
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We set out below a list of our major suppliers which accounted for 5.0% or more of our purchases during
the periods under review:-
Major supplier Products supplied
Percentage of total purchases (%)
FY2011 FY2012 FY2013
Formosa FCFC Carpet tiles and broadloom carpets
under SMJ brand
29.7 27.0 28.8
Shaw Industries
(1)
Carpet tiles and broadloom carpets
under Shaw Contract Group brand
25.0 42.9 28.7
Voxor Carpet tiles and broadloom carpets
under SMJ brand
9.2 7.7 13.7
Weihai Shanhua Carpet tiles and broadloom carpets
under SMJ brand
17.9 9.9 12.0
Shanghai Jia Nai Rong Carpet tiles and broadloom carpets
under SMJ brand
11.1 5.3 11.1
Note:-
(1) Shaw Industries has invoiced us through its subsidiary, Shaw Industries Asia Pte. Ltd. since 2013 in conjunction with the
setting up of its new factory in the PRC. We combine the percentage of purchases derived from Shaw Industries and Shaw
Industries Asia Pte. Ltd. as a single major supplier for illustration purposes.
Formosa FCFC, a member of the Taiwan Formosa Group, is our third party carpet manufacturer based
in Taiwan whereas Voxor, Weihai Shanhua and Shanghai Jia Nai Rong are our third party carpet
manufacturers based in the PRC.
To the best of our Directors knowledge, Shaw Industries is one of the largest carpet manufacturers in the
world and is a subsidiary of Berkshire Hathaway Inc., whose headquarters is based in the USA. We are
appointed by Shaw Industries as the authorised supplier for its Shaw Contract Group range of carpets in
Singapore.
Shaw Industries supplied 42.9% of our products in FY2012 compared to 25.0% in FY2011 due to a
project completed for DBS Bank Ltd. which requested for Shaw Contract Group range of carpets. As
a result, purchases from Shaw Industries peaked in FY2012 at 42.9% before falling back to 28.7% in
FY2013.
The uctuations in our purchases vary according to the demand for our products, which in turn is
dependent on changing customer preferences and fashion trends. Each supplier has their own specic
designs and product range. On a year to year basis, some suppliers may see more purchases depending
on the prevailing customer preferences and fashion trends, as well as our need to replenish our stockpile
of those designs. Hence, year on year comparison of purchases from each individual supplier may not be
strictly comparative.
Our Directors believe that our protability will not be materially affected by the loss of any of our regular
third party carpet manufacturers as long as we are able to source for carpets of comparable quality and
prices from alternative manufacturers in a timely manner.
To the best of our Directors knowledge, we are not aware of any information or arrangements which
would lead to a cessation or termination of our current relationship with any of our major suppliers. Our
business and protability are currently not dependent on any particular industrial, commercial or nancial
contract with any of our regular third party carpet manufacturers.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their respective
Associates has any interest, direct or indirect, in any of the above major suppliers.

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CREDIT MANAGEMENT
Trade Receivables
We grant our customers up to 90 days credit terms. All our credit terms are recommended by our sales
and marketing department after performing credit standing checks with an independent credit rating
company and subject to the approval of our Executive Directors. We also perform periodic credit limit
reviews of our customers. Factors taken into consideration will include the customers current nancial
strength, payment history, transaction volume and length of business relationship with the customer.
Our average trade receivables turnover during the periods under review were as follows:-
FY2011 FY2012 FY2013
Trade receivables (S$000) 5,349 5,139 5,285
Trade receivables turnover days
(1)
82 81 86
Note:-
(1) Trade receivables turnover days were determined based on the average of trade receivables divided by the revenue for the
nancial year, then multiplied by 365 days.
The trade receivables aging schedule of our Group (based on the date of invoice) as at 31 December
2013 was as follows:
Age of Trade Receivables
Amount of Trade Receivables
(S$000) Percentage of Trade Receivables
Up to 90 days 4,075 77.1%
More than 90 days 1,210 22.9%
As at 31 December 2013, 22.9% of our trade receivables were outstanding for more than 90 days. The
delay in collection was mainly due to completed Contract Sales awaiting the nal certication of the work
performed, hence inadvertently adversely affecting the age of the trade receivables as at 31 December
2013.
We do not have any material provisions for doubtful debts during the periods under review.
Trade Payables
Our suppliers normally grant us between 30 to 90 days credit terms for our purchases (or extended up to
180 days credit terms for purchase of newly introduced stocking items). However, we will make payment
of the purchase value by way of telegraphic transfer in certain transactions to several of our suppliers
before the shipment of the products or once the products have been shipped. We also use trust receipts
from banks to settle payment to our suppliers. Our trust receipts typically have a maturity period of up to
120 days.
Our average trade payables (excluding trust receipts) turnover during the periods under review were as
follows:-
FY2011 FY2012 FY2013
Trade payables (excluding trust receipts) (S$000) 1,158 1,333 1,247
Trade payables (excluding trust receipts) turnover days
(1)
139 76 126
Note:-
(1) Trade payables turnover days were determined based on the average of trade payables (excluding trust receipts) divided by
the relevant purchases for the nancial year, then multiplied by 365 days.
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RESEARCH AND DEVELOPMENT
We do not have a research and development department. As such, we leverage on the research and
design team of third party carpet manufacturers to assist us in the production of new designs and range
of carpets based on our ideas and concepts. Certain third party carpet manufacturers will produce a
sample prototype for our evaluation and assessment before commercial production.
We constantly evaluate the market trends affecting the supply and demand of carpets in our target
markets in Asia. We also monitor the type of fabric, designs and colours used by manufacturers and
suppliers from the USA. In addition, our sales and marketing team will gather feedback from interior
designers and architects from time to time to nd out the latest market trends affecting interior furnishing.
Such feedback will help our management in assessing prevailing market trends and demands and
planning for our inventory stocking programme and new product launch.
Our senior management team works hand-in-hand with our sales and marketing team and our regular
third party carpet manufacturers to develop new range of carpets for launch to the market. We have been
introducing and launching around eight to 12 products with new designs, colours and/or specications in
terms of materials over three to four times a year during the past few years.
INTELLECTUAL PROPERTY
Trademark
Save as disclosed below, we do not own nor are we dependent on any registered trademark, patent or
other intellectual property rights:-
Trademark Application No.
Registration
Class
Country of
Registration Status
T1312333Z 27 and 35 Singapore Registered
(Application led on
1 August 2013)
Note:-
(1) The class of Specication of Goods and Services in Singapore is described as follows:-
Class 27: Carpets; Carpet inlays; Carpet protectors; Carpeting; Floor tiles made of carpet; Handmade woollen carpets; Mat
(carpet) tiles; Moquettes (carpets); Squares for use as carpets; Underlay for carpets; Carpet tiles; Broadloom
carpets; Wall to wall carpets.
Class 35: Export services, not being transport services; Import services, not being transport services; Retail services;
Retailing of goods (by any means); Promotion of fairs for trade purposes; Provision of trade information; Trade
promotional services.
Licence Agreements
As an effort to promote our proprietary SMJ brand name as a premier carpet supplier, we have granted
the following companies the rights to use SMJ as part of their corporate name in the territory set out
below and on the terms and conditions set out in the respective licence agreements made with them:-
Companies Countries Annual Licence Fee
SMJ Philippines
(1)
Philippines S$10,000
SMJ Malaysia
(2)
Malaysia S$10,000
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Notes:-
(1) None of our Directors or Controlling Shareholders has an interest, direct or indirect, in SMJ Philippines.
(2) SMJ Malaysia was incorporated on 1 October 1998 by our late founder, Peter Ho and an unrelated party, Chong Yoke Cheng
(an existing shareholder of SMJ Malaysia). In September 2013, following the demise of Peter Ho, the shareholdings of Peter
Ho, Rena Ho and Nellie Ho in SMJ Malaysia were transferred to Chong Yoke Cheng and another unrelated party, Lim Phaik
Khoon. With the aforesaid transfers, none of our Directors or Controlling Shareholders has an interest, direct or indirect, in
SMJ Malaysia.
Pursuant to the licence agreements made between SMJ Furnishings and each of the above companies,
the licensees are permitted to use our SMJ or SMJ Furnishings (as the case may be) as part of their
respective corporate names in the country which they are operating in at the annual licence fee stated
above. In the event that SMJ Philippines and SMJ Malaysia make purchases from SMJ Furnishings
exceeding the respective agreed target amounts in a 12-month period during which the licence fee is
payable, SMJ Furnishings shall waive payment of the licence fee during the relevant 12-month period.
The respective agreed target amounts were determined based on the purchases made by SMJ
Philippines and SMJ Malaysia in FY2013. Upon the expiry of every three years starting from the date
of the respective licence agreements, SMJ Furnishings shall be entitled to review and adjust the target
amount subject to consent from the relevant licensee.
The licence granted by SMJ Furnishings to each of the licensees shall continue indenitely unless
terminated by it by giving 90 days prior written notice to the licensee. The licence is granted to each of
the licensees without the rights to assign or sub-licence the licence to any other third party.
The above licensees are carpet dealers and importers serving the domestic market in the country that
they are operating in. Under the terms of the licence agreements, the licensees agree to maintain and
promote the reputation and goodwill of our proprietary SMJ brand and will consider SMJ Furnishings
as their rst priority when selecting a supplier for carpets on such terms and conditions to be mutually
agreed between them and us from time to time.
As at the Latest Practicable Date, our business or protability is not materially dependent on any
registered trademark, patent or other intellectual property rights. To the best of our knowledge, we are not
aware of any third party infringing on our intellectual property rights.
INVENTORY MANAGEMENT
Our inventory comprises carpet tiles, broadloom carpets and carpet accessories.
We manage our inventory based on the recent sales trend and make purchases based on our stocking
program and indent requirements. In our stocking program, we acquire inventories of various carpet
designs and colours in anticipation of potential orders whereas we only make purchases for carpets
required for indent sales according to the specic requirements of our customers when there is a rm
contract order from our customers.
We continuously monitor the development of the construction and renovation activities in the geographical
areas we operate in, especially our primary market Singapore and in other Southeast Asia countries.
Our sales and marketing personnel interact consistently with our distributors, existing and potential
customers to better understand markets requirements and preferences, which enable us to make efcient
procurement decisions.
We apply weighted average costing for our inventory and conduct half yearly inventory counts in our
warehouse. Our management conducts regular inventory reviews based on the different carpet designs
and colours to assess our inventory level in order to better plan for replenishment and to manage
inventory obsolescence risk.
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Our average inventory turnover days during the periods under review were as follows:
FY2011 FY2012 FY2013
Inventories (S$000) 5,775 5,145 5,035
Average inventory turnover days
(1)
152 137 146
Note:-
(1) Average inventory turnover days were determined based on the average inventory balance divided by purchases and
changes of inventory balances for the nancial year, then multiplied by 365 days.
As at 31 December 2013, our inventory value was S$5.0 million and our inventory aging was as follows:-
Age of inventory
0 12
months
12 24
months
24 36
months
More than
36 months
Percentage of inventory as at 31 December 2013 78.4% 9.5% 5.6% 6.5%
Our management is of the opinion that the risk of inventory obsolescence is low due to the durable
nature of our inventory and that inventory which we have kept for more than 36 months can still be sold.
We review the inventory aging periodically and write-off inventory that is considered obsolete and slow
moving in the line of our business.
The write-off of inventory during the periods under review were as follows:-
FY2011 FY2012 FY2013
Inventory write-off (S$000) 58
As a percentage of PBT (%) 1.8%
LICENCES, PERMITS, APPROVALS AND CERTIFICATIONS
As at the Latest Practicable Date, our Group holds the following licences, permits, approvals and
certications which are material to our operations:-
Description of Licence / Permit /
Approval / Certication
Licence / Reference
number Authority Date of expiry
BCA Contractors Registration
(L4 under the workhead of SY06 -
Finishing and Building Products)
BCA ID 87.1.9 BCA 1 February 2016
Major Exporter Scheme GST Registration Number
M2-0079728-X
IRAS 30 April 2015
bizSAFE Level 3 E05746 Workplace Safety
and Health Council
13 May 2015
In addition, our subsidiary, SMJ Furnishings has obtained Singapore Green Label certication for some of
the carpets it distributes which is valid up to 2015.
As at the Latest Practicable Date, none of the licences which is material to the business and operations
of our Group has been suspended or revoked. There are at present no facts or circumstances which
would cause such licences to be suspended or revoked or for any applications for, or for the renewal of,
any of these licences to be rejected by the relevant authorities.
Save as disclosed above, our Group does not require any other governmental licences, permits or
approvals in respect of its operations apart from those pertaining to general business registration
requirements.
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PRODUCTION FACILITY
As we work with third party carpet manufacturers to manufacture carpets under our proprietary SMJ
brand, we do not have any manufacturing or production facilities. As such, information indicating the
production capacity and extent of utilisation of production facilities is not applicable.
PROPERTIES AND FIXED ASSETS
Our Group currently owns the following investment property:-
Location Developer
Purchase
Price Tenure
Use of
Property
Floor Area
(sq ft) Encumbrances
608 Telok Blangah
Road, #08-01 Skyline
Residences,
Singapore 109030
(1)
Bukit
Sembawang
View Pte. Ltd.
S$3,189,000 Freehold Residential 1,722 Nil
Note:-
(1) The property is still under construction as at the Latest Practicable Date and is scheduled to be completed no later than 1
October 2015.
As at 31 December 2013, the net book value of our xed assets comprising mainly plant and equipment
was approximately S$24,000 and motor vehicle was S$8,000.
Our Group currently leases the following properties:-
Location Lessor Usage
Approximate
Gross
Floor Area
(sq ft) Tenure
Monthly
Rental and
Service Charge
(excluding
GST)
31 Jurong Port Road,
#01-25/26/27/28/29/30
Jurong Logistics Hub,
Singapore 619115
HSBC
Institutional
Trust Services
(Singapore)
Limited (as
trustee of
Mapletree
Logistics
Trust)
Storage 42,614 From 1 April
2012 to 31
March 2015
with an option
to renew for a
further term of
three years
S$74,547.97
31 Jurong Port Road,
#02-20 Jurong
Logistics Hub,
Singapore 619115
HSBC
Institutional
Trust Services
(Singapore)
Limited (as
trustee of
Mapletree
Logistics Trust)
Ofce 5,113 From 1 April
2012 to 31
March 2015
with an option
to renew for a
further term of
three years
S$7,158.25
Blk 208 Boon Lay
Place, #05-199,
Singapore 640208
Jafar Bin Amat Workers
accommodation
700 From 1 July
2012 to 30
June 2014 with
an option to
renew for a
further term of
12 months
(1)
S$1,800.00
Note:-
(1) Our Group intends to renew the lease for another one month till 31 July 2014 upon the expiry of the original lease.
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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 xed assets, save as disclosed under
the Government Regulations section of this Offer Document.
STAFF TRAINING
We recognise that our employees are an invaluable resource and that the competency and dedication
of our employees have been instrumental to our continuous success in delivering quality products and
services. Our training policy is to ensure that our employees are equipped with the essential skills and
expertise for our business and have the right attitude and approach towards customer service. To this
end, we have conducted seminars and courses for our employees in the areas of basic legal principles
relating to commercial contract, sales and marketing, accounting, quality management and public
relations. In addition, we organise orientation programmes for new employees.
Employee performances are reviewed by their respective department heads to identify further training
needs of each employee on an annual basis. The department head may also from time to time
recommend appropriate training for our staff when suitable courses or seminars are conducted by
external trainers. Some of such training include courses organised by BCI Asia Construction Information
Pte Ltd and Shaw Industries.
During the periods under review, our expenses incurred in relation to staff training were not signicant as
most of the training was conducted in-house and consisted of on-the-job training.

INSURANCE
Our Group has taken up, inter alia, the following insurance policies:-
(i) Travel insurance for certain management staff;
(ii) Hospitalisation and surgical insurance;
(iii) Marine cargo insurance;
(iv) Burglary insurance;
(v) Fire insurance;
(vi) Public liability insurance;
(vii) Work injury compensation insurance;
(viii) Keyman insurance; and
(ix) Motor vehicle insurance.
Our Directors are of the view that the above insurance policies are adequate for our existing operations.
However, signicant damage to our operations, whether as a result of re or other causes, may still have
a material adverse effect on our results of operations or nancial position. We are not insured against
business interruption and if such event were to occur, our business may be materially or adversely
affected. Please refer to the Risk Factors - Our insurance coverage may not be adequate section of
this Offer Document for more details. We will review our insurance coverage annually to ensure that our
Group has sufcient insurance coverage.
85
BUSINESS
CORPORATE SOCIAL RESPONSIBILITY
Our Group is committed to contributing towards sustainable development and making a positive impact
on local communities. As part of our on-going efforts towards sustainability, we supply carpets which
have been certied as environmentally friendly products with green label certication. This is to meet
the increasing trend of projects requiring green and eco-friendly products in line with the government
initiatives to promote green or resource efcient buildings in Singapore. To meet the environmentally
friendly requirements, the carpets and the adhesives used on them must, inter alia, have low emissions
of volatile organic compounds (commonly known as VOC) to help improve indoor air quality, which is in
turn determined by the raw materials (such as the bres, dyes and colorants) used in the manufacture of
such carpets.
COMPETITION
We operate in a competitive environment and face competition from existing competitors as well as new
market entrants. While our Directors recognise that the barriers to entry are not prohibitive in terms of
capital investment, we believe that our competitive strengths, as set out in the Competitive Strengths
section of this Offer Document, set us apart from our existing and potential competitors.
To the best of our knowledge, we regard Contrac-Image Trading Pte Ltd, which is currently representing
another American brand of carpets in the Singapore market, as our key competitor for our local business
taking into account the scale of its operations in Singapore and the competition we encountered when we
pitched for the supply of similar range of products to potential customers.
In regard to our export business, we face competition from various carpet manufacturers mainly operating
in the PRC who sell directly to overseas markets and local dealers operating in our targeted overseas
markets.
Please also refer to the Risk Factors Our business may be affected by competition with existing
industry players and new entrants section of this Offer Document.
To the best of our knowledge, there are no published statistics or ofcial sources of information with
respect to industry statistics and the market shares of our Group and our competitors.
None of our Directors, Controlling Shareholders or Substantial Shareholders has any interest, direct or
indirect, in any of the above competitors.

COMPETITIVE STRENGTHS
Our Directors believe that our Groups competitive strengths are as follows:-
(a) Abilities to provide wide selection of carpets and full customers order within short
turnaround time
Our Group has a large warehouse located in Singapore of approximately 42,614 sq ft which is
stocked with a wide variety of carpet tiles and broadloom carpets in approximately 80 different
designs of carpets in up to 400 different colours. We maintain a real-time inventory management
system which is updated daily to allow us to check on the availability of our stocks and enable us
to manage our stock level efciently. Equipped with a good inventory management system, our
turnaround time to full our customers orders is greatly reduced, thereby allowing us to respond
to our customers orders within the next working day (if the stocks are available in our warehouse)
and giving us a competitive edge over our competitors. The short turnaround time from order to
delivery is crucial as we serve the commercial and institutional sectors where our customers will
have to complete installation of carpets and renovation of their premises within a few weeks time
of rent-free tting out period.
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BUSINESS
(b) Strong management team assisted by experienced sales and project teams with deep
product knowledge
Our Group has a strong management team who is assisted by an in-house experienced project
team with many years of experience in the carpet industry. Our CEO, Rena Ho, and Deputy CEO,
Nellie Ho, have been with our Company since 1997 and 1999 respectively and our COO, Lee Lay
Choo has been with SMJ Furnishings for more than 25 years. Together with SMJ Furnishings as
a player in the carpet industry for more than 25 years, this has allowed our management, sales
and project teams to be equipped with deep knowledge about our products in the marketplace. In
addition, our management and sales teams attend overseas trade fairs, as well as product trainings
conducted by Shaw Industries, which help to strengthen our teams knowledge about our products
in the marketplace and enable us to keep abreast of market trends, respond to market changes
and maintain our competitiveness in the marketplace.
(c) Our proprietary SMJ brand of carpets is well-recognised in Singapore and overseas,
supported by global distribution network of more than 260 distributors in over 20 countries
We started marketing and distributing our proprietary brand of carpets under SMJ since 1996 and
have been actively developing our export sales business to the overseas markets for more than 15
years. Our proprietary SMJ brand has become well-recognised within the carpet industry in both
Singapore and overseas for quality and reliability. At the Latest Practicable Date, we have exported
our proprietary SMJ brand of carpets to the overseas market through our global distribution
networks of more than 260 carpet dealers, carpet importers and carpet installation companies
in over 20 countries mainly in Asia, such as Malaysia, Indonesia, Philippines, Hong Kong, PRC,
Taiwan, Korea, Thailand, Vietnam, Brunei, India, Sri Lanka, United Arab Emirates, Saudi Arabia,
Maldives, Brazil, Uruguay, Chile, Australia, Kuwait and United Kingdom. This is a testament of our
proprietary SMJ brand recognition in overseas markets.
(d) Long standing relationship with our major supplier, Shaw Industries
In 1992, we were appointed by Shaw Industries as its authorised supplier for Shaw Contract
Group brand of carpets in Singapore. This relationship has continued for the past 21 years and
has grown into a strong working relationship evidenced by the regular joint promotional and
marketing efforts between us and Shaw Industries to promote and launch new Shaw Contract
Group carpets in Singapore. In addition, Shaw Industries will refer potential customers to us
from time to time due to our comprehensive range of services from carpet consultancy, project
management, delivery and installation of carpets on site, as well as our ready stock of Shaw
Contract Group brand of carpets in our Singapore warehouse. This collaboration not only allows
us to represent the Shaw Contract Group brand of carpets which caters for the higher end market
and is well-recognised in the industry, it also allows us to leverage on the training and technical
knowledge provided by Shaw Industries which places us in a more competitive position vis--vis
other competitors. Although we have not entered into a written agreement with Shaw Industries,
based on the working relationship and arrangement between Shaw Industries and our Group, our
Directors believe that our Group is currently the exclusive supplier for the Shaw Contract Group
range of carpets in Singapore.
(e) Strong working relationship with third party carpet manufacturers
We have strong working relationships with third party carpet manufacturers such as Formosa
FCFC (a member of the Taiwan Formosa Group), Voxor, Weihai Shanhua and Shanghai Jia
Nai Rong, which manufacture carpets under our proprietary SMJ brand. We have maintained
working relationships with them over a period of ve years to 13 years. As such, they are
competent to manufacture and supply our proprietary SMJ brand of carpets with good quality
control at competitive costs. Through our third party carpet manufacturers, we have been able to
provide customised carpets according to the preference of our customers for specic colour and/
or design. In addition, the research and design teams of these third party carpet manufacturers
have supported us in developing our new concepts and ideas of carpets, thereby enabling us to
develop and launch new range of carpets in different designs and colours to keep abreast with the
changing market trends. Hence, our proprietary SMJ brand of carpets can be distinguished and
recognised widely in the marketplace.
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PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
PROSPECTS
Our Directors believe the following to be factors affecting the growth of our business:-
State of the economies in Singapore and Southeast Asia region
Generally, our business is dependent on the spending budget of businesses and organisations for
renovations and furnishings as our products are mainly used in the ofce and commercial space. The
spending budget of businesses and organisations are in turn dependent on the perceived economic
conditions.
On 21 November 2013, the Ministry of Trade and Industry announced that the Singapore economy is
expected to grow by 2.0% to 4.0% in 2014
(1)
. Global growth is projected to increase from 3.0% in 2013
to 3.7% in 2014 and 3.9% in 2015 while the growth in the economies of Indonesia, Malaysia, Philippines,
Thailand, and Vietnam is projected to increase from 5.0% in 2013 to 5.1% in 2014 and 5.6% in 2015, as
anticipated in the World Economic Outlook Update released on 21 January 2014
(2)
.
However, the growth of the Singapore economy has moderated in the rst quarter of 2014 compared
to the immediate preceding quarter. Notwithstanding the moderation of the economic growth in the rst
quarter of 2014, the Singapore economy is still expected to grow by 2.0% to 4.0% in 2014
(3)
.
Having considered the general positive outlook on the world economy and barring unforeseen
circumstances, our Directors are of the view that the spending budgets of businesses and organisations
will remain relatively constant compared to past years which is likely to translate into continuous demand
in renovation and furnishing activities of the ofce and commercial space.
Continuous supply of commercial space in Singapore
The Ministry of National Development had also announced on 18 December 2013 that its rst half
2014 Government Land Sales Programme will comprise eight conrmed list sites and 15 reserve list
sites. These sites can yield up to 193,000 sq m gross oor area of commercial space. The conrmed
list contains one commercial and residential site which can yield about 5,000 sq m gross oor area of
commercial space while the reserve list contains one commercial site and one white site which can yield
188,000 sq m gross oor area of commercial space. The two sites for commercial developments under
the reserve list will provide opportunities for the market to initiate the development of more commercial
space, over and above the 1.1 million sq m gross oor area of ofce space in the pipeline, if there is
demand
(4)
.
In addition, the Ministry of National Development has provided in its Land Use Plan issued in January
2013 that more commercial centres outside the central business district will be developed to provide
employment and amenities close to home. By 2030, the government will provide at least 13 million sq
m of commercial space outside the city. The new commercial nodes outside the city include Jurong Lake
District, One-North, Paya Lebar Central, North Coast Innovation Corridor and Southern Waterfront City
(5)
.
To the best of our Directors knowledge, there are also various opportunities arising from commercial
developments at Buona Vista, Jurong and Tuas, undertaken by the private property developers.
Our Directors believe that the pipeline supply of commercial space in Singapore coupled with the general
optimism on the global growth would translate into positive impact on demand for our Groups products,
barring unforeseen circumstances.
Potential in Export Markets
We believe that expanding and strengthening our geographical coverage for distribution network will
drive the growth of sales of our proprietary SMJ brand of carpets. As at the Latest Practicable Date, we
have exported our proprietary SMJ brand of carpets to overseas markets through our global distribution
networks of more than 260 carpet dealers, carpet importers and carpet installation companies in over
20 countries mainly in Asia, such as Malaysia, Indonesia, Philippines, Hong Kong, PRC, Taiwan, Korea,
Thailand, Vietnam, Brunei, India, Sri Lanka, United Arab Emirates, Saudi Arabia, Maldives, Brazil,
Uruguay, Chile, Australia, Kuwait and United Kingdom. We recognise the market potential and intend
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PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
to grow our distribution networks in new emerging markets such as Myanmar. We believe that our
established track record and our extensive distribution network will stand us in good stead to expand our
distribution network in new emerging markets. Please refer to the Business Strategies and Future Plans
section of this Offer Document for our plan to expand our global distribution networks.
Notes:-
(1) The information was extracted from the press release entitled MTI Forecasts Growth of 3.5 to 4.0 Per Cent in 2013 and 2.0
to 4.0 Per Cent in 2014 issued by the Ministry of Trade and Industry on 21 November 2013 and published on the website of
the Singapore Department of Statistics at (http://www.singstat.gov.sg/news/press_releases/gdp3q2013.pdf).
(2) The information was extracted from the article entitled World Economic Outlook - Update issued by the International
Monetary Fund on 21 January 2014 and published on the website of the International Monetary Fund at (http://www.imf.org/
external/pubs/ft/weo/2014/update/01/pdf/0114.pdf).
(3) The information was extracted from the press release entitled GDP Growth Forecast in 2014 Maintained at 2.0 to 4.0 Per
Cent issued by the Ministry of Trade and Industry on 20 May 2014 and published on its website at (http://www.mti.gov.sg/
ResearchRoom/SiteAssets/Pages/Economic-Survey-of-Singapore-First-Quarter-2014/PR_1Q14.pdf).
(4) The information was extracted from the press release entitled First Half 2014 Government Land Sales Programme issued
by the Ministry of National Development on 18 December 2013 and published on the website of the Urban Redevelopment
Authority at (http://www.ura.gov.sg/uol/media-room/news/2013/dec/pr13-87.aspx).
(5) The information was extracted from the report entitled A High Quality Living Environment For All Singaporeans Land
Use Plan to Support Singapores Future Population issued by the Ministry of National Development in January 2013 and
published on its website at (http://www.mnd.gov.sg/landuseplan/e-book/#/4/).
(6) Each of the Ministry of Trade and Industry, the Singapore Department of Statistics, the International Monetary Fund, the
Ministry of National Development and the Urban Redevelopment Authority has not consented to the inclusion of the above
information in this Offer Document for the purposes of Sections 249 and 254 of the SFA. While our Directors have taken
reasonable action to ensure that the information is extracted accurately and fairly and has been included in this Offer
Document in its proper form and content, they have not independently veried the accuracy of the relevant information.
TREND INFORMATION
Barring unforeseen circumstances and as disclosed in the Prospects, Business Strategies and Future
Plans section of this Offer Document, our Directors have observed the following trends for FY2014:-
(1) We expect revenue from sale of our products to increase due to construction growth and continuing
supply of new commercial space in FY2014, which will result in higher demand for furnishing
materials such as carpets. Due to the moderation in the overall economic growth of Singapore in
the rst quarter of FY2014, our Group has not experienced the expected increase in revenue in the
corresponding period. In addition, any increase in revenue will be subject to the uctuations of the
US$ against the S$ where any weakening of the US$ will have a negative impact on our revenue;
(2) We expect the cost of our products to increase in line with the increase in revenue. Also, subject
to the uctuations of the US$ against the S$, any strengthening of the US$ will have an adverse
impact on our cost;
(3) In relation to our inventory, we plan to improve our average inventory turnover days from 146
days in FY2013 and maintain our ability to serve our customers as a premier carpet specialist in
Asia. We also plan to widen our product range to meet our customers requirements stated in the
Prospect, Business Strategies and Future Plans section of this Offer Document; and
(4) We expect our operating expenses to increase mainly due to (i) marketing and business
development efforts being intensied in execution of our expansion plans and (ii) an increase in
employment costs to execute our expansion plans.
Save for the above, as at the Latest Practicable Date, our Directors do not expect any signicant recent
trends or any other known trends, uncertainties, demands, commitments or events to have a material
effect on us in the current nancial year.
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PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
ORDER BOOK
Our Distribution Sales customers orders are based on confirmed orders and we do not typically enter
into long term contracts with them. Our lead-time to fulfil an order is generally within the next working day
for local customers or within seven working days for overseas customers, upon final confirmation from
our Distribution Sales customers. Our Contract Sales customers enter into contracts (which specifically
indicate delivery schedule, quantity and pricing) with us for the supply, delivery and installation of our
carpets for specific projects, which the project life may range from one week to several months.
As at the Latest Practicable Date, our order book including both Contract Sales and Distribution Sales is
approximately S$1,700,000, due for delivery over the next two months, barring unforeseen circumstances.
Due to the aforesaid reasons, the state of our order book at any point in time is not reflective or indicative
of our Groups overall financial results and performance at the relevant point in time and may be subject
to variation, modification and cancellation by customers. Please refer to the Risk Factors section of this
Offer Document for further details.
BUSINESS STRATEGIES AND FUTURE PLANS
Our business strategies and future plans are as follows:-
Expanding and strengthening our geographical coverage
Currently, we only carry out our Contract Sales projects in Singapore. Our Directors believe that we are
able to develop and expand our geographical coverage to serve potential customers in the commercial
sector in overseas markets in respect of our Contract Sales business by leveraging on our established
track record and positive brand image. Subject to market conditions, we may consider to embark on
strengthening our geographical coverage by setting up subsidiaries or representative offices in overseas
markets or joint ventures with local partners to tap the opportunities in these markets.
At the Latest Practicable Date, we have exported our proprietary SMJ brand of carpets to overseas
markets through our global distribution networks of more than 260 carpet dealers, carpet importers
and carpet installation companies in over 20 countries mainly in Asia, such as Malaysia, Indonesia,
Philippines, Hong Kong, PRC, Taiwan, Korea, Thailand, Vietnam, Brunei, India, Sri Lanka, United Arab
Emirates, Saudi Arabia, Maldives, Brazil, Uruguay, Chile, Australia, Kuwait and United Kingdom. We
intend to continue to expand our distribution network in these countries. In addition, we recognise the
market potential and intend to grow our distribution networks in new emerging markets such as Myanmar.
We believe that our established track record and our extensive distribution network will stand us in
good stead to expand our distribution network in existing and new emerging markets. Nonetheless, we
will increase our marketing efforts by (i) inviting potential carpet dealers, carpet importers and carpet
installation companies from these countries to our product launches; and (ii) visiting new potential carpet
dealers, carpet importers and carpet installation companies in these countries.
We intend to utilise approximately S$0.25 million of our net proceeds from the Placement towards
marketing and business development.
Expanding our product range and services through acquisitions, joint ventures and/or strategic
alliances
Although we are currently selling and distributing carpets for ofce furnishing, it is our vision to become
a regional one-stop ofce furnishing solution provider. Our Group sees opportunity in offering products
and services which are ancillary and complementary to our existing core business in the distribution of
carpets. Such new products include system ofce furniture, blinds, wall coverings and non-carpet oor
coverings and we intend to sell and distribute such products in a similar fashion like our business in
the distribution of carpets. New service offering which we may expand our business to include carpet
maintenance and cleaning.
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PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS
We intend to leverage on our track record and expertise in executing Contract Sales projects, existing
customer base and regional distribution network to diversify our existing core business in the sale and
distribution of carpets. Such offering of new products and services will serve to create new revenue
streams for our Group whilst leveraging on our existing sales and distribution networks. We aim
to achieve greater success through the introduction of new products or services to stay ahead of the
competition.
We believe that one of the most effective ways for an organisation to grow is through acquisitions, joint
ventures and strategic alliances. We are keen to consider suitable acquisitions and joint ventures that
will enable us to expand our geographical coverage, grow our distribution network, expand our product
range and services to include ancillary products to complement our business and operations or enable
us to have better control over our supply chain. With our status as a listed company, we would be better
positioned to take advantage of opportunities for acquisitions, joint ventures and strategic alliances as we
would then be able to issue marketable securities as consideration for any acquisition or joint venture.
As at the Latest Practicable Date, we have not entered into any preliminary agreement with any party
concerning such ventures. Should we nalise any agreement to further our corporate objectives, we
would make the necessary announcements, and (where required) seek approval from our Shareholders
and the relevant regulatory authorities in accordance with the requirements of the applicable laws and
regulations.
We intend to utilise approximately S$1.50 million of our net proceeds from the Placement towards
acquisitions, joint ventures and/or strategic alliances.
Improving our inventory management system and logistics support to cater for our expanding
product range.
In line with our plan to expand our product range, there will be a need for our Group to enhance our
inventory management system so that we can continue to monitor and manage our inventory efciently
with the expanded range of products offered by our Group. We also intend to expand our eet of delivery
trucks to ensure that we will not compromise our present ability to full our customers orders within a
short turnaround time from order to delivery which is crucial to our customers mainly in the commercial
and institutional sectors, notwithstanding the offering of new products and services by our Group.
We intend to utilise approximately S$0.34 million of our net proceeds from the Placement towards
improving our inventory management system and logistics support.
91
GOVERNMENT REGULATIONS
We have identied the main laws and regulations (apart from those pertaining to general business
requirements) that materially affect our operations and the relevant bodies in Singapore. Details of these
laws and regulations are set out below:-
Registration with BCA
The Contractors Registration System is administered by the BCA to serve the procurement needs of
government departments, statutory bodies and other public section organisations. Registration in the
Contractors Registry maintained by the BCA is a pre-requisite to tendering for projects in the public
sector. Presently, there are seven major categories of registration, some of which are further sub-
classied into seven grades, depending on the category of registration. Registration of a contractor
with the BCA is dependent on the contractor fullling certain requirements relating to, amongst others,
the value of previously completed projects, personnel resources, and consistent and continuous good
performance record. The grade assigned to each contractor is dependent on its minimum net worth and
paid-up capital. Our Group is currently registered with the BCA as set out in the Licences, Permits,
Approvals and Certications section of this Offer Document.
The scope of work that our Group may carry out under the Finishing and Building Products (SY06)
Category includes all types of supply in connection with the nishing and building products such as
carpets, tiles, ceiling boards, awnings, blinds, wallpapers and non-structural precast products.
Generally, supply of nishing and building products will fall under (SY06) category.
To maintain the existing BCA grading for our Group, there are certain requirements to be complied with.
For example, to maintain SMJ Furnishings existing L4 grading under the workhead of SY06 - Finishing
and Building Products, there are certain requirements to be complied with, including but not limited to the
following:-
(i) a minimum paid-up capital and minimum net worth of S$0.25 million;
(ii) at least one employee possessing a technical qualication with a recognised diploma in Mechanical
/ Electric / Electronics Engineering or equivalent and have obtained attended the Basic Concept in
Construction Productivity Enhancement course conducted by the BCA Academy; and
(iii) a track record of S$2.5 million (contract value of awarded projects) for the past three years.
Major Exporter Scheme
We are subject to the provisions under the GST Act, which provides that the importation of goods into
Singapore is subject to GST. Section 8(4) of the GST Act provides that GST is charged, levied and
payable as if it were customs duty or excise duty and as if all goods imported into Singapore are dutiable
and liable to customs duty. However, by virtue of Sections 26 and 37(5) of the GST Act and Regulation 45
of the GST (General) Regulations, we are under the Major Exporter Scheme, the effect of which is that
GST is suspended on non-dutiable goods imported into Singapore.
To maintain or renew the Major Exporter Scheme status for our Group, there are certain requirements to
be complied with, including but not limited to the following:-
(i) importation of goods in the course of a business carried on by our Group;
(ii) our zero-rated supplies must account for more than 50.0% of our total supplies or the value of our
zero-rated supplies must be more than S$10 million for the past 12 months;
(iii) maintain good compliance record with GST, Income Tax, and Property Tax;
(iv) maintain good compliance record with Singapore Customs;
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GOVERNMENT REGULATIONS
(v) maintain good internal controls and proper accounting records; and
(vi) provision of a letter of guarantee for the coverage of an amount equivalent to the amount of GST
for one prescribed accounting period.
Section 21 of the Goods and Services Tax Act states that a supply of goods is zero-rated only if the
goods are exported.
Our Major Exporter Scheme status was renewed by the Comptroller of Goods and Services Tax
(Comptroller) in 2011 and shall continue to be valid until 30 April 2015 or upon revocation by the
Comptroller, whichever is the earlier.
Regulation of Imports and Exports Act
Under the Regulation of Imports and Exports Act (Cap. 272A), the Director-General of Customs
appointed under Section 4(1) of the Customs Act (Cap. 70) may make regulations for the registration,
regulation and control of all or any class of goods imported into, exported from, trans-shipped in or in-
transit through Singapore. The Regulations of Imports and Exports Regulations (RIER) was prescribed
in 1999 to control the import-export or trans-shipment of goods through requirements of permits. We are,
by virtue of our import and export business, subject to the RIER.
Workplace and Health Safety Measures
Under the MOMs Workplace Safety and Health Act (Chapter 354A) (WSHA), every employer has
the duty to take, so far as is reasonably practicable, such measures as are necessary to ensure the
safety and health of his employees at work. These measures include providing and maintaining for
the employees a work environment which is safe, without risk to health, and adequate as regards to
facilities and arrangements for their welfare at work, ensuring that adequate safety measures are taken
in respect of any machinery, equipment, plant, article or process used by the employees, ensuring
that the employees are not exposed to hazards arising out of the arrangement, disposal, manipulation,
organisation, processing, storage, transport, working or use of things in their workplace or near their
workplace and under the control of the employer, developing and implementing procedures for dealing
with emergencies that may arise while those persons are at work and ensuring that the person at work
has adequate instruction, information, training and supervision as is necessary for that person to perform
his work.
From 1 September 2011, the WSHA has been revised to include amongst others:-
(a) Imposing duties on the employer, to ensure that the employer has the necessary expertise for the
work that he is engaged for; and implemented adequate safety and health measures;
(b) Creating a new offence for persons at work who did a negligent act without reasonable cause; and
(c) Broadening the denition of an occupational disease to include any disease directly attributable to
any exposure to any chemical or biological agent.
Workplace Safety and Health (General Provisions) Regulations (WSHR)
More specic duties imposed by the MOM on employers are laid out in WSHR.
Pursuant to the WSHR, the following equipment, amongst others, are required to be tested and examined
by an examiner (Authorised Examiner) who is authorised by the Commissioner for Workplace Safety
and Health (CWSH), before they can be used in a factory and thereafter, at specied intervals:-
- hoist or lift;
- lifting gears; and
- lifting appliances and lifting machines.
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GOVERNMENT REGULATIONS
Upon examination, the Authorised Examiner will issue and sign a certicate of test and examination,
specifying the safe working load of the equipment. Such certicate of test and examination shall be kept
available for inspection. Under the WSHR, it is the duty of the owner of the equipment / occupier of the
factory to ensure that the equipment complies with the provisions of the WSHR and to keep a register
containing the requisite particulars with respect to the lifting gears, lifting appliances and lifting machines.
In addition to the above, under the WSHA, inspectors appointed by the CWSH may, amongst others,
enter, inspect and examine any workplace and any machinery, equipment, plant, installation or article
at any workplace, to make such examination and inquiry as may be necessary to ascertain whether
the provisions of the WSHA are complied with, to take samples of any material or substance found in
a workplace or being discharged from any workplace for the purpose of analysis or test, to assess the
levels of noise, illumination, heat or harmful or hazardous substances in any workplace and the exposure
levels of persons at work therein and to take into custody any article in the workplace which is required
for the purpose of an investigation or inquiry under the WSHA.
Under the WSHA, the CWSH may issue a stop-work order in respect of a workplace if he is satised
that (i) the workplace is in such condition, or is so located, or any part of the machinery, equipment,
plant or article in the workplace is so used, that any process or work carried on in the workplace cannot
be carried on with due regard to the safety, health and welfare of persons at work; (ii) any person has
contravened any duty imposed by the WSHA; or (iii) any person has done any act, or has refrained from
doing any act which, in the opinion of the CWSH, poses or is likely to pose a risk to the safety, health
and welfare of persons at work. The stop-work order shall direct the person served with the order to
immediately cease to carry on any work indenitely or until such measures as are required by the CWSH
have been taken to remedy any danger so as to enable the work in the workplace to be carried on with
due regard to the safety, health and welfare of the persons at work.
Employment of Foreign Workers
The employment of foreign workers in Singapore is governed by the Employment of Foreign Manpower
Act (Chapter 91A) (the EFMA) and regulated by the MOM. In Singapore, under Section 5(1) of the
EFMA, no person shall employ a foreign worker unless he has obtained in respect of the foreign worker a
valid work permit from the MOM, which allows the foreign worker to work for him. Any person who fails to
comply with or contravenes Section 5(1) of the EFMA shall be guilty of an offence and shall:-
(a) be liable on conviction to a ne not less than S$5,000 and not more than S$30,000 or to
imprisonment for a term not exceeding 12 months or to both; and
(b) on a second or subsequent conviction:-
(i) in the case of an individual, be punished with a ne of not less than S$10,000 and not more
than S$30,000 and with imprisonment for a term of not less than one month and not more
than 12 months; or
(ii) in any other case, be punished with a ne not less than S$20,000 and not more than
S$60,000.
Work Injury Compensation
The Work Injury Compensation Act (Chapter 354) (WICA), which is regulated by the MOM, applies to
workmen in all industries in respect of injury suffered by them in the course of their employment and sets
out, amongst others, the amount of compensation they are entitled to and the method(s) of calculating
such compensation. The WICA provides that if in any employment, personal injury by accident arising
out of and in the course of the employment is caused to a workman, the employer shall be liable to pay
compensation in accordance with the provisions of the WICA.
94
GOVERNMENT REGULATIONS
The WICA provides, amongst others, that, where any person (referred to as the principal) in the course
of its business or for the purpose of his trade or business contracts with any other person (referred to as
the contractor) for the execution by the contractor of the whole or any part of any work undertaken by the
principal, the principal shall be liable to pay to any workman employed in the execution of the work any
compensation which he would have been liable to pay if that workman had been immediately employed
by the principal.
The Workmens Compensation (Amendment) Act of 2008 amended the WICA and, amongst others,
extended its coverage and revised compensation norms.
To the best of our Directors knowledge, as at the Latest Practicable Date, we have obtained all requisite
approvals and licences and we are in compliance with all laws and regulations that would materially affect
our business operations.
95
EXCHANGE CONTROLS
Currently there are no Singapore governmental laws, decrees, regulations and other legislation that may
affect the following:-
(a) the import or export of capital, including the availability of cash and cash equivalents for use by our
Group; and
(b) the remittance of dividends, interest or other payments to non-resident holders of our Companys
securities.

96
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
MANAGEMENT REPORTING STRUCTURE
Our management reporting structure as at the Latest Practicable Date is set out below:-
Board of Directors
CEO
Rena Ho
Deputy CEO
Nellie Ho
Business Director
Tay Twan Lee
Finance and
Administration Manager
Sherina Low Yeen Mei
CFO
Bernard Neoh Teck Wei
COO
Lee Lay Choo
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DIRECTORS, EXECUTIVE OFFICERS AND STAFF
DIRECTORS
Our Directors are entrusted with the responsibility for the overall management of our Group. The
particulars of our Directors as at date of this Offer Document are set out below:-
Name Age Address Current Occupation
Ho DOrville Raymond 79 Blk 75 Whampoa Drive
#07-356
Singapore 320075
Nil
Rena Ho
(1)
39 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Executive Director and CEO
Nellie Ho
(1)
34 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Executive Director and Deputy
CEO
Lee Lay Choo 51 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Executive Director and COO
Ng Tiang Hwa 62 83 Paterson Road
#10-01 Paterson Residence
Singapore 238549
Director of Eastern Growth
International Holdings Pte. Ltd.
Chow Wen Kwan Marcus 40 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Partner of ATMD Bird & Bird
LLP
Note:-
(1) Rena Ho and Nellie Ho are sisters.
Information on the business and working experience, education and professional qualications, if any, and
areas of responsibilities of our Directors is set out below:-
Ho DOrville Raymond is our Independent Director and was appointed to our Board on 3 June 2014.
From 1963 and 1970, Ho DOrville Raymond was with Cycle & Carriage Company (Industries) Pte
Ltd as nance manager and company secretary in charge of nance, human resource and general
management. He later served as the nance controller of Vetco Pte Ltd, an MNC based in the USA
which produces connectors and drill pipes for the petroleum industry between 1970 and 1975. From 1976
to 2006, he was the founder and chief executive ofcer of Systematic Commercial Training Centre, an
institution offering business related courses in Singapore and Malaysia. From 2006 to 2012, he served as
an independent director of Innio Group Limited, a company listed on Catalist and from 2012 to 2014, he
was an executive director of Innio Group Limited, where he was responsible for its overall management.
Ho DOrville Raymond holds an associateship in Commerce from Perth Technical College. He was a
certied public accountant (Australia) and a qualied teacher who taught accountancy, economics, and
cost and management accounting and had also provided educational consultancy services to tertiary
institutions in Vietnam, Cambodia, Thailand and Indonesia.
Rena Ho is the Executive Director and CEO of our Group and is responsible for the formulation of our
Groups strategic directions, expansion plans and managing our Groups overall business development.
In addition, she oversees local sales and marketing function of our Group. She joined our Group in
1997 and rose through the ranks from administrative assistant, local sales co-ordinator, becoming an
executive director in 2002 and subsequently CEO in 2014. During her time with our Group, she gained
experience on various products in carpet industry and spearheaded the growth of our local sales and
marketing department with effective sales strategies and techniques. Rena Ho graduated from Nanyang
Technological University with a Bachelors degree in Business (Honours) in 1997.
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DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Nellie Ho is the Executive Director and Deputy CEO of our Group and her primary role is to formulate
the viable expansion plans and business development for overseas markets. She is responsible for export
sales and marketing function and monitoring the implementation of all expansion plans and policies for
overseas markets. She joined our Group in 1999 starting as an administrative assistant, export sales co-
ordinator, becoming an executive director in 2002 and subsequently Deputy CEO in 2014. Her experience
in handling overseas customers and distributorships led to the continuous growth of our Distribution Sales
department. Nellie Ho has been admitted as a Certied Accounting Technician of the Association of
Chartered Certied Accountants in 2001.
Lee Lay Choo is the Executive Director and COO of our Group. Lee Lay Choo started her career in
1979 with Carpets & Furnishings (United Agencies Pte Ltd) as administrative assistant in charge of
administrative duties and local client delivery scheduling. In 1981, Lee Lay Choo joined Hong Fook Realty
Pte Ltd as administrative assistant in charge of administrative duties. Lee Lay Choo joined our Group in
1988 as administrative assistant and was promoted to administrative manager in 1996 handling local
distribution sales and overseeing the administrative and warehousing functions. She was subsequently
promoted to associate director in 2004 and was responsible for local and export distribution sales,
purchasing and cost control. In 2014, she was promoted to the role of COO, where she is responsible for
the day to day operation, purchasing and inventory management. Lee Lay Choo attained a GCE O Level
certicate in 1978.
Ng Tiang Hwa is our Independent Director and was appointed to our Board on 3 June 2014. He is
currently the director of Eastern Growth International Holdings Pte. Ltd., a trading and investment
services company which he founded jointly with his partners in 2004. He is also the executive director of
TPK & Co. Pte. Ltd., an investment company and the director of Pawsibility Pte. Ltd., an animal assisted
therapy counselling company. Ng Tiang Hwa was the chief nancial ofcer of Qualitek Singapore Pte Ltd
and was responsible for nancial management and corporate affairs from 2003 to 2004. Between 2001
and 2002, he was the head of nance department in Singapore Land Authority where he was in charge
of accounting, treasury tax and budgets. From 2000 to 2001, he was the nancial controller of Image
Transforms Pte Ltd and was responsible for nancial management and corporate affairs. Between 1992
and 1999, he was the senior manager in The Polyolen Company (Singapore) Pte. Ltd. where he was
in charge of accounting, manufacturing costing, corporate nance, banking and treasury, taxation and
audit. Ng Tiang Hwa is a member of the Institute of Singapore Chartered Accountants, a fellow member
of the Chartered Institute of Management Accountants, United Kingdom and an afliate member of the
Singapore Institute of Directors. He graduated from the University of Singapore with a Bachelors degree
in Accountancy in 1976.
Chow Wen Kwan Marcus is our Independent Director and was appointed to our Board on 3 June 2014.
He is currently a partner of ATMD Bird & Bird LLP in Singapore. Chow Wen Kwan Marcus has more than
13 years of experience in legal practice and his practice focuses on mergers and acquisitions, private
equity and equity and debt capital markets. He had worked in Fried, Frank, Harris, Shriver & Jacobson
in New York, Hogan Lovells in Hong Kong and White & Case LLP and Drew & Napier LLC in Singapore.
Chow Wen Kwan Marcus graduated with a Bachelor of Laws from the National University of Singapore
in 1998 and a Master of Laws from the University of Virginia in 1999. He also holds a certicate in
Governance as Leadership from Harvard Kennedy School. Chow Wen Kwan Marcus is qualied to
practise in Singapore and New York, USA.
Ho DOrville Raymond and Chow Wen Kwan Marcus have prior experience as directors of public listed
companies in Singapore. Rena Ho, Nellie Ho, Lee Lay Choo and Ng Tiang Hwa do not have prior
experience as directors of public listed companies in Singapore but have received relevant training to
familiarise themselves with the roles and responsibilities of a director of a company listed on the SGX-ST.
Save for (i) our Executive Directors, Rena Ho and Nellie Ho who are sisters, (ii) our Executive Ofcer, Tay
Twan Lee who is the spouse of our Executive Director, Nellie Ho; and (iii) our Controlling Shareholder, Lui
Oi Kheng who is the mother of our Executive Directors, Rena Ho and Nellie Ho, none of our Directors has
any family relationship with another Director or with any Executive Ofcer or Substantial Shareholder of
our Company.
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DIRECTORS, EXECUTIVE OFFICERS AND STAFF
There was no agreement or arrangement with our Substantial Shareholders, customers or suppliers
pursuant to which we will appoint any of them or any person nominated by any of them as our Director.
None of our Independent Directors sits on the board of our subsidiary. The list of present and past
directorships of each Director over the last ve years preceding the date of this Offer Document excluding
those held in our Company, is set out below:-
Name Present Directorships Past Directorships
Ho DOrville Raymond Group corporations
Nil
Group corporations
Nil
Other corporations
Nil
Other corporations
Broadband Network Systems Limited
Horay Business Consultants Pte Ltd
Innio Group Limited
(1)
Roomwise Holdings Pte. Ltd.
Widget Exchange Pte. Ltd.
Rena Ho Group corporations
SMJ Furnishings
Group corporations
Nil
Other corporations
Nil
Other corporations
SMJ Furnishings (H.K.) Limited
(2)
SMJ Malaysia
(3)
Nellie Ho Group corporations
SMJ Furnishings
Group corporations
Nil
Other corporations
Nil
Other corporations
SMJ Furnishings (H.K.) Limited
(2)
SMJ Malaysia
(3)
Lee Lay Choo Group corporations
SMJ Furnishings
Group corporations
Nil
Other corporations
Nil
Other corporations
Nil
Ng Tiang Hwa Group corporations
Nil
Group corporations
Nil
Other corporations
Eastern Growth International
Holdings Pte. Ltd.
Pawsibility Pte. Ltd.
TPK & Co. Pte. Ltd.
Other corporations
Sinofabric Limited
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DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Name Present Directorships Past Directorships
Chow Wen Kwan Marcus Group corporations
Nil
Group corporations
Nil
Other corporations
Hafary Holdings Limited
Ley Choon Group Holdings Limited
Other corporations
Duty Free International Limited
Weiye Holdings Limited
Zhongxin Fruit and Juice Limited
Notes:-
(1) Innio Group Limited was formerly known as Auston International Group Ltd.
(2) Pursuant to Hong Kong laws, SMJ Furnishings (H.K.) Limited had been deregistered voluntarily on 15 June 2012. There was
no transaction between our Group and SMJ Furnishings (H.K.) Limited during the periods under review.
(3) Please refer to the Intellectual Property section of this Offer Document for more information on SMJ Malaysia.
EXECUTIVE OFFICERS
Our day-to-day operations are entrusted to our Executive Directors who are assisted by an experienced
and qualied team of Executive Ofcers. The particulars of our Executive Ofcers are set out below:-
Name Age Address Current Occupation
Tay Twan Lee 35 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Business Director
Bernard Neoh Teck Wei 36 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
CFO
Sherina Low Yeen Mei 34 c/o 31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Finance and Administration
Manager
Information on the business and working experience, education and professional qualications, if any, and
areas of responsibilities of our Executive Ofcers are set out below:-
Tay Twan Lee is our Business Director where he is responsible for business development of our export
and local sales departments. He started his career as sales staff in charge of selling automobile with
Pinnacle Motors Pte Ltd from 2002 to 2005 and RTMT Motors Pte Ltd from 2005 to 2006. Tay Twan Lee
joined our Group in 2007 as sales executive and was promoted to senior product consultant in 2012 and
eventually to our Business Director in 2014. Tay Twan Lee graduated from Temasek Polytechnic in 2001
with a Diploma in Mechatronics.
Bernard Neoh Teck Wei joined our Group as CFO in November 2013 where he is responsible for the
overall nancial accounting and nancial reporting of our Group. Prior to joining our Group, Bernard
Neoh Teck Wei provided advisory services to companies seeking listing in the Singapore or Malaysia
stock exchange and assisted expanding enterprise in fund raising through Sino-Capital Consulting Pte.
Ltd. and Dektos Investments Ltd, companies co-founded by him, from 2008 to 2013. Bernard Neoh
Teck Wei has about nine years experience in the audit profession. He joined Baker Tilly TFWLCL and
First-Trust Partnership as assurance manager from 2006 to 2008 and from 2005 to 2006 respectively.
He started his career in 1999 as an audit assistant with Heng Lee Seng & Co. before he joined
PricewaterhouseCoopers as audit associate in the same year and was an assistant manager when he left
PricewaterhouseCoopers in 2004. Bernard Neoh Teck Wei is a member of the Association of Chartered
Certied Accountants.
101
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Sherina Low Yeen Mei is our Finance and Administration Manager. She is responsible for daily
accounting and human resource matters of our Group. Sherina Low Yeen Mei started her career working
as accounts assistant for Evergreen Shipping (S) Pte Ltd, a company which is principally engaged in
shipping business, from 2003 to 2005. She joined Geometra Worldwide Movers Pte Ltd which is
principally engaged in logistic business in 2005 as accounts executive and was the accounts manager
when she left in 2011. Prior to joining our Group in 2012, she was on a six-month contract assignment
with FIL SPA Intelligence Pte Ltd as an accountant. She graduated with a Bachelor of Science in Applied
Accounting (Honours) from Oxford Brookes University in 2008.
Save for Tay Twan Lee who is the spouse of our Executive Director, Nellie Ho, none of our Executive
Ofcers has any family relationship with another Executive Ofcer or with any Director or Substantial
Shareholder of our Company.
There was no agreement or arrangement with our Substantial Shareholders, customers or suppliers
pursuant to which we will appoint any of them or any person nominated by any of them as our Executive
Ofcer.
The list of present and past directorships of each Executive Ofcer over the last ve years preceding the
date of this Offer Document excluding those held in our Company, is set out below:-
Name Present Directorships Past Directorships
Tay Twan Lee Group corporations
Nil
Group corporations
Nil
Other corporations
Nil
Other corporations
Nil
Bernard Neoh Teck Wei Group corporations
Nil
Group corporations
Nil
Other corporations
Sino-Capital Consulting Pte. Ltd.
(1)
Other corporations
Dektos Investments Ltd
Sherina Low Yeen Mei Group corporations
Nil
Group corporations
Nil
Other corporations
Nil
Other corporations
Nil
Note:-
(1) Sino-Capital Consulting Pte. Ltd. is a dormant company.
STAFF
As at 31 December 2013, we have a workforce of 41 full-time employees. We do not experience any
signicant seasonal uctuations in our number of employees, as we do not employ a signicant number
of temporary employees.
None of our employees are unionised. There has not been any incidence of work stoppages or labour
disputes that has affected our operations. Accordingly, we consider our relationship with our employees to
be good.
102
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
The number of employees of our Group as at the end of each of the periods under review, segmented by
function are as follows:-
Number of Employees
As at
31 December 2011
As at
31 December 2012
As at
31 December 2013
Function
Management
(1)
5 5 6
Sales and marketing 10 10 9
Project management 4 4 4
Finance and administration 5 5 4
Warehouse and logistics 16 15 15
Others 1 3 3
Total 41 42 41
Note:-
(1) Executive Directors and Executive Ofcers are classied under management.
Save for CPF contributions, we have not set aside or accrued any amounts to provide for pension,
retirement or similar benets for any of our employees.
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES

Directors and Executive Ofcers
The remuneration paid to our Directors and Executive Ofcers (which includes benets-in-kind and
bonuses) for services rendered to us on an aggregate basis and in remuneration bands of S$250,000
(1)
during FY2012 and FY2013 (being the two most recent completed nancial years) and as estimated for
FY2014 is as follows:-
FY2012 FY2013 FY2014
(2)
(estimated)
Directors
Ho DOrville Raymond
(3)

(3)
Band A
Rena Ho Band A Band A Band A
Nellie Ho Band A Band A Band A
Lee Lay Choo Band A Band A Band A
Ng Tiang Hwa
(3)

(3)
Band A
Chow Wen Kwan Marcus
(3)

(3)
Band A
Executive Ofcers
Tay Twan Lee Band A Band A Band A
Bernard Neoh Teck Wei
(3)
Band A Band A
Sherina Low Yeen Mei Band A Band A Band A
Notes:-
(1) Band A: Compensation from S$0 to S$250,000 per annum.
(2) The estimated amount for FY2014 does not take into account the performance bonus that our Executive Directors are entitled
to receive under their respective Service Agreements, further details of which are set out in the Service Agreements section
of this Offer Document.
(3) Not under our appointment as at the relevant period.
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DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Related Employees
As at the Latest Practicable Date, save for (i) our Executive Directors, Rena Ho and Nellie Ho who are
sisters, (ii) our Executive Ofcer, Tay Twan Lee who is the spouse of our Executive Director, Nellie Ho;
and (iii) our Controlling Shareholder, Lui Oi Kheng who is the mother of our Executive Directors, Rena Ho
and Nellie Ho, we do not have employees who were related to our Directors or Substantial Shareholders.
For FY2012 and FY2013, the remuneration (including CPF contributions thereon and bonuses) of
Tay Twan Lee amounted to less than S$250,000 each year. For the current nancial year ending 31
December 2014, the estimated remuneration (including CPF contributions thereon and excluding bonus)
of Tay Twan Lee is expected to be less than S$250,000.
The remuneration of any employees who are related to our Directors or Substantial Shareholders will be
reviewed annually by our Remuneration Committee to ensure that their remuneration packages are in line
with our staff remuneration guidelines and commensurate with their respective job scopes and level of
responsibilities. Any bonuses, pay increases and/or promotions for these related employees will also be
subject to the review and approval of our Remuneration Committee. In addition, any new employment of
related employees and the proposed terms of their employment will be subject to the review and approval
of our Remuneration Committee. In the event that a member of our Remuneration Committee is related to
the employee under review, he will abstain from the review.

SERVICE AGREEMENTS
Our Company has entered into separate service agreements (the Service Agreements) with our
Executive Directors, namely Rena Ho, Nellie Ho and Lee Lay Choo. The Service Agreements are valid for
an initial period of three years upon admission of our Company to Catalist. Upon the expiry of the initial
period of three years, the employment of the Executive Directors shall be automatically renewed for a
period of two years (and thereafter automatically renewed every two years) on such terms and conditions
as the parties may agree. During the initial period of three years, either party may terminate the Service
Agreement at any time by giving to the other party not less than six months notice in writing, or in lieu
of notice, payment of an amount equivalent to six months salary based on the Executive Directors last
drawn monthly salary. Our Group may also terminate the employment of any of the Executive Directors at
any time without notice or payment in lieu of notice under the following circumstances:-
(i) if the Executive Director is guilty of any gross default or grave misconduct in connection with or
affecting the business of our Group;
(ii) in the event of any serious or repeated breach or non-observance by the Executive Director of any
of the stipulations contained in the Service Agreements;
(iii) if the Executive Director becomes bankrupt or makes any composition or enters into any deed of
arrangement with his creditors;
(iv) if the Executive Director shall become of unsound mind; or
(v) If the Executive Director commits any act of criminal breach of trust or dishonesty.
Pursuant to the terms of the Service Agreements, Rena Ho, Nellie Ho and Lee Lay Choo are entitled to a
monthly salary of S$12,240, S$10,540 and S$14,110 respectively. Our Executive Directors are entitled to
an annual xed bonus of one month of their respective last drawn salary. They are also entitled to receive
an annual performance bonus, the amount of which is to be determined in the absolute discretion of our
Remuneration Committee. All reasonable travelling, hotel and other expenses incurred by the Executive
Directors in connection with our business will also be borne by us. In addition, all reasonable medical
expenses of our Executive Directors in accordance with our personnel policy shall be reimbursed by us.
Under the Service Agreements, the salaries of the Executive Directors are subject to review by the
Remuneration Committee after the accounts of our Group for the immediate preceding nancial year
have been audited. The Executive Directors shall abstain from voting in respect of any resolution or
decision to be made by our Board in relation to the terms and renewal of their respective Service Agreements.
104
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Under the Service Agreements, each Executive Director has covenanted not to do business with any
person who has done business with us or entice away any of our employees in connection with the
carrying on of any business similar to or in competition with our business for 12 months after ceasing to
be employed by our Group. Each Executive Director has also covenanted not to carry on any activity or
business in competition with us within Singapore or any country in which we have operations or carried
on business, for 12 months after ceasing to be employed under his Service Agreement.
Directors fees do not form part of the terms of the Service Agreements as these will only be paid out to
Directors after the approval of Shareholders at our Companys annual general meeting.
Had the Service Agreements been in existence since the beginning of FY2013, the aggregate
remuneration paid to the Executive Directors would have been approximately S$685,000 instead of
S$431,000 and our PBT would have been approximately S$2,972,000 (instead of S$3,226,000) and our
PAT would have been approximately S$2,478,000 (instead of S$2,732,000).
Save as disclosed, there are no existing or proposed service agreements between our Group and any of
our Directors. There are no existing or proposed service agreements entered or to be entered into by our
Directors with our Company or our subsidiary which provide for benets upon termination of employment.
CORPORATE GOVERNANCE
Our Directors recognise the importance of corporate governance and the offering of high standards
of accountability to our Shareholders. Our Board of Directors has formed three committees: (i) the
Nominating Committee, (ii) the Remuneration Committee and (iii) the Audit Committee.
Nominating Committee
Our Nominating Committee comprises Ho DOrville Raymond, Chow Wen Kwan Marcus and Rena Ho.
The chairman of the Nominating Committee is Chow Wen Kwan Marcus.
Our Nominating Committee will be responsible for:-
(a) re-nomination of our Directors having regard to each Directors contribution and performance;
(b) determining annually whether or not a Director is independent;
(c) deciding whether or not a Director is able to and has been adequately carrying out his duties as a
director; and
(d) assessing the effectiveness of the Board as a whole and the contribution of each Director to the
effectiveness of the Board.
Each member of the Nominating Committee shall abstain from voting any resolutions in respect of the
assessment of his performance or re-nomination as Director.
Generally, the Nominating Committee does not appoint new directors, but nominates them to the Board
which retains the nal discretion in appointing such new directors.
Our Nominating Committee (apart from Chow Wen Kwan Marcus), after having:-
(a) noted that Chow Wen Kwan Marcus is aware of his responsibilities and obligations owing to each
of the companies whom he serves as director as well as the time commitment and duties required
from him given his past experience acting as director of listed companies; and
(b) considered that Chow Wen Kwan Marcus is supported by his staff in carrying out the duties of his
full time employment,
105
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
is of the opinion that Chow Wen Kwan Marcus is suitable to be appointed as our Independent Director,
notwithstanding that he is concurrently holding full time employment and serving as independent
director of other listed companies. Chow Wen Kwan Marcus had also obtained the consent of the
respective nominating committees of the listed companies whom he serves as director with regard to his
appointment as our Independent Director.
Our Sponsor and Issue Manager after having considered the opinion of our Nominating Committee
as disclosed above, and its interactions with our Independent Directors, is of the view that Chow Wen
Kwan Marcus is able to devote sufcient time to our Company to carry out his duties as our Independent
Director.
Remuneration Committee
Our Remuneration Committee comprises Ho DOrville Raymond, Ng Tiang Hwa and Chow Wen Kwan
Marcus. The chairman of the Remuneration Committee is Ng Tiang Hwa.
Our Remuneration Committee will recommend to our Board a framework of remuneration for our
Directors and Executive Ofcers, and determine specic remuneration packages for each Executive
Director.
The recommendations of our Remuneration Committee should be submitted for endorsement by
the entire Board. All aspects of remuneration, including but not limited to Directors fees, salaries,
allowances, bonuses, options and benets-in-kind shall be covered by our Remuneration Committee.
Each member of the Remuneration Committee shall abstain from voting any resolutions in respect of his
remuneration package. The remuneration of employees who are related to our Directors or Substantial
Shareholders will also be reviewed annually by our Remuneration Committee to ensure that their
remuneration package are in line with our staff remuneration guideline and to commensurate with their
respective job scopes and level of responsibilities.
Audit Committee
Our Audit Committee comprises Ho DOrville Raymond, Ng Tiang Hwa and Chow Wen Kwan Marcus.
The chairman of the Audit Committee is Ho DOrville Raymond.
Our Independent Directors do not have any existing business or professional relationship of a material
nature with our Group, our Directors or Substantial Shareholders.
Our Audit Committee will assist our Board in discharging their responsibility to safeguard our assets,
maintain adequate accounting records and develop and maintain effective systems of internal control,
with the overall objective of ensuring that our management creates and maintains an effective control
environment in our Group.
Our Audit Committee will provide a channel of communication between our Board, our management and
our external auditors on matters relating to audit.
Our Audit Committee shall meet periodically to perform the following functions:-
(a) review the audit plans of our external auditors and internal auditors, including the results of our
external and internal auditors review and evaluation of our system of internal controls;
(b) review the annual consolidated nancial statements and our external auditors report on those
nancial statements, and discuss any signicant adjustments, major risk areas, changes in
accounting policies, compliance with Singapore Financial Reporting Standards, concerns and
issues arising from their audits including any matters which the auditors may wish to discuss in the
absence of management, where necessary, before submission to our Board for approval;
(c) review the periodic consolidated nancial statements comprising the prot and loss statements and
the balance sheets and such other information required by the Catalist Rules, before submission to
our Board for approval;
106
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
(d) review and discuss with our external and internal auditors (if any), any suspected fraud, irregularity
or infringement of any relevant laws, rules and regulations, which has or is likely to have a material
impact on our Groups operating results or nancial position and our managements response;
(e) review the co-operation given by our management to our external auditors;
(f) consider the appointment or re-appointment of the external auditors;
(g) review and ratify any interested person transactions falling within the scope of Chapter 9 of the
Catalist Rules;
(h) review potential conicts of interests (if any);
(i) review the procedures by which employees of our Group may, in condence, report to the chairman
of the Audit Committee, possible improprieties in matters of nancial reporting or other matters and
ensure that there are arrangements in place for independent investigation and follow-up actions
thereto;
(j) undertake such other reviews and projects as may be requested by our Board, and report to our
Board its ndings from time to time on matters arising and requiring the attention of our Audit
Committee; and
(k) undertake generally such other functions and duties as may be required by law or the Catalist
Rules, and by such amendments made thereto from time to time.
Apart from the duties listed above, our Audit Committee shall commission and review the ndings of
internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal
controls or infringement of any Singapore law, rule or regulation which has or is likely to have a material
impact on our Groups operating results and/or nancial position. Each member of the Audit Committee
shall abstain from voting from any resolutions in respect of matters in which he is interested.
Our Audit Committee shall also commission an annual internal control audit until such time as our Audit
Committee is satised that our Groups internal controls are robust and effective enough to mitigate our
Groups internal control weakness (if any). Prior to decommission of such annual audit, our Board is
required to report to the SGX-ST and the Sponsor and Issue Manager on how the key internal control
weaknesses have been rectied, and the basis for the decision to decommission the annual internal
control audit. Thereafter, such audits may be initiated by our Audit Committee as and when it deems t to
satisfy itself that our Groups internal controls remain robust and effective. Upon completion of the internal
control audit, appropriate disclosure will be made via SGXNET of any material, price-sensitive internal
control weaknesses and any follow-up actions to be taken by our Board.
Currently, based on the internal controls established and maintained by our Group, work performed by the
internal and external auditors, and reviews performed by our management and our Board, our Board, to
the best of its knowledge and belief, with the concurrence of our Audit Committee, is of the opinion that
the internal controls of our Group are adequate to address nancial, operational and compliance risks of
our Group.
Our Audit Committee, after having:-
(a) conducted interviews with Bernard Neoh Teck Wei;
(b) considered the qualications and past working experiences of Bernard Neoh Teck Wei (as
described in the Directors, Executive Ofcers and Staff section of this Offer Document); and
(c) observed Bernard Neoh Teck Weis abilities, familiarity and diligence in relation to the nancial
matters and information of our Group,
is of the view that Bernard Neoh Teck Wei is suitable for the position of CFO of our Group.
107
DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Further, after making all reasonable enquiries, and to the best of their knowledge and belief, nothing has
come to the attention of our Audit Committee members to cause them to believe that Bernard Neoh Teck
Wei does not have the competence, character and integrity expected of a CFO of a listed issuer.
BOARD PRACTICES
Our Articles of Association provide that our Board will consist of not less than two (2) Directors. None of
our Directors is appointed for any xed terms.
Our Directors are appointed by our Shareholders at a general meeting, and an election of Directors takes
place annually. One-third (or the number nearest one-third) of our Directors, are required to retire from
ofce at each annual general meeting. Every Director must retire from ofce at least once in every three
years. However, a retiring Director is eligible for re-election at the meeting at which he retires.
108
INTERESTED PERSON TRANSACTIONS
In general, transactions between our Group and any of its interested persons (namely, our Directors or
Controlling Shareholders or their respective Associates) are known as interested person transactions.
The following discussions on material interested person transactions for the periods under review and the
period from 1 January 2014 to the Latest Practicable Date (the Relevant Period), is based on our Group
and interested persons as construed accordingly.
Save as disclosed below and in the Restructuring Exercise section of this Offer Document, none of our
Directors, Controlling Shareholders or their respective Associates (each, an Interested Person) was or is
interested in any material transaction undertaken by our Group for the Relevant Period.
PAST TRANSACTIONS
Loan from our Group to Interested Person
In FY2012, our Group granted a loan of S$416,000 to our late founder, Peter Ho, spouse of our
Controlling Shareholder, Lui Oi Kheng and father of our Executive Directors, Rena Ho and Nellie Ho, for
personal use. Such loan was not made on an arms length basis as it was interest-free, unsecured and
had no xed terms of repayment. The loan had been fully repaid to our Group by the family of Peter Ho
following his demise in FY2013. After our admission to Catalist, we have no intention to grant loans and
advances to any interested persons.
Provision of Personal Guarantee and Securities by Interested Persons
During the Relevant Period, Peter Ho and Lui Oi Kheng provided joint and several personal guarantees to
secure the credit and trade facilities of S$1,000,000 provided by DBS Bank Ltd. Peter Ho also provided a
personal guarantee for S$7,350,000 to secure the credit and trade facilities of S$9,800,000 provided by
Oversea-Chinese Banking Corporation Limited during the Relevant Period.
Apart from the provision of the aforesaid personal guarantee, Peter Ho furnished the properties formerly
jointly held by him and Lui Oi Kheng at No.151 Chin Swee Road, #07-11 and #07-13 Manhattan House,
Singapore 169876 as securities to secure the credit and trade facilities of S$9,800,000 provided by
Oversea-Chinese Banking Corporation Limited during the Relevant Period.
No consideration was paid to Peter Ho and Lui Oi Kheng for the provision of the aforesaid personal
guarantee and/or securities. The largest aggregated amount guaranteed by Peter Ho and Lui Oi Kheng
was S$8,350,000 during the Relevant Period, which was the maximum contracted guarantee liability.
PRESENT AND ON-GOING TRANSACTIONS
Provision of Personal Guarantees and Securities by Interested Persons
During the Relevant Period, our Controlling Shareholder, Lui Oi Kheng and Executive Directors, namely
Rena Ho, Nellie Ho and Lee Lay Choo provided personal guarantees for S$7,350,000 to secure the credit
and trade facilities of S$9,800,000 provided by Oversea-Chinese Banking Corporation Limited.
Apart from the provision of the aforesaid personal guarantees, Lui Oi Kheng furnished the properties
at No.151 Chin Swee Road, #07-11 and #07-13 Manhattan House, Singapore 169876 as securities to
secure the credit and trade facilities of S$9,800,000 provided by Oversea-Chinese Banking Corporation
Limited during the Relevant Period.
No consideration was paid to Lui Oi Kheng, Rena Ho, Nellie Ho and Lee Lay Choo for the provision of
the aforesaid personal guarantees and/or securities. The largest aggregated amount guaranteed by Lui Oi
Kheng, Rena Ho, Nellie Ho and Lee Lay Choo was S$7,350,000 during the Relevant Period which was
the maximum contracted guarantee liability. As at the Latest Practicable Date, the aggregated amount
guaranteed by Lui Oi Kheng, Rena Ho, Nellie Ho and Lee Lay Choo was S$7,350,000 which was the
maximum contracted guarantee liability.
109
INTERESTED PERSON TRANSACTIONS
Subsequent to the Placement, the above-named guarantors and securities provider intend to obtain a
release and discharge of the above guarantees and securities from the nancial institution by substituting
the same with other securities to be furnished by our Group that are acceptable to the nancial institution,
if required. Should the nancial institution be unwilling to release and discharge the above guarantees
and securities, the guarantors and securities provider will continue to provide the personal guarantees
and securities.
Chapter 9 of the Catalist Rules
Under Chapter 9 of the Catalist Rules, where a listed company or any of its subsidiaries or associated
companies over which the listed company has control (other than a subsidiary or associated company
that is listed on a foreign stock exchange) proposes to enter into a transaction with the listed companys
interested persons, shareholders approval and/or an immediate announcement is required in respect
of the transaction if the value of the transaction is equal to or exceeds certain nancial threshold. In
particular, shareholders approval is required where the value of such transaction is not below S$100,000
and is:-
(i) equal to or more than 5.0% of the latest audited NTA of the listed company; or
(ii) equal to or more than 5.0% of the latest audited NTA, when aggregated with other transactions
entered into with the same interested person during the same nancial year.
Denitions under the Catalist Rules
Under the Catalist Rules:-
(a) the term interested person is dened to mean a director, CEO, or controlling shareholder of the
listed company or an associate of any such director, CEO or controlling shareholder; and
(b) the term associate is dened to mean:-
(i) in relation to any director, CEO, substantial shareholder or controlling shareholder (being an
individual):-
his immediate family;
the trustee of any trust of which he and his immediate family is a beneciary or, in the
case of a discretionary trust, is a discretionary object; and
any company in which he and his immediate family (that is, the spouse, child, adopted
child, step child, sibling or parent) together (directly or indirectly) have an interest of
30.0% or more;
(ii) in relation to a substantial shareholder or a controlling shareholder (being a company)
means any other company which is its subsidiary or holding company or is a subsidiary
of such holding company or one in the equity of which it and/or such other company or
companies taken together (directly or indirectly) have an interest of 30.0% or more.
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS
To ensure that future transactions with interested persons are undertaken on normal commercial terms
and are consistent with our Groups usual business practices and policies, which are generally no more
favourable than those extended to unrelated third parties, the following procedures will be implemented
by our Group.
110
INTERESTED PERSON TRANSACTIONS
In relation to any purchase of products or procurement of services from interested persons, quotes from
at least two unrelated third parties in respect of the same or substantially the same type of transactions
will be used as comparison wherever possible. The purchase price, procurement price or fee for services
shall not be higher than the most competitive price of the two comparative prices from the two unrelated
third parties. The Audit Committee will review the comparables, taking into account, the suitability, quality
and cost of the product or service, and the experience and expertise of the supplier.
In relation to any sale of products or provision of services to interested persons, the price and terms of
two other completed transactions of the same or substantially the same type of transactions to unrelated
third parties are to be used as comparison wherever possible. The interested persons shall not be
charged at rates lower than that charged to the unrelated third parties.
All interested person transactions above S$100,000 are to be approved by our Board who shall not be
an interested person in respect of the particular transaction. Any contracts to be made with an interested
person shall not be approved unless the pricing is determined in accordance with our usual business
practices and policies, consistent with the usual margin given or price received by us for the same or
substantially similar type of transactions between us and unrelated parties and the terms are no more
favourable than those extended to or received from unrelated parties.
For the purposes above, where applicable, contracts for the same or substantially similar type of
transactions entered into between us and unrelated third parties will be used as a basis for comparison
to determine whether the price and terms offered to or received from the interested person are no more
favourable than those extended to unrelated parties.
In addition, we shall monitor all interested person transactions entered into by us categorising the
transactions as follows:-
(i) a category one interested person transaction is one where the value thereof is in excess of 5.0%
of the NTA of our Group; and
(ii) a category two interested person transaction is one where the value thereof is below or equal to
5.0% of the NTA of our Group.
Category one interested person transactions must be approved by our Audit Committee prior to entry.
Category two interested person transactions need not be approved by our Audit Committee prior to
entry but shall be reviewed on a half-yearly basis by our Audit Committee.
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 enquiries with landlords of similar properties and obtaining suitable reports or
reviews published by property agents (as necessary), including independent valuation report by property
valuer, where appropriate. The rent 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 enquiries. Such
transactions shall be subject to review by our Audit Committee on a half-yearly basis.
We will prepare relevant information to assist our Audit Committee in its review.
Before any agreement or arrangement with an interested person that is not in the ordinary course of
business of our Group is transacted, prior approval must be obtained from our Audit Committee. In the
event that a member of our Audit Committee is interested in any interested person transactions, he will
abstain from reviewing that particular transaction. Any decision to proceed with such an agreement or
arrangement would be recorded for review by our Audit Committee.
We will also comply with the provisions in Chapter 9 of the Catalist Rules in respect of all future
interested person transactions, and if required under the Catalist Rules, the Companies Act or the SFA,
we will seek independent Shareholders approval for such transactions.
111
POTENTIAL CONFLICTS OF INTERESTS
INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES
Save as disclosed in the Interested Person Transactions section of this Offer Document, during the
periods under review and the period from 1 January 2014 to the Latest Practicable Date:-
(a) none of our Directors, Controlling Shareholders or any of their respective Associates has any
interest, direct or indirect, in any material transactions to which our Company or our subsidiary was
or is a party;
(b) none of our Directors, Controlling Shareholders or any of their respective Associates has any
interest, direct or indirect, in any entity carrying on the same business or dealing in similar products
which competes materially and directly with the existing business of our Group; and
(c) none of our Directors, Controlling Shareholders or any of their respective Associates has any
interest, direct or indirect, in any enterprise or company that is our customer or supplier of goods
and services.
INTERESTS OF EXPERTS
None of the experts named in this Offer Document:-
(i) is employed on a contingent basis by our Company or our subsidiary;
(ii) has a material interest, whether direct or indirect, in our Shares or in the shares of our subsidiary;
or
(iii) has a material economic interest, whether direct or indirect, in our Company, including having an
interest in the success of the Placement.
INTERESTS OF SPONSOR, ISSUE MANAGER AND PLACEMENT AGENT
In the reasonable opinion of our Directors, the Sponsor, Issue Manager and Placement Agent do not
have a material relationship with our Company save that HLF is the Sponsor, Issue Manager and the
Placement Agent for the Placement. Please refer to the Management and Placement Arrangements
section of this Offer Document for further details on our management and placement arrangements.

112
CLEARANCE AND SETTLEMENT
Upon listing and quotation on Catalist, our Shares will be traded under the book-entry settlement
system of the CDP, and all dealings in and transactions of our Shares through Catalist will be effected
in accordance with the terms and conditions for the operation of Securities Accounts with the CDP, as
amended from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf
of persons who maintain, either directly or through Depository Agents, Securities Accounts with CDP.
Persons named as direct Securities Account holders and Depository Agents in the Depository Register
maintained by the CDP, rather than CDP itself, will be treated, under our Articles of Association and
the Companies Act, as members of our Company in respect of the number of Shares credited to their
respective Securities Accounts.
Persons holding the Shares in Securities Accounts with CDP may withdraw the number of Shares
they own from the book-entry settlement system in the form of physical share certicates. Such share
certicates will, however, not be valid for delivery pursuant to trades transacted on Catalist, although they
will be prima facie evidence of title and may be transferred in accordance with our Articles of Association.
A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal
of more than 1,000 Shares is payable upon withdrawing our Shares from the book entry settlement
system and obtaining physical share certicates. 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 certicate 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 certicates who wish to trade on Catalist
must deposit with CDP their share certicates together with the duly executed and stamped instruments
of transfer in favour of CDP, and have their respective Securities Accounts credited with the number of
Shares deposited before they can effect the desired trades. A fee of S$10.00 is payable upon the deposit
of each instrument of transfer with CDP. The above fees may be subject to such charges as may be in
accordance with CDPs prevailing policies or the current tax policies that may be in force in Singapore
from time to time.
Transactions in our Shares under the book-entry settlement system will be reected by the sellers
Securities Account being debited with the number of Shares sold and the buyers Securities Account
being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for our
Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on Catalist is payable at the rate of 0.04% of the
transaction value subject to a maximum of S$600.00 per transaction. The clearing fee, instrument of
transfer deposit fee and share withdrawal fee may be subject to Singapore GST at the prevailing rate of
7% (or such other rate prevailing from time to time).
Dealing in our Shares will be carried out in Singapore dollars and will be effected for settlement on CDP
on a scripless basis. Settlement of trades on a normal ready basis on Catalist generally takes place on
the third Market Day following the transaction date, and payment for the securities is generally settled
on the following business day. CDP holds securities on behalf of investors in Securities Accounts. An
investor may open a direct account with CDP or a sub-account with a CDP Depository Agent. The CDP
Depository Agent may be a member company of the SGX-ST, bank, merchant bank or trust company.
113
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1. Save as disclosed below, none of our Directors, Executive Ofcers or Controlling Shareholder is or
was involved in any of the following events:-
(a) had at any time during the last 10 years, an application or a petition under any bankruptcy
laws of any jurisdiction led against him or against a partnership of which he was a partner
at the time when he was a partner or at any time within two years from the date he ceased
to be a partner;
(b) had at any time during the last 10 years, an application or a petition under any law of any
jurisdiction led 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 unsatised judgment against him;
(d) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or
dishonesty, which is punishable with imprisonment, or has been the subject of any criminal
proceedings (including any pending criminal proceedings of which he is aware) for such
purpose;
(e) has 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) at any time during the last 10 years, had judgment entered against him in any civil
proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere, or
a nding 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 disqualied from acting as a director or an equivalent person of any entity
(including the trustee of a business trust), or from taking part directly or indirectly in the
management of any entity or business trust;
(i) has been the subject of any order, judgment or ruling of any court, tribunal or governmental
body permanently or temporarily enjoining him from engaging in any type of business
practice or activity;
(j) has ever, to his knowledge, been concerned with the management or conduct, in Singapore
or elsewhere, of the 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;
114
GENERAL AND STATUTORY INFORMATION
(iii) any business trust which has been investigated for a breach of any law or regulatory
requirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned with the entity or business trust; or
(k) has been the subject of any current or past investigation or disciplinary proceedings, or has
been reprimanded or issued any warning, by the Authority or any other regulatory authority,
exchange, professional body or governmental agency, whether in Singapore or elsewhere.
Disclosure pertaining to Ho DOrville Raymond
Ho DOrville Raymond was a director of Broadband Network Systems Limited (BNSL), a Hong
Kong incorporated company, from 18 September 2010 to 17 February 2011. BNSL is a wholly-
owned subsidiary of Innio Group Limited (Innio). An amended winding up petition was led by
certain former employees of BNSL on 1 June 2011 in the High Court of Hong Kong in respect of a
claim for unpaid salaries and bonuses. Innio, in view of the above, had on 7 June 2011 applied to
the High Court of Hong Kong for an order to join as supporting creditor in the winding up petition
against BNSL in respect of various loans extended to BNSL by the Company amounting to an
aggregate of S$4,824,694.51. On 8 June 2011, a winding up order was made by the High Court of
Hong Kong in respect of BNSL.
Disclosure pertaining to Bernard Neoh Teck Wei
In February 2004, a bankruptcy order was obtained by DBS Bank Ltd. against Bernard Neoh Teck
Wei for a debt of approximately S$13,788. Bernard Neoh Teck Wei was unrepresented at the court
hearing. The outstanding debt owing to DBS Bank Ltd. was subsequently settled by Bernard Neoh
Teck Wei, and the bankruptcy order against him was annulled by the Ofcial Assignee in October
2005.
CHANGES IN SHARE CAPITAL
2. Save as disclosed below, there were no changes in the issued and paid-up capital of our Company
and subsidiary within the three years preceding the date of lodgement of this Offer Document:-
Our Company
Date of Issue
Number
of Shares
Issued Purpose
Consideration
Per Share
Resultant
Issued Share
Capital
31 December 2013 100 Incorporation S$1.00 S$100
26 May 2014 100 Restructuring
Exercise
S$35,000 S$3,500,100
3. Save as disclosed above and in the Restructuring Exercise section of this Offer Document, no
shares in our Company or subsidiary have been issued for a consideration other than cash during
the three years preceding the date of lodgement of this Offer Document.
115
GENERAL AND STATUTORY INFORMATION
MATERIAL CONTRACT
4. The following contract, not being a contract entered into in the ordinary course of business, has
been entered into by our Company and our subsidiary within the two years preceding the date of
lodgement of this Offer Document and is or may be material:-
(a) Restructuring agreement dated 16 May 2014 entered into between our Company, Lui Oi
Kheng, Rena Ho, Nellie Ho and Lee Lay Choo as described in the Restructuring Exercise
section of this Offer Document.
LITIGATION
5. At the Latest Practicable Date, neither our Company nor our subsidiary is engaged in any legal or
arbitration proceedings, including those which are pending or known to be contemplated, which
may have or have had during the last 12 months before the date of this Offer Document, a material
effect on our Groups nancial position or protability.

MISCELLANEOUS
6. Save as disclosed in Appendix A of this Offer Document, our Directors are not aware of any event
which has occurred since 31 December 2013, which may have a material effect on the nancial
information provided in the Audited Combined Financial Statements set out in Appendix A of this
Offer Document.
7. We currently have no intention of changing the auditors of our Company and our subsidiary after
the admission of our Company to Catalist.
CONSENTS
8. Nexia TS Public Accounting Corporation, the Independent and Reporting Auditors, has given and
has not withdrawn its written consent to the issue of this Offer Document with the inclusion herein
of the Audited Combined Financial Statements in the form and context in which it is included and
its name and references thereto in the form and context in which it appears in this Offer Document
and to act in such capacity in relation to this Offer Document.
9. HLF, the Sponsor, Issue Manager and Placement Agent, has given and has not withdrawn
its written consent to the issue of this Offer Document with the inclusion herein of its name and
references thereto in the form and context in which it appears in this Offer Document and to act in
such capacity as in relation to this Offer Document.
10. Opal Lawyers LLC, the Solicitors to the Placement, has given and has not withdrawn its written
consent to the issue of this Offer Document with the inclusion herein of its name and references
thereto in the form and context in which it appears in this Offer Document and to act in such
capacity in relation to this Offer Document.
11. Unless otherwise expressly stated herein, each of the Solicitors to the Placement, the Share
Registrar and Share Transfer Ofce, the Principal Banker and the Receiving Banker does not make
or purport to make any statement in this Offer Document or any statement upon which a statement
in this Offer Document is based and each of them makes no representation regarding any
statement in this Offer Document and to the maximum extent permitted by law, expressly disclaim
and takes no responsibility for any liability to any person which is based on, or arises out of, any
statement, information or opinions in, or omission from, this Offer Document.
116
GENERAL AND STATUTORY INFORMATION
DOCUMENTS AVAILABLE FOR INSPECTION
12. Copies of the following documents may be inspected at the registered address of our Company
during normal business hours for a period of six months from the date of registration by the SGX-
ST acting as agent on behalf of the Authority, of this Offer Document:-
(a) the Memorandum and Articles of Association of our Company;
(b) the Audited Combined Financial Statements set out in Appendix A of this Offer Document;
(c) the audited nancial statements of SMJ Furnishings for FY2011, FY2012 and FY2013;
(d) the material contract referred to in paragraph 4 above;
(e) the letters of consent referred to in paragraphs 8 to 10 above; and
(f) the Service Agreements.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS AND THE VENDORS
13. This Offer Document has been seen and approved by our Directors and the Vendors and they
collectively and individually accept full responsibility for the accuracy of the information given in
this Offer Document and conrm after making all reasonable enquiries, that to the best of their
knowledge and belief, this Offer Document constitutes full and true disclosure of all material facts
about the Placement, our Company and its subsidiary, and our Directors and the Vendors are
not aware of any facts the omission of which would make any statement in this Offer Document
misleading. Where information in this Offer Document has been extracted from published or
otherwise publicly available sources or obtained from a named source, the sole responsibility of
our Directors and the Vendors has been to ensure that such information has been accurately and
correctly extracted from those sources and/or reproduced in this Offer Document in its proper form
and context.
A-1
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Statement by Directors
For the Financial Years Ended 31 December 2011, 2012 and 2013
In the opinion of the directors,
(i) the combined nancial statements set out on pages A-4 to A-39 are drawn up so as to give a true
and fair view of the state of affairs of the Group as at 31 December 2011, 2012 and 2013, and of
the results, changes in equity and cash ows of the Group for the nancial years then ended, and
(ii) at the date of this statement, there are reasonable grounds to believe that the Company will be
able to pay its debts as and when they fall due.
On behalf of the directors
Ho Pei Yuen, Rena
Director
Ho Wan Jing, Nellie
Director
Singapore
20 June 2014
A-2
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
INDEPENDENT AND REPORTING AUDITORS REPORT ON THE COMBINED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
20 June 2014
The Board of Directors
SMJ International Holdings Ltd.
31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Dear Sirs
Report on the Combined Financial Statements
We have audited the accompanying combined nancial statements of SMJ International Holdings
Ltd. (the Company) and its subsidiary (collectively, the Group) set out on pages A-4 to A-39, which
comprise the combined balance sheets of the Group as at 31 December 2011, 2012 and 2013, and
the combined statements of comprehensive income, combined statements of changes in equity and
combined statements of cash ows for the nancial years ended 31 December 2011, 2012 and 2013, and
a summary of signicant accounting policies and other explanatory information.
Managements Responsibility for the Combined Financial Statements
Management is responsible for the preparation of combined nancial statements that give a true and fair
view in accordance with the provisions of the Singapore Financial Reporting Standards, and for devising
and maintaining a system of internal accounting controls sufcient to provide a reasonable assurance
that assets are safeguarded against loss from unauthorised use or disposition; and transactions are
properly authorised and that they are recorded as necessary to permit the preparation of true and fair
prot and loss accounts and balance sheets and to maintain accountability of assets.

Auditors Responsibility
Our responsibility is to express an opinion on these combined nancial statements based on our audit.
We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the combined nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the combined nancial statements. The procedures selected depend on the auditors judgement, including
the assessment of the risks of material misstatement of the combined nancial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entitys preparation of nancial statements that give a true and fair view in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as well
as evaluating the overall presentation of the combined nancial statements.
A-3
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
INDEPENDENT AND REPORTING AUDITORS REPORT ON THE COMBINED FINANCIAL
STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
(continued)

Auditors Responsibility (continued)
We believe that the audit evidence we have obtained is sufcient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the combined nancial statements of the Group are properly drawn up in accordance with
the Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of
the Group as at 31 December 2011, 2012 and 2013, and of the results, changes in equity and cash ows
of the Group for each of the nancial years ended on 31 December 2011, 2012 and 2013.
Restriction on Distribution and Use
This report has been prepared solely for inclusion in the Offer Document of the Company in connection
with the proposed initial public offering of ordinary shares in the Capital of the Company on Catalist, the
sponsor-supervised listing platform of the Singapore Exchange Securities Trading Limited (SGX-ST).
Nexia TS Public Accounting Corporation
Public Accountants and Chartered Accountants
Director-in-charge: Philip Tan Jing Choon
Singapore
20 June 2014
A-4
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Combined Statements of Comprehensive Income
For the Financial Years Ended 31 December 2011, 2012 and 2013
Note 2011 2012 2013
$000 $000 $000
Revenue 4 24,088 23,614 22,026
Other income/ (losses) net 5 1 164 (11)
Changes in inventories (478) (629) (111)
Expenses
- Purchases of inventories (14,009) (13,873) (12,625)
- Depreciation 15 (73) (58) (52)
- Employee compensation 6 (2,236) (2,379) (2,259)
- Finance 7 (35) (31) (57)
- Freight and transportation (1,342) (1,308) (670)
- Installation (958) (804) (798)
- Other 8 (1,836) (1,890) (2,217)
Total expenses (20,967) (20,972) (18,789)
Prot before income tax 3,122 2,806 3,226
Income tax expense 9 (467) (411) (494)
Total comprehensive income, representing net prot 2,655 2,395 2,732
Total comprehensive income attributable to:
Equity holders of the Company 2,655 2,395 2,732
Earnings per share for prot attributable to equity
holders of the Company (cents per share)
Basic and diluted 10 0.76 0.68 0.78
The accompanying notes form an integral part of these combined nancial statements.
A-5
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Combined Balance Sheets
As at 31 December 2011, 2012 and 2013
Note 2011 2012 2013
$000 $000 $000
ASSETS
Current assets
Cash and cash equivalents 11 4,474 4,891 5,475
Trade and other receivables 12 5,609 5,615 5,960
Inventories 13 5,775 5,145 5,035
15,858 15,651 16,470
Non-current assets
Investment property 14 728 1,047 1,047
Property, plant and equipment 15 128 78 32
856 1,125 1,079
Total assets 16,714 16,776 17,549
LIABILITIES
Current liabilities
Trade and other payables 16 3,024 2,395 2,193
Current income tax liabilities 507 456 654
Borrowings 17 1,557 435 2,480
5,088 3,286 5,327
Non-current liabilities
Deferred income tax liabilities 18 15 9 9
Total liabilities 5,103 3,295 5,336
NET ASSETS 11,611 13,481 12,213
EQUITY
Capital and reserves attributable to equity holders of
the Company
Share capital 19 3,500 3,500 3,500
Retained prots 8,111 9,981 8,713
Total equity 11,611 13,481 12,213
The accompanying notes form an integral part of these combined nancial statements.
A-6
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Combined Statements of Changes in Equity
For the Financial Years Ended 31 December 2011, 2012 and 2013
Attributable to equity holders
of the Company
Note Share capital
Retained
prots
(1)
Total equity
$000 $000 $000
2011
Beginning of nancial year 3,500 5,981 9,481
Dividend relating to 2010 paid 20 (525) (525)
Total comprehensive income for the year 2,655 2,655
End of nancial year 3,500 8,111 11,611
2012
Beginning of nancial year 3,500 8,111 11,611
Dividend relating to 2011 paid 20 (525) (525)
Total comprehensive income for the year 2,395 2,395
End of nancial year 3,500 9,981 13,481
2013
Beginning of nancial year 3,500 9,981 13,481
Dividend relating to 2012 paid 20 (1,000) (1,000)
Interim dividend relating to 2013 20 (3,000) (3,000)
Total comprehensive income for the year 2,732 2,732
End of nancial year 3,500 8,713 12,213
(1) The retained prots of the Group are distributable.
The accompanying notes form an integral part of these combined nancial statements.
A-7
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Combined Statements of Changes in Equity
For the Financial Years Ended 31 December 2011, 2012 and 2013
2011 2012 2013
Note $000 $000 $000
Cash ows from operating activities
Net prot 2,655 2,395 2,732
Adjustments for:
- Income tax expense 9 467 411 494
- Depreciation 15 73 58 52
- Interest expense 7 35 31 57
3,230 2,895 3,335
Change in working capital:
- Inventories 478 630 110
- Trade and other receivables 96 (6) (761)
- Trade and other payables (772) (629) (202)
Cash generated from operations 3,032 2,890 2,482
Income tax paid (438) (468) (296)
Net cash provided by operating activities 2,594 2,422 2,186
Cash ows from investing activities
Additions to property, plant and equipment 15 (56) (8) (6)
Additions to investment property 14 (728) (319) -
Net cash used in investing activities (784) (327) (6)
Cash ows from nancing activities
Proceeds from borrowings 11,074 8,513 9,479
Repayment of borrowings (10,114) (9,635) (7,434)
Interest (35) (31) (57)
Dividends paid to equity holders of the Company 20 (525) (525) (3,584)
Net cash provided by/ (used in) nancing activities 400 (1,678) (1,596)
Net increase in cash and cash equivalents 2,210 417 584
Cash and cash equivalents
Beginning of nancial year 2,264 4,474 4,891
End of nancial year 11 4,474 4,891 5,475
The accompanying notes form an integral part of these combined nancial statements
A-8
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
These notes form an integral part and should be read in conjunction with the accompanying combined
nancial statements.
1 Corporate information
1.1 The Company
The Company is incorporated in Singapore on 31 December 2013 as a private company limited by
shares, under the name of SMJ International Holdings Pte Ltd., to act as the holding corporation
of the Group. At incorporation, the Companys issued and paid-up share capital was $100,
comprising 100 ordinary shares. The Company was incorporated for the purpose of acquiring the
existing companies of the Group pursuant to the Group Restructuring Exercise (Note 1.2).
The Company was converted into a public limited company and the name was changed to SMJ
International Holdings Ltd. on 28 May 2014. The combined nancial statements are presented
in Singapore Dollar and all values are rounded to the nearest thousand ($000) except otherwise
indicated.
The combined nancial statements of SMJ International Holdings Ltd. (the Company) and its
subsidiary (collectively, the Group) have been prepared for the purpose of inclusion in lings
associated with the proposed initial public offering of ordinary shares in the Capital of the Company
on Catalist, the sponsor-supervised listing platform of the Singapore Exchange Securities Trading
Limited (SGX-ST).
The address of its registered and principal place of business is located at 31 Jurong Port Road
#02-20 Jurong Logistics Hub Singapore 619115.
The principal activity of the Company is investment holding. The principal activities of the
subsidiaries are described below.
The Group after restructuring comprises the Company and the following subsidiaries:
Name of companies Principal activities
Country
of Business/
incorporation
Equity holding
2011 2012 2013
% % %
SMJ Furnishings (S) Pte Ltd
(SMJ Furnishings)
General wholesale trade of carpets
and furnishings material
Singapore 100 100 100

(a) Sale of shares in SMJ Furnishings by Lui Oi Kheng to Lee Lay Choo
In 20 February 2014, our Controlling Shareholder, Lui Oi Kheng entered into a share sale
agreement with our Executive Director and COO, Lee Lay Choo relating to the sale of
350,000 ordinary shares in the share capital of SMJ Furnishings by Lui Oi Kheng to Lee Lay
Choo at a sale price of $888,000. The sale price was determined based on the willing buyer
and willing seller basis.
A-9
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
1 Corporate information (continued)
1.1 The Company (continued)
(a) Sale of shares in SMJ Furnishings by Lui Oi Kheng to Lee Lay Choo (continued)
Following the completion of such share sale which took place on 20 February 2014, the
shareholders of SMJ Furnishings were as follows:-

Name of shareholder Number of shares Shareholding (%)
Lui Oi Kheng 1,750,000 50.0
Rena Ho 700,000 20.0
Nellie Ho 700,000 20.0
Lee Lay Choo 350,000 10.0
3,500,000 100.0
1.2 Restructuring exercise
The Group was formed through the following exercise (the Restructuring Exercise) which involved
acquisitions and rationalisation of the corporate and shareholding structure for the purposes of the
Invitation. Pursuant to the Restructuring Exercise, the Company became the holding company of
the Group. The Restructuring Exercise involved the following steps:
(a) Incorporation of the Company
The Company was incorporated in Singapore on 31 December 2013 under the Companies
Act as a private company limited by shares with an issued and paid-up share capital of $100
comprising 100 ordinary shares held by Lui Oi Kheng (55 shares), Rena Ho (20 shares),
Nellie Ho (20 shares) and Tay Twan Lee (5 shares) respectively (collectively known as the
Subscriber Shares).
(b) Share swaps between the original shareholders of the subsidiary for the shares in the
Company to acquire SMJ Furnishings
Pursuant to a restructuring agreement dated 16 May 2014 (the Restructuring Agreement)
entered into between our Company and the existing shareholders of SMJ Furnishings,
namely Lui Oi Kheng (50%), Rena Ho (20%), Nellie Ho (20%) and Lee Lay Choo (10%),
the Company acquired the entire issued and paid-up share capital of SMJ Furnishings for
an aggregate consideration of $3,500,000, which was determined based on the amount of
issued and paid-up share capital of SMJ Furnishings as at 16 May 2014. The consideration
was satised by the allotment and issuance of 100 new Shares (before the subdivision)
credited as fully paid, by the Company to the existing shareholder of SMJ Furnishings as
follows:-
Name of shareholder Number of shares Consideration ($)
Lui Oi Kheng 50 1,750,000
Rena Ho 20 700,000
Nellie Ho 20 700,000
Lee Lay Choo 10 350,000
100 3,500,000
A-10
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
1 Corporate information (continued)
1.2 Restructuring exercise (continued)
(b) Share swaps between the original shareholders of the subsidiary for the shares in the
Company to acquire SMJ Furnishings (continued)
Upon the completion of the Restructuring Agreement, SMJ Furnishings became a wholly-
owned subsidiary of the Company.
The resultant shareholding in the Company (after taking into account the Subscriber Shares
held by Lui Oi Kheng, Rena Ho, Nellie Ho and Tay Twan Lee respectively) before the
subdivision was as follows:-

Name of shareholder Number of shares Shareholding (%)
Lui Oi Kheng 105 52.5
Rena Ho 40 20.0
Nellie Ho 40 20.0
Lee Lay Choo 10 5.0
Tay Twan Lee 5 2.5
200 100.0
(c) Subdivision of shares
On 2 June 2014, each share in the issued and paid-up share capital of the Company was
subdivided into 320,000 shares. Upon completion of the Subdivision, the Companys issued
and paid-up capital comprised of 64,000,000 shares.

The Restructuring Exercise as described in Note 1.2 (b) involved companies which are under
common control since all the entities took part in the Restructuring Exercise were controlled by the
same control party before and immediately after the Restructuring Exercise. Lui Oi Kheng, Rena
Ho and Nellie Ho holds 90% equity interest in SMJ Furnishings and 92.5% equity interest in the
Company, hence are regarded as the controlling parties of SMJ Furnishings and of the Company.
The combined nancial statements for the nancial years ended 31 December 2011, 2012 and
2013 (the Relevant Periods) have been prepared based on the pooling-of-interest method as if
the current group structure had been in existence prior to the Restructuring Exercise.
2 Summary of signicant accounting policies
2.1 Basis of preparation
These combined nancial statements have been prepared in accordance with Singapore Financial
Reporting Standards (FRS) under the historical cost convention, except as disclosed in the
accounting policies below.

The preparation of combined nancial statements in conformity with FRS requires management to
exercise its judgement in the process of applying the Groups accounting policies. It also requires
the use of certain critical accounting estimates and assumptions. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are signicant to
the combined nancial statements are disclosed in Note 3.
A-11
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.1 Basis of preparation (continued)
Interpretations and amendments to published standards effective in 2011, 2012 and 2013
On 1 January 2011, the Group adopted the new or amended FRS and Interpretations to FRS (INT
FRS) that are mandatory for application for the nancial years ended 31 December 2011, 2012
and 2013. Changes to the Groups accounting policies have been made as required, in accordance
with the transitional provisions in the respective FRS and INT FRS.
The adoption of these FRS and INT FRS did not result in substantial changes to the Groups
accounting policies and had no material effect on the amounts reported for the nancial years
ended 31 December 2011, 2012 and 2013 or prior nancial years except for the following:
FRS 113 Fair Value Measurement
FRS 113 aims to improve consistency and reduce complexity by providing a precise denition
of fair value and a single source of fair value measurement and disclosure requirements for
use across FRSs. The requirements do not extend the use of fair value accounting but provide
guidance on how it should be applied where its use is already required or permitted by other
standards within FRSs.
The adoption of FRS 113 does not have any material impact on the accounting policies of the
Group. The Group has incorporated the additional disclosures required by FRS 113 into the
nancial statements.
2.2 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods
and rendering of services in the ordinary course of the Groups activities. Revenue is presented,
net of goods and services tax, rebates and discounts, and after eliminating sales within the Group.
The Group assesses its roles as an agent or principal for each transaction and in an agency
arrangement the amounts collected on behalf of the principal are excluded from revenue. The
Group recognises revenue when the amount of revenue and related cost can be reliably measured,
it is probable that the collectability of the related receivables is reasonably assured and when the
specic criteria for each of the Groups activities are met as follows:
(a) Distribution sales
Distribution sales refer to wholesale of carpets to dealers, carpet importers and carpet
installation companies. Revenue from sale of carpets is recognised upon the transfer
of signicant risks and rewards of ownership of the goods to the customer, and generally
coincides with their delivery and acceptance by customers.

(b) Contract sales
Contract sales refer to supply, deliver of carpets which include the project management
work, by handling the installation of these carpets on site for its customers. Revenue is
recognised upon service rendered.
A-12
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.3 Government grants
Grants from the government are recognised as receivables at their fair value when there is
reasonable assurance that the grant will be received and the Group will comply with all the
attached conditions.
Government grants receivable are recognised as income over the periods necessary to match
them with the related costs which they are intended to compensate, on a systematic basis.
Government grants relating to expenses are shown separately as other income.
Government grants relating to assets are deducted against the carrying amount of the assets.
2.4 Group accounting
(a) Subsidiaries
(i) Consolidation
Subsidiaries are entities (including special purpose entities) over which the Group has
power to govern the nancial and operating policies so as to obtain benets from its
activities, generally accompanied by a shareholding giving rise to a majority of the
voting rights. The existence and effect of potential voting rights that are currently
exercisable or convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are consolidated from the date on which control
is transferred to the Group. They are de-consolidated from the date on which control
ceases.
In preparing the combined nancial statements, transactions, balances and unrealised
gains on transactions between group entities are eliminated. Unrealised losses are
also eliminated but are considered an impairment indicator of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Non-controlling interests are that part of the net results of operations and of net assets
of a subsidiary attributable to the interests which are not owned directly or indirectly
by the equity holders of the company. They are shown separately in the combined
statement of comprehensive income, statement of changes in equity and balance
sheet. Total comprehensive income is attributed to the non-controlling interests based
on their respective interests in a subsidiary, even if this results in the non-controlling
interests having a decit balance.

(ii) Acquisition
The acquisition method of accounting is used to account for the acquisition of
subsidiaries, other than those entities which are under common control.

The consideration transferred for the acquisition of a subsidiary or business comprises
the fair value of the assets transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred also includes the fair value of any
contingent consideration arrangement and the fair value of any pre-existing equity
interest in the subsidiary.

A-13
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.4 Group accounting (continued)
(a) Subsidiaries (continued)
(ii) Acquisition (continued)
If the business combination is achieved in stages, the acquisition date carrying value
of the acquirers previously held equity interest in the acquiree is remeasured to fair
value at the acquisition date; any gains or losses arising from such re-measurement
are recongnised in prot or loss.
Acquisition-related costs are expensed as incurred.
Identiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are, with limited exceptions, measured initially at their fair values
at the acquisition date.
On an acquisition-by-acquisition basis, the Group recognises any non-controlling
interest in the acquiree at the date of acquisition either at fair value or at the non-
controlling interests proportionate share of the acquirees net identiable assets.
The excess of (a) the consideration transferred, the amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of any previously-held
equity interest in the acquiree over the (b) fair values of the net identiable assets
acquired net of the fair values of the liabilities and any contingent liabilities assumed,
is recorded as goodwill.
Acquisitions of entities under common control have been accounted for using the
pooling-of-interest method. Under this method:
The combined nancial statements of the Group have been prepared as if the
Group structure immediately after the transaction has been in existence since
the earliest date the entities are under common control;
The assets and liabilities are brought into the combined nancial statements at
their existing carrying amounts from the perspective of the controlling party;
The combined statement of comprehensive income includes the results of the
acquired entities since the earliest date the entities are under common control;
The cost of investment is recorded at the aggregate of the nominal value of
the equity shares issued, cash and cash equivalents and fair values of other
consideration; and
On consolidation, the difference between the cost of investment and the
nominal value of the share capital of the merged subsidiary is taken to merger
reserve.
A-14
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.4 Group accounting (continued)
(a) Subsidiaries (continued)
(iii) Disposals
When a change in the Groups ownership interest in a subsidiary results in a loss of
control over the subsidiary, the assets and liabilities of the subsidiary including any
goodwill are derecognised. Amounts previously recognised in other comprehensive
income in respect of that entity are also reclassied to prot or loss or transferred
directly to retained prots if required by a specic Standard.
Any retained equity interest in the entity is remeasured at fair value. The difference
between the carrying amount of the retained interest at the date when control is lost
and its fair value is recognised in prot or loss.
(b) Transactions with non-controlling interests
Changes in the Groups ownership interest in a subsidiary that do not result in a loss of
control over the subsidiary are accounted for as transactions with equity owners of the
Company. Any difference between the change in the carrying amounts of the non-controlling
interest and the fair value of the consideration paid or received is recognised within equity
attributable to the equity holders of the Company.
2.5 Property, plant and equipment
(a) Measurement
(i) Property, plant and equipment
All items of property, plant and equipment are initially recognised at cost and
subsequently carried at cost less accumulated depreciation and accumulated
impairment losses.
(ii) Components of costs
The cost of an item of property, plant and equipment initially recognised includes
its purchase price and any cost that is directly attributable to bringing the asset to
the location and condition necessary for it to be capable of operating in the manner
intended by management.
(b) Depreciation
Depreciation on property, plant and equipment is calculated using the straight-line method to
allocate their depreciable amounts over their estimated useful lives as follows:
Useful lives
Computers 3 years
Furniture and ttings 10 years
Motor vehicles 5 years
Ofce equipment 10 years
A-15
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.5 Property, plant and equipment (continued)
(b) Depreciation (continued)
The residual values, estimated useful lives and depreciation method of property, plant and
equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The
effects of any revision are recognised in prot or loss when the changes arise.
Fully depreciated property, plant and equipment still in use are retained in the combined
nancial statements.
(c) Subsequent expenditure
Subsequent expenditure relating to property, plant and equipment that has already been
recognised is added to the carrying amount of the asset only when it is probable that future
economic benets associated with the item will ow to the entity and the cost of the item can
be measured reliably. All other repair and maintenance expenses are recognised in prot or
loss when incurred.
(d) Disposal
On disposal of an item of property, plant and equipment, the difference between the disposal
proceeds and its carrying amount is recognised in prot or loss within Other income/
(losses) net.
2.6 Borrowings costs
Borrowing costs are recognised in prot or loss using the effective interest method.
2.7 Investment properties
Investment properties include those residential buildings that are held for long-term rental yields
and/or for capital appreciation. Investment properties include properties that are being constructed
or developed for future use as investment properties.
Land and buildings are initially recognised at cost. Freehold land is subsequently carried at cost
less accumulated impairment losses. Buildings are subsequently carried at cost less accumulated
depreciation and accumulated impairment loss. Depreciation of buildings is calculated using the
straight-line method to allocate the depreciable amounts of the buildings over the estimated useful
lives of 50 years. The residual values, estimated useful lives and depreciation method of buildings
are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision
are recognised in prot or loss when the changes arise.
The cost of major renovations and improvements is capitalised and the carrying amounts of the
replaced components are recognised in prot or loss. The cost of maintenance, repairs and minor
improvements is recognised in prot or loss when incurred.
On disposal of an investment property, the difference between the disposal proceeds and the
carrying amount is recognised in prot or loss.


A-16
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.8 Impairment of non-nancial assets
(a) Property, plant and equipment
Investment properties
Property, plant and equipment and investment properties are tested for impairment whenever
there is any objective evidence or indication that these assets may be impaired.

For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair
value less cost to sell and the value-in-use) is determined on an individual asset basis
unless the asset does not generate cash inows that are largely independent of those
from other assets. If this is the case, the recoverable amount is determined for the cash-
generating units (CGU) to which the asset belongs.
If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying
amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
The difference between the carrying amount and recoverable amount is recognised as an
impairment loss in prot or loss, unless the asset is carried at revalued amount, in which
case, such impairment loss is treated as a revaluation decrease.
An impairment loss for an asset is reversed only if, there has been a change in the
estimates used to determine the assets recoverable amount since the last impairment loss
was recognised. The carrying amount of this asset is increased to its revised recoverable
amount, provided that this amount does not exceed the carrying amount that would have
been determined (net of any accumulated amortisation or depreciation) had no impairment
loss been recognised for the asset in prior years.
A reversal of impairment loss for an asset is recognised in prot or loss, unless the asset is
carried at revalued amount, in which case, such reversal is treated as a revaluation increase.
However, to the extent that an impairment loss on the same revalued asset was previously
recognised as an expense, a reversal of that impairment is also recognised in prot or loss.
2.9 Financial assets
(a) Classication
The Group classies its nancial assets as loans and receivables. The classication depends
on the nature of the asset and the purpose for which the assets were acquired. Management
determines the classication of its nancial assets at initial recognition.
(i) Loans and receivables
Loans and receivables are non-derivative nancial assets with xed or determinable
payments that are not quoted in an active market. They are presented as current
assets, except for those that are expected to be realised later than 12 months after the
balance sheet date which are presented as non-current assets. Loans and receivables
are presented as Trade and other receivables (Note 12) and Cash and cash
equivalents (Note 11) on the combined balance sheets.
A-17
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.9 Financial assets (continued)
(b) Recognition and derecognition
Regular way purchases and sales of nancial assets are recognised on trade date the date
on which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash ows from the nancial
assets have expired or have been transferred and the Group has transferred substantially
all risks and rewards of ownership. On disposal of a nancial asset, the difference between
the carrying amount and the sale proceeds is recognised in prot or loss. Any amount
recognised other comprehensive income relating to that asset is reclassied to prot or loss.
(c) Initial measurement
Financial assets are initially recognised at fair value plus transaction costs.
(d) Subsequent measurement
Loans and receivables are subsequently carried at amortised cost using the effective interest
method.
(e) Impairment
The Group assesses at each balance sheet date whether there is objective evidence that
a nancial asset or a group of nancial assets is impaired and recognises an allowance for
impairment when such evidence exists.
(i) Loans and receivables
Signicant nancial difculties of the debtor, probability that the debtor will enter
bankruptcy and default or signicant delay in payments are objective evidence that
these nancial assets are impaired.
The carrying amount of these assets is reduced through the use of an impairment
allowance account which is calculated as the difference between the carrying amount
and the present value of estimated future cash ows, discounted at the original
effective interest rate. When the asset becomes uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously written off are
recognised against the same line item in prot or loss.
The impairment allowance is reduced through prot or loss in a subsequent period
when the amount of impairment loss decreases and the related decrease can be
objectively measured. The carrying amount of the asset previously impaired is
increased to the extent that the new carrying amount does not exceed the amortised
cost had no impairment been recognised in prior periods.
(f) Offsetting nancial instruments
Financial assets and liabilities are offset and the net amount reported in the combined
balance sheets when there is a legally enforceable right to offset and there is an intention to
settle on a net basis or realise the asset and settle the liabilities simultaneously.
A-18
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.10 Borrowings
Borrowings are presented as current liabilities unless the Group has an unconditional right to defer
settlement for at least 12 months after the balance sheet date, in which case they are presented as
non-current liabilities.
Borrowings are initially recognised at fair value (net of transaction costs) and subsequently
carried at amortised cost. Any difference between the proceeds (net of transaction costs) and
the redemption value is recognised in prot and loss over the period of the borrowings using the
effective interest method.
2.11 Trade and other payables
Trade and other payables represent liabilities for goods and services provided to the Group prior to
the end of the nancial year which are unpaid. They are classied as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). Otherwise,
they are presented as non-current liabilities.
Trade and other payables are initially recognised at fair value, and subsequently carried at
amortised cost using the effective interest method.
2.12 Fair value estimation of nancial assets and liabilities
The carrying amounts of current financial assets and liabilities carried at amortised cost
approximate their fair values.
2.13 Leases
When the Group is the lessee
The Group leases ofce, warehouse spaces and workers accommodation under operating leases
from non-related parties.
Lessee Operating lease
Leases where substantially all risks and rewards incidental to ownership are retained by the
lessors are classied as operating leases. Payments made under operating leases (net of any
incentives received from the lessors) are recognised in prot or loss on a straight-line basis over
the period of the lease.
Contingent rents are recognised as an expense in prot or loss when incurred.
2.14 Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is determined using the
weighted average method. The cost of inventories comprises the purchase price and other direct
costs directly attributable to the acquisition of nished goods carpets but excludes borrowing
costs. Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated cost of completion and applicable variable selling expenses.
A-19
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.15 Income taxes
Current income tax for current and prior periods is recognised at the amount expected to be paid
to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date.
Deferred income tax is recognised for all temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the combined nancial statements except when
the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and affects neither accounting nor taxable prot or
loss at the time of the transaction.
A deferred income tax liability is recognised on temporary differences arising on investments in
subsidiaries, except where the Group is able to control the timing of the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
A deferred income tax asset is recognised to the extent that it is probable that future taxable prot
will be available against which the deductible temporary differences and tax losses can be utilised.
Deferred income tax is measured:
(i) at the tax rates that are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the balance sheet date; and
(ii) based on the tax consequence that will follow from the manner in which the Group
expects, at the balance sheet date, to recover or settle the carrying amounts of its assets
and liabilities except for investment property that is measured using the fair value model.
Investment property measured at fair value is presumed to be recovered entirely through
sale.
Current and deferred income taxes are recognised as income and expense in prot or loss, except
to the extent that the tax arises from a business combination or a transaction which is recognised
directly in equity. Deferred tax arising from a business combination is adjusted against goodwill on
acquisition.
2.16 Provisions
Provisions for other liabilities and charges are recognised when the Group has a present legal
or constructive obligation as a result of past events, it is more likely than not that an outow of
resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of the expenditure expected to be required to settle
the obligation using a pre-tax discount rate that reects the current market assessment of the time
value of money and the risks specic to the obligation. The increase in the provision due to the
passage of time is recognised in prot or loss as nance expense.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in
prot or loss when the changes arise.

A-20
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.17 Employee compensation
Employee benets are recognised as an expense, unless the cost qualies to be capitalised as an
asset.
Dened contribution plans
Dened contribution plans are post-employment benet plans under which the Group pays xed
contributions into separate entities such as the Employees Provident Fund on a mandatory,
contractual or voluntary basis. The Group has no further payment obligations once the
contributions have been paid.
2.18 Currency translation
(a) Functional and presentation currency
Items included in the nancial statements of each entity in the Group are measured using
the currency of the primary economic environment in which the entity operates (functional
currency). The nancial statements are presented in Singapore Dollar (SGD), which is the
functional currency of the Company and its subsidiaries.
(b) Transactions and balances
Transactions in a currency other than the functional currency (foreign currency) are
translated into the functional currency using the exchange rates at the dates of the
transactions. Currency translation differences resulting from the settlement of such
transactions and from the translation of monetary assets and liabilities denominated in
foreign currencies at the closing rate at the balance sheet date are recognised in prot or
loss. However, in the combined nancial statements, currency translation differences arising
from borrowings in foreign currencies and other currency instruments designated and
qualifying as net investment hedges and net investment in foreign operations, are recognised
in other comprehensive income and accumulated in the currency translation reserve.
When a foreign operation is disposed of or any loan forming part of the net investment of the
foreign operation is repaid, a proportionate share of the accumulated currency translation
differences is reclassied to prot or loss, as part of the gain or loss on disposal.
Foreign exchange gains and losses that relate to borrowings are presented in prot or loss
within Finance expense. All other exchange gains and losses impacting prot or loss are
presented in prot or loss within Other income/ (losses) net.
Non-monetary items measured at fair values in foreign currencies are translated using the
exchange rates at the date when the fair values are determined.
2.19 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the Board of Directors whose members are responsible for allocating resources and assessing
performance of the operating segments.
A-21
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
2 Summary of signicant accounting policies (continued)
2.20 Cash and cash equivalents
For the purpose of presentation in the combined statement of cash ows, cash and cash
equivalents include cash at bank and on hand, deposits with nancial institutions which are subject
to an insignicant risk of change in value, and bank overdrafts. Bank overdrafts are presented as
current borrowings on the balance sheet.
2.21 Share capital
Ordinary shares are classied as equity. Incremental costs directly attributable to the issuance of
new ordinary shares are deducted against the share capital account.
2.22 Dividends to Companys shareholders
Dividends to the Companys shareholders are recognised when the dividends are approved for
payment.
3 Critical accounting estimates, assumptions and judgements
Estimates, assumptions and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be
reasonable under circumstances.
3.1 Critical accounting estimates and assumptions
(a) Impairment of loans and receivables
Management reviews its loans and receivables for objective evidence of impairment
at least quarterly. Signicant nancial difculties of the debtor, the probability that the
debtor will enter bankruptcy, and default or signicant delay in payments are considered
objective evidence that a receivable is impaired. In determining this, management has
made judgements as to whether there is observable date indicating that there has been a
signicant change in the payment ability of the debtor, or whether there have been signicant
changes with adverse effect in the technological, market, economic or legal environment in
which the debtor operates in.
Where there is objective evidence of impairment, management had made judgements as
to whether an impairment loss should be recorded as an expense. In determining this,
management has used estimates based on historical loss experience for assets with similar
credit risk characteristics. The methodology and assumptions used for estimating both the
amount and timing of future cash ows are reviewed regularly to reduce any differences
between the estimated loss and actual loss experience. At the respective balance sheet
date, management has assessed that no allowance for impairment is required for the
receivables. However, management has written off certain trade receivables of approximately
$68,000, $1,000 and $9,000 in the respective nancial years ended 31 December 2011,
2012 and 2013 as recoverability of these receivables was determined to be doubtful due
to the signicant delay in settlements by the customers. The carrying amounts of trade
receivables at the end of nancial years ended 31 December 2011, 2012 and 2013 were
$5,349,000, $5,139,000 and $5,285,000 respectively.
A-22
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
3 Critical accounting estimates, assumptions and judgements (continued)
3.1 Critical accounting estimates and assumptions (continued)
(a) Impairment of loans and receivables (continued)
If the net present values of estimated cash ows had been higher/ lower by 10% from
managements estimates for all loans and receivables, the allowance for impairment of the
Group for the nancial years ended 31 December 2011, 2012 and 2013 would have been
lower/ higher by $535,000, $514,000 and $529,000 respectively.
(b) Net realisable value of inventories
A review is made periodically on inventory for obsolete and excess inventory and declines
in net realisable value below cost and an allowance is recorded against the carrying
value of inventories for any such obsolescence, excess and declines. The review requires
management to consider the future demand for the inventories. The realisable value
represents the best estimate of the recoverable amount and is based on the acceptable
evidence available at the end of the reporting year and inherently involves estimates
regarding the future expected realisable value. The usual considerations for determining
the amount of write-down include ageing analysis and future demand on the respective
carpet. In general, such an evaluation process requires signicant judgement and affects the
carrying value of inventories at the end of the respective nancial years. Possible changes
in these estimates could result in revisions to the stated value of the inventories but these
changes would not arise from the assumptions or other sources of estimation uncertainty
at the end of the nancial years. As at 31 December 2013, management has written
down approximately S$58,000 of its inventories and accounted as part of the changes in
inventories in prot or loss.
The carrying amounts of inventories at the end of the nancial years ended 31 December
2011, 2012 and 2013 were $5,775,000, $5,145,000 and $5,035,000 respectively.
4 Revenue
2011 2012 2013
$000 $000 $000
Distribution sales 13,141 12,761 12,560
Contract sales 10,947 10,853 9,466
24,088 23,614 22,026
5 Other income/ (losses) net
2011 2012 2013
$000 $000 $000
Bad debts recovered * 16
Currency translation gains/ (losses) net 1 126 (45)
Other 22 34
1 164 (11)
* Balance less than S$1,000.
A-23
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
6 Employee compensation
2011 2012 2013
$000 $000 $000
Wages and salaries 1,934 1,989 1,970
Employers contribution to dened contribution plan including
Central Provident Fund 221 240 251
Other short-term benets 81 150 38
2,236 2,379 2,259
7 Finance expenses
2011 2012 2013
$000 $000 $000
Interest expense trust receipts 35 31 57
8 Other operating expenses
2011 2012 2013
$000 $000 $000
Bank charges 41 40 34
Bad debts written off 69 1 9
Commission and agency fees 293 256 342
Entertainment 31 27 37
Insurance 80 101 93
Professional fees 30 25 61
Printing, stationery and postages 122 154 88
Rental expense on operating leases 581 740 819
Repair and maintenance 283 280 344
Telecommunication 41 38 36
Travelling and transportation 139 95 199
Utilities 33 39 35
Others 93 94 120
1,836 1,890 2,217
A-24
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
9 Income taxes
Income tax expense
2011 2012 2013
$000 $000 $000
Tax expense attributable to prot is made up of:
- Prot for the nancial year
Current income tax 463 456 484
Deferred income tax (Note 18) 4 (6)
467 450 484
(Over)/Under provision in prior nancial years:
Current income tax (39) 10
467 411 494
The tax on the Groups prot before tax differs from the theoretical amount that would arise using
the Singapore standard rate of income tax is as follows:
2011 2012 2013
$000 $000 $000
Prot before tax 3,122 2,806 3,226
Tax calculated at tax rate of 17% 531 477 548
Effects of:
- Expenses not deductible for tax purposes 9 15 18
- Tax exemptions and incentives (77) (42) (82)
Tax charge 463 450 484
10 Earnings per share
For illustrative purpose, the calculation of the basic earnings per share is based on the net prot
attributable to equity holders of the Company for the nancial years ended 31 December 2011,
2012 and 2013 and on 3,500,000 ordinary shares, representing the aggregate amounts of the
paid-up share capital of S$3,500,000.
There were no diluted earnings per share for the nancial years ended 31 December 2011, 2012
and 2013 as there were no potential ordinary shares outstanding.
2011 2012 2013
$ $ $
Basic and diluted 0.76 0.68 0.78
A-25
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
11 Cash and cash equivalents
2011 2012 2013
$000 $000 $000
Cash at bank and on hand 4,474 4,891 5,475
12 Trade and other receivables
2011 2012 2013
$000 $000 $000
Trade receivables non-related parties 5,349 5,139 5,285
Advances to employees 56 24 14
Amount due from director
(1)
416
Deposits 16 14 17
Prepayments 188 22 644
5,609 5,615 5,960
(1) Amount due from director was subsequently offset against the interim dividend of $3,000,000 declared on 31 October
2013 (Note 20).
13 Inventories
2011 2012 2013
$000 $000 $000
Finished goods 5,775 5,145 5,035
The cost of inventories recognised as an expense in prot or loss in the respective nancial
years ended 31 December 2011, 2012 and 2013 amounting to $14,487,000, $14,502,000 and
$12,736,000 respectively.
The Group has recognised a write-down of its slow-moving inventories amounting to $58,000
during the nancial year ended 31 December 2013 and included as part of the changes in
inventories in prot or loss.
14 Investment property
2011 2012 2013
$000 $000 $000
Cost
Beginning of nancial year 728 1,047
Additions 728 319
End of nancial year 728 1,047 1,047
A-26
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
14 Investment property (continued)
As at the respective balance sheet date, the details of the Groups investment property are as
follows:-
Location Description Tenure
608 Telok Blangah Road, #08-01
(1)
Condominium Freehold
(1) The property is still under construction and scheduled to be completed no later than 1 October 2015.
15 Property, plant and equipment
Computers
Furniture
and ttings
Motor
vehicles
Ofce
equipment Total
$000 $000 $000 $000 $000
2011
Cost
Beginning of nancial year 52 214 429 95 790
Additions 55 1 56
Written-off (27) (63) (90)
End of nancial year 80 214 429 33 756
Accumulated depreciation
Beginning of nancial year 39 208 326 72 645
Depreciation charge 26 1 43 3 73
Written-off (27) (63) (90)
End of nancial year 38 209 369 12 628
Net book value
End of nancial year 42 5 60 21 128
2012
Cost
Beginning of nancial year 80 214 429 33 756
Additions 7 1 8
End of nancial year 87 214 429 34 764
Accumulated depreciation
Beginning of nancial year 38 209 369 12 628
Depreciation charge 28 1 26 3 58
End of nancial year 66 210 395 15 686
Net book value
End of nancial year 21 4 34 19 78
A-27
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
15 Property, plant and equipment (continued)
Computers
Furniture
and ttings
Motor
vehicles
Ofce
equipment Total
$000 $000 $000 $000 $000
2013
Cost
Beginning of nancial year 87 214 429 34 764
Additions 2 1 3 6
End of nancial year 89 215 429 37 770
Accumulated depreciation
Beginning of nancial year 66 210 395 15 686
Depreciation charge 21 1 26 4 52
End of nancial year 87 211 421 19 738
Net book value
End of nancial year 2 4 8 18 32
16 Trade and other payables
2011 2012 2013
$000 $000 $000
Trade payables to non-related parties 1,158 1,333 1,247
Accruals for operating expenses 807 813 745
Dividend payable 794
Other payables 265 249 201
3,024 2,395 2,193
17 Borrowings
2011 2012 2013
$000 $000 $000
Current
Bank borrowings trust receipts 1,557 435 2,480
The exposure of the borrowings of the Group to interest rate changes and contractual repricing
dates at the balance sheet date are as follows:
2011 2012 2013
$000 $000 $000
6 months or less 1,557 435 2,480
A-28
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
17 Borrowings (continued)
(a) Security granted
These borrowings are secured by:
i) open legal mortgage over the properties held by individual shareholder at No. 151
Chin Swee Road, #07-11 and #07-13 Manhattan House, Singapore 169876; and
ii) guarantee from four individual shareholders in favor of the bank for $7,350,000.
18 Deferred income taxes
Deferred income tax assets and liabilities are offset when there is a legally enforceable right
to offset current income tax assets against current income tax liabilities and when the deferred
income taxes relate to the same scal authority. The amounts, determined after appropriate
offsetting, are shown on the balance sheet as follows:
2011 2012 2013
$000 $000 $000
Deferred income tax liabilities, representing accelerated
tax depreciation
- to be settled within one year 15 9 9
Movement in deferred income tax account is as follows:
2011 2012 2013
$000 $000 $000
Beginning of nancial year 11 15 9
Tax charge to prot or loss (Note 9) 4 (6)
End of nancial year 15 9 9
A-29
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
19 Share capital
For the purpose of the preparation of the combined nancial statements, the issued share capital
represents the paid-up capital of SMJ Furnishings (S) Pte Ltd.
2011 2012 2013
$000 $000 $000
No. of ordinary shares
Beginning and end of nancial year 3,500 3,500 3,500
Amount
Beginning and end of nancial year 3,500 3,500 3,500
All issued ordinary shares are fully paid. There is no par value for these ordinary shares.
Fully paid ordinary shares carry one vote per share and carry a right to dividends as and when
declared by the Company.
The newly issued shares rank pari passu with the previously issued shares.
20 Dividends
2011 2012 2013
$000 $000 $000
Ordinary dividends paid
Final dividend paid in respect of previous nancial year of
$0.28571 (2012: $0.15 and 2011: $0.15) per share 525 525 1,000
Interim dividend paid in respect of current nancial year of
$0.8571 (2012: $nil and 2011: $nil) per share 3,000
525 525 4,000
On 31 October 2013, an interim dividend of $3,000,000 was declared and an amount of $416,000
relating to this interim dividend was used to offset against the amount due from director. As at 31
December 2013, the interim dividend of $2,584,000 was paid to the respective equity holders of
the Company.
21 Contingencies
(a) Contingent liabilities
Contingent liabilities, of which the probability of settlement is remote at the balance sheet
date, are as follows:

2011 2012 2013
$000 $000 $000
Performance guarantees 479 742 715
A-30
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
22 Commitments
(a) Capital commitments
Capital expenditures contracted at the balance sheet date but not recognised in the
combined nancial statements, are as follows:
2011 2012 2013
$000 $000 $000
Investment property 2,551 2,232 2,232
(b) Operating lease commitments where the Group is a lessee
The Group leases ofce, warehouse spaces and workers accommodation from non-related
parties under non-cancellable operating lease agreements. The leases have varying terms,
escalation clauses and renewal rights.
The future minimum lease payables under non-cancellable operating leases contracted for at
the balance sheet date but not recognised as liabilities, are as follows:
2011 2012 2013
$000 $000 $000
Not later than one year 177 1,002 991
Between one and ve years 1,226 245
177 2,228 1,236
23 Financial risk management
Financial risk factors
The Groups activities expose it to market risk (including currency risk, price risk and interest risk),
credit risk, liquidity risk and capital risk. The Groups overall risk management strategy seeks to
minimise adverse effects from the unpredictability of nancial markets on the Groups nancial
performance. The Group do not use nancial instruments such as currency forwards, interest rate
swaps and foreign currency borrowings to hedge certain nancial risk exposure.
The Board of Directors is responsible for setting the objectives and underlying principles of
nancial risk management for the Group. This includes establishing detailed policies such as
authority levels, oversight responsibilities, risk identication and measurement, and exposure limits.
Financial risk management is carried out by the nance department in accordance with the policies
set by the Board of Directors. The nance personnel identies, evaluates and monitors nancial
risks in close co-operation with the Groups operating units. The nance personnel measures
actual exposures against the limits set and prepares periodic reports for review by the Executive
Directors. Regular reports are also submitted to the Board of Directors.
A-31
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
23 Financial risk management (continued)
(a) Market risk
(i) Currency risk
The Group dominant operations is in Singapore but regularly transacts in currencies
other than its functional currency due to the geographically widespread of sales.
Currency risk arises in the Group when transactions are denominated in foreign
currencies such as United States Dollar (USD).
The Groups currency exposure based on the information provided to key
management is as follows:

SGD USD Total
$000 $000 $000
At 31 December 2011
Financial assets
Cash and bank balances 3,869 605 4,474
Trade and other receivables 3,985 1,436 5,421
7,854 2,041 9,895
Financial liabilities
Trade and other payables 1,872 1,152 3,024
Borrowings 1,557 1,557
1,872 2,709 4,581
Net nancial assets/ (liabilities) 5,982 (668) 5,314
Currency exposure of nancial liabilities
net of those denominated in the Groups
functional currency (668) (668)
At 31 December 2012
Financial assets
Cash and bank balances 4,629 262 4,891
Trade and other receivables 4,723 870 5,593
9,352 1,132 10,484
Financial liabilities
Trade and other payables 1,068 1,327 2,395
Borrowings 435 435
1,068 1,762 2,830
Net nancial assets/ (liabilities) 8,284 (630) 7,654
Currency exposure of nancial liabilities
net of those denominated in the Groups
functional currency (630) (630)
A-32
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
23 Financial risk management (continued)
(a) Market risk (continued)
(i) Currency risk (continued)
SGD USD Total
$000 $000 $000
At 31 December 2013
Financial assets
Cash and bank balances 5,470 5 5,475
Trade and other receivables 4,021 1,295 5,316
9,491 1,300 10,791
Financial liabilities
Trade and other payables 946 1,247 2,193
Borrowings 2,480 2,480
946 3,727 4,673
Net nancial assets/ (liabilities) 8,545 (2,427) 6,118
Currency exposure of nancial liabilities
net of those denominated in the Groups
functional currency (2,427) (2,427)
If the USD change against the SGD for the nancial years ended 31 December 2011,
2012 and 2013 by 0.6%, 5.8% and 3.7% respectively with all other variables including
tax rate being held constant, the effects arising from the net nancial liability position
will be as follows:
Increase/ (Decrease)
Prot after tax
2011 2012 2013
$000 $000 $000
Group
USD against SGD
- Strengthened (3) (30) (74)
- Weakened 3 30 74
(ii) Price risk
The Group does not have exposure to equity price risk as it does not hold any equity
nancial assets.
A-33
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
23 Financial risk management (continued)
(a) Market risk (continued)
(iii) Cash ow and fair value interest rate risks
Cash ow interest rate risk is the risk that the future cash ows of a nancial
instrument will uctuate because of changes in market interest rates. Fair value
interest rate risk is the risk that the fair value of a nancial instrument will uctuate
due to changes in market interest rates. As the Group does not have any signicant
interest-bearing assets, the Groups income is substantially independent of changes in
market interest rates. The Groups interest rate risk mainly arises from borrowings at
oating interest rate. The Group manages its interest rate risk by keeping bank loans
to the minimum required to sustain the operations of the Group.
The Groups borrowings at variable rates on which effective hedges have not been
entered into are denominated mainly in USD. If the USD interest rates had increased/
decreased by 0.50% in the respective nancial years ended 31 December 2011, 2012
and 2013 with all other variables including tax rate being held constant, the impact to
prot after tax as a result of higher/lower interest expense on these borrowings is not
signicant.
(b) Credit risk
Credit risk refers to the risk that counterparty will default as its contractual obligations
resulting in nancial loss to the Group. The major classes of nancial assets of the Group
are cash and bank balances and trade receivables. For trade receivables, the Group adopts
the policy of dealing only with customers of appropriate credit history. For other nancial
assets, the Group adopts the policy of dealing only with high credit quality counterparties.
Credit exposure to individual counterparty is restricted by credit limits that are approved
by Executive Directors based on continuous credit evaluation. The counterpartys payment
pattern and credit exposure are regularly monitored by the Executive Directors.
As the Group does not hold any collateral, the maximum exposure to credit for each class of
nancial instruments is the carrying amount of that class of nancial instruments presented
on the balance sheet.
As at 31 December 2011, 2012 and 2013, the trade receivables are largely corporate
companies and comprise 4 debtors, 5 debtors and 4 debtors respectively that individually
represented 5% - 11% of trade receivables.
A-34
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
23 Financial risk management (continued)
(b) Credit risk (continued)
The credit risk of trade receivables based on the information provided to key management is
as follows:
2011 2012 2013
$000 $000 $000
By geographical areas
Singapore 3,913 4,246 3,531
Malaysia 146 265 630
Philippines 159 319 490
Indonesia 280 122 479
Hong Kong 157 93 38
Brazil 486
Other countries 208 94 117
5,349 5,139 5,285
(i) Financial assets that are neither past due nor impaired
Bank deposits that are neither past due nor impaired are mainly deposits with
banks with high credit-ratings assigned by international credit-rating agencies. Trade
receivables that are neither past due nor impaired are substantially companies with a
good collection track record with the Group and are not re-negotiated.
(ii) Financial assets that are past due and/ or impaired
There is no other class of nancial assets that is past due and/ or impaired except for
trade receivables.
The age analysis of trade receivables past due but not impaired is as follows:

2011 2012 2013
$000 $000 $000
Past due less than 3 months 3,375 3,343 3,287
Past due over 3 months 1,115 884 1,081
4,490 4,227 4,368
At the respective balance sheet date, management has assessed that no allowance
for impairment is required for the receivables. However, management has written
off certain trade receivables of approximately $68,000, $1,000 and $9,000 in the
respective nancial years ended 31 December 2011, 2012 and 2013 as recoverability
of these receivables was determined to be doubtful due to the signicant delay in
settlements by the customers.

A-35
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
23 Financial risk management (continued)
(c) Liquidity risk
Prudent liquidity risk management includes maintaining sufcient cash and the availability of
funding through an adequate amount of committed credit facilities (Note 17). At the balance
sheet date, assets held by the Group for managing liquidity risk included cash and bank
balances as disclosed in Note 11.

Management monitors rolling forecasts of the liquidity reserve (comprises undrawn
borrowing facility and cash and cash equivalents of the Group on the basis of expected cash
ow. This is generally carried out in accordance with the practice and limits set by the Board
of Directors.

The table below analyses non-derivative nancial liabilities of the Group into relevant
maturity groupings based on the remaining period from the balance sheet date to
the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash ows. Balances due within 12 months equal their carrying amounts as
the impact of discounting is not signicant.
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
$000 $000 $000
At 31 December 2011
Trade and other payables 3,024
Borrowings 1,557
4,581
At 31 December 2012
Trade and other payables 2,395
Borrowings 435
2,830
At 31 December 2013
Trade and other payables 2,193
Borrowings 2,480
4,673
A-36
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
23 Financial risk management (continued)
(d) Capital risk
The Groups objectives when managing capital are to safeguard the Groups ability to
continue to operate as a going concern and to maintain an optimal capital structure so as to
maximise shareholder value. In order to maintain or achieve an optimal capital structure, the
Group may adjust the amount of dividend payment, return capital to shareholders, issue new
shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings.
Management monitors capital based on gearing ratio. The Groups strategies were
unchanged from 2011, and the Board of Directors monitors the Groups equity ratio on
periodic basis. The gearing ratio is calculated as net debt divided by total capital. Net debt is
calculated as borrowings plus trade and other payables less cash and cash equivalents. Total
capital is calculated as total equity plus net debt.
2011 2012 2013
$000 $000 $000
Net debt/ (cash) 107 (2,061) (802)
Total equity 11,611 13,481 12,213
Total capital 11,718 11,420 11,411
Gearing ratio 0.9% n/m n/m
The Group is in compliance with all externally imposed capital requirements for the nancial
years ended 31 December 2011, 2012 and 2013.
(e) Fair value measurements
The carrying amount less impairment provision of trade receivables and payables are
assumed to approximate their fair values. The fair value of current borrowings is approximate
their carrying amount.
(f) Financial instruments by category
The carrying amount of the different categories of nancial instruments is as disclosed on
the face of the balance sheet, except for the following:
2011 2012 2013
$000 $000 $000
Loans and receivables 9,895 10,484 10,791
Financial liabilities at amortised cost 4,581 2,830 4,673
A-37
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
24 Related party transactions
In addition to the information disclosed elsewhere in the nancial statements, the following
transactions took place between the Group and related parties at terms agreed between the
parties:
(a) Key management personnel compensation
Key management personnel compensation is as follows:
2011 2012 2013
$000 $000 $000
Directors
Wages and salaries 641 645 478
Employers contribution to dened contribution plan,
including Central Provident Fund 53 53 43
694 698 521
Key management personnel
Wages and salaries 63 140 160
Employers contribution to dened contribution plan,
including Central Provident Fund 10 21 23
73 161 183
767 859 704
25 Segment information
Management has determined the operating segments based on the reports reviewed by the Board
of Directors for the purpose of resource allocation and assessment of the Groups performance.
At 31 December 2011, 2012 and 2013, the Group only has one business segment, which is sale
and distribution of wide range of carpets. This is based on the Groups internal organisation,
management structure and the primary way in which the Board of Directors is provided with the
nancial information.
Whilst revenue is classied into two business streams, as described below, the Groups results, the
cost and combined balance sheets are only analysed by one operating segment.
(i) Distribution sales
Distribution sales refer to wholesale of carpets to dealers, carpet importers and carpet
installation companies.
(ii) Contract sales
Contract sales refer to supply, deliver of carpets which include the project management
work, by handling the installation of these carpets on site for its customers.
A-38
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
25 Segment information (continued)
(a) Geographical information
The Groups revenue is mainly derived from the following geographical areas:
2011 2012 2013
$000 $000 $000
Distribution sales
Brazil 1,568 406 3
Brunei 306 343 316
Indonesia 2,021 1,691 2,120
Malaysia 2,191 3,027 3,010
Saudi Arabia 96 675 314
Singapore 4,053 3,907 3,789
Philippines 1,466 1,614 2,034
Other countries 1,440 1,098 974
Contract sales
Singapore 10,947 10,853 9,466
24,088 23,614 22,026
Information of major customer
Revenue of approximately $Nil, $2,572,000 and $2,958,000 is derived from a single external
customer at the respective nancial year ended 31 December 2011, 2012 and 2013.
26 New or revised accounting standards and interpretations
Below are the mandatory standards, amendments and interpretations to existing standards that
have been published, and are relevant for the Groups accounting periods beginning on or after 1
January 2014 or later periods and which the Group has not early adopted:
FRS 27 (revised 2011) Separate Financial Statements (effective for annual periods
beginning on or after 1 January 2014)
FRS 28 (revised 2011) Investment in Associates and Joint Ventures (effective for annual
periods beginning on or after 1 January 2014)
Amendments to FRS 32 Offsetting Financial Assets and Financial Liabilities (effective for
annual periods beginning on or after 1 January 2014)
Amendments to FRS 36: Recoverable Amount Disclosures for Non-Financial Assets
(effective for annual periods beginning on or after 1 January 2014)
Amendments to FRS 39: Novation of Derivatives and Continuation of Hedge Accounting
(effective for annual periods beginning on or after 1 January 2014)
A-39
APPENDIX A
INDEPENDENT AND REPORTING AUDITORS REPORT
ON THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL
YEARS ENDED 31 DECEMBER 2011, 2012 AND 2013
SMJ International Holdings Ltd. and its Subsidiary
Notes to the Combined Financial Statements
For the Financial Years Ended 31 December 2011, 2012 and 2013
26 New or revised accounting standards and interpretations (continued)
FRS 110 Consolidated Financial Statements (effective for annual periods beginning on or
after 1 January 2014)
FRS 111 Joint Arrangements (effective for annual periods beginning on or after 1 January
2014)
FRS 112 Disclosures of Interest in Other Entities (effective for annual periods beginning on
or after 1 January 2014)
Amendments to FRS 110, FRS 111, FRS 112, FRS 27 (2011) and FRS 28 (2011):
Mandatory Effective Date (effective for annual periods beginning on or after 1 January 2014)
Amendments to FRS 110, FRS 111 and FRS 112: Transition Guidance (effective for annual
periods beginning on or after 1 January 2014)
Amendments to FRS 110, FRS 112 and FRS 27: Investment Entities (effective for annual
periods beginning on or after 1 January 2014)
27 Authorisation of nancial statements
These combined nancial statements have been prepared for inclusion in the Offer Document of
SMJ International Holdings Ltd. (the Company) and were authorised for issue by the Board of
Directors of the Company on 20 June 2014.
B-1
APPENDIX B
SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR
COMPANY
The discussion below provides a summary of the principal objects of our Company set out in our
Memorandum of Association and certain provisions of our Articles of Association and the laws of
Singapore. This discussion is only a summary and is qualied by reference to Singapore law and our
Memorandum and Articles of Association.
MEMORANDUM OF ASSOCIATION AND REGISTRATION NUMBER
We are registered in Singapore with the Accounting and Corporate Regulatory Authority. Our company
registration number is 201334844E. Our Memorandum of Association sets out the objects for which our
Company was formed, including carrying on business as, inter alia, an investment holding company.
SUMMARY OF OUR ARTICLES OF ASSOCIATION
1. Directors
(a) Ability of interested directors to vote
A director shall not vote in respect of any contract, proposed contract or arrangement or any
other proposal in which he has any personal material interest, and he shall not be counted
in the quorum present at the meeting except under circumstances set out in the Articles of
Association.
(b) Remuneration
Fees payable to Non-Executive Directors shall be a xed sum (not being a commission on or
a percentage of prots or turnover of the Company) as shall from time to time be determined
by the Company in general meeting. Fees payable to Directors shall not be increased except
at a general meeting convened by a notice specifying the intention to propose such increase.
Any Director who holds any executive ofce, or who serves on any committee of the
Directors, or who performs services outside the ordinary duties of a Director, may be
paid extra remuneration by way of salary or otherwise (not being a commission on or a
percentage of prots or turnover of the Company), as the Directors may determine.

The remuneration of a Chief Executive Ofcer shall be xed by the Directors and may be by
way of salary or commission or participation in prots or by any or all of these modes but
shall not be by a commission on or a percentage of turnover.
The Directors shall have power to pay pensions or other retirement, superannuation, death
or disability benets to (or to any person in respect of) any Director for the time being holding
any executive ofce and for the purpose of providing any such pensions or other benets, to
contribute to any scheme or fund or to pay premiums.
(c) Borrowing
Our Directors may exercise all the powers of our Company to raise or borrow money, to
mortgage or charge its undertaking, property and uncalled capital, and to secure any debt,
liability or obligation of our Company.
(d) Retirement age limit
There is no retirement age limit for Directors under our Articles of Association. Section
153(1) of the Companies Act however, provides that no person of or over the age of
70 years shall be appointed a director of a public company, unless he is appointed or re-
appointed as a director of the Company or authorised to continue in ofce as a director of
the Company by way of an ordinary resolution passed at an annual general meeting of the
Company.
B-2
APPENDIX B
SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR
COMPANY
(e) Shareholding qualication
There is no shareholding qualication for Directors in the Memorandum and Articles of
Association of our Company.
2. Share rights and restrictions
Our Company currently has one class of shares, namely, ordinary shares. 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 the ordinary
shares, are recognised as our Shareholders.
(a) Dividends and distribution
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting,
but we may not pay dividends in excess of the amount recommended by our Board. We must
pay all dividends out of our prots and we may satisfy dividends by the issue of shares to
our Shareholders. All dividends are paid pro-rata amongst our Shareholders in proportion
to the amount paid-up on each Shareholders ordinary shares, unless the rights attaching
to an issue of any ordinary share provide otherwise. Unless otherwise directed, dividends
are paid by cheque, warrant or post ofce order sent through the post to each Shareholder
at his registered address. Notwithstanding the foregoing, the payment by us to CDP of any
dividend payable to a Shareholder whose name is entered in the depository register shall,
to the extent of payment made to CDP, discharge us from any liability to that shareholder in
respect of that payment.
The payment by the Directors of any unclaimed dividends or other monies payable on or
in respect of a share into a separate account shall not constitute the Company a trustee in
respect thereof. All dividends unclaimed after being declared may be invested or otherwise
made use of by the Directors for the benet of the Company. Any dividend unclaimed after
a period of six (6) years after having been declared may be forfeited and shall revert to the
Company but the Directors may thereafter at their discretion annul any such forfeiture and
pay the dividend so forfeited to the person entitled thereto prior to the forfeiture.
The Directors may retain any dividends or other monies payable on or in respect of a share
on which our Company has a lien, and may apply the same in or towards satisfaction of the
debts, liabilities or engagements in respect of which the lien exists.
(b) Voting rights
A holder of our ordinary shares is entitled to attend, speak and vote at any general meeting,
in person or by proxy. Proxies need not be a Shareholder. A person who holds ordinary
shares through the SGX-ST book-entry settlement system will only be entitled to vote at a
general meeting as a shareholder if his name appears on the depository register maintained
by CDP 48 hours before the general meeting. Except as otherwise provided in our Articles of
Association, two or more Shareholders must be present in person or by proxy to constitute
a quorum at any general meeting. Under our Articles of Association, on a show of hands,
every Shareholder present in person and by proxy shall have one vote, and on a poll, every
Shareholder present in person or by proxy shall have one vote for each ordinary share
which he holds or represents. A poll may be demanded in certain circumstances, including
by the Chairman of the meeting or by any Shareholder present in person or by proxy and
representing not less than one-tenth of the total voting rights of all Shareholders having the
right to attend and vote at the meeting or by any ve Shareholders present in person or by
proxy and entitled to vote. In the case of a tie vote, whether on a show of hands or a poll, the
Chairman of the meeting shall be entitled to a casting vote.
B-3
APPENDIX B
SUMMARY OF MEMORANDUM AND ARTICLES OF ASSOCIATION OF OUR
COMPANY
3. Change in capital
Changes in the capital structure of our Company (for example, consolidation, cancellation, sub-
division or conversion of our share capital) require Shareholders to pass an ordinary resolution.
Ordinary resolutions generally require at least 14 days notice in writing. The notice must be given
to each of our Shareholders who have supplied us with an address in Singapore for the giving
of notices and must set forth the place, the day and the hour of the meeting. However, we are
required to obtain our Shareholders approval by way of a special resolution for any reduction of our
share capital or other undistributable reserve, subject to the conditions prescribed by law.
4. Variation of rights of existing shares or classes of shares
Subject to the Companies Act, whenever the share capital of the Company is divided into different
classes of shares, the special rights attached to any class may be varied or abrogated either with
the consent in writing of the holders of three-quarters of the total number of the issued shares
of the class or with the sanction of a special resolution passed at a separate general meeting of
the holders of the shares of the class. To every such separate general meeting the provisions of
our Articles of Association relating to general meetings of the Company and to the proceedings
thereat shall mutatis mutandis apply, except that the necessary quorum shall be two persons at
least holding or representing by proxy at least one-third of the total number of the issued shares
of the 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 the class held
by him, provided always that where the necessary majority for such a special resolution is not
obtained at such general meeting, consent in writing if obtained from the holders of three-quarters
of the total number of the issued shares of the class concerned within two months of such general
meeting shall be as valid and effectual as a special resolution carried at such general meeting.
These provisions shall apply to the variation or abrogation of the special rights attached to some
only of 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 or abrogated.
The relevant Article does not impose more signicant conditions than the Companies Act in this
regard.
5. Limitations on foreign or non-resident Shareholders
There are no limitations imposed by Singapore law or by our Articles of Association on the rights of
our Shareholders who are regarded as non-residents of Singapore, to hold or vote their shares.
C-1
APPENDIX C
DESCRIPTION OF OUR SHARES
The following statements are brief summaries of the rights and privileges of our Shareholders conferred
by the laws of Singapore, the Catalist Rules and our Articles of Association (Articles). These statements
summarise the material provisions of our Articles but are qualied in entirety by reference to our Articles,
a copy of which is available for inspection at our registered ofce during normal business hours for a
period of six months from the date of this Offer Document.
Ordinary Shares
All of our Shares are in registered form. We may, subject to the provisions of the Companies Act and
the rules of the SGX-ST, purchase our Shares. However, we may not, except in circumstances permitted
by the Companies Act, grant any nancial 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 the limit as may
be prescribed by the SGX-ST of which the aggregate number of Shares to be issued other than on a
pro rata basis to our Shareholders may not exceed the limit as may be prescribed by the SGX-ST. The
approval, if granted, will lapse at the conclusion of the annual general meeting following the date on
which the approval was granted or the date by which the annual general meeting is required by law to
be held, whichever is the earlier. Subject to the foregoing, the provisions of the Companies Act and any
special rights attached to any class of shares currently issued, all New Shares are under the control of
our Board of Directors who may allot and issue the same with such rights and restrictions as it may think
t.
Shareholders
Only persons who are registered in 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 the 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 SGX-ST at least 10 clear Market Days notice. However, the Register of
Shareholders may not be closed for more than 30 days in aggregate in any calendar year. We typically
close our Register of Shareholders to determine 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 Catalist
Rules or the rules or by-laws of any stock exchange on which our Company is listed. Our Board of
Directors may decline to register any transfer of Shares which are not fully paid Shares or Shares on
which we have a lien. Our Shares may be transferred by a duly signed instrument of transfer in a form
approved by the SGX-ST or any stock exchange on which our Company is listed. Our Board of Directors
may also decline to register any instrument of transfer unless, among other things, it has been duly
stamped and is presented for registration together with the share certicate and such other evidence of
title as they may require. We will replace lost or destroyed certicates for Shares if it is properly notied
and if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and indemnity that
our Board of Directors may require.
C-2
APPENDIX C
DESCRIPTION OF OUR SHARES
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Board of Directors may convene
an Extraordinary General Meeting whenever it thinks t and must do so if Shareholders representing
not less than 10% of the total voting rights of all Shareholders request in writing that such a meeting
be held. In addition, two or more 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 afrmative vote of a simple majority of the votes cast at the meeting. An
ordinary resolution sufces, for example, for the appointment of directors. A special resolution, requiring
the afrmative 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 the Memorandum of Association
and our Articles, a change of our corporate name and a reduction in our share capital. 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 Shares is entitled to attend, speak and vote at any general meeting, in person or by
proxy. Proxies need not be Shareholders. A person who holds Shares through the SGX-ST book-entry
settlement system will only be entitled to vote at a general meeting as a Shareholder if his name appears
on the Depository Register maintained by CDP 48 hours before the general meeting. Except as otherwise
provided in our Articles, two 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 and by proxy shall have one vote and on a poll, every Shareholder present in person or by proxy
shall have one vote for each Share which he holds or represents. A poll may be demanded in certain
circumstances, including by the chairman of the meeting or by any Shareholder present in person or by
proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the
right to attend and vote at the meeting or by any ve 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 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 of Directors. We must pay all
dividends out of our prots and we may satisfy dividends by the issue of Shares to our Shareholders.
All dividends are paid pro rata among our Shareholders in proportion to the amount paid-up on each
Shareholders Shares, unless the rights attaching to an issue of any Share provides 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 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 of Directors may, with approval of our Shareholders at a general meeting, capitalise any
reserves or prots and distribute the same as bonus Shares credited as paid-up to our Shareholders
in proportion to their shareholdings. Our Board of Directors 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.
C-3
APPENDIX C
DESCRIPTION OF OUR SHARES
Take-overs
Under the Singapore Code on Take-overs and Mergers (Singapore Take-over Code), issued by the
Authority pursuant to Section 321 of the SFA, any person acquiring an interest, either on his own or
together with parties acting in concert with him, in 30.0% or more of the voting Shares must extend a
take-over offer for the remaining voting Shares in accordance with the provisions of the Singapore Take-
over Code. In addition, a mandatory take-over offer is also required to be made if a person holding, either
on his own or together with parties acting in concert with him, between 30.0% and 50.0% of the voting
shares acquires additional voting shares representing more than 1.0% of the voting shares in any six
month period. Under the Singapore Take-over Code, the following individuals and companies will be
presumed to be persons acting in concert with each other unless the contrary is established:-
(a) the following companies:-
(i) a company
(ii) the parent company of (i);
(iii) the subsidiaries of (i);
(iv) the fellow subsidiaries of (i);
(v) the associated companies of (i), (ii), (iii) or (iv); and
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v);
(b) a company with any of its directors (together with their close relatives, related trusts as well as
companies controlled by any of the directors, their close relatives and related trusts);
(c) a company with any of its pension funds and employee share schemes;
(d) a person with any investment company, unit trust or other fund whose investment such person
manages on a discretionary basis, but only in respect of the investment account which such person
manages;
(e) a nancial or other professional adviser, including a stockbroker, with its customer in respect of the
shareholdings of:-
(i) the adviser and persons controlling, controlled by or under the same control as the adviser;
and
(ii) all the funds which the adviser manages on a discretionary basis, where the shareholdings
of the adviser and any of those funds in the customer total 10.0% or more of the customers
equity share capital;
(f) directors of a company (together with their close relatives, related trusts and companies controlled
by any of such directors, their close relatives and related trusts) which is subject to an offer or
where the directors have reason to believe a bona de offer for their company may be imminent;
(g) partners; and
(h) the following persons and entities:-
(i) an individual;
(ii) the close relatives of (i);
(iii) the related trusts of (i);
C-4
APPENDIX C
DESCRIPTION OF OUR SHARES
(iv) any person who is accustomed to act in accordance with the instructions of (i); and
(v) companies controlled by any of (i), (ii), (iii) or (iv).
Under the Singapore Take-over Code, a mandatory offer made with consideration other than cash must
be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person
acting in concert within the preceding six months.
Liquidation or Other Return of Capital
If we liquidate or in the event of any other return of capital, holders of our Shares will be entitled 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 of
Directors and ofcers shall be entitled to be indemnied 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 ofcer, 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 ofcers 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 Take-overs above, there are no limitations imposed by
Singapore law or by our Articles on the rights of non-resident Shareholders to hold or vote in respect of
our Shares.
Minority Rights
The rights of minority Shareholders of Singapore-incorporated companies are protected under Section
216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon
application by any of our Shareholders, as they think t to remedy any of the following situations where:-
(a) our affairs are being conducted or the powers of our Board of Directors are being exercised in a
manner oppressive to, or in disregard of the interests of, one or more of our Shareholders; or
(b) we take an action, or threaten to take an action, or our Shareholders pass a resolution, or 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 of, or on behalf of, by a person or persons
and on such terms as the court may direct;
(d) provide for the purchase of a minority Shareholders Shares by our other Shareholders or by us
and, in the case of a purchase of Shares by us, a corresponding reduction of our share capital; or
(e) provide that we be wound up.
D-1
APPENDIX D
TAXATION
The following is a discussion of certain tax matters relating to Singapore income tax, capital gains tax,
stamp duty and estate duty consequences in relation to the purchase, ownership and disposal of our
Shares. The discussion is limited to a general description of certain tax consequences in Singapore with
respect to the ownership of shares and is based on laws, regulations and interpretations now in effect
and available as of the date of this Offer Document. The laws, regulations and interpretations, however,
may change at any time, and any change could be retroactive to the date of issuance of our Shares.
These laws and regulations are also subject to various interpretations and the relevant tax authorities or
the courts of Singapore could later disagree with the explanations or conclusions set out below.
Prospective purchasers of our Shares should consult their tax advisors concerning the tax
consequences of owning and disposing of our Shares. Neither our Company, our Directors, the
Vendors nor any other persons involved in this Placement accepts responsibility for any tax
effects or liabilities resulting from the subscription, purchase, holding or disposal of our Shares.
SINGAPORE INCOME TAX
General
Scope of Tax
Corporate taxpayers are generally subject to Singapore income tax on all Singapore-sourced income, and
on foreign-sourced income received or deemed received in Singapore (unless specically exempted).
In general, individuals are subject to Singapore income tax only on Singapore-sourced income. However,
foreign-sourced income received through a partnership may be subject to Singapore income tax if it is
received or deemed received in Singapore (unless specically exempted).
Rates of Tax
The prevailing corporate income tax rate is 17.0% with partial tax exemption for normal chargeable
income of up to S$300,000 as follows:-
75.0% exemption of up to the rst S$10,000 and
50.0% exemption of up to the next S$290,000.
For newly incorporated Singapore tax resident companies, with no more than 20 shareholders where all
shareholders are individuals or at least one shareholder is an individual holding at least 10.0% of the total
number of issued ordinary shares throughout the basis period relating to the Year of Assessment of claim,
the following exemptions for normal chargeable income apply for the rst three Years of Assessment:-
100% exemption of up to the rst S$100,000 and
50.0% of exemption of up to the next S$200,000.
A company is considered to be resident in Singapore for Singapore tax purposes if the control and
management of its business is exercised in Singapore. Control and management is generally regarded
as exercised at the place where the companys board of directors meets regularly to hold their board
meetings where strategic policies are discussed and formulated.
For the Years of Assessment 2013 to 2015, all companies are granted a 30.0% corporate income tax
rebate capped at S$30,000 per Year of Assessment.
An individual is regarded as tax resident in Singapore for a year of assessment if, in the preceding year,
he was physically present or had exercised employment in Singapore (other than as a director of a
company) for 183 or more days, or if he resides in Singapore.
Singapore tax-resident individuals are generally subject to tax based on a progressive scale. The top
marginal rate of tax is currently 20.0%.
D-2
APPENDIX D
TAXATION
Non-Singapore resident individuals are generally subject to tax at a at rate of 20%. Their Singapore
employment income is however taxed at a at rate of 15% or at resident tax rates, whichever yields a
higher amount of tax.
Dividend Distributions
Under the one-tier corporate tax system, the tax paid by a resident company is a nal tax and the
distributable prots of the company can be paid to shareholders as tax exempt (one-tier) dividends,
regardless of the tax residence status or the legal form of the shareholders. However, foreign
shareholders receiving tax exempt (one-tier) dividends are advised to consult their own tax advisors to
take into account the tax laws of their respective countries of residence and the existence of any double
taxation agreement which their country of residence may have with Singapore.
Gains on Disposal of Ordinary Shares
Singapore does not impose tax on capital gains. There are no specic laws or regulations which deal
with the characterisation of whether a gain is income or capital in nature. Gains arising from the disposal
of our Shares may be construed to be of an income nature and subject to Singapore income tax, if they
arise from activities which the IRAS regards as the carrying on of a trade or business in Singapore.
Gains derived by a resident company from the disposal of ordinary shares in an investee company during
the period from 1 June 2012 to 31 May 2017 (both dates inclusive) are not taxable if immediately prior to
the date of disposal, the divesting company had held at least 20.0% of the ordinary share capital of the
investee company for a continuous period of at least 24 months.
STAMP DUTY
No stamp duty is payable on the subscription and issuance of our Shares.
No stamp duty is payable if no instrument of transfer is executed (such as in the case of scripless shares,
the transfer of which does not require an instrument of transfer to be executed) or if the instrument of
transfer is executed outside of Singapore. However, stamp duty may be payable if the instrument of
transfer which is executed outside Singapore is subsequently brought into Singapore.
Where applicable, stamp duty is payable at 0.2% of the consideration paid or market value of the shares,
whichever is higher. The purchaser is liable for the stamp duty charge, unless otherwise agreed by the
parties to the transaction.
ESTATE DUTY
Singapore estate duty was abolished with effect from 15 February 2008.
GOODS AND SERVICES TAX (GST)
GST is a tax on domestic consumption of goods and services and on the importation of goods into
Singapore. The standard rate of GST is currently 7.0%.
The sale of our Shares by an investor belonging in Singapore through an SGX-ST member or to
another person belonging in Singapore is an exempt supply not subject to GST. Any GST incurred by
a GST registered investor in the making of such an exempt supply is generally not recoverable from the
Comptroller of GST.
Where our Shares are sold by a GST registered investor to a person belonging outside Singapore,
the sale is a taxable supply subject to GST at 0% if certain conditions are met. Any GST incurred by a
GST registered investor in the making of this supply in the course or furtherance of a business may be
recovered from the Comptroller of GST.
D-3
APPENDIX D
TAXATION
Services such as brokerage, handling and clearing charges rendered by a GST registered person to
an investor belonging in Singapore in connection with the investors purchase, sale or holding of shares
will be subject to GST at the standard rate. Similar services rendered to an investor belonging outside
Singapore may be zero-rated if certain conditions are met.
E-1
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS
You are invited to subscribe for and/or purchase the Placement Shares at the Placement Price, subject to
the following terms and conditions:-
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 PLACEMENT SHARES OR
INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF
PLACEMENT SHARES WILL BE REJECTED.
2. Your application for the Placement Shares may only be made by way of printed Placement Shares
Application Forms.
YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE PLACEMENT SHARES.
3. You are allowed to submit only one application in your own name for the Placement Shares.
If you, not being an approved nominee company, have submitted an application for the
Placement Shares in your own name, you should not submit any other application for the
Placement Shares for any other person. Such separate applications shall be deemed to be
multiple applications and will be liable to be rejected at the discretion of our Company and
the Vendors, in consultation with the Placement Agent.
Joint applications shall be rejected. Multiple applications for the Placement Shares shall be
liable to be rejected at the discretion of our Company and the Vendors, in consultation with
the Placement Agent. If you submit or procure submissions of multiple share applications,
you may be deemed to have committed an offence under the Penal Code, Chapter 224 of
Singapore and the SFA, and your applications may be referred to the relevant authorities for
investigation. Multiple applications or those appearing to be or suspected of being multiple
applications will be liable to be rejected at the discretion of our Company and the Vendors,
in consultation with the Placement Agent.
4. We will not accept applications from any person under the age of 18 years, undischarged
bankrupts, sole proprietorships, partnerships or non-corporate bodies, joint Securities Account
holders of CDP and from applicants whose addresses (as furnished in their Application Forms)
bear post ofce box numbers. No person acting or purporting to act on behalf of a deceased
person is allowed to apply under the Securities Account with CDP in the deceased name at the
time of application.
5. We will not recognise the existence of a trust. Any application by a trustee or trustees must be
made in his/her/their own name(s) and without qualication or, where the application is made by
way of an Application Form by a nominee, in the name(s) of an approved nominee company or
approved nominee companies after complying with paragraph 6 below.
6. WE WILL ONLY ACCEPT 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 persons acting as nominees other than approved nominee
companies shall be rejected.
7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES
ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do
not have an existing Securities Account with CDP in your own name at the time of your application,
your application will be rejected. If you have an existing Securities Account with CDP but fail to
provide your Securities Account number or provide an incorrect Securities Account number in
Section B of the Application Form, your application is liable to be rejected. Subject to paragraph 8
below, your application shall be rejected if your particulars such as name, NRIC/passport number,
nationality, permanent residence status and CDP Securities Account number provided in your
Application Form differ from those particulars in your Securities Account as maintained with CDP.
If you have more than one individual direct Securities Account with CDP, your application shall be
rejected.
E-2
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS
8. If your address as stated in the Application Form is different from the address registered
with CDP, you must inform CDP of your updated address promptly, failing which the
notication letter on successful allotment and/or allocation and other correspondences
from CDP will be sent to your address last registered with CDP.
9. Our Company and the Vendors reserve the right to reject any application which does
not conform strictly to the instructions set out in the Application Forms and in this Offer
Document or with the terms and conditions of this Offer Document or, in the case of an
application by way of an Application Form, which is illegible, incomplete, incorrectly
completed or which is accompanied by an improperly drawn up or improper form of
remittance. Our Company and the Vendors further reserve the right to treat as valid any
applications not completed or submitted or effected in all respects in accordance with
the instructions set out in the Application Forms or the terms and conditions of this Offer
Document, and also to present for payment or other processes all remittances at any time
after receipt and to have full access to all information relating to, or deriving from, such
remittances or the processing thereof.
10. Our Company and the Vendors reserve the right to reject or accept, in whole or in part, or to
scale down or to ballot any application, without assigning any reason therefor, and no enquiry
and/or correspondence on our decision of our Company and the Vendors will be entertained. In
deciding the basis of allotment and/or allocation which shall be at the discretion of our Company
and the Vendors, due consideration will be given to the desirability of allotting and/or allocating the
Placement Shares to a reasonable number of applicants with a view to establishing an adequate
market for our Shares.
11. Share certicates 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 Placement Shares allotted and/or allocated to you. This will be the only
acknowledgement of application monies received and is not an acknowledgement by our Company
and the Vendors. You irrevocably authorise CDP to complete and sign on your behalf as transferee
or renounce, any instrument of transfer and/or other documents required for the issue or transfer of
the Placement Shares allotted and/or allocated to you.
12. You irrevocably authorise CDP to disclose the outcome of your application, including the number of
Placement Shares allotted and/or allocated to you pursuant to your application, to us, the Vendors,
the Sponsor, Issue Manager and Placement Agent and, any other parties so authorised by the
foregoing persons.
13. 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 Placement Shares by way of a Placement
Shares Application Form.
14. By completing and delivering an Application Form in accordance with the provisions of this Offer
Document, you:-
(a) irrevocably offer, agree and undertake to subscribe for and/or purchase the number
of Placement Shares specied in your application (or such smaller number for which the
application is accepted) at the Placement Price for each New Share and agree that you
will accept such Placement Shares as may be allotted and/or allocated to you, in each
case on the terms of, and subject to the conditions set out in this Offer Document and the
Memorandum and Articles of Association of our Company;
E-3
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS
(b) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such information,
representations and declarations will be relied on by our Company and the Vendors in
determining whether to accept your application and/or whether to allot and/or allocate any
Placement Shares to you;
(c) agree that the aggregate Placement Price for the Placement Shares applied for is due and
payable to our Company and the Vendors upon application; and
(d) 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
Vendors, the Sponsor and Issue Manager, and/or the Placement Agent will infringe any such
laws as a result of the acceptance of your application.
15. Our acceptance of applications will be conditional upon, inter alia, our Company and the Vendors
being satised that:-
(a) permission has been granted by the SGX-ST to deal in and for quotation of all our existing
Shares (including the Vendor Shares) and the Placement Shares on Catalist;
(b) the Management Agreement and Placement Agreement referred to in the Management
and Placement Agreements section of this Offer Document have become unconditional and
have not been terminated or cancelled prior to such date as we may determine; and
(c) the Authority has not issued a stop order under the SFA which directs that no further shares
to which this Offer Document relates be allotted and/or allocated.
16. We will not hold any application in reserve.
17. We will not allot and/or allocate Shares on the basis of this Offer Document later than six months
after the date of registration of this Offer Document by the SGX-ST acting as agent on behalf of the
Authority.
18. Additional terms and conditions for applications by way of Application Forms are set out in the
Additional Terms and Conditions for Applications using Application Forms below.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS
You shall make an application by way of an Application Form on and subject to the terms and conditions
of this Offer Document including but not limited to the terms and conditions appearing below as well
as those set out in the Terms, Conditions And Procedures For Applications section as well as the
Memorandum and Articles of Association of our Company.
1. Your application for the Placement Shares must be made using the BLUE Application Forms for
Placement Shares accompanying and forming part of this Offer Document.
We draw your attention to the detailed instructions contained in the Application Forms and this
Offer Document for the completion of the Application Forms which must be carefully followed. Our
Company and the Vendors reserve the right to reject applications which do not conform
strictly to the instructions set out in the Application Forms and this Offer Document
or to the terms and conditions of this Offer Document or which are illegible, incomplete,
incorrectly completed or which are accompanied by improperly drawn remittances or
improper form of remittances or remittances which are not honoured upon their rst
presentation.
2. Your Application Forms must be completed in English. Please type or write clearly in ink using
BLOCK LETTERS.
E-4
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS
3. All spaces in the Application Forms, except those under the heading FOR OFFICIAL USE
ONLY, must be completed and the words NOT APPLICABLE or N.A. should be written in
any space that is not applicable.
4. Individuals, corporations, approved nominee companies and trustees must give their names in full.
You must make your application, in the case of individuals, in your full names as they appear in
your identity card (if applicants have such identication documents) 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 ofcial 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 afx 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 Companys Share
Registrar and Share Transfer Ofce. Our Company and the Vendors reserve the right to require you
to produce documentary proof of identication for verication purposes.
5. (a) You must complete Sections A and B and sign on 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 benecial owner(s).
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on
page 1 of the Application Form, your application is liable to be rejected.
6. You, whether an individual or corporate applicant, whether incorporated or unincorporated
and wherever incorporated or constituted, will be required to declare whether you are a citizen
or permanent resident of Singapore or a corporation in which citizens or permanent residents of
Singapore or any body corporate constituted under any statute of Singapore have an interest in
the aggregate of more than 50% 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 benecial owner
of the Placement 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% of the issued share capital of or interests in such corporation.
7. Your application must be accompanied by a remittance in Singapore currency for the full amount
payable, in respect of the number of Placement Shares applied for, in the form of a BANKERS
DRAFT or CASHIERS ORDER drawn on a bank in Singapore, made out in favour of SMJ
SHARE ISSUE ACCOUNT crossed A/C PAYEE ONLY, with your name, CDP Securities
Account number and address written clearly on the reverse side. We will not accept applications
not accompanied by any payment or accompanied by any other form of payment. We will
reject remittances bearing NOT TRANSFERABLE or NON TRANSFERABLE crossings. The
completed and signed BLUE Placement Shares Application Form and your remittance in full in
respect of the number of the Placement Shares applied for in accordance with the terms and
conditions of this Offer Document, 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. The sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY
HAND, at your own risk, to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Rafes
Place #32-01 Singapore Land Tower, Singapore 048623 to arrive by 12.00 noon on 25 June
2014 or such other time as our Company and the Vendors may, in consultation with the
Sponsor, Issue Manager and Placement Agent decide. Local Urgent Mail or Registered Post
must NOT be used. No acknowledgement of receipt will be issued by our Company, the Vendors
or the Sponsor, Issue Manager and Placement Agent for any applications or application monies
received.
E-5
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS
8. Monies paid in respect of unsuccessful applications are expected to be returned (without interest
or any share of revenue or other benet arising therefrom) to you by ordinary post within 24 hours
of balloting of applications at your own risk. Where your application is rejected or accepted in part
only, the full amount or the balance of the application monies, as the case may be, will be refunded
(without interest or any share of revenue or other benet 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. In the event that the Placement is cancelled by us following the termination
of the Management Agreement and/or Placement Agreement, the application monies received will
be refunded (without interest or any share of revenue or any other benet arising therefrom) to you
by ordinary post at your own risk within 5 Market Days of the termination of the Placement. In the
event that the Placement is cancelled by us following the issuance of the stop order by the SGX-
ST, acting as agent on behalf of the Authority, the application monies received will be refunded
(without interest or any share of revenue or other benet arising therefrom) to you by ordinary post
at your own risk within 14 days from the date of the stop order.
9. Capitalised terms used in the Application Forms and dened in this Offer Document shall bear the
meanings assigned to them in this Offer Document.
10. You irrevocably agree and acknowledge that your application is subject to risks of res, acts of
God and other events beyond the control of our Company, our Directors, the Vendors, the Sponsor,
Issue Manager and Placement Agent and/or any other party involved in the Placement, and if,
in any such event, our Company, our Directors, the Vendors, the Sponsor, Issue Manager and
Placement Agent do not receive your Application Form, you shall have no claim whatsoever
against our Company, our Directors, the Vendors, the Sponsor, Issue Manager and Placement
Agent and/or any other party involved in the Placement for the Placement Shares applied for or for
any compensation, loss or damage.
11. By completing and delivering the Application Form, you agree that:-
(a) in consideration of our Company having distributed the Application Form to you and agreeing
to close the Application List at 12.00 noon on 25 June 2014 or such other time or date as
our Directors and the Vendors may, in consultation with the Sponsor, Issue Manager and
Placement Agent, decide:-
(i) your application is irrevocable; and
(ii) your remittance will be honoured on rst presentation and that any application monies
returnable may be held pending clearance of your payment without interest or any
share of revenue or other benet arising therefrom;
(b) neither our Company, our Directors, the Vendors, the Sponsor, Issue Manager and
Placement Agent nor any other party involved in the Placement shall be liable for any delays,
failures or inaccuracies in the recording, storage or in the transmission or delivery of data
relating to your application to us or CDP due to breakdowns or failure of transmission,
delivery or communication facilities or any risks referred to in paragraph 10 above or to any
cause beyond their respective controls;
(c) all applications, acceptances and contracts resulting therefrom under the Placement shall
be governed by and construed in accordance with the laws of Singapore and that you
irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(d) in respect of the Placement Shares for which your application has been received and not
rejected, acceptance of your application shall be constituted by written notication and not
otherwise, notwithstanding any remittance being presented for payment by or on behalf of
our Company;
E-6
APPENDIX E
TERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS
(e) you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application;
(f) in making your application, reliance is placed solely on the information contained in this
Offer Document and none of our Company, the Vendors, the Sponsor, Issue Manager and
Placement Agent nor any other person involved in the Placement shall have any liability for
any information not so contained;
(g) you consent to the disclosure of your name, NRIC/passport number, address, nationality,
permanent resident status, CDP Securities Account number, CPF Investment Account
number (if applicable), and share application amount to our Share Registrar, CDP, SCCS,
SGX-ST, our Company, the Vendors, the Sponsor, Issue Manager and Placement Agent or
other authorised operators; and
(h) you irrevocably agree and undertake to subscribe for and/or purchase the number of the
Placement Shares applied for as stated in the Application Form or any smaller number
of such Placement Shares that may be allotted and/or allocated to you in respect of your
application. In the event that our Company and the Vendors decide to allot and/or allocate
any smaller number of the Placement Shares or not to allot and/or allocate any Placement
Shares to you, you agree to accept such decision as nal.
31 Jurong Port Road
#02-20 Jurong Logistics Hub
Singapore 619115
Phone: (65) 6261 1212
Fax: (65) 6261 6512
Email: [email protected]