HOR KEW CORPORATION LIMITED

Application has been made to the Singapore Exchange Securities

Trading Limited (the “SGX-ST”) for permission to deal in and for

quotation of all the ordinary shares of $0.05 each (the “Shares”)

in the capital of Hor Kew Corporation Limited (the “Company”)

already issued and the new Shares (the “New Shares”) which are

part of the subject of this Invitation. Such permission will be

granted when the Company has been admitted to the Official

List of the SGX-ST.

Acceptance of applications will be conditional upon permission

being granted to deal in and for quotation of all the issued

Shares as well as the New Shares. Moneys paid in respect of any

application accepted will be returned, without interest or any

share of revenue or other benefit arising therefrom and at the

applicant’s risk, if the said permission is not granted.

The SGX-ST assumes no responsibility for the correctness of any

of the statements made, opinions expressed or reports contained

in this Prospectus. Admission to the Official List of the SGX-ST

is not to be taken as an indication of the merits of the Invitation,

the Company, its subsidiaries or the Shares. A copy of this

Prospectus has been lodged with and registered by the Registrar

of Companies and Businesses in Singapore who takes no

responsibility for its contents.

HOR KEW CORPORATION LIMITED(incorporated in the Republic of Singapore on 18 June 1999)

Invitation in respect of 153,800,000 Shares of $0.05 each comprising 113,800,000 New Shares and 40,000,000 Vendor Shares:-

(1) 23,070,000 Offer Shares at $0.20 for each Offer Shareby way of public offer; and

(2) 130,730,000 Placement Shares by way of placement, comprising.-

(i) a minimum of 115,350,000 Placement Share at $0.20for each Placement Share; and

(ii) up to 15,380,000 Reserved Shares at $0.20 for each Share reserved forindependant director, employees and business associates of our Group,

payable in full on application

Manager, Underwriter and Placement Agent

P R O S P E C T U S D A T E D 4 A P R I L 2 0 0 0

Pr o viding Value-Added Qu a l i t y C o n s t r u c t i o n Se r vices Since 1979

Category BCA registration Tender capacitygrade

General Construction

•General Building Construction G8 Unlimited

• Piling G5 $10 million

• Civil engineering G4 $5 million

Prefabrication

• Pre-cast concrete products L6 Unlimited

• Supplier of doors, windows, L4 $5 million

louvres and glazing

0

100

200

CAGR (FY96 to FY99E) :25.2%

96 97 98 99E

FINANCIAL PERFORMANCE

Turnover ($M)

0

8

16

CAGR (FY96 to FY99E) :106.3%

96 97 98 99E

Profit before tax ($M)

Left:Precast Facade

CORPORATE PROFILE

We are a building construction groupproviding an integrated range ofconstruction-related products andservices which include :■ undertaking construction activities,

as a main contractor, forresidential, commercial, schooland industrial projects; and

■ the design, manufacture andsupply of prestressed and precastreinforced concrete buildingcomponents and prefabricatedarchitectural metal components.

We are one of 92 companies rankedG8 by the Building and ConstructionAuthority ("BCA") in the generalbuilding construction category, whichallows us to undertake public sectorprojects of unlimited value. We areranked by BCA in the followingcategories :

As a prequalified supplier to theHousing Development Board("HDB") "Design and Build"projects, we are involved in thebuilding design and specificationsas well as construction of thebuilding. Our market share for HDB“Design and Build” projects is anestimated 11.3% as at November1999.

We have supplied prestressed andprecast reinforced concrete buildingcomponents and prefabricatedarchitectural metal components tomajor construction projects underHDB’s Major Upgrading Programmeand “Design and Build” projects.

To complement our general buildingconstruction operations, we are alsoinvolved in building maintenancework, property investment anddevelopment and the import andexport of building materials.

12

4 1.8

5.6

7.7

15.8

89.2

161.9

175.5 174.9

Above:Prestressed and precastfloor planksLeft:Turreting machine

FOUNDATION FOR GROWTH

General constructionWe focus on two main marketsegments :■ HDB tenders which include Major

Upgrading Projects and “Designand Build” projects; and

■ Public Works Department projectswhich cover construction andmaintenance of governmentschools.

Current major projects are :■ Two “Design and Build” projects,

worth a total of $184.2 million,due to be completed in 2000 and2001; and

■ Building and civil engineeringworks at Bukit Panjang, worth$145.0 million, due to becompleted in 2000.

Prefabrication■ We manufacture a wide range of

prestressed and precast reinforcedconcrete building componentssuch as columns, trenches, beams,slabs, planks, staircases, utilityrooms, balconies, precast wallsand specialist precast componentsfor civil defence shelters.

■ We also manufacture prefabricatedarchitectural metal componentssuch as mild steel door frame,stainless steel hopper, aluminiumletterbox, aluminium cloth rackand mild steel entrance gate.

■ As at 31 October 1999, we havesecured contracts, worthapproximately $16.9 million, tosupply to projects due to completein 2000 and 2001.

Residential property development■ We have developed small scale

private housing projects, bothlanded and non-landed, since1986. Most of these projects weredeveloped for sale.

■ Though this business is not ourGroup’s focus, we will look outfor opportunities whenever theyarise.

Established track recordWe have more than 22 years experience in the local constructionindustry and have successfully undertaken contracts worth a totalof at least S$600 million for the past five years up to 10 monthsended 31 October 1999, making us one of the largest buildingcontractors with BCA in terms of annual turnover.

Integrated servicesAs a main contractor for general building construction and "Designand Build" projects; and a supplier for prestressed and precastreinforced concrete building materials and prefabricated architecturalmetal components, we are able to better control the quality andprogress of the projects, lower construction costs and add value toour customers’ projects.

Quality of workOur professionalism and quality services are embodied in the variousawards and accreditation we received. In 1997, we received a silvermedallion from the HDB in recognition of our contribution as abusiness partner. We also won the CIDB Best Buildable Design Awardin 1994 and 1997. Our 3 subsidiaries – Hor Kew Private Limited,Prefab Technology Pte Ltd and Prefab Technology 3 Pte Ltd areISO 9002-certified.

Above:Future propertydevelopment

Far left:Bukit Panjang “Designand Build” flatsLeft:Precast walls

Below:Prefabricated bathroom

INDUSTRY PROSPECTS

FUTURE PLANS

Legislation of buildable designsAccording to the Construction 21 report launched by the Ministry of NationalDevelopment and the Ministry of Manpower, the Government has legislatedthat all buildings in both the public and private sectors will have to meetthe minimum buildability requirement starting from January 2001. This policy,which improves productivity and reduces the industry’s reliance on foreignworkers, strongly supports the extensive use of precast and prefabricatedcomponents in both public and private housing projects.

As manufacturers of such components, we are well positioned to benefitfrom the expected increase in demand for precast and prefabricatedcomponents. In addition, we are able to offer a cost advantage whenbidding for such building projects.

Recovery in the construction industryThe construction industry is projected to grow by 3% in 2000 and 6%in 2001. The ongoing Ponggol 21 project, the Estate Renewal Strategy inToa Payoh, Ang Mo Kio, Queenstown, Mountbatten and Bedok, the Mainand Interim Upgrading Programmes and the Selective En-bloc RedevelopmentScheme in 2000 will support the growth in the industry and generate steadydemand for building construction services.

To enter into the next phase ofgrowth, the Group intends to:

Focus on HDB “Design and Build”and upgrading projectsWith our prefabrication capabilitiesand track record, we are wellpositioned to tender for “Designand Build” and HDB upgradingprojects which we believe willincrease this year.

Increase production capacity ofprefabricated components■ With the expected recovery in the

construction sector in 2000 andthe legislation of buildable designsin 2001, we expect demand forprecast concrete components andprefabricated architectural metalcomponents to increase. Thisaugurs well for us as amanufacturer of such components.

■ We have plans to increase ourproduction capacity by expandingour current plant. The set up ofa new manufacturing plant inMalaysia will enable us to lowerour production costs.

Left and below:Rolling form machine

New products■ Mild steel civil defence blast door

This is a necessary feature in everyresidential dwelling to beconstructed in Singapore. Weexpect to commence marketing thisproduct in Singapore from the 2nd

half of 2000.

■ Prefabricated bathroomThe HDB will be introducingprefabricated bathrooms for use inseveral of the new HDB contracts.Prefabrication Technology Centre,a unit under HDB, estimated thedemand for prefabricated bathroomsto be worth more than $100 millionper year. Arising from the aboveestimate, we have acquired a patentpending system used tomanufacture prefabricatedbathrooms.

1

CONTENTS

Page

CORPORATE INFORMATION ............................................................................................................. 3

DEFINITIONS ...................................................................................................................................... 5

DETAILS OF THE INVITATION

Listing on the SGX-ST .......................................................................................................................... 8

Indicative Timetable for Listing .............................................................................................................. 9

PROSPECTUS SUMMARY ............................................................................................................... 10

RISK FACTORS ................................................................................................................................ 12

INVITATION STATISTICS ................................................................................................................. 15

SUMMARY OF FINANCIAL INFORMATION .................................................................................... 17

GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP

Share Capital ...................................................................................................................................... 19

Shareholders ....................................................................................................................................... 21

Moratorium .......................................................................................................................................... 22

Restructuring Exercise ........................................................................................................................ 22

Group Structure .................................................................................................................................. 25

History ................................................................................................................................................ 27

Business ............................................................................................................................................. 28

Quality Control .................................................................................................................................... 36

Insurance Policies ............................................................................................................................... 37

Project Tendering and Marketing.......................................................................................................... 38

Credit Policy ........................................................................................................................................ 38

New Products ..................................................................................................................................... 39

Patent ................................................................................................................................................. 39

Staff Training ....................................................................................................................................... 39

Year 2000 Compliance......................................................................................................................... 40

Major Suppliers ................................................................................................................................... 40

Major Customers................................................................................................................................. 41

Competition......................................................................................................................................... 41

Competitive Strengths......................................................................................................................... 43

Turnover and Profitability ..................................................................................................................... 44

Profit Estimate .................................................................................................................................... 46

Dividends ............................................................................................................................................ 46

Prospects and Future Plans ................................................................................................................ 47

Brought to you by Global Reports

2

Page

Review of Financial Position ............................................................................................................... 50

Potential Conflicts of Interests ............................................................................................................ 52

Interested Persons Transactions.......................................................................................................... 53

Directors, Management and Staff ........................................................................................................ 57

Service Agreements............................................................................................................................ 60

Properties and Fixed Assets ............................................................................................................... 61

LETTER FROM THE AUDITORS AND REPORTING ACCOUNTANTSIN RELATION TO THE ESTIMATED CONSOLIDATED FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1999 .............................................................. 63

DIRECTORS’ REPORT ...................................................................................................................... 64

ACCOUNTANTS’ REPORT ................................................................................................................ 65

VALUATION REPORT FROM ALLIED APPRAISAL CONSULTANTS PTE LTD ............................... 86

VALUATION REPORT FROM CHESTERTON INTERNATIONALPROPERTY CONSULTANTS PTE LTD ............................................................................................. 96

GENERAL AND STATUTORY INFORMATION .................................................................................. 99

APPENDIX A

Procedures for Application and Acceptance ...................................................................................... 113

Additional Terms and Conditions for Applications using Application Forms ........................................ 116

Additional Terms and Conditions for Electronic Applications .............................................................. 119


3

CORPORATE INFORMATION

BOARD OF DIRECTORS : Aw Leng Hwee, BBM, Chairman & Managing DirectorAw Khoon Hwee, Deputy Managing DirectorAw Hoon Hui, Executive DirectorDr Low Seow ChayWilliam Chew Yew Meng

COMPANY SECRETARY : Lee Seng Hua

REGISTERED OFFICE : 66 Sungei Kadut Street 1Singapore 729367

SHARE REGISTRAR : Lim Associates Pte Ltd10 Collyer Quay#19-08 Ocean BuildingSingapore 049315

MANAGER, UNDERWRITER : Overseas Union Bank Limited AND PLACEMENT AGENT 1 Raffles Place

OUB CentreSingapore 048616

JOINT AUDITORS AND : Ernst & Young REPORTING ACCOUNTANTS Certified Public Accountants

10 Collyer Quay #21-01Ocean BuildingSingapore 049315

Lee Seng Chan & CoCertified Public Accountants6001 Beach Road#14-01 Golden Mile TowerSingapore 199589

JOINT SOLICITORS TO : Yeo-Leong & Peh INVITATION 20 McCallum Street

#12-03 Asia ChambersSingapore 069046

Rodyk & Davidson9 Raffles Place #55-01Republic PlazaSingapore 048619

VALUERS : Chesterton InternationalProperty Consultants Pte Ltd5 Temasek Boulavard #07-02Suntec City Tower 5Singapore 038985

Allied Appraisal Consultants Pte Ltd400 Orchard RoadOrchard Towers #06-26Singapore 238875


4

PRINCIPAL BANKERS : Overseas Union Bank Limited1 Raffles PlaceOUB CentreSingapore 048616

Malayan Banking Berhad50 Raffles Place #01-00Singapore 048623


5

DEFINITIONS

In this Prospectus and the accompanying Application Forms, the following definitions apply throughoutwhere the context so admits :-

“Act” : The Companies Act of Singapore, Chapter 50

“Application Forms” : The printed application forms to be used for the purpose ofthe Invitation and which form part of this Prospectus

“Application List” : The list of the applications to subscribe for and/or topurchase the Invitation Shares

“Aw Family” : Consists of its members, Mr Aw Leng Hwee, BBM, Mr AwHoon Hui, Mr Aw Soon Hwee, Mr Aw Khoon Hwee, Mr AwHong Hwee, Ms Aw Lay Sim, Ms Aw Geok Mui, Ms Aw LayTin and Ms Aw Lay Choo

“ATM” : Automated teller machines of a Participating Bank

“BCA” : Building and Construction Authority

“CDP” : The Central Depository (Pte) Limited

“CIDB” : Construction Industry Development Board

“Company” : Hor Kew Corporation Limited

“CPF” : The Central Provident Fund

“Directors” : The directors of our Company as at the date of thisProspectus

“Electronic Applications” : Applications for the Offer Shares made through an ATM orthrough Internet Banking websites in accordance with theterms and conditions of this Prospectus

“EPS” : Earnings per Share

“FY” : Financial year ended 31 December

“Group” or “Proforma Group” : Our Company and our subsidiaries as if our existing Groupstructure had been in place since 1 January 1994

“HDB” : Housing & Development Board

“Internet Banking websites” : Internet websites of OUB and DBS

“Invitation” : The invitation by our Company and our Vendors to the publicto subscribe for and/or purchase the Invitation Shares at theIssue Price, subject to and on the terms and conditions ofthis Prospectus

“Invitation Shares” : The New Shares and the Vendor Shares

“Issue Price” : $0.20 for each Invitation Share


6

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

“New Shares” : The 113,800,000 new Shares for which our Company willinvite applications to subscribe pursuant to the Invitation

“NTA” : Net tangible assets

“OUB”, “Manager”, “Underwriter” : Overseas Union Bank Limitedor “Placement Agent”

“Offer” : The offer by our Company and our Vendors of the OfferShares to the public for subscription and/or purchase at theIssue Price, subject to and on the terms and conditions ofthis Prospectus

“Offer Shares” : The 23,070,000 Invitation Shares to be offered pursuant tothe Offer

“PER” : Price earnings ratio

“PWD” : Public Works Department

“Participating Banks” : OUB, The Development Bank of Singapore Ltd (including itsPOSBank Services division) (“DBS”); Keppel TatLee BankLimited (“KTB”); Oversea-Chinese Banking CorporationLimited and its subsidiary, Bank of Singapore Limited(“OCBC Group”); and United Overseas Bank Limited and itssubsidiaries, Chung Khiaw Bank Limited, Far Eastern BankLimited and Industrial & Commercial Bank Limited (“UOBGroup”)

“Placement” : The placement by the Placement Agent of the PlacementShares on behalf of our Company and our Vendors forsubscription and/or purchase at the Issue Price, subject toand on the terms and conditions of this Prospectus

“Placement Shares” : The 130,730,000 Invitation Shares (inclusive of the15,380,000 Reserved Shares) to be offered under thePlacement

“Reserved Shares” : Up to 15,380,000 Placement Shares reserved forsubscription by our independent Director, employees and thebusiness associates of our Group

“Restructuring Exercise” : The restructuring exercise implemented upon the receipt ofin-principle approval from the SGX-ST for the admission ofour Company to the Official List of the SGX-ST, more fullydescribed on pages 22 to 25 of this Prospectus

“SCCS” : Securities Clearing & Computer Services (Pte) Ltd

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Securities Account” : The securities account maintained by a depositor with CDP

“Shareholder” : Holders of Shares of our Company


7

“Shares” : Ordinary shares of $0.05 each in the capital of our Company

“Vendors” : Mr Aw Leng Hwee, BBM, Mr Aw Hoon Hui, Mr Aw SoonHwee, Mr Aw Khoon Hwee, Mr Aw Hong Hwee, Ms Aw LaySim, Ms Aw Lay Choo, Ms Aw Geok Mui and Ms Aw Lay Tincollectively

“Vendor Shares” : The 40,000,000 issued and fully paid-up Shares for whichour Vendors invite applications to purchase under theInvitation, subject to and on the terms and conditions of thisProspectus

“$” or “S$” and “cents” : Singapore dollars and cents respectively

“%” or “per cent.” : Percentage

“sq m” : Square metres

Companies

“Aik Hwee” : Aik Hwee Construction Pte Ltd

“HKHPL” : Hor Kew Holdings Pte Ltd

“HKPL” : Hor Kew Private Limited

“HKL” : Hor Kew Land Pte Ltd

“PFT” : Prefab Technology Pte Ltd

“PFT3” : Prefab Technology 3 Pte Ltd

“PFT8” : Prefab Technology 8 Pte Ltd

“PVDD” : Park Vale Design & Development Pte Ltd

“Prefab Group” : Consisting of PFT, PFT3 and PFT8

Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter genders andvice versa. References to persons shall include corporations.

Any reference in this Prospectus to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word defined under the Act or any statutory modification thereof and used inthis Prospectus shall, where applicable, have the meaning ascribed to it under the Act.

Any reference in this Prospectus or the Application Forms to Shares being allotted and/or allocated to anapplicant includes allotment and/or allocation to CDP for the account of that applicant. Any reference toa time of day in this Prospectus shall be a reference to Singapore time.


8

DETAILS OF THE INVITATION

LISTING ON THE SGX-ST

Application has been made to the SGX-ST for permission to deal in and for quotation of all the Sharesalready issued (including the Vendor Shares) and the New Shares. Such permission will be granted whenour Company has been admitted to the Official List of the SGX-ST. Acceptance of applications will beconditional upon permission being granted to deal in and for quotation of all the issued Shares (includingthe Vendor Shares) as well as the New Shares. Moneys paid in respect of any application accepted willbe returned, without interest or any share of revenue or other benefit arising therefrom and at theapplicant’s risk, if the said permission is not granted.

The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinionsexpressed or reports contained in this Prospectus. Admission to the Official List of the SGX-ST is not tobe taken as an indication of the merits of the Invitation, our Company, our subsidiaries, associatedcompany, or our Shares.

Our Directors individually and collectively accept full responsibility for the accuracy of the informationgiven in this Prospectus and confirm, having made all reasonable enquiries, that to the best of theirknowledge and belief, there are no other material facts the omission of which would make any statementin this Prospectus misleading.

No person is authorised to give any information or to make any representation not contained in thisProspectus in connection with the Invitation and, if given or made, such information or representationmust not be relied upon as having been authorised by our Company, our Vendors or our Managers.Neither the delivery of this Prospectus and the Application Forms nor the Invitation shall, under anycircumstances, constitute a continuing representation or create any implication that there has been nochange in the affairs of our Company or our Group or in the statements of fact contained in thisProspectus since the date of this Prospectus. When such changes occur, our Company may make anannouncement of the same to the SGX-ST. All applicants should take note of any such announcementsand, upon the release of such an announcement, shall be deemed to have notice of such changes.Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise orrepresentation as to the future performance or policies of our Company or our Group. This Prospectushas been prepared solely for the purpose of the Invitation and may not be relied upon by any otherperson other than the applicants in connection with their applications for the Invitation Shares and not forany other purpose. This Prospectus does not constitute an offer of or invitation to subscribe for theInvitation Shares in any jurisdiction in which such an offer or invitation is unauthorised or unlawful nordoes it constitute an offer or invitation to any person to whom it is unlawful to make such an offer orinvitation.

Copies of this Prospectus and the Application Forms and envelopes may be obtained on request,subject to availability, from:-

OVERSEAS UNION BANK LIMITED1 Raffles Place

OUB CentreSingapore 048616

and from branches of OUB, members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in Singapore.

The Application List will open at 10.00 a.m. on 12 April 2000 and will remain open until 12.00noon on the same day or for such further period or periods as our Company and our Vendorsmay, in consultation with OUB, decide.


9

INDICATIVE TIMETABLE FOR LISTING

In accordance with the SGX-ST’s News Release of 28 May 1993 on the trading of initial public offeringshares on a “when issued” basis, an indicative timetable is set out below for the reference of applicants:-

Indicative date/time Event

12.00 noon on 12 April 2000 Close of Application List.

13 April 2000 Balloting of applications, if necessary (in the event of over-subscription for the Invitation Shares).

9.00 a.m. on 14 April 2000 Commencement of trading on a “when issued” basis.

24 April 2000 Last day of trading on a “when issued” basis.

9.00 a.m. on 25 April 2000 Commencement of trading on a “ready” basis.

2 May 2000 Settlement date for all trades done on a “when issued” basisand for all trades done on a “ready” basis on 25 April 2000.

The above timetable is only indicative as it assumes that the closing date for the Application List is 12April 2000, the date of admission of the Company to the Official List of the SGX-ST is 14 April 2000, theSGX-ST’s shareholding spread requirement will be complied with and the Invitation Shares will be issuedand fully paid-up and/or allocated prior to 14 April 2000. The actual date on which the Shares willcommence trading on a “when issued” basis will be announced when it is confirmed by the SGX-ST.

The above timetable and procedure may be subject to such modifications as the SGX-ST may in itsdiscretion decide, including the decision to permit trading on a “when issue” basis, and thecommencement date of such trading. All persons trading in the Shares on a “when issued” basis do soat their own risk. In particular, persons trading in the Shares before their Securities Accounts withCDP are credited with the relevant number of Shares do so at the risk of selling Shares whichneither they nor their nominees, as the case may be, have been allotted and/or allocated or areotherwise beneficially entitled to. Such persons are also exposed to the risk of having to covertheir net sell positions earlier if “when issued” trading ends sooner than the indicative datementioned above. Persons who have a net sell position traded on a “when issued” basis shouldclose their position on or before the first day of “ready” basis trading.

Investors should consult the SGX-ST announcement on “ready” trading date on the Internet (at SGX-STwebsite http://www.singaporeexchange.com.sg), INTV or the newspapers or check with their brokers onthe date on which trading on a “ready” basis will commence.


10

PROSPECTUS SUMMARY

The information contained in this summary may not contain all the information that may be important toa prospective investor. A prospective investor should read this entire Prospectus, including the financialdata and related notes, before making an investment decision.

The Company : Our Company was incorporated in Singapore under the Act on 18June 1999 as a private limited company under the name of BirkinsTrading Pte Ltd. Our Company has been dormant since itsincorporation until the Restructuring Exercise which was completedon 26 March 2000. On 29 March 2000, our Company was convertedinto a public limited company and adopted its present name.

Our Group carries on business principally as main contractor forresidential, commercial, school and industrial projects, in propertyinvestment and development and as designer, manufacturer andsupplier of prestressed and precast reinforced concrete buildingcomponents and prefabricated architectural metal components.

Our business can be classified into 2 major divisions, namely, thegeneral construction division and the prefabrication division. Ourgeneral construction business is undertaken by our wholly ownedsubsidiaries, HKPL, HKL and PVDD, while our prefabricationbusiness is undertaken by subsidiaries, PFT and PFT3.

Currently, our Group is registered with BCA as a G8 contractor underthe category of general construction and a L6 supplier under thecategory of precast concrete products. We are also an approvedsupplier of the HDB under the following product categories:-

— Door frame – mild steel door frame with cathodic electrodedeposition

— Door frame – mild steel door frame with cathodic electrodedeposition primer for main entrance door

— Gate – mild steel metal gate for main entrance (3 leaves)

— Letter boxes – 3-way aluminium letter boxes with anti-junk maildevice and master door

— Refuse chute – foot operated stainless steel hopper

— Drying rack – aluminium clothes drying rack and stainless steelrailings at recessed area

For our future plans, we intend to focus on “design and build” andupgrading projects; and to develop 27 Ewe Boon Road, 42 EastCoast Road and 104 & 106 Arthur Road under our generalconstruction division. As for our prefabrication division, we intend toincrease our production capacity by building a factory extension at99 Pioneer Road and setting up a new manufacturing plant inMalaysia. We also intend to launch 2 new products, namely the mildsteel civil defence blast door which have been approved by the HDBto be used in HDB flats and the prefabricated bathroom (for which weare currently seeking approval from the relevant authorities). Pleaserefer to the section under “Prospects and Future Plans” in thisProspectus for more information.


11

The Invitation

Issue Size : 153,800,000 Invitation Shares, comprising 113,800,000 New Sharesand 40,000,000 Vendor Shares. Our New Shares will, upon issue andallotment, rank pari passu in all respects with our existing issuedShares.

Issue Price : $0.20 for each Invitation Share.

Purpose of the Invitation : Our Directors consider that the listing of our Company and thequotation of our Shares on the SGX-ST will enhance the publicimage of our Group locally and overseas and will enable us to tap thecapital markets for expansion of our operations. Our listing will alsoprovide members of the public, the management, staff and businessassociates of our Group with an opportunity to participate in theequity of our Company.

Use of Proceeds : The net proceeds from the issue of the New Shares of approximately$21.6 million (after deducting our Company’s share of the Invitationexpenses of approximately $1.2 million) will be used to finance ourGroup’s continued growth and development as follows:-

(i) approximately $4.0 million for the expansion of our Group’sprefabrication business to Malaysia;

(ii) approximately $2.0 million for our factory extension at 99Pioneer Road;

(iii) approximately $3.0 million for our property development at 27Ewe Boon Road;

(iv) approximately $2.8 million for the repayment of our bank loans(not outstanding loans with OUB); and

(v) the balance for general working capital purposes.

Pending the deployment of funds for the above identified uses, thenet proceeds may be added to our Group’s working capital, placed onfixed deposit with banks or financial institutions or invested in short-term money market instruments as our Directors may, in theirabsolute discretion, deem fit.

Reserved Shares : Up to 15,380,000 Shares will be reserved for the management, staffand business associates of our Group. In the event that any of theReserved Shares are not taken up, they will be made available tosatisfy applications for the Placement Shares, or in the event ofunder-subscription for the Placement Shares, to satisfy applicationsmade by members of the public for the Offer Shares.

Listing Status : Our Shares will be quoted on the SGX-ST, subject to admission ofour Company to the Official List of SGX-ST and permission fordealing in and quotation of our Shares being granted by the SGX-ST.


12

RISK FACTORS

Investment considerations

To the best of our belief and knowledge, all risk factors that are material to investors in making aninformed judgement on the Group are set out below. You should carefully evaluate each of the followingconsiderations and all of the other information set forth in this Prospectus before deciding to invest in ourShares.

General

You should be aware that our Group’s businesses rely entirely on the growth of the local constructionindustry. As such, our Group’s turnover and profits may be affected adversely if the constructionindustry registers a negative growth.

Singapore has weathered the Asian economic crisis with a jump in economic growth from 0.6% to 6.7%in the second quarter of 1999. This has led to the upgrade of its full year growth forecast to between 4-5%, up from 0-2% previously. However, the construction industry is still contracting and there remainsoversupply of residential properties and commercial space (Source: Economist Intelligence Unit, 9August 1999).

The construction industry, after enjoying 4 years of strong growth, declined by an estimated 33% in 1998and will decline further by 3% in 1999 before it is expected to recover by a similar margin in 2000 and by6% in 2001. Residential building activity increased by 49% to a record high of $11.2 billion in 1997, butfell by an almost similar margin in 1998 with a build-up of unsold private housing stock dragging down themarket. This sector is forecast to decline by 6% in 1999 before stabilising in 2000 (Source: Asia Pulse,16 August 1999). Subsequently as reported in the 1999 Economic Survey of Singapore, the constructionindustry declined by 11.8% in 1999.

On 10 August 1999, a Ministry of Trade and Industry official commented that Singapore’s constructionsector is expected to improve from 2001, lagging the current strength in the manufacturing sector by ayear to a year-and-a-half (Source: Reuters News Service, 10 August 1999).

In the event that the anticipated recovery in the construction industry does not materialise and the totalvalue of contracts to be awarded decreases, our Group’s turnover and profit may be affected adversely.

A major contribution to our turnover is from contracts with government bodies

The Singapore construction industry is made up of the public sector and the private sector. In thesecond quarter of 1999, the public sector awarded $1.8 billion worth of contracts while the private sectorawarded another $1.1 billion. Together with the contracts awarded in the first quarter of 1999 worth $2.4billion, the first half of 1999 saw a drop of $3.5 billion worth of contracts from the first half of 1998(Source: Construction Economics Report, Second Quarter 1999).

For FY1996, FY1997, FY1998 and the 10 months ended 31 October 1999, HDB accounted forapproximately 79%, 81%, 85% and 85% respectively of our Group’s turnover. Contracts by HDB areusually by an open tender system and are normally awarded to companies with a consistent track recordfor high quality, timely completion and competitive pricing. As our Group’s business is dependent onHDB contracts, any significant downturn in the demand for new HDB flats or change in policy by HDB toreduce the supply of new flats will have an adverse impact on our Group’s operating results. In addition,there is no guarantee that HDB will continue to award contracts to our Group in future.

Our Group’s businesses are dependent on foreign workers and changes in foreign workers’ levy

Our Group is dependent on skilled and unskilled foreign workers. As at 31 December 1999, we employ196 foreign workers (of which 188 workers are subject to foreign workers’ levies (“FWL”)) fromBangladesh, India and the People’s Republic of China. Any changes in labour policy in these countriesmay affect the supply of foreign workers. In addition, the supply of foreign workers is also subject to thepolicies imposed by the Ministry of Manpower. Our Group is vulnerable to the shortage of foreignworkers and the increase in FWL. In the event that there is a shortage of foreign workers or there is anincrease in FWL, our Group’s operating results will be affected negatively.


13

As at 31 December 1999, our Group employs approximately 188 foreign workers who are subject to FWL.The FWL, depending on skill levels, range from $30 per skilled worker to $470 per unskilled worker. OurGroup’s profit margin will be affected negatively if there is a change in policy to increase the FWLwhether in respect of skilled workers or unskilled workers. In particular, if the FWL in respect of skilledworkers remained at $470 per worker per month, our Group’s profit margin for FY1999 would have beenreduced by an amount of approximately $992,640.

Our Group’s businesses are subject to price fluctuations of raw materials

In the construction industry, the cost structure can be broken down into that of fixed costs and variablecosts. Fixed costs include fixed overheads, cost of machineries and staff salaries whereas variablecosts comprise mainly the cost of raw materials. Raw materials include mainly ready mixed concrete,reinforcement materials, precast components, tiles, concreting sand, cement, steel bars, steel weldedmesh, steel strands, mild steel, stainless steel and aluminium. Due to varying levels of supply anddemand of construction materials, prices of construction materials may fluctuate when there is ashortage or excess of building materials. In addition, changes in government policies or regulations andforeign exchange rates may also affect material costs. As a result, our variable costs may increasebeyond initial projections, resulting in unanticipated reduction in our profit margins or even resulting inlosses. Furthermore, as a typical construction project usually spans a period of 18 to 24 months, we areparticularly susceptible to such price fluctuations which may affect the profit margins negatively for eachof our projects.

Our Group may face liquidated damages, disputes and claims

In the construction industry, any delay in the completion of projects will lead to the payment of liquidateddamages. Disputes and claims may also arise due to defective workmanship, non-adherence to contractspecifications and materials supplied. The quantum of liquidated damages is normally specified in thecontracts. As for disputes and claims, retention monies are normally held by customers to guard againstpotential defective work that may surface only after a period of time. Retention monies withheld arenormally in the range of 2.5% to 5.0% of contract value and will be held by customers for approximately1 year. For the last 3 financial years from FY1996 to FY1998 and the 10 months ended 31 October1999, the amount of liquidated damages, disputes and claims paid by our Group were 0%, 0.77%, 0.76%and 0.05% respectively of our total turnover. However, there is no assurance that there will not be anydelays in our current and future projects which may result in the payment of high liquidated damages andthat disputes and claims against us will not happen in the future. If such events occur, our profit marginwill be affected negatively.

Our Group may face liquidity and non payment risks

In the construction industry, payments are made only upon completion of each phase of project. Assuch, there is a time lag between the expenditure incurred and actual receipt of payment fromcustomers. A lack of constant monitoring of this may cause our Group’s businesses to run into liquidityproblems. Furthermore, the time lag increases the risk of bad debts as the financial position of ourcustomers may deteriorate over the same period of time. Our provision for doubtful debts wereapproximately $608,000, $800,000, $1,928,000 and $1,707,000 for FY1996, FY1997, FY1998 and the 10months ended 31 October 1999 respectively. Our actual bad debts written off for the 3 years ended 31December 1996, 31 December 1997 and 31 December 1998 were approximately $295,282, $148,649 and$11,091 respectively. For the 10 months ended 31 October 1999, an amount of $308,428 was written offagainst provision. Our operating results will be affected negatively if there is any significant default inpayment by our customers.

Our Group is in a highly competitive industry

Based on BCA’s website as at 13 March 2000, there were already 92 recognised BCA G8 contractors ascompared to 68 in 1996. To maintain the existing G8 status, our Group must secure projects withaggregate values of at least $100 million over a three year period and must have a minimum paid upcapital and net worth of $5 million. In addition, our Group must have 4 holders of approved professionalqualification, 2 of whom must have at least 5 years of relevant experience. In the event that this statusis not maintained, our Group will not be able to tender for any public sector contract of value above $50million. This will impact negatively on our Group’s financial performance.


14

Our Group faces market risks associated with the property market

From FY1996 up to the 10 months ended 31 October 1999, our Group’s residential property developmentbusiness did not contribute significantly to our turnover and profits. We are not established as a majorproperty developer in Singapore. The residential properties developed by our Group are mainly for saleand are hence subject to the supply and demand forces faced by the residential property market. Whilewe could potentially make substantial profit from the sale of such development properties in a strongmarket, we could also make losses and be saddled with unsold properties in a depressed market. Inaddition, as property development projects are capital intensive in nature, our Group’s working capitaland cash flows may be adversely affected.

Our Group has faced negative working capital in our business

In the past, we have faced negative working capital in our Group’s operations but have managed toobtain support in the form of suppliers’ credit and bank overdrafts. Any withdrawal of such support willcreate liquidity problems for our Group which if not resolved will have an adverse impact on our Group’sviability.

You will face specific risks as a shareholder of our Company’s ordinary shares.

Our Company’s share price may be volatile in the future

The Issue Price of our Invitation Shares was determined after discussions between our Manager andourselves and may not necessarily be indicative of prices that will prevail in the market. Our share priceafter the Invitation may fluctuate widely, depending on many factors, including:-

(i) perceived prospects and future plans for our Company and subsidiaries’ businesses and the generaloutlook of the construction industry in Singapore;

(ii) differences between our Group’s actual results and those expected by investors and the investmentcommunity;

(iii) changes in analysts’ recommendations or perceptions;

(iv) changes in general economic or market conditions in Singapore and the region;

(v) changes in share prices of companies with similar businesses as our Group that are listed either onthe SGX-MAINBOARD or SGX-SESDAQ; and

(vi) broad stock market price fluctuations.

Our share price may trade below the Issue Price.

Future issuance of equity securities may have an impact on our Company’s share price

Our Company is not able to predict what effect, if any, the issuance of further equity securities will haveon our Company’s share price. Issue of significant amounts of our Company’s equity securities in thepublic market after the Invitation, or the perception that such issues may occur, could affect the marketprice of our Company’s Shares. These factors may also affect our Company’s ability to issue additionalequity securities.

Upon completion of the Invitation, our controlling shareholders, the Aw Family, will hold in aggregateapproximately 72.91% of our Company’s enlarged share capital. Except as otherwise described in“Moratorium” on page 22 and as required under the continuing listing rules of the SGX-ST, there will be norestrictions on the ability of our controlling shareholders to sell Shares on the SGX-ST.


15

INVITATION STATISTICS

Issue Price

Net Tangible Assets

NTA per Share based on the audited consolidated balance sheet of our ProformaGroup as at 31 October 1999, referred to on page 18 of this Prospectus:-

(a) before adjusting for the estimated net proceeds from the issue of the NewShares and based on the pre-Invitation share capital of 454,014,640 Shares

(b) after adjusting for the estimated net proceeds from the issue of the NewShares and based on the post-Invitation share capital of 567,814,640 Shares

Premium of the Issue Price over the NTA per Share as at 31 October 1999:

(a) before adjusting for the estimated net proceeds from the issue of the NewShares and based on the pre-Invitation share capital of 454,014,640 Shares

(b) after adjusting for the estimated net proceeds from the issue of the NewShares and based on the post-Invitation share capital of 567,814,640 Shares

Earnings

Historical net EPS of our Group for FY1998 based on the pre-Invitation sharecapital of 454,014,640 Shares

Historical net EPS of our Group for FY1998 based on the pre-Invitation sharecapital of 454,014,640 Shares, assuming the Service Agreements (as defined onpages 60 to 61 of this Prospectus) had been in place in FY1998 and taking intoaccount the remuneration payable to the Executive Directors, Executive Officersand employees who are related to the substantial shareholders

Estimated net EPS of our Group for FY1999, based on the pre-Invitation sharecapital of 454,014,640 Shares

Estimated net EPS of our Group for the financial year ended 31 December 1999based on the pre-Invitation share capital of 454,014,640 Shares, assuming theService Agreements (as defined on pages 60 and 61 of this Prospectus) had beenin place for the whole of FY1999 and taking into account the remuneration payableto the Executive Directors, Executive Officers and employees who are related tothe substantial shareholders

Price Earnings Ratio

Historical PER based on the Issue Price and historical net EPS of our ProformaGroup for FY1998

Historical price earnings ratio based on the historical net earnings per Share of ourGroup for the financial year ended 31 December 1998 based on the pre-Invitationshare capital of 454,014,640 Shares, assuming the Service Agreements (asdefined on pages 60 and 61 of this Prospectus) had been in place in FY1998 andtaking into account the remuneration payable to the Executive Directors,Executive Officers and employees who are related to the substantial shareholders

Estimated PER based on the Issue Price and estimated net EPS of our ProformaGroup for FY1999

$0.20

5.00 cents

7.79 cents

300.0%

157.7%

1.12 cents

1.26 cents

2.51cents

2.58 cents

17.86 times

15.87 times

7.97 times


16

Estimated price earnings ratio based on the estimated net EPS of our Group forthe financial year ended 31 December 1999 based on the pre-Invitation sharecapital of 454,014,640 Shares, assuming the Service Agreements (as defined onpages 60 and 61 of this Prospectus) had been in place for the whole of FY1999and taking into account the remuneration payable to the Executive Directors,Executive Officers and employees who are related to the substantial shareholders

Net Operating Cash Flow (1)

Historical net operating cash flow per Share for FY1998 based on the pre-Invitationshare capital of 454,014,640 Shares

Historical net operating cash flow per Share for the financial year ended 31December 1998 based on the pre-Invitation share capital of 454,014,640 Shares,assuming the Service Agreements (as defined on pages 60 and 61 of thisProspectus) had been in place in FY1998 and taking into account the remunerationpayable to the Executive Directors, Executive Officers and employees who arerelated to the substantial shareholders

Estimated net operating cash flow per Share for FY1999 based on the pre-Invitation share capital of 454,014,640 Shares

Estimated net operating cash flow per Share for the financial year ended 31December 1999 based on the pre-Invitation share capital of 454,014,640 Shares,assuming the Service Agreements (as defined on pages 60 and 61 of thisProspectus) had been in place for the whole of FY1999 and taking into account theremuneration payable to the Executive Directors, Executive Officers andemployees who are related to the substantial shareholders

Dividends

Our Company does not intend to declare any dividends for FY1999

Market Capitalisation

Our Company’s market capitalisation based on the post-Invitation share capital of567,814,640 Shares and the issue price of $0.20

Note:-

(1) Net operating cash flow is defined as net profit after taxation with depreciation for the year added back.

7.75 times

1.69 cents

1.82 cents

3.10 cents

3.17 cents

$113.6 million


17

SUMMARY OF FINANCIAL INFORMATION

The following financial information should be read in conjunction with the Accountants’ Report and the fulltext of this Prospectus.

RESULTS OF OPERATIONS OF OUR GROUP (1)

<————————— Audited ——————————>10 months

ended$’000 FY1996(3) FY1997 FY1998 31 Oct 1999

Turnover 89,154 161,860 175,479 152,914

Profit before depreciation,interest and taxation 5,712 9,765 10,094 15,927

Depreciation (3,190) (3,378) (2,584) (2,366)Interest expense (1,419) (1,852) (975) (698)Other income (2) 652 1,096 1,176 1,376

(3,957) (4,134) (2,383) (1,688)

Profit before taxation 1,755 5,631 7,711 14,239Taxation (277) (950) (2,634) (4,089)

Profit after taxation 1,478 4,681 5,077 10,150Minority interest (3) (1) (11) (12)

Profit for the year 1,475 4,680 5,066 10,138

EPS (cents) (4) 0.33 1.03 1.12 2.24

Notes:-

(1) The results of operations of our Group for the period under review have been prepared on a proforma basis, as if ourGroup structure had been in existence since 1 January 1994.

(2) Other income comprises gain/(loss) of foreign exchange, rental income, interest income, sundry income and gain/(loss)on sales of fixed assets.

(3) With effect from 1 January 1996, our Group changed its accounting policy for revenue recognition from completedmethod to percentage of completion method. The latter was recommended by our auditors, Lee Seng Chan & Co, as amore appropriate income recognition method. Had the accounting policy not been changed, the turnover and profit/(loss) before taxation of our Group for FY1996 would have been as follows:-

($’000) FY1996

Turnover 169,143

Profit/(loss) before taxation (2,012)

(4) For comparative purposes, the EPS has been calculated based on the profit/(loss) after taxation divided by the pre-Invitation share capital of 454,014,640 Shares.

(5) Had the Service Agreements, which our Company entered into with Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee andAw Hoon Hui separately, as set out on pages 60 and 61 of this Prospectus, been in place for FY1998 and FY1999(estimated) and taking into account the remuneration payable to the Executive Directors, Executive Officers andemployees who are related to the substantial shareholders, the profit before taxation of the Proforma Group for FY1998and FY1999 (estimated) would have been approximately $8.56 million and $16.24 million respectively and the adjustedprofit after taxation would have been approximately $5.70 million and $11.73 million respectively. The adjusted EPS andPER for FY1998 and FY1999 (estimated) would have been 1.26 cents and 2.58 cents respectively and 15.87 times and7.75 times respectively.


18

FINANCIAL POSITION OF OUR GROUP(1)

<————————— Audited ——————————>As at

$’000 FY1996 FY1997 FY1998 31 Oct 1999

Fixed assets 21,011 19,536 21,429 21,655Development properties 2,210 2,679 3,078 25,168Investments 8 199 398 400

Current assets 34,237 37,769 41,555 45,914Current liabilities (47,089) (45,968) (44,320) (45,848)

Net current (liabilities)/assets (12,852) (8,199) (2,765) 66Non-current liabilities (7,910) (7,067) (10,105) (24,557)

2,467 7,148 12,035 22,732

Share capital and reserves 2,463 7,143 12,019 22,701Minority interest 4 5 16 31

2,467 7,148 12,035 22,732

NTA per Share (cents) (2) 0.5 1.6 2.7 5.0

Notes:-

(1) The results of operations of our Group for the period under review have been prepared on a proforma basis, as if ourGroup structure had been in existence since 1 January 1994.

(2) For comparative purposes, NTA per Share for the period under review has been computed based on the pre-Invitationshare capital of 454,014,640 Shares.


19

GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP

SHARE CAPITAL

Our Company was incorporated in Singapore on 18 June 1999 under the Act, as a private limitedcompany. On 29 March 2000, our Company was renamed Hor Kew Corporation Limited in connectionwith its conversion to a public company limited by shares. As at 26 March 2000, our Company had anauthorised share capital of $100,000,000 comprising 100,000,000 ordinary shares of $1.00 each, and anissued and paid-up share capital of $22,700,732 comprising 22,700,732 ordinary shares of $1.00 each.

At an Extraordinary General Meeting held on 26 March 2000, our Company’s shareholders approved,inter alia, the following:-

(i) the increase in the authorised share capital of our Company from $100,000 divided into 100,000ordinary shares of $1.00 each, to $100,000,000 divided into 100,000,000 ordinary shares of $1.00each by the creation of 99,900,000 ordinary shares of $1.00 each; and

(ii) the Restructuring Exercise, details of which are set out on pages 20 to 25 of this Prospectus.

At a subsequent Extraordinary General Meeting held on the same day, our Company’s shareholdersapproved the following:-

(i) the sub-division of each ordinary share of $1.00 each in the authorised as well as the issued andpaid-up share capital of our Company into 20 ordinary shares of $0.05 each (the “Stock Split”).

At an Extraordinary General Meeting held on 29 March 2000, our Company’s shareholders approved thefollowing:-

(i) the conversion of our Company into a public limited company and the change of our Company’sname to “Hor Kew Corporation Limited”;

(ii) the adoption of a new set of Articles of Association;

(iii) the issue of 113,800,000 New Shares pursuant to the Invitation. The New Shares, when issued andfully paid, will rank pari passu in all respects with our Company’s existing Shares; and

(iv) the granting of authority pursuant to Section 161 of the Act to our Directors to issue shares in ourCompany (whether by way of rights, bonus or otherwise) at any time and upon such terms andconditions and for such purposes and to such persons as our Directors may in their absolutediscretion deem fit provided that the aggregate number of shares to be issued pursuant to thisResolution does not exceed 50 per cent. of the issued share capital of our Company for the timebeing of which the aggregate number of shares to be issued other than on a pro-rata basis to theshareholders of our Company does not exceed 20 per cent. of the issued share capital of ourCompany for the time being, and, unless revoked or varied by our Company in general meeting,such authority shall continue in force until the conclusion of the next Annual General Meeting of ourCompany or the date by which the next Annual General Meeting of our Company is required by lawto be held, whichever is the earlier.

As at the date of this Prospectus, there is only one class of shares in our Company, being ordinaryshares of $0.05 each. The rights and privileges of these Shares are stated in our Company’s Articles ofAssociation. There are no founder, management or deferred shares reserved for issuance for anypurpose.

The present issued and paid-up share capital of our Company is $22,700,732 comprising 454,014,640Shares. Upon the allotment of the New Shares, the resultant issued and paid-up share capital of ourCompany will be increased to $28,390,732 comprising 567,814,640 Shares.


20

The details of the changes in the issued and paid-up share capital of our Company since 31 October1999, being the date of the last audited accounts of our Company, and its issued and paid-up sharecapital immediately after the Invitation are as follows:-

Number of Shares $

Issued and fully paid ordinary shares of $1.00 eachas at 31 October 1999 2 2

Issue of ordinary shares of $1.00 each pursuantto the Restructuring Exercise 22,700,730 22,700,730

22,700,732 22,700,732

Subdivision of ordinary shares of $1.00 each intoordinary shares of $0.05 each 454,014,640 22,700,732

Share capital before Invitation 454,014,640 22,700,732

New Shares to be issued for the Invitation 113,800,000 5,690,000

Share capital after the Invitation 567,814,640 28,390,732

The authorised share capital and the shareholders’ funds of our Company as at 31 October 1999 beforeand after adjustments to reflect the Restructuring Exercise and the issue of New Shares, are set out onpages 65 to 85 of this Prospectus:-

As at As31 October 1999 adjusted

$ $

Authorised Share Capital

Ordinary shares of $1.00 each 100,000 —Ordinary shares of $0.05 each — 100,000,000

Shareholders’ Funds

Issued and fully paid Shares 2 28,390,732Share premium — 15,850,000Reserves (2,000) —

Total shareholders’ funds (1,998) 44,240,732

The changes in the issued and paid-up share capital of our Company and Subsidiaries in the two yearspreceding the date of this Prospectus are set out on page 99 of this Prospectus under “General andStatutory Information”.


21

SHAREHOLDERS

The shareholders of our Company and their respective direct shareholdings immediately before and afterthe Invitation are summarised below:-

Before the Invitationand after the

Shareholders Restructuring Exercise After the Invitation

No. of Shares % No. of Shares %DirectorsAw Leng Hwee, BBM 56,722,197 12.5 46,722,197 8.23Aw Khoon Hwee 45,150,868 9.9 37,190,868 6.55Aw Hoon Hui 45,377,757 10.0 37,377,757 6.58Dr Low Seow Chay — — 50,000 0.01William Chew Yew Meng — — — —

Substantial Shareholders (5% or more)HKHPL 227,125,856 50.0 227,125,856 40.00Aw Soon Hwee 45,377,757 10.0 37,377,757 6.58

Other Shareholders(of less than 5% who are related to theDirectors or substantial Shareholders)Aw Hong Hwee 11,344,439 2.5 9,344,439 1.65Aw Lay Sim 11,344,439 2.5 9,344,439 1.65Aw Geok Mui 3,857,109 0.9 3,177,109 0.56Aw Lay Tin 3,857,109 0.9 3,177,109 0.56Aw Lay Choo 3,857,109 0.9 3,177,109 0.56

Public — — 153,750,000 27.08

Total 454,014,640 100.00 567,814,640 100.00

Notes:-

(1) Interest in percentage terms may not add up to 100.00 per cent. because of rounding off.

(2) Save as disclosed from pages 57 to 58 and note (3) below, there are no other relationships between our Directors andsubstantial Shareholders.

(3) HKHPL is a private limited company and is an investment holding company. The shareholders of the company are AwLeng Hwee, BBM (25.0%), Aw Hoon Hui (20.0%), Aw Soon Hwee (20.0%), Aw Khoon Hwee (19.9%), Aw Hong Hwee(5.0%), Aw Lay Sim (5.0%), Aw Geok Mui (1.7%), Aw Lay Tin (1.7%) and Aw Lay Choo (1.7%).

Messrs Aw Leng Hwee, BBM, Aw Hoon Hui and Aw Soon Hwee are deemed to be interested in the shareholding ofHKHPL in our Company by virtue of their interests of 25.0%, 20.0% and 20.0% respectively in HKHPL.

(4) In connection with the Invitation, Dr Low Seow Chay, one of our Company’s independent Directors, will be allotted 50,000Reserved Shares at the Issue Price. These Shares will form part of the total Invitation of 153,800,000 Shares. Apartfrom Dr Low Seow Chay, no other Directors will be allotted any Reserved Shares.


22

The Vendors

The names of the Vendors and the number of Vendor Shares which they will offer (in proportion to theirrespective shareholdings before the Invitation) pursuant to the Invitation are set out below:-

No. of Shares No. of No. of Sharesheld before Vendor held after

Name the Invitation Shares the Invitation

Aw Leng Hwee, BBM 56,722,197 10,000,000 46,722,197Aw Hoon Hui 45,377,757 8,000,000 37,377,757Aw Soon Hwee 45,377,757 8,000,000 37,377,757Aw Khoon Hwee 45,150,868 7,960,000 37,190,868Aw Hong Hwee 11,344,439 2,000,000 9,344,439Aw Lay Sim 11,344,439 2,000,000 9,344,439Aw Geok Mui 3,857,109 680,000 3,177,109Aw Lay Tin 3,857,109 680,000 3,177,109Aw Lay Choo 3,857,109 680,000 3,177,109

226,888,784 40,000,000 186,888,784

MORATORIUM

To demonstrate their commitment to our Group, our Company’s substantial Shareholders, namelyHKHPL, Messrs Aw Leng Hwee, BBM, Aw Hoon Hui, Aw Soon Hwee and Aw Khoon Hwee, who will inaggregate hold 385,794,435 Shares, representing approximately 67.94% of our Company’s enlargedissued and paid-up capital after the Invitation, have undertaken not to dispose of or transfer any part oftheir direct and indirect interests in our Company for a period of 6 months from the date of ourCompany’s admission to the Official List of the SGX-ST, and for a period of 6 months thereafter, they willcollectively retain at least 50% of our Company’s issued and paid-up capital.

Mr Aw Leng Hwee, BBM, Mr Aw Hoon Hui, Mr Aw Soon Hwee, Mr Aw Khoon Hwee, Mr Aw Hong Hwee,Ms Aw Lay Sim, Ms Aw Geok Mui, Ms Aw Lay Tin and Ms Aw Lay Choo have also undertaken not todispose of or transfer any part of their interests in HKHPL for a period of 6 months from the date ofadmission of our Company to the Official List of the SGX-ST, and for a period of 6 months thereafter,they will collectively retain at least 50% of HKHPL’s issued and paid-up capital.

In addition, Mr Aw Hong Hwee, Ms Aw Lay Sim, Ms Aw Geok Mui, Ms Aw Lay Tin and Ms Aw Lay Choohave undertaken not to dispose of or transfer more than 50% of their respective shareholdings in ourCompany’s enlarged issued and paid-up share capital for a period of 6 months from the date of ourCompany’s admission to the Official List of the SGX-ST.

RESTRUCTURING EXERCISE

Our Group underwent a Restructuring Exercise on 26 March 2000 pursuant to which Hor Kew CorporationLimited became the investment holding company of our Group. The rationale for the RestructuringExercise was to streamline the corporate structure and business activities of our Group for the purposeof the listing of the Shares on the SGX-ST.

The Restructuring Exercise involved the following steps:-

(a) HKPL divested its entire holding of 888,890 ordinary shares of $1.00 each, representing 44% of theissued and paid up share capital of Steady Piling Engineering Pte Ltd, to Mr Aw Hong Hwee, who isthe Managing Director of Steady Piling Engineering Pte Ltd, for a nominal consideration of $1.00 inview of its audited negative NTA as at 31 December 1998. The principal activities of Steady PilingEngineering Pte Ltd were those of piling and precast concrete manufacturers and it had been in aloss-making position for several years and will continue to incur losses for the immediate future.

The divestment was completed and the sale consideration was satisfied on 20 August 1999 in cash.


23

(b) PFT, which prior to the Restructuring Exercise held 32% of the issued and paid-up capital of PFT8,acquired the remaining 68% comprising 170,000 ordinary shares of $1.00 each from Messrs AwLeng Hwee, BBM, and Aw Khoon Hwee, for a nominal consideration of $1.00 in view of its auditednegative NTA as at 31 October 1999.

The acquisition was completed and the purchase consideration was satisfied on 26 March 2000 incash.

(c) Hor Kew Holdings Pte Ltd, a Company owned by Messrs Aw Leng Hwee, BBM, Aw Hoon Hui, AwSoon Hwee and Aw Khoon Hwee, acquired 50% of the issued and paid up capital of HKPLcomprising 2,500,000 ordinary shares of $1.00 each from the members of the Aw Family for anaggregate purchase consideration of $10,610,162. The purchase consideration was arrived at basedon 50% of the audited NTA of HKPL of $21,220,324 as at 31 October 1999.

The acquisition was completed and the purchase consideration was satisfied on 26 March 2000 bythe allotment and issue of an aggregate of 10,610,162 ordinary shares of $1.00 each in the capitalof HKHPL, credited as fully paid, to the respective vendors as follows:-

Issued to Number of shares

Aw Leng Hwee, BBM 2,652,541Aw Soon Hwee 2,122,032Aw Hong Hwee 530,508Aw Hoon Hui 2,122,032Aw Khoon Hwee 2,111,422Aw Lay Choo 180,373Aw Geok Mui 180,373Aw Lay Sim 530,508Aw Lay Tin 180,373

10,610,162

(d) Upon completion of steps (a), (b) and (c) above, our Company acquired from HKPL :-

(i) 71% of the issued and paid-up capital of PFT, comprising 709,845 ordinary shares of $1.00each for a purchase consideration of $3,621,715;

(ii) the entire issued and paid-up capital of PVDD, comprising 1,000,000 ordinary shares of $1.00each for a purchase consideration of $2,634,516; and

(iii) the entire issued and paid-up capital of HKL, comprising 3 ordinary shares of $1.00 each for apurchase consideration of $33,307.

The purchase considerations were arrived at based on the respective audited NTA of PFT, PVDDand HKL of $5,102,121, $2,634,516 and $33,307 as at 31 October 1999.

The acquisition was completed and the purchase was satisfied on 26 March 2000 by the allotmentand issue of an aggregate of 6,289,538 ordinary shares of $1.00 each in the capital of our Companyto HKPL.


24

(e) Upon completion of step (d) above, HKPL declared a dividend of $6,289,538, payable by way of adistribution of its entire shareholdings of 6,289,538 ordinary shares of $1.00 each in our Company toHKHPL and the members of the Aw Family (“distribution in specie”) as follows:-


HKHPL 3,144,768Aw Leng Hwee, BBM 1,182,685Aw Soon Hwee 270,702Aw Hong Hwee 553,731Aw Hoon Hui 358,252Aw Khoon Hwee 128,936Aw Lay Choo 241,896Aw Geok Mui 241,896Aw Lay Sim 157,238Aw Lay Tin 9,434

6,289,538

The distribution in specie resulted in a reduction in HKPL’s revenue reserve of a similar amount.

(f) Upon completion of step (d) above, our Company held 709,845 ordinary shares of PFT, representing71% of the issued and paid-up capital of PFT. Our Company acquired the remaining 29%comprising 290,155 ordinary shares of $1.00 each from Messrs Aw Leng Hwee, BBM, Aw KhoonHwee, Aw Soon Hwee and Aw Hoon Hui, for an aggregate purchase consideration of $1,480,406.The purchase consideration was arrived at based on 29% of the audited NTA of PFT as at 31October 1999.

The acquisition was completed and the purchase consideration was satisfied on 26 March 2000 bythe allotment and issue of an aggregate of 1,480,406 ordinary shares of $1.00 each in the capital ofour Company, credited as fully paid, to the respective vendors as follows:-


Aw Leng Hwee, BBM 1,039,393Aw Khoon Hwee 51,074Aw Hoon Hui 211,402Aw Soon Hwee 178,537

1,480,406

(g) Upon completion of step (f) above, our Company acquired the entire issued and paid up sharecapital of HKPL from HKHPL and the members of the Aw Family, comprising an aggregate of5,000,000 ordinary shares of $1.00 each for an aggregate purchase consideration of $14,930,786,based on the audited NTA of HKPL as at 31 October 1999, taking into account the distribution inspecie in step (e) above.


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The acquisition was completed and the purchase consideration was satisfied on 26 March 2000 bythe allotment and issue of an aggregate of 14,930,786 ordinary shares of $1.00 each in the capitalof our Company (credited as fully paid) to HKHPL and the members of the Aw Family as follows:-


HKHPL 7,465,393Aw Leng Hwee, BBM 2,807,585Aw Soon Hwee 642,621Aw Hong Hwee 1,314,506Aw Hoon Hui 850,458Aw Khoon Hwee 306,081Aw Lay Choo 574,238Aw Geok Mui 574,238Aw Lay Sim 373,270Aw Lay Tin 22,396

14,930,786

Upon completion of the above, each ordinary share of $1.00 each in the authorised as well as the issuedand paid-up share capital of the Company was sub-divided into 20 ordinary shares of $0.05 each, and theshareholdings of each member of the Aw Family were further rationalised in order to achieve the finaldesired shareholding structure.

Following the completion of the Restructuring Exercise, the Prefab Group (comprising PFT and itssubsidiaries, PFT3 (99% owned) and PFT8 (100% owned)), PVDD, HKL and HKPL became whollyowned subsidiaries of our Company.

GROUP STRUCTURE

The shareholding structure before the Restructuring Exercise is set out below:-

HOR KEW PRIVATE LIMITED

100% 44% 71% 100%

Hor Kew Steady Piling Prefab Technology Park Vale Design &Land Pte Ltd Engineering Pte Ltd Pte Ltd Development Pte Ltd

99% 32%

Prefab Technology Prefab Technology3 Pte Ltd 8 Pte Ltd


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The shareholding structure of our Group immediately after the Restructuring Exercise and the Invitationis set out below:-

* The shareholding of the Aw Family is held by its members, Mr Aw Leng Hwee, BBM (8.23%), Mr Aw Hoon Hui (6.58%), MrAw Soon Hwee (6.58%), Mr Aw Khoon Hwee (6.55%), Mr Aw Hong Hwee (1.65%), Ms Aw Lay Sim (1.65%), Ms Aw GeokMui (0.56%), Ms Aw Lay Tin (0.56%) and Ms Aw Lay Choo (0.56%). Percentage terms may add up to more than 32.91%because of rounding off.

The details of each subsidiary in our Group as at the date of this Prospectus are as follows:-

Date and place Issued and fully %Name of incorporation Principal business paid-up capital owned

($)

Hor Kew Private Limited 28 Mar 1979 / Building and engineering contractors 5,000,000 100Singapore and property investment

Hor Kew Land Pte Ltd 23 Aug 1994 / Property investment and development 3 100Singapore

Prefab Technology Pte Ltd 11 Oct 1976 / Design, manufacture and sale of 1,000,000 100Singapore prestressed and precast reinforced

concrete building components

Prefab Technology 3 Pte Ltd 16 Jan 1993 / Design, manufacture and sale of 800,000 99Singapore prefabricated architectural metal components

Prefab Technology 8 Pte Ltd 18 May 1989 / Importers and exporters of building 250,000 100Singapore materials and commission agents

Park Vale Design & 15 April 1983 / Turnkey building contractors and 1,000,000 100Development Pte Ltd Singapore provision of maintenance work

Note:-

(1) Prefab Technology 8 Pte Ltd has been dormant since 1996.

100% 100% 100% 100%

Hor Kew Hor Kew Prefab Technology Park Vale Design &Private Limited Land Pte Ltd Pte Ltd Development Pte Ltd

99% 100%

Prefab Technology Prefab Technology3 Pte Ltd 8 Pte Ltd

HOR KEW CORPORATION LIMITED

Public Aw Family*

27.09% 40% 32.91%

Hor Kew HoldingsPte Ltd


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HISTORY

Our Company was incorporated on 18 June 1999 in the Republic of Singapore under the Act as a privatecompany under the name of Birkins Trading Pte Ltd. On 29 March 2000, our Company was convertedinto a public company under its present name, Hor Kew Corporation Limited, with a view to it being theholding company for our Group. Prior to the Restructuring Exercise on 26 March 2000, Hor Kew PrivateLimited was our holding company.

Our Group has its roots as a business partnership, Ann Teng General Building Contractor, registered in1975 to carry on business as a sub-contractor to supply and install metal louvre windows predominantlyin the HDB market. Subsequently, aluminium windows were introduced to the construction industry as abetter substitute for the louvre windows. This led to the eventual cessation of the louvre windowbusiness in 1980. During this period, the partners of Ann Teng General Building Contractor, namelyMessrs Aw Leng Hwee, BBM, Aw Hoon Hui and Aw Soon Hwee, shifted the focus of the family businessto building construction.

In 1977, Messrs Aw Leng Hwee, BBM, and Aw Hoon Hui took a 7% stake in a newly incorporatedcompany, Aik Hwee, to venture into the general building construction business. From 1979 to 1982,together with their brothers Messrs Aw Hong Hwee, Aw Soon Hwee and Aw Khoon Hwee, they increasedthe Aw family’s investment in Aik Hwee from 7% to approximately 49%.

On 28 March 1979, we incorporated HKPL which became the main business vehicle of our Group. Sincethen, we have established ourselves as a group of companies with expanded business activities such asbuilding and engineer ing contractors, property development and investment holdings, design,manufacture and sale of prestressed and precast reinforced concrete building components andprefabricated architectural metal components, importers and exporters of building materials, commissionagents, turnkey building contractors and provision of building maintenance work (for example paintingworks and repair works). Currently, the main businesses that contribute to our turnover and profits arethe general construction activities and the manufacturing and supplying of precast reinforced concretebuilding components and prefabricated architectural metal components.

In 1983, HKPL secured its first main building contract with the Housing Development Board in Tampines.The contract, worth $28.5 million, was for the building of 8 blocks of residential flats comprising 600apartments. This marked our Group’s first foray into the HDB market.

Over the next few years, our Company continued our growth with the completion of numerous publicsector projects. These projects included HDB projects in Yishun, Choa Chu Kang and Tampines. In1988, HKPL acquired a 50% stake in PVDD for $3,851. Our intention was for PVDD to focus on privateresidential property development projects.

In 1990, HKPL ventured into the business of design and manufacture of prestressed and precastreinforced concrete building components and in April of the same year, HKPL was approved by HDB as aprecaster. Precast construction is a technique which uses precast concrete elements. Precast concretecomponents are building parts that are pre-made or pre-assembled in a factory and installed at theworksite. The benefits of precast construction include speed, quality, low material wastage and minimummanpower requirements on site. In November 1990, HKPL was awarded its first precast façade buildingcontract for a HDB project in Pasir Ris.

In 1991, HKPL was awarded L4 grade in the “doors, windows, louvres and glazing” category by BCA (themerged entity of CIDB and the Building Control Division of the PWD). As a L4 contractor, our Group wasable to tender for projects to supply doors, windows, louvres and glazing for values of up to $5 million.

With the anticipated increase in housing demands, in 1991, our Group built a precast manufacturingfactory with an adjoining office block at 66 Sungei Kadut Street 1. By 1992, the remaining 51% in AikHwee was also acquired by HKPL for a consideration of $257,145. The name of Aik Hwee was thenchanged to Prefab Technology Pte Ltd to focus on precast concrete manufacturing.


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To further integrate its operations vertically, our Group acquired a 50% stake in a company whichmanufactured and supplied prefabricated components in March 1994 and changed its name to PrefabTechnology 3 Pte Ltd on 30 July 1994. In 1995, our Group acquired an additional 49% stake in PFT3.PFT3 manufactures and supplies prefabricated architectural metal components used in the constructionindustry such as metal door frames, metal grill gates, letterboxes and refuse chute hoppers. PFT3 isalso an approved HDB supplier for such products.

Our expansion continued with PFT acquiring a 88% stake in a company in the air-cleaning business. In1995, the company’s name was changed to Prefab Technology 8 Pte Ltd. PFT reduced its stake in PFT8to 32% as PFT8 diversified into the business of development of soil stabilisation product/process forconstructing rural roads. However, in 1996, development was ceased as the cost of starting-up thebusiness was too high, thus rendering the business not viable. PFT8 has since remained dormant.

In 1995, both PFT and PFT3 were awarded the ISO 9002 certification for its management system formanufacturing and supply of precast concrete components and for manufacturing of metal products forthe building construction industry respectively. The metal products include mild steel doorframe,aluminium letterbox, aluminium cloth rack, stainless steel hoppers and mild steel entrance gate.

In December 1994, HKPL was approved by BCA as a Grade 8 (“G8”) contractor. As a G8 contractor,HKPL is qualified to tender for public sector projects without any limit on the value of the project. In thesame year, HKPL won the CIDB Best Buildable Design Award 1994 for the Pasir Ris N2C1A project.

In August 1995, HKPL was awarded its first HDB major upgrading project at Balam Road, worthapproximately $61.5 million. In 1996, HKPL secured a $134 million contract for the HDB’s HougangN9C9 project. This marked our Group’s first contract with a project value of more than $100 million. In1996, HKPL was approved by BCA as a L6 supplier for precast concrete products. As a L6 supplier,HKPL is qualified to tender for public sector projects to supply prestressed and precast reinforcedconcrete building components of unlimited value.

In 1997, HKPL was awarded its first “design and build” contract for the Bukit Panjang N4C11 projectworth $104 million. In the same year, the Serangoon North N5C15 project was awarded the CIDB BestBuildable Design Award 1997 and HKPL attained the ISO 9002 certification for its management systemfor building construction services.

In 1997, HDB was awarded the prestigious Singapore Quality Award. In recognition of HKPL’scontribution as a business partner with HDB to provide quality housing and services, HDB awardedHKPL a silver medallion. In 1998, HDB named HKPL as an approved supplier of metal formworks forrental. Metal formwork is a term used to describe a series of standard sizes of metal panels which areused to form structural frames such as a beam, column and slab of a building or any other concretestructures. These metal panels form the mould for casting the reinforced concrete.

In 1999, our Group acquired a shell company and changed its name to Hor Kew Land Pte Ltd to focus onour Group’s future property development activities. On 30 December 1999, our Group exercised theoption to purchase 2 freehold properties at 104 Arthur Road (with land area of 761.2 sq m) and 106Arthur Road (with land area of 807.0 sq m) for an aggregate purchase consideration of $6.8 million.These properties are held under HKL and are intended to be redeveloped for sale.

In November 1999, HKPL was ranked 16 out of 50 companies in the E50 Enterprise Award. To-date, ourGroup has retained all our classifications awarded by BCA and continues to be an approved supplier forHDB projects.

BUSINESS

Our Group carries on business principally as a main contractor for residential, commercial, school andindustrial projects, in property investment and development and as designer, manufacturer and supplierof prestressed and precast reinforced concrete building components and prefabricated architectural metalcomponents. Currently, the main businesses that contribute to our turnover and profits are the generalconstruction activities and the manufacturing and supplying of precast reinforced concrete buildingcomponents and prefabricated architectural metal components.


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Our business can be classified into 2 major divisions, namely, the general construction division and theprefabrication division. Our general construction business is undertaken by our wholly ownedsubsidiaries, HKPL, HKL and PVDD, while our prefabrication business is undertaken by our subsidiaries,namely, PFT and PFT3.

General construction

Our Group’s building construction activities is undertaken by HKPL, an ISO9002 certified and G8contractor registered with BCA. A G8 grade allows our company to tender for public sector projects ofunlimited value. HKPL was awarded this classification in 1994.

Over the years, HKPL has successfully bid for public sector projects as a main contractor. In August1995, our Group was awarded our first HDB major upgrading project at Balam Road. To-date, our Grouphas completed several HDB building and major upgrading projects.

The major HDB residential projects, including major upgrading projects, completed by our Group in thelast 5 years are as follows:-

Date of Total contractDescription of project completion value ($ m)

Building contract including sanitary, water and other plumbing 1996 39.58installations at Serangoon North Neighbourhood 5 Contract 15

(Total: 531 dwelling units)

Building contract including sanitary, water and other plumbing 1996 30.89installations at Jurong West Neighbourhood 3 Contract 28


Building contract including sanitary, water and other plumbing 1998 25.59installations at Jurong West Neighbourhood 3 Contract 24(Balance of works)


Building contract including sanitary, water and other plumbing 1998 22.49installations at Jurong West Neighbourhood 3 Contract 22B(Balance of works)


Upgrading of Block 38 to 40, 61 to 67 at MacPherson Precinct 1999 51.23(Major Upgrading Project 4)

Upgrading of Block 1 to 6 & 8 at Farrer Road Precinct 1999 52.84(Major Upgrading Project Batch 4)

Upgrading of Block 19 to 24, 30 to 32, 34 to 36, 77 & 78 at Balam Road 1999 61.48(Major Upgrading Project 3)

Building works at Hougang Neighbourhood 9 Contract 9 1999 134.10(Total: 1,614 dwelling units)


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As at 31 October 1999, the HDB residential projects, which are presently under construction, are asfollows:-

Expected year EstimatedDescription of project of completion contract value

($ m)

Building and civil engineering works at Bukit Panjang Neighbourhood 2000 145.006 Contract 2 & 3

(Total: 1,440 dwelling units)

Design and build public housing project at Bukit Panjang Neighbourhood 2000 104.524 Contract 11


Design and build public housing project at Jurong West Neighbourhood 2001 79.682 Contract 4


Our Group’s construction business can be broadly categorised into 2 main areas:-

A) HDB tenders (including Major Upgrading Projects and “design and build” projects)

The projects tendered by our Group include both Major Upgrading Projects and “design and build”projects. “Design and build” contracts are awarded by HDB. In a typical “design and build” project,HDB will invite companies and professional parties including architects and engineers to form a“design and build” project team. Companies are prequalified by HDB to tender for “design and build”contracts based on their classification with BCA and their track record. The team is required tosubmit a joint proposal to HDB that includes design schemes for the projects, structural designs,architectural designs and landscape designs. The proposal will be assessed based on thefunctionality and cost effectiveness of the proposed designs, the track record of the professionalteam and the financial strength of the company. Tender price may not be a key consideration for theaward of the project. In conventional housing projects, the building designs and specifications ofprojects are developed by HDB’s in-house designers whereas in “design and build” projects, themain contractor is responsible for the building design and specifications and the actual constructionof the building.

HKPL engages HDB-approved design teams and consultants to co-design some of these “designand build” contracts. In 1997, HKPL was awarded its first design and build contract worth $104.52million at Bukit Panjang Neighbourhood 4 Contract 11 (“N4C11”). This project comprised 8residential blocks totalling 862 dwelling units with a 5 storey carpark block, a children’s playgroundand a covered passage connecting all the 8 blocks and the carpark block.

As at 31 October 1999, our Group has completed 3 Major Upgrading Projects worth $165.55 millionand are involved in 2 “design and build” projects due to complete in the years 2000 and 2001.

B) Public Works Department (“PWD”) projects

HKPL was awarded its first PWD project in 1992 through a novation arranged by insuranceunderwriters. Novation contracts are awarded by clients following the insolvency of a contractorwho is unable to complete the project underwritten by the insurance companies. The contractawarded was for the construction of Damai Secondary School. Subsequently, in 1994, HKPL wasawarded 1 more novation contract at Springfield Secondary School.

In 1994, HKPL was awarded a 2-year Comprehensive Building Maintenance contract, to undertakeall maintenance works including painting and repair works for all government secondary schools andjunior colleges in Zone E1 (including areas like Ang Mo Kio, Bishan, Serangoon North, UpperSerangoon and Yishun) in Singapore.


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Prefabrication

HKPL is registered with BCA as a L6 supplier for precast concrete products and a L4 supplier for doors,windows, louvres and glazing. The L6 and L4 grades allow HKPL to tender for public sector projects ofunlimited value and up to $5 million respectively. Our Group’s prefabrication activity is undertaken byPFT and PFT3. PFT is engaged in the design, manufacture and sale of prestressed and precastreinforced concrete building components while PFT3 is engaged in the design, manufacture and sale ofprefabricated architectural metal components.

Our Group has supplied prestressed and precast reinforced concrete building components andprefabricated architectural metal components to the following major construction projects in the last 5years:-

Date of ContractDescription of project completion awarded

($’m)

Upgrading of Blocks 38 to 40, 61 to 67 at MacPherson Precinct(Major Upgrading Project 4) 1999 4.399

Upgrading of Blocks 1 to 6 & 8 at Farrer Road Precinct(Major Upgrading Project Batch 4) 1999 4.967

Upgrading of Blocks 19 to 24, 30 to 32, 34 to 36, 77 & 78at Balam Road (Major Upgrading Project 3) 1999 6.500

Building works at Hougang Neighbourhood 9 Contract 9(Total: 1,614 dwelling units) 1999 9.657

Building and civil engineering works at Bukit Panjang N6C2&3 1999 2.507

Design and build at Bukit Panjang N4C11 1999 2.897

Bendemeer/Whampoa MUP8 1999 3.335

As at 31 October 1999, our Group has secured contracts to supply prestressed and precast reinforcedconcrete building components and prefabricated architectural metal components to the following projectswhich are presently under construction:-

EstimatedExpected date contract

Description of project of completion value ($’m)

Sengkang N3C8 Apr 2000 1.029Jurong West N6C6&6 Aug 2000 5.467Bukit Panjang N6C2&3 Aug 2000 1.558Bukit Panjang N1C13 Sep 2000 3.300Jurong West N2C4 Sep 2000 2.492Bukit Merah RC33A Dec 2000 1.086Bedok 6-flated factory Jun 2001 2.000

Residential property development

In 1986, HKPL completed its first private housing project comprising a pair of 2-storey semi-detachedhouses at Parry Avenue on a land area of about 1,100 sq m with a built-in area of about 650 sq m in total.The tenure is 999 years.

In 1990, HKPL developed another pair of 2-storey semi-detached houses and 4 units of terrace housesat Sea Breeze Road. This project sat on a freehold land area of about 1,400 sq m with a built-in area ofabout 2,300 sq m. In the same year, HKPL also developed apartment blocks with a basement carpark atLorong G Telok Kurau. The apartment blocks at Lorong G Telok Kurau were built on a freehold land areaof about 1,148 sq m with a built-in area of about 1,032 sq m.


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In 1993, HKPL launched 3 units of 2-storey detached houses with attic and basement at Siglap Road.This project was completed in 1996 on a freehold land area of about 1,469.5 sq m with a built-in area ofabout 1,449 sq m.

In the following year, HKPL undertook another private project to develop 2 units of 3-storey semi-detached houses on a freehold land area of about 392.7 sq m at Jalan Tari Payong. This project wascompleted in 1999 with a built-in area of about 414.6 sq m.

With the exception of the 2 completed apartments at Lorong G Telok Kurau which are currently held asinvestment properties (“Investment Properties”), the rest of the completed properties were developed forsale, including one unit of the detached houses at Siglap Road which is still held by the Group (“SiglapRoad Property”). HKPL and HKL have applied to the Land Dealings (Approval) Unit (“LDAU”) and haveobtained the approval of the Minister for Law on 29 March 2000 for their conversion into “convertedforeign companies” as defined in the Residential Property Act (Cap. 274) (“RPA”). The Minister hasimposed the condition, inter alia, that HKPL, which is the legal owner of the Investment Properties andSiglap Road Property, shall sell the properties within 2 years from the date HKPL becomes a convertedforeign company. In addition, HKPL shall not rent out the Investment Properties without prior writtenapproval of the Minister after expiry of the existing tenancies for the Investment Properties, and in thecase of the Siglap Road Property, which is currently untenanted, HKPL shall not rent out the Siglap RoadProperty without prior written approval of the Minister.

Our Group has obtained written permission on 10 March 2000 from the Urban Redevelopment Authority(“URA”) to redevelop our property known as 27 Ewe Boon Road Singapore 259330. Construction isexpected to commence in May 2000. The Minister for Law has imposed the conditions, inter alia, thatHKPL, which is the legal owner of the above property, shall sell all the residential units under thedevelopment within 2 years from the date of Temporary Occupation Permit or Certificate of StatutoryCompletion, whichever is issued earlier, and shall not rent out any of the units without prior writtenapproval of the Minister.

Our Group has also obtained provisional approval on 12 February 2000 from the URA to redevelop ourproperty known as 42 East Coast Road Singapore 428762 into a commercial / residential complex.Construction is expected to commence in July 2002. The commercial portion will be held for investmentpurposes while the residential portion will be for sale. The Controller of Residential Property took theview that the property is not a residential property under the RPA as the same is not strata-subdivided.

On 31 March 2000, our Group completed the purchase of 2 properties known as 104 Arthur RoadSingapore 439808 and 106 Arthur Road Singapore 439810 for the purpose of redevelopment for sale. TheMinister for Law has imposed the conditions that HKL, which is the legal owner of the above properties,shall, inter alia, obtain provisional permission from the URA for development of the properties within 6months from 29 March 2000.

Our policy on such development properties for sale has always been opportunistic in nature. We willcontinue with this policy for the foreseeable future and will look out for pockets of opportunities wherethey exist to purchase land sites for such development business.

Tendering, award of contracts and construction

The tendering, award of contracts and construction process is as follows:-

A. Notification of tender

There are 2 forms of tender systems, namely the open tender and the closed tender. Our Groupparticipates in both tenders. Public Sector Projects are usually awarded by open tender and ourGroup normally obtains information on these projects from notices in the newspapers, industrialpublications or by word of mouth. Closed tenders are normally the mode for the awarding of privateprojects and information on these tenders would only be available to selected contractors byinvitation only.


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B. Evaluation of project and submission of tender

Currently, our Group has a team comprising a contract manager, quantity surveyors, projectmanager and Directors who are responsible for the pre-tender evaluation and submission of tenders.The process involves the following:-

• Evaluation of the availability of the Group’s resources.• Review of tender documents, drawings and specifications.• Discussion and resolution of any discrepancies or ambiguities noted with the customer.• Proposal of alternatives, if necessary.• Determination of project costs.• Submission of tender documents.

C. Award of contract and appointment of sub-contractors and suppliers

Upon award of the contract, our Group as a main contractor will sub-contract specific parts of thecontract to sub-contractors. These include steel-bending, carpentry, concreting, sanitary andplumbing, installation of doors and windows, civil engineering, piling, tiling works, concreting works,electrical installation works and other architectural or finishing works. Our Group maintains a list ofapproved sub-contractors that are registered with HDB and will appoint the sub-contractors based ontheir track record, the availability of resources, pricing and past working experiences.

In addition, a project team will be set up to monitor the progress of each project on a full time basis.This team comprises engineers, site supervisors, architect, clerk of works, safety officers, quantitysurveyor and project managers. The team will undertake responsibility for monitoring the progressof the project, co-ordinating with all sub-contractors and suppliers, ensuring safety and security atthe construction site and ensuring minimum cost overruns, if any.

D. Construction

There are 2 stages in building construction, namely the sub-structure building stage and the super-structure building stage. The sub-structure consists of laying the foundation which include the piles,pile caps, ground beams and slabs. The super-structure consists of the upper storey beams,columns, floor slabs and walls.

The construction will start with the laying of foundation. Next, the beams, columns and floor slabswill be constructed. Upon completion, the walls will be constructed using either bricks or reinforcedconcrete. The building structure is considered completed with the erection of the roof. In addition,architectural or finishing works and all mechanical and electrical services such as sanitary, watertanks, lifts, water pipes and electrical wirings are installed concurrently in tandem with theconstruction progress of the building.

Upon the issuance of the temporary occupancy permit, the project will be handed over to theowners.

Manufacturing process of prestressed and precast reinforced concrete building components

The prestressed and precast reinforced concrete building components manufactured by our Groupinclude columns / trenches / beams / slabs, planks, staircases, utility rooms, balconies, precast wallsand specialist precast components for civil defence shelters. Our Group’s manufacturing process forprestressed and precast reinforced concrete building components is as follows:-

A. Pre-production planning

The production team commences its pre-production planning based on the contract requirementsand work specifications. The requirements and specifications will normally include the types andquantity of components to be produced, material and manufacturing specifications and deliveryschedule.


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The production team comprises the designers, the technical staff, the quantity surveyor, theplanners and the mould team. The designers and technical staff are responsible for the checking ofall structural and architectural drawings and confirming details with the customer’s engineer andarchitect. The quantity surveyor is responsible for the confirmation of the contract bill of quantities,the preparation of the production schedule and material required for the mix. The planners areresponsible for ordering materials that are required for the mould making and monitoring productionstatus against site progress to ensure timely delivery.

B. Production process

In general, the production cycle for all prestressed and precast reinforced concrete buildingcomponents is similar. The production process is outlined as follows:-

Step 1: Mould preparation

The steel mould is first cleaned and then assembled according to drawing dimensions. Next, alayer of mould release agent is applied onto the mould surfaces. The quality controller will theninspect the mould before the placement of structural reinforcement.

Step 2a: Placement of structural reinforcement

In this stage, the structural reinforcement is pre-assembled and tied together according to structuraldrawings. Next, the pre-assembled reinforcement cage is placed into the steel mould. Adjustmentswill be made to ensure that the reinforcement can be fully covered with concrete. Upon completion,the quality controller will inspect the structural reinforcement before moving on to the next stage.

or

Step 2b: Placement of prestressing strand

For prestressed concrete components, wire strands are first laid on the mould base. Each wirestrand is stressed to a predetermined force and anchored onto bulkheads at both ends of the mould.The stressing work is carried out using hydraulic jacks and supervised by the quality controller. Apre-assembled reinforcement cage is then placed into the mould and tied together with theprestressed wire strands. The quality controller then inspects and passes the structuralreinforcement.

Step 3: Concrete batching

The batching plant operators will determine the moisture content of sand using the Speedy MoistureMeter. Based on this result, the quality controller will make the necessary adjustments to the mixproportion. Thereafter, different proportions of raw materials like cement, sand, aggregates, waterand admixture are poured into the concrete mixer for blending. The purpose of the admixture is tohelp the concrete to gain early strength for demoulding. Upon completion, the quality controllerconducts a concrete slump test and passes the quality of the mix. Cube samples are taken forconcrete strength test later. A concrete slump test is conducted on the concrete mixture to checkon the right mixture proportion: cement, sand, aggregate and water. This is to ensure the workabilityof the concrete such that it will not be too wet or too dry.

Step 4: Concrete casting

Before the placement of the concrete mixture, a final check on the prepared steel mould andstructural reinforcement will be done by the quality controller and the customer’s representatives.After passing the inspection, the concrete mixture is poured into the steel mould. Between pours,the concrete mixture is vibrated to ensure that all space in the mould is completely filled. Theconcrete surface is levelled and finished with a trowel for smooth finish or a broom for rough finishaccording to customers’ specifications. The cast concrete is then left to set and gain strengthovernight.

Step 5: Demoulding

After the concrete mixture has settled and solidified, cube samples will be taken for the testing ofconcrete strength before demoulding. The demoulding process will involve the removal of the side-form of the steel mould first, followed by the transfer of the precast component to the storage yardusing an overhead crane. Thereafter, a quality check will be conducted on the precast component.


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Step 6: Finishing

All defects reported by the quality controller after the quality check will be repaired according to theapproved procedures set by HDB. The quality controller and the representative from the customer’soffice will inspect the finished precast components before delivery to the site.

Step 7: Delivery

The finished precast components will be stored till the customers require them. The deliverysupervisor will then plan the delivery of the precast components according to each site’srequirement.

Manufacturing process of prefabricated architectural metal components

The prefabricated architectural metal components manufactured by our Group include mild steel doorframe, aluminium letterbox, aluminium cloth rack, stainless steel hoppers and mild steel entrance gate.Our Group’s manufacturing process for our prefabricated architectural metal components is as follows:-

A. Pre-production planning

Upon receipt of confirmation from customers based on the sales quotation, a pre-productionplanning program will be carried out whereby the required specifications and production workschedules will be drawn up. This pre-production planning program is drawn up by a team comprisingthe sales manager, purchasing executive, production planner and production manager.

B. Material planning

Next, a material planning program will be drawn up based on the approved production workschedules. The purchasing officer will then purchase the required materials accordingly.

C. Preparation of tooling and jig

The production department will prepare the tooling, jigs, dies and other fixtures based on customers’specifications. Next, a trial production will be carried out and the production manager will conductquality and efficiency analyses on a continuous basis. All inefficiencies identified will be promptlyrectified and modification will be made to the production processes.

D. Production (Fabrication and assembly)

After the trial production test, the actual production will commence. A master schedule and astructure list or bill of material will also be prepared to monitor the costing and schedule planning foreach product. The production process involves 2 stages, the fabrication and assembly stages:-

D.1 Fabrication

The sheet metal fabrication production involves the following steps:-

Step 1: Shearing

Sheet metal is sheared to the required size and shapes using the Computer Numerical Control turretpunch and the Computer Numerical Control shearing machines.

Step 2: Blanking

Next, metal articles are punched out of the sheet metal using the hydraulic presses and powerpresses and/or turret punching.

Step 3: Deep drawing

The metal articles are then pulled or drawn from flat sheets or blanks into cylinder cups or othershapes (known as sheared or blanked metal articles) according to specifications.


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Step 4: Bending

The sheared or blanked metal ar ticles are bent using the Armada Bending Machines into therequired dimension according to specifications.

Step 5: Roll forming

A roll forming process will be carried out to produce the desired profile. This is achieved by rollingthe sheared or blanked metal article between a pair of dies and rollers.

Step 6: Rolling

The final step in fabrication is to pass the sheared or blanked metal article through the rollers of therolling machines to produce the required curvatures.

D.2 Assembly

Step 1: Welding

The fabricated metal component parts are welded together using either the Mixed Inner Gas orTungsten Inner Gas welding and spot welding operations. These gases are a mixture of helium,neon, xenon and other gases with different ration.

Step 2: Fastening

Next, the metal parts are fastened together by riveting. If required, the products are sent forCathodic Electrode Deposition (“CED”) in the factory. The CED is a process whereby the coatingcompound will be ionised and deposited at the cathode. The purpose of this process is to preventsurface corrosion.

E. Quality control inspection

Quality control checks are carried out at each stage and a final check will be carried out on the finalmetal component before delivery to the customers.

Currently, all our manufacturing activities for prestressed and precast reinforced concrete buildingcomponents and prefabricated architectural metal components are at 66 Sungei Kadut Street 1(PFT) and 99 Pioneer Road (PFT3) respectively. The production capacity of our prestressed andprecast reinforced concrete building components has increased from 16,000 cubic metres in 1996 to33,000 cubic metres in 1997 due to the introduction of an additional production line in 1997. As forprefabricated architectural metal components, our current production capacity is approximately1,878 tons. However, with our planned factory extension at 99 Pioneer Road, our productioncapacity for prefabricated architectural metal components is expected to increase further (pleaserefer to the section on “Prospects and Future Plans” for more details).

QUALITY CONTROL

General construction

Our Group’s corporate mission is to provide customers with high quality projects and constructionexcellence to meet their satisfaction. The award of ISO9002 certification in 1997 to HKPL attests to itsability to provide quality management to all its projects. In addition, in 1997, HDB was awarded theprestigious Singapore Quality Award. In recognition and appreciation of HKPL’s contribution as abusiness partner with HDB to provide quality housing and services, HDB awarded HKPL a silvermedallion.

Our Group’s quality objectives are as follows:-

(i) to complete all projects within specified timeframes;

(ii) to minimise unnecessary wastage of materials. As a measure, we seek to cap wastages to nomore than 2.0% of the material cost of each project;


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(iii) to reduce work defects and reworks through constant monitoring to ensure that the design andspecifications of all projects are met; and

(iv) to maintain a record of minimal accidents on all projects through strict adherence to all safetyprocedures.

Our Group has a quality control team which comprises the project manager, site supervisor, engineer andquantity surveyor who meet on a weekly basis to monitor the progress of our ongoing projects. Inaddition, a project safety audit committee comprising project manager, safety officer, safety supervisor,site supervisor and sub-contractor representative meet on a weekly basis to ensure that safety checksare conducted at all its sites.

For the past 3 years, our percentage of wastages, defects and accidents are as follows:-

FY1997 FY1998 FY1999

Percentages of wastages 0.37% 0.31% 0.18%

Defects Not available Not available 0.35 perdwelling unit

Accidents* 7 6 13

* These were mainly minor accidents that did not require hospitalisation of the workers.

Prefabrication

PFT and PFT3 were both certified ISO 9002 in 1995. The ISO 9002 certification is awarded tocompanies for quality assurance in production, installation and servicing of quality systems including thedetection, prevention and correction of problems during these processes. The ISO 9002 certificationserves as an endorsement of the quality of work done by PFT and PFT3.

Our Group has a stringent quality control system to check on every stage of production. Checks beginfrom the purchase of raw materials and end with a final quality check before the products are sent to theconstruction sites. Random samples are collected and tested for compliance with customers’specifications. Raw materials that do not meet with the specifications are rejected and returned tosuppliers.

Quality checks at every stage of production include dimensional checks, reinforcement checks,compliance checks with structural and architectural drawings and concrete strength checks. Currently,our Group’s rejection rates for its prestressed and precast reinforced concrete building components andprefabricated architectural metal components are below 0.01% and 2% respectively.

INSURANCE POLICIES

Our Group takes out contractor’s all-risks insurance policies for all our construction projects. The insuredsum for each project is generally up to the full value of the contract and the period of insurance coverfrom the commencement of the project to the expiry of the defects liability period. Our Group also takesout insurance for workmen’s compensation.

With respect to HDB projects, the Group takes out insurance policies in compliance with HDB’sspecification standards. Currently, HDB’s specification standards require contractors to take outinsurance for:-

(i) personal injury and property damage;

(ii) workmen’s compensation; and

(iii) contract works.


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With regard to (i), the limit of liability in respect of any one accident is set at $2,000,000 and is unlimitedin respect of any one period of insurance. For (ii), the coverage is required for all workmen employed bythe contractor and its sub-contractors for the project. For (iii), the sum insured is required to be up to thefull value of the contract works. The period of cover for all three types of insurance is required tocommence on the date the construction site is handed over to the contractor and end upon the expiry ofthe defects liability period under the construction contract.

Our Group also takes out all-risks insurance on major items of machinery and equipment to indemnifyagainst any loss or damage occasioned. We also take out fire insurance for our factories up to thereplacement or market values of the buildings.

Our staff is covered by both group personal accident insurance and group hospital and surgicalinsurance. In addition, keyman insurance has also been taken out for personnel holding the followingsenior executive positions:-

1. Managing Director2. Deputy Managing Director3. Project Manager4. Contracts Manager5. Purchasing Manager6. Group Human Resource Manager7. Quality Control Controller

The insurance premiums paid and the insurance claims made by the Group for FY1996 to FY1998 are asfollows:-

Insurance InsurancePremium Claim

$ $

FY1996 135,573.50 54,035.00FY1997 340,478.40 790.45FY1998 425,604.62 18,391.22

PROJECT TENDERING AND MARKETING

Awards of construction contracts are in general, carried out by way of open tenders for public sectorprojects or closed tenders for private projects. Our Group keeps ourselves informed of these tenders byway of notices in newspapers, industrial publications and through recommendations. Our Group is alsoinvited to participate in closed tenders for private projects. To-date, our Group has participated innovation contracts arranged by underwriting insurance companies and private projects at the invitation ofclients. As for our Group’s development properties, we intend to continue marketing our developmentprojects through advertisements in newspapers, brochures and property agents.

CREDIT POLICY

Our Group does not have any credit policy for our general construction business. However, our majorcustomer, the Housing & Development Board (please refer to the section on “Major Customers” for HDB’spercentage of contribution to our Group’s turnover), normally makes payments within 30 days afterreceiving the monthly progress claims from us. The progress claims will show the amounts to which weconsider ourselves to be entitled to the last day of the monthly interval and the actual amount to be paidwill be approved by HDB.

The credit terms granted by our Group to our clients for our prefabrication business are typically between30 to 90 days. The average collection period ranges from 90 to 120 days from the date of invoice. Thecriteria for credit terms granted to our clients are based on our working relationship with our clients andtheir payment track records. Clients with good creditworthiness are normally given better credit terms.As for new clients, our Group will grant them credit terms based on their market reputation.


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For our general construction business, our sub-contractors grant our Group on an average of 30 days ofcredit upon the certification of work done by the quantity surveyor. As for our suppliers, we are grantedan average of 30 to 90 days credit from the date of invoice. We normally pay our sub-contractors andsuppliers within the credit terms granted.

As for our prefabrication business, our sub-contractor and suppliers grant us on an average of 30 to 90days of credit and our payments are normally made within the credit terms granted.

NEW PRODUCTS

Our Group has 2 new products, namely the mild steel civil defence blast door and the prefabricatedbathroom.

We manufacture the mild steel civil defence blast door based on the specifications, design and drawingsprovided by the HDB. On 1 May 1998, The Civil Defence Shelter Act (Cap. 42A) came into force. Underthe Act, it is stipulated that every new residential dwelling (inclusive of private houses and flats) must beprovided with either a household or storey civil defence shelter. The mild steel civil defence blast door isa prescribed requirement for every household or storey civil defence shelter. As such, the blast door is anecessary feature of every new residential dwelling to be constructed in Singapore. The Group hassubmitted and obtained conditional approval from HDB for its mild steel civil defence blast door, andfurther approval is pending from the BCA, being the relevant authority governing the construction of civildefence shelters. Subject to obtaining all necessary approvals, the Group expects to commencemarketing this product to both the private and public sectors in Singapore earliest from the 2nd quarter of2000.

The prefabricated bathroom that we developed is based on a patent pending wall panel process. Pleaserefer to the “Prospectus and Future Plans” section of this Prospectus for more details.

PATENT

The manufacturing of the prefabricated bathroom requires the use of a patent pending process developedby Tectonic Transfer, a partnership engaged in business management and consultancy services. Mr AwKhoon Hwee, the Deputy Managing Director of the Company, has a 50% interest in the partnership. On9 September 1999, Tectonic Transfer filed an application with the Registry of Patents in Singapore for apatent under the Patents Act (Cap. 221).

If approved, this patent will allow Tectonic Transfer to safeguard its proprietary rights to the wall panelsystem of the prefabricated bathrooms. Whilst there is no assurance that the Registry of Patents inSingapore will approve the patent application, on 23 December 1999, Tectonic Transfer assigned all itsrights and benefits, including, without limitation, any patent rights, in respect of the composite wall panelsystem for prefabricated enclosures to PFT (please refer to page 53 of this Prospectus for details of theassignment).

STAFF TRAINING

Our Group’s commitment in providing reliable and quality services and products to customers is evidentin our training policy. Our Group’s training programmes endeavour to ensure that our employees’ skillsare upgraded on a periodical basis. Currently, employees are sent to external courses, conferences andseminars to keep them updated on the latest technology and trends in the construction industry. In1999, these courses, conferences and seminars included the Singapore Institute of Architects Standardsof Conditions, LAVA2000 – Prefabrication Toilet Seminar, Analysis & Design of Concrete Beams withOpenings, Construction Quality Assessment 21, ISO9002 Internal Quality Audit, Cutting EdgeTechnologies in Sheet Metal Fabrication and New Product Development in Singapore.

In general, our Group’s training programmes consist of a series of courses coupled with continuous on-the-job training. Various types of training are targeted at different staff according to their job scopes andfunctions. Our Group’s aim is for all staff to be trained with the basic product knowledge, and to beaware of the relevant statutory requirements and building regulations and the latest industrydevelopments.


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Our Group’s training programmes can be classified into 5 major categories:-

• Technical knowledge• Production and engineering knowledge• Productivity and quality• Management and supervisory skills• Computer related skills

There has been a steady increase in our Group’s investment in training from $11,813 in 1996 to $100,264in 1998. Although this amount remains insignificant to our sales, it represents tangible sums spent onexternal and formalised courses. Time and expense spent on on-the-job training cannot be quantifiedand hence are not reflected in our financial statements.

YEAR 2000 COMPLIANCE

We understand Year 2000 (“Y2K”) compliance to mean that the performance and functionality of ourcritical equipment or systems will not be affected by data relating to dates prior to, during and after theyear 2000.

Our Group’s computer systems are personal computers for internal use, mainly for accounting, inventoryand data management functions. All our computer applications are standard commercial packages thatare stated by the software developer to be Y2K compliant. Moreover, our Group’s systems are not linkedto any external systems of our suppliers and customers. Our production machines have also beenconfirmed by the vendors to be Y2K compliant as they are not time and date sensitive. Our Group, inreviewing and ensuring that all our computer systems, software applications and machines are Y2Kcompliant, had budgeted approximately $150,000, out of which $17,000 and $26,000 have beencapitalised and expensed respectively in FY1999.

Since the beginning of year 2000, we have not experienced any problems with respect to Y2K issues andwe do not expect that the Y2K issue will have any significant impact on our Group’s business, costs andrevenues.

MAJOR SUPPLIERS

The suppliers accounting for 5% or more of our Group’s purchases in each of the last 3 financial yearsfrom FY1996 to FY1998 and the 10 months ended 31 October 1999 are as follows:-

Percentage contribution to thepurchases of our Group

10 monthsended

FY1996 FY1997 FY1998 31 Oct 1999% % % %

Name of major supplier

Housing & Development Board (1) — 7 7 9

Name of sub-contractor

Federal Paint Factory (S) Pte Ltd (2) 23 39 31 3China Construction (South Pacific)Development Co Pte Ltd (3) — — 24 51

Note:-

(1) The supplies from Housing & Development Board include concreting sand, aggregate, tiles, cement, steel and bricks.

(2) The variations of contribution over the years were due to the percentage of recognition of revenue. In FY1997, workprogress at Farrer Major Upgrading Project, MacPherson Major Upgrading Project and Balam Major Upgrading Projectwere faster than in FY1996. In FY1998, the decrease in the percentage was due to the slow down in work progress.For the 10 months ended 31 October 1999, the percentage dropped to 3% due to the near completion of the 3 projects.

(3) The increase in percentage from 24% in FY1998 to 51% for the 10 months ended 31 October 1999 was due to thecommencement of the Bukit Panjang N6C2&3 project.


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None of our Directors or substantial Shareholders has any interest, direct or indirect, in any of the abovesuppliers of our Group.

MAJOR CUSTOMERS

The customers accounting for 5% or more of our Group’s turnover in each of the last 3 financial yearsfrom FY1996 to FY1998 and the 10 months ended 31 October 1999 are as follows:-

Percentage contribution to theturnover of our Group

10 monthsended

FY1996 FY1997 FY1998 31 Oct 1999% % % %

Name of major supplier

Housing & Development Board 79 81 85 85

None of our Directors or substantial Shareholders has any interest, direct or indirect, in any of the abovecustomers of our Group.

Save for HDB, our Group was not dependent on any single customer which accounted for more than 5%of our Group’s turnover in FY1998. The contribution in percentage terms from HDB to the turnover andoperating profit of our Group for each of the past 3 financial years from FY1996 to FY1998 and the 10months ended 31 October 1999 are as follows:-

10 monthsended 31

FY1996 FY1997 FY1998 October 1999% % % %

Housing & Development Board

Contribution to turnover 79 81 85 85Contribution to operating profit 44 83 58 79

COMPETITION

General Construction

– Category of general building (CW01)

As at 13 March 2000, there are approximately 5,073 companies engaged in construction and relatedactivities (source: BCA website, 8 November 1999). Amongst these, 1,605 were classified as generalbuilding contractors which are graded by BCA from G1 to G8.

The grades that determine the size of public sector contracts that contractors can tender for are asfollows:-

BCA registration grade Tender capacity Number of contractors

G1 $0.5 million 738G2 $1 million 247G3 $3 million 117G4 $5 million 141G5 $10 million 177G6 $30 million 46G7 $50 million 47G8 Unlimited value 92

Source: BCA website, 13 March 2000


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HKPL, which is ranked G8 in the general building construction category, competes mainly with the other91 companies that are ranked in the same category. Our Directors are of the opinion that our Group’smain competitors for building construction include Chip Eng Seng Contractors (1988) Pte Ltd, Hua KokRealty (Pte) Ltd, Sim Lian Construction Co. (Pte.) Ltd. and Tiong Aik Construction Pte Ltd.

Prefabrication

– Category of precast concrete products (SY13)

As at 13 March 2000, there are approximately 37 companies which are classified as suppliers of precastconcrete products and graded by BCA from L1 to L6.

The grades that determine the size of public sector contracts that suppliers can supply are as follows:-

BCA registration grade Tender capacity Number of suppliers

L1 $0.1 million 0L2 $0.5 million 2L3 $1 million 3L4 $5 million 8L5 $10 million 11L6 Unlimited value 13

Source: BCA website, 13 March 2000

HKPL, which is ranked L6 in the precast concrete products category, competes mainly with the other 12companies that are ranked in the same category. Our Directors are of the opinion that our Group’s maincompetitors for precast concrete products include Eastern Pretech Ltd, Hong Leong Asia Ltd and L&MPrecast (Tuas) Pte Ltd.

– Category of doors, windows, louvres and glazing (SY03)

HKPL is graded L4 by BCA in the supply of doors, windows, louvres and glazing category. However, ourGroup competes mainly with the other approved list of HDB’s suppliers for HDB projects. As at 31October 1999, the number of suppliers within the HDB’s approved list in each product category is asfollows:-

Total number ofHDB approved

Product item suppliers

Door Frame – Mild steel door frame with cathodic electrode depositionprimer for internal door 5

Door frame – Mild steel door frame with cathodic electrode depositionprimer for main entrance door 5

Gate – Mild steel metal gate for main entrance (3 leaves) 5

Letter boxes – 3-way aluminium letter boxes with anti-junk mail deviceand master door 5

Refuse chute – Foot operated stainless steel hopper 6

Drying rack – Aluminium clothes drying rack and stainless steel railingsat recessed area 29

Source: HDB Approved Materials & Suppliers, July 1999 edition


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Our Directors are of the opinion that our Group’s main competitors for the supply of the above productsinclude Nam Lee Pressed Metal Industries Limited and Yong Tai Loong Pte Ltd.

Our Group received approval in December 1999 to supply the mild steel civil defence blast door to HDB.According to HDB Approved Materials & Suppliers, July 1999 edition, there are a total of 4 suppliers forthese doors.

To the best of our Directors’ knowledge, there are no published statistics on the local constructionindustry that can be used to accurately measure our Group’s market share in the industry. However,based on our Group’s successful tenders in 1999 and HDB’s published notices of successful tenders for“design and build” projects for 11 months in 1999 available from HDB’s webpage, our Group’s marketshare in 1999 for HDB “design and build” projects is estimated at approximately 11.3%.

COMPETITIVE STRENGTHS

Our Directors believe that our Group has the following competitive advantages:-

(a) Established track record

Our Group has 22 years of experience in the local construction industry and is one of the largestbuilding contractors registered with BCA in terms of annual turnover (source: BCA Singapore Top 30Construction Companies Survey 1998. Our Group was not listed in the survey as we did notparticipate in the survey. However, based on our Group’s general construction business turnover for1998 of approximately $148.6 million, we are ranked among the top 30 construction companies inSingapore in 1998.). HKPL, classified as a G8 general building contractor, is allowed to tender forpublic projects of unlimited values. As at 8 November 1999, approximately 5.7% of the contractorsregistered with BCA are of G8 grading for general building category. In addition, HKPL is also G4registered with BCA for the civil engineering category and G5 registered for the piling category. As aG4 civil engineering contractor, it is able to tender for projects of up to $5 million while a G5 gradingin the piling category allows it to tender for piling contracts of up to $10 million.

Besides being a main contractor, our Group is also registered with BCA as a supplier of constructionmaterials. HKPL is registered as a L6 supplier for precast concrete products and a L4 supplier fordoors, windows, louvres and glazing. As a L6 registered supplier, HKPL can tender for projects ofunlimited values, while a L4 grading allows HKPL to supply up to $5 million worth of doors,windows, louvres and glazing per project.

Our Group has been involved in HDB projects since 1977. In 1983, our Group won our first HDBmain building contract for Tampines N4C5 project. Over the past 5 years up to 10 months ended 31October 1999, our Group has successfully undertaken contracts (comprising building projects andsupply contracts) worth a total of at least $600 million, a testimony to our Group’s experience andestablished track record in the local construction industry.

(b) Integrated services

In line with our Group’s decision to provide integrated services, our Group ventured into the design,manufacture and sale of prestressed and precast reinforced concrete building components in 1990.Apart from supporting our Group’s construction projects, our Group also tenders for public projectsto supply prestressed and precast reinforced concrete building components. As at 8 November1999, HKPL is one of the 13 L6 suppliers for precast concrete products and one of the HDBapproved suppliers for prefabricated architectural metal components. Today, our Group isrecognised as a main contractor for general building construction, “design and build” projects and asupplier for prestressed and precast reinforced concrete building materials and prefabricatedarchitectural metal components.

Our Directors believe that through these integrated services, our Group is able to better control thequality and progress of its projects, provide a lower cost of construction and add value to itsprojects.


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(c) Quality of work

Our Group takes pride and places great emphasis on providing quality service to all its projects.The consistent quality of work provided by our Group has gained recognition with HDB. In 1997,HDB was awarded the prestigious Singapore Quality Award. In recognition of HKPL’s contribution asa business partner with HDB to provide quality housing and services, HDB awarded HKPL a silvermedallion.

In addition, both PFT and PFT3 have been certified ISO 9002 for its business operations in 1995and HKPL has been similarly certified in 1997. The ISO 9002 certification is awarded to companiesfor quality assurance in production, installation and servicing of quality systems including thedetection, prevention and correction of problems during these processes. The ISO certification alsoserves as an endorsement of the quality of work done by our Group.

TURNOVER AND PROFITABILITY

Review of Performance by Activities

Our Group’s turnover and operating profit by activities are set out below. This analysis should be read inconjunction with the Accountants’ Report set out on pages 65 to 85 of this Prospectus.

Proforma<———————————— Year ended 31 December ————————————>

10 months1996 1997 1998 ended 1999

$’000 % $’000 % $’000 % $’000 %

Turnover

Generalconstruction 70,050 78.6 131,665 81.3 148,597 84.7 130,679 85.5

Prefabrication 19,104 21.4 30,195 18.7 26,882 15.3 22,235 14.5

Total 89,154 100.0 161,860 100.0 175,479 100.0 152,914 100.0

Profit before taxation

Generalconstruction 780 44.4 4,695 83.4 4,547 59.0 11,034 77.5

Prefabrication 975 55.6 936 16.6 3,164 41.0 3,205 22.5

Total 1,755 100.0 5,631 100.0 7,711 100.0 14,239 100.0

Our Group’s businesses are carried on in Singapore only. The review of our Group’s past performancebased on our Group’s proforma results over the past three financial years is set out below.

FY1996 to FY1997

Our Group’s turnover increased by $72.7 million or 81.6% to $161.9 million in FY1997 due mainly to a$61.6 million increase for our Group’s general construction business and a $11.1 million for our Group’sprefabrication business. Our Group’s increase in turnover for our general construction business was duemainly to revenue recognised for the year from new contracts such as Hougang Neighbourhood 9Contract 9 (“N9C9”) valued at $49.7 million, upgrading project at Farrer Road Precinct (Major UpgradingProject Batch 4) (“Farrer MUP4”) valued at $11.0 million and upgrading project at MacPherson Precinct(Major Upgrading Project 4) (“MacPherson MUP”) valued at $17.3 million. However, these contributionswere dampened by the lower percentage of revenue recognition from previously clinched contracts suchas upgrading project at Balam Road Precinct (Major Upgrading Project 4) (“Balam MUP”).


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Our Group’s increase in turnover for our prefabrication business was due to an increase in new contractsincluding projects at Jurong West N6C13, East Vale and West Mere. This has also led to the introductionof an additional production line to meet the excess demand. As a result, the production output forprestressed and precast reinforced concrete building components rose from 14,500 cubic metre inFY1996 to 25,200 cubic metre in FY1997.

Our Group’s profit before taxation increased by approximately $3.9 million or 220.9% from $1.8 million inFY1996 to $5.6 million in FY1997. The improvement was mainly due to increase in profit contributionfrom our Group’s construction business of approximately $3.9 million due to higher gross profits achievedfor the new projects which were in excess of $50 million in contract value. This led to the bulksubcontracting and bulk purchase of raw materials, resulting in greater economies of scale.

Our Group’s prefabrication business registered a marginal drop in profit before tax of $39,000 in FY1997despite registering an increase in turnover for our Group’s prefabrication business. Our Group’s profitbefore taxation margin for our prefabrication business decreased from 5.1% in FY1996 to 3.1% inFY1997. This decrease was due to the provision for liquidated damages of $1.2 million (due largely tothe late delivery of components which resulted in the delay of projects), an increase in handling andstorage costs which resulted in higher unit cost (due largely to the increase in new contracts whichresulted in additional storage space rented from external parties), and Directors’ fee of $1 million paid outfor FY1997.

In FY1997, our prefabrication business registered a profit of $936,000 as compared to $975,000 inFY1996. However, if the provision of liquidated damages of $1.2 million was added back, our adjustedprofit will be $2.14 million which is 119.1% better than FY1996’s profit of $975,000. In view of this betterperformance, our Directors were paid a Directors’ fee of $1 million in FY1997.

FY1997 to FY1998

Our Group’s turnover increased by $13.6 million or 8.4% to $175.5 million in FY1998 due mainly to ahigher turnover of $16.9 million achieved for our Group’s general construction business offset by adecrease in turnover of $3.3 million for our Group’s prefabrication business. Our Group’s increase inturnover for our general construction business was due mainly to revenue recognised for the newprojects, namely, the “design and build” project at Bukit Panjang Neighbourhood 4 Contract 11 (“N4C11”)valued at $30.0 million and building project at Bukit Panjang Neighbourhood 6 Contract 2&3 (“N6C2&3”)valued at $40.4 million. However, the increase was offset by the lower percentage of contribution fromN9C9 (in the last phase of construction), Farrer MUP4 and MacPherson MUP (both of these contractsare moving into the last phase of construction). In 1998, our Group has a lower number of new contractsas compared to 1997 as there were few contracts available in the industry due to the economic crisis.This is especially so for the MUP contracts which our Group did not secure any in 1998. Consequently,our turnover grew by only 8.4% compared to 81.6% in FY1997.

The decrease in turnover for our Group’s prefabrication business was due mainly to increasedcompetition and fewer contracts being secured by our Group due to the contraction in the localconstruction industry. In 1998, the value of contracts for both private and public sectors was only $15.3billion, decreased by 34.9% from 1997’s $23.5 billion. Based on the value of contracts for residentialbuilding work alone, it contracted from $11.3 billion in FY1997 to $5.3 billion in FY1998, representing adrop of 53.7% (source: BCA as at 16 December 1999).

Our Group’s profit before taxation increased by approximately $2.1 million or 36.9% from $5.6 million inFY1997 to $7.7 million in FY1998. Accordingly, our profit before taxation margin improved from 3.5% inFY1997 to 4.4% in FY1998 due to the improvement in profit before taxation margin for our prefabricationbusiness. Our profit before taxation margin for our prefabrication business improved from 3.1% inFY1997 to 11.8% in FY1998. The improvement was mainly due to increase in profit contribution from ourGroup’s prefabrication business of approximately $2.2 million offset by a decrease of approximately$148,000 from our Group’s general construction business. The increase of $2.2 million was mainly dueto the absence of liquidated damages in FY1998 as compared to the $1.2 million paid out in FY1997 dueto our Group’s ability to meet all our customers’ deadlines and delivery schedules and a lower Directors’fee of $650,000 as our Directors wanted to retain additional cash reserves in our prefabrication group forthe future expansion. In addition, we had a write back of $436,000 from bad debts provided for in


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FY1997 which was subsequently collected in FY1998. If the liquidated damages, write back of baddebts and the difference of $350,000 in Directors’ fees for FY1997 and FY1998 are adjusted back, ourprofit before taxation margin for our prefabrication business will be 8.5% and 8.8% for FY1997 andFY1998 respectively.

Our Group’s profit before taxation margin for our general construction business decreased from 3.6% inFY1997 to 3.1% in FY1998. This decrease was due mainly to the additional provision for doubtful debtsof $1.9 million offset by the increase in profit from revenue recognised from projects. The additionalprovision for doubtful debts was mainly due to an additional provision for loans and advances to SteadyPiling Engineering Pte Ltd of $1.6 million (please refer to the section “Interested Persons Transactions”,part (c) on “Transactions with Steady Piling Engineering Pte Ltd”).

FY1998 to 10 months ended 1999

Our Group’s turnover for the first 10 months of FY1999 was approximately $152.9 million. This amountrepresents approximately 87.4% of our Group’s estimated turnover for FY1999. Our Group’s generalconstruction business registered a turnover of approximately $130.7 million (mainly contributed fromongoing projects including the N4C11 project and the N6C2&3 project), whilst our Group’s prefabricationbusiness registered about $22.2 million from ongoing and new contracts. The new contracts includeprojects at Bukit Panjang N1C13, Punggol East C10 and Jurong West N6C12.

Our Group’s profit before taxation for the first 10 months of FY1999 was approximately $14.2 million.This amount represents approximately 89.9% of our Group’s estimated profit before taxation for FY1999.Our Group’s general construction business contributed approximately $11.0 million whilst, our Group’sprefabrication business contributed approximately $3.2 million. Our general construction businessregistered an increase in profit before taxation margin to 8.4% for the 10 months ended 31 October 1999from 3.1% in FY1998 due to the lower materials and sub-contracting costs for our ongoing projects whichwere concluded during the economic crisis in 1998. Although the contracts secured were also at lowerprices, the percentage drop in material and sub-contracting costs were larger than that of the contracts’values.

Our Group’s profit before taxation for our prefabrication business increased due to a lower material andlabour costs offset by lower selling prices. The lower material costs were the result of favourable pricesfrom suppliers and sub-contractors which help the Group to bid more competitively for projects. Thelower labour costs were due to the recruitment of a higher proportion of skilled workers to non-skilledworkers which led to a decrease in foreign workers’ levy. The reduction in Central Provident Fundemployer’s contribution from 20% to 10% also contributed to a higher profit for our Group. The totalsavings for our prefabrication business were $196,535 from the decrease in foreign workers’ levy andreduction in Central Provident Fund employer’s contribution.

PROFIT ESTIMATE

Barring any unforeseen circumstances, our Directors estimate that our Group will achieve turnover, profitbefore tax and profit after tax of $174.9 million, $15.8 million and $11.4 million respectively for the yearended 31 December 1999.

DIVIDENDS

We have not declared any dividend for the past 3 financial years ended FY1998 and we do not intend todeclare any dividend for the year ended 31 December 1999. Our Group does not currently have adividend policy. Any payment of dividends in the future will be at the discretion of our Board of Directorsand will depend upon the earnings and financial position of our Company, its results of operations, itscapital needs including plans for expansion to which our Company may be subject and such otherfactors as our Board of Directors may deem appropriate.


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PROSPECTS AND FUTURE PLANS

Overview of the Singapore construction industry

On 20 October 1999, the Construction 21 Report (“C21”) was launched by the Ministry of NationalDevelopment and the Ministry of Manpower with the aim of transforming Singapore’s constructionindustry into a professional, productive and progressive industry. The C21 blueprint has drawn up severalstrategies including improving industry practices and techniques, raising skill levels and professionalstandards and developing an external wing for the sector. The C21’s vision for the industry is “to be aworld-class builder in the knowledge age”, no less (source: Construction 21 Report, as reported in TheBusiness Times on 3 November 1999). In addition, the Singapore government will invest, over the next 4years, $44 million to help the construction industry keep up with information technology trends, improvework processes and stay competitive (source: National Development Minister Mah Bow Tan’s speech atthe launch of Baucon Asia ’99, as reported in The Straits Times on 6 October 1999). This will improvethe efficiency and competitiveness of the construction industry.

Although the construction industry has declined by an estimated 33% in 1998 and will decline further by3% in 1999, it is expected that the industry will increase by 3% in 2000 and 6% in 2001(source: BISShrapnel study, Building and Construction in the Asia Pacific Region 1998-2001, as reported in AsiaPulse on 16 August 1999). Currently, the public sector, which accounts for more than half of the totalvalue of contracts awarded for the entire construction industry, is supported mainly by HDB projects.The ongoing Punggol 21 project, the Estate Renewal Strategy in Toa Payoh, Ang Mo Kio, Queenstown,Mountbatten and Bedok, the main and interim Upgrading Programmes and the Selective En-blocRedevelopment Scheme in 2000 will support the growth in the construction industry.

The HDB home ownership programme over the years has played an important role in the growth ofSingapore’s construction industry and a vital role in improving the standards of living of Singaporeans.Approximately 86% of Singaporeans live in HDB flats (source: National Development Minister Mah BowTan’s addenda to President S.R. Nathan’s address to Parliament in October 1999, as reported in TheStraits Times on 6 October 1999). Furthermore, HDB’s building programme is being adjusted regularly tomeet the demand for new flats. First time applicants for HDB flats are given priority in the allocation ofnew flats and low-income families will receive special assistance.

In view of the Construction 21 Report and the HDB-announced scheme for the enhancement of the homeownership programme, the main and interim Upgrading programmes and the Selective En-blocRedevelopment Scheme are positive developments in the Singapore construction industry. Based on ourstrength, these could create opportunities for us to clinch new projects.

Legislation of Buildable Designs

The Singapore government in June 1999, decided to implement the Buildable Design Appraisal System(“BDAS”) whereby all projects will be graded with a buildability score. The development of the BDAS isbased on:- (1) the observation that structural work and architectural work have the highest potential forproductivity improvement and reduction in foreign workers; and (2) the 3 “S” principles that isstandardisation, simplicity of building system and the use of single integrated building components.Starting from January 2001, all new projects in both the public and private sectors (residential,commercial, industrial and institutional buildings), including new extensions or additions to existingbuildings, with gross floor area exceeding 5,000 sq m will need to meet the minimum buildability score.

To prepare the industry for the legislation of buildable designs, BCA has identified 4 areas fordevelopment:-

(1) Development of code of practice

The Ministry of National Development has established 2 committees responsible for the smoothimplementation of minimum buildability requirements. These 2 committees are represented byrepresentatives from the Real Estate Developer Association of Singapore (“REDAS”), SingaporeInstitute of Architects (“SIA”), Institute Engineers of Singapore (“IES”) and Singapore Institute ofSurveyors & Valuers (“SISV”). Comments from industry key players were also obtained to help thecommittees focus on major areas of concerns and to develop solutions to foreseeable problems.


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(2) Training and promotion programmes

Since 1991, the concept of buildability has been promoted through the following activities:-

- An annual competition for the Best Buildable Design Awards- D&B tenders of public sector agencies stipulating minimum buildability score- BDAS, modular co-ordination and precast design courses by BCA- In-house briefings or consultations on specific projects by BCA- Structural precast concrete workshops- Architectural precast concrete workshops

In addition, BCA has published a combined Buildability Training and Promotion Programme to assistthe industry to identify and co-ordinate the relevant training courses.

(3) New publications/guides

Currently, BCA has the following publications/guides to help the industry to familiarise itself withbuildable design. These publications/guides include:-

- Guide to precast concrete and prefabricated reinforcement for buildings- Prefabricated reinforcement handbook- Structural precast concrete handbook- Guide on modular co-ordination

(4) Developing the precast sector

In anticipation of the increase in demand for precast components, BCA has set aside adequate landfor precasters. In addition, BCA is working with prefabricators to standardise the dimensions ofprefabricated components. This will help to reduce the cost of precast components and allow awider spread of usage for precast components.

Our Directors are of the opinion that the legislation of the buildable designs will result in the increasein demand for prestressed and precast reinforced concrete building components and prefabricatedarchitectural metal components in both public and private housing projects. This augurs well for usas the demand for our components will increase, and because as manufacturer of suchcomponents, our costs will be lower versus other contractors who may need to purchase thesecomponents from us and our competitors.

In view of the expected recovery of the construction industry and the legislation of buildabledesigns, our Group’s future growth and expansion plans are as follows:-

(1) General construction

To focus on “design and build” and upgrading projects

Currently, our Group’s main profit contribution comes from HDB projects and we intend tocontinue our focus on HDB projects. Our Directors are of the opinion that there will be anincrease in “design and build” projects and that the HDB upgrading projects will resume in year2000.

Our Directors believe that with our Group’s prefabrication capabilities and our 22 years’experience in the construction industry, we are well positioned to tender for these projects.Currently, our Group has 2 ongoing “design and build” projects and has completed 3 MajorUpgrading Projects.


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(2) Prefabrication

Increase in production capacity

(i) Factory expansion at 99 Pioneer Road

In view of the anticipated recovery in the construction industry in 2000 and the legislationof buildable designs in 2001, our Directors are of the opinion that the demand forprefabricated architectural metal components will increase which will give rise to morecontracts being awarded in the market. Our Group intends to build an extension to ourfactory at 99 Pioneer Road to increase the production capacity for our prefabricatedarchitectural metal components. Our Group will set aside approximately $2 million fromthe net proceeds raised from the Invitation for the factory extension.

(ii) Setting up of new manufacturing plant in Malaysia

Our Group is also looking to further expand our production capacity for its prestressed andprecast reinforced concrete building components and prefabricated architectural metalcomponents. Our Directors believe that a manufacturing plant in Malaysia will enable ourGroup to benefit from lower operating costs. As at 31 December 1999, our Group has notacquired any factory or land in Malaysia. Our Group will set aside approximately $4million from the net proceeds raised from the Invitation for the expansion of our Group’sprefabrication business to Malaysia.

(3) To develop 27 Ewe Boon Road, 42 East Coast Road, 104 & 106 Arthur Road

Our Group intends to develop 27 Ewe Boon Road into a 10-storey development comprising 17units of apartments with a basement carpark and a swimming pool for sale. The project isexpected to be launched by FY2000. Our Group has not started marketing this project yet.Our Group received written permission on 10 March 2000 from the URA to redevelop thisproperty.

Our Group has obtained provisional approval on 12 February 2000 from the URA to redevelopour property at 42 East Coast Road. Our Group intends to redevelop the existing site into acommercial / residential complex. Construction is expected to commence in July 2002. Thecommercial portion will be held for investment purposes while the residential portion will be forsale.

On 30 December 1999, our Group exercised the option to purchase 104 & 106 Arthur Road foran aggregate purchase price of $6.8 million. We intend to redevelop these 2 properties intoresidential properties for sale.

(4) New products

As at 31 October 1999, our Group has 2 new products, namely the mild steel civil defenceblast door (which has been approved by the HDB to be used in all HDB flats) and theprefabricated bathroom (for which we are currently seeking approval from the relevantauthorities) which we intend to launch this year.

(i) Mild steel civil defence blast door

As stated on page 39 of the Prospectus, this product forms part of the household orstorey civil defence shelter which is required under the Civil Defence Shelter Act (Cap.42A) to be provided in every new residential dwelling (inclusive of private houses andflats). Our Group intends to target this product at the public and private markets. OurGroup intends to market this product through direct marketing in the 2nd half of year 2000.


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(ii) Prefabricated bathroom

At a briefing for the “LAVA2000 - Prefabrication Toilet Seminar” held on 5 October 1999 byHDB, it was mentioned that Prefabrication Technology Centre (“PTC”), a unit under HDB,will be introducing prefabricated bathrooms for use in several new HDB contracts and afterthis seminar, the tender for the first contract incorporating the prefabricated bathroom wascalled on 10 March 2000. The demand estimated by PTC for prefabricated bathroomproduct is predicted to be worth more than $100 million per year (source: Briefing notes onthe LAVA2000 - Prefabrication Toilet Seminar).

Arising from the above estimate, our Group has acquired a patent pending system usedfor the manufacture of prefabricated bathrooms. The prototype of the prefabricatedbathroom is in the final stage of testing.

Our Group has on 17-18 February 2000, participated in a prefabricated bathroomexhibition, organised by PTC.

REVIEW OF FINANCIAL POSITION

Fixed assets

Fixed assets comprise mainly leasehold land and buildings, freehold properties, plant and machineriesand construction equipment.

Fixed assets decreased by approximately $1.5 million or 7.0% from $21.0 million in FY1996 to $19.5million in FY1997. The decrease was mainly due to the higher depreciation expense incurred as a resultof the purchase of site containers and plants and machineries for the new project at Hougang N9C9 andan increase in the development cost of factory extension at Sungei Kadut Street 1 in 1996.

Fixed assets increased by approximately $1.9 million or 9.7% from $19.5 million in FY1997 to $21.4million in FY1998. The increase was mainly due to the purchase of property at 99 Pioneer Road for $3.9million offset by the disposal of property at Telok Kurau #01-02 with a net book value of $407,553, thedisposal of site containers and plant and machineries of total net book value of $244,540 and thedepreciation charge.

For the 10 months ended 31 October 1999, the fixed assets were fairly constant with acquisitions ofplant and machineries being offset by depreciation charged.

Development properties

Development properties were fairly constant from FY1996 to FY1998. For the 10 months ended 31October 1999, the development properties of $25.2 million consist of the following properties:-

(a) a 2-storey detached house known as 27 Ewe Boon Road, Singapore 259330 on a freehold land withan area of 1,285.9 sq m; and

(b) a 4-storey commercial cum residential building known as 42A/B/C/D/E/F, East Coast Road,Singapore 428762 on a freehold land with an area of 1,686.1 sq m.

Current assets

Current assets comprise mainly developed property held for sale, stocks and trade debtors. Currentassets increased by approximately $3.5 million or 10.3% from $34.2 million in FY1996 to $37.8 million inFY1997. The increase was mainly due to the increase in sales turnover from $89.2 million in FY1996 to$161.9 million in FY1997 resulting in an increase in trade debtors of $8.8 million offset by a decrease inconstruction work-in-progress of $4.4 million. In FY1996, the $4.4 million was costs incurred plusattributable profits in excess of progress billings.

In FY1998, current assets increased by $3.8 million or approximately 10.0% from $37.8 million inFY1997 to $41.6 million in FY1998 due mainly to the increase in sales turnover from $161.9 million inFY1997 to $175.5 million in FY1998 resulting in an increase in trade debtors of $2.2 million and cash andbank balances of $2.3 million offset by a drop in other debtors of $0.8 million.


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For the 10 months ended 31 October 1999, current assets increased by $4.4 million due mainly toincrease in fixed deposits.

Current liabilities

Current liabilities comprise mainly construction work-in-progress, trade creditors and bank overdraft.Current liabilities decreased by approximately $1.1 million or 2.4% from $47.1 million in FY1996 to $46.0million in FY1997 due to lower cost of operations. During the year, our bank overdraft was restructuredinto term loans. In FY1998, current liabilities decrease marginally from $46.0 million in FY1997 to $44.3million in FY1998 due to further restructuring of bank overdraft into term loans offset by an increase intrade creditors, provision for taxation and amount due to our Directors.

For the 10 months ended 31 October 1999, current liabilities increased marginally by $1.5 million duemainly to increase in provision for current taxation of $2.5 million resulting from higher profit margin forprojects including Jurong West N2C4, Bukit Panjang N4C11, Bukit Panjang N6C2&3, Hougang N9C9 andupgrading projects at Balam Road, Farrer Road and MacPherson Road and increase in progress billing inexcess of construction work-in-progress of $5.5 million. This was offset by a drop in trade creditors,other creditors and amount due to our Directors totalling $6.1 million.

Long term liabilities

Non-current liabilities comprise mainly bank loans, hire purchase creditors and deferred taxation. Non-current liabilities increased from $7.9 million in FY1996 to $24.6 million for the 10 months ended 31October 1999 due to additional term loans for the acquisition of development properties. In 1999, ourGroup paid $6.5 million and $17.0 million for development properties at 27 Ewe Boon Road and 42 EastCoast Road respectively.

Working Capital

Our Group had negative working capital positions for FY1996, FY1997 and FY1998 of $12.9 million, $8.2million and $2.8 million respectively. For the 10 months ended 31 October 1999, we have a positiveworking capital of $66,000.

For FY1996 to FY1998, the negative working capital position was mainly due to the advance receipts forwork that are still in progress and the bank overdrafts. In FY1996, FY1997 and FY1998, our Group hasbank overdrafts of $20.1 million, $7.9 million and $0.4 million respectively. The decrease in bankoverdrafts over the years was due to the repayment of the bank overdrafts.

For the 10 months ended 31 October 1999, our Group achieved a positive working capital position of$66,000 due to the placement of fixed deposits from cash generated from our operations.

Our Group’s debt to equity ratio as at 31 October 1999 is 0.98 and this is expected to be lower in FY2000as a result of the partial repayment of bank borrowings from the proceeds raised from the Invitation anda larger equity base. Our Directors believe that our Group is in a healthy financial position and togetherwith the proceeds raised from the Invitation, our Group will be able to meet our business needs.

Shareholders’ equity

Shareholders’ equity grew steadily over the past 3 financial years in line with the Group’s profitableoperations. Profit attributable to our Group increased from $1.5 million in FY1996 to $4.7 million inFY1997 to $5.1 million in FY1998 and $10.1 million for 10 months ended 31 October 1999.


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POTENTIAL CONFLICTS OF INTERESTS

Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee, Aw Hoon Hui and/or their associates have interests incertain companies and businesses which are engaged in similar trade as our Group but which are notincluded in our Group. The details of these companies or businesses are set out below:-

(a) Ann Teng General Building Contractor (“Ann Teng”)

Messrs Aw Leng Hwee, BBM, and Aw Hoon Hui, together with their brother, Aw Soon Hwee, arepartners in Ann Teng, a business registered on 10 October 1975. The partnership was originally setup to carry on business as a sub-contractor to supply and install metal louvre windowspredominantly in the HDB market. However, since the cessation of the louvre window business in1980, the partnership has been dormant. The partners do not have any intention of reactivating AnnTeng.

(b) Steady Piling Engineering Pte Ltd (“SPEPL”)

SPEPL was incorporated on 27 July 1981 and its 80% owned subsidiary, Foundation AsianaRegional Pte Ltd (“FARPL”) was incorporated on 14 November 1992. Mr Aw Hong Hwee (who is abrother of the Executive Directors of the Company) is the managing director of SPEPL and a holderof approximately 44% of the issued and paid-up share capital of SPEPL. The other shareholders ofSPEPL are Hiap Hong & Company Private Limited (“HHCPL”) (28%) and Hock Teh Private Limited(“HTPL”) (28%). None of our Directors or substantial shareholders and their immediate familymembers has any interest in HHCPL or HTPL.

HKPL was a shareholder of SPEPL until it transferred its entire shareholding of 888,890 shares(representing 44% of the issued and paid-up share capital of SPEPL) to Mr Aw Hong Hwee on 20August 1999 as part of the Restructuring Exercise. Mr Aw Leng Hwee, BBM, was a director ofSPEPL until his resignation was effected in March 1999 and in his capacity as a director, hadentered into personal guarantees to secure the obligations of SPEPL in the aggregate amount ofapproximately $7.65 million. These guarantees are still valid and outstanding.

On 7 January 2000, the directors of FARPL petitioned the High Court to place FARPL under judicialmanagement and a copy of the Notice of Petition for Judicial Management Order was advertised inThe Straits Times on 24 January 2000.

SPEPL is primarily engaged in the piling business and precast concrete manufacturing. Currently,SPEPL is registered with BCA under the following categories:-

Category Grading

CW01 – General building G2CW02 – Civil piling G4CW06 – Piling G5SY13 – Precast concrete products L4

HKPL is registered with BCA as a G8 contractor under the category of general building and a L6supplier under the category of precast concrete products. As such, SPEPL will be in competitionwith HKPL if HKPL also bids for projects that SPEPL bids for. Our Group may also from time totime appoint SPEPL as its sub-contractor. However, any sub-contract so awarded will be on anarms’ length basis subject to review by the Audit Committee.

After the Invitation, Mr Aw Hong Hwee will hold approximately 1.65% of the issued and paid-upshare capital of our Company. As Mr Aw is not an employee of our Company, he will not beinvolved in the day-to-day operations of our Company and will have no influence over ourCompany’s decision making process.


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(c) Kai Sheng Building Construction Pte Ltd (“KSBC”)

KSBC was incorporated on 18 July 1992 and is carrying on business as general contractors forbuilding construction including major upgrading works and non-building construction works. Mr AwSoon Hwee (who is a substantial Shareholder and a brother of the Executive Directors of theCompany) holds approximately 15% of the issued and paid-up share capital of KSBC. Theremaining interests are held by 7 private individuals who are not related to any of our Directors orsubstantial shareholders and their immediate family members. As he is a not an employee ofKSBC, Mr Aw Soon Hwee is not involved in the daily operations of KSBC and has no influence overits decision making process.

To avoid any potential conflict of interests, Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee and AwHoon Hui have each given an undertaking that for so long as they hold in aggregate, directly orindirectly, more than 50% of our Company’s issued share capital and/or control, directly or indirectly,the management of our Company, they will not, directly or indirectly:-

(i) carry on for their own account either alone or in partnership (or be concerned in any capacity inany company engaged in) any business which is of the same or similar type to our businessesor is likely to be in competition with our businesses; or

(ii) be concerned or interested in any such business.

Save as disclosed, none of our Directors, substantial Shareholders or Executive Officers have anyinterest in any company or business carrying on a similar trade as our Group.

INTERESTED PERSONS TRANSACTIONS

Save for the Restructuring Exercise and as disclosed below, no Director, substantial Shareholder orExecutive Officer was or is interested in any material interested persons transactions undertaken by ourGroup within the last 3 financial years and up to 31 October 1999.

(a) Transactions with Tectonic Transfer

Mr Aw Khoon Hwee has a 50% interest in Tectonic Transfer, a partnership engaged in businessmanagement and consultancy services. The other partner of Tectonic Transfer is a private individualnot related to any of the Directors or substantial Shareholders. On 23 December 1999, TectonicTransfer entered into a Deed of Assignment with PFT to assign to PFT absolutely all its rights andbenefits, including, without limitation, any patent rights, in respect of a composite wall panel systemfor prefabricated enclosures. Under the terms of the Deed of Assignment, PFT is to pay theassignors a fixed sum upon the sale of a predetermined number of products falling within the scopeof any claim of the patent and thereafter, to pay to the assignors a variable sum calculated basedon a predetermined sum per unit of the products sold during the period of 15 years starting from 1January 2000. PFT has no obligation to make further payments to the assignors thereafter. Thepatent application was filed on 9 September 1999 and is still pending. Our Directors are of theopinion that the amount to be paid to the assignors is not material to our Group.

Our Audit Committee will review the transaction and ensure that it is carried out on normal arm’slength and commercial terms and the interested Director is to abstain from reviewing thistransaction and voting. Please refer to the section “Review Procedures for Future InterestedPersons Transactions” for more details.

(b) Transactions with Mr Aw Poh Hwee

On 3 December 1998, Mr Aw Poh Hwee, Mdm Fong Siew Choo, Agnes and Ms Aw Cindy (Hu Cindy)bought the apartment at 68 Lorong G Telok Kurau #01-02 Singapore 426258 from HKPL for aconsideration of $570,000. Mr Aw Poh Hwee, who is a brother of the Executive Directors of theCompany and Mdm Fong Siew Choo, Agnes and Ms Aw Cindy (Hu Cindy), who are the wife anddaughter respectively of Mr Aw Poh Hwee, are deemed to have an interest in the transaction. Thepurchase was completed on a willing-buyer willing-seller basis and the consideration was based onthe valuation of the apartment as at 12 October 1998 carried out by Henry Butcher Appraisal GroupPte Ltd, a firm of independent real estate valuers appointed by HKPL for this purpose.


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Prior to the purchase, Mr Aw Poh Hwee was renting the apartment at a monthly rental of $800pursuant to a lease agreement dated 1 January 1991. The rental rate was based on the prevailingmarket rate at the time of entering into the lease agreement.

(c) Transactions with Steady Piling Engineering Pte Ltd (“SPEPL”)

SPEPL is primarily engaged in the piling business and precast concrete manufacturing. On 20August 1999, HKPL transferred its entire shareholding of 44% in SPEPL to Mr Aw Hong Hwee, whois a brother of the Executive Directors of the Company and the managing director of SPEPL (pleaserefer to pages 22 to 25 of the Prospectus on “Restructuring Exercise” for details of the transfer). MrAw Hong Hwee is currently the majority shareholder of SPEPL.

Shareholders’ loans and advances from HKPL to SPEPL

As at 31 December 1997, 1998 and the 10 months ended 31 October 1999, loans and advanceswere extended by HKPL to SPEPL in the form of shareholders’ loans, amounting to $402,000,$1,998,000 and $2,619,000 respectively. Interest rates applicable were at Malayan BankingBerhad’s prime rate plus 2% per annum on the amounts outstanding.

These sums are repayable on demand and partially secured under a confidential arrangement. If thesecurity is fully enforced and realised under such arrangement, HKPL expects to be able to writeback $1,189,726.55 to its books. Notwithstanding this arrangement, HKPL has made full provisiontotalling $2,619,000 for the loans and advances made to SPEPL. The maximum financial exposureof HKPL under this arrangement is a further $265,272. The validity of this arrangement is presentlyin dispute and may be the subject of litigation. In spite of this, our Directors are of the opinion thatthe outcome should not affect our Group’s profitability adversely.

Sub-contracted piling and precasting works to SPEPL

In FY1998 and the 10 months ended 31 October 1999, our Group sub-contracted piling andprecasting works to SPEPL for its projects. In FY1998, the total contract value of piling andprecasting works awarded to SPEPL were $30,000 and $736,342 respectively whereas for the 10months ended 31 October 1999, the total contract value of piling and precasting works awarded toSPEPL were $63,000 and $2,665,748 respectively. The contract value and the basis of the awardswere determined at the prevailing market value and upon arm’s length terms. For future piling andprecasting works, our Group will obtain quotes from external parties and select contractors basedon price and quality. These transactions will also be subject to the review of the Audit Committee.

Sub-contracted labour works from SPEPL

In FY1996 and FY1997, SPEPL sub-contracted labour works to PFT for value in the sum of$61,985.50 and $108,232.50 respectively. The hourly rate of the construction workers supplied werefixed at prevailing market rates. For future sub-contract labour works, our Group will continue tocharge at market rate and such rates will be reviewed from time to time by the Audit Committee.

(d) Transactions with Niecon Trading & Engineering (“NTE”)

NTE, a sole proprietorship owned and managed by Mr Aw Poh Hwee, is principally engaged inmechanical engineering works and general wholesale trade (including general importers andexporters).

In FY1996, FY1998 and the 10 months ended 31 October 1999, our Group sub-contracted pilingworks to NTE for its HDB projects at Hougang and Jurong. In FY1996, FY1998 and 10 monthsended 31 October 1999, the total contract value awarded to NTE were $30,000, $100,000 and$25,000 respectively. Our Directors confirm that the amounts paid to NTE were at prevailing marketrates and were allocated based on the same criteria as other sub-contractors. For future pilingworks, our Group will obtain quotes from external parties and select contractors based on price andquality. These transactions will also be subject to the review of the Audit Committee.


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In FY1996, NTE purchased machinery from our Group at a price of $4,000. These machinery hadbeen fully depreciated. For the 10 months ended 31 October 1999, NTE also rented the office unitat 398 Changi Road #01-04 Castle Court from the Group for the period March 1999 to June 1999 ata monthly rental of $1,000 per month fixed at prevailing market rates.

(e) Transaction with Ms Aw Lay Tin

Since 1 January 1991, Ms Aw Lay Tin has been renting an apartment at 68 Lorong G Telok Kurau#02-02 from HKPL at a monthly rental of $800. On 17 March 2000, Ms Aw Lay Tin entered into atenancy agreement with HKPL to rent the apartment for a period of 1 year from 1 April 2000 to 31March 2001 at a monthly rental of $1,380, which was similar to the rent fetched for a similarapartment rented to an unrelated party. The lease agreement may be terminated by HKPL upongiving 6 months’ prior notice to Ms Aw Lay Tin.

(f) Rental free transaction with Ms Aw Lay Sim

Due to the regional financial crisis that started in July 1997, our Group was not able to sell ourproperty at 99B Siglap Road at a reasonable price. During that time, Ms Aw Lay Sim stayed at thesaid property free of rental charges. In June 1999, Ms Aw Lay Sim shifted out and the property hasbeen vacant since then.

(g) Transaction with Foundation Asiana Regional Pte Ltd (“FARPL”)

FARPL, a company in which SPEPL has a 80% stake, is principally engaged in the business ofconstruction activities. For the 10 months ended 31 October 1999, FARPL rented machinery fromour Group for the period from March 1999 to October 1999 at an aggregate rental of $5,250 permonth. The rent was fixed at prevailing market rental rates. All rental rates for future transactionswill continue to be based on market rates and will be reviewed by the Audit Committee.

In FY1997 and FY1998, FARPL sub-contracted labour works to HKPL at the market rate of$1,668.60 and $14,414.85, respectively. For future sub-contract labour works, our Group willcontinue to charge at market rate and such rates will be reviewed by the Audit Committee.

On 7 January 2000, the directors of FARPL petitioned the High Court to place FARPL under judicialmanagement and a copy of the Notice of Petition for Judicial Management Order was advertised inThe Straits Times on 24 January 2000.

(h) Advances to Directors

Messrs Aw Leng Hwee, BBM, and Aw Khoon Hwee have from time to time received advances fromour Group. Such advances were non-trade related and were extended at an interest rate rangingfrom nil to 2% per annum. As at 31 October 1999, the total amount due from Messrs Aw LengHwee, BBM, and Aw Khoon Hwee were $4,582,269. On 4 April 2000, the advances were repaidcompletely.

(i) Advances to Mr Aw Poh Hwee

In FY1998 and the 10 months ended 31October 1999, Mr Aw Poh Hwee from time to time receivedadvances from HKPL. Such advances were non-trade related and were extended without interest.As at 31 October 1999, the amount outstanding from Mr Aw Poh Hwee is $204,528. On 4 April2000, the amount was repaid completely.

(j) Advances from Mr Aw Hong Hwee

Our Group has also from time to time received advances from Mr Aw Hong Hwee. Such advanceswere for the working capital of our Group and were extended without interest. As at 31 October1999, the amount due from our Group to Mr Aw Hong Hwee was $33,573. On 27 March 2000, theamount was repaid completely.


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(k) Transactions with Mdm Chua Tong Sua

Mdm Chua Tong Sua, who is the wife of Mr Aw Khoon Hwee, an insurance agent with CosmicInsurance Corporation Ltd, Prudential Assurance Company Singapore (Pte) Limited and TheNanyang Insurance Company Ltd. From time to time, our Group insures part of our insurancerequirements from the above insurance companies through Mdm Chua. The aggregate premiumsand consideration paid by our Group for the above transactions in FY1996, FY1997, FY1998 and the10 months ended 31 October 1999 were approximately $350,000. The above transactions wereentered into based on the prevailing market rate of premiums or price upon arms’ length terms. Forfuture project insurance or bond transactions, our Group will continue to obtain quotes from externalparties. These transactions will also be reviewed from time to time by the Audit Committee.

Review Procedures for Future Interested Persons Transactions

Our Directors envisage that our Group, in our ordinary course of business, may enter into interestedparty transactions with interested persons of the Company in the future.

Our Directors will ensure that all future business dealings between our Group and any interested partieswill be conducted on an arm’s length basis by undertaking the following procedures:-

(a) market rates will be used as benchmarks for interested party transactions. Two or three quotationswill be obtained from unrelated third parties for the purpose of comparison;

(b) should any future business dealings between our Group and any interested party be on lessfavourable terms to our Group, prior approval from the Board (excluding interested parties who shallabstain from voting) will be obtained; and

(c) all interested party transactions will be reviewed at least annually by the Board (excluding interestedparties) or as and when it deems necessary.

Each interested party transaction will be properly documented and submitted to the Audit Committeewhich will periodically review such transactions to ensure that they are carried out on normal arms’ lengthand commercial terms. In the event that a member of the Audit Committee is interested in anyinterested party transaction, he will abstain from reviewing that particular transaction. The AuditCommittee will include the review of interested party transactions as part of its standard procedureswhile examining the adequacy of internal controls of our Group. It will also ensure that all disclosurerequirements on interested party transactions, including those required by prevailing legislation, SGX-STlisting rules and accounting standards are complied with.


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DIRECTORS, MANAGEMENT AND STAFF

Directors

Our Board of Directors are entrusted with the responsibility for the overall management of the Company.The particulars of the Directors are as follows:-

Name Age Address Current Occupation

Aw Leng Hwee, BBM 47 23 Lorong Salleh Chairman &Singapore 416779 Managing Director

Aw Khoon Hwee 38 99A Siglap Road DeputySingapore 455893 Managing Director

Aw Hoon Hui 49 99 Siglap Road Executive DirectorSingapore 455892

Dr Low Seow Chay 50 56 Chu Lin Road Independent DirectorSingapore 669950

William Chew Yew Meng 42 22 Lorong Puntong #10-02 Independent DirectorCountry GrandeurSingapore 576439

Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee and Aw Hoon Hui are brothers. They are also thebrothers of Mr Aw Soon Hwee, who is a substantial Shareholder of our Company. Save as disclosed inthe Prospectus, none of the Directors are related to one another or to the substantial Shareholders.

The business and working experience of our Directors are as follows:-

Mr Aw Leng Hwee, BBM, is our Company’s Chairman & Managing Director and is responsible for theoverall strategic decisions of our Group. In 1975, he started Ann Teng General Building Contractor as asub-contractor to supply and install metal louvre windows. 4 years later, Mr Aw founded Hor Kew PrivateLimited with the other Aw Family members and has since been actively participating in developingcorporate objectives and strategies for HKPL. With more than 20 years’ experience in the constructionindustry, Mr Aw has established good working relationships within the construction industry. Besides hisactive participation in our Group, Mr Aw is also very active in providing his services in communityorganisations. Currently, he is a Council Member of the North East Community Development Council,Chairman of the Tampines West Citizens’ Consultative Committee and the Vice Chairman of TampinesWest Community Centre Building Fund. Over the years, Mr Aw has also received numerous awards forhis participation in the public service. The highest award Mr Aw received was the Public Service StarMedal (BBM) award. Other awards received include the Public Service Bronze Medal (PBM) Medal. Heholds a Masters degree in Business Administration from the McQuarie University, Australia.

Mr Aw Khoon Hwee is our Company’s Deputy Managing Director. Mr Aw started his career with HKPLin 1983 after graduating with a Diploma in Building from the Singapore Polytechnic and has helped topropel HKPL from a general construction company into a group with interests in construction,prefabrication and property development. Currently, he is responsible for making decisions for ourGroup’s investments, business development, tenders and capital expenditure. He is also involved intechnical and contractual matters, and contract negotiations with major suppliers and sub-contractors onbehalf of our Group. In 1995, Mr Aw obtained his Bachelor in Business Administration from the RoyalMelbourne Institute of Technology, Australia.

Mr Aw Hoon Hui is our Company’s Executive Director and is responsible for all hardware of our Group.Mr Aw started his career together with his brothers, Messrs Aw Leng Hwee, BBM, and Aw Soon Hwee, inAnn Teng General Building Contractor as a sub-contractor to supply and install metal louvre windows. In1984, he joined HKPL as an Executive Director. Currently, he is in charge of the purchase andmaintenance of all hardware, in particular, plant and machineries, for our Group.


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Dr Low Seow Chay was appointed as our Company’s independent Director on 3 April 2000. Currently,Dr Low is an independent director of CASA Holdings Ltd and Asia Carbiz.com Pte Ltd. He was anindependent director of Sun Corporation Limited (now known as Cosco Investment (Singapore) Limited)and also held the office of Board member of the Housing and Development Board. Dr Low holds a PhDin Mechanical Engineering from Victoria University of Manchester, United Kingdom.

Mr William Chew Yew Meng was appointed as our Company’s independent Director on 3 April 2000.Currently, Mr Chew is a senior deputy director (Public Affairs) of People’s Association. He serves on theSingapore Cable Roll-out Committee and is a council member of the National First Aid Council. Mr Chewholds a Masters degree in Mass Communication from Oklahoma City University, the United States ofAmerica.

Independent Directors / Audit Committee

Dr Low Seow Chay and Mr William Chew Yew Meng are our Company’s independent Directors. OurGroup’s Audit Committee comprises Dr Low Seow Chay, Messrs Aw Khoon Hwee and William Chew YewMeng. Dr Low Seow Chay will be the Chairman of the Audit Committee.

Management

Our day-to-day operations are entrusted to our Executive Directors who are assisted by a team ofexecutive officers (the “Executive Officers”) whose particulars are as detailed below:-

Name Age Address Current Occupation

Chen Hee Huat 48 Blk 310 Jurong East Street 32 Product and#05-300 Singapore 600310 Development Manager

Aw Lay Sim 41 33 Keris Drive Group HumanSingapore 456996 Resource Manager

Lau Geok Lian 35 Blk 666B Jurong West Street Financial Controller#11-207 Singapore 642666

See Bee Chien 38 94 Lorong G Telok Kurau Purchasing ManagerSingapore 426286

Goh Siap Ping 33 991 Bukit Timah Road Contracts Manager#03-03 Singapore 589630

Lim Wei Keong 34 Blk 725 Jurong West Avenue 5 Project Manager#09-170 Singapore 640725

Chin Chye Foong 37 Blk 436 Choa Chu Kang Ave 4 Production Manager#02-505 Singapore 680436

Bee (Lee) Choo Huah 35 Blk 404 Choa Chu Kang Ave 3 Assistant#03-255 Singapore 680404 Production Manager

Ms Aw Lay Sim is the sister of Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee and Aw Hoon Hui. MsSee Bee Chien is the wife of Mr Aw Soon Hwee and the sister-in-law of Ms Aw Lay Sim. Save asaforementioned, none of the Directors and Executive Officers is related to one another or to thesubstantial Shareholders. Further information on the Directors and the Executive Officers are set out onpage 99 of this Prospectus under “General and Statutory Information”.

The business and working experience of our Executive Officers are as follows:-

Mr Chen Hee Huat is the Product and Development Manager of PFT3. He is responsible for theresearch and development of new products for PFT3. Prior to joining us in 1994, he had worked in theresearch and development department with several companies and was also a sub-contractor in the1970s.


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Ms Aw Lay Sim is the Group Human Resource Manager of our Company. Ms Aw joined our Group aftergraduating in 1984 and is now responsible for the overall human resource and administrative functions ofour Group. She also oversees the information technology administration of our Group. Ms Aw holds aBachelor degree in Art (Economics and Geography) from the Wilfrid Laurier University, Canada.

Ms Lau Geok Lian is the Financial Controller of our Company. She is responsible for the overallaccounting functions of our Group. Prior to joining the Group in 1997, Ms Lau had accumulated morethan 15 years of experience in the accounting profession. She started her career in 1982 as abookkeeper. Between 1982 to 1998, she held various positions including Accounts Assistant, Accountscum Administration Executive, Accounts Officer and Assistant Manager in various companies. Prior tojoining our Group, she worked as a Personal Assistant to the managing director of a local company andwas responsible for the company’s payroll and daily administrative work for the managing director. MsLau graduated with a Bachelor degree in Business (Accountancy) from the Royal Melbourne Institute ofTechnology, Australia in 1997.

Ms See Bee Chien is the Purchasing Manager of Hor Kew Private Limited. She is responsible for theprocurement of materials and management of materials and machinery logistics. She has accumulatedmore than 17 years of experience in the construction industry since joining us in 1983.

Ms Goh Siap Ping is the Contracts Manager of Hor Kew Private Limited. She is responsible for allcontractual matters relating to the tendering of projects, awarding of contracts to sub-contractors andsuppliers. Prior to joining the Group in 1995, she had been a quantity surveyor for 5 years with thePublic Works Department. Ms Goh holds a Bachelor degree in Building Management (Honours) from theNational University of Singapore.

Mr Lim Wei Keong is the Project Manager of Hor Kew Private Limited. He is responsible for the projectand site management of projects undertaken by Hor Kew Private Limited. Prior to joining us in 1995, hehad also worked as a Project Manager with other construction firms for 3 years. Mr Lim holds a Bachelordegree in Civil Engineering from the Nanyang Technological University of Singapore.

Mr Chin Chye Foong is the Production Manager of Prefab Technology Pte Ltd. He is responsible for theday-to-day production operations of PFT. Prior to joining us in 1997, he had accumulated more than 11years of experience in the construction industry. During this period, he had worked as a project manager,a construction manager and a production manager in various construction companies. Mr Chin holds aBachelor degree in Civil Engineering (Honours) from the National University of Singapore.

Mr Bee (Lee) Choo Huah is the Assistant Production Manager of Prefab Technology 3 Pte Ltd. He isresponsible for the overall production process of PFT3 and ensures that specifications of products aremet. Prior to joining us in 1993, he had worked as a welder cum fitter and was the head of research anddevelopment of Hong Soon Enterprise (S) Pte Ltd.

Staff

As at 31 December 1999, our Group has 281 full-time employees of which 196 are foreign workers. OurGroup enjoys a good relationship with our employees and has never experienced any major disruption toour operations on account of labour disputes.

Directors’ Remuneration

The remuneration including accrued bonuses paid to our Directors on an aggregate basis and inremuneration bands for FY1997 and FY1998 are as follows:-

(i) Aggregate directors’ remuneration ($’000)

<————— FY1997 —————> <————— FY 1998 —————>Non- Non-

Executive Executive Executive ExecutiveDirectors Directors Total Directors Directors Total

2,276 — 2,276 3,723 — 3,723


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(ii) Number of directors in remuneration bands:-

<————— FY1997 —————> <————— FY1998 —————>Non- Non-

Executive Executive Executive ExecutiveDirectors Directors Total Directors Directors Total

$500,000 and above 2 — 2 4 — 4$250,000 to $499,999 — — — — — —$0 to $249,999 2 — 2 — — —

SERVICE AGREEMENTS

Our Company has, on 3 April 2000, entered into separate service agreements (“Service Agreements”)with Mr Aw Leng Hwee, BBM, who is appointed as our Chairman & Managing Director, Mr Aw KhoonHwee, who is appointed as our Deputy Managing Director and Mr Aw Hoon Hui, who is appointed as ourExecutive Director.

The Service Agreements are for initial terms of 3 years each and may be terminated by either partygiving not less than 12 months’ notice in writing to the other party. Our Company may also terminate theService Agreements without notice upon occurrence of certain events, such as misconduct andbankruptcy.

Under the terms of the Service Agreements, the annual basic salaries of Messrs Aw Leng Hwee, BBM,Aw Khoon Hwee and Aw Hoon Hui shall initially be $360,000, $360,000 and $240,000 respectively or atsuch other rate as may from time to time be agreed in writing. Any adjustment to the rate of their annualbasic salaries shall be approved by the Board of Directors. As interested parties, Messrs Aw LengHwee, BBM, Aw Khoon Hwee and/or Aw Hoon Hui will abstain from voting on any such resolution. TheBoard of Directors may also, at its discretion, engage management consultants to advise on suchadjustment.

Under the terms of the Service Agreements, Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee and AwHoon Hui are entitled to a fixed bonus equivalent to 3.5 times of each of their monthly salary. Messrs AwLeng Hwee, BBM, Aw Khoon Hwee and Aw Hoon Hui are each also entitled to a profit sharing incentivebased on our Group’s profit before tax as reflected in its audited accounts for the last financial year if thesaid profit is $3 million or more based on the following formula:-

Group’s profit before taxation Profit sharing incentive

$3 million or more but less than $5 million • 1.5 per cent. each on the amount equal to orexceeding $3 million (for Messrs Aw Leng Hwee,BBM, and Aw Khoon Hwee)

• 1.0 per cent. on the amount equal to or exceeding$3 million (for Mr Aw Hoon Hui)

$5 million or more • 3.0 per cent. each on the amount equal to orexceeding $5 million (for Messrs Aw Leng Hwee,BBM, and Aw Khoon Hwee)

• 2.0 per cent. on the amount equal to or exceeding$5 million (for Mr Aw Hoon Hui)

The Service Agreements are effective as of 1 January 2000. Save as disclosed, none of the Directors orExecutive Officers is entitled to participate in any profit sharing scheme.

The remuneration of each of our Directors, Executive Officers and employees who are related to oursubstantial shareholders shall be subject to the annual review and majority approval of the AuditCommittee. Mr Aw Khoon Hwee, who is a member of the Audit Committee, will abstain fromparticipating in the review and approval process in relation to the remuneration of any Directors andExecutive Officers to whom he is related. The total remuneration paid to the Directors and Executive


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Officers who are related to the substantial Shareholders will be disclosed in the annual report of ourCompany. The total remuneration paid to our substantial shareholders and their relatives amounted to50.4% of our Group’s profit before tax for FY1998 and 26.6% of estimated profit before tax for FY1999respectively.

Had the Service Agreements been in place in FY1998, the estimated total remuneration (including CPFcontributions and other benefits) payable to Directors would have been $2.7 million instead of $3.7 millionand the Proforma Group’s profit before tax would have been approximately $8.7 million instead of $7.7million.

Save as disclosed above, there is no other existing or proposed service agreement between ourCompany or its subsidiaries and any Director or Executive Officer.

PROPERTIES AND FIXED ASSETS

As at 31 December 1999, our Group owns the following properties:-

Net BookTenure/ Value as at

Land / Built Unexpired Annual 31 Oct 1999Location Description up Area Term Rental (audited) Valuation

(sq m) $ $ $

HKPL66 Sungei Kadut St 1 2 storey factory 15,587 / 7,518 JTC leasehold 214,160 7,602,000 7,800,000Singapore 729367 cum prod shed 30 years from

16 Jan 1990

Factory 5,076extension

398 Changi Road Shop unit 45 / 45 Freehold n.a. 357,000 357,000Castle Court #01-05Singapore 419845

398 Changi Road Shop unit 45 / 45 Freehold n.a. 300,000 300,000Castle Court #01-04Singapore 419845

68 Lorong G Apartment 111 / 111 Freehold n.a. 460,000 550,000Telok Kurau #02-02Singapore 426258

68 Lorong G Apartment 114 / 114 Freehold n.a. 515,000 650,000Telok Kurau #03-03Singapore 426258

99B Siglap Road 2 storey 490 / 484 Freehold n.a. 2,506,117 3,000,000Singapore 455894 detached

house with anattic level and abasement level

27 Ewe Boon Road 2 storey 1,285.9 / Freehold n.a. 6,796,138 13,825,000Singapore 259330 detached house 1,285.9

PFT399 Pioneer Road 2 storey factory 6,404.4 / Leasehold 103,847.76 4,011,000 4,200,000Singapore 639850 2,791 30 years from

1 Dec 1997

HKL42 East Coast Road 4 storey 1,686.1 / Freehold n.a. 18,371,829 17,800,000Singapore 428762 commercial / 3,174

residentialcomplex


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Note:-

(1) The above properties had an aggregate net book value of approximately $40.9 million as at 31 October 1999.

(2) All the above valuations were done on 30 October 1999 by Allied Appraisal Consultants Pte Ltd except for 42 EastCoast Road, which was valued by Chesterton International Property Consultants Pte Ltd on 21 March 2000.

(3) The property at 99B Siglap Road is held for sale purposes, whilst the properties at 27 Ewe Boon Road and 42 EastCoast Road are held for development purposes. These properties were recorded at the lower of cost or net book value.

(4) Properties at 398 Changi Road, Castle Court, units #01-04 & #01-05 were valued lower than their net book values. Assuch, their net book values were adjusted downwards to their respective market values as at 31 October 1999.

(5) The aggregate surplus from valuations for the other properties were $898,019 and a net total of $286,019 was taken intothe books.

(6) On 30 December 1999, our Group exercised the option to purchase 2 freehold properties at 104 Arthur Road (with landarea of 761.2 sq m) and 106 Arthur Road (with land area of 807.0 sq m) for an aggregate purchase consideration of$6.8 million. These properties are intended to be redeveloped for sale. On 31 March 2000, the purchase of the 2properties were completed.

(7) On 26 February 2000, our Group signed a Sale and Purchase Agreement with Sing Investments and Finance Limited topurchase 19A Sungei Kadut Street 2 by way of mortgagee sale for an aggregate purchase consideration of $4.2 million.On 1 March 2000, we received notice from the Jurong Town Corporation (“JTC”) that the transaction was not approved.Currently, our Group is in the process of appealing to the Ministry of Trade Industry in respect of JTC’s decision. Theproperty was previously owned by Steady Piling Engineering Pte Ltd and was mortgaged to Sing Investments andFinance Limited.


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LETTER FROM THE AUDITORS AND REPORTING ACCOUNTANTS INRELATION TO THE ESTIMATED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 1999

4 April 2000

The Board of DirectorsHor Kew Corporation Limited66 Sungei Kadut Street 1Singapore 729367

Dear Sirs

This letter has been prepared for inclusion in the Prospectus dated 4 April 2000 (the “Prospectus”) inconnection with the Invitation by Hor Kew Corporation Limited (the “Company”) in respect of 113,800,000new ordinary shares of S$0.20 each and 40,000,000 Vendor Shares of S$0.20 each in the capital of theCompany.

We have examined the forecast of the Company and its subsidiaries (the “Group”) for the financial yearending 31 December 1999 in accordance with the Singapore Standard on Auditing applicable to theexamination of the prospective financial information. The Directors are solely responsible for the forecastincluding the assumptions on which the forecast is based. The forecast forms the basis of the profitestimate for the financial year ending 31 December 1999 made by the Directors on page 46 of theProspectus.

The forecast includes results shown by audited financial statements for the ten months ending 31October 1999.

Based on our examination of the evidence supporting the assumptions, nothing has come to ourattention to cause us to believe that these assumptions do not provide a reasonable basis for theforecast. Further, in our opinion, the forecast, so far as the accounting policies and calculations areconcerned, is properly prepared on the basis of the assumptions, is consistent with the accountingpolicies normally adopted by the Group, and has been presented in accordance with Statements ofAccounting Standard.

Your faithfully,

ERNST & YOUNG LEE SENG CHAN & COCertified Public Accountants Certified Public Accountants(Partner: Mr Gerard Ee) (Partner: Mr Lee Sen Choon)

Singapore


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DIRECTORS’ REPORT

4 April 2000

The ShareholdersHor Kew Corporation Limited66 Sungei Kadut Street 1Singapore 729367

Dear Sirs

This report has been prepared for inclusion in the Prospectus dated 4 April 2000 (the “Prospectus”) inconnection with the invitation in respect of 153,800,000 ordinary shares of $0.05 each in the capital ofHor Kew Corporation Limited (the “Company”) comprising 113,800,000 New Shares and 40,000,000Vendor Shares.

On behalf of the Directors of the Company, I report that, having made due inquiry in relation to theinterval between 31 October 1999, the date to which the last audited accounts of the Company and itssubsidiaries were made up, and the date hereof, being a date not earlier than 14 days before the issue ofthis Prospectus:-

(i) in the opinion of the Directors, the business of the Company and its subsidiaries has beensatisfactorily maintained;

(ii) in the opinion of the Directors, no circumstances have arisen since the last Annual General Meetingof the Company which would adversely affect the trading or the value of the assets of the Companyand its subsidiaries;

(iii) the current assets of the Company and its subsidiaries appear in the books at values which arebelieved to be realisable in the ordinary course of business;

(iv) save as disclosed on page 107 of this Prospectus, there are no contingent liabilities by reason ofany guarantees given by the Company or its subsidiaries; and

(v) there has been no change in the published reserves or any unusual factor affecting the profits of theCompany and its subsidiaries since the date that the last audited accounts were made up to.

Yours faithfullyfor and on behalf of the Board of Directors

Aw Leng Hwee, BBM,Chairman & Managing DirectorHor Kew Corporation Limited


65

ACCOUNTANTS’ REPORT

4 April 2000


A. Introduction

This report has been prepared for inclusion in the Prospectus of Hor Kew Corporation Limited (the“Company”) dated 4 April 2000 in connection with the invitation (“the Invitation”) in respect of theissue of 113,800,000 new ordinary shares of S$0.20 each (the “New Shares”) and 40,000,000Vendor Shares of S$0.20 each in the capital of the Company comprising:-

(a) 23,070,000 Offer Shares at S$0.20 for each Offer Share by way of public offer; and

(b) 130,730,000 Placement shares at S$0.20 for each Placement Share by way of placements.

1. The Company

The Company was incorporated as Birkins Trading Pte Ltd in the Republic of Singapore on 18June 1999 as a private limited company. It was converted into a public limited company on29 March 2000 and changed its name to Hor Kew Corporation Limited.

At the date of incorporation, the authorised share capital of the Company was S$100,000divided into 100,000 ordinary shares of S$1.00 each. Two ordinary shares of S$1.00 each wereissued to the subscribers at the time of incorporation.

The authorised share capital of the Company as at the date of this Report is S$100,000,000divided into 2,000,000,000 ordinary shares of S$0.05 each. Upon completion of the allotmentof the New Shares, the resultant issued and paid-up capital of the Company will beS$28,390,732 comprising 567,814,640 ordinary shares of S$0.05 each.

2. The Restructuring Exercise

At an Extraordinary General Meeting held on 26 March 2000, the shareholders of the Companyapproved, inter alia, the following:-

(a) the increase in the authorised share capital of the Company from S$100,000 comprising of100,000 ordinary shares of S$1.00 each to S$100,000,000 comprising 100,000,000ordinary shares of S$1.00 each;

(b) the Reconstruction Exercise as follows:

(i) Hor Kew Private Limited (“HKPL”) divested its entire holding of 888,890 ordinaryshares of S$1.00 each, representing 44% of the issued and paid up share capital ofSteady Piling Engineering Pte Ltd, to Mr Aw Hong Hwee, who is the ManagingDirector of Steady Piling Engineering Pte Ltd, for a nominal consideration of S$1.00in view of its audited negative net tangible assets (“NTA”) as at 31 December 1998.The principal activities of Steady Piling Engineering Pte Ltd were those of buildingcontractors, piling, civil and structural engineers and it had been in a loss-makingposition for several years. The divestment was completed and the sale considerationwas satisfied on 20 August 1999 in cash.


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(ii) Prefab Technology Pte Ltd (“PFT”), which prior to the Reconstruction Exercise, held32% of the issued and paid-up capital of PFT8, acquired the remaining 68%comprising 170,000 ordinary shares of S$1.00 each from Messrs Aw Leng Hwee,BBM, and Aw Khoon Hwee, for a nominal consideration of S$1.00 in view of itsaudited negative NTA as at 31 October 1999. The acquisition was completed andthe purchase consideration was satisfied on 26 March 2000 in cash.

(iii) Hor Kew Holdings Pte Ltd (“HKHPL”), a company owned by Messrs Aw Leng Hwee,BBM, Aw Soon Hwee, Aw Hoon Hui and Aw Khoon Hwee, acquired 2,500,000ordinary shares of S$1.00 each, representing 50% of the issued and paid-up capitalof HKPL, for an aggregate purchase consideration of S$10,610,162. The purchaseconsideration was arrived at based on 50% of the audited NTA of HKPL ofS$21,220,324 as at 31 October 1999. The consideration was satisfied on 26 March2000 by the issue of 10,610,162 ordinary shares of S$1.00 each in the capital ofHKHPL, credited as fully paid, to the respective vendors.

(iv) Upon completion of steps (i), (ii) and (iii) above, the Company acquired from HKPL:-

1. 71% of the issued and paid-up capital of PFT, comprising 709,845 ordinaryshares of S$1.00 each for a purchase consideration of S$3,621,715;

2. the entire issued and paid-up capital of Park Vale Design & Development Pte Ltd(“PVDD”), comprising 1,000,000 ordinary shares of S$1.00 each for a purchaseconsideration of S$2,634,516; and

3. the entire issued and paid-up capital of Hor Kew Land Pte Ltd (“HKL”), comprising3 ordinary shares of S$1.00 each for a purchase consideration of S$33,307.

The purchase considerations were arrived at based on the respective audited NTA ofPFT, PVDD and HKL of S$5,102,121, S$2,634,516 and S$33,307 as at 31 October1999. The acquisition was satisfied on 26 March 2000 by the allotment and issue ofan aggregate of 6,289,538 ordinary shares of S$1.00 each in the capital of theCompany to HKPL.

(v) Upon completion of step (iv) above, HKPL declared a dividend of S$6,289,538,payable by way of a distribution of its entire shareholdings of 6,289,538 ordinaryshares of S$1.00 each in the Company to HKHPL and members of the Aw Family(“distribution in specie”). The distribution in specie resulted in a reduction in HKPL’srevenue reserve of a similar amount.

(vi) The Company then acquired the remaining 29% of the issued and paid-up capital ofPFT, comprising 290,155 ordinary shares of S$1.00 each from Messrs Aw LengHwee, BBM, Aw Khoon Hwee, Aw Soon Hwee and Aw Hoon Hui, for an aggregatepurchase consideration of S$1,480,406 on the 26 March 2000. The acquisition wassatisfied with the issue of 1,480,406 ordinary shares of S$1.00 each in the capital ofthe Company, credited as fully paid, to the respective vendors. The purchaseconsideration was arrived at based on 29% of the audited NTA of PFT as at 31October 1999.

(vii) Upon completion of step (vi) above, the Company acquired the entire issued and paidup share capital of HKPL from HKHPL and members of the Aw Family, comprisingan aggregate of 5,000,000 ordinary shares of S$1.00 each for an aggregatepurchase consideration of S$14,930,786, based on the audited NTA of HKPL as at31 October 1999, taking into account the distribution in specie in step (v) above.The acquisition was completed and the purchase consideration was satisfied on 26March 2000 with the allotment and issue of an aggregate of 14,930,786 ordinaryshares of S$1.00 each in the capital of the Company, credited as fully paid, toHKHPL and members of the Aw Family.


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Upon completion of the Reconstruction Exercise, the Company holds 100% of HKPL,100% of HKL, 100% of PVDD, 100% of PFT, 99% of PFT3 and 100% of PFT8.

At a subsequent Extraordinary General Meeting held on the same day, our Company’sshareholders approved the following:-

(a) the sub-division of each of the ordinary shares of S$1.00 each in the authorised capitalof the Company into 20 shares of S$0.05 each.

At an Extraordinary General Meeting held on 29 March 2000, the Company’s shareholdersapproved the following:-

(a) the conversion of the Company into a public limited company and the change of theCompany’s name to “Hor Kew Corporation Limited”;

(b) the adoption of a new set of Articles of Association;

(c) the issue of 113,800,000 New Shares, which form part of this Invitation; and

(d) the granting of authority pursuant to Section 161 of the Act to the Directors to issueshares in the Company (whether by way of rights, bonus or otherwise) at any time subjectto certain terms and conditions.

B. Group

At the date of this report, the Company held the following subsidiary companies (referred tocollectively with the Company as the “Group”):-

Issued andDate and country paid-up/ Percentage of

Name of of incorporation/ registered equity held PrincipalCompany operations capital* by the Group* activities

%Hor Kew 28 March 1979 5,000,000 100 Building and engineeringPrivate Limited Singapore contractors and property

investment

Hor Kew Land 23 August 1994 3 100 Property investment andPte Ltd Singapore development

Park Vale Design 15 April 1983 1,000,000 100 Turnkey building contractors& Development Singapore and provision ofPte Ltd maintenance work

Prefab Technology 11 October 1976 1,000,000 100 Design, manufacture andPte Ltd Singapore sale of prestressed and

precast reinforced concretebuilding components

Prefab Technology 16 January 1993 800,000 99 Design, manufacture and3 Pte Ltd Singapore sale of prefabricated

architectural metalcomponents

Prefab Technology 18 May 1989 250,000 100 Importers and exporters of8 Pte Ltd Singapore building materials and

commission agents

* After Reconstruction Exercise


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C. Basis of Presentation of Financial Information

The financial information set out in this report is expressed in Singapore dollars and shows theProforma Group Results for the five financial years ended 31 December 1994 to 31 December 1998and for the ten months ended 31 October 1999, the Summarised Proforma Group Balance Sheetsas at the end of each of the five financial years ended 31 December 1994 to 31 December 1998and as at 31 October 1999, and the Proforma Net Assets at 31 October 1999 of the Group andthe Company.

The Proforma Group Results, Summarised Proforma Group Balance Sheets and Proforma NetAssets have been prepared as if the group structure as at the date of this report as outlined inSection B above had been in existence throughout the period covered by this report or since thedates of incorporation of the companies in the Proforma Group. The financial information is basedon the audited financial statements of the Company and the subsidiary companies, after makingsuch adjustments which we considered appropriate in order to present the financial statements ona consistent and comparable basis.

All material inter-company transactions and balances have been eliminated in the preparation of theProforma Group Results, Summarised Proforma Group Balance Sheets and Proforma Net Assets.

The objective of the financial information of the Proforma Group is to show what the historicalinformation might have been, had the Proforma Group as described above existed at an earlier date.However, the financial information of the Proforma Group is not necessarily indicative of the resultsof the operations or the related effects on the financial position that would have been attained if theProforma Group, as described above, had actually existed earlier.

Since the Company’s incorporation, Messrs Ernst & Young and Lee Seng Chan & Co acted as thejoint auditors of the Company.

Auditors of the subsidiary companies throughout the financial periods covered by this report are asfollows:-

Name of Financial years/company period ended Auditors

Hor Kew Private Limited Incorporation - 1998 Lee Seng Chan & Co1999 Ernst & Young/Lee Seng Chan & Co

Hor Kew Land Pte Ltd Incorporation - 1998 Ang & Co(formerly known as 1999 Ernst & YoungYeo Sibs Pte Ltd)

Park Vale Design & Incorporation - 1998 Lee Seng Chan & CoDevelopment Pte Ltd 1999 Ernst & Young/Lee Seng Chan & Co

Prefab Technology Pte Ltd Incorporation - 1994 Lee Seng Chan & Co1995 - 1999 Ernst & Young

Prefab Technology 3 Pte Ltd Incorporation - 1994 Lee Seng Chan & Co1995 - 1999 Ernst & Young

Prefab Technology 8 Pte Ltd Incorporation - 1994 S.C. Teo & Co1995 - 1999 Ernst & Young


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D. Statement of Proforma Group Results

The results of the Proforma Group for each of the five financial years ended 31 December 1994 to31 December 1998 and for the 10 months ended 31 October 1999, prepared on the basis set out inSection C above, after making such adjustments as we considered appropriate, are as follows:-

Year ended 31 December 10 monthsended

Note 1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Turnover E1 54,412 61,544 89,154 161,860 175,479 152,914

Profit/(loss) before taxation E2 (3,285) (977) 1,755 5,631 7,711 14,239

Taxation E3 (12) — (277) (950) (2,634) (4,089)

Profit/(loss) after taxation before minority interest (3,297) (977) 1,478 4,681 5,077 10,150

Minority interest — (1) (3) (1) (11) (12)

Profit/(loss)attributable toshareholders (3,297) (978) 1,475 4,680 5,066 10,138

E. Notes to Statement of Proforma Group Results

1. Turnover

Turnover comprises revenues from construction contracts, sales of properties and sales ofgoods. It excludes dividends, interest income and intra-group transactions.

Turnover is analysed as follows:-

Construction 44,540 46,652 70,050 131,665 148,597 130,679Sale of goods 9,872 14,892 19,104 30,195 26,882 22,235

54,412 61,544 89,154 161,860 175,479 152,914


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2. Profit/(loss) before taxation


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Profit/(loss) beforetaxation is stated aftercharging/(crediting):-

Auditors’ remuneration 26 38 52 51 52 54Bad debts written off – – 295 149 11 –Depreciation of fixed assets 1,458 821 3,190 3,378 2,584 2,366Directors’ remuneration 665 456 1,020 2,276 3,723 3,259(Gain)/loss on disposalsof fixed assets, net (365) (293) 228 36 102 90

Interest expense:-- Bank borrowings 705 1,004 1,218 1,668 834 575- Hire purchase 30 2 201 184 141 123Interest income (27) (55) (33) (13) (143) (389)Provision for doubtful debts 16 227 608 800 1,928 1,707

3. Taxation

Provision of taxationin respect ofprofit/(loss) for thefinancial year/period:-Current 12 — 50 743 1,970 4,237Deferred/(reversal) — — 227 207 664 (148)

12 — 277 950 2,634 4,089

The income tax charge for the Group for the financial years 1994 to 1998 and the 10 monthsperiod ended 31 October 1999 differed from the income tax charge derived by applying theSingapore income tax rate to the profit or loss for the financial year due to the following:-

1994 and 1995

The income tax charges for these two financial years were mainly incurred by a profitablesubsidiary.

1996 and 1997

The income tax charges were lower for these two financial years primarily due to utilisation ofunabsorbed losses carried forward from prior financial years.

1998 and the ten months ended 31 October 1999

The income tax charges were higher primarily due to non-allowable items.


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4. Related party transactions


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Related parties:- Sales of goods — — — — (626) (611)- Sales of properties — — — — (570) —- Sales of fixed assets (237) — (4) — — —- Service and sub-

contracting income (72) (70) (62) (110) (14) —- Interest income — (22) (26) (21) (90) (157)- Rental income (19) (19) (19) (19) (19) (54)- Rental expense 10 — — — — —- Sub-contracting fee paid 15 159 30 — 866 2,741

Directors:- Sales of properties — (7,400) — — — —- Interest income — — — — — (61)- Interest expense — — — 308 — —

F. Summarised Proforma Group Balance Sheets

The summarised balance sheets of the Proforma Group as at the end of each of the five financialyears ended 31 December 1994 to 31 December 1998 and as at 31 October 1999, prepared on thebasis set out in Section C above, after making such adjustments as we considered appropriate, areas follows:-

31.12.94 31.12.95 31.12.96 31.12.97 31.12.98 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Shareholders’ equity 1,986 988 2,463 7,143 12,019 22,701

Minority interests — 1 4 5 16 31

1,986 989 2,467 7,148 12,035 22,732

Represented by:-

Fixed assets 16,696 17,564 21,011 19,536 21,429 21,655

Investments 8 8 8 199 398 400

Development properties 4,908 2,030 2,210 2,679 3,078 25,168

Expenditure carried forward 4 — — — — —

Current assets 14,696 20,457 34,237 37,769 41,555 45,914

Less: Current liabilities (26,128) (30,896) (47,089) (45,968) (44,320) (45,848)

Net current assets/(liabilities) (11,432) (10,439) (12,852) (8,199) (2,765) 66

Non-current liabilities (8,198) (8,174) (7,910) (7,067) (10,105) (24,557)

1,986 989 2,467 7,148 12,035 22,732


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The movements in the Shareholders’ equity of the Group for each of the five financial years ended31 December 1994 to 31 December 1998 and for the 10 months ended 31 October 1999 are asfollows:-


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Balance brought forward 5,283 1,986 988 2,463 7,143 12,019(Loss)/profit attributableto the Group (3,297) (978) 1,475 4,680 5,066 10,138

(Deficit)/surplus onrevaluation offixed assets — (20) — — — 544

Surplus on revaluation offixed assets written backon disposal — — — — (190) —

Balance carried forward 1,986 988 2,463 7,143 12,019 22,701

G. Statement of Adjustments

The following adjustments have been made to the audited consolidated financial statements of theProforma Group to arrive at the Proforma Group Results and the Proforma Group Balance Sheetsfor the respective financial years/period covered by this report:-

1. Turnover


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Turnover per audit financialstatements 21,388 27,225 172,043 159,867 173,626 156,535

Adjustments:-Change of accountingpolicy (a) 29,593 38,889 (79,989) — — —

Reallocation ofconstruction revenueto correct periods (b) — 2,960 (2,960) — 4,358 (4,358)

Error in recognition ofconstruction revenue — — — 1,993 (2,505) 737

Elimination of inter-company transactions — (7,543) — — — —

Effect of changes toGroup structure 3,431 13 60 — — —

Turnover per Statementof Proforma Group

Results 54,412 61,544 89,154 161,860 175,479 152,914


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2. Profit/(loss) before taxation


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Profit/(loss) beforetaxation per auditedfinancial statements (2,730) (326) (713) 3,751 7,127 16,474

Adjustments:-Change of accountingpolicy (a) (364) (1,190) 3,767 — — —

Reallocation ofconstruction revenueto correct periods (b) — 1,028 (1,028) — 4,358 (4,358)

Error in recognition ofconstruction revenue — — — 1,993 (2,505) 737

Provision for doubtfuldebts (c) (16) (227) (92) (67) (1,596) 1,407

Effect of changes toGroup structure (175) (327) (239) (46) (26) (21)

Reclassification for profit/(loss) before taxation ofitems previously reportedas extraordinary — 65 60 — 353 —

Profit/(loss) beforetaxation per Statementof ProformaGroup Results (3,285) (977) 1,755 5,631 7,711 14,239

3. Taxation


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Taxation per auditedfinancial statements 12 — 277 335 1,930 6,398

Adjustments:-Reallocation ofconstruction revenueto correct periods — — — — 1,133 (1,133)

Error in recognition ofconstruction revenue — — — 460 (649) 192

Under-provision oftaxation (d) — — — — — (993)

Prior year tax adjustments — — — 155 220 (375)

Taxation per Statementof Proforma GroupResults 12 — 277 950 2,634 4,089


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4. Extraordinary item


1994 1995 1996 1997 1998 31.10.99S$’000 S$’000 S$’000 S$’000 S$’000 S$’000

Extraordinary item peraudited financialstatements — 65 60 — 353 —

Adjustment:Reclassification toprofit/(loss) beforetaxation of itemspreviously reportedas extraordinary — (65) (60) — (353) —

Extraordinary item perStatement of ProformaGroup Results — — — — — —

Notes

(a) Change of accounting policy

The Group changed its accounting policy in order to account for the recognition of revenue from long-termcontracts using the percentage of completion method by reference to the stage of completion of the contractactivity at the end of each accounting period in 1996. Previously the Group recognised revenues from long-term contracts on a completion basis. Adjustments have been made to reflect the revised accounting policybetween 1994 and 1996.

(b) Reallocation of construction revenue to correct periods

The adjustments for 1995 and 1996 is to record the sale of a developed property in the relevant accountingperiod.

The adjustment for 1998 is to effect the matching of construction revenue against its costs for a buildingproject.

(c) Provision for doubtful debts

For the financial period ended 31 October 1999, a provision was made in the audited financial statements foradvance receivable from related party which was extended by the Group over the period covered by thisreport. Adjustments have been made to effect the impact on the profit and loss accounts in the financialyears when the advances were extended.

(d) Under-provision of taxation

This relates to the under provision of tax arising on the disposal of a property in 1993.


75

H. Statement of Proforma Net Assets

The net assets of the Proforma Group and Company as at 31 October 1999, prepared on thebasis set out in Section C above, are as follows:-

Note Group CompanyS$’000 S$’000

Proforma shareholders’ equity 22,701 22,701Minority interest 31 —

22,732 22,701

Represented by:

Fixed assets J1 21,655 —Investment in subsidiaries J2 — 22,701Investments J3 400 —Development properties J4 25,168 —Current assetsConstruction work-in-progress J5 3,171 —Developed property held for sale J6 2,506 —Trade debtors J7 24,690 —Other debtors J8 1,911 —Amounts due from directors, net J9 4,582 —Stocks J10 2,029 —Fixed deposits J11 5,110 —Cash and bank balances 1,915 —

45,914 —

Deduct : Current liabilitiesProgress billings in excess ofconstruction work-in-progress J5 9,850 —Trade creditors J12 27,022 —Other creditors J13 2,841 —Amounts due to bankers J14 548 —Hire purchase creditors J15 614 —Provision for taxation 4,973 —

45,848 —

Net current assets 66

Non-current liabilitiesOther creditors 168 —Amounts due to bankers, secured J14 21,621 —Hire purchase creditors J15 825 —Deferred taxation 1,943 —

(24,557) —

22,732 22,701


76

I. Significant Accounting Policies

The significant accounting policies of the Group, which have been consistently applied in thepreparation of the financial information of the Company and the Proforma Group are described in thefollowing paragraphs:

(a) Basis of accounting

The Statement of Proforma Group Results, Summarised Proforma Group Balance Sheetsand the Statement of Proforma Net Assets, expressed in Singapore dollars, are preparedunder the historical cost convention and in accordance with applicable accounting standards.

(b) Basis of consolidation

The Statement of Net Assets of the Proforma Group incorporates the financial statements ofthe Company and all its subsidiary companies made up to the end of the financial year orperiod. The results of subsidiary companies acquired or disposed of during the financial year/period are included from the effective date of acquisition or to the effective date of disposal.All inter-company balances and transactions are eliminated.

Any excess of the purchase consideration over the fair values of the underlying net assets ofsubsidiary companies acquired is accounted for as goodwill on consolidation. Goodwill onconsolidation is written off to revenue reserves in the financial year of acquisition.

(c) Subsidiary companies

Shares in subsidiary companies are revalued by the Directors at the balance sheet date in thebooks of the holding company on the basis of the attributable net assets value of thesubsidiaries determined on an individual basis. The resulting surplus or deficit is transferred tocapital reserve or charged to the profit and loss account as extraordinary items. Whererevaluation deficits exceed any surplus held in reserves for the same investment, the excessis written off to profit and loss account as extraordinary items. An increase in revaluationdirectly related to a previous decrease in carrying amount for the same investment that wascharged to income is credited to income to the extent that it offsets the previously recordeddecrease.

(d) Revenue recognition

Revenue and results from construction contracts are recognised on the percentage ofcompletion method by reference to the percentage of actual costs incurred to date againstbudgeted costs. Provision for any anticipated losses on contracts is recognised in the financialstatements as soon as the possibility of loss is ascertained. Claims for additional contractcompensation are not recognised until resolved.

Revenues from sales of goods are recognised upon passage of title to customer whichgenerally coincides with their delivery and acceptance.

(e) Foreign currencies

Transactions arising in foreign currencies during the financial year/period are converted at ratesclosely approximating those ruling on the transaction dates. Foreign currency monetary assetsand liabilities are translated into local currency at exchange rates ruling at the balance sheetdate. All exchange differences arising from conversion are included in the profit and lossaccount.

(f) Taxation

Taxation is accounted for under the liability method whereby the tax charge for the financialyear is based on the disclosed book profit after adjusting for all permanent differences. Theamount of taxation deferred on account of all material timing differences expected to berealised in the foreseeable future is reflected in the deferred taxation account. Deferred taxbenefits are not recognised unless there is reasonable expectation of their realisation.


77

(g) Fixed assets

Fixed assets are stated at cost or valuation less accumulated depreciation. The cost of anasset comprises its purchase price and any directly attributable costs of bringing the asset toworking condition for its intended use. Expenditures for additions, improvements and renewalsare capitalised and expenditures for repairs and maintenance are charged to the profit and lossaccount. When assets are sold or retired, their cost and accumulated depreciation are removedfrom the accounts and any gain or loss resulting from their disposal is included in the profit andloss account.

Where fixed assets are revalued, any surplus on revaluation is credited to capital reserve. Ondisposal of fixed assets, surplus on revaluation of the disposed assets is transferred to theprofit and loss account. A decrease in net carrying amount arising on revaluation of fixedassets is charged to the profit and loss account to the extent that it exceeds any surplus heldin capital reserve relating to previous revaluation of the same class of assets.

(h) Depreciation

Depreciation is calculated using the straight line basis to write off the cost or valuation of fixedassets over their estimated useful lives. The estimated useful lives are as follows:

Site and factory equipment - 3 - 6 yearsFreehold properties - 100 yearsLeasehold land and buildings - Over period of leasePlant and machinery - 3 - 12 yearsFurniture, fittings and office equipment - 1 - 10 yearsMotor vehicles - 3 - 8 yearsMoulds - 1 - 5 years/over term of propertyRenovation - 5 years

Fully depreciated assets are retained in the financial statements until they are no longer in useand no further charge for depreciation is made in respect of these assets.

(i) Investments

Investments held on a long term basis are stated at cost. Provision is made for any diminutionin value which is considered to be permanent.

Dividend income is accrued on the basis of the dates dividends are declared by the investeecompany.

Interest income is accrued on the day-to-day basis.

(j) Development properties

Development properties are stated at cost and includes all expenditure directly related to thedevelopment. Provision is made against expenditure from which no future benefit is likely toarise.

Profits on property development projects are recognised using the percentage of completionmethod. Profits are brought into the financial statements only in respect of sales agreementsfinalised and to extent that such profits relate to the progress of the construction work.

(k) Developed properties held for sale

These comprise completed properties which are intended for sale and are stated at lower ofcost and estimated net realisable value determined on an individual basis. Cost ofdevelopment properties includes all expenditure directly related to the development. Income isrecognised as and when the properties are sold.


78

(l) Stocks

Stocks are stated at the lower of cost and net realisable value. Raw materials is stated at coston a first-in first-out basis. The cost of finished goods and work-in-progress includes directlabour and attributable production overheads based on normal level of activity. Net realisablevalue represents estimated selling price less anticipated costs of disposal and after makingallowance for damaged, obsolete and slow-moving items.

(m) Construction work-in-progress

Construction work-in-progress are stated at cost plus a proportion of estimated profits, usingthe percentage of completion method, less progress claims received and receivable, includingretentions. Cost comprises direct materials, labour and other direct overheads, but excludesthe cost of central administrative and finance charges. Progress claims have been taken upbased on billings made for work performed. Anticipated losses, if any, are provided for in full,as and when they are determined.

(n) Finance leases

Leased assets financed by leasing agreements that give rights approximating to ownership arecapitalised in the financial statements, and the corresponding obligation treated as a liability.The assets so capitalised are depreciated in accordance with the Company’s depreciationpolicy. The total finance charges, being the difference between the total instalments payableand the capitalised amount is charged to the profit and loss account over the period of thelease in equal annual instalments over the period of the lease.

J. Notes to the Proforma Statement of Net Assets

1. Fixed assets

At cost/ Accumulated Net bookvaluation depreciation value

S$’000 S$’000 S$’000

GroupAt costSite and factory equipment 1,001 572 429Plant and machinery 13,661 7,720 5,941Motor vehicles 1,703 552 1,151Furniture, fittings and office equipment 1,363 885 478Renovations 120 115 5Moulds 1,708 1,302 406

19,556 11,146 8,410

At valuationLeasehold land and building 11,613 — 11,613Freehold properties 1,632 — 1,632

13,245 — 13,245

32,801 11,146 21,655

Leasehold land and building and freehold properties are stated at directors’ valuation based onthe latest independent professional valuations carried out by Allied Appraisal Consultants PteLtd on 30 October 1999 on the basis of open market valuation. The directors have takenthese valuation into consideration.

Leasehold land and building and freehold properties are mortgaged to banks for bankingfacilities granted to the Group.


79

Leasehold land and building consists of the following:-

(a) two 2-storey office blocks and a part 2-storey/part 4-storey factory building known as 66Sungei Kadut Street 1, Sungei Kadut Industrial Estate, Singapore 729367 on a leaseholdland area of 15,587 sq. m. (30 years from 16 January 1990), independently valued atS$7,800,000; and

(b) a standard JTC Type D8 single-storey detached factory building incorporating a mezzaninelevel known as 99 Pioneer Road, Jurong Industrial Estate, Singapore 639850 on aleasehold land area of 6,406.4 sq. m. (30 years from 1 December 1997), independentlyvalued at S$4,200,000.

Freehold properties consist of the following:-

(a) two adjoining shop units in a 4-storey residential/commercial building known as 398Changi Road #01-04 & #01-05, Castle Court, Singapore 419845 on a freehold land area of90 sq. m, independently valued at S$300,000 and S$357,000, respectively; and

(b) two apartment units of a 3-storey block of apartments with a basement carpark known as68 Lorong G Telok Kurau #02-02 and #03-03, The Vermilion, Singapore 426258 on afreehold land area of 225 sq. m, independently valued at S$550,000 and S$650,000respectively.

Plant and machinery and motor vehicles with net book values amounted to S$2,475,669 areacquired under hire purchase agreements.

2. Investment in subsidiaries

Group CompanyS$’000 S$’000

Unquoted shares, at cost — 22,701

Investments in subsidiary companies represent the Company’s investment in the unquotedshares of the subsidiary companies as if the Company had acquired these subsidiaries as at31 October 1999 in accordance with the Reconstruction Exercise as described in Section A.

3. Investments


Quoted shares, at cost 10 —Unquoted bond, at cost 200 —Golf club membership 190 —

400 —

Market value of quoted shares 16 —


80

4. Development properties


Freehold land, at cost27 Ewe Boon Road 6,796 —42 East Coast Road 18,372 —

25,168 —

Freehold land consists of the following properties:-

(a) a 2-storey detached house known as 27 Ewe Boon Road, Singapore 259330 on a freeholdland with an area of 1,285.9 sq. m, independently valued by Allied Appraisal ConsultantsPte Ltd on 30 October 1999 at S$13,825,000; and

(b) a 4-storey commercial-cum-residential building known as 42A/B/C/D/E/F, East CoastRoad, Singapore 428762 on a freehold land with an area of 1,686.1 sq. m, independentlyvalued by Chesterton International Consultants Pte Ltd on 21 March 2000 atS$17,800,000.

The development properties are mortgaged to secure banking facilities.

5. Construction work-in-progress/(progress billings in excess of construction work-in-progress)


Current assets

Construction costs and attributable profits 185,600 —Progress claims (182,429) —

Being costs incurred plus attributable profits in excess of progress billings 3,171 —

Current liabilities

Progress claims 322,429 —Construction costs and attributable profits (312,579) —

Being progress billings in excess of costs incurred plus attributable profits 9,850 —

6. Developed property held for sale


Freehold land, at cost 1,174 —Development expenditure 1,332 —

2,506 —


81

The developed property held for sale relates to a two-storey split-level detached house withan attic level and a basement level known as 99B Siglap Road, Singapore 455894 on afreehold land with an area of 490 sq. m, independently valued by Allied Appraisal ConsultantsPte Ltd on 30 October 1999 at S$3,000,000.

The developed property is mortgaged for banking facilities granted to the Group.

7. Trade debtors


Trade debtors are stated after deducting provisionfor doubtful debts of 2,372 —

8. Other debtors


Due by shareholders 205 —Sundry deposits 285 —Prepayments 1,132 —Sundry debtors 179 —Recoverable expenses 92 —Staff advance 18 —

1,911 —

Other debtors are stated after provision for doubtful debts of 2,619 —

9. Amounts due from directors, net

The amounts due from directors are unsecured, bearing interest ranging from nil to 2% andhave no fixed terms of repayment.

10. Stocks


Raw materials, net 669 —Work-in-progress 275 —Finished goods 1,085 —

2,029 —

Raw materials is stated after deducting provision for obsolete stocks of S$50,000.

11. Fixed deposits

Included in fixed deposits is an amount of S$83,927 which is pledged to secure bankingfacilities.


82

12. Trade creditors


Trade creditors 24,922 —Provision for liquidated damages 2,100 —

27,022 —

13. Other creditors


Amounts due to shareholders 34 —Accrued expenses 1,652 —Sundry creditors 1,155 —

2,841 —

14. Amounts due to bankers


Bank overdrafts, unsecured 233 —Term loans, secured 21,936 —

22,169 —Portion due within 12 months (548) —

Portion due after 12 months 21,621 —

Term loans comprise:-

2,587 —

4,550 —

11,900 —

2,899 —

21,936 —

Term loan I - is repayable on demand, however is not expectedto be settled within the next twelve months, andbears interest at prime plus 0.875% per annum.

Term loan II - is repayable no later than March 2002 or 6 monthsafter the receipt of the Temporary OccupationPermit for the development property at 27 EweBoon Road and bears interest ranging from swapplus 0.5% to 1.75% per annum.

Term loan III - is repayable not later than 30 June 2002 andbears interest at 4.3% per annum.

Term loan IV - is repayable in monthly instalments of S$26,200commencing February 1998 until principal sum ofS$3,155,000 and interest thereon is fully paid.This loan bears interest at 5.75% per annum forthe first 3 years from date of drawdown and thelower of 5.75% or prime plus 1% per annum forthe remaining term.


83

The term loan facilities are secured by:-

(a) Legal mortgages on the following assets of the Group:-

(i) Leasehold land and building and freehold properties (note J1);

(ii) Development properties (note J4);

(iii) Developed property held for sale (note J6);

(b) Pledge of fixed deposit (note J11).

(c) Joint and several guarantees of the directors.

15. Hire purchase creditors


Minimum hire purchase payments payable 1,669 —Finance charges allocated to future periods (230) —

1,439 —Portion due within 12 months (614) —

Portion due after 12 months but not exceeding 5 years 825 —

16. Capital commitments


Commitments for the purchase of fixed assets 161 56

17. Contingent liabilities, unsecured

(i) HKPL extended loans and advances to SPEPL totalling S$2,619,000. These loans andadvances were repayable on demand and partially secured under a confidentialarrangement. Notwithstanding this arrangement, HKPL has provided S$2,619,000against the loans and advances made to SPEPL. HKPL may be liable for a furtherS$265,000 should the security provided under this arrangement be called upon.

(ii) On 28 March 2000, PFT was served a letter of demand from a party seeking to recoverS$716,800 for work performed and services rendered on a construction project carriedout by the subsidiary Company in 1998. Insufficient particulars were provided in theletter of demand to allow the Directors to determine the merits of the amount claimed.The Directors are currently seeking legal advice in relation to the claim and haveinstructed their lawyers to request for further particulars of the claim. The Directors are ofthe opinion that there will be no material financial impact on the Group.


84

K. Subsequent Events

(i) On 26 February 2000, the Group signed a Sale and Purchase Agreement with SingInvestments and Finance Limited to purchase 19A Sungei Kadut Street 2 by way ofmortgagee sale for an aggregate purchase consideration of S$4,200,000. On 1 March 2000,the Group received notice from the Jurong Town Corporation (“JTC”) that the transaction wasnot approved. Currently, the Group is in the process of appealing to the Ministry of TradeIndustry in respect of JTC’s decision. The property was previously owned by Steady PilingEngineering Pte Ltd and was mortgaged to Sing Investments and Finance Limited.

(ii) On 26 March 2000, the Company completed the following:-

(a) the increase in the authorised share capital of the Company from S$100,000 comprisingof 100,000 ordinary shares of S$1.00 each to S$100,000,000 comprising 100,000,000ordinary shares of S$1.00 each;

(b) the Reconstruction Exercise, details of which are set out in Section A of this report;

(c) the sub-division of each of the ordinary shares of S$1.00 each in the authorised capital ofthe Company into 20 shares of S$0.05 each;

(iii) On 29 March 2000, the Company completed the following:-

(a) the conversion of the Company into a public limited company and the change of theCompany’s name to “Hor Kew Corporation Limited”;

(b) the adoption of a new set of Articles of Association;

(c) the issue of 113,800,000 New Shares which form part of this Invitation; and

(d) the granting of authority pursuant to Section 161 of the Act to the Directors to issueshares in the Company (whether by way of rights, bonus or otherwise) at any timesubject to certain terms and conditions.

(iv) On 31 March 2000, HKPL acquired 104 & 106 Arthur Road for an aggregate purchase priceof S$6,800,000. The directors intend to redevelop these 2 properties into residentialproperties for sale.


85

L. Net Tangible Asset Backing

The net tangible asset backing of the Group for each of the ordinary shares of S$0.05 each,based on the Proforma Statement of Net Assets of the Group as at 31 October 1999, after takinginto account the effects of the Restructuring Exercise and the proceeds and estimated expensesfrom the issue of New Shares, is set out below:-

GroupS$’000

Net tangible assets as at 31 October 1999 before issue of New Shares 22,701Add:Estimated proceeds from the issue of 113,800,000 New Shares 22,760

Less:Estimated issue expenses (1,220)

Net tangible assets after issue of New Shares 44,241

Number ofshares

Issued share capital

Issued and fully paid ordinary shares of S$1.00 each as at 31 October 1999 2Issue of ordinary shares of S$1.00 each pursuant to the RestructuringExercise 22,700,730

Pre-flotation share capital 22,700,732

Subdivision of 22,700,732 ordinary shares of S$1.00 each into 454,014,640 ordinary shares of S$0.05 each 454,015,640Issue of 113,800,000 New Shares of S$0.05 each which forms partof this Invitation 113,800,000

567,814,640

Net tangible asset backing for each ordinary share of S$0.05

- after restructuring but before issue of New Shares 5.00 cents

- after restructuring and issue of New Shares 7.79 cents

M. Dividends

The Company has not declared any dividends since the date of its incorporation.

N. General

No audited financial statements of the Group and the Company have been prepared for any financialperiod subsequent to 31 October 1999.

Yours faithfully,

ERNST & YOUNG LEE SENG CHAN & COCertified Public Accountants Certified Public Accountants(Partner: Mr Gerard Ee) (Partner: Mr Lee Sen Choon)

Singapore


86

VALUATION REPORT FROMALLIED APPRAISAL CONSULTANTS PTE LTD

4 April 2000


Dear Sirs,

VALUATION OF(1) 27 EWE BOON ROAD, SINGAPORE 259330(2) 99B SIGLAP ROAD, SINGAPORE 455894(3) 68 LORONG G TELOK KURAU #02-02 THE VERMILLION, SINGAPORE 426258(4) 68 LORONG G TELOK KURAU #03-03 THE VERMILLION, SINGAPORE 426258(5) 398 CHANGI ROAD #01-04/05, CASTLE COURT, SINGAPORE 419845(6) 66 SUNGEI KADUT STREET 1, SINGAPORE 729367(7) 99 PIONEER ROAD, SINGAPORE 639580

These valuation certificates have been prepared for the purpose of inclusion in the Prospectus to bedated 4 April 2000 (or such other date as the Company may determine) in relation to the Invitation byHor Kew Corporation Limited.

We confirm that we have inspected the subject properties, conducted relevant inquir ies andinvestigations as we consider necessary for the purposes of providing you with our opinion of the OpenMarket Values of these properties as at 30 October 1999.

Our valuation is our opinion of the open market value of the property which we would define asintended to mean “the best price at which the sale of an interest in a property might reasonably beexpected to have been completed unconditionally for cash consideration on the date of valuationassuming :-

1) a willing seller;

2) that, prior to the date of valuation, there had been a reasonable period (having a regard to thenature of the properties and the state of the market) for the proper marketing of the interest, forthe agreement of price and terms and for the completion of the sale;

3) that the state of the market, level of values and other circumstances were, on any earlier assumeddate of exchange of contracts, the same as on the date of valuation;

4) that no account had been taken of any additional bid by a purchaser with a special interest; and

5) that both parties to the transactions had acted knowledgeably, prudently and without compulsion.”

Our valuation has been made on the assumption that the owner sells the properties on the openmarket without the benefit of a deferred term contract, lease back, joint venture or any similararrangement which could serve to affect the value of the property.

We have relied on the information provided by your company on such matters on tenure, site area,land/floor area, age of building, lease terms, etc.


87

No allowance has been made in our valuation for any charges, mortgages or amounts owing on theproperties, nor for any expenses or taxation which may be incurred in effecting a sale. It is assumedthat the properties are free from encumbrances, restrictions and outgoings of an onerous nature whichcould affect their values.

We were not instructed to carry out structural survey of the buildings, or to test any of the services, butwe have reflected in our valuation, where necessary, any items of disrepair which we noticed duringthe course of our inspection. We are not, however, able to report that the buildings are free of rot,infestation or any other defects.

In our valuation of the subject properties, we have taken into account sales of comparable propertiesand made necessary comparisons and adjustments. The Investment Method was also used as a crosscheck where appropriate.

Our valuation certificates for the respective properties are attached

These valuation certificates are for the use of the Board of Directors of Hor Kew Corporation Limitedonly and no responsibility is accepted to any third party for the whole or any part of its contents.

Yours faithfully,ALLIED APPRAISAL CONSULTANTS PTE LTD

TEO YIK WENG, FRICS, FSISV, ASVACHARTERED VALUATION SURVEYORLICENSED APPRAISER & AUCTIONEERREGISTERED VALUER (MALAYSIA)


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VALUATION CERTIFICATE

Address of Property : 27 Ewe Boon Road, Singapore 259330

Legal Description : Lot 459 of Town Subdivision 26

Tenure : Freehold.

Site Area : 1,285.9 square metres

Brief Description : The subject property comprises an existing old 2-storeydetached house of brick and tile construction. The buildingwould eventually be demolished to make way for a 10-storeyresidential building with provision for a swimming pool and abasement car park.

The proposed development comprises 16 apartment units anda penthouse. The proposed gross floor area and saleablearea are 2,057.440 square metres and 1,966.965 squaremetres respectively. The preliminary estimated constructioncost (excluding professional fees) is S$4,423,496 and theestimated construction period is between 1.5 to 2 years.

Town Planning : Under the Singapore Master Plan (1998 Edition), it is zonedfor residential purposes with a plot ratio of 1.6 and has aheight restriction of 10 storeys.

Written planning permission was granted on 14th July 1999for a 10-storey residential building to be built on the land witha plot ratio of 1.6 and a 10 storey height is permissible. It isassumed that development charge has been fully paid.

Open Market Value as a : S$13,825,000 (Singapore Dollars Thir teen Million Eightredevelopment site as at Hundred and Twenty Five Thousand Only)30th October 1999


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Address of Property : 99B Siglap RoadSingapore 455894

Type of Property : 2-storey detached house with an attic level and a basementlevel

Legal Description : Lot 454-97pt of Mukim 27

Land Area : 490 square metres (subject to final survey)

Tenure : Freehold

Floor Area : 484 square metres

Brief Description : The subject property is a 2-storey semi-detached house withan attic level and a basement level.

The building was completed in 1996 or thereabouts and isconstructed of reinforced concrete frame with brick in-fill-walls,reinforced concrete floors and tiled roof.

The accommodation of the subject property is as follows : -

Basement Level : Rumpus room and a store room

First Storey : Lower LevelLevel

Porch, car porch and living area

Upper Level

Dining area cum family lounge and terrace,kitchen, guest room bathroom, utility room,toilet and wash area

Second Storey : Lower LevelLevel

Landing hall and two bedroomswith attached bathrooms

Upper Level

Family hall with balcony, store room andmaster bedroom with attached bathroom,dressing area and a study area

Attic Level : Landing hall, two bedrooms, commonbathroom and a store room

The internal floor finishes include slates/granite slabs in therumpus room and store room on the basement level, graniteflooring in the living and dining areas, parquet flooring in theguest room, landing hall, family hall, study area and bedroomson the second storey level, marble flooring in the masterbathroom, timber strip flooring in the bedrooms and landing


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hall on the attic level and ceramic tiled flooring to theremaining areas. All the bedrooms including the living anddining areas are provided with split-unit/cassette ceilingairconditioners. The bedrooms are also provided with built-inwardrobes.

The subject property is in good condition.

All essential services are connected.

Open Market Value as at : S$3,000,000 (Singapore Dollars Three Million Only)30th October 1999


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Address of Property : 68 Lorong G Telok Kurau #02-02The VermilionSingapore 426258

Type of Property : An apartment unit located on the second storey level of a 3-storey residential building.

Legal Description : Subject property is held under Strata Lot 7405/U6 of Mukim26


Tenure : Freehold

Brief Description : The subject property is a 3-bedroom Type C apartment on thesecond storey level of a 3-storey walk-up block within aresidential development known as The Vermilion.

The building was built in 1989 or thereabouts and isconstructed of reinforced concrete frame with brick in-fill-walls,reinforced concrete floors and tiled roof.

The accommodation of the subject property comprises a livingcum dining area, kitchen, two bedrooms sharing a commonbathroom, master bedroom with an attached bathroom and aservice yard.

The internal floor finishes include parquet flooring to thebedrooms, marble flooring to the living cum dining area andceramic tiled flooring to the remaining areas.

The subject property is in fair condition.

Public utilities such as electrical power, mains water supply,modern water-borne sanitation and telephones are provided.

Open Market Value as at : S$550,000 (Singapore Dollars Five Hundred And Fifty30th October 1999 Thousand Only)


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Address of Property : 68 Lorong G Telok Kurau #03-03The VermilionSingapore 426258

Type of Property : An apartment unit located on the third storey level of a 3-storey residential building.

Legal Description : Subject property is held under Strata Lot 7405/U9 of Mukim26


Tenure : Freehold

Brief Description : The subject property is a 3-bedroom Type A apartment on thethird (top level) storey level of a 3-storey walk-up block withina residential development known as The Vermilion.

The building was built in 1989 or thereabouts and isconstructed of reinforced concrete frame with brick in-fill-walls,reinforced concrete floors and tiled roof.

The accommodation of the subject property comprises a livingcum dining area with balcony, kitchen, two bedrooms sharinga common bathroom, master bedroom with an attachedbathroom, store room and a service yard.

The internal floor finishes include parquet/carpet flooring tothe bedrooms, marble flooring to the living cum dining areaand ceramic tiled flooring to the remaining areas.


Public utilities such as electrical power, mains water supply,modern water-borne sanitation and telephones are provided.

Open Market Value as at : S$650,000 (Singapore Dollars Six Hundred And Fifty30th October 1999 Thousand Only)


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Address of Property : 398 Changi Road #01-04/05,Castle Court,Singapore 419845

Type of Property : Two adjoining shop units located on the first storey level of a4-storey residential building incorporating a single-storey blockof shops.

Legal Description : 398 Changi Road #01-04 is held under Strata Lot 5640/U4 ofMukim 26 and 398 Changi Road #01-05 is held under StrataLot 5640/U5 of Mukim 26

Floor Area : 45 square metres (Unit 01-04)45 square metres (Unit 01-05)

Tenure : Freehold

Brief Description : The subject property comprises two adjoining shop unitslocated on the first storey level of a 4-storey residentialbuilding incorporating a single-storey block of shops at thefront within a residential development known as Castle Court.

The building was completed in 1983 or thereabouts and isconstructed of reinforced concrete frame with brick in-fill-walls,reinforced concrete floors and reinforced concrete flat roof.

Each unit has a glass shop front with a glass entrance door,mineral board ceiling and is fully carpeted. It is provided withsplit-unit airconditioners.


All essential services are connected.

Open Market Value as at : S$657,000 (Singapore Dollars Six Hundred and Fifty Seven30th October 1999 Thousand Only)


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Address of Property : 66 Sungei Kadut Street 1, Singapore 729367

Legal Description : Pte Lot A11473 of Mukim 11

Tenure : 30-year JTC lease commencing from 16th January 1990.

Site Area : 15,587 square metres

Brief Description : The subject property comprises a precast fabrication factorybuilding with two 2-storey office blocks and a part 2-storey/part 4-storey factory building.

It is located on the east side of Sungei Kadut Street 1 which isalmost mid-way between the road junctions of Sungei KadutStreet 1/Sungei Kadut Street 4 and Sungei Kadut Street 1/Sungei Kadut Street 5. It is within Sungei Kadut IndustrialEstate and some twenty kilometres from the city centre atCollyer Quay.

The property occupies a rectangular land plot which isgenerally flat and elevated, lying slightly above the level of thepublic road.

According to the plans provided, the approximate built-up areaof the various buildings is estimated as follows:-

Office Block 1 : 724 square metresOffice Block 2 : 540 square metresPrecast FabricationFactory Building : 3,551 square metresSemi-FinishedFabrication Building : 2,703 square metresNew Factory Building : 5,076 square metres

Open Market Value as at : S$7,800,000 (Singapore Dollars Seven Million Eight Hundred30th October 1999 Thousand Only)


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Address of Property : 99 Pioneer Road, Singapore 639580

Legal Description : Lot 1933 of Mukim 7

Tenure : 30-year JTC lease commencing from 1st December 1997. Afurther term of 30 years shall be granted provided that therebeing no breach or non-observance of the covenants andconditions and the yearly rent be revised according to thestipulated terms. In our valuation, we have assumed that afurther term of 30 years will be granted.

Site Area : 6,406.4 square metres

Brief Description : The subject property comprises a standard JTC Type D8single-storey detached factory building incorporating amezzanine level at the front of steel frame construction.

It is located on the south side of Pioneer Road which isapproximately three hundred metres north of the junction ofPioneer Road and Tuas Avenue 2. It is within Jurong IndustrialEstate and some twenty two kilometres from the city centre atCollyer Quay.

The property occupies a rectangular land plot which isgenerally flat and level with the public road and thesurrounding sites.

According to the plans provided, the approximate built-up areaof the building is estimated to be 2,791 square metres.

Open Market Value as at : S$4,200,000 (Singapore Dollars Four Million Two Hundred30th October 1999 Thousand Only)


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VALUATION REPORT FROMCHESTERTON INTERNATIONAL PROPERTY CONSULTANTS PTE LTD

21 March 2000

Hor Kew Corporation Limited66 Sungei Kadut Street 1Singapore 729367

Dear Sirs,

VALUATION FOR LOT 5113X MUKIM 26 LOCATED ALONGEAST COAST ROAD (CURRENTLY KNOWN AS42/A/B/C/D/E/F EAST COAST ROAD) SINGAPORE 1542

We refer to your recent instructions to determine the Open Market Value of the above mentionedproperty. We confirm that we have inspected the property and made the relevant searches andenquiries and we are pleased to report our opinion.

Our valuation is based on the Open Market Value as defined by the Royal Institution of CharteredSurveyor, which is the “best price” at which the sale of an interest in the property would have beencompleted unconditionally for cash consideration on the date of valuation, assuming:

(a) a willing seller;

(b) that, prior to the date of valuation, there had been a reasonable period (having regard to thenature of the property and the state of the market) for the proper marketing of the interest for thenegotiation and agreement of price and terms and for the completion of the sale;

(c) that the state of the market, level of values and other circumstances were, on any earlier assumeddate of exchange of contracts, the same as on the date of valuation;

(d) that no account is taken of any additional bid by a prospective purchaser with a special interest;and

(e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.

No allowances are made for any expenses or taxation which might arise in the event of a disposal.The property is considered as if free and clear of all mortgages, encumbrances and other outstandingpremiums, charges and liabilities.

We have not carried out any investigations on the suitability of the site and ground conditions for theexisting or any new development, nor have we undertaken any archaeological, ecological orenvironmental surveys.

In arriving at our valuation, we have adopted the direct sales comparable method and have analysedevidence of recent sales of comparable properties in the vicinity and elsewhere. Necessaryadjustments have been made to reflect the differences between the subject property and thecomparables in relation to location, tenure, size and time difference amongst other material factorswhich may affect the value. We have also cross checked our valuation with the residual method.

Finally and in accordance with our practice, we must emphesize that the report is for the use only ofM/s Hor Kew Corporation Limited for the sole purpose of an intending public listing of the Company.


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Our opinion of the Open Market Value of the subject property is in the Valuation Certificate attached.

Yours trulyCHESTERTON INTERNATIONALPROPERTY CONSULTANTS PTE LTD

TAN KENG CHIAMDIRECTORB.Sc.(Est Mgt), MSISV


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The subject proper ty is a plot of land for theproposed erection of a commercial/ residentialdevelopment comprising a 6 storey podium with 4levels of carparks and a 12-storey residential towerblock (Total 24 units) above the podium. The detailsof proposed development is as follows:-

ProposedGross Floor

S/No Uses Area (sqm)

1. Commercial 2,023.32

2. Residential 3,034.98

Total 5,058.30

Currently, there is a 4 storey commercial-cum-residential development known as Lai Lai Complex.According to the architect Integral Will Design, thegross floor area is approximately 3,174 squaremetres.

Planning Application

The outline planning permission was issued on 6/7/1999 vide reference no:- DC1232/56-6(020699-15A1) and subsequently provisional permission wasgranted on 12/2/2000 vide reference no:-ES20000105R0158, subject to amongst many otherconditions the following:-

i) payment of development charges

ii) gross plot ratio is 2.99

Master Plan Zoning 1985:-

Local Shopping

Master Plan Zoning 1998:-

Commercial & Residential


Open Market ValueProperty Brief Description As at 21 March 2000

Lot 5113X Mukim 26 $17,800,000/-located along excludingEast Coast Road development(currently known as charges based on42/A/B/C/D/E/F 1/9/1998 ratesEast Coast Road)Singapore 1542

Site Area : 1,686.1 sqm

Tenure : Freehold

Registered Owner : Hor Kew Land Pte Ltd

Encumbrance :Mortgaged to Overseas Union Bank Ltd


99

GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS

1. The particulars of our Directors and Executive Officers are set out on pages 57 to 59 of thisProspectus.

2. The interests of our Directors and substantial Shareholders in the Shares as at the date of thisProspectus (before the Invitation) as recorded in our Company’s Register of Directors’Shareholdings and the Register of Substantial Shareholders maintained under the Act, are asfollows:-

No. of SharesNo. of Shares in which Directors

registered in the or substantialnames of Directors Shareholders are

or substantial deemed to haveShareholders % an interest %

Directors

Aw Leng Hwee, BBM 56,722,197 12.5 227,125,856 50.0Aw Khoon Hwee 45,150,868 9.9 — —Aw Hoon Hui 45,377,757 10.0 227,125,856 50.0Dr Low Seow Chay — — — —William Chew Yew Meng — — — —

Substantial Shareholders

Hor Kew Holdings Pte Ltd 227,125,856 50.0 — —Aw Soon Hwee 45,377,757 10.0 227,125,856 50.0

Note:-

(1) Messrs Aw Leng Hwee, BBM, Aw Khoon Hwee, Aw Hoon Hui and Aw Soon Hwee are brothers.

(2) Hor Kew Holdings Pte Ltd is a private limited company and is an investment holding company. The shareholders ofthe company are Aw Leng Hwee, BBM, (25.0%), Aw Hoon Hui (20.0%), Aw Soon Hwee (20.0%), Aw Khoon Hwee(19.9%), Aw Hong Hwee (5.0%), Aw Lay Sim (5.0%), Aw Geok Mui (1.7%), Aw Lay Tin (1.7%) and Aw Lay Choo(1.7%).

3. The list of present and past directorships of each Director, excluding those held in our Company,over the past five years preceding the date of this Prospectus, are as follows:-

Name Present Directorships Past Directorships

Aw Leng Hwee, BBM Group companies Other companiesHor Kew Land Pte Ltd Better Batters Restaurant Pte LtdHor Kew Private Limited (presently known as FC81 Pte Ltd)Park Vale Design & Development Pte Ltd Foundation Asiana Regional Pte LtdPrefab Technology Pte Ltd Goodfield Asia LtdPrefab Technology 3 Pte Ltd Steady Piling Engineering Pte LtdPrefab Technology 8 Pte Ltd

Other companyHor Kew Holdings Pte Ltd

Aw Khoon Hwee Group companies Other companyHor Kew Private Limited FC81 Pte Ltd (formerly known asHor Kew Land Pte Ltd Better Batters Restaurant Pte Ltd)Park Vale Development & Design Pte LtdPrefab Technology Pte LtdPrefab Technology 3 Pte LtdPrefab Technology 8 Pte Ltd


100

Name Present Directorships Past Directorships

Aw Khoon Hwee Other companiesRadiant Radius Sdn BhdHor Kew Holdings Pte Ltd

Aw Hoon Hui Group company Other companyHor Kew Private Limited City Concrete Pump Service Pte Ltd

(dissolved with effect fromOther company 5 December 1997)Hor Kew Holdings Pte Ltd

Dr Low Seow Chay Other companies Other companyAsiacarbiz.com Pte Ltd Sun Corporation LimitedCASA Holdings Ltd (now known as Cosco Investment

(Singapore) Limited)

William Chew Yew Meng Nil Nil

4. The list of present and past directorships of each Executive Officer over the past 5 yearspreceding the date of this Prospectus are as follows:-

Name Present Directorship Past Directorship

Chen Hee Huat Group company NilPrefab Technology 3 Pte Ltd

5. Save as disclosed on page 99 of this Prospectus, none of the Directors or substantialShareholders of our Company have any shareholding in our Company.

6. Save as disclosed on pages 57 and 58 of this Prospectus, none of the Directors, ExecutiveOfficers and substantial Shareholders of our Company are related to one another. None of theDirectors have any professional relationship with our Company or our other Directors orsubstantial Shareholders.

7. Save as disclosed on pages 53 to 56 of this Prospectus and in relation to the RestructuringExercise, none of our Directors are interested, directly or indirectly, in the promotion of, or in, anyassets which have been acquired or disposed of by, or leased to, our Company or any of oursubsidiaries within the two years preceding the date of this Prospectus, or are proposed to beacquired or disposed of by, or leased to, our Group.

8. Messrs Aw Hoon Hui, Aw Leng Hwee, BBM, and Aw Soon Hwee are partners in a businessundertaking known as Ann Teng General Building Contractor, which was formed to carry on thebusiness of mixed construction activities. This business undertaking is presently dormant.

Mr Aw Soon Hwee is the holder of 50,000 ordinary shares in Kai Sheng Building Construction PteLtd, representing 15.15% of the issued and paid-up share capital of that company, which carries onthe business of general contractors for building construction, including major upgrading works.

Save as disclosed above, none of our Directors or substantial Shareholders of our Company hasany interest, direct or indirect, in any company carrying on a similar trade as our Group.

9. Save for the Service Agreements, no Director is materially interested in any existing contract orarrangement which is significant in relation to the business of our Group taken as a whole.

10. Save as disclosed on pages 60 and 61 of this Prospectus, there are no existing or proposedservice agreements between our Directors or our Executive Officers and our Company or any ofour Subsidiaries.


101

11. Save in respect of the Vendor Shares, none of our Directors have any intention to realise ortransfer any part of their shareholding interests in our Company as at the close of the Invitationand within a period of six months after the admission of our Company to the Official List of theSGX-ST.

12. There is no shareholding qualification for our Directors under the Articles of Association of ourCompany.

13. The aggregate remuneration and emoluments paid to the then existing directors for services in allcapacities to our Group for FY1998 amounted to approximately $3.7 million. For FY1999, theestimated aggregate remuneration and emoluments payable to our Directors amount toapproximately $4.0 million.

14. No options to subscribe for shares in or debentures of our Company or our subsidiaries have beengranted to, or exercised by, any Director or Executive Officer within the last financial year.

15. No sum or benefit has been paid or is agreed to be paid to any Director or expert, or to any firm inwhich such Director or expert is a partner or to any corporation in which such Director or expertholds shares or debentures, in cash or shares or otherwise, by any person to induce him tobecome, or to qualify him as, a Director, or otherwise for services rendered by him or by such firmor corporation in connection with the promotion or formation of our Company.

16. Save as disclosed below, no Director or Executive Officer is or was involved in any of the followingevents:-

(i) a petition under any bankruptcy laws filed in any jurisdiction against him or any partnership inwhich he was a partner or any corporation of which he was a director or an executive officer;

(ii) a conviction of any offence, other than a traffic offence, or a judgement, including findings inrelation to fraud, misrepresentation or dishonesty, given against him in any civil proceeding inSingapore or elsewhere or any proceeding now pending which may lead to such a convictionor judgement and none of our Directors or Executive Officers is aware of any criminalinvestigation pending against him;

(iii) a conviction in a criminal proceeding or being a named subject of a pending criminalproceeding; and

(iv) the subject of any order, judgement or ruling of any court of competent jurisdiction, tribunal orgovernmental body, permanently or temporarily enjoining him from acting as an investmentadvisor, dealer in securities, director or employee of a financial institution or engaging in anytype of business practice or activity.

Mr Aw Hoon Hui was a director of City Concrete Pump Service Pte Ltd, against which a petition towind up the company was filed. The company had an issued and paid-up share capital of $2.00comprising 2 ordinary shares of $1.00 each, which were held by Mr Aw Hoon Hui and anotherdirector, Mr Heng Mok Choon. The petition to wind up the company was filed on the grounds that MrHeng Mok Choon had gone missing and that the company was unable to pay its debts. The petitionwas filed by HKPL, which was a creditor of the company for the amount of $219,454.96. Thecompany was dissolved with effect from 5 December 1997.

SHARE CAPITAL

17. As at the date of this Prospectus, there is only one class of shares in the capital of our Company.The rights and privileges of the Shares are stated in the Articles of Association of our Company.There are no founder, management or deferred shares reserved for issuance for any purpose.

18. Save as disclosed on pages 22 to 25 of this Prospectus (“Restructuring Exercise”), there were nochanges in the issued share capital of our Company and our Subsidiaries within the two yearspreceding the date of this Prospectus.


102

19. Save as disclosed on pages 22 to 25 of this Prospectus (“Restructuring Exercise”), no shares inor debentures of our Company have been issued or are agreed to be issued by our Company,whether as fully or partly paid-up and whether for cash or for a consideration other than cash,within the two years preceding the date of this Prospectus.

20. No person has been, or is entitled to be, granted an option to subscribe for shares in ordebentures of our Company or any of our subsidiaries.

ARTICLES OF ASSOCIATION

21. (i) The following provisions in the Articles of Association of our Company relates to restrictionson the transferability of shares and the voting rights of members of our Company:-

Article 38

(A) There shall be no restriction on the transfer of fully paid-up shares (except where required bylaw, the listing rules of any Stock Exchange upon which the shares of the Company may belisted or the rules and/or bye-laws governing any Stock Exchange upon which the shares ofthe Company may be listed) but the Directors may in their discretion decline to register anytransfer of shares upon which the Company has a lien and in the case of shares not fullypaid-up may refuse to register a transfer to a transferee of whom they do not approve,provided always that in the event of the Directors refusing to register a transfer of shares,they shall within ten market days beginning with the day on which the application for atransfer of shares was made, serve a notice in writing to the applicant stating the facts whichare considered to justify the refusal as required by the Statutes.

(B) The Directors may in their sole discretion refuse to register any instrument of transfer ofshares unless:-

(a) all or any part of the stamp duty (if any) payable on each share certificate and such feenot exceeding S$2/- as the Directors may from time to time require, is paid to theCompany in respect thereof;

(b) the instrument of transfer is deposited at the office or at such other place (if any) as theDirectors may appoint accompanied by the certificates of the shares to which it relates,and such other evidence as the Directors may reasonably require to show the right ofthe transferor to make the transfer and, if the instrument of transfer is executed bysome other person on his behalf, the authority of the person so to do;

(c) the instrument of transfer is in respect of only one class of shares; and

(d) the amount of the proper duty with which each share certificate to be issued inconsequence of the registration of such transfer is chargeable under any law for the timebeing in force relating to stamps is tendered.

Article 61

At any General Meeting a resolution put to the vote of the meeting shall be decided on a show ofhands unless a poll is (before or on the declaration of the result of the show of hands) demandedby:-

(a) the chairman of the meeting; or

(b) not less than two members present in person or by proxy and entitled to vote; or

(c) a member present in person or by proxy and representing not less than one-tenth ofthe total voting rights of all the members having the right to vote at the meeting; or


103

(d) a member present in person or by proxy and holding shares in the Companyconferring a right to vote at the meeting being shares on which an aggregate sum hasbeen paid up equal to not less than one-tenth of the total sum paid on all the sharesconferring that right,

Provided always that no poll shall be demanded on the choice of a chairman or on a questionof adjournment.

Article 63

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of themeeting at which the show of hands takes place or at which the poll is demanded shall be entitledto a casting vote.

Article 65

Subject and without prejudice to any special privileges or restrictions as to voting for the time beingattached to any special class of shares for the time being forming part of the capital of theCompany each member entitled to vote may vote in person or by proxy. On a show of hands everymember who is present in person and each proxy shall have one vote and on a poll, every memberwho is present in person or by proxy shall have one vote for every share which he holds orrepresents. For the purpose of determining the number of votes which a member, being aDepositor, or his proxy may cast at any General Meeting on a poll, the reference to shares heldor represented shall, in relation to shares of that Depositor, be the number of shares enteredagainst his name in the Depository Register as at 48 hours before the time of the relevantGeneral Meeting as certified by the Depository to the Company.

Article 66

In the case of joint holders of a share the vote of the senior who tenders a vote, whether in personor by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for thispurpose seniority shall be determined by the order in which the names stand in the Register ofMembers or (as the case may be) the Depository Register in respect of the share.

Article 67

Where in Singapore or elsewhere a receiver or other person (by whatever name called) has beenappointed by any court claiming jurisdiction in that behalf to exercise powers with respect to theproperty or affairs of any member on the ground (however formulated) of mental disorder, theDirectors may in their absolute discretion, upon or subject to production of such evidence of theappointment as the Directors may require, permit such receiver or other person on behalf of suchmember to vote in person or by proxy at any General Meeting or to exercise any other rightconferred by membership in relation to meetings of the Company.

Article 68

No member shall, unless the Directors otherwise determine, be entitled in respect of shares held byhim to vote at a General Meeting either personally or by proxy or to exercise any other rightconferred by membership in relation to meetings of the Company if any call or other sum presentlypayable by him to the Company in respect of such shares remains unpaid.

Article 69

No objection shall be raised as to the admissibility of any vote except at the meeting or adjournedmeeting at which the vote objected to is or may be given or tendered and every vote not disallowedat such meeting shall be valid for all purposes. Any such objection shall be referred to thechairman of the meeting whose decision shall be final and conclusive.

Article 70

On a poll, votes may be given either personally or by proxy and a person entitled to more thanone vote need not use all his votes or cast all the votes he uses in the same way.


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Article 71

(A) A member may appoint not more than two proxies to attend and vote at the same GeneralMeeting provided that if the member is a Depositor, the Company shall be entitled and bound:-

(a) to reject any instrument of proxy lodged if the Depositor is not shown to have anyshares entered against his name in the Depository Register as at 48 hours before thetime of the relevant General Meeting as certified by the Depository to the Company; and

(b) to accept as the maximum number of votes which in aggregate the proxy of proxiesappointed by the Depositor is or are able to cast on a poll a number which is the numberof shares entered against the name of that Depositor in the Depository Register as at 48hours before the time of the relevant General Meeting as certified by the Depository tothe Company, whether that number is greater or smaller than the number specified inany instrument of proxy executed by or on behalf of that Depositor.

(B) The Company shall be entitled and bound, in determining rights to vote and other matters inrespect of a completed instrument of proxy submitted to it, to have regard to the instructions(if any) given by and the notes (if any) set out in the instrument of proxy.

(C) In any case where a form of proxy appoints more than one proxy, the proportion of theshareholding concerned to be represented by each proxy shall be specified in the form ofproxy.

(D) A proxy need not be a member of the Company.

Article 72

(A) An instrument appointing a proxy shall be in writing in any usual or common form or in anyother form which the Directors may approve and:-

(a) in the case of an individual shall be signed by the appointor or his attorney; and

(b) in the case of a corporation shall be either given under its common seal or signed on itsbehalf by an attorney or a duly authorised officer of the corporation.

(B) The signature on such instrument need not be witnessed. Where an instrument appointing aproxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or aduly certified copy thereof must (failing previous registration with the Company) be lodgedwith the instrument of proxy pursuant to the next following Article, failing which theinstrument may be treated as invalid.

Article 73

An instrument appointing a proxy must be left at such place or one of such places (if any) as maybe specified for that purpose in or by way of note to or in any document accompanying the noticeconvening the meeting (or, if no place is so specified, at the Office) not less than 48 hours beforethe time appointed for the holding of the meeting or adjourned meeting or (in the case of a polltaken otherwise than at or on the same day as the meeting or adjourned meeting) for the takingof the poll at which it is to used, and in default shall not be treated as valid. The instrument shall,unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for themeeting to which it relates; provided that an instrument of proxy relating to more than one meeting(including any adjournment thereof) having once been so delivered for the purposes of anymeeting shall not require again to be delivered for the purposes of any subsequent meeting towhich it relates.

Article 74

An instrument appointing a proxy shall be deemed to include the right to demand or join indemanding a poll, to move any resolution or amendment thereto and to speak at the meeting.


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Article 75

A vote cast by proxy shall not be invalidated by the previous death or insanity of the principal or bythe revocation of the appointment of the proxy or of the authority under which the appointment wasmade provided that no intimation in writing of such death, insanity or revocation shall have beenreceived by the Company at the Office at least one hour before the commencement of the meetingor adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as themeeting or adjourned meeting) the time appointed for the taking of the poll at which the vote iscast.

Article 76

Any corporation which is a member of the Company may by resolution of its directors or othergoverning body authorise such person as it thinks fit to act as its representative at any meeting ofthe Company or of any class of members of the Company. The person so authorised shall beentitled to exercise the same powers on behalf of such corporation as the corporation couldexercise if it were an individual member of the Company and such corporation shall for thepurposes of these presents be deemed to be present in person at any such meeting if a person soauthorised is present thereat.

(ii) The following provisions in the Articles of Association of the Company relate to theremuneration, voting rights on proposals, arrangements of contracts in which Directors areinterested and the borrowing powers of Directors:-

Article 79

The ordinary remuneration of the Directors shall from time to time be determined by an OrdinaryResolution of the Company, shall not be increased except pursuant to an Ordinary Resolutionpassed at a General Meeting where notice of the proposed increase shall have been given in thenotice convening the General Meeting and shall (unless such resolution otherwise provides) bedivisible among the Directors as they may agree, or failing agreements, equally, except that anyDirector who shall hold office for part only of the period in respect of which such remuneration ispayable shall be entitled only to rank in such division for a proportion of remuneration related tothe period during which he has held office.

Article 80

(A) Any Director who holds any executive office, or who serves on any committee of theDirectors, or who otherwise performs services which in the opinion of the Directors are outsidethe scope of the ordinary duties of a Director, may be paid such extra remuneration by way ofsalary, commission or otherwise as the Directors may determine.

(B) The remuneration (including any remuneration under Article 80(A) above) in the case of aDirector other than an Executive Director shall be payable by a fixed sum and shall not at anytime be by commission on or percentage of the profits or turnover, and no Director whether anExecutive Director or otherwise shall be remunerated by a commission on or percentage ofturnover.

Article 81

The Directors may repay to any Director all such reasonable expenses as he may incur in attendingand returning from meetings of the Directors or of any committee of the Directors or GeneralMeetings or otherwise in or about the business of the Company.

Article 82

The Directors shall have power to pay and agree to pay pensions or other retirement,superannuation, death or disability benefits to (or to any person in respect of) any Director for thetime being holding any executive office and for the purposes of providing any such pensions orother benefits to contribute to any scheme or fund or to pay premiums.


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Article 83

A Director may be party to or in any way interested in any contract or arrangement or transaction towhich the Company is a party or in which the Company is in any way interested and he may holdand be remunerated in respect of any office or place of profit (other than the office of Auditor of theCompany or any subsidiary thereof) under the Company or any other company in which theCompany is in any way interested and he (or any firm of which he is a member) may act in aprofessional capacity for the Company or any such other company and be remunerated thereforand in any such case as aforesaid (save as otherwise agreed) he may retain for his own absoluteuse and benefit all profits and advantages accruing to him thereunder or in consequence thereof.

Article 88

The remuneration of a Managing Director shall from time to time be fixed by the Directors and maysubject to these presents be by way of salary or commission or participation in profits or by any orall these modes but he shall not under circumstances be remunerated by a commission on or apercentage of turnover.

Article 98

(A) Any Director may at any time by writing under his hand and deposited at the Office, ordelivered at a meeting of the Directors, appoint any person (other than another Director) to behis alternate Director and may in like manner at any time terminate such appointment. Suchappointment, unless previously approved by the Directors, shall have effect only upon andsubject to being so approved. A person shall not act as alternate Director to more than oneDirector at the same time.

(B) The appointment of an alternate Director shall determine on the happening of any eventwhich if he were a Director would cause him to vacate such office or if the Directorconcerned (below called “his principal”) ceases to be a Director.

(C) An alternate Director shall (except when absent from Singapore) be entitled to receivenotices of meetings of the Directors and shall be entitled to attend and vote as a Director atany such meeting at which his principal is not personally present and generally at suchmeeting to perform all functions of his principal as a Director and for the purposes of theproceedings at such meeting the provisions of these presents shall apply as if he (instead ofhis principal) were a Director. If his principal is for the time being absent from Singapore ortemporarily unable to act through ill health or disability, his signature to any resolution inwriting of the Directors shall be as effective as the signature of his principal. To such extentas the Directors may from time to time determine in relation to any committee of theDirectors, the foregoing provisions of this paragraph shall also apply mutatis mutandis toany meeting of any such committee of which his principal is a member. An alternateDirector shall not (save as aforesaid) have power to act as a Director nor shall he bedeemed to be a Director for the purposes of these presents.

(D) An alternate Director shall be entitled to contract and be interested in and benefit fromcontracts or arrangements or transactions and to be repaid expenses and to be indemnified tothe same extent mutatis mutandis as if he were a Director but he shall not be entitled toreceive from the Company in respect of his appointment as alternate Director anyremuneration except only such part (if any) of the remuneration otherwise payable to hisprincipal as such principal may by notice in writing to the Company from time to time direct.

Article 102

A Director shall not vote in respect of any contract or arrangement or any other proposalwhatsoever in which he has any interest, directly or indirectly. A Director shall not be counted inthe quorum at a meeting in relation to any resolution on which he is debarred from voting.


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Article 109

Subject as hereinafter provided and to the provisions of the Statutes, the Directors may exercise allthe powers of the Company to borrow money, to mortgage or charge its undertaking, property anduncalled capital and to issue debentures and other securities, whether outright or as collateralsecurity for any debt, liability or obligation of the Company or of any third party.

BANK BORROWINGS AND WORKING CAPITAL

22. As at 31 October 1999, the total borrowings of our Group amounted to $22,169,351. Save asdisclosed on pages 54, 109 and in the Accountants’ Report, our Group does not have any othercontingent liabilities.

23. In the opinion of our Directors, no minimum amount must be raised by the issue of the NewShares in order to provide for the following items:-

(i) the purchase price of any property purchased or to be purchased which is to be defrayed inwhole or in part out of the proceeds from the issue of the Invitation Shares;

(ii) any preliminary expenses payable by our Company, and any commission so payable to anyperson in consideration of his agreeing to subscribe for, or of his procuring or agreeing toprocure subscriptions for, any shares in our Company;

(iii) the repayment of any moneys borrowed by our Company in respect of any of the foregoingmatters; and

(iv) working capital.

Although no minimum amount must be raised by the Invitation in order to provide for the items setout above, the estimated amount to be provided for items set out in paragraphs (i), (ii), (iii) and (iv)are approximately $4.0 million, $1.2 million, $2.8 million and $9.8 million respectively. This amountis proposed to be provided out of the proceeds from the issue of the New Shares or, in the eventthe Invitation is cancelled, out of existing banking facilities.

24. Our Directors are of the opinion that, after taking into account the present banking facilities, ourGroup has adequate working capital for its present requirements. Our Group’s banking facilitiesare presently secured by the personal guarantees of our Directors. It is intended that theseguarantees be discharged in due course. Our Directors are of the opinion that the discharge ofthese personal guarantees will not adversely affect the availability of our Group’s banking facilities.

MATERIAL CONTRACTS

25. The following contracts (not being contracts entered into in the ordinary course of business by ourGroup) have been entered into by our Company and our subsidiaries, within the two years precedingthe date of this Prospectus and are or may be material:-

(i) Management and Underwriting Agreement dated 4 April 2000 between our Company andOUB as our Manager and Underwriter;

(ii) Placement Agreement dated 4 Apr il 2000 between our Company and OUB as ourPlacement Agent;

(iii) Receiving Bank Agreement dated 4 April 2000 between our Company and OUB pursuant towhich OUB will be appointed as the receiving bank in relation to the Invitation;

(iv) Depository Agreement dated 3 April 2000 between (a) our Company and (b) The CentralDepository (Pte) Limited (“CDP”) pursuant to which CDP will act as share depository for ourCompany;


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(v) Reconstruction Agreement dated 26 March 2000 between (i) Messrs Aw Leng Hwee, BBM,and Aw Khoon Hwee, and (ii) Prefab Technology Pte Ltd, relating to the acquisition by PFTof an aggregate of 170,000 ordinary shares of $1.00 each in the capital of PrefabTechnology 8 Pte Ltd, further particulars of which are set out in “Restructuring Exercise” onpage 22 of this Prospectus;

(vi) Reconstruction Agreement dated 26 March 2000 between (i) the individual shareholders ofHor Kew Private Limited, and (ii) Hor Kew Holdings Pte Ltd, relating to the acquisition byHKHPL of an aggregate of 2,500,000 ordinary shares of $1.00 each in the capital of HorKew Private Limited, further particulars of which are set out in “Restructuring Exercise” onpage 22 of this Prospectus;

(vii) Reconstruction Agreement dated 26 March 2000 between (i) Hor Kew Private Limited and(ii) our Company, relating to the acquisition by our Company of (a) 709,845 ordinary sharesof $1.00 each in the capital of Prefab Technology Pte Ltd, (b) 1,000,000 shares of $1.00each in the capital of Park Vale Design & Development Pte Ltd and (iii) 3 ordinary shares of$1.00 each in the capital of Hor Kew Land Pte Ltd, further particulars of which are set out in“Restructuring Exercise” on page 22 of this Prospectus;

(viii) Reconstruction Agreement dated 26 March 2000 between (i) Messrs Aw Leng Hwee, BBM,Aw Khoon Hwee, Aw Hoon Hui and Aw Soon Hwee and (ii) our Company, relating to theacquisition by our Company of an aggregate of 290,155 ordinary shares of $1.00 each inthe capital of Prefab Technology Pte Ltd, fur ther particulars of which are set out in“Restructuring Exercise” on page 22 of this Prospectus;

(ix) Reconstruction Agreement dated 26 March 2000 between (i) Hor Kew Holdings Pte Ltd; (ii)members of the Aw Family; and (iii) our Company, relating to the acquisition by ourCompany of an aggregate of 5,000,000 ordinary shares of $1.00 each in the capital of HorKew Private Limited, further particulars of which are set out in “Restructuring Exercise” onpage 22 of this Prospectus;

(x) Sale and Purchase Agreement dated 19 August 1999 between (i) Hor Kew Private Limitedand (ii) Aw Hong Hwee, relating to the sale and purchase of an aggregate of 888,890ordinary shares of $1.00 each in the capital of Steady Piling Engineering Pte Ltd, furtherparticulars of which are set out in “Restructuring Exercise” on page 22 of this Prospectus;

(xi) Deed of Assignment dated 23 December 1999 entered into between Tectonic Transfer andPFT pursuant to which (a) Tectonic Transfer assigned to PFT all its rights and benefits,including, without limitation, any patent rights, in respect of a composite wall panel systemfor prefabricated enclosures; and (b) PFT granted to Tectonic Transfer the right of firstrefusal in the event that it decides to assign the rights and benefits in respect of thecomposite wall panel system to any third party within the period of 15 years commencingfrom 1 January 2000;

(xii) Service Agreement dated 3 April 2000 entered into between our Company and Mr Aw LengHwee, BBM, to appoint him as the Chairman and Managing Director of our Company;

(xiii) Service Agreement dated 3 April 2000 entered into between our Company and Mr AwKhoon Hwee to appoint him as the Deputy Managing Director of our Company; and

(xiv) Service Agreement dated 3 April 2000 entered into between our Company and Mr Aw HoonHui to appoint him as an Executive Director of our Company.


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LITIGATION

26. Save as disclosed below and on page 54 of this Prospectus, our Group is not engaged in anylitigation as plaintiff or defendant in respect of any claims or amounts which are material in thecontext of the Invitation and our Directors have no knowledge of any proceedings which arepending or threatened against our Company or any of our subsidiaries or of any facts likely to giverise to any litigation, claims or proceedings which might materially affect the position or thebusiness of our Company or our Group in the context of the Invitation:-

A demand was made against PFT by Cermar Enterprise Pte Ltd (“CEPL”), a sub-contractor ofPFT, for the sum of $716,784.64 by way of a letter of demand dated 28 March 2000 for work doneand services rendered by CEPL to PFT. As no particulars of the claim was disclosed in the letterof demand, our Company does not know the basis for arriving at the full amount of the claim. Weare currently seeking legal advice in relation to the claim made by CEPL and have instructed ourlawyers to request for full particulars of the claim. However, in the worst case scenario, ourDirectors are of the opinion that our maximum exposure will be approximately $352,000 and thisamount is not material as it constitutes less than 5% of our estimated profit after tax of $11.4million for FY1999.

MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS

27. (i) Pursuant to the Management and Underwriting Agreement dated 4 April 2000 (the“Management and Underwriting Agreement”) made between (1) our Company, (2) ourVendors and (3) OUB, our Company and our Vendors appointed OUB to manage theInvitation and underwrite the Offer Shares.

(ii) OUB will receive a management fee from our Company for its services rendered inconnection with the Invitation.

(iii) Pursuant to the Management and Underwriting Agreement, the Underwriter agreed tounderwrite the Offer Shares for an underwriting commission of 1.25 per cent. of the IssuePrice for each Offer Share, payable by our Company and our Vendors, in the proportion inwhich the number of Invitation Shares offered by each of them pursuant to the Invitationbears to the total number of Invitation Shares, for subscribing for or procuring subscribersfor any Offer Shares not subscribed for by the public pursuant to the Invitation and will payor procure payment to our Company and our Vendors for such Offer Shares.

(iv) Pursuant to the Placement Agreement dated 4 April 2000 (the “Placement Agreement”)entered into between (1) our Company (2) our Vendors and (3) OUB, OUB agreed tosubscribe for or procure subscribers for the Placement Shares for a placement commissionof 1.25 per cent. of the Issue Price for each Placement Share.

(v) Brokerage will be paid by our Company and our Vendors on the Invitation Shares to themembers of the SGX-ST, merchant banks and members of the Association of Banks inSingapore (including the Underwriter and the Placement Agent) at the rate of 1.0 per cent.of the Issue Price for each Invitation Share in respect of successful applications made onApplication Forms bearing their respective stamps or to the Participating Banks in respect ofsuccessful Electronic Applications made at their respective ATMs.

(vi) Save as aforesaid, no commission, discount or brokerage has been paid or other specialterms granted within the two years preceding the date of this Prospectus or is payable toany Director, promoter, expert, proposed director or any other person for subscribing oragreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in ordebentures of our Company or any of our subsidiaries.

(vii) The Management and Underwriting Agreement may be terminated by the Underwriter atany time before the close of the Application List on the occurrence of certain eventsincluding, inter alia, any change or prospective changes in the political, financial, industrial,economic, legal or monetary conditions in Singapore or internationally which would in theopinion of the Underwriter, inter alia, be likely to result in a material adverse fluctuation oradverse conditions in the stock market in Singapore or prejudice the success of theInvitation.


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(viii) The Placement Agreement is conditional upon the Management and UnderwritingAgreement not having been terminated or rescinded pursuant to the provisions of theManagement and Underwriting Agreement.

(ix) In the event the Management and Underwriting Agreement is terminated, our Company andour Vendors reserve the right, at their absolute discretion, to cancel the Invitation.

MISCELLANEOUS

28. The nature of the business of our Company is stated on pages 28 to 36 of this Prospectus. As atthe date of this Prospectus, the companies which are deemed to be related to our Company byvirtue of Section 6 of the Act are the subsidiaries of our Company as set out in the Accountants’Report on page 67 of this Prospectus.

29. The time of opening of the Application List is set out on page 9 of this Prospectus.

30. The amount payable on application is $0.20 for each Invitation Share. There has been no previousissue of Shares by our Company or offer for subscription of its Shares to the public within the twoyears preceding the date of this Prospectus.

31. Application moneys received by our Company and our Vendors in respect of successful applications(including successfully balloted applications which are subsequently rejected) will be placed in aseparate non-interest bearing account with OUB (the “Receiving Bank”). In the ordinary course ofbusiness, the Receiving Bank will deploy these moneys in the inter-bank money market. Pursuantto the agreement constituted by a letter dated 3 April 2000 from the Receiving Bank, ourCompany, our Vendors and the Receiving Bank have agreed that our Company and our Vendorswill collectively receive for our own accounts a 50.0 per cent. share of any net revenue in excessof $100,000 earned by the Receiving Bank from the deployment of such moneys in the inter-bankmoney market. Any refund of all or part of the application moneys to unsuccessful or partiallysuccessful Applicants will be made without any interest or share of revenue or other benefit arisingtherefrom.

32. Save as disclosed on page 11 of this Prospectus, no property has been purchased or acquired orproposed to be purchased or acquired by our Group which is to be paid for, wholly or partly, out ofthe proceeds of the Invitation or the purchase or acquisition of which has not been completed atthe date of this Prospectus, other than property the contract for the purchase or acquisitionwhereof was entered into in the ordinary course of business of our Company or our subsidiaries,such contract not being made in contemplation of the Invitation nor the Invitation in consequenceof the contract.

33. The estimate of the preliminary expenses is approximately $34,000. The expenses in connectionwith the Invitation, including underwriting commission, placement commission, brokerage,management fee and other expenses in relation to the Invitation, are approximately $1.4 million.The underwriting commission, placement commission and brokerage, are payable by ourCompany and our Vendors, in the proportion in which the number of Invitation Shares offered byeach of them pursuant to the Invitation bears to the total number of Invitation Shares. The rest ofthe expenses in connection in the Invitation, including the management fee, are payable by ourCompany.

34. No amount, benefit, cash or securities has been paid or given to any promoter within the two yearspreceding the date of this Prospectus or is proposed or intended to be paid or given to anypromoter.

35. Our Directors are not aware of any material information, including trading factors or risks, whichare not mentioned elsewhere in this Prospectus and which are unlikely to be known or anticipatedby the general public and which could materially affect the profits of our Company or our Group.


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36. Save as disclosed in this Prospectus, the financial condition and operations of our Group are notlikely to be affected by any of the following:-

(i) known trends, demands, commitments, events or uncertainties that will result in or that arereasonably likely to result in our Group’s liquidity increasing or decreasing in any material way;

(ii) material commitments for capital expenditure;

(iii) unusual or infrequent events or transactions or significant economic changes that willmaterially affect the amount of reported income from operations; or

(iv) known trends or uncertainties that have had or that our Group reasonably expects will have amaterial favourable or unfavourable impact on revenues or operating income.

37. No Shares will be allotted on the basis of this Prospectus later than six months after the date ofthis Prospectus.

CONSENTS

38. (i) The Auditors and Reporting Accountants have given and have not withdrawn their writtenconsent to the issue of this Prospectus with the inclusion herein of and references to theirname and the Accountants’ Report in the form and context in which they, respectively, appearin this Prospectus and to act in such capacity in relation to this Prospectus.

(ii) The Manager, the Underwriter, the Placement Agent, the Solicitors to the Invitation, thePrincipal Bankers and the Share Registrar have each given and have not withdrawn theirrespective written consents to the issue of this Prospectus with the references to theirrespective names in the form and context in which they, respectively, appear in thisProspectus and to act in such respective capacities in relation to this Prospectus.

(iii) The Valuers have given and have not withdrawn their written consent to the issue of theProspectus with the inclusion herein of their Valuers’ Report in the form and context in whichit is included and references to their name and the Valuers’ Report in the form and context inwhich they respectively appear in this Prospectus and to act in such capacity in relation tothis Prospectus.

STATEMENT BY THE MANAGER

39. The Manager acknowledges that, to the best of its knowledge and belief and based on informationmade available to it by our Group, this Prospectus constitutes full and true disclosure of allmaterial facts about the Invitation, our Company and our subsidiaries and is not aware of any factsthe omission of which would make any statements herein misleading. It is also satisfied that theconsolidated profit estimate for the financial year ended 31 December 1999 has been stated byour Directors after due and careful enquiry.

RESPONSIBILITY STATEMENT BY OUR DIRECTORS

40. This Prospectus has been seen and approved by our Directors and each of our Directorsindividually and collectively accept full responsibility for the accuracy of the information given inthis Prospectus and confirm, having made all reasonable enquiries, that to the best of ourknowledge and belief, there are no other material facts the omission of which would make anystatement herein misleading and that this Prospectus constitutes full and true disclosure of allmaterial facts about the Invitation, our Company and our subsidiaries. Our Directors also confirmthat the consolidated profit estimate for the financial year ended 31 December 1999 has beenstated after due and careful enquiry.


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DOCUMENTS FOR INSPECTION

41. Copies of the following documents may be inspected at the registered office of our Companyduring normal business hours for a period of six months from the date of this Prospectus:-

(i) the Memorandum and Articles of Association of our Company;

(ii) the Accountants’ Report as set out on pages 65 to 85 of this Prospectus and the statementof adjustments;

(iii) the Directors’ Report as set out on page 64 of this Prospectus;

(iv) the Service Agreements referred to on pages 60 to 61 of this Prospectus;

(v) the material contracts (except for item (xi)) referred to in paragraph 25 on pages 107 to 108of this Prospectus;

(vi) the letters of consent referred to in paragraph 38 on page 111 of this Prospectus;

(vii) the audited accounts of our Company and our Subsidiaries for FY1997, FY1998 and the 10months ended 31 October 1999; and

(viii) valuation reports.


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APPENDIX A

PROCEDURES FOR APPLICATION AND ACCEPTANCE

You are invited for the subscription of and/or purchase of the Invitation Shares at the Issue Price subjectto the following terms and conditions:-

1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 INVITATION SHARES AND INTEGRALMULTIPLES THEREOF. YOUR APPLICATIONS FOR ANY OTHER NUMBER OF INVITATIONSHARES WILL BE REJECTED.

2. Your applications for Offer Shares may be made by way of Offer Shares Application Forms or byway of Electronic Applications through ATMs belonging to the Participating Banks (“ATM ElectronicApplications”) or through Internet Banking (“IB”) websites of the relevant Participation Banks(“Internet Electronic Applications”, which together with ATM Electronic Applications, shall bereferred to as “Electronic Applications”). Your application for the Placement Shares may only bemade by way of Placement Shares Application Form. Your applications for Reserved Shares mayonly be made by way of Reserved Shares Application Forms. YOU MAY NOT USE YOUR CPFFUNDS TO APPLY FOR THE INVITATION SHARES.

3. You are allowed to submit only one application in your own name for the Offer Shares. If yousubmit an application for Offer Shares by way of an Application Form, you MAY NOT submitanother application for Offer Shares by way of an Electronic Application and vice versa. Suchseparate applications shall be deemed to be multiple applications and shall be rejected.

If you (being other than an approved nominee company), have submitted an application forOffer Shares in your own name, you should not submit any other application for OfferShares, whether by way of an Application Form or by way of an Electronic Application, forany other person. Such separate applications shall be deemed to be multiple applicationsand shall be rejected.

If you have made an application for Placement Shares (other than Reserved Shares), youshould not make any application for Offer Shares either by way of an Application Form or byway of an Electronic Application and vice versa. Such separate applications shall bedeemed to be multiple applications and shall be rejected.

Conversely, if you have made an application for Offer Shares either by way of an ElectronicApplication or by way of an Application Form, you may not make any application forPlacement Shares (other than Reserved Shares). Such separate applications shall be deemedto be a multiple application and shall be rejected.

If you have made an application for Reserved Shares, you may submit one separateapplication for the Offer Shares in your own name by way of an Application Form or by wayof an Electronic Application or submit one separate application for Placement Shares(other than Reserved Shares), provided that you adhere to the terms and conditions of thisProspectus. Such separate applications shall not be treated as multiple applications.

Joint applications shall be rejected. Multiple applications for Invitation Shares shall berejected. If you submit or procure submissions of multiple share applications (whether forOffer Shares, Placement Shares or both Offer Shares and Placement Shares), you may bedeemed to have committed an offence under the Penal Code, Chapter 224 of Singapore andthe Securities Industry Act, Chapter 289 of Singapore, and your applications may bereferred to the relevant authorities for investigation. Multiple applications or thoseappearing to be or suspected of being multiple applications will be liable to be rejected atthe discretion of our Company and our Vendors.


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4. We will not accept applications from any person under the age of 21 years, undischargedbankrupts, sole-proprietorships, partnerships, chops or non-corporate bodies, joint SecuritiesAccount holders of CDP and from Applicants whose addresses (furnished in their ApplicationForms or, in the case of Electronic Applications, contained in the records of the relevantParticipating Banks) bear post office box numbers.

5. We will not recognise the existence of a trust. Any application by a trustee or trustees must bemade in his/their own name(s) and without qualification or, where the application is made by way ofan Application Form, in the name(s) of an approved nominee company or approved nomineecompanies after complying with paragraph 6 below.

6. WE WILL ONLY ACCEPT NOMINEE APPLICATIONS FROM APPROVED NOMINEECOMPANIES. Approved nominee companies are defined as banks, merchant banks, financecompanies, insurance companies, licensed securities dealers in Singapore and nominee companiescontrolled by them. Applications made by nominees other than approved nominee companies shallbe rejected.

7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIESACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do nothave an existing Securities Account with CDP in your own name at the time of your application,your application will be rejected (if you apply by way of an Application Form), or you will not be ableto complete your Electronic Application (if you apply by way of an Electronic Application). If youhave an existing Securities Account but fails to provide your Securities Account number or whoprovides an incorrect Securities Account number in Section B of the Application Form or in yourElectronic Application, as the case may be, your application is liable be rejected. Subject toparagraph 8 below, your application shall be rejected if your particulars such as name, NRIC/passport number, nationality and permanent residence status provided in your Application Form orin the records of the relevant Participating Bank at the time of your Electronic Application, as thecase may be, differ from those particulars in your Securities Account as maintained with CDP. Ifyou have more than one individual direct Securities Account with CDP, your application shall berejected.

8. If your address as stated in the Application Form or, in the case of an ElectronicApplication, in the records of the relevant Participating Bank, as the case may be, isdifferent from the address registered with CDP, you must inform CDP of your updatedaddress promptly, failing which the notification letter on successful allotment and/orallocation will be sent to your address last registered with CDP.

9. Our Company and our Vendors reserve the right to reject any application which does notconform strictly to the instructions set out in the Application Form and in this Prospectus orwhich does not comply with the instructions for Electronic Applications or with the termsand conditions of this Prospectus or, in the case of an application by way of an ApplicationForm, which is illegible, incomplete, incorrectly completed or which is accompanied by animproperly drawn remittance. Our Company and our Vendors further reserve the right to treatas valid any applications not completed or submitted or effected in all respects inaccordance with the instructions set out in the Application Forms or the instructions forElectronic Applications or the terms and conditions of this Prospectus, the instructions setout in the Application Forms or the instructions for Electronic Applications and also topresent for payment or other processes all remittances at any time after receipt and to havefull access to all information relating to, or deriving from, such remittances or the processingthereof.

10. Our Company and our Vendors reserve the right to reject or to accept, in whole or in part, or to scaledown or to ballot any application, without assigning any reason therefor, and we will not entertainany enquiry and/or correspondence on the decision of our Company and our Vendors will beentertained. This right applies to applications made by way of Application Forms and by way ofElectronic Applications. In deciding the basis of allotment and/or allocation, our Company and ourVendors will give due consideration will be given to the desirability of allotting and/or allocating theInvitation Shares to a reasonable number of Applicants with a view to establishing an adequatemarket for the Shares.


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11. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It isexpected that CDP will send to you, at your own risk, within 15 Market Days after the close of theApplication List, a statement of account stating that your Securities Account has been credited withthe number of Invitation Shares allotted and/or allocated to you. This will be the onlyacknowledgement of application moneys received and is not an acknowledgement by our Companyor our Vendors. You irrevocably authorise CDP to complete and sign on your behalf as transferee orrenouncee any instrument of transfer and/or other documents required for the issue or transfer of theInvitation Shares allotted and/or allocated to you. This authorisation applies to applications madeby way of printed Application Forms and by way of Electronic Applications.

12. In the event of an under-subscription for Offer Shares as at the close of the Application List, we willmake available that number of Offer Shares under-subscribed to satisfy applications for PlacementShares to the extent that there is an over-subscription for Placement Shares as at the close of theApplication List.

We will make available any of the Reserved Shares not taken up by our independent Director,employees and business associates of our Group to satisfy applications for the Placement Sharesto the extent that there is an over-subscription for the Placement Shares.

In the event of an under-subscription for Placement Shares as at the close of the Application List,we will make available that number of Placement Shares under-subscribed to satisfy applicationsfor Offer Shares to the extent that there is an over-subscription for Offer Shares as at the close ofthe Application List.

In the event of an over-subscription for Offer Shares as at the close of the Application List andPlacement Shares are fully subscribed or over-subscribed as at the close of the Application List,the successful applications for Offer Shares will be determined by ballot or otherwise as determinedby our Directors and approved by the SGX-ST.

13. You irrevocably authorise CDP to disclose the outcome of your application, including the number ofInvitation Shares allotted and/or allocated to you pursuant to your application, to authorisedoperators.

14. Any reference to “you” or the “Applicant” in this section shall include an individual, a corporation,an approved nominee and trustee applying for the Offer Shares by way of an Application Form orby way of an Electronic Application and a person applying for the Placement Shares through thePlacement Agents.

15. By completing and delivering an Application Form or by making and completing an ElectronicApplication (in the case of an ATM Electronic Application) by pressing the “Enter” or “OK” or“Confirm” or “Yes” key on the ATM (as the case may be) or by (in the case of an Internet ElectronicApplication) clicking “Submit” or “Continue” or “yes” or Confirm” on the IB website screen (as thecase may be) in accordance with the provisions of this Prospectus, you:-

(a) irrevocably offers to subscribe for and/or purchase the number of Invitation Shares specifiedin your application (or such smaller number for which the application is accepted) at the IssuePrice and agrees that you will accept such Invitation Shares as may be allotted and/orallocated to you, in each case on the terms of, and subject to the conditions set out in, thisProspectus and the Memorandum and Articles of Association of our Company; and

(b) warrants the truth and accuracy of the information provided in your application.

16. Our acceptance of applications will be conditional upon, inter alia, our Company and our Vendorsbeing satisfied that:-

(a) permission has been granted by the SGX-ST to deal in and for quotation for all our existingShares and the New Shares on the Official List of the SGX-ST; and


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(b) the Management and Underwriting Agreement and the Placement Agreement referred to onpage 109 of this Prospectus have become unconditional and have not been terminated.

17. We will not hold any application in reserve.

18. We will not allot and/or allocate Shares on the basis of this Prospectus later than six months afterthe date of this Prospectus.

19. Additional terms and conditions for applications by way of Application Forms are set out on pages116 to 119 of this Prospectus.

20. Additional terms and conditions for applications by way of Electronic Applications are set out onpages 119 to 126 of this Prospectus.

ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS

You shall make an applications by way of an Application Form. Such application shall be made on andsubject to the terms and conditions of this Prospectus including but not limited to the terms andconditions appearing below as well as those set out under the section on “PROCEDURES FORAPPLICATION AND ACCEPTANCE” on pages 113 to 126 of this Prospectus, as well as theMemorandum and Articles of Association of our Company.

1. Your application must be made using the WHITE Application Forms for Offer Shares and the BLUEApplication Forms for Placement Shares (other than Reserved Shares) accompanying and formingpart of this Prospectus. We draw your attention to the detailed instructions contained in therespective Application Forms and this Prospectus for the completion of the Application Forms whichmust be carefully followed. Our Company and our Vendors reserves the right to rejectapplications which do not conform strictly to the instructions set out in the ApplicationForms and this Prospectus or to the terms and conditions of this Prospectus or which areillegible, incomplete, incorrectly completed or which are accompanied by improperly drawnremittances.

2. You must complete your Application Forms in English. Please type or write clearly in ink usingBLOCK LETTERS.

3. You must complete all spaces in your Application Forms except those under the heading “FOROFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.” should bewritten in any space that is not applicable.

4. Individuals, corporations, approved nominee companies and trustees must give their names in full.If you are an individual, you must make your application using your full name as it appears in youridentity card (if you have such an identification document) or in your passports and, in the case ofcorporations, in your full names as registered with a competent authority. If you are not anindividual, you must complete the Application Form under the hand of an official who must state thename and capacity in which he signs the Application Form. If you are a corporation completingthe Application Form, you are required to affix your Common Seal (if any) in accordance with yourMemorandum and Articles of Association or equivalent constitutive documents of the corporation. Ifyou are a corporate Applicant and your application is successful, a copy of your Memorandumand Articles of Association or equivalent constitutive documents must be lodged with ourCompany’s Share Registrar and Share Transfer Office. Our Company and our Vendors reserve theright to require you to produce documentary proof of identification for verification purposes.

5. (a) You must complete page 1, and Sections A and B of the Application Forms.

(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Forms.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formswith particulars of the beneficial owner(s).

(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, onpage 1 of the Application Form, your application is liable to be rejected.


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6. You (whether a an individual or a corporate Applicant, whether incorporated or unincorporated andwherever incorporated or constituted), will be required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore have an interest in theaggregate of more than 50 per cent. of the issued share capital of or interests in such corporations.If you are an approved nominee company, you are required to declare whether the beneficial ownerof the Invitation Shares is a citizen or permanent resident of Singapore or a corporation, whetherincorporated or unincorporated and wherever incorporated or constituted, in which citizens orpermanent residents of Singapore or any body corporate whether incorporated or unincorporated andwherever incorporated or constituted under any statute of Singapore have an interest in theaggregate of more than 50 per cent. 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 amountpayable, in respect of the number of Invitation Shares applied for, in the form of a BANKER’SDRAFT or CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “HOR KEWSHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, with your name and address of theApplicant written clearly on the reverse side. We will not accept applications accompanied by ANYOTHER FORM OF PAYMENT WILL NOT BE ACCEPTED. We will reject remittances bearing “NOTTRANSFERABLE” or “NON TRANSFERABLE” crossings shall be rejected. No acknowledgement orreceipt will be issued by our Company, our Vendors or our Managers for applications and applicationmoneys received.

8. Unsuccessful applications are expected to be returned (without interest or any share of revenue orother benefit arising therefrom) to you by ordinary post within three Market Days after the close ofthe Application List at your own risk. Where your application is rejected or accepted in part only, thefull amount or the balance of the application moneys, as the case may be, will be refunded (withoutinterest or any share of revenue or other benefit arising therefrom) to you by ordinary post at yourown risk within 14 days after the close of the Application List.

9. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear themeanings assigned to them in this Prospectus.

10. By completing and delivering the Application Form, you agree that:-

(a) in consideration of our Company and our Vendors having distributed the Application Form toyou and agreeing to close the Application List at 12.00 noon on 12 April 2000 or such othertime or date as our Directors and our Vendors may, in consultation with the Manager, decideand by completing and delivering the Application Form, you agree that:-

(i) your application is irrevocable; and

(ii) your remittance will be honoured on first presentation and that any moneys returnablemay be held pending clearance of your payment without interest or any share of revenueor other benefit arising therefrom;

(b) all applications, acceptances and contracts resulting therefrom under the Invitation shall begoverned by and construed in accordance with the laws of Singapore and that you irrevocablysubmits to the non-exclusive jurisdiction of the Singapore courts;

(c) in respect of the Invitation Shares for which your application has been received and notrejected, acceptance of your application shall be constituted by written notification and nototherwise, notwithstanding any remittance being presented for payment by or on behalf of ourCompany and our Vendors; and

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at any timeafter acceptance of your application.


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Applications For Offer Shares

1. Your application for Offer Shares MUST be made using the WHITE Offer Shares ApplicationForms and BROWN official envelopes “A” and “B”.

2. You must:-

(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together withyour remittance in the BROWN envelope “A” provided;

(b) in the appropriate spaces on BROWN envelope “A”:-

(i) write your name and address;

(ii) state the number of Offer Shares applied for; and

(iii) affix adequate Singapore postage;

(c) SEAL BROWN ENVELOPE “A”;

(d) write, in the special box provided on the larger BROWN envelope “B” addressed toOVERSEAS UNION BANK LIMITED, 1 RAFFLES PLACE, OUB CENTRE, SINGAPORE048616, the number of Offer Shares you have applied for; and

(e) insert BROWN envelope “A” into BROWN envelope “B”, seal BROWN envelope “B” andthereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk toOVERSEAS UNION BANK LIMITED, 1 RAFFLES PLACE, OUB CENTRE, SINGAPORE048616, to arrive by 12.00 noon on 12 April 2000 or such other time as our Companymay, in consultation with OUB, decide. Local Urgent Mail or Registered Post must NOTbe used. No acknowledgement of receipt will be issued for any application or remittancereceived.

3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances are liable to be rejected.

4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receiptwill be issued for any application or remittance received.

Applications for Placement Shares (other than Reserved Shares)

1. Your application for Placement Shares (other than Reserved Shares) must be made using theBLUE Placement Shares Application Forms.

2. The completed BLUE Placement Shares Application Form and your remittance with your nameand address written clearly on the reverse side, must be enclosed and sealed in an envelope tobe provided by you. The sealed envelope must be DESPATCHED BY ORDINARY POST ORDELIVERED BY HAND at your own risk to OVERSEAS UNION BANK LIMITED, 1 RAFFLESPLACE, OUB CENTRE, SINGAPORE 048616, to arrive by 12.00 noon on 12 April 2000 orsuch other time as our Company may, in consultation with OUB, decide. Local Urgent Mailor Registered Post must NOT be used. No acknowledgement of receipt will be issued for anyapplication or remittance received.


4. Alternatively, you may remit his application moneys by electronic transfer to the account ofOverseas Union Bank Limited, Account No. 89-43426-2, in favour of “HOR KEW SHARE ISSUEACCOUNT” for the number of Placement Shares applied for. If you remit your application moneysvia electronic transfer, you should fax and send a copy of the remittance advice to OverseasUnion Bank Limited at fax no. 534 2232/438 1175 for the attention of Corporate FinanceDepartment.


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Applications for Reserved Shares

1. Your application for Reserved Shares must be made using the PINK Reserved Shares ApplicationForms.

2. The completed PINK Reserved Shares Application Form and your remittance with your name andaddress written clearly on the reverse side, must be enclosed and sealed in an envelope to beprovided by you. The sealed envelope must be DESPATCHED BY ORDINARY POST ORDELIVERED BY HAND at your own risk to our Company at 66 Sungei Kadut Street 1Singapore 729367, to arrive by 12.00 noon on 12 April 2000 or such other time as ourCompany may, in consultation with OUB, decide. Local Urgent Mail or Registered Postmust NOT be used. No acknowledgement of receipt will be issued for any application orremittance received.


ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS

The procedures for Electronic Applications at ATMs are set out on the ATM screens of the relevantParticipating Banks (in the case of ATM Electronic Applications) and the IB website screens (in thecase of Internet Electronic Applications) of the relevant Participating Banks. Currently, DBS and OUBare the only Participating Banks through which Internet Electronic Applications can be made. Forillustration purposes, the procedures for Electronic Applications through ATMs of OUB and the IBwebsite of OUB are set out respectively in the “Steps for Electronic Applications” and the “Steps forInternet Electronic Applications through the IB website of OUB” (the “Steps”) appearing on pages 125to 126 of this Prospectus. The Steps set out the actions that you must take at an ATM or the IB websiteof OUB to complete an Electronic Application. Please read carefully the terms of this Prospectus, theSteps and the terms and conditions for Electronic Applications set out below before making anElectronic Application. Any reference to “you” or the “Applicant” in the additional terms and conditionsfor Electronic Applications and the Steps shall refer to you making an application for Offer Sharesthrough an ATM or the IB website of a relevant Participating Bank.

You must have an existing bank account with and be an ATM cardholder of one of the ParticipatingBanks before you can make an Electronic Application at the ATMs. An ATM card issued by oneParticipating Bank cannot be used to apply for Offer Shares at an ATM belonging to other ParticipatingBanks. For an Internet Electronic Application, you must have an existing bank account with and a UserIdentification (“User ID”) and a Personal Identification Number/Password given by a relevantParticipating Bank. The Steps set out the actions that you must take at ATMs or the IB website of OUBto complete an Electronic Application. The actions that you must take at ATMs or the IB websites ofother Participating Banks are set out on the ATM screens or the IB website screens of the relevantParticipating Banks. Upon the completion of your ATM Electronic Application transaction, you will receivean ATM transaction slip (“Transaction Record”), confirming the details of your Electronic Application.Upon completion of your Internet Electronic Application, there will be an on-screen confirmation(“Confirmation Screen”) of the application which can be printed out for your record. The TransactionRecord or your printed record of the Confirmation Screen is for your retention and should not besubmitted with any Application Form.

You must ensure that you enter your own Securities Account number when using the ATM cardissued to you in your own name. If you fail to use your own ATM card or do not key in your ownSecurities Account number, your application will be rejected. If you operate a joint bank accountwith any of the Participating Banks, you must ensure that you enter your own SecuritiesAccount number when using the ATM card issued to you in your own name. Using your ownSecurities Account number with an ATM card which is not issued to you in your own name willrender your Electronic Application liable to be rejected.

You must ensure, when making an Internet Electronic Application, that your mailing address is inSingapore and you will be asked to declare accordingly. Otherwise, your application is liable to berejected.


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You shall an Electronic Application shall be made on the terms and subject to the conditions of thisProspectus including but not limited to the terms and conditions appearing below and those set outunder the section on “PROCEDURES FOR APPLICATION AND ACCEPTANCE” on pages 113 to 126of this Prospectus as well as the Memorandum and Articles of Association of our Company.

1. In connection with your Electronic Application for Offer Shares, you are required to confirmstatements to the following effect in the course of activating the ATM for your ElectronicApplication:-

(a) that you have received a copy of this Prospectus (in the case of ATM ElectronicApplications only) and have read, understood and agreed to all the terms andconditions of application for Offer Shares and this Prospectus prior to effecting theElectronic Application and agrees to be bound by the same;

(b) that you consent to the disclosure of your name, NRIC/passport number, address,nationality, permanent resident status, CDP Securities Account number, and shareapplication amount (the “Relevant Particulars”) from your account with the relevantParticipating Bank to our Share Registrar, CDP, SCCS, our Company, our Vendors andour Managers (the “Relevant Parties”); and

(c) that this is your only application for Offer Shares and it is made in your own name andat your own risk.

Your application will not be successfully completed and cannot be recorded as a completedtransaction in the ATM unless you press the “Enter” or “Confirm” or “Yes” key in the ATM or click“Confirm” or “OK” on the IB website screen. By doing so, you signify your confirmation of each ofthe above three statements. In respect of statement 1(b) above, your confirmation, by pressing the“Enter” or “Confirm” or “Yes” key, shall signify and shall be treated as your written permission, givenin accordance with the relevant laws of Singapore including Section 47(4) of the Banking Act(Chapter 19) of Singapore to the disclosure by the relevant Participating Bank of the RelevantParticulars to the Relevant Parties.

2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOTAPPLYING FOR OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANYELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOUAS BENEFICIAL OWNER.

YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION AND SHOULD NOT MAKE ANYOTHER APPLICATION FOR OFFER SHARES, WHETHER AT THE ATMS OR THE IBWEBSITES (IF ANY) OF ANY PARTICIPATING BANK OR ON THE APPLICATION FORMS.

3. You must have sufficient funds in your bank account with your Participating Bank at the time youmake your Electronic Application, failing which your Electronic Application will not be completed.Any Electronic Application which does not conform strictly to the instructions set out in thisProspectus or on the screens of the ATM or the IB website through which your ElectronicApplication is being made shall be rejected.

You may make an ATM Electronic Application at the ATM of any Participating Bank or an InternetElectronic Application at the IB website of a relevant Participating Bank for Offer Shares usingcash only by authorising such Participating Bank to deduct the full amount payable from hisaccount with such Participating Bank.

4. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Sharesapplied for as stated on the Transaction Record or the Confirmation Screen or any lesser numberof Offer Shares that may be allotted and/or allocated to you in respect of your ElectronicApplication. In the event that our Company and our Vendors decide to allot and/or allocate anylesser number of such Offer Shares or not to allot and/or allocate any Offer Shares to you, youagree to accept such decision as final. If your Electronic Application is successful, your


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confirmation (by your action of pressing the “Enter” or “Confirm” or “Yes” key on the ATM orclicking “Confirm” or “OK” on the IB website screen) of the number of Offer Shares applied forshall signify and shall be treated as your acceptance of the number of Offer Shares that may beallotted and/or allocated to you and your agreement to be bound by the Memorandum and Articlesof Association of our Company.

5. We will not keep any application in reserve. Where your Electronic Application is unsuccessful,the full amount of the application moneys will be refunded (without interest or any share ofrevenue or other benefit arising therefrom) to you by being automatically credited to your accountwith your Participating Bank within three Market Days after the close of the Application List.Trading on a “WHEN ISSUED” basis, if applicable, is expected to commence after suchrefund has been made.

Where your Electronic Application is rejected or accepted in part only, the full amount or the balanceof the application moneys, as the case may be, will be refunded (without interest or any share ofrevenue or other benefit arising therefrom) to you by being automatically credited to your accountwith your Participating Bank within 14 days after the close of the Application List.

Responsibility for timely refund of application moneys from Electronic Applications liessolely with the respective Participating Banks. Therefore, you are strongly advised to consultyour Participating Bank as to the status of your Electronic Application and/or the refund ofany moneys to you from unsuccessful or partially successful Electronic Application, todetermine the exact number of Offer Shares allotted and/or allocated to you before tradingthe Offer Shares on the SGX-ST. Neither the SGX-ST, the CDP, the SCCS, the ParticipatingBanks, our Company, our Vendors or our Managers assume any responsibility for any lossthat may be incurred as a result of you having to cover any net sell positions or from buy-in procedures activated by the SGX-ST.

6. If your ATM Electronic Application is made through the ATMs of Keppel TatLee Bank Limited or theUOB Group, and is unsuccessful, it is expected that a computer generated notice will be sent toyou by your Participating Bank (at your address as stated in the records of such ParticipatingBank as at the date of your ATM Electronic Application) by ordinary post at your own risk withinthree Market Days after the close of the Application List.

If your ATM Electronic Application is made through the ATMs of DBS (including its POSBankServices division), the OCBC Group or OUB, and is unsuccessful, no notification will be sent bysuch Participating Bank.

If your Internet Electronic Application made through the IB website of OUB or DBS isunsuccessful, no notification will be sent by such Participating Bank.


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If you who make ATM Electronic Applications through the ATMs of the following banks, you maycheck the results of your Electronic Applications as follows:-

Available atBank Telephone ATM Operating Hours Service expected from

DBS 1800 222 2222/ Internet Banking 24 hours a day 7 p.m. on the balloting day327 4767 or Internet Kiosk

Keppel TatLee 222 8228 ATM ATM - 24 hours a day ATM - Evening of theBank Limited balloting day

Phone Banking - Phone Banking -Mon-Fri 0800-2200 8 a.m. on the daySat 0800-1500 after the balloting day

OCBC 1800 363 3333 ATM ATM / Phone Banking - Evening of the balloting day24 hours a day

OUB 1800 224 2000 OUB Personal Banking Phone Banking - Evening of the balloting day24 hours a day

www.oub2000.com.sg Internet Banking - Evening of the balloting day24 hours a day

OUB Mobile Buzz OUB Mobile Buzz - Evening of the balloting day24 hours a day

UOB 1800 533 5533/ ATM (Other ATM / Phone Banking 6 p.m. on the balloting day1800 222 2121 Transactions – - 24 hours a day

“IPO Enquiry”)

• If you make your Electronic Application through the ATMs or IB website of OUB and have activated your OUB MobileBuzz services, you will be notified of the results of your Electronic Applications via your mobile phones.

• If you make your Internet Electronic Application through the IB website of OUB or DBS, you may check the resultthrough the same channels listed in the table above in relation to ATM Electronic Applications made at ATMs of OUBor DBS.

7. Electronic Applications shall close at 12.00 noon on 12 April 2000 or such other time as ourCompany may, in consultation with OUB, decide. An Internet Electronic Application is deemed tobe received only upon its completion, that is, when there is an on-screen confirmation of theapplication.

8. You are deemed to have irrevocably requested and authorised our Company and our Vendors to:-

(a) register the Offer Shares allotted and/or allocated to you in the name of CDP for deposit intoyour Securities Account;

(b) send the relevant Share certificate(s) to CDP;

(c) return or refund (without interest or any share of revenue earned or other benefit arisingtherefrom) the application moneys, should your Electronic Application be rejected, byautomatically crediting your bank account with your Participating Bank with the relevantamount within three Market Days after the close of the Application List; and

(d) return or refund (without interest or any share of revenue or other benefit arising therefrom)the balance of the application moneys, should your Electronic Application be accepted in partonly, by automatically crediting your bank account with your Participating Bank with therelevant amount within 14 days after the close of the Application List.


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9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God andother events beyond the control of the Participating Banks and if, in any such event, our Company,our Vendors, our Managers and/or the relevant Participating Bank do not receive the Applicant’sElectronic Application, or data relating to your Electronic Application is lost, corrupted or nototherwise accessible, whether wholly or partially for whatever reason, you shall be deemed not tohave made an Electronic Application and you shall have no claim whatsoever against our Company,our Vendors, our Managers and/or the relevant Participating Bank for Offer Shares applied for or forany compensation, loss or damage.

10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must bemade in his own name and without qualification. Our Company and our Vendors will reject anyapplication by any person acting as nominee.

11. All your particulars in the records of your Participating Bank at the time you make your ElectronicApplication shall be deemed to be true and correct and your Participating Bank and the RelevantParties shall be entitled to rely on the accuracy thereof. If there has been any change in yourparticulars after making your Electronic Application, you shall promptly notify your ParticipatingBank.

12. You should ensure that your personal particulars as recorded by both CDP and the relevantParticipating Bank are correct and identical, otherwise, your Electronic Application is liableto be rejected. You should promptly inform CDP of any change in address, failing which thenotification letter on successful allotment and/or allocation will be sent to your address lastregistered with CDP.

13. By making and completing an Electronic Application, you are deemed to have agreed that:-

(a) in consideration of our Company and our Vendors making available the Electronic Applicationfacility, through the Participating Banks acting as agents of our Company and our Vendors, atthe ATMs and the IB websites (if any):-

(i) your Electronic Application is irrevocable; and

(ii) your Electronic Application, the acceptance by our Company and our Vendors and thecontract resulting therefrom under the Invitation shall be governed by and construed inaccordance with the laws of Singapore and he irrevocably submits to the non-exclusivejurisdiction of the Singapore courts;

(b) none of our Company, our Vendors, our Managers or the Participating Banks shall be liable forany delays, failures or inaccuracies in the recording, storage or in the transmission or deliveryof data relating to your Electronic Application to our Company, our Vendors or CDP due tobreakdowns or failure of transmission, delivery or communication facilities or any risks referredto in paragraph 9 above or to any cause beyond their respective controls;

(c) in respect of Offer Shares for which your Electronic Application has been successfullycompleted and not rejected, acceptance of your Electronic Application shall be constituted bywritten notification by or on behalf of our Company and our Vendors and not otherwise,notwithstanding any payment received by or on behalf of our Company and our Vendors;

(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at any timeafter acceptance of your application; and

(e) in respect of the Offer Shares for which his Electronic Application has been successfullycompleted and not rejected, acceptance of the applicant’s Electronic Application shall beconstituted by written notification by or on behalf of the Company and not otherwise,notwithstanding any payment received by or on behalf of the Company.


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Steps for Electronic Applications through ATMs and the IB website of OUB

The instructions for Electronic Applications will appear on the ATM screens and the IB website screens.For illustration purposes, the steps for making an Electronic Application through an ATM belonging toOUB or through the IB website of OUB are shown below. Instructions for Electronic Applications onthe ATM screens and the IB website screens (if any) of the Participating Banks, other than OUB, maydiffer from those represented below.

Owing to space constraints on OUB’s ATM screen, the following terms will appear in abbreviated form:-

“&” : and

“A/C” : Account


“CDP A/C” : CDP Account

“CPF” : The Central Provident Fund Board

“CPF Inv A/C” : CPF Investment Account

“Mgrs” : Manager and Co-Manager

“NETS” : Network for Electronic Funds Transfer

“No.” : Number

“NRIC/PP No.” : National Registration Identity Card/Passport Number

“PR” : Permanent Resident

“S$” : Singapore Dollars



Steps for an ATM Electronic Application for Offer Shares

Step 1 : Insert your personal ATM Card

2 : Select Language Choice

3 : Enter your Personal Identification Number

4 : Select “Cash Card / Other Services”

5. : Select “Securities / Unit Trust”

6 : Select “Electronic Share Appl (ESA)”

7 : Select “Hor Kew”

8 : Select the type of bank account to debit your application moneys


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9 : Press the “YES” key to confirm that you have read the following messages:-

- A copy of prospectus/document is available at all participating banks.

- Where applicable, a copy of this prospectus has been lodged with &registered by The Registrar of Companies & Businesses in Singaporewho takes no responsibility for its contents.

10 : Press the “YES” key again to confirm that:-

(1) I have read, understood and agreed to all the terms & conditions of theapplication & prospectus/document.

(2) I consent to the disclosure of my name, NRIC/PP No., nationality, PRstatus, CPF Investment Account, CDP Account and Application detailsto the registrars, CDP, SGX-ST, SCCS, CPF, NETS, Issuer, vendor(s) andlead Manager.

11 : Select “Fixed Price”

12 : Press the “YES” key to confirm that:-

- This is my only application and is made in my name and at my ownrisk.

13 : Select your nationality and permanent resident status

14 : Press the “YES” key to confirm your NRIC/Passport No.

15 : Press the “YES” key to confirm your CDP Securities A/C No. or enter your ownCDP Securities A/C No. (12 digits)

16 : Enter No. of Shares applied for

17 : Check the details of your application on screen and press the “YES” key toconfirm application

18 : Remove the Transaction Record; this is for your reference only

Owing to space constraints on OUB’s IB website screens, the following terms will appear inabbreviated form:-


“CPF” : The Central Provident Fund

“NRIC” : National Registration Identify Card

“PR” : Permanent Resident

“SGD” or “$” : Singapore Dollars




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Steps for an Internet Electronic Application through the IB website of OUB

Step 1 : Click on to OUB website

2 : Login to OUB Personal Internet Banking

3 : Enter your User ID and Password

4 : Select “Investment”

5 : Select “Electronic Securities Application”

6 : Select “IPO”

7 : Click “Yes” to declare that you are in Singapore and have a mailing address inSingapore

8 : Select “HOR KEW”

9 : Click “Yes” to confirm that:-

(1) I have read, understood and agreed to all terms of the application andconditions of the application and prospectus/document;

(2) I consent to disclose my name, NRIC/Passport Number, address,nationality, PR status, CPF Investment account number, CDP securitiesaccount number and application details to the registrars, CDP, SGX-ST,SCCS, CPF, issuer, and vendor(s) and the lead manager;

(3) This application is made in my own name and at my own risk. For Fixedprice securities applications, this is my only application. For Tender pricesecurities applications, this is my only application at the selected price.

10 : For Fixed price securities applications, click “Continue”. For applications forsecurities with Fixed price and Tender price tranches, click “Fixed price” to makea fixed price application and click “Tender price” to make a tender priceapplication.

11 : Fill in details for securities application and click “Continue”

12 : For Fixed price securities applications, enter the quantity of securities appliedfor and click “Continue”. For Tender price securities application, enter tenderprice and quantity of securities applied for and click “Continue”.

13 : Check details for your application, your NRIC/Passport Number, and quantity ofsecurities on the screen and click “Confirm” to confirm your application

14 : Print Confirmation Screen (optional) for your reference and retention only


Documents

HOR KEW CORPORATION LIMITED