THE STRAITS TRADING COMPANY LIMITEDstraitstrading.listedcompany.com/newsroom/20080226... · 2008-02-26 · circular dated 23 february 2008 this circular is issued by the straits trading

CIRCULAR DATED 23 FEBRUARY 2008

THIS CIRCULAR IS ISSUED BY THE STRAITS TRADING COMPANY LIMITED. THIS CIRCULAR ISIMPORTANT AS IT CONTAINS THE RECOMMENDATIONS OF THE INDEPENDENT DIRECTORS OFTHE STRAITS TRADING COMPANY LIMITED AND THE ADVICE OF CIMB-GK SECURITIES PTE.LTD. IN RELATION TO THE FINAL TCPL OFFER (AS DEFINED HEREIN) AND THE REVISED KTIPLOFFER (AS DEFINED HEREIN). THIS CIRCULAR REQUIRES YOUR IMMEDIATE ATTENTION ANDYOU SHOULD READ IT CAREFULLY.

If you are in any doubt in relation to this Circular or as to the action you should take, you should consultyour stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.

If you have sold or transferred all your issued ordinary shares in the capital of The Straits TradingCompany Limited, you should immediately forward this Circular to the purchaser or to the bank,stockbroker or agent through whom you effected the sale for onward transmission to the purchaser.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of anyof the statements made, reports contained or opinions expressed in this Circular.

THE STRAITS TRADING COMPANY LIMITED(Incorporated in Singapore)

(Company Registration Number: 188700008D)

CIRCULAR TO SHAREHOLDERS

in relation to

THE FINAL TCPL OFFER AND THE REVISED KTIPL OFFER

Independent Financial Adviser to the Independent Directors of The Straits Trading Company Limited

CIMB-GK SECURITIES PTE. LTD.(Incorporated in the Republic of Singapore)


SHAREHOLDERS SHOULD NOTE THAT THE SECOND PRICE REVISION ANNOUNCEMENT ON THETCPL OFFER STATES THAT ACCEPTANCES SHOULD BE RECEIVED BY THE CLOSE OF THEFINAL TCPL OFFER AT 5.30 P.M. ON 6 MARCH 2008 AND THAT TCPL DOES NOT INTEND TOEXTEND THE FINAL TCPL OFFER BEYOND 5.30 P.M. ON 6 MARCH 2008 EXCEPT WHERE THEFINAL TCPL OFFER BECOMES UNCONDITIONAL AS TO ACCEPTANCES OR WHERE TCPLINCURS A MANDATORY OFFER OBLIGATION UNDER RULE 14 OF THE CODE DURING THEOFFER PERIOD THROUGH THE ACQUISITION OF SHARES (OTHER THAN PURSUANT TOACCEPTANCES OF THE FINAL TCPL OFFER).

SHAREHOLDERS WHO WISH TO ACCEPT THE FINAL TCPL OFFER MUST DO SO BY 5.30 P.M. ON6 MARCH 2008.

SHAREHOLDERS SHOULD NOTE THAT THE KTIPL OFFER DOCUMENT STATES THATACCEPTANCES SHOULD BE RECEIVED BY THE CLOSE OF THE REVISED KTIPL OFFER AT 5.30P.M. ON 13 MARCH 2008, OR SUCH LATER DATE(S) AS MAY BE ANNOUNCED FROM TIME TOTIME BY OR ON BEHALF OF KTIPL.

SHAREHOLDERS WHO WISH TO ACCEPT THE REVISED KTIPL OFFER MUST DO SO BY 5.30 P.M.ON 13 MARCH 2008, OR SUCH LATER DATE(S) AS MAY BE ANNOUNCED FROM TIME TO TIME BYOR ON BEHALF OF KTIPL.

DEFINITIONS .................................................................................................................................... 1

LETTER TO SHAREHOLDERS

1. INTRODUCTION ...................................................................................................................... 7

2. THE FINAL TCPL OFFER ...................................................................................................... 7

3. THE REVISED KTIPL OFFER ................................................................................................ 8

4. RATIONALE FOR THE KTIPL OFFER AND KTIPL’S FUTURE PLANS FOR THE COMPANY .............................................................................................................................. 10

5. LISTING STATUS AND COMPULSORY ACQUISITION ........................................................ 10

6. INFORMATION ON KTIPL AND LEE LATEX ........................................................................ 11

7. IRREVOCABLE UNDERTAKINGS.......................................................................................... 11

8. ADVICE OF THE IFA .............................................................................................................. 12

9. INDEPENDENT DIRECTORS’ RECOMMENDATIONS .......................................................... 15

10. OVERSEAS SHAREHOLDERS .............................................................................................. 15

11. CPFIS INVESTORS ................................................................................................................ 16

12. ACTION TO BE TAKEN BY SHAREHOLDERS ...................................................................... 16

13. RESPONSIBILITY STATEMENT ............................................................................................ 17

LETTER FROM CIMB-GK TO THE INDEPENDENT DIRECTORS OF THE STRAITS TRADING COMPANY LIMITED ........................................................................................................ 18

APPENDIX 1 - GENERAL INFORMATION .................................................................................. 74

APPENDIX 2 - INFORMATION ON KTIPL AND LEE LATEX ...................................................... 83

APPENDIX 3 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE GROUP FOR FY 2007 ........................................................................................................ 100

CONTENTS

1

Except where the context otherwise requires, the following definitions apply throughout this Circular:

“Act” : Companies Act, Chapter 50 of Singapore

“Annual Report” : The annual report of the Company

“Auditors” or “Ernst & Young” : Ernst & Young, the auditors of the Company

“CDP” : The Central Depository (Pte) Limited

“CPF” : Central Provident Fund

“CPF Agent Banks” : Agent banks included under CPFIS

“CPFIS” : Central Provident Fund Investment Scheme

“CPFIS Investors” : Investors who have purchased Shares using their monies pursuantto the CPFIS

“Circular” : This circular to Shareholders dated 23 February 2008 from theCompany containing the recommendations of the IndependentDirectors and the advice of the IFA to the Independent Directors inrelation to the Final TCPL Offer and the Revised KTIPL Offer

“Code” : The Singapore Code on Take-overs and Mergers

“Company” or “STC” : The Straits Trading Company Limited

“Concert Parties” : Parties acting or presumed to be acting in concert with KTIPL inconnection with the KTIPL Offer

“Concert Party Group” : (i) The directors of KTIPL;

(ii) Lee Latex and its directors and shareholders; and

(iii) certain presumed concert parties of KTIPL, namely,

(a) Selat (Pte) Limited, Island Investment Company(Private) Limited, Lee Plantations (Pte) Ltd, LeeFoundation, Lee Rubber Company (Pte) Limited andSingapore Investments (Pte) Limited (beingcompanies within the Lee Family Companies);

(b) OCBC Bank and its wholly-owned subsidiaries; and

(c) GEH and its wholly-owned subsidiaries

“Condition” : Shall have the meaning ascribed to it in paragraph 3.4 of theCompany’s Letter to Shareholders in this Circular

“Credit Suisse” : Credit Suisse (Singapore) Limited

“Directors” : The directors of the Company as at the Latest Practicable Date

“DTZ” : DTZ Debenham Tie Leung (SEA) Pte Ltd

DEFINITIONS

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“FAs” : Credit Suisse and OCBC Bank, the financial advisers to KTIPL

“Final TCPL Offer” : The final voluntary conditional cash offer by SCB, for and on behalfof TCPL, to acquire all the TCPL Offer Shares on the terms andsubject to the conditions set out in the Final TCPL Offer Letter, theTCPL Offer Document, the TCPL FAA and the TCPL FAT

“Final TCPL Offer Letter” : The letter from TCPL dated 18 February 2008 issued by SCB, forand on behalf of TCPL, to Shareholders, setting out, inter alia, therevisions to the Revised TCPL Offer

“Final TCPL Offer Price” : Shall have the meaning ascribed to it in paragraph 2.1 of theCompany’s Letter to Shareholders in this Circular

“FY” : Financial year ended or ending 31 December

“GEH” : Great Eastern Holdings Limited

“GEH Group” : GEH and its subsidiaries

“Group” or “STC Group” : The Company and its subsidiaries

“IFA” or “CIMB-GK” : CIMB-GK Securities Pte. Ltd., the independent financial adviser tothe Independent Directors

“Independent Directors” : The directors of the Company who consider themselves to beindependent for the purpose of making recommendations toShareholders in respect of the TCPL Offer and the KTIPL Offer,namely, Mr Tang I-Fang, Professor Lim Chong Yah, Mr MichaelHwang, Mr Norman Ip Ka Cheung, Mr Razman Ariffin and MrGerard Ee Hock Kim

“JLL” : Jones Lang LaSalle Hotels

“KTIPL” : Knowledge Two Investment Pte Ltd, a wholly-owned subsidiary ofLee Latex

“KTIPL FAA” : Form of Acceptance and Authorisation for the KTIPL Offer

“KTIPL FAT” : Form of Acceptance and Transfer for the KTIPL Offer

“KTIPL Offer” : The mandatory conditional cash offer by the FAs, for and on behalfof KTIPL, for all the KTIPL Offer Shares on the terms and subjectto the conditions set out in the KTIPL Offer Document, the KTIPLFAA and the KTIPL FAT

“KTIPL Offer Announcement” : Announcement of KTIPL’s intention to make the KTIPL Offer whichwas released on the KTIPL Offer Announcement Date

“KTIPL Offer Announcement : 24 January 2008, being the date on which the KTIPL OfferDate” Announcement was made

“KTIPL Offer Closing Date” : 5.30 p.m. (Singapore time) on 13 March 2008 or such later date(s)as may be announced from time to time by or on behalf of KTIPL,being the last day and time for the lodgement of acceptances forthe Revised KTIPL Offer

DEFINITIONS

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“KTIPL Offer Document” : The document dated 12 February 2008 issued by the FAs, for andon behalf of KTIPL, in respect of the KTIPL Offer

“KTIPL Offer Price” : S$5.76 in cash for each KTIPL Offer Share

“KTIPL Offer Shares” : All the issued Shares other than those already owned or agreed tobe acquired by KTIPL and the Lee Family Companies

“Latest Practicable Date” : 20 February 2008, being the latest practicable date prior to theprinting of this Circular

“Lee Family” : Messrs Lee Seng Gee, Lee Seng Tee and Lee Seng Wee and theirimmediate family members

“Lee Family Companies” : The intermediate companies through which the Lee Family directlyor indirectly has interests in Lee Latex

“Lee Latex” : Lee Latex (Pte) Limited

“Listing Manual” : The SGX-ST Listing Manual

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

“MSC” : Malaysia Smelting Corporation Berhad, a subsidiary of theCompany

“MYR” : Malaysian Ringgit, being the lawful currency of Malaysia

“OCBC Bank” : Oversea-Chinese Banking Corporation Limited, a substantialshareholder of the Company

“OCBC Bank Malaysia” : OCBC Bank (Malaysia) Berhad, a subsidiary of OCBC Bank

“OCBC Group” : OCBC Bank and its subsidiaries

“Offers to OCBC Bank and : Shall have the meaning ascribed to it in paragraph 2.4 of theGEH Announcement” Company’s Letter to Shareholders in this Circular

“Overseas Shareholder” : Shall have the meaning ascribed to it in paragraph 10.1 of theCompany’s Letter to Shareholders in this Circular

“Properties” : The properties of the Group which are the subject of the ValuationReports, as set out in Appendix 8 to the TCPL Offeree Circular

“Relevant Directors” : Shall have the meaning ascribed to it in paragraph 9.1 of theCompany’s Letter to Shareholders in this Circular

“Revised KTIPL Offer” : The revised mandatory conditional cash offer by the FAs, for andon behalf of KTIPL, to acquire all the KTIPL Offer Shares on theterms and subject to the conditions set out in the Revised KTIPLOffer Letter, the KTIPL Offer Document, the KTIPL FAA and theKTIPL FAT

DEFINITIONS

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“Revised KTIPL Offer : Announcement of KTIPL’s intention to revise the KTIPL Offer whichAnnouncement” was released on 14 February 2008, setting out, inter alia, the

revisions to the KTIPL Offer as set out in the KTIPL OfferDocument

“Revised KTIPL Offer Letter” : The letter from KTIPL which will be despatched to Shareholderssetting out, inter alia, the revisions to the KTIPL Offer as set out inthe KTIPL Offer Document

“Revised KTIPL Offer Price” : Shall have the meaning ascribed to it in paragraph 1.4 of theCompany’s Letter to Shareholders in this Circular

“Revised TCPL Offer” : The revised voluntary conditional cash offer by SCB, for and onbehalf of TCPL, to acquire all the TCPL Offer Shares on the termsand subject to the conditions set out in the Revised TCPL OfferLetter, the TCPL Offer Document, the TCPL FAA and the TCPLFAT

“Revised TCPL Offer Letter” : The letter from TCPL dated 2 February 2008 issued by SCB, forand on behalf of TCPL, to Shareholders, setting out, inter alia, therevisions to the TCPL Offer

“Revised TCPL Offer Price” : S$6.50 in cash for each TCPL Offer Share

“SCB” : Standard Chartered Bank, the financial adviser to TCPL

“Second Price Revision : Announcement of TCPL’s intention to revise the Revised TCPL Announcement on the Offer Price which was released on 18 February 2008, setting out, TCPL Offer” inter alia, the Final TCPL Offer Price and TCPL Offer Closing Date

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Shareholders” : Persons who are registered as holders of Shares in the Register ofMembers of the Company and Depositors who have Sharesentered against their names in the Depository Register

“Shares” : Issued ordinary shares in the capital of the Company

“SIC” : The Securities Industry Council of Singapore

“STASB” or “STAR(M)” : Straits Trading Amalgamated Resources Sendirian Berhad, awholly-owned subsidiary of the Company

“STC Distribution” : Shall have the meaning ascribed to it in paragraph 3.3 of theCompany’s Letter to Shareholders in this Circular

“TCPL” : The Cairns Pte. Ltd.

“TCPL FAA” : Form of Acceptance and Authorisation for the TCPL Offer.

“TCPL FAT” : Form of Acceptance and Transfer for the TCPL Offer.

“TCPL Offer” : The voluntary conditional cash offer by SCB, for and on behalf ofTCPL, to acquire all the TCPL Offer Shares on the terms andsubject to the conditions set out in the TCPL Offer Document, theTCPL FAA and the TCPL FAT

DEFINITIONS

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“TCPL Offer Closing Date” : Shall have the meaning ascribed to it in paragraph 2.2 of theCompany’s Letter to Shareholders in this Circular

“TCPL Offeree Circular” : The circular to Shareholders dated 3 February 2008 from theCompany containing the recommendations of the IndependentDirectors and the advice of the IFA to the Independent Directors inrelation to the Revised TCPL Offer

“TCPL Offer Document” : The document dated 23 January 2008 issued by SCB, for and onbehalf of TCPL, in respect of the TCPL Offer

“TCPL Offer Price” : S$5.70 in cash for each TCPL Offer Share

“TCPL Offer Shares” : All the Shares in issue that are not already owned, controlled, oragreed to be acquired by TCPL

“S$” or “$” and “cents” : Singapore dollars and cents respectively, being the lawful currencyof Singapore

“Valuation Reports” : The valuation reports dated 28 January 2008, 29 January 2008and 1 February 2008 and the valuation certificates of theProperties from the Valuers setting out, inter alia, their valuation ofthe Properties which were reproduced in Appendix 8 to the TCPLOfferee Circular

“Valuers” : DTZ, JLL and WTW, the valuers appointed by the Company, inconnection with the TCPL Offer and the KTIPL Offer, to value theProperties and to issue the Valuation Reports on these Properties

“WTW” : CH Williams Talhar & Wong Sdn Bhd

“%” or “per cent.” : Per centum or percentage

Unless otherwise defined, the term “acting in concert” shall have the meaning ascribed to it in the Code.

The terms “Depositor”, “Depository Register” and “substantial shareholder” shall have the meaningsascribed to them respectively in the Act.

The headings in this Circular are inserted for convenience only and shall be ignored in construing thisCircular.

Any discrepancies in the tables in this Circular between the listed amounts and the totals thereof are dueto rounding.

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

Any reference in this Circular to any enactment is a reference to that enactment as for the time beingamended or re-enacted. Any word defined under the Act, the Code, the Listing Manual or any statutorymodification thereof and not otherwise defined in this Circular shall, where applicable, have the samemeaning assigned to it under the Act, the Code, the Listing Manual or any statutory modification thereof,as the case may be, unless the context otherwise requires.

Any reference to a time of day and date in this Circular is made by reference to Singapore time and daterespectively unless otherwise stated.

DEFINITIONS

All statements other than statements of historical facts included in this Circular are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as“expect”, “anticipate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” and similar expressions orfuture or conditional verbs such as “will”, “would”, “should”, “could”, “may” and “might”. These statementsreflect the Company’s current expectations, beliefs, hopes, intentions or strategies regarding the futureand assumptions in light of currently available information. Such forward-looking statements are notguarantees of future performance or events and involve known and unknown risks and uncertainties.Accordingly, actual results may differ materially from those described in such forward-looking statements.Shareholders and investors should not place undue reliance on such forward-looking statements, andneither the Company nor CIMB-GK undertakes any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or rules of theSGX-ST and/or any other regulatory or supervisory body or agency.

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DEFINITIONS

7

THE STRAITS TRADING COMPANY LIMITED(Incorporated in Singapore)


Directors Registered Address

Mr Bobby Chin Yoke Choong (Chairman) 18 Cross Street #15-01Mr Tang I-Fang Singapore 048423Mr Michael Wong Pakshong Professor Lim Chong Yah Mr Michael Hwang Tan Sri Dato’ Dr Lin See-Yan Mr Norman Ip Ka Cheung (President & Chief Executive Officer)Mr Razman Ariffin Mr Gerard Ee Hock Kim

23 February 2008

To: The Shareholders of The Straits Trading Company Limited

Dear Sir/Madam

THE FINAL TCPL OFFER AND THE REVISED KTIPL OFFER

1. INTRODUCTION

1.1 TCPL Offer. On 6 January 2008, SCB announced, for and on behalf of TCPL, that TCPL intends tomake the TCPL Offer at the TCPL Offer Price.

1.2 KTIPL Offer. On 24 January 2008, OCBC Bank announced, for and on behalf of KTIPL, that KTIPLintends to make the KTIPL Offer at the KTIPL Offer Price.

1.3 Revised TCPL Offer. On 28 January 2008, SCB announced, for and on behalf of TCPL, that TCPLwas revising its offer price from the TCPL Offer Price to the Revised TCPL Offer Price.

1.4 Revised KTIPL Offer. On 14 February 2008, the FAs announced, for and on behalf of KTIPL, thatKTIPL is revising its offer price from the KTIPL Offer Price to S$6.55 in cash for each KTIPL OfferShare (the “Revised KTIPL Offer Price”). Details of the Revised KTIPL Offer are set out inparagraph 3 below.

1.5 KTIPL Offer Document and Revised KTIPL Offer Letter. Shareholders should by now havereceived a copy of the KTIPL Offer Document issued by the FAs, for and on behalf of KTIPL,setting out, inter alia, the terms and conditions of the KTIPL Offer. The principal terms andconditions of the KTIPL Offer are set out on pages 8 to 11 of the KTIPL Offer Document.Shareholders are advised to read the terms and conditions contained therein carefully.

The Revised KTIPL Offer Announcement states that the Revised KTIPL Offer Letter will bedespatched to Shareholders as soon as practicable.

2 THE FINAL TCPL OFFER.

2.1 Final TCPL Offer Price. On 18 February 2008, SCB announced, for and on behalf of TCPL, thatTCPL is revising its offer price again from the Revised TCPL Offer Price to S$6.70 in cash for eachTCPL Offer Share (the “Final TCPL Offer Price”). Save as disclosed in the Second Price RevisionAnnouncement on the TCPL Offer, all the other terms and conditions of the TCPL Offer as set outin the TCPL Offer Document remain unchanged.


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2.2 TCPL Offer Closing Date. As announced in the Second Price Revision Announcement on theTCPL Offer, TCPL does not intend to further revise the Final TCPL Offer Price and the Final TCPLOffer will remain open for acceptances until 5.30 p.m. (Singapore time) on 6 March 2008 (the“TCPL Offer Closing Date”).

The Second Price Revision Announcement on the TCPL Offer also states that TCPL does notintend to extend the Final TCPL Offer beyond 5.30 p.m. (Singapore time) on the TCPL OfferClosing Date except where the Final TCPL Offer becomes unconditional as to acceptances orwhere TCPL incurs a mandatory offer obligation under Rule 14 of the Code during the offer periodthrough the acquisition of Shares (other than pursuant to acceptances of the Final TCPL Offer).

2.3 Final TCPL Offer Letter. Shareholders should by now have received a copy of the Final TCPLOffer Letter issued by SCB, for and on behalf of TCPL, setting out, inter alia, the revisions to theRevised TCPL Offer.

2.4 Offers to OCBC Bank and GEH. On 18 February 2008, SCB also announced that it had alsoissued, for and on behalf of TCPL, a letter of offer to each of OCBC Bank and GEH to purchase, atthe Final TCPL Offer Price, all the 20,248,704 Shares held by the OCBC Group (excluding theGEH Group) representing approximately 6.21 per cent. of all the issued Shares, and all the64,903,864 Shares held by the GEH Group, including the Shares held by the participating funds ofGreat Eastern Life Assurance Company Limited and Great Eastern Life Assurance (Malaysia)Berhad, representing approximately 19.92 per cent. of all the issued Shares (the “Offers to OCBCBank and GEH Announcement”)1.

The offers to OCBC Bank and GEH are unconditional and will expire at 5.00 p.m. (Singapore time)on 6 March 2008 if they are not accepted by OCBC Bank and/or GEH. The same announcementalso states that should OCBC Bank and GEH accept the offers, TCPL and parties acting in concertwith it shall then own, control or have agreed to acquire not less than 162,205,896 Shares,representing 49.77 per cent. of all the issued Shares. TCPL shall then convert the TCPL Offer intoa mandatory offer for the TCPL Offer Shares in accordance with the provisions of the Code.

2.5 Circular. The purpose of this Circular is to provide Shareholders with relevant informationpertaining to the Group and to set out the recommendations of the Independent Directors and theadvice of the IFA to the Independent Directors with regard to the Final TCPL Offer and the RevisedKTIPL Offer.

3. THE REVISED KTIPL OFFER

3.1 Consideration. As set out in the Revised KTIPL Offer Announcement, KTIPL will make theRevised KTIPL Offer on the following basis:

For each KTIPL Offer Share : S$6.55 in cash

Shareholders should note that the Final TCPL Offer Price of S$6.70 in cash for each TCPLOffer Share is S$0.15 higher than the Revised KTIPL Offer Price of S$6.55 in cash for eachKTIPL Offer Share.

3.2 Other Terms. According to the Revised KTIPL Offer Announcement, save for the revision of theKTIPL Offer Price as disclosed in the Revised KTIPL Offer Announcement, all the other terms andconditions of the KTIPL Offer as set out in the KTIPL Offer Document remain unchanged.


1 The figures set out in paragraph 2.4 of the Company’s Letter to Shareholders in this Circular are based on the information setout in the Offers to OCBC Bank and GEH Announcement.

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3.3 No Encumbrances. The KTIPL Offer Shares are to be acquired fully paid and free from all claims,charges, equities, liens, pledges and other encumbrances and together with all rights, benefits,entitlements and advantages attached thereto as at the KTIPL Offer Announcement Date andthereafter attaching thereto, including the right to all dividends, rights and other distributions (if any)declared, made or paid thereon on or after the KTIPL Offer Announcement Date (including anydividends that may be declared, made or paid thereon in respect of FY 2007).

Without prejudice to the generality of the foregoing, the Revised KTIPL Offer Price has beendetermined on the basis that the KTIPL Offer Shares will be acquired with the right to receive anydividends, other distributions or return of capital that may be declared, made or paid by STC on theKTIPL Offer Shares on or after the KTIPL Offer Announcement Date (the “STC Distribution”).

In the event any STC Distribution has been paid by STC to a Shareholder who accepts orhas accepted the Revised KTIPL Offer, the Revised KTIPL Offer Price payable to suchaccepting Shareholder shall be reduced by the amount which is equal to the STCDistribution paid by STC to such accepting Shareholder.

Accordingly, if any STC Distribution is declared, made or paid by STC on or after the KTIPL OfferAnnouncement Date and the settlement date in respect of the KTIPL Offer Shares acceptedpursuant to the Revised KTIPL Offer falls after the books closure date for the determination ofentitlements to the STC Distribution, the amount of the STC Distribution in respect of such KTIPLOffer Shares will be deducted from the Revised KTIPL Offer Price payable for such KTIPL OfferShares, as KTIPL will not have received the STC Distribution in respect of those KTIPL OfferShares from STC.

3.4 Condition. In the KTIPL Offer Document, it was stated that the KTIPL Offer will be conditionalupon KTIPL having received, by the close of the KTIPL Offer, valid acceptances in respect of suchnumber of KTIPL Offer Shares which, when taken together with the Shares owned or agreed to beacquired by KTIPL and its Concert Parties including the Concert Party Group (either before orduring the KTIPL Offer and pursuant to the KTIPL Offer or otherwise), will result in KTIPL and itsConcert Parties, including the Concert Party Group, holding such number of Shares carrying morethan 50 per cent. of the voting rights attributable to the issued Shares as at the close of the KTIPLOffer (the “Condition”).

The KTIPL Offer is unconditional in all other respects.

3.5 Warranty. According to the KTIPL Offer Document, acceptance of the KTIPL Offer will be deemedto constitute an unconditional and irrevocable warranty by the accepting Shareholder that eachKTIPL Offer Share in respect of which the KTIPL Offer is accepted is sold by the acceptingShareholder, as or on behalf of the beneficial owner, fully paid and free from all claims, charges,equities, liens, pledges and other encumbrances and together with all rights, benefits, entitlementsand advantages attached thereto as at the KTIPL Offer Announcement Date and thereafterattaching thereto, including the right to all dividends, rights and other distributions (if any) declared,made or paid thereon on or after the KTIPL Offer Announcement Date (including any dividends thatmay be declared, made or paid thereon in respect of FY 2007).

3.6 Details of the KTIPL Offer. Further details of the KTIPL Offer are set out in pages 8 to 11 of theKTIPL Offer Document and Appendix 1 to the KTIPL Offer Document including details on (a) theduration of the KTIPL Offer; (b) the procedures for acceptance of the KTIPL Offer; (c) therequirements relating to announcements of the level of acceptances of the KTIPL Offer; and (d) theright of withdrawal of acceptances.

A copy each of the KTIPL Offer Announcement, the KTIPL Offer Document and the Revised KTIPLOffer Announcement is available on the website of the SGX-ST at www.sgx.com.

3.7 KTIPL Offer Closing Date. Shareholders should note that the Revised KTIPL Offer will close at5.30 p.m. (Singapore time) on 13 March 2008 or such later date(s) as may be announced fromtime to time by or on behalf of KTIPL.


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4. RATIONALE FOR THE KTIPL OFFER AND KTIPL’S FUTURE PLANS FOR THE COMPANY

The full text of the rationale for the KTIPL Offer and KTIPL’s intentions relating to the Company hasbeen extracted from the KTIPL Offer Document and is set out in italics below. Unless otherwisedefined, all terms and expressions used in the extract below shall have the same meanings asthose defined in the KTIPL Offer Document. Shareholders are advised to read the extract belowcarefully.

“5.1 Rationale for the Offer

The Lee Family has had shareholding interests in STC for many years. The Offeror(together with the GEH Group and the OCBC Group) has effective control of STC as theycontrol the largest single block of Shares. The Offer is being made in response to theCairns Offer with the objective of maintaining or consolidating effective control of STC.

5.2 The Offeror’s Intentions relating to STC

It is the intention of the Offeror that STC will continue to develop and grow its existingbusinesses. Depending on the outcome of the Offer and the resultant shareholding of theOfferor in STC following the close of the Offer, the Offeror (if appropriate together with itsConcert Parties) intends to seek representation on the board of directors of STC.

In addition, after the close of the Offer, if the Offeror (together with the GEH Group and theOCBC Group) continues to control the largest single block of Shares, the Offeror intends topropose to STC to engage a financial adviser to conduct a study on the financialperformance of STC and to recommend possible steps to take to further unlock value inSTC for the benefit of Shareholders. In this connection, the Offeror supports the policy ofthe STC board as stated on page 83 of STC’s circular to Shareholders dated 3 February2008 in relation to the Cairns Offer, which is reproduced as follows:

“With a clear focus on shareholders’ value, the Group will continue to review its businessstrategy and prioritise the allocation of funds to enhance shareholders’ value and togenerate higher return to shareholders in the long term”.

Save as disclosed above, the Offeror has no immediate plans for any major changesrelating to the existing business of the STC Group (including redeployment of fixed assets)or the employment of the existing employees of the STC Group, other than in the ordinarycourse of business.”

5. LISTING STATUS AND COMPULSORY ACQUISITION

The KTIPL Offer Document also sets out the intentions of KTIPL relating to the listing status of theCompany as follows:

“7. COMPULSORY ACQUISITION AND LISTING STATUS

Pursuant to Section 215(1) of the Act, if the Offeror receives valid acceptances pursuant tothe Offer in respect of not less than 90% of the Offer Shares (other than those already heldby the Offeror, its related corporations or their respective nominees as at the date of theOffer and excluding any Shares held as treasury shares), the Offeror would have the rightto compulsorily acquire all the Offer Shares not acquired by the Offeror pursuant to theOffer.

Shareholders who have not accepted the Offer have the right under and subject to Section215(3) of the Act, to require the Offeror to acquire their Shares in the event that the Offeroror its nominees acquire, pursuant to the Offer, such number of Shares which, together withthe Shares held by the Offeror, its related corporations or their respective nominees,comprise 90% or more of the total number of issued Shares (excluding treasury shares).Shareholders who have not accepted the Offer and who wish to exercise such right areadvised to seek their own independent legal advice.


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Pursuant to Rule 1105 of the Listing Manual, upon an announcement by the Offeror thatacceptances have been received pursuant to the Offer that bring the holdings owned by theOfferor and its Concert Parties to above 90% of the total number of issued Sharesexcluding treasury shares, the SGX-ST may suspend the listing of the Shares on the SGX-ST until such time it is satisfied that at least 10% of the total number of issued Sharesexcluding treasury shares are held by at least 500 Shareholders who are members of thepublic. Rule 1303(1) of the Listing Manual provides that if the Offeror succeeds in garneringacceptances exceeding 90% of the total number of issued Shares excluding treasuryshares, thus causing the percentage of the total number of issued Shares excludingtreasury shares held in public hands to fall below 10%, the SGX-ST will suspend trading ofthe Shares only at the close of the Offer.

In addition, under Rule 724 of the Listing Manual, if the percentage of the total number ofissued Shares excluding treasury shares held in public hands falls below 10%, STC must,as soon as practicable, announce that fact and the SGX-ST may suspend the trading of allthe Shares. Rule 725 of the Listing Manual states that the SGX-ST may allow STC a periodof three months, or such longer period as the SGX-ST may agree, to raise the percentageof Shares in public hands to at least 10%, failing which STC may be delisted from the SGX-ST.

It is the present intention of the Offeror to maintain the listing status of STC on theSGX-ST. However, in the event SGX-ST suspends the listing of the Shares on theSGX-ST in the above circumstances or in the event that the Offeror receivesacceptances in respect of not less than 90% of the Offer Shares (other than thosealready held by the Offeror, its related corporations or their respective nominees asat the date of the Offer and excluding Shares held as treasury shares), the Offerorwill reassess its position in respect of its shareholdings in STC.”

6. INFORMATION ON KTIPL AND LEE LATEX

Paragraph 3 of the KTIPL Offer Document sets out information on KTIPL and Lee Latex, asfollows:

“3.1 The Offeror. The Offeror is a company incorporated in Singapore on 13 October 2000. Itsprincipal activities are those of an investment holding company. As at the Latest PracticableDate, the Offeror has an issued and paid-up ordinary share capital of S$20,000,000comprising 20,000,000 ordinary shares, all of which are held by Lee Latex. The Offeror is adirect wholly-owned subsidiary of Lee Latex. As at the Latest Practicable Date, theDirectors are Messrs Huang Thiay Sherng and Tan Khiam Hock.

3.2 Lee Latex. Lee Latex is a company incorporated in Singapore on 10 June 1947. Itsprincipal activity is that of investment holding. As at the Latest Practicable Date, Lee Latexhas an issued and paid-up share capital of S$30,000,000 comprising 30,000 ordinaryshares. As at the Latest Practicable Date, the directors of Lee Latex are Messrs Lee SengWee, Lee Seng Gee, Lee Seng Tee, Lee Yuen-Shih, Lee Han-Shih (alternate to Lee SengGee), Lee Shih Hua (alternate to Lee Seng Tee) and Huang Thiay Sherng.

3.3 Additional Information. Additional information on the Offeror and Lee Latex is set out inAppendix 2 and Appendix 3 to this Offer Document, respectively.”

7. IRREVOCABLE UNDERTAKINGS

The KTIPL Offer Document states that as at 11 February 2008, neither KTIPL nor its ConcertParties have received any irrevocable undertaking from any holder of KTIPL Offer Shares to acceptor reject the KTIPL Offer.


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8. ADVICE OF THE IFA

8.1 IFA. CIMB-GK has been appointed as the independent financial adviser to advise the IndependentDirectors in respect of the TCPL Offer and the KTIPL Offer. Shareholders should consider carefullythe recommendations of the Independent Directors and the advice of CIMB-GK to the IndependentDirectors before deciding whether to accept or reject the Final TCPL Offer or the Revised KTIPLOffer, as the case may be. The advice of CIMB-GK is set out in its letter dated 23 February 2008,which is set out on pages 18 to 73 of this Circular (the “IFA Letter”).

8.2 Key Factors Taken into Consideration by CIMB-GK. Unless otherwise defined or the contextotherwise requires, all capitalised terms below shall have the same meanings as defined in the IFALetter.

In arriving at its advice, CIMB-GK has relied on the following key considerations (an extract ofwhich is set out below and which should be read in conjunction with, and in the context of, the fulltext of the IFA Letter):

“8. SUMMARY OF ANALYSIS

In arriving at our advice on the Revised KTIPL Offer and the Final TPL Offer, we have reliedon the following key considerations (which should be read in conjunction with, and in thecontext of, the full text of this letter):

(a) the Revised KTIPL Offer Price and the Final TCPL Offer Price falls within the rangeof the estimated sum-of-parts valuation of each Share.

(b) The Revised KTIPL Offer Price represents a premium of approximately 17.0% overthe unaudited book NTA per Share as at 31 December 2007 but is at a discount ofapproximately 0.6% to the Revalued NTA per Share as at 31 December 2007. TheFinal TCPL Offer Price represents a premium of approximately 19.6% over theunaudited book NTA per Share as at 31 December 2007 and at a premium ofapproximately 1.7% to the Revalued NTA per Share as at 31 December 2007.

(c) The ex-cash Revised KTIPL Offer Price represents a premium of approximately20.9% over the ex-cash book NTA per Share as at 31 December 2007 but is at adiscount of approximately 0.7% to the ex-cash Revalued NTA per Share as at 31December 2007. The ex-cash Final TCPL Offer Price represents a premium ofapproximately 24.2% over the ex-cash book NTA per Share as at 31 December 2007and is at a premium of approximately 2.0% over the ex-cash Revalued NTA perShare as at 31 December 2007.

(d) The Revised KTIPL Offer Price and the Final TCPL Offer Price are at a premiumover the VWAP of the Shares for all historical periods during the three years prior tothe TCPL Offer Announcement Date. As at the Latest Practicable Date, the Sharesare trading above the Revised KTIPL Offer Price but are trading at the Final TCPLOffer Price.

(e) It is highly likely that the market price of the Shares has been supported by theOffers and purchases by KTIPL, TCPL or their respective concert parties since theTCPL Offer Announcement Date. As the Shares have been trading at or about theFinal TCPL Offer Price since the Second Price Revision Announcement on the TCPLOffer, there is no assurance that the market price and the trading volume of theShares will be maintained at the level prevailing as at the Latest Practicable Dateafter the closing dates of the Offers.


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(f) The market price premia to the last transacted price, the 1-month VWAP and the 3-month VWAP prior to the TCPL Offer Announcement Date implied in the RevisedKTIPL Offer Price and the Final TCPL Offer Price are above the correspondingmedian and mean premia in both the successful privatisation and non-privatisationTake-over Transactions while the P/NTA ratios of the Group implied in the RevisedKTIPL Offer Price and the Final TCPL Offer Price are below the mean but equal tothe median P/NTA ratios of the successful non-privatisation Take-over Transactions.

(g) The net dividend yield of the Company implied in the Revised KTIPL Offer Price andthe Final TCPL Offer Price is lower than the net dividend yields (in respect of theirlast financial year) of almost all of the Alternative Companies and that of the STI ETF.

(h) As at the Latest Practicable Date, neither KTIPL nor TCPL and their respectiveconcert parties possess statutory control of the Company. Both the Revised KTIPLOffer and the Final TCPL Offer have not become unconditional as at the LatestPracticable Date.

(i) It is the present intention of each of KTIPL and TCPL to maintain the listing status ofthe Company on the SGX-ST. There is however no assurance that KTIPL or TCPLwill preserve the listing status of the Company on the SGX-ST if free float is lessthan 10 per cent. or that they will not exercise the right of compulsory acquisitionunder Section 215(1) of the Act.

(j) The Final TCPL Offer Price of S$6.70 for each Share is S$0.15 higher than theRevised KTIPL Offer Price of S$6.55 for each Share.

(k) It is stated in the Second Price Revision Announcement on the TCPL Offer thatTCPL does not intend to further revise the Final TCPL Offer Price. The Final TCPLOffer will close at 5.30 p.m. on 6 March 2008 and TCPL has stated that it does notintend to extend the Final TCPL Offer beyond 5.30 p.m. on the Final Closing Dateexcept where the Final TCPL Offer becomes unconditional as to acceptances orwhere TCPL incurs a mandatory offer obligation under Rule 14 of the Code duringthe offer period through the acquisition of the Shares (other than pursuant toacceptances of the Final TCPL Offer). The Revised KTIPL Offer will close at 5.30p.m. on 13 March 2008 or such later date(s) as may be announced from time to timeby or on behalf of KTIPL.

In summary, based on our analysis set out above and after having considered carefully theinformation available to us, the existence of competing bids for statutory control of theCompany and based on the monetary, industry, market, economic and other relevantconditions prevailing as at the Latest Practicable Date, we are of the view that both theRevised KTIPL Offer Price and the Final TCPL Offer Price are, on balance, reasonable butnot compelling.”


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8.3 Advice of CIMB-GK. Unless otherwise defined or the context otherwise requires, all capitalisedterms below shall have the same meanings as defined in the IFA Letter.

After carefully considering all available information and based on CIMB-GK’s assessment of thefinancial terms of the Final TCPL Offer and the Revised KTIPL Offer, CIMB-GK has advised theIndependent Directors to make the following recommendations to Shareholders in relation to theFinal TCPL Offer and the Revised KTIPL Offer:

“9. CIMB-GK’S ADVICE ON THE OFFERS

After carefully considering all available information and based on our assessment of thefinancial terms of the Revised KTIPL Offer and the Final TCPL Offer, we advise theIndependent Directors to make the following recommendations to Shareholders in relation tothe Revised KTIPL Offer and the Final TCPL Offer:

“Shareholders who hold a long-term view of their investments in the Shares and/or whoare confident and optimistic about their equity investments in the Company and theprospects of the Group may wish to REJECT both the Revised KTIPL Offer and the FinalTCPL Offer.

Shareholders who hold a short-term view of their investments in the Shares and whowish to realise their holdings in the Shares in the near term and/or who are not preparedto accept the uncertainties facing the future prospects of the Group or the risk that noneof the Offers will become unconditional may wish to SELL their Shares on the openmarket if they can obtain a price at about or higher than the Final TCPL Offer Price (afterdeducting all related expenses) by doing so as there is currently no certainty that eitherof the Offers will become unconditional. Shareholders should note that as at the LatestPracticable Date, the Shares are trading at the Final TCPL Offer Price. In the event thatShareholders (in particular, those with significant holdings) are unable to sell theirShares on the open market at a price at about or higher than the Final TCPL Offer Price,they should REJECT the Revised KTIPL Offer but may wish to ACCEPT the Final TCPLOffer but should be aware that there is currently no certainty that the Final TCPL Offerwill become unconditional. Further, such Shareholders may wish to consider acceptingthe Final TCPL Offer at a later time so as to be able to take into account anyannouncements and/or documents relevant to their consideration of the Offers whichmay be released or published by or on behalf of the Company, TCPL and/or KTIPL afterthe Latest Practicable Date. The Final TCPL Offer will close at 5.30 p.m. on 6 March2008 and TCPL has stated that it does not intend to extend the Final TCPL Offer beyond5.30 p.m. on the Final Closing Date except where the Final TCPL Offer becomesunconditional as to acceptances or where TCPL incurs a mandatory offer obligationunder Rule 14 of the Code during the offer period through the acquisition of the Shares(other than pursuant to acceptances of the Final TCPL Offer). The Revised KTIPL Offerwill close at 5.30 p.m. on 13 March 2008 or such later date(s) as may be announcedfrom time to time by or on behalf of KTIPL.

Shareholders should note that (i) there is currently no indication as to whether there maybe a further enhancement or revision of the Revised KTIPL Offer following the SecondPrice Revision Announcement on the TCPL Offer; and (ii) there is no assurance that thetrading volumes and market prices of the Shares will be maintained at current levelsprevailing as at the Latest Practicable Date.”

Shareholders should read the extracts in paragraphs 8.2 and 8.3 above in conjunction with, and inthe context of the full text of the IFA Letter which is set out on pages 18 to 73 of this Circular.


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9. INDEPENDENT DIRECTORS’ RECOMMENDATIONS

9.1 Exemptions by SIC. In its letter dated 31 January 2008, the SIC has ruled that the followingdirectors of the Company, namely Mr Bobby Chin Yoke Choong, Mr Michael Wong Pakshong andTan Sri Dato Dr Lin See-Yan (the “Relevant Directors”) are exempt from the requirement to makerecommendations on the TCPL Offer and the KTIPL Offer as they face irreconcilable conflicts ofinterest being directors of parties acting in concert with KTIPL. Nevertheless, the RelevantDirectors will still accept responsibility for the accuracy of the facts stated or opinions expressed indocuments and advertisements issued by, or on behalf of, the Company in connection with theTCPL Offer and the KTIPL Offer.

9.2 Recommendations of Independent Directors. The Independent Directors, having consideredcarefully the terms of the Final TCPL Offer and the Revised KTIPL Offer and the advice given byCIMB-GK, concur with the advice of CIMB-GK in respect of the Final TCPL Offer and the RevisedKTIPL Offer. Accordingly, the Independent Directors’ recommendations in respect of the Final TCPLOffer and the Revised KTIPL Offer are as set out in paragraph 8.3 above.

Shareholders are advised to read the IFA Letter set out on pages 18 to 73 of this Circularcarefully.

9.3 No Regard to Specific Objectives. In making their recommendations, the Independent Directorshave not had regard to the specific objectives, financial situation, tax status, risk profiles or uniqueneeds and constraints of any individual Shareholder. Accordingly, the Independent Directorsrecommend that any individual Shareholder who may require advice in the context of his specificinvestment portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviseror other professional adviser immediately.

10. OVERSEAS SHAREHOLDERS

10.1 Overseas Shareholders. Based on the KTIPL Offer Document, the availability of the RevisedKTIPL Offer to Shareholders whose addresses are outside Singapore, as shown in the Register ofMembers of STC or in the records of CDP (as the case may be) (each, an “OverseasShareholder”) may be affected by the laws of the relevant overseas jurisdictions. Accordingly,Overseas Shareholders should inform themselves about and observe any applicable legalrequirements.

It is the responsibility of Overseas Shareholders who wish to accept the Revised KTIPL Offer tosatisfy themselves as to the full observance of the laws of the relevant jurisdiction, including theobtaining of any governmental or other consent which may be required, or compliance with othernecessary formalities or legal requirements and the payment of any taxes, imposts, duties or otherrequisite payments due in such jurisdiction. Such Overseas Shareholders shall be liable for anysuch taxes, imposts, duties or other requisite payments payable and KTIPL, its relatedcorporations, the FAs, CDP and any person acting on their behalf shall be fully indemnified andheld harmless by such Overseas Shareholders for any such taxes, imposts, duties or otherrequisite payments as KTIPL, its related corporations, the FAs, CDP and/or any person acting ontheir behalf may be required to pay. In accepting the Revised KTIPL Offer, each OverseasShareholder represents and warrants to KTIPL and the FAs that he is in full observance of the lawsof the relevant jurisdiction in that connection and that he is in full compliance with all necessaryformalities or legal requirements.


If you are in doubt about your position, you should consult your professional adviser in therelevant jurisdiction.

KTIPL and the FAs each reserve the right not to treat an acceptance or purported acceptance ofthe Revised KTIPL Offer in or from any overseas jurisdiction and/or in respect of an OverseasShareholder as valid. Overseas Shareholders accepting the Revised KTIPL Offer should note that ifthey have, in the KTIPL FAT, provided addresses in overseas jurisdictions for the receipt ofremittances of payment by KTIPL, such acceptances may be rejected.

10.2 Copies of KTIPL Offer Document. Where there are potential restrictions on sending the KTIPLOffer Document, the KTIPL FAA and the KTIPL FAT to any overseas jurisdiction, KTIPL and theFAs each reserve the right not to send the KTIPL Offer Document, the KTIPL FAA and the KTIPLFAT to any overseas jurisdiction. Subject to compliance with applicable laws, any affected OverseasShareholder may, nonetheless, attend in person and obtain copies of the KTIPL Offer Document,the KTIPL FAA or the KTIPL FAT, as the case may be, and any related documents during normalbusiness hours and up to the KTIPL Offer Closing Date, from Knowledge Two Investment Pte Ltdc/o Tricor Barbinder Share Registration Services (a division of Tricor Singapore Pte. Ltd.) at 8Cross Street, #11-00, PWC Building, Singapore 048424 or CDP at 4 Shenton Way, #02-01 SGXCentre 2, Singapore 068807, as the case may be. Alternatively, an Overseas Shareholder may,subject to compliance with applicable laws, write in to Tricor Barbinder Share Registration Servicesat the above-stated address to request that the KTIPL Offer Document, the KTIPL FAA or theKTIPL FAT, as the case may be, and any related documents be sent to an address in Singapore byordinary post at his own risk (up to three Market Days prior to the KTIPL Offer Closing Date). Forthe avoidance of doubt, the Revised KTIPL Offer is made to all Shareholders (for all KTIPL OfferShares) including those to whom the KTIPL Offer Document may not be despatched.

10.3 Notice. KTIPL and the FAs each reserve the right to notify any matter, including the fact that theRevised KTIPL Offer has been made, to any or all Shareholders (including Overseas Shareholders)by announcement to the SGX-ST or paid advertisement in a daily newspaper published orcirculated in Singapore, in which case, such notice shall be deemed to have been sufficiently givennotwithstanding any failure by any Shareholder to receive or see such announcement oradvertisement.

11. CPFIS INVESTORS

According to the KTIPL Offer Document, CPFIS Investors should receive further information onhow to accept the Revised KTIPL Offer from their CPF Agent Banks shortly. CPFIS Investors areadvised to consult their respective CPF Agent Banks should they require further information, and ifthey are in any doubt as to the action they should take, CPFIS Investors should seek independentprofessional advice. CPFIS Investors who wish to accept the Revised KTIPL Offer are to reply totheir respective CPF Agent Banks accordingly by the deadline stated in the letter from theirrespective CPF Agent Banks. Subject to the Revised KTIPL Offer becoming or being declaredunconditional in accordance with its terms, CPFIS Investors who accept the Revised KTIPL Offerwill receive the Revised KTIPL Offer Price payable in respect of their KTIPL Offer Shares in theirCPF investment accounts.

12. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders who do not wish to accept the Final TCPL Offer need not take any further action inrespect of the TCPL Offer Document, the TCPL FAA and/or the TCPL FAT which have been sent tothem.

Shareholders who wish to accept the Final TCPL Offer must do so not later than 5.30 p.m. on 6March 2008. The Directors would like to draw the attention of Shareholders who wish to accept theFinal TCPL Offer to the “Procedures for Acceptance” as set out on pages 19 to 23 of the TCPLOffer Document.

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Acceptances should be completed and returned as soon as possible and, in any event, so as to bereceived by CDP (in respect of the TCPL FAA) or the share registrar of the Company (in respect ofthe TCPL FAT), as the case may be, not later than 5.30 p.m. on 6 March 2008.

Shareholders who do not wish to accept the Revised KTIPL Offer need not take any further actionin respect of the KTIPL Offer Document, the KTIPL FAA and/or the KTIPL FAT which have beensent to them.

Shareholders who wish to accept the Revised KTIPL Offer must do so not later than 5.30 p.m. on13 March 2008, or such later date(s) as may be announced from time to time by or on behalf ofKTIPL. The Directors would like to draw the attention of Shareholders who wish to accept theRevised KTIPL Offer to “Additional Terms of the Offer” as set out in Appendix 1 to the KTIPL OfferDocument.

Acceptances should be completed and returned as soon as possible and, in any event, so as to bereceived by CDP (in respect of the KTIPL FAA) or the share registrar of the Company (in respect ofthe KTIPL FAT), as the case may be, not later than 5.30 p.m. on 13 March 2008, or such laterdate(s) as may be announced from time to time by or on behalf of KTIPL.

13. RESPONSIBILITY STATEMENT

The Directors of the Company (including any who may have delegated detailed supervision of thisCircular) have taken all reasonable care to ensure that the facts stated and all opinions expressedin this Circular are fair and accurate and that no material facts have been omitted from this Circular,and they jointly and severally accept responsibility accordingly. Where any information has beenextracted or reproduced from published or publicly available sources, the sole responsibility of theDirectors of the Company has been to ensure through reasonable enquiries that such informationis accurately extracted from such sources or, as the case may be, reflected or reproduced in thisCircular.

In respect of the IFA Letter, the sole responsibility of the Directors has been to ensure that the factsstated therein with respect to the Group are fair and accurate.

Yours faithfullyFor and on behalf of the Board of Directors ofTHE STRAITS TRADING COMPANY LIMITED

Norman Ip Ka CheungPresident and Chief Executive Officer

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LETTER FROM CIMB-GK TO THE INDEPENDENT DIRECTORS OF THE STRAITS TRADING COMPANY LIMITED

CIMB-GK SECURITIES PTE. LTD.(Incorporated in the Republic of Singapore)


50 Raffles Place #19-00Singapore Land Tower

Singapore 048623

23 February 2008

To: The Independent DirectorsThe Straits Trading Company Limited18 Cross Street #15-01Singapore 048423

Dear Sirs,

MANDATORY CONDITIONAL CASH OFFER BY CREDIT SUISSE (SINGAPORE) LIMITED ANDOVERSEA-CHINESE BANKING CORPORATION LIMITED FOR AND ON BEHALF OF KNOWLEDGETWO INVESTMENT PTE LTD FOR THE STRAITS TRADING COMPANY LIMITED

VOLUNTARY CONDITIONAL CASH OFFER BY STANDARD CHARTERED BANK FOR AND ONBEHALF OF THE CAIRNS PTE. LTD. FOR THE STRAITS TRADING COMPANY LIMITED

1. INTRODUCTION

On 6 January 2008 (the “TCPL Offer Announcement Date”), Standard Chartered Bank (“SCB”)announced (the “TCPL Offer Announcement”), for and on behalf of The Cairns Pte. Ltd. (“TCPL”),that TCPL intends to make a voluntary conditional cash offer (the “TCPL Offer”) for all the issuedordinary shares (“Shares”) in the capital of The Straits Trading Company Limited (“STC” or the“Company”), other than those already owned, controlled or agreed to be acquired by TCPL (“TCPLOffer Shares”), at a price of S$5.70 for each TCPL Offer Share.

On 24 January 2008 (the “KTIPL Offer Announcement Date”), Oversea-Chinese BankingCorporation Limited (“OCBC Bank”) announced (the “KTIPL Offer Announcement”), for and onbehalf of Knowledge Two Investment Pte Ltd (“KTIPL”), a wholly-owned subsidiary of Lee Latex(Pte) Limited (“Lee Latex”), that KTIPL intends to make a mandatory conditional cash offer (the“KTIPL Offer”) for all the Shares other than those already owned or agreed to be acquired byKTIPL and the intermediate companies (“Lee Family Companies”) through which Messrs Lee Seng Gee, Lee Seng Tee and Lee Seng Wee and their immediate family members hold theirinterests in Lee Latex (“KTIPL Offer Shares”), at a price of S$5.76 for each KTIPL Offer Share(the “KTIPL Offer Price”).

On 28 January 2008 (the “Revised TCPL Offer Announcement Date”), SCB announced (the“Revised TCPL Offer Announcement”), for and on behalf of TCPL, that TCPL is revising the offerprice to S$6.50 (the “Revised TCPL Offer Price”) for each TCPL Offer Share (the “Revised TCPLOffer”).

On the same date, SCB also issued, for and on behalf of TCPL, a letter of offer to each of OCBCBank and Great Eastern Holdings Limited (“GEH”) to purchase, at the Revised TCPL Offer Price,all the 20,248,704 Shares held by OCBC Bank and its subsidiaries (excluding the GEH Group (asdefined hereinafter)) (“OCBC Group”) representing approximately 6.21 per cent. of all the issued


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Shares, and all the 64,903,864 Shares held by GEH and its subsidiaries (“GEH Group”)representing approximately 19.92 per cent. of all the issued Shares. The announcement also statedthat the offers to OCBC Bank and GEH are unconditional and would expire at 5.30 p.m. on 22February 2008 if they were not accepted by OCBC Bank and/or GEH and should OCBC Bank andGEH have accepted the offers, TCPL and parties acting in concert with it would then own, controlor have agreed to acquire not less than 162,058,845 Shares, representing 49.73 per cent. of all theissued Shares. TCPL would then convert the Revised TCPL Offer into a mandatory conditionalcash offer for the Shares in accordance with the provisions of The Singapore Code on Take-oversand Mergers (the “Code”).

On 14 February 2008 (the “Revised KTIPL Offer Announcement Date”), Credit Suisse(Singapore) Limited (“Credit Suisse”) and OCBC Bank announced (the “Revised KTIPL OfferAnnouncement”), for and on behalf of KTIPL, that KTIPL is revising the offer price to S$6.55 (the“Revised KTIPL Offer Price”) for each KTIPL Offer Share (the “Revised KTIPL Offer”).

On 15 February 2008, OCBC Group (excluding the GEH Group) announced that, having regard toits own considerations, it has decided that it does not intend to accept either the Revised TCPLOffer or the Revised KTIPL Offer in respect of its 6.21 per cent. of all the issued Shares.

On 18 February 2008 (the “Second Price Revision Announcement Date on the TCPL Offer”),SCB announced (the “Second Price Revision Announcement on the TCPL Offer”), for and onbehalf of TCPL, that TCPL is revising the offer price to S$6.70 (the “Final TCPL Offer Price”) foreach TCPL Offer Share (the “Final TCPL Offer”). It is also stated in the Second Price RevisionAnnouncement on the TCPL Offer that TCPL does not intend to further revise the Final TCPL OfferPrice.

On 18 February 2008, SCB also announced that it had also issued, for and on behalf of TCPL, aletter of offer to each of OCBC Bank and GEH to purchase, at the Final TCPL Offer Price, all the20,248,704 Shares held by the OCBC Group (excluding the GEH Group) representingapproximately 6.21 per cent. of all the issued Shares, and all the 64,903,864 Shares held by theGEH Group, including the Shares held by the participating funds of Great Eastern Life AssuranceCompany Limited and Great Eastern Life Assurance (Malaysia) Berhad, representingapproximately 19.92 per cent. of all the issued Shares.

The offers to OCBC Bank and GEH are unconditional and will expire at 5.00 p.m. (Singapore time)on 6 March 2008 if they are not accepted by OCBC Bank and/or GEH. The same announcementalso states that should OCBC Bank and GEH accept the offers, TCPL and parties acting in concertwith it shall then own, control or have agreed to acquire not less than 162,205,896 Shares,representing 49.77 per cent. of all the issued Shares. TCPL shall then convert the TCPL Offer intoa mandatory offer for the TCPL Offer Shares in accordance with the provisions of the Code.

Shareholders should by now have received the offer document containing the terms and conditionsof the KTIPL Offer (the “KTIPL Offer Document”).

CIMB-GK Securities Pte. Ltd. has been appointed as the independent financial adviser to thedirectors of the Company who are deemed to be independent (“Independent Directors”) for thepurpose of rendering a recommendation to the shareholders of the Company (“Shareholders”) inconnection with the offers made by TCPL and KTIPL (collectively, the “Offers”).

This letter sets out, inter alia, our evaluation of the financial terms of the Offers and our advicethereon. It forms part of the circular dated 23 February 2008 and issued by the Company,providing, inter alia, details of the KTIPL Offer, the Revised KTIPL Offer and the Final TCPL Offerand the recommendation of the Independent Directors in respect of the Revised KTIPL Offer andthe Final TCPL Offer (the “Circular”). Unless otherwise defined or the context otherwise requires,all terms defined in the Circular shall have the same meanings herein.

2. TERMS OF REFERENCE

We have been appointed to advise the Independent Directors on the financial terms of the Offersand whether Shareholders should accept or reject the Offers, pursuant to Rules 7.1 and 24.1(b) ofthe Code. We have confined our evaluation to the financial terms of the Offers and our terms ofreference do not require us to evaluate or comment on the commercial risks and/or commercialmerits of the Offers or the future prospects of the Company and its subsidiaries (the “Group”) orany of its associated or joint venture companies and we have not made such evaluation orcomment. However, we may draw upon the views of the Directors and/or the management of theCompany or make such comments in respect thereof (to the extent deemed necessary orappropriate by us) in arriving at our opinion as set out in this letter. We have not been requested,and we do not express any opinion on the relative merits of the Offers as compared to any otheralternative transaction. We have not been requested or authorised to solicit, and we have notsolicited, any indications of interest from any third party with respect to the Shares.

We have held discussions with the Directors and the management of the Company and haveexamined publicly available information collated by us as well as information, both written andverbal, provided to us by the Directors, the management of the Company and the Company’s otherprofessional advisers. We have not independently verified such information, whether written orverbal, and accordingly we cannot and do not warrant or make any representation (whetherexpress or implied) regarding, or accept any responsibility for, the accuracy, completeness oradequacy of such information. However, we have made such enquiries and exercised our judgmentas we deem necessary on such information and have found no reason to doubt the reliability of theinformation.

We have relied upon the assurances of the Directors (including those who may have delegatedsupervision of the Circular) that they have taken all reasonable care to ensure that the facts statedand opinions expressed by them or the Company in the Circular are true, complete and accurate inall material respects. The Directors have confirmed to us, that to the best of their knowledge andbelief, all material information relating to the Group, its associated or joint venture companies andthe Offers have been disclosed to us, that such information is true, complete and accurate in allmaterial respects and that there are no other material facts and circumstances the omission ofwhich would make any statement in the Circular inaccurate, incomplete or misleading in anymaterial respect. The Directors have jointly and severally accepted such responsibility accordingly.

We have not made any independent evaluation or appraisal of the assets and liabilities (includingwithout limitation, real property) of the Group or any of its associated or joint venture companiesand we have not been furnished with any such evaluation or appraisal, except for the letters andvaluation certificates from the Valuers appointed by the Company in connection with the Offers setout in Appendix 8 to the TCPL Offeree Circular in which we have placed sole reliance on for suchasset appraisal. With respect to such letters and valuation certificates, we are not experts in theevaluation or appraisal of the assets concerned and we have not made any independentverification of the contents of these letters and valuation certificates.

Our opinion is based upon market, economic, industry, monetary and other conditions prevailing on20 February 2008 (the “Latest Practicable Date”), as well as the information made available to usas at the Latest Practicable Date. Such conditions may change significantly over a short period oftime. Accordingly, we do not express any opinion or view on the future prospects, financialperformance and/or financial position of the Group, its associated or joint venture companies.Shareholders should take note of any announcement and/or documents relevant to theirconsideration of the Offers which may be released or published by or on behalf of the Company,TCPL and/or KTIPL after the Latest Practicable Date.

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In rendering our advice, we have not had regard to the specific investment objectives, financialsituation, tax position, risk profile or particular needs and constraints of any individual Shareholder.As each Shareholder would have different investment objectives and profiles, any Shareholder whomay require specific advice in the context of his specific investment objectives or portfolio shouldconsult his stockbroker, bank manager, solicitor, accountant, tax adviser or other professionaladviser immediately.

The Company has been separately advised in the preparation of the Circular (other than thisletter). We were not involved in and have not provided any advice in the preparation, review andverification of the Circular (other than this letter). Accordingly, we take no responsibility for, andexpress no views (express or implied) on, the contents of the Circular (other than this letter).

3. THE REVISED KTIPL OFFER

Shareholders should by now have received a copy of the KTIPL Offer Document dated 12 February 2008 issued by Credit Suisse and OCBC Bank, for and on behalf of KTIPL. TheRevised KTIPL Offer Announcement states that KTIPL will shortly despatch the Revised KTIPLOffer Letter to Shareholders relating to the Revised KTIPL Offer.

According to the Revised KTIPL Offer Announcement, save for the Revised KTIPL Offer Price, allthe other terms and conditions of the KTIPL Offer as set out in the KTIPL Offer Document remainunchanged.

3.1 Revised KTIPL Offer Price

For and on behalf of KTIPL, Credit Suisse and OCBC are making the Revised KTIPL Offer toacquire all the KTIPL Offer Shares on the following basis:

For each KTIPL Offer Share : S$6.55 in cash

3.2 No Encumbrances

The KTIPL Offer Shares are to be acquired:

(i) fully paid;

(ii) free from all claims, charges, equities, liens, pledges, and other encumbrances; and

(iii) together with all rights, benefits, entitlements and advantages attached thereto as at theKTIPL Offer Announcement Date and thereafter attaching thereto, including the right to alldividends, rights and other distributions (if any) declared, made or paid thereon on or afterthe KTIPL Offer Announcement Date (including any dividends that may be declared, madeor paid thereon in respect of the financial year ended 31 December 2007).

Without prejudice to the generality of the foregoing, the Revised KTIPL Offer Price has beendetermined on the basis that the KTIPL Offer Shares will be acquired with the right to receive anydividends, other distributions or return of capital that may be declared, made or paid by STC on theKTIPL Offer Shares on or after the KTIPL Offer Announcement Date (“STC Distribution”). In theevent any STC Distribution has been paid by STC to a Shareholder who accepts the KTIPL Offer,the Revised KTIPL Offer Price payable to such accepting Shareholder shall be reduced by anamount which is equal to the STC Distribution paid by STC to such accepting Shareholder.Accordingly, if any STC Distribution is declared, made or paid by STC on or after the KTIPL OfferAnnouncement Date and the settlement date in respect of the KTIPL Offer Shares acceptedpursuant to the Revised KTIPL Offer falls after the books closure date for the determination ofentitlements to the STC Distribution, the amount of the STC Distribution in respect of such KTIPLOffer Shares will be deducted from the Revised KTIPL Offer Price payable for such KTIPL OfferShares, as KTIPL will not receive the STC Distribution in respect of those KTIPL Offer Shares fromSTC.

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3.3 Conditions of the Revised KTIPL Offer

In the KTIPL Offer Document, it was stated that the KTIPL Offer will be conditional upon KTIPLhaving received, by the close of the KTIPL Offer, valid acceptances in respect of such number ofKTIPL Offer Shares which, when taken together with the Shares owned or agreed to be acquiredby KTIPL and parties acting in concert with it (either before or during the KTIPL Offer and pursuantto the KTIPL Offer or otherwise), will result in KTIPL and parties acting in concert with it, includingsuch relevant persons, holding such number of Shares carrying more than 50 per cent. of thevoting rights attributable to the issued Shares in the capital of STC as at the close of the KTIPLOffer.

The KTIPL Offer will be unconditional in all other respects.

3.4 Closing Date of the Revised KTIPL Offer

Shareholders should note that the Revised KTIPL Offer will close at 5.30 p.m. on 13 March2008 or such later date(s) as may be announced from time to time by or on behalf of KTIPL.

3.5 Information on KTIPL

KTIPL is a private company limited by shares and was incorporated in Singapore on 13 October2000. Its principal activities are those of an investment holding company. As at the KTIPL OfferAnnouncement Date, KTIPL has an issued and paid-up ordinary share capital of S$20,000,000comprising 20,000,000 ordinary shares, all of which are held by Lee Latex. KTIPL is a directwholly-owned subsidiary of Lee Latex. As at the KTIPL Offer Announcement Date, the directors ofKTIPL are Messrs Huang Thiay Sherng and Tan Khiam Hock.

Lee Latex is a company incorporated in Singapore on 10 June 1947. Its principal activity is that ofinvestment holding. As at the KTIPL Offer Announcement Date, Lee Latex has an issued and paid-up share capital of S$30,000,000 comprising 30,000 ordinary shares. As at the KTIPL OfferAnnouncement Date, the directors of Lee Latex are Messrs Lee Seng Wee, Lee Seng Gee, LeeSeng Tee, Lee Yuen-Shih, Lee Han-Shih (alternate to Lee Seng Gee), Lee Shih Hua (alternate toLee Seng Tee) and Huang Thiay Sherng.

3.6 Rationale for the KTIPL Offer and KTIPL’s Future Plans for STC

The full text of the rationale for the KTIPL Offer and KTIPL’s future plans for STC are stated inSection 5 of the KTIPL Offer Document. Excerpts of the relevant sections are reproduced in italicsbelow.

“The Lee Family has had shareholding interests in STC for many years. The Offeror (together withthe GEH Group and the OCBC Group) has effective control of STC as they control the largestsingle block of Shares. The Offer is being made in response to the Cairns Offer with the objectiveof maintaining or consolidating effective control of STC.”

“It is the intention of the Offeror that STC will continue to develop and grow its existing businesses.Depending on the outcome of the Offer and the resultant shareholding of the Offeror in STCfollowing the close of the Offer, the Offeror (if appropriate together with its Concert Parties) intendsto seek representation on the board of directors of STC.

In addition, after the close of the Offer, if the Offeror (together with the GEH Group and the OCBCGroup) continues to control the largest single block of Shares, the Offeror intends to propose toSTC to engage a financial adviser to conduct a study on the financial performance of STC and torecommend possible steps to take to further unlock value in STC for the benefit of Shareholders. Inthis connection, the Offeror supports the policy of the STC board as stated on page 83 of STC’scircular to Shareholders dated 3 February 2008 in relation to the Cairns Offer, which is reproducedas follows:

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“With a clear focus on shareholders’ value, the Group will continue to review its business strategyand prioritise the allocation of funds to enhance shareholders’ value and to generate higher returnto shareholders in the long term”.

Save as disclosed above, the Offeror has no immediate plans for any major changes relating to theexisting business of the STC Group (including redeployment of fixed assets) or the employment ofthe existing employees of the STC Group, other than in the ordinary course of business.”

The KTIPL Offer Document also sets out the intentions of KTIPL in relation to the listing status ofthe Company as follows:

“It is the present intention of the Offeror to maintain the listing status of STC on the SGX-ST.However, in the event SGX-ST suspends the listing of the Shares on the SGX-ST in the abovecircumstances or in the event that the Offeror receives acceptances in respect of not less than 90%of the Offer Shares (other than those already held by the Offeror, its related corporations or theirrespective nominees as at the date of the Offer and excluding Shares held as treasury shares), theOfferor will reassess its position in respect of its shareholdings in STC.”

Based on the above, we would like to draw your attention to the following:

(i) The Lee Family has had shareholding interests in STC for many years. KTIPL (togetherwith GEH Group and the OCBC Group) has effective control of STC as they control thelargest single block of Shares. As at the Latest Practicable Date, KTIPL and its concertparties own, control or have agreed to acquire an aggregate of 108,927,956 Shares,representing approximately 33.4 per cent. of the total number of issued Shares.

(ii) KTIPL has stated its intention that STC will continue to develop and grow its existingbusinesses. However, KTIPL has also stated its intention to seek representation on theboard of directors of STC depending on the outcome of the Offer and the resultantshareholding of KTIPL and its concert parties in STC following the close of the RevisedKTIPL Offer.

(iii) KTIPL has also stated its intention, if it (together with the GEH Group and the OCBCGroup) continues to control the largest single block of Shares, to propose to STC to engagea financial adviser to conduct a study on the financial performance of the Company and torecommend possible steps to take to further unlock value in STC for the benefit ofShareholders. OCBC has also in its announcement dated 15 February 2008 stated that itintends to, if it together with the GEH Group and the Lee Family Companies continue tohave effective control of the Company, make a formal request to the board of the Companyto appoint, after the close of the offer, a financial adviser to conduct a study and makerecommendations to the Company’s board on possible ways to unlock value and enhanceShareholders’ value.

(iv) KTIPL has stated that it is its present intention to maintain the listing status of the Companyon the SGX-ST. However, in the event that free float falls below 10 per cent. and trading inthe Shares is suspended or in the event that KTIPL is entitled to exercise the right ofcompulsory acquisition pursuant to Section 215(1) of the Act, KTIPL will reassess itsposition in respect of its shareholdings in the Company. Accordingly, there is no assurancethat KTIPL will preserve the listing status of the Company on the SGX-ST if free float isless than 10 per cent. or that it will not exercise the right of compulsory acquisition underSection 215(1) of the Act.

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4. THE FINAL TCPL OFFER

Shareholders should by now have received a copy of the TCPL Offer Document dated 25 January2008 and the Final TCPL Offer Letter dated 18 February 2008 issued by SCB, for and on behalf ofTCPL.

According to the Second Price Revision Announcement on the TCPL Offer, save as disclosed inthe Second Price Revision Announcement on the TCPL Offer, all the other terms and conditions ofthe TCPL Offer as set out in the TCPL Offer Document remain unchanged.

4.1 Final TCPL Offer Price

For and on behalf of TCPL, SCB is making the Final TCPL Offer to acquire all the TCPL OfferShares on the following basis:

For each TCPL Offer Share : S$6.70 in cash

It is stated in the Second Price Revision Announcement on the TCPL Offer that TCPL does notintend to further revise the Final TCPL Offer Price.

4.2 No Encumbrances

The TCPL Offer Shares are to be acquired:

(i) fully paid;

(ii) free from all liens, equities, mortgages, charges, encumbrances, rights of pre-emption andother third party rights and interests of any nature whatsoever; and

(iii) together with all rights, benefits and entitlements attached thereto as at the TCPL OfferAnnouncement Date and thereafter attaching thereto (including the right to receive andretain all dividends and other distributions (if any) announced, declared, paid or madethereon by the Company on or after the TCPL Offer Announcement Date together with allinterest accrued thereon). If any dividend, other distribution or return of capital is declared,made or paid on or after the TCPL Offer Announcement Date, TCPL reserves the right toreduce the Final TCPL Offer Price by the amount of such dividend, distribution or return ofcapital.

In this respect, as announced by the Company on 16 February 2008, the directors of theCompany have declared a second interim divided of one-tier tax exempt dividend of 5 centsper Share in respect of FY2007 payable on 6 May 2008 to those Shareholders on the shareregister on 23 April 2008 (“Second Interim Dividend”). Accordingly, should the SecondInterim Dividend be paid by the Company to a Shareholder who accept the Final TCPLOffer, the Final TCPL Offer Price payable to such accepting Shareholder shall be reducedby an amount which is equal to the Second Interim Dividend paid by the Company to suchaccepting Shareholder.

4.3 Condition of the Final TCPL Offer

In the TCPL Offer Document, it was stated that the TCPL Offer will be conditional upon TCPLhaving received, by the close of the TCPL Offer, valid acceptances in respect of such number ofTCPL Offer Shares which, together with the Shares owned, controlled or agreed to be acquired byTCPL and parties acting in concert with it either before or during the period of the TCPL Offer andpursuant to the TCPL Offer or otherwise, will result in TCPL and the parties acting in concert with itholding such number of Shares carrying more than 50 per cent. of the voting rights of theCompany.

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4.4 Closing Date of the Final TCPL Offer

Shareholders should note that the Final TCPL Offer will close at 5.30 p.m. on 6 March 2008 (the“Final Closing Date”) and TCPL does not intend to extend the Final TCPL Offer beyond 5.30p.m. on the Final Closing Date except where the Final TCPL Offer becomes unconditional as toacceptances or where TCPL incurs a mandatory offer obligation under Rule 14 of the Code duringthe offer period through the acquisition of the Shares (other than pursuant to acceptances of theFinal TCPL Offer).

4.5 Information on TCPL

The information on TCPL is set out in Section 3 and Appendix I of the TCPL Offer Document. Wewish to highlight the following:

(i) TCPL is an investment holding company incorporated in Singapore on 4 March 2005 andits name was changed from Granger Pte. Ltd. to The Cairns Pte. Ltd..

(ii) The directors of TCPL are Chew Gek Khim, Chew Gek Hiang and Chew Kwee San. Theshareholders of TCPL (namely, Kambau Pte. Ltd., Siong Lim Private Limited, Tecity Pte.Ltd., Mellford Pte. Ltd., Raffles Investments Limited, Raffles Investments (Singapore) Pte.Limited. and Raffles Investments (1993) Pte. Ltd.), together with TCPL, are part of a groupof investment companies commonly referred to as the “Tecity Group” (the “Tecity Group”).

(iii) The Tecity Group was founded by the late Tan Sri (Dr) Tan Chin Tuan and is currentlyowned or controlled by his family members (which include the directors of TCPL).

4.6 Rationale for the TCPL Offer and TCPL’s Future Plans for STC

The full text of the rationale for the TCPL Offer and TCPL’s future plans for STC are stated inSection 5 of the TCPL Offer Document. Excerpts of the relevant sections are reproduced in italicsbelow.

“The Offeror is of the view that the Offer is an opportunity for the Tecity Group to acquire anincreased stake in STC as part of its strategic investments in well-run companies.

Various companies in the Tecity Group have been shareholders of STC since the 1950s. Giventhese historical ties, the Tecity Group wishes to increase its shareholding interest in the Company.

For the past 20 years, the Shares have been trading with a very low liquidity but purchases by theTecity Group over the last 10 months have contributed significantly to both the volume and theincreased price of the Shares today. The Tecity Group’s purchases of the Shares have accountedfor approximately 50.1% of the trading in the Shares on the SGX-ST from 1 March 2007 to theOffer Announcement Date.

The share price of the Company has appreciated by 71.6% during the period between 3 January2006 and the Offer Announcement Date, partly driven by buoyant economic conditions and capitalappreciation in the Singapore property market. The Offer Price represents not only a premium tothe volume-weighted average price (as outlined in more detail in paragraph 6 below), but also thehighest price of the Shares in the preceding 20 years (up until the Offer Announcement Date).

In light of the current volatility in global credit and capital markets, the Offer presents theShareholders with an opportunity to realise their investment in the Shares for cash at an attractiveprice.”

“The Offeror does not intend to make changes to the management team of the Company. In theevent that it obtains control of the Company, the Offeror would wish to participate with the board ofdirectors and management of the Company in undertaking a strategic and operational review of theSTC Group’s businesses.

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The Offeror currently has no plans for any changes to (a) the business of the STC Group, (b) thedeployment of the fixed assets of the STC Group or (c) the employment of the employees of theSTC Group.”

The TCPL Offer Document also sets out the intentions of TCPL in relation to the listing status ofthe Company as follows:

“It’s the present intention of the Offeror to maintain the listing status of the Company on the SGX-ST. However, in the event the SGX-ST suspends the listing of the Shares in the manner describedin paragraph 7.1 or in the event that the Offeror is entitled to exercise the right of compulsoryacquisition in the manner as described in paragraph 7.2, the Offeror will reassess its position inrespect of its shareholdings in the Company. Accordingly, there is no assurance that the Offeror willpreserve the listing status of the Company on the SGX-ST if the Free Float is less than 10% or thatit will not exercise the right of compulsory acquisition under Section 215(1) of the Companies Act.”

Based on the above, we would like to draw your attention to the following:

(i) The companies in the Tecity Group have been shareholders of STC since the 1950s. As atthe Latest Practicable Date, TCPL and its concert parties own, control or have agreed toacquire an aggregate of 77,717,348 Shares, representing approximately 23.8 per cent. ofthe voting rights of the Company.

(ii) TCPL has stated that it does not intend to make changes to the management team of theCompany. However, TCPL has further stated that in the event that it obtains control of theCompany, TCPL would wish to participate with the board of directors and management ofthe Company in undertaking a strategic and operational review of the Group’s businesses.

(iii) TCPL has stated that it is its present intention to maintain the listing status of the Companyon the SGX-ST. However, in the event that free float falls below 10 per cent. and trading inthe Shares is suspended or in the event that TCPL is entitled to exercise the right ofcompulsory acquisition pursuant to Section 215(1) of the Act, TCPL will reassess itsposition in respect of its shareholdings in the Company. Accordingly, there is no assurancethat TCPL will preserve the listing status of the Company on the SGX-ST if free float is lessthan 10 per cent. or that it will not exercise the right of compulsory acquisition underSection 215(1) of the Act.

5. INFORMATION ON THE GROUP

5.1 Business

STC was incorporated in Singapore on 8 November 1887. The Group is primarily engaged in tinmining and smelting, hotel investment and management, property operations, financial investmentsand media advertising. The Group’s tin mining and smelting business is carried out by itssubsidiary, Malaysia Smelting Corporation Berhad (“MSC”), which is listed on the Main Board ofBursa Malaysia Securities Berhad (“Bursa Malaysia”).

The Group’s major properties include Straits Trading Building in Singapore, Straits Trading Buildingin Kuala Lumpur, Malaysia as well as residential properties known as Gallop Gables and GallopGreen and bungalow development at Cable Road/Nathan Road, Singapore. The Group also ownsand manages Rendezvous Hotel in Singapore and Rendezvous Observation City Hotel in Perth,Australia, and also currently operates several other hotels in Australia, New Zealand and China.Further details of the Group’s properties are set out in Section 6.2 of this letter.

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5.2 Financial Information

A summary of the financial information of the Group for the last three financial years ended 31December 2007 is set out below. The following summary of financial information should be readtogether with the annual reports of STC in respect of the relevant financial years, where available,including the notes thereto.

Summary of the Group’s Financial Information (1)

(S$’000) FY2005 FY2006 FY2007(Audited) (2) (Audited) (2) (Unaudited)

Revenues 744,364 924,339 1,109,262

Profit from operations before exceptional items 58,019 84,764 116,777

Exceptional items (3) 33,160 139,771 420,028

Profit from operations before taxation 91,179 224,535 536,805

Profit attributable to equity holders 70,003 194,018 484,957

Earnings per Share (cents) 19.6 cents 57.9 cents 148.8 cents

Shareholders’ funds 1,229,443 1,289,322 1,831,487

Net asset value (“NAV”) per Share (S$) S$3.45 S$3.96 S$5.62

Notes:

(1) The summary in this table was extracted from the Company’s annual reports for FY2005 and FY2006 and theannouncement relating to the unaudited financial statements of the Company for FY2007.

(2) Certain comparative figures have been reclassified to conform with FY2007’s presentation in line with the eXtensibleBusiness Reporting Language (XBRL) format.

(3) The exceptional gain in FY2005 amounting to S$33.2 million was mainly due to the gain on disposal of investmentsand properties and revaluation deficit from commercial properties. The exceptional gain in FY2006 amounting toS$139.8 million was mainly due to the recognition of fair value surpluses arising from the revaluation of the Group’sinvestment properties with the adoption of the Singapore Financial Reporting Standard 40, the gain on disposal ofproperties and investments. The exceptional gain in FY2007 amounting to S$420.0 million was mainly due to therecognition of fair value surpluses arising from the revaluation of the Group’s investment properties, net surplusarising from the disposal of the Group’s investments and land plots in Malaysia as well as net tax refund from prioryears’ assessments on gains from sale of long term investment securities by a subsidiary.

6. FINANCIAL EVALUATION OF THE TERMS OF THE OFFERS

Methodology

In assessing the financial terms of the Offers, we have considered the following:

(i) Sum-of-parts valuation of the Group;

(ii) Book net tangible assets (defined to exclude, where applicable, minority interests, deferredtax assets and liabilities, mining rights, deferred exploration and evaluation expenditure,deferred mine development expenditure, management rights and goodwill) (“NTA”) andrevalued NTA (“Revalued NTA”) of the Group;

(iii) Market quotation and trading activity of the Shares;

(iv) Premium paid in other take-overs of companies listed on the SGX-ST;

(v) Financial terms of the selective capital reduction undertaken by the Company in April 2006;

(vi) Dividend track record of the Company; and

(vii) Other relevant considerations which have a significant bearing on our assessment.

General bases and assumptions

In considering the Offers, we have relied solely on information found in the TCPL Offer Document,KTIPL Offer Document and respective subsequent announcements in relation thereto (in particularthe Revised KTIPL Offer Announcement and the Second Price Revision Announcement on theTCPL Offer).

In the course of our analysis, we have relied on the following general bases:

(a) The share capital of the Company as at the Latest Practicable Date is S$265,928,000comprising 325,897,000 Shares; and

(b) The market prices and trading statistics of all securities and equity indices as well asforeign exchange rates used in this letter have been extracted from Bloomberg unlessotherwise stated.

Valuation ratios

We have applied the following valuation ratios in our analysis:

Valuation ratio General description

P/NTA : “P/NTA” or “price-to-NTA” ratio illustrates the ratio of the market price of a company’sshares relative to its historical book NTA per share as recorded in its financialstatements. The NTA figure provides an estimate of the value of a company assumingthe sale of all its tangible assets, the proceeds which are first used to settle its liabilitiesand obligations with the balance available for distribution to its shareholders.Comparisons of companies using their book NTAs are affected by differences in theirrespective accounting policies, in particular their depreciation and asset valuationpolicies. Where the value of a company’s key assets are adjusted to their current marketvalues, the NTA figure derived is referred to as its “Revalued NTA”.

EV/EBITDA : “EV” or “enterprise value” is the sum of a company’s market capitalisation, preferredequity, minority interests, short and long term debt less its cash and cash equivalents.“EBITDA” stands for historical earnings before interest, tax, depreciation andamortisation expenses, inclusive of share of associates’ and joint ventures’ income andexcluding exceptional items. The EV/EBITDA ratio illustrates the market value of acompany’s business relative to its historical pre-tax operating cashflow performance,without regard to the company’s capital structure.

P/E : “P/E” or “price-to-earnings” ratio illustrates the ratio of the market price of a company’sshares relative to its earnings per share. The P/E ratio is affected by, inter alia, the capitalstructure of a company, its tax position as well as its accounting policies relating todepreciation and intangible assets.

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6.1 Sum-of-Parts Valuation of the Group

The Group has four distinct core businesses comprising:

(a) Tin mining and smelting;

(b) Hotel operations;

(c) Property operations; and

(d) Securities trading and investment holding.

Given the unique profile of the Group whereby the Group is engaged in diverse businesses, weconsider it appropriate to value each of the Group’s businesses separately to arrive at anaggregate valuation of the Group on a sum-of-parts basis. We have arrived at a range of valuationfor the Group rather than a single specific value as this will provide a more objective measure ofthe value of the Shares taking into account inter alia market price volatility of MSC and the Group’ssignificant investment portfolio of securities which is sensitive to general stock market andeconomic conditions.

Our valuation methodologies for each of the Group’s businesses are further set out from Section6.1.1 to Section 6.1.4 of this letter. We set out below a summary of our sum-of-parts analysis of theGroup.

Summary of Sum-of-parts Valuation Analysis

Lower Upper(S$’ million) (S$’ million)

Tin mining and smelting 129.8 340.6Hotel operations 112.2 274.8Property operations 1,064.1 1,064.1Investment in United Engineers Limited 66.3 115.5Investment in WBL Corporation Limited 81.5 116.4Remaining investment portfolio 311.7 311.7Other net tangible assets (1) 300.1 300.1

Total valuation of the Group 2,065.7 2,523.2

Estimated valuation for each Share (S$) 6.34 7.74

Note:

(1) “Other net tangible assets” refers to such tangible assets less such tangible liabilities as at 31 December 2007 whichcannot be directly attributable to any of the distinct businesses of the Group, and is provided by the Company.

The Revised KTIPL Offer Price and the Final TCPL Offer Price fall within the range of theestimated sum-of-parts valuation of each Share.

Shareholders should note that a discount may be applied on the sum-of-parts valuation of aconglomerate such as the Group for various reasons. In an efficient capital market, investors cangenerally diversify more effectively by purchasing a portfolio of stocks of focused firms ascompared to purchasing stocks of a conglomerate investing in a range of diverse businesses. Avaluation discount may also be applied as conglomerates are generally believed to use capital lessefficiently. In arriving at the sum-of-parts valuation of the Group above, we have not applied anyconglomerate discount as the quantification of such discount is highly subjective. The conglomeratediscount is dependent on inter alia the size of the conglomerate, the extent of businessdiversification or synergies (if any) within the conglomerate and the requirement for additionalmanagement as compared to standalone businesses.

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Similarly, we have not taken into account any premium that may arise from the Group’s majoritycontrolling interest in MSC nor the economic value of the Group’s hotel trademarks (as elaboratedelsewhere in this letter) as the quantification of such premium is highly subjective.

6.1.1 Tin Mining and Smelting

The Group’s subsidiary, MSC, was incorporated in Malaysia as a private limited companyunder the name of STC (Conversion) Sdn Bhd in 1978 and changed its name to MalaysiaSmelting Corporation Sdn Bhd in 1981. MSC was converted to a public company in 1985and was listed on the Main Board of the Kuala Lumpur Stock Exchange (as it was thenknown) in 1994.

The principal activities of MSC are investment holding and the smelting of tin concentratesand tin bearing materials, the production of various grades of refined tin metal under thebrand name “MSC” and the sales and delivery of refined tin metal and by-products. MSC’ssubsidiaries are principally engaged in tin mining and smelting, investment holding and theprovision of an authorised warehouse for tin metal under the Kuala Lumpur Tin Market andKuala Lumpur Commodity Exchange Warrant. MSC’s associated companies are principallyengaged in tin mining and the manufacture and sale of solder products.

For FY2006, MSC achieved audited consolidated revenue and audited profit after taxattributable to shareholders of approximately MYR1,637.7 million and MYR41.5 million,respectively. For FY2007, MSC achieved unaudited consolidated revenue and unauditedprofit after tax attributable to shareholders of approximately MYR1,913.1 million andMYR67.4 million, respectively. The NTA of MSC amounted to approximately MYR320.6million as at 31 December 2007.

(i) Market quotation and trading activity of the MSC Shares

The trend of the daily last transacted prices of the shares of MSC (“MSC Shares”)from 8 November 2006 (being the date of lifting of its trading suspension) to theLatest Practicable Date is set out below.

Source: Bloomberg

Daily Last Transacted Prices of the MSC Shares(From 8 November 2006 to the Latest Practicable Date)

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

6

6.5

7

7.5

8

8.5

9

Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08

Share Price (MYR)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2.2

2.4

Volume (millions)

Note 3

Note 4

Note 5

Note 8

Note 10

Note 12

Note 13

Note 1

Note 2

Note 6

Note 7

Note 9

Note 11

TCPL Offer Announcement

Date

KTIPL Offer Announcement Date

Revised TCPL Offer Announcement Date

Note 14

Note 16

Revised KTIPL Offer Announcement Date

Second Price Revision

Announcement Dateon the TCPL Offer

Note 15


31

Notes:

(1) On 24 January 2007, MSC announced that the special task force of national police had commencedinvestigations at its 75%-owned subsidiary, PT Koba Tin in Bangka Island as a result of a reportalleging PT Koba Tin’s involvement in the collection of tin ore from small scale miners operatingoutside its contract of work areas.

(2) On 12 February 2007, MSC announced that three of the executive directors of PT Koba Tin havebeen held by the police to assist in their ongoing investigations and that during the period of theinvestigation, PT Koba Tin is allowed to continue mining and smelting but delivery and shipment oftin metal was suspended. It was also announced that it was expected that MSC group’sperformance for the first quarter 2007 would be affected by the developments.

(3) On 21 February 2007, MSC released its unaudited results for FY2006 and reported that netearnings decreased by approximately 25.8% to MYR41.5 million as compared to the correspondingperiod in FY2005.

(4) On 18 April 2007, MSC announced inter alia that PT Koba Tin has been granted export licence bythe Ministry of Trade in Jakarta effective from 18 April 2007 and that it would resume delivery andshipment of tin metal.

(5) On 8 May 2007, MSC released its unaudited results for the 3 months ended 31 March 2007 andreported that net earnings decreased by approximately 33.4% to MYR6.5 million as compared tothe corresponding period in FY2006.

(6) On 4 June 2007, MSC announced inter alia that the three executive directors of PT Koba Tin wereaccused of the allegation of being involved in the collection of tin ore from small scale minersoperating outside PT Koba Tin’s contract of work area, in the district court of Sungailiat in theprovince of Bangka Belitung and that all three directors had maintained a not guilty plea.

(7) On 1 August 2007, MSC announced that the three directors of PT Koba Tin had been fully acquittedof all charges.

(8) On 7 August 2007, MSC released its unaudited results for the 6 months ended 30 June 2007 andreported that net earnings decreased by approximately 26.1% to MYR14.6 million as compared tothe corresponding period in FY2006.

(9) On 16 August 2007, MSC announced that it had entered into a heads of agreement with MetalResources Capital Limited to collaborate in the development of tin and other mineral resources inIndonesia. It was also announced that the parties intend that the joint venture company to be set upseek a listing on a recognised stock exchange at an appropriate time.

(10) On 29 October 2007, MSC announced that it had entered into a joint venture contract with GuangxiGuilin Jinwei Realty Co., Ltd and Vertex Metals Incorporation to establish a new joint venturecompany named Guilin Hinwei Tin Technology Co., Ltd for the smelting and refining of tin, and theproduction and sale of tin-based products in China.

(11) On 2 November 2007, MSC released its unaudited results for the 9 months ended 30 September2007 and reported that net earnings increased marginally by approximately 18.3% to MYR22.1million as compared to the corresponding period in FY2006.

(12) On 23 December 2007, MSC announced that it had entered into a subscription agreement pursuantto which MSC purchased 11.4 million common shares with 6.8 million detachable warrantsrepresenting approximately 12.8% interest in the capital of Asian Mineral Resources Limited whichis listed on the TSX Venture Exchange.

(13) On 28 December 2007, MSC announced that PT Tenaga Anugerah, in which MSC has an indirect60% interest, had entered into mining cooperation agreement with PT Sarana Marindo to undertakeoffshore tin mining.

(14) On 29 January 2008, MSC announced that the head of local police force in Kabupaten (district)Bangka Tengah had issued a letter to its 75%-owned subsidiary, PT Koba Tin, to stop receiving tinore from its subcontractors as well as cease production of tin ingots from its smelting operations.According to the local police, this was to facilitate them to carry out investigations followingallegations that two of PT Koba Tin’s appointed subcontractors have been mining in a forest areawithin PT Koba Tin’s contract of work area where mining is prohibited. PT Koba Tin’s internal controlmeasures and investigations have however, confirmed that all production from its appointedsubcontractors have been derived from mining activities carried out within PT Koba Tin’s contract ofwork area and outside of the forest area.


32

(15) On 12 February 2008, MSC entered into a conditional subscription agreement with BeaconsfieldGold N.L. (“BCD”) in relation to the subscription of 70,000,000 common shares in BCD at 28Australia cents per share, representing approximately 19% of enlarged issued and paid-up sharecapital of BCD for a total cash consideration of approximately 19.6 million Australia dollars (orapproximately MYR57 million) pursuant to a non-brokered private placement by BCD.

(16) On 15 February 2008, MSC announced its unaudited results for FY2007 and reported that netearnings increased by approximately 62.5% to MYR67.4 million as compared to the correspondingperiod in FY2006.

The volume-weighted average price (“VWAP”) and trading volume of the MSCShares from 8 November 2006 to the Latest Practicable Date are set out below.

Dailytrading volume

Average as adaily percentage

trading ofVWAP High Low volume (1) free float (2)

(MYR) (MYR) (MYR) (‘000) (%)

Prior to TCPL OfferAnnouncement Date

Since 8 November 2006 7.19 8.80 5.40 61 0.3Last 1 year 7.35 8.80 5.60 56 0.3Last 6 months 7.70 8.80 6.45 58 0.3Last 3 months 8.31 8.60 7.50 27 0.1Last 1 month 7.78 8.00 7.60 2 <0.1Last traded Market Dayprior to the TCPL OfferAnnouncement 7.80 7.80 7.80 1 <0.1

Last traded Market Dayprior to the KTIPL OfferAnnouncement 7.58 7.60 7.55 50 0.3

After TCPL OfferAnnouncement Date

Between TCPL OfferAnnouncement Date andthe Latest Practicable Date 7.75 8.40 7.10 6 <0.1

As at Latest PracticableDate 7.80 7.80 7.80 1 <0.1

From 8 November 2006 tothe Latest PracticableDate 7.20 8.80 5.40 56 0.3

Source: Bloomberg

Notes:

(1) The average daily trading volume of the MSC Shares is calculated based on the total volume ofshares traded during the period divided by the number of Market Days during that period.

(2) Free float refers to those MSC Shares in which the directors and the substantial shareholders ofMSC has no interests and amounts to approximately 18.9 million MSC Shares or approximately25.2% of the issued share capital of MSC based on information available in MSC’s latest annualreport.


We note the following:

(i) Since 8 November 2006 up to the Latest Practicable Date, the MSC Shareshave traded between a low of MYR5.40 and a high of MYR8.80 with a VWAPof MYR7.20.

(ii) Since 8 November 2006 up to the Latest Practicable Date, the MSC Shareswere traded on 260 Market Days or 82.8% of the total Market Days with anaverage daily trading volume of approximately 56,000 Shares representingapproximately 0.3% of MSC’s free float.

Market price represents the value of a company as perceived by the stock marketand subject to market efficiency and rationality, reflects information relevant to acompany such as its business directions, plans and strategies, expected financialperformance, future prospects and potential growth and is susceptible to, inter alia,investor sentiment and market speculation. Based on the highest and lowest marketprices of the MSC Shares during the period from 8 November 2006 up to the LatestPracticable Date, the valuation of the Company’s existing stake in MSC will rangefrom approximately S$129.8 million to S$211.5 million.

We wish to highlight that a control premium may be imputed on the market valuationof MSC given the majority controlling interest in MSC held by the Group. We havehowever not applied any control premium as the quantification of such premium ishighly subjective. We further note that trading in the MSC Shares has been ratherilliquid. Accordingly, the aforementioned valuation of MSC may not reasonably reflectits fair value.

We wish to highlight that the market price of MSC Shares is and will continue to beaffected to varying extent by changes in, inter alia, market, economic, political,industry, monetary and other general macroeconomic conditions as well ascompany-specific factors. Accordingly, the historical trading performance of the MSCShares should not be relied upon as a promise of its future trading performance.

(ii) Valuation ratios of listed comparable companies of MSC

As an alternative assessment of the valuation of MSC, we consider the valuationratios of selected listed companies which are principally engaged in tin mining andmanufacturing and which are, in our opinion, broadly comparable to MSC (“TinCompanies”). A summary profile of the Tin Companies is set out below.

Exchange ofTin Companies Listing Description

Minsur S.A. Lima Stock Minsur mines and refines tin, copper, and other(“Minsur”) Exchange, Peru metals in Peru. Minsur owns and operates

processing plants in San Rafael and Pisco, anddistributes its products mainly to Asia, the UnitedStates and Europe.

Timah Tbk PT Jakarta Stock PT Timah operates tin mines on Indonesian(“PT Timah”) Exchange, islands such as Bangka and Karimun and coastal

Indonesia areas of Sumatra. Through its subsidiaries, PTTimah also provides consultancy, shippingdockyard and workshop, transportation, explorationand research and development services.

Source: Bloomberg

33


We wish to highlight that the Tin Companies are not exhaustive and they differ fromMSC in terms of, inter alia, market capitalisation, principal exchange of listing, size ofoperations, composition of business activities, asset base, geographical spread, trackrecord, financial performance, operating and financial leverage, risk profile, liquidity,accounting policies, future prospects and other relevant criteria. As such, anycomparison made is necessarily limited and merely serves only as an illustrativeguide.

The valuation ratios of the Tin Companies set out below are based on their lasttransacted share prices as at the Latest Practicable Date.

Marketcapitalisation Current P/E EV/EBITDA P/NTA(S$’ million) (times) (times) (times)

MSC (implied in thelast transacted shareprice of MSC Shares) 256.2 8.7 6.1 1.8

Minsur (1) 4,055.9 8.6 9.3 3.4PT Timah (2) 2,253.6 10.1 25.4 5.1

Mean (3) 9.3 9.3 4.2

MSC’s consolidated netprofit after taxattributable toshareholders forFY2007 (S$’ million) 29.5

MSC’s consolidatedEBITDA for FY2007(S$’ million) 65.9

MSC’s NTA as at31 December 2007(S$’ million) 140.4

Implied valuation ofMSC based on themean valuation ratio(S$’ million) 274.9 465.6 593.5

Implied valuation foreach MSC Share (S$) (4) 3.66 6.21 7.91

Implied valuation of73.16% in MSC heldby STC (S$’ million) 201.1 340.6 434.2

Source: Bloomberg

Notes:

(1) The EV/EBITDA ratio of Minsur is based on earnings as obtained from Bloomberg as at the LatestPracticable Date. The current P/E ratio for 2007 of Minsur is based on analysts’ estimates quoted byBloomberg available as at the Latest Practicable Date. The P/NTA ratio of Minsur is based on itsNTA value as obtained from Bloomberg as at the Latest Practicable Date.

34


35

(2) The EV/EBITDA ratio of PT Timah is based on earnings as set out in its latest available publishedfull-year financial statements as at the Latest Practicable Date. The current P/E ratio for 2007 of PTTimah is based on analysts’ estimates quoted by Bloomberg available as at the Latest PracticableDate. The P/NTA ratio of PT Timah is based on its NTA value as set out in its latest availablepublished financial statements as at the Latest Practicable Date.

(3) In computing the mean EV/EBITDA ratio, the ratio pertaining to PT Timah has been excluded asoutlier.

(4) The implied valuation per MSC Share is based on 75,000,000 outstanding MSC Shares as at theLatest Practicable Date.

Among the P/E ratio, the EV/EBITDA ratio and the P/NTA ratio, it would beappropriate to attach most weight to the P/E ratio and the EV/EBITDA ratio, beingearnings-based valuation approaches given that MSC is a going concern engaged inthe business of tin mining and manufacturing and such business is typically valuedbased on the amount of earnings that it can generate through the use of its capitaland resources. As at the Latest Practicable Date, MSC has not publicly announcedany intention to change the nature of its business or to realise or convert the use ofits assets in any material respect within the foreseeable future.

As at the Latest Practicable Date, the Company holds approximately 73.16%shareholding interest in the issued share capital of MSC. We wish to highlight that acontrol premium may be imputed on the valuation of MSC given the majoritycontrolling interest in MSC held by the Group. We have however not applied anycontrol premium in this analysis as the quantification of such premium is highlysubjective. Accordingly, based on the range of P/E and EV/EBITDA ratios of the TinCompanies, the implied valuation of the Company’s stake in MSC will range fromapproximately S$201.1 million to S$340.6 million.

(iii) Past dealings in MSC Shares by the Group

We note the following past dealings in MSC Shares by the Group:

(a) Takeover of MSC by STC in November 2004

On 26 November 2004, the Company entered into an agreement to purchase8.19% shareholding interest in MSC at a purchase price of MYR6.30 in cashper MSC Share (“Acquisition”). On 17 February 2005, pursuant to theAcquisition, Straits Trading Amalgamated Resources Sdn Bhd (“STAR(M)”), awholly owned subsidiary of the Company, gave notice of a take-over offer forMSC at an offer price of MYR6.30 in cash for each MSC Share (“MSC Take-over”). This offer price was subsequently adjusted, to account for net dividendpaid out by MSC, to MYR6.12 for each MSC Share.

Based on the offer price of MYR6.12 for each MSC Share, MSC would havebeen valued under the MSC Take-over at MYR459.0 million. This translates toan implied valuation of the Company’s existing stake in MSC of approximatelyS$147.5 million. Shareholders should note that such implied valuation of MSCis likely to have imputed a control premium given that the Company did nothave statutory control of MSC prior to the Acquisition and the MSC Take-over.

(b) Purchase of an additional 30.0% equity interest in MSC by the Group inAugust 2006

On 29 August 2006, the Company’s wholly-owned subsidiaries, STAR(M) andSword Investments Private Limited (“Sword”) entered into a conditional shareacquisition agreement with MMC Corporation Berhad pursuant to whichSTAR(M) and Sword agreed to purchase an aggregate of 22,500,000 MSCShares representing a total of 30% interest in the issued share capital of MSCat a purchase price of MYR4.75 in cash for each MSC Share.


36

Based on the purchase price of MYR4.75 for each MSC Share, MSC wouldhave been valued at MYR356.3 million. This translates to an implied valuationof the Company’s existing stake in MSC of approximately S$114.5 million.Shareholders should note that such implied valuation of MSC is likely to haveimputed a liquidity discount given that trading in the MSC Shares was thensuspended as its public float was below the prescribed 25% minimumshareholding spread requirement of Bursa Malaysia.

(c) Placement of MSC Shares by the Group in November 2006

On 1 November 2006, the Company announced that, to facilitate the increasein public shareholding and the re-quotation of MSC Shares on Bursa Malaysia,the Group had successfully placed out 15,422,000 MSC Shares at MYR4.95each. Based on the placement price of MYR4.95 for each MSC Share, MSCwould have been valued at MYR371.3 million. This translates to an impliedvaluation of the Company’s existing stake in MSC of approximately S$119.3million. Shareholders should note that such implied valuation of MSC is likelyto have imputed a discount given that the placement was undertaken torestore public float.

(d) Purchase of an additional 0.15% equity interest in MSC by MSC’s associatedcompany in May 2007

On 10 May 2007, the Company announced that Redring Solder (Malaysia)Sdn Bhd, a 40%-owned associate of MSC had acquired an additional 110,000MSC Shares at MYR7.45 each, thereby increasing the Group’s direct anddeemed interest in MSC to 73.16%. Based on the purchase price of MYR7.45for each MSC Share, MSC would have been valued at MYR558.8 million. Thistranslates to an implied valuation of the Company’s existing stake in MSC ofapproximately S$179.6 million.

Shareholders should note that the above is purely for information purposes only. Wehave not taken into consideration the implied valuation of MSC in the aforementionedtransactions in our assessment of the Group’s tin mining and smelting businessowing to, inter alia, the time elapsed since the aforementioned transactions and thatthe intention of the parties to the transactions as well as the rationale underlyingsuch transactions were entirely different from those of the Offers. The aforementionedtransactions should not be regarded in the context of the Offers as these transactionswere entered into at different points in time under different circumstances and marketconditions.

(iv) Outlook of MSC

We note that STC had, in the announcement of its results for FY2007, stated thefollowing in respect of the tin mining and smelting segment:

“On 29 January 2008, MSC announced that the local police force in Bangka,Indonesia had asked PT Koba Tin to stop receiving tin ore from its sub-contractorsand to cease production of tin ingots. This was to facilitate the police to carry outinvestigations following allegations that two of PT Koba Tin’s appointed sub-contractors had been mining in a forest area within PT Koba Tin’s contract of workarea where mining is prohibited. PT Koba Tin’s internal control measures andinvestigations have, however, confirmed that all production from its appointed sub-contractors have been derived from mining activities carried out within the contract ofwork area and outside the forest area.


37

Subject to early resolution to the current investigation on PT Koba Tin and barringany further unforeseen circumstances, MSC should continue to contribute positivelyin the light of the current high tin prices.”

We wish to highlight the following:

i. On 16 August 2007, MSC entered into a heads of agreement with MetalResources Capital Limited to collaborate in the development of tin and othermineral resources in Indonesia. In connection therewith, a joint venturecompany (“Newco”) will be incorporated in Singapore to inter alia hold theexclusive rights in respect of several proposed tin exploration concessions inIndonesia. It is the intention of the parties to seek a listing of Newco on arecognised stock exchange at an appropriate time. MSC recognised that thisstrategic alliance represents an opportunity to significantly increase thepotential of discovering new tin reserves in identified concessions.

ii. On 29 October 2007, MSC entered into a joint venture contract with GuangxiGuilin Jinwei Realty Co., Ltd and Vertex Metals Technology Co., Ltd toestablish a new joint venture company for the smelting and refining of tin, andthe production and sale of tin and tin-based products in China. While theproposed joint venture is not expected to have an immediate material effect onthe earnings, net assets and gearing of MSC for FY2007, it is howeverexpected to contribute positively to the future earnings of MSC.

iii. On 21 December 2007, MSC entered into a subscription agreement pursuantto which MSC purchased 11.4 million common shares with 6.8 million warrantsrepresenting approximately 12.8% interest in the capital of Asian MineralResources Limited, a company listed on TSX Venture Exchange. Thissubscription represents a strategic and significant entry for the MSC group ofcompanies into the nickel mining business in the Asean region. While theproposed joint venture is not expected to have an immediate material effect onthe earnings, net assets and gearing of MSC for FY2007, it is howeverexpected to contribute positively to the earnings of MSC over the longer term,especially upon commencement of commercial production at the Ban PhucNickel Sulphide Project located in North Vietnam which is expected to takeplace in 2009.

iv. On 28 December 2007, PT Tenaga Anugerah (a company in which MSCindirectly has a 60% interest) entered into a mining cooperation agreementwith PT Sarana Marindo. The Group expects that, barring unforeseencircumstances, this cooperation to undertake offshore tin mining venture willcontribute positively to the earnings of the MSC group in 2008.

v. On 12 February 2008, MSC entered into a conditional subscription agreementwith BCD in relation to MSC’s subscription of 70,000,000 common shares inBCD, representing approximately 19% of the enlarged issued and paid-upshare capital of BCD, for a total cash consideration of approximately 19.6million Australia dollars (or approximately MYR57 million) pursuant to a non-brokered private placement by BCD. This subscription represents a strategicand significant entry for MSC into the gold sector, through a proven high gradegold mining operation in an established gold mining country (Australia). Theinvestment is part of MSC Group’s strategic expansion and diversification intothe resource sectors, following MSC’s entry into the nickel sector throughAsian Mineral Resources Ltd in December 2007.


6.1.2. Hotel Operations

(i) Market value of the hotel assets

In connection with the Offers, the Directors have commissioned the Valuers toconduct independent valuations of its hotel properties (refer to Section 6.2 of thisletter). The Directors are of the view that, apart from those assets encompassed insuch valuation, it is not necessary to revalue the other assets of the Group’s hoteloperations business as the revaluation of these assets would not have a materialimpact on the market value of the hotel assets.

The financial contribution of those hotel assets which the Group owns presentlyaccounts for a major portion of the profit attributable to the Group’s hotel operations.Accordingly, we have not ascribed any value to the management contracts relating tothose hotels not owned by the Group on the basis that the value thereon may not besignificant relative to the market value of the Group’s hotel assets.

Taking into account the revaluation of its hotel properties, the market value of theGroup’s hotel assets as at 31 December 2007 would amount to approximatelyS$274.8 million in aggregate.

(ii) Valuation ratios of listed comparable hotel companies

As an alternative valuation of the Group’s hotel operations business, we consider thevaluation ratios of selected companies listed on the SGX-ST which are principallyengaged in hotel operations and which are, in our opinion, broadly comparable to theCompany in this aspect (“Hotel Companies”).

We wish to highlight that the Hotel Companies are not exhaustive and they differfrom the Group’s hotel operations business in terms of, inter alia, ownership andlocation of hotel assets, size of operations, composition of business activities, assetbase, geographical spread, track record, financial performance, operating andfinancial leverage, risk profile, accounting policies, future prospects and otherrelevant criteria. As such, any comparison made is necessarily limited and merelyserves as an illustrative guide.

38


The valuation ratios of the Hotel Companies set out below are based on their lasttransacted share prices as at the Latest Practicable Date.

Market CurrentCompany capitalisation P/E (1) EV/EBITDA (2) P/NTA (3)

(S$’ million) (times) (times) (times)

Hotel Grand Central 423.8 12.5 5.3 0.7Limited

Hotel Plaza Limited 1,086.0 28.0 10.6 1.3Hotel Properties Limited 1,608.4 12.3 15.2 1.5L.C. Development Ltd 286.3 35.0 19.2 1.1Stamford LandCorporation Limited 457.8 13.7 11.5 1.1

Maximum (4) 13.7 19.2 1.5Minimum (4) 12.3 5.3 0.7Mean (4) 12.8 12.3 1.1

Segment results of thehotel operationsbusiness for FY2007 (5)

(S$ ’million) 8.7

EBITDA of the hoteloperations businessfor FY2007 (5)

(S$’ million) 18.9

NTA of the hoteloperations businessas at 31 December 2007 (5) (S$’ million) 177.7

Implied valuation ofthe hotel operationsbusiness based onthe mean valuationratio (S$’ million) 112.2 215.1 (6) 198.4

Source: Bloomberg and respective companies’ latest available annual reports and financial statements

Notes:

(1) The current P/E ratios for 2007 of Hotel Grand Central Limited and Hotel Properties Limited arebased on analysts’ estimates quoted by Bloomberg available as at the Latest Practicable Date. Thecurrent P/E ratios for Hotel Plaza Limited, L.C. Development Ltd and Stamford Land CorporationLimited are based on their respective earnings as set out in their latest available published full-yearfinancial statements for 2007 as at the Latest Practicable Date and have been adjusted to excludeexceptional items.

(2) The EV/EBITDA ratios of the Hotel Companies are based on their respective earnings as set out intheir latest available published full-year financial statements as at the Latest Practicable Date andhave been adjusted to exclude exceptional items.

(3) The P/NTA ratios of the Hotel Companies are based on their respective NTA values as set out intheir latest available published financial statements as at the Latest Practicable Date.

(4) In computing the maximum, minimum and mean current P/E ratios, Hotel Plaza Limited and L.C.Development Ltd have been excluded as outliers.

(5) Segment results, EBITDA and NTA attributable to the Group’s hotel operations business areprovided by the Company.

39


40

(6) The implied valuation of the hotel operations business is computed by applying the relevantvaluation ratio to the EBITDA of the hotel operations business and adjusting for the segmentliabilities.

Based on the mean P/E, EV/EBITDA and P/NTA valuation ratios of the HotelCompanies, the implied valuation of the Group’s hotel operations business isapproximately S$112.2 million to S$215.1 million.

(iv) Outlook of hotel operations business

We note that STC had, in the announcement of its results for FY2007, stated thefollowing in respect of the hotel operations segment:

“The additions to the Group’s hotel management portfolio such as Christchurch (NewZealand), Kuala Lumpur (Malaysia), Guilin (China), Fujairah (United Arab Emirates)and Shanghai (China) are scheduled to commence operations in 2008/2009 and areexpected to contribute positively.

Refurbishment is currently being carried out at (a) the Rendezvous hotels inAuckland and Port Douglas and (b) the Marque hotels in Sydney and Brisbane,which should lift room rates once completed in 2008. Revenue will further increasewith availability of more rooms at the hotel in Broome after the completion ofrefurbishment in 2007 and higher occupancy and room rates from the newlyrefurbished rooms at the hotel in Melbourne.

Outlook for the hotel industry in Singapore and the region remains strong, whichaugurs well for the Group hotels’ performance.”

6.1.3. Property Operations

(i) Market value of properties

The Group’s property operations comprise property development and holding ofinvestment properties. Currently, the Group’s main investment properties are StraitsTrading Building in Singapore (currently under re-development), Straits TradingBuilding in Kuala Lumpur, Malaysia, Gourmet Gallery, residential properties inSingapore known as Gallop Gables and Gallop Green as well as bungalows at CableRoad/Nathan Road.

In connection with the Offers, the Directors have commissioned the Valuers toconduct independent valuations of certain properties (refer to Section 6.2 of thisletter). The Directors are of the view that, apart from those assets encompassed insuch valuation, it is not necessary to revalue the other properties of the Group as therevaluation of these assets would not have a material impact on the market value ofthe properties.

Taking into account the revaluation of the properties, the market value of the Group’sinvestment properties, properties held for sale and properties under development asat 31 December 2007 would amount to approximately S$1,064.1 million inaggregate.


41

(ii) Outlook of property operations business

We note that STC had, in the announcement of its results for FY2007, stated thefollowing in respect of the property operations segment:

“The Singapore property leasing market continues to be strong. With the increase inrentals and rise in capital values, the Group will continue to benefit from thesefavourable conditions.

The completion of the redevelopment of Straits Trading Building, Singapore in 2009will significantly raise the Group’s rental income. Other major property developmentactivities that the Group may undertake include:

1. the development of Rendezvous Observation City Hotel in Perth, Australia intoa mixed development consisting of a boutique hotel, high-end residentialapartments and retail/commercial areas.

2. the redevelopment, construction and leasing of a hotel-cum-retail complex onOversea-Chinese Banking Corporation Limited (OCBC)’s existing Specialists’Centre and Hotel Phoenix site. As announced on 10 January 2008, theCompany is currently in advanced discussions with OCBC on thisredevelopment project.”

6.1.4. Securities Trading and Investment Holding

The investment portfolio (comprising both long-term investments and short-term marketablesecurities) held by the Group is significant and comprises quoted and unquoted equities,bonds and other securities in Malaysia, Singapore and other countries.

We note that United Engineers Limited (“UE”) and WBL Corporation Limited (“WBL”) whichare both listed on the SGX-ST account for more than 30 per cent. of the Group’sinvestment portfolio and the Company holds, as at the Latest Practicable Date,approximately 12.1% interest in UE and 10.6% interest in WBL. We have thereforeseparately reviewed the trading performance of the shares of UE and WBL and consideredthe sensitivity of the valuation of the portfolio to these shares. We wish to highlight that apremium may be imputed on the valuation of these investments due to the significance ofthe blocks of shares held. In arriving at our valuation of the investment portfolio, we havehowever not applied any premium as the quantification of such premium is highly subjectiveand is dependent on inter alia the existing and desired level of control as well as prevailingmarket conditions and sentiments.


42

(i) Market value of investment in UE

As at the Latest Practicable Date, the Group holds 26,609,240 shares in UE (“UEShares”) representing approximately 12.1 per cent. of UE’s issued share capital.

The trend of the daily last transacted prices of the UE Shares from 8 January 2007(being one year prior to the TCPL Offer Announcement Date) to the LatestPracticable Date is set out below.

Source: Bloomberg

Notes:

(1) On 13 February 2007, UE announced the acquisition of the remaining 12.6% interest in UEIEMvirotech Pte Ltd not held by the UE group for a cash consideration of US$750,000.

(2) On 27 February 2007, UE released its unaudited full-year results for FY2006 and reported that netprofit attributable to members increased by approximately 54% to S$34.8 million as compared toFY2005.

(3) On 19 April 2007, UE announced that the sale of its warehouse complex (known as UE Tech Park)by its 90% subsidiary, United Tech Park Pte Ltd (“UTPPL”), to MacarthurCook Property InvestmentPte Ltd (acting as trustee for MacarthurCook Induistrial REIT) for a total cash consideration ofS$115 million, had been completed.

(4) On 9 May 2007, UE released its unaudited results for the 3 months ended 31 March 2007 andreported that net profit attributable to members increased by approximately 101% to S$11.8 millionas compared to the corresponding period in FY2006.

(5) On 29 May 2007, UE announced the sale of its effective 60% stake in Dalian Xinwei MetalformProducts Company Limited for a consideration of RMB6.0 million.

(6) On 26 June 2007, UE announced the disposal of 29 million shares in Yongnam Holdings Limited fora consideration of approximately S$12.0 million.

Daily Last Transaction Price for UE Shares (From 8 January 2007 to the Latest Practicable Date)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

4.2

4.4

4.6

Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08

Share Price (S$)

0

0.5

1

1.5

2

2.5

3

3.5

4

Volume (Millions)

Note 2

Note 3Note 4

Note 7

Note 8

Note 10

Note 13

Note 14

Note 1

Note 5

Note 6

Note 9

Note 11

Note 12Note 15

TCPL Offer Announcement Date


Revised TCPL Offer Announcement

Date

Revised KTIPL Offer Announcement DateSecond Price

RevisionAnnouncement Date

on the TCPL Offer


43

(7) On 6 August 2007, UE announced that the units at The Rochester were sold at an average price ofS$1,300 per square foot, a first for District 5 private residential property.

(8) On 13 August 2007, UE released its unaudited results for the 6 months ended 30 June 2007 andreported that net profit attributable to members increased by approximately 121% to S$26.7 millionas compared to the corresponding period in FY2006.

(9) On 23 October 2007, UE announced that International Finance Corporation would provide a loan ofUS$9 million which was repayable over a 6-year period commencing 2010 for the purposes offunding approximately 32 medical waste treatment facilities and related operations. In addition,International Finance Corporation would subscribe for convertible redeemable cumulativepreference shares in the capital of UE Envirotech Pte Ltd for a consideration of US$3.5 million.

(10) On 13 November 2007, UE released its unaudited results for the 9 months ended 30 September2007 and reported that net profit attributable to members increased by approximately 164% toS$34.1 million as compared to the corresponding period in FY2006.

(11) On 15 November 2007, UE announced the acquisition of the remaining 40% stake in PT UnitedEngineers Indonesia for a cash consideration of S$0.3 million.

(12) On 23 November 2007, UE announced the disposal of its entire 6.5% interest in Air-SysInternational Holdings Pte Ltd for a consideration of approximately US$0.8 million.

(13) On 30 November 2007, UE announced that its wholly-owned subsidiary, United EngineersDevelopments Pte Ltd, had been awarded a new Built-to-Suit project at the Changi Business Park,by the Jurong Town Council. It was stated that the development cost was estimated to be in theregion of S$280 million and this project was expected to contribute positively to the earnings of UEin the future.

(14) On 26 December 2007, UE announced that its wholly-owned subsidiary, United Infrastructure PteLtd has entered into a conditional share sale and purchase agreement with Xing Gang PowerInvestments Limited for the sale of 67% shareholding interest in its subsidiary, United PowerCorporation for a total cash consideration of US$85.6 million.

(15) On 4 January 2008, UE announced that it had been awarded two residential sites at Ang Mo KioStreet 52 through its 92.5%-owned subsidiary, Greatearth Developments Pte Ltd and the other atAlexandra Road through a 20-80 joint venture between Greatearth Developments and Wing TaiHoldings Ltd.


The VWAP and trading volume of the UE Shares from 8 January 2007 to the LatestPracticable Date are set out below.

Dailytradingvolume

Average as a daily percentage

Highest Lowest trading ofVWAP price price volume (1) free float (2)

(S$) (S$) (S$) (‘000) (%)

Periods prior to TCPLOffer Announcement Date

Last 1 year 3.43 4.34 2.49 479 0.4Last 6 months 3.74 4.34 2.88 406 0.3Last 3 months 3.83 4.10 3.58 285 0.2Last 1 month 3.67 3.80 3.58 196 0.2Last transacted price prior to the TCPL OfferAnnouncement 3.77 3.77 3.72 74 <0.1

Last transacted price prior to the KTIPL OfferAnnouncement 3.28 3.45 3.12 342 0.3


Between TCPL OfferAnnouncement Date andthe Latest Practicable Date 3.50 3.81 2.99 283 0.2

As at Latest PracticableDate 3.65 3.70 3.63 172 0.1

From 8 January 2007 tothe Latest PracticableDate 3.43 4.34 2.49 457 0.4

Notes:

(1) The average daily trading volume of the UE Shares is calculated based on the total volume ofshares traded during the period divided by the number of Market Days during that period.

(2) Free float is estimated to be approximately 124.1 million UE Shares or approximately 57.0% of theissued sharebcapital of UE as disclosed in UE’s latest annual report.


(i) Since 8 January 2007 up to the Latest Practicable Date, the UE Shares havetraded between a low of S$2.49 and a high of S$4.34 with a VWAP of S$3.43.

(ii) Since 8 January 2007 up to the Latest Practicable Date, the UE Shares weretraded on 281 Market Days or 100.0% of the total Market Days with anaverage daily trading volume of approximately 457,000 Shares representingapproximately 0.4% of UE’s free float.

(iii) On the Latest Practicable Date, the UE Shares have traded between a low ofS$3.63 and a high of S$3.70 with a VWAP of S$3.65.

44


45

Based on the highest and lowest market prices of the UE Shares during the periodfrom 8 January 2007 up to the Latest Practicable Date, the valuation of theCompany’s investment in UE will range from approximately S$66.3 million to S$115.5million.

The past trading performance of the UE Shares should not, in any way, be reliedupon as a promise or indication of its future trading performance.

(ii) Market value of investment in WBL

As at the Latest Practicable Date, the Group holds 22,389,120 shares in WBL (“WBLShares”) representing approximately 10.6 per cent. of WBL’s issued share capital.

The trend of the daily last transacted prices of the WBL Shares from 8 January 2007(being one year prior to the TCPL Offer Announcement Date) to the LatestPracticable Date is set out below.

Source: Bloomberg

Notes:-

(1) In March 2006, WBL’s subsidiary listed on Nasdaq, Multi-Fineline Electronix Inc., (“M-Flex”),announced its intention to acquire MFS Technology Ltd. (“MFS”), another of WBL’s subsidiarieswhich is listed on the Main Board of the SGX-ST through a voluntary general offer (“GO”), subject tothe fulfillment of certain conditions by 31 December 2006. In relation thereto, WBL provided anirrevocable undertaking to both M-Flex and MFS to vote in favor of the proposed acquisition at M-Flex’s stockholders meeting (“Undertaking”).

In August 2006, M-Flex announced that its independent special committee of its board of directorshad withdrawn its recommendation for the GO as it had determined that the terms of the GO werecontrary to the best interests of M-Flex and its stockholders. The committee also recommended thatM-Flex stockholders vote against the GO. M-Flex also made an application to the SIC to withdrawthe GO.

In October 2006, M-Flex announced that it had filed a complaint in the United States District Courtfor the Central District of California alleging inter alia that certain filings of certain fund managersand hedge funds were false and misleading and failed to adequately inform M-Flex stockholders asto the true nature of their positions and intentions with respect to M-Flex and failed to disclose theirsubstantial holdings in MFS securities. The aforementioned complaint was subsequently amendedin November 2006. Further, M-Flex also filed a lawsuit in October 2006, in the Delaware ChanceryCourt seeking to direct WBL to vote its M-Flex shares against the GO and its complaint alleged thatcompliance by WBL with the Undertaking would result in WBL breaching its fiduciary duties andobligations to M-Flex’s minority stockholders.

Daily Last Transacted Prices of the WBL Shares (From 8 January 2007 to the Latest Practicable Date)

2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

4.3

4.5

4.7

4.9

5.1

5.3

Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08

Share Price (S$)

0

0.5

1

1.5

2

2.5

3

3.5

Volume (Millions)

Note 2

Note 3

Note 4

Note 5

Note 6

Note 9

Note 11

Note 12

Note 13

Note 16

Note 17

Note 18

Note 1

Note 7 Note 8

Note 10

Note 14

Note 15

Note 19

Note 19Note 20



Revised TCPL Offer Announcement

Date





46

In December 2006, SIC denied M-Flex’s application to withdraw the GO and ruled that M-Flexshould extend the deadline for the fulfillment of the pre-conditions to the GO to 31 March 2007.

On 3 January 2007, WBL announced that the Undertaking had expired as at 31 December 2006.

On 6 January 2007, M-Flex announced that its independent special committee of its board ofdirectors had agreed that M-Flex would extend the deadline for the fulfillment of the pre-conditionsto the GO to 31 March 2007. WBL announced that the Undertaking will not be extended.

On 22 January 2007, M-Flex announced that Stark Master Fund and M-Flex had voluntarily agreedto dismiss without prejudice the litigation by Stark Master Fund against M-Flex in the DelawareChancery Court and that such dismissal did not affect the pending action brought by M-Flex againstWBL which was proceeding.

(2) On 5 February 2007, WBL announced that, pursuant to an application made by WBL, the Court ofChancery of the State of Delaware had ordered on 2 February 2007 that M-Flex’s suit against WBLin connection with the GO be dismissed.

(3) On 14 February 2007, WBL released its unaudited results for the 3 months ended 31 December2006 and reported that net profit attributable to the equity holders of WBL decreased byapproximately 71.2% to S$7.4 million as compared to the corresponding period in FY2006.

(4) On 16 March 2007, WBL announced that having considered inter alia various key factors includingthe strategic, operational and financial synergies which are anticipated to arise from making MFS asubsidiary of M-Flex, it would continue to be in the interests of WBL to continue to proceed with thedisposal of its holdings in MFS for M-Flex common stock when the GO is made by M-Flex.

(5) On 31 March 2007, M-Flex announced that the independent special committee of its board ofdirectors had agreed, at the discretion of the SIC, to extend the deadline for fulfillment of the pre-conditions to the GO from 31 March 2007 to 30 June 2007.

(6) On 12 April 2007, WBL announced the disposal of its entire 43% interest in the registered capital ofWBL Peking University Biotech Co. Ltd for a cash consideration of approximately S$19.9 million.

(7) On 20 April 2007, WBL announced the acquisition of the remaining 51% interest in the capital ofSummer Palace Management Co Ltd not held by WBL for a cash consideration of approximatelyS$11.8 million.

(8) On 7 May 2007, WBL announced the disposal of its entire interest in the issued share capital ofWearnes Biotech & Medicals (1998) Pte Ltd for a consideration of approximately S$2.1 million.

(9) On 12 May 2007, WBL released its unaudited results for the 6 months ended 31 March 2007 andreported that net profit attributable to the equity holders of WBL decreased by approximately 77.5%to S$9.1 million as compared to the corresponding period in FY2006.

(10) On 20 June 2007, WBL announced that it had entered into a 40-60 joint venture with GIC RealEstate Pte Ltd to undertake the development of a prime retail mall, commercial and residentialproject in Shenyang, the capital of Liaoning Province, China.

(11) On 26 June 2007, WBL announced that the proposed disposal of its interest in MFS to M-FlexPursuant to the GO was not approved by its shareholders at the extraordinary general meeting. On27 June 2007, M-Flex announced that its special committee of independent directors intend towithdraw M-Flex’s amended Registration Statement on Form S-4 regarding the GO.

(12) On 17 July 2007, WBL announced that the Group would be reporting a loss for the third quarterended 30 June 2007.

(13) On 8 August 2007, WBL announced the disposal of its entire 51% interest in Wuhan Speedling CoLtd for a cash consideration of RMB3.0 million and the disposal of its entire 50% interest inTongcheng Medicinal Plants Development Co., Ltd for a cash consideration of RMB0.6 million.

(14) On 14 August 2007, WBL released its unaudited results for the 9 months ended 30 June 2007 andreported a net loss attributable to the equity holders of WBL of S$18.2 million compared to a profitof S$49.2 million in the corresponding period in FY2006.

(15) On 27 August 2007, WBL announced the proposed sale and lease back arrangement in respect ofits property known as 163 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong for a cash considerationof HK$202 million.


47

(16) On 5 October 2007, WBL announced that its Thai precision manufacturing subsidiary, WearnesPrecision (Thailand) Limited (“WPT”), in which the group has a 98% effective interest, had on thatday filed a petition for business reorganisation with the Central Bankruptcy Court in Thailand. Inaddition to the impairment charge of S$26.6 million, the discontinuation of this Thai unit would resultin retrenchment costs of approximately S$2.1 million which would have a further impact on theGroup’s results for FY2007.

(17) On 9 November 2007, WBL announced that the WBL group will be reporting a loss for its FY2007full year results.

(18) On 22 November 2007, WBL released its unaudited results for FY2007 and reported a net lossattributable to the equity holders of WBL of S$20.2 million compared to a profit of S$58.9 million inFY2006.

(19) On 24 January 2008, WBL presented at its annual general meeting, a summary of the WBL group’sreal estate holdings.

(20) On 5 February 2008, WBL announced, with reference to the previous announcement released on 5October 2007 that the Central Bankruptcy Court in Thailand has on 4 February 2008 issued anorder allowing WPT to reorganise its business under the Thai Bankruptcy Act and appointing KPMGPhoomchai Business Advisory Ltd. as the planner of WPT.

(21) On 14 February 2008, WBL released its unaudited results for the 3 months ended 31 December2007 and reported that net profit attributable to the equity holders of WBL increased byapproximately 442.2% to S$40.2 million as compared to the corresponding period in FY2007.

The VWAP and trading volume of the WBL Shares from 8 January 2007 to the LatestPreacticable Date are set out below.

Dailytradingvolume

Average as a daily percentage

Highest Lowest trading ofVWAP price price volume (1) free float (2)

(S$) (S$) (S$) (‘000) (%)

Periods prior to TCPLOffer Announcement Date

Last 1 year 4.47 5.20 3.64 100 0.1Last 6 months 4.29 5.10 3.64 79 0.1Last 3 months 3.99 4.20 3.64 77 0.1Last 1 month 4.07 4.20 3.97 48 0.1Last transacted price priorto the TCPL OfferAnnouncement 4.00 4.00 4.00 5 <0.1

Last transacted price priorto the KTIPL OfferAnnouncement 3.90 3.90 3.70 11 <0.1


Between TCPL OfferAnnouncement Date andthe Latest Practicable Date 4.07 4.26 3.67 136 0.2

As at Latest PracticableDate 4.20 4.23 4.17 424 0.5

From 8 January 2007 tothe Latest PracticableDate 4.41 5.20 3.64 104 0.1


48

Notes:

(1) The average daily trading volume of the WBL Shares is calculated based on the total volume ofshares traded during the period divided by the number of Market Days during that period.

(2) Free float is estimated to be approximately 88.8 million WBL Shares or approximately 42.3% of theissued share capital of WBL as disclosed in WBL’s latest annual report.


(i) Since 8 January 2007 up to the Latest Practicable Date, the WBL Shares havetraded between a low of S$3.64 and a high of S$5.20 with a VWAP of S$4.41.

(ii) Since 8 January 2007 up to the Latest Practicable Date, the WBL Shares weretraded on 269 Market Days or 95.7% of the total Market Days with an average daily trading volume of approximately 104,000 Shares representingapproximately 0.1% of WBL’s free float.

(iii) On the Latest Practicable Date, the WBL Shares have traded between a low ofS$4.17 and a high of S$4.23 with a VWAP of S$4.20. The trading volume onthe Latest Practicable Date was significantly higher at approximately 424,000Shares compared to the average daily trading volume of 104,000 Sharesduring the period from 8 January 2007 to the Latest Practicable Date.

Based on the highest and lowest market prices of the WBL Shares during the periodfrom 8 January 2007 up to the Latest Practicable Date, the valuation of theCompany’s investment in WBL will range from approximately S$81.5 million toS$116.4 million. We note however that trading in the WBL Shares has historicallybeen rather illiquid. Accordingly, the aforementioned valuation of WBL may notreasonably reflect its fair value.

The past trading performance of the WBL Shares should not, in any way, be reliedupon as a promise or indication of its future trading performance.

(iii) Market value of remaining investment portfolio

We set out below a geographical and industry breakdown of the Group’s remaininginvestment portfolio and their respective market values as at 31 December 2007.

Market Value Breakdown of the Group’s Remaining Investment Portfolio by Industry and Country as at 31 December 2007 (S$’million)

Industry / Country Malaysia Singapore Others Sub-Total

Finance 4.1 51.3 3.4 58.8Commerce – 0.9 – 0.9Consumer products 7.5 – – 7.5Industrial and commercial – – 19.0 19.0Industrial products 4.2 – – 4.2Manufacturing – 17.8 – 17.8Multi-industry – 3.5 – 3.5Mining and resources 0.1 – 38.8 38.9Plantation 16.9 0.1 – 17.0Properties and hotel 0.9 28.9 2.1 31.9Trading 134.4 1.5 – 135.9Transport 1.9 – – 1.9Others – 1.1 – 1.1

TOTAL 170.0 105.1 63.3 338.4


49

Based on information provided by the Company, the aggregate market value of theGroup’s remaining investment portfolio (excluding its investments in UE and WBL)amounted to approximately S$338.4 million as at 31 December 2007 andapproximately S$311.7 million as at the Latest Practicable Date.

We wish to highlight that the composition of the Group’s investment portfolio maychange from time to time and the market prices of the securities held by the Groupare and will continue to be affected to varying extent by changes in, inter alia,market, economic, political, industry, monetary and other general macroeconomicconditions as well as company-specific factors. Therefore, the historical marketvalues of the Group’s investment holdings, as set out above, should not in any waybe relied upon as a promise or indication of its future market values.

(iv) Outlook of securities trading and investment holding business

We note that STC had, in the announcement of its results for FY2007, stated thefollowing in respect of the financial investments segment:

“Activities from the trading of securities are expected to remain low and dividendincome will likely remain at current levels.”

6.2 Book NTA and Revalued NTA of the Group

Given the asset intensive nature of the Group’s business, we have considered both the book NTAand Revalued NTA of the Group in assessing the Revised KTIPL Offer Price and Final TCPL OfferPrice. Based on the Company’s unaudited consolidated financial statements for FY2007, the Groupalso has significant cash at bank and on deposit amounting to approximately S$346.2 million as at31 December 2007. In assessing the Revised KTIPL Offer Price and the Final TCPL Offer Price,we have therefore also considered both the book NTA and Revalued NTA of the Group on an ex-cash basis.

6.2.1. Book NTA and ex-cash book NTA

Based on the Company’s unaudited consolidated financial statements for FY2007, theunaudited book NTA of the Group as at 31 December 2007 (as computed by theCompany’s management) was approximately S$1,824.5 million or approximately S$5.60per Share. The Revised KTIPL Offer Price is at a premium of approximately 17.0% and theFinal TCPL Offer Price is at a premium of approximately 19.6% over the unaudited bookNTA per Share as at 31 December 2007.

On an ex-cash basis, the unaudited book NTA of the Group as at 31 December 2007 wasapproximately S$1,478.3 million or approximately S$4.54 per Share. The ex-cash RevisedKTIPL Offer Price of approximately S$5.49 is at a premium of approximately 20.9%, andthe ex-cash Final TCPL Offer Price of approximately S$5.64 is at a premium ofapproximately 24.2%, and over the ex-cash book NTA per Share as at 31 December 2007.


50

6.2.2. Revalued NTA and ex-cash Revalued NTA

To obtain an estimate of the Revalued NTA of the Group, we have relied upon theCompany’s unaudited consolidated financial statements as at 31 December 2007 as a baseand made the appropriate adjustments (based on information provided by the Company) totake into account the following:

(i) Fair value changes of the Group’s investment portfolio from 31 December 2007 tothe Latest Practicable Date

The Group’s investment portfolio (comprising both long-term investments and short-term marketable securities) amounted to approximately S$526.4 million as at 31December 2007 and has decreased to approximately S$502.6 million as at theLatest Practicable Date mainly due to net sales of securities and fair value changes.

We have made adjustment for the fair value changes in the Group’s investmentportfolio since 31 December 2007 based on information provided by the Company.

(ii) Revaluation of certain properties owned by the Group (the “Revalued Properties”) totheir open market values as at 31 December 2007

The Directors have commissioned the Valuers to conduct independent valuations ofthe Revalued Properties and their valuation certificates are set out in Appendix 8 tothe TCPL Offeree Circular.

The valuation of the Revalued Properties is carried out on an open market valuebasis and is according to the current intended uses of the Revalued Properties asadvised by the Company’s management. The Group’s property known as StraitsTrading Building in Singapore has been valued taking into account its developmentpotential on the basis that the development has been completed according to theGroup’s plans as at 31 December 2007 and after factoring in the relevant estimateddevelopment costs. With regard to the Rendezvous Observation City Hotel in Perth,Australia, we understand from the Company that while the Group has submittedplans for the conversion of the existing hotel tower to 112 residential apartments andfor the construction of a new 8-level, 140-room hotel, such plans are not finalised andare subject to further changes. Whilst the Valuers have had regard to the underlyingproperty considerations such as zoning and potential alternate use issues, itsvaluation has been carried out on a “going-concern” basis assuming vacantpossession of hotel management, as advised by the Company’s management, andnot in accordance with the proposed re-development plan which may have a valuethat differs from the value reported by the Valuers. The remaining RevaluedProperties are valued based on their existing uses.

Save as stated below, the other assets of the Group have not been revalued for thepurpose of determining the Revalued NTA of the Group. The Directors haveconfirmed to us that to the best of their knowledge and belief, that there are nomaterial differences between the realisable value of these other assets and theirrespective book values as at 31 December 2007 which would have a material impacton the Revalued NTA of the Group. The Directors have confirmed to us that therehave been no material acquisitions and disposals of assets by the Group, its jointventure companies and its associated companies since 31 December 2007 up to theLatest Practicable Date. Further, the Directors have also confirmed to us that to thebest of their knowledge and belief, other than that already provided for or disclosed inthe Company’s unaudited consolidated financial statements for FY2007 (refer toSection 7.3 of this letter), there are no other contingent liabilities which are likely tohave a material impact on the NTA of the Group as at the Latest Practicable Date.


We set out below the open market values of the Revalued Properties and the netrevaluation surplus/(deficit) after potential tax liabilities arising from the revaluation of theRevalued Properties.

Net revaluationsurplus afterpotential tax

Description (1) Open market value liabilities (2)

(S$’ million) (S$’ million)

Investment Properties

Straits Trading Building,9 Battery Road, Singapore 049910(Undergoing re-development) 391.3 (3) 115.5

Properties Held for Sale

17 apartment units atGallop Gables, 74/76/78/80/82 Farrer Road, Singapore 268852/3/4/5/6 45.5 28.7

4 units of 3-storey shop houses and 5 units of 4-storey shop houses atJalan SelatTaman SelatButterworth 2.2 1.5

Hotels

Hotel Rendezvous, Singapore,9 Bras Basah Road,Singapore 189559 165.4 61.0

Rendezvous Observation City Hotel, Perth,183 West Coast Highway, Scarborough, Perth, Western Australia 105.1 55.5

Properties Under Development

6 plots of land Cable Road and Nathan Road,Singapore 79.8 77.4

Total 339.6

Notes:

(1) We have excluded in the table above properties which were revalued by the Group but did not result in anymaterial net revaluation surplus. Please refer to Appendix 8 of the TCPL Offeree Circular.

(2) The potential tax effects arising from the hypothetical sale of the Revalued Properties are computed by themanagement of the Company in consultation with its respective tax advisers in the different tax jurisdictions.For the purpose of the computation, the fair market values (as determined by the Valuers) are taken to bethe hypothetical sales proceeds arising from the disposal of the Revalued Properties.

(3) The open market value of Straits Trading Building at 9 Battery Road, Singapore, is derived based on thegross development value on completion (as appraised by the Valuers) of S$439.0 million less the relevantdevelopment costs as estimated by the Company’s management amounting to approximately S$47.7million.

51


52

We set out below the computation of the Group’s Revalued NTA as at 31 December 2007.

S$’ million S$’ million

Unaudited book NTA as at 31 December 2007 1,824.5

Gross revaluation surplus on Revalued Properties 357.5

Less: Potential tax liabilities (17.9)

Net revaluation surplus 339.6

Less: Net decrease in fair value of the Group’sinvestment portfolio (17.4)

Add: Net gain on disposal of group’s investments 0.3

Net adjustments 322.5

Revalued NTA as at 31 December 2007 2,147.0

Revalued NTA per Share as at 31 December 2007 S$6.59

Discount of Revised KTIPL Offer Price to RevaluedNTA per Share as at 31 December 2007 (0.6)%

Premium of Final TCPL Offer Price over RevaluedNTA per Share as at 31 December 2007 1.7%

The Revised KTIPL Offer Price is at a discount of approximately 0.6 per cent. while theFinal TCPL Offer Price is at a premium of approximately 1.7 per cent. to the Revalued NTAper Share of S$6.59 as at 31 December 2007.

On an ex-cash basis, the Revalued NTA of the Group as at 31 December 2007 would beapproximately S$1,800.8 million or approximately S$5.53 per Share. The ex-cash RevisedKTIPL Offer Price of approximately S$5.49 is at a discount of approximately 0.7 per cent.while the ex-cash Final TCPL Offer Price of approximately S$5.64 is at a premium ofapproximately 2.0 per cent. to the ex-cash Revalued NTA per Share as at 31 December2007.

Shareholders should note that the above analysis assumes the hypothetical sale of theassets (including the Revalued Properties) of the Group as at the Latest Practicable Date.The Directors have confirmed to us that as at the Latest Practicable Date, save for thoseproperties held for sale, the Group has not entered into any negotiation with any party inrespect of any impending material disposal and/or conversion of the use of the Group’sassets and/or any material change in the nature of the Group’s businesses.

In addition, we wish to highlight that the Revalued NTA per Share shown above includesthe revaluation surpluses on properties and changes in value arising from the Group’sinvestment portfolio. Shareholders should be aware that the Group has not fully earned orrealised the surpluses on such properties nor materialised the value of its investmentportfolio as at the Latest Practicable Date. There is no assurance that any surpluses orreturns eventually recorded by the Group on its properties and investment portfolio will bethe same as that appraised by the Valuers or indicated in the table above.


53

6.3 Market Quotation and Trading Activity of the Shares

6.3.1 Historical Share Price Performance

The trend of the daily last transacted prices of the Shares from 7 January 2005 (beingthree years prior to the TCPL Offer Announcement Date) to the Latest Practicable Date isset out below.

Source: Bloomberg

Notes:-

(1) On 17 February 2005, the Company announced that it had served notice of the MSC Take-over as a resultof its acquisition of the MSC Shares.

(2) On 25 February 2005, the Company released its unaudited results for FY2004 and reported that netearnings increased by approximately 33.7% to S$55.3 million as compared to the corresponding period inFY2003.

(3) On 10 March 2005, the Company announced that the offer price in the MSC Take-over was adjusted for netdividend from MYR6.30 to MYR6.12 per offer share.

(4) On 17 March 2005, the Company announced that the MSC Take-over had become unconditional.

(5) On 14 April 2005, the Company announced that the MSC Take-over had closed and the Group’s resultantshareholding in MSC was 63.16%. As a result of the MSC Take-over, trading in the MSC Shares would besuspended from 31 May 2005.

(6) On 27 April 2005, the Company released its unaudited results for the 3 months ended 31 March 2005 andreported that net earnings decreased by approximately 16.7% to S$15.5 million as compared to thecorresponding period in FY2004.

(7) On 8 June 2005, the Company announced that as a result of the merger of the asset managementoperations of OCBC Asset Management Limited and Straits Lion Asset Management (“SLAM”), STC’sinterest in SLAM would be 15.1%.

(8) On 5 August 2005, the Company released its unaudited results for the 6 months ended 30 June 2005 andreported that net earnings decreased by approximately 4.7% to S$55.1 million as compared to thecorresponding period in FY2004.

(9) On 10 August 2005, the Company announced the sale of its entire stake of 15.1% in the capital of SLAM toOCBC Bank and Great Eastern Holdings Limited for a consideration of S$43.1 million.

(10) On 29 September 2005, the Company announced the sale-and-lease-back of 18, 20, 22 Cross Street,Singapore. The sale price of the said property was S$390 million.

Daily Last Transacted Prices of the Shares(From 7 January 2005 to the Latest Practicable Date)

00.20.40.60.8

11.21.41.61.8

22.22.42.62.8

33.23.43.63.8

44.24.44.64.8

55.25.45.65.8

66.26.46.66.8

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08

Share Price(S$)

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

Volume(Millions)

Note 2Note 6

Note 8

Note 11Note 12

Note 14

Note 16

Note 17

Note 22

Note 23

Note 24

Note 25

Note 26

Note 27

Revised KTIPL Offer Price

Note 1 Note 3

Note 4

Note 5

Note 7

Note 9 Note 10 Note 13

Note 15

Note 18

Note 19

Note 20

Note 21

Note 28




Note 29

Note 30




Note 31Note 32Final TCPL Offer Price

Note 33


54

(11) On 11 November 2005, the Company released its unaudited results for the 9 months ended 30 September2005 and reported that net earnings decreased by approximately 36.2% to S$45.9 million as compared tothe corresponding period in FY2004.

(12) On 30 December 2005, the Company announced the Selective Capital Reduction (as defined hereinafter).

(13) On 12 January 2006, the Company announced the sale of its entire holding in the issued share capital ofKillinghall (Malaysia) Berhad.


(15) On 20 March 2006, the Company announced that its wholly-owned subsidiary, Merevale Holdings PrivateLimited had sold its 51% interest in the issued share capital of Straits Eastern Square Private Limited, asubsidiary of The Great Eastern Life Assurance Company Limited, for a cash consideration of S$4.36million.

(16) On 9 May 2006, the Company released its unaudited results for the 3 months ended 31 March 2006 andreported that net earnings increased by approximately 176.2% to S$42.9 million as compared to thecorresponding period in FY2005.

(17) On 8 August 2006, the Company released its unaudited results for the 6 months ended 30 June 2006 andreported that net earnings increased by approximately 20.9% to S$64.4 million as compared to thecorresponding period in FY2005.

(18) On 29 August 2006, the Company announced that the Group had purchased an additional 30.0% interest inMSC, increasing its interest from 63.31% to 93.31%.

(19) On 21 September 2006, the Company announced that the Group had entered into an agreement with MSCto implement several corporate proposals to restore public float.

(20) On 1 November 2006, the Company announced that the Group had successfully placed out MSC Shares torestore public float and accordingly, the corporate proposals announced on 21 September 2006 had beenaborted. STC’s resultant shareholding was 73.01%.

(21) On 7 November 2006, the Company announced that MSC would be re-quoted on Bursa Malaysia on 8November 2006.

(22) On 10 November 2006, the Company released its unaudited results for the 9 months ended 30 September2006 and reported that net earnings increased by approximately 120.2% to S$95.4 million as compared tothe corresponding period in FY2005.


(24) On 10 May 2007, the Company released its unaudited results for the 3 months ended 31 March 2007 andreported that net earnings increased by approximately 29.1% to S$55.4 million as compared to thecorresponding period in FY2006. On the same date, the Company also announced that its direct anddeemed interest in MSC had been increased to 73.16%.

(25) On 14 August 2007, the Company released its unaudited results for the 6 months ended 30 June 2007 andreported that net earnings increased by approximately 351.7% to S$290.8 million as compared to thecorresponding period in FY2006.

(26) On 9 November 2007, the Company released its unaudited results for the 9 months ended 30 September2007 and reported that net earnings increased by approximately 214.9% to S$300.6 million as compared tothe corresponding period in FY2006.

(27) On 6 January 2008, the TCPL Offer was announced.

(28) On 10 January 2008, the Company announced that it is in advanced negotiation with OCBC Bank in respectof the development, construction and completion of a hotel cum retail complex at OCBC Bank’s existingSpecialists’ Centre and Hotel Phoenix sites.

(29) On 24 January 2008, the KTIPL Offer was announced.

(30) On 28 January 2008, the Revised TCPL Offer was announced.

(31) On 14 February 2008, the Revised KTIPL Offer was announced.



(33) On 18 February 2008, the Final TCPL Offer was announced.

The VWAP and trading volume of the Shares from 7 January 2005 to the Latest PracticableDate are set out below.

Premium/ Premium/(Discount) (Discount) Daily trading

of Final of Revised Average volume as a TCPL Offer KTIPL Offer daily percentagePrice over Price over Highest Lowest trading of

VWAP VWAP VWAP price price volume (1) free float (2)

(S$) (%) (%) (S$) (S$) (‘000) (%)

Periods priorto TCPL OfferAnnouncementDate

Last 3 years 3.39 97.4 92.9 5.30 2.22 256 0.2Last 2 years 3.96 69.2 65.4 5.30 2.58 234 0.2Last 1 year 4.45 50.5 47.2 5.30 3.42 299 0.2Last 6 months 4.72 42.0 38.8 5.30 4.02 239 0.2Last 3 months 4.96 35.0 31.9 5.30 4.52 224 0.2Last 1 month 5.14 30.4 27.5 5.30 4.90 449 0.3Last transacted price prior to the TCPL Offer Announcement 4.96 35.1 32.1 4.97 4.92 811 0.6

Last transacted price prior to the KTIPL Offer Announcement 5.71 17.3 14.7 5.72 5.70 279 0.2

Last transacted price prior to the Revised TCPL Offer Announcement 5.89 13.8 11.2 6.11 5.88 166 0.1

After TCPL OfferAnnouncementDate

Between TCPL Offer Announcement Date and the Latest Practicable Date 6.17 8.5 6.1 6.82 5.62 568 0.4

As at Latest Practicable Date 6.70 – (2.3) 6.71 6.70 614 0.4

Source: Bloomberg

Notes:

(1) The average daily trading volume of the Shares is calculated based on the total volume of shares tradedduring the period divided by the number of Market Days during that period.

(2) Free float refers to those Shares in which the Directors and the substantial shareholders of the Companyhas no interests as at the Latest Practicable Date, and amounts to approximately 138.9 million Shares orapproximately 42.6% of the issued share capital of STC as at the Latest Practicable Date.

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56


(i) Over the last three years prior to the TCPL Offer Announcement Date, the marketprice of the Shares has trended upwards and has traded at between a low of S$2.22and a high of S$5.30, with an average daily trading volume of 256,000 Shares. Asthe market price of the Shares did not trade at or above the Revised KTIPL OfferPrice and the Final TCPL Offer Price during this 3-year period, the Revised KTIPLOffer Price and the Final TCPL Offer Price are at a premium to the VWAP of theShares for all the historical periods within this time span.

(ii) Over a longer historical period, the Revised KTIPL Offer Price represents asignificant premium of 92.9 per cent., 65.4 per cent. and 47.2 per cent. over thecorresponding VWAP of the Shares over the 3-year period, 2-year period and 1-yearperiod prior to the TCPL Offer Announcement Date, respectively, while the FinalTCPL Offer Price represents a significant premium of 97.4 per cent., 69.2 per cent.and 50.5 per cent. over the corresponding VWAP of the Shares over the 3-yearperiod, 2-year period and 1-year period prior to the TCPL Offer Announcement Date,respectively.

(iii) Over a more recent historical period, the Revised KTIPL Offer Price represents apremium of 38.8 per cent., 31.9 per cent. and 27.5 per cent. over the correspondingVWAP over the 6-month period, 3-month period and 1-month period prior to theTCPL Offer Announcement Date, respectively, while the Final TCPL Offer Pricerepresents a premium of 42.0 per cent., 35.0 per cent. and 30.4 per cent. over thecorresponding VWAP over the 6-month period, 3-month period and 1-month periodprior to the TCPL Offer Announcement Date, respectively.

(iv) During the 3-month period prior to the TCPL Offer Announcement Date, based onpublicly available information, KTIPL and its concert parties did not acquire anyShares while the Tecity Group had acquired 4,106,000 Shares in aggregate at anaverage price of between S$4.59140 and S$5.09733 each and these accounted forapproximately 30.10% of the total trading volume of the Shares over that period.

(v) From the TCPL Offer Announcement Date to the Latest Practicable Date, the marketprice of the Shares has traded at between a low of S$5.62 to a high of S$6.82, withan average daily trading volume of 568,000 Shares.

(vi) From the TCPL Offer Announcement Date to the Latest Practicable Date, based onpublicly available information, KTIPL and/or its concert parties had acquired3,441,424 Shares in aggregate at a price of between S$5.66 to S$5.75 each andthese accounted for approximately 19.5% of the total trading volume of the Sharesover that period. Over the same period, based on publicly available information,TCPL and/or its concert parties had acquired 4,512,805 Shares in aggregate at aprice of between S$5.65 to S$6.70 each and these accounted for approximately25.6% of the total trading volume of the Shares over that period.

(vii) As at the Latest Practicable Date, the last traded market price of the Shares is abovethe Revised KTIPL Offer Price and is equal to the Final TCPL Offer Price. TheRevised KTIPL Offer Price is at a discount of approximately 2.2 per cent. and theFinal TCPL Offer Price is equal to the last transacted price of the Shares of S$6.70on the Latest Practicable Date.


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(viii) During the 1-year period prior to the TCPL Offer Announcement Date, the Shareswere traded on 248 Market Days or 99.2% of the total Market Days with an averagedaily trading volume of approximately 299,000 Shares representing approximately0.2% of the free float.

The past trading performance of the Shares should not, in any way, be relied upon as apromise or indication of its future trading performance.

6.3.2 Relative Share Price Performance vis-à-vis Performance of Market Indices

To gauge the market price performance of the Shares relative to the general performanceof the Singapore equity market, we have compared the normalised market price movementof the Shares against that of the Straits Times Index (“STI”) for the period between 7January 2005 (being three years prior to the TCPL Offer Announcement Date) and theLatest Practicable Date, as illustrated below.

Source: Bloomberg

Based on the above chart, on a normalised basis, it appears that the market price of theShares generally moves in line with the STI and has consistently outperformed the STIduring the period commencing three years prior to the TCPL Offer Announcement Date andending on the Latest Practicable Date. In the recent period running up to the TCPL OfferAnnouncement Date from mid-October 2007, it appears that the market price movement ofthe Shares and the STI has diverged.

Normalised Market Price Movements of the Shares Against STI(From 7 January 2005 to the Latest Practicable Date)

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

3.2

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08

STC

STI




Revised KTIPLOffer Announcement Date

Second Price RevisionAnnouncement Date

on the TCPL Offer


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The movements in the closing prices of the Shares and the STI between the Market Dayimmediately prior to the TCPL Offer Announcement and immediately prior to the KTIPLOffer Announcement, and the Latest Practicable Date are as follows:

Percentage Percentagechange change between between

TCPL Offer KTIPL Offer Market Day Market Day Announcement Announcementimmediately immediately Date and Date and prior to the prior to the Latest Latest Latest TCPL Offer KTIPL Offer Practicable Practicable Practicable

Announcement Announcement Date Date Date(%) (%)

STC (S$) 4.96 5.71 6.70 35.1 17.3

STI 3,416.48 3,050.09 3,026.83 (11.4) (0.8)

Source: Bloomberg

The market price of the Shares experienced an immediate upward spike upon the releaseof the TCPL Offer Announcement, and another upward spike upon the release of the KTIPLOffer Announcement and upon the release of the Revised TCPL Offer Announcement andthe Revised KTIPL Offer Announcement. However, the market price movement was moresubdued after the release of the Second Price Revision Announcement on the TCPL Offer,closing at S$6.71 on the next market day following the Second Price RevisionAnnouncement Date on the TCPL Offer.

The market price of the Shares has increased by approximately 35.1 per cent. from theMarket Day prior to the TCPL Offer Announcement to the Latest Practicable Date. Over thesame period, the STI has declined by approximately 11.4 per cent.. The market price of theShares has increased by approximately 17.3 per cent. from the Market Day prior to theKTIPL Offer Announcement to the Latest Practicable Date. Over the same period, the STIhas declined by approximately 0.8 per cent..

We note that the average daily trading volume of the Shares since the TCPL OfferAnnouncement is substantially higher compared to the average daily trading volume in the12-month period prior to the TCPL Offer Announcement Date.

From the TCPL Offer Announcement Date to the Latest Practicable Date, KTIPL and/or itsconcert parties had acquired 3,441,424 Shares in aggregate at a price of between S$5.66to S$5.75 each and these accounted for approximately 19.5% of the total trading volume ofthe Shares over that period. Over the same period, based on publicly available information,TCPL and/or its concert parties had acquired 4,512,805 Shares in aggregate at a price ofbetween S$5.65 to S$6.70 each and these accounted for approximately 25.6% of the totaltrading volume of the Shares over that period.

Based on the above observations, it appears highly likely that the Offers and purchases byTCPL and KTIPL and their respective concert parties have been supporting the marketprice of the Shares since the TCPL Offer Announcement. As such, there is no assurancethat the market prices and the trading volumes of the Shares will be maintained at the levelprevailing as at the Latest Practicable Date after the closing dates of the Offers.


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6.4 Premium Paid in Other Take-Overs of Companies Listed on the SGX-ST

Each of KTIPL and TCPL has stated that it is their present intention to maintain the listing status ofthe Company on the SGX-ST. However, in the event that trading in the Shares is suspended or inthe event that they are entitled to exercise the right of compulsory acquisition pursuant to Section215 (1) of the Act, TCPL and KTIPL will reassess their position in respect of their shareholdings inthe Company.

In assessing whether the Revised KTIPL Offer Price and the Final TCPL Offer Price arereasonable given the abovementioned intentions, we have compared the financial terms of theOffers with those of successful completed take-overs of companies listed on the SGX-STannounced in the last 12 months prior to the TCPL Offer Announcement Date where the offerorsucceeded in securing statutory control and/or privatising or de-listing of the target listed company(“Take-over Transactions”).

We wish to highlight that the list of target companies involved in the Take-over Transactions set outin the analysis below are not directly comparable with the Company in terms of size of operations,market capitalisation, business activities, asset base, geographical spread, track record, accountingpolicy, financial performance, operating and financial leverage, future prospects and other relevantcriteria. The analysis below is based on data compiled from publicly available sources and servesas a guide as to the premium paid in connection with take-overs of companies listed on the SGX-ST. Each transaction must be judged on its own commercial and financial merits. Thepremium that an offeror pays in any particular take-over depends on various factors such as thepotential synergy that the offeror can gain by acquiring the target, the presence of competing bidsfor the target, prevailing market conditions and sentiments, attractiveness and profile of the target’sbusiness and assets, size of consideration and existing and desired level of control in the target.Hence, the comparison of the Offers with the Take-over Transactions set out below is for illustrationpurpose only. Conclusions drawn from the comparisons made may not reflect any perceived marketvaluation of the Company.


A summary of the relevant financial terms of the Take-over Transactions is set out below.

Premium of Offer Price to

Lasttransacted 1-month 3-month

Date of price prior to VWAP prior to VWAP prior to announcement announcement announcement announcement P/NTA

(%) (%) (%) (times)

PrivatisationsLandwind Medical Holdings Limited (1) 12-Jan-07 58.9 62.4 45.8 3.8

Media Asia Entertainment GroupLimited (1) 27-Feb-07 39.5 37.7 38.1 1.1

Amtek Engineering Ltd 22-May-07 3.8 14.6 27.9 1.8Pan-United Marine Limited 28-May-07 3.0 14.4 21.7 4.6Sembawang Kimtrans Ltd 13-Jun-07 12.0 13.9 15.1 3.2ECS Holdings Limited (2) 8-Aug-07 6.0 9.5 15.9 1.3Labroy Marine Limited 29-Oct-07 3.4 9.2 19.9 11.2

Median 6.0 14.4 21.7 3.2Mean 18.1 23.1 26.3 3.9

Non-privatisationsSTATS ChipPAC Ltd. (3) 01-Mar-07 18.2 30.9 38.2 3.3RSH Limited 04-Mar-07 -12.5 4.9 41.4 5.0Guthrie GTS Limited (4) 05-Mar-07 10.1 7.1 9.7 0.8Jurong Cement Limited 30-Apr-07 10.5 9.7 9.4 1.2Jade Technologies Singapore Ltd (5) 07-May-07 -81.3 -80.5 -79.4 1.2

Radiance Electronics Limited (5) 05-Oct-07 -30.0 -22.2 -17.6 0.8Gates Electronics Limited 24-Oct-07 3.5 0.4 0.8 2.3

Median 10.1 7.1 9.7 1.2Mean 6.0 10.6 19.9 2.1

High 58.9 62.4 45.8 11.2Low -12.5 0.4 0.8 0.8Median 8.1 11.8 20.8 2.1Mean 13.0 17.9 23.7 3.0

STC (Implied in the Final TCPL Offer Price) 6-Jan-08 (6) 35.1 30.4 35.0 1.2

STC (Implied in the Revised KTIPL Offer Price) 24-Jan-08 (7) 32.1 27.5 31.9 1.2

Source: SGX-ST announcements and circulars to shareholders in relation to the respective Take-over Transactions

Notes:

(1) The implied P/NTA ratios in respect of the take-overs of Landwind Medical Holdings Limited and Media AsiaEntertainment Group Limited in the table above represent P/NAV ratios instead.

(2) The offeror’s intention was to maintain the listing status of ECS Holdings Limited on the SGX-ST. As a result of theoffer, the free float of ECS Holdings Limited had fallen below 10% and trading in its shares was accordinglysuspended. The offeror had stated that it would take steps to procure the lifting of trading suspension. As at the LatestPracticable Date, ECS Holdings Limited has not been de-listed.

(3) The offer price for each share is S$1.75 in cash. If the level of acceptances of 90% is reached, the offer price wouldbe increased to S$1.88 in cash. The valuation parameters in the table above were based on the price of S$1.75 asthe acceptance level of 90% was not reached.

(4) On 28 February 2007, the offeror made the offer at a price of S$0.395 in cash, with a stake of 30.07%. On 5 March2007, the offeror revised the offer price to S$0.435 in cash, with a stake of 32.93%. The valuation parameters in thetable above were based on the revised offer price.

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(5) In computing the high, low, median and mean ratios in respect of market price premia, Jade Technologies SingaporeLtd and Radiance Electronics Limited have been excluded as outliers.

(6) The TCPL Offer was first announced on 6 January 2008 and was subsequently revised on 28 January 2008 and 18February 2008 respectively. In computing the market premia in respect of the Final TCPL Offer, we have used the lasttransacted price, 1-month VWAP and 3-month VWAP prior to the TCPL Offer Announcement Date (instead of theSecond Price Revision Announcement Date on the TCPL Offer).

(7) In computing the market premia in respect of the KTIPL Offer, we have used the last transacted price, 1-month VWAPand 3-month VWAP prior to the TCPL Offer Announcement Date (instead of the Revised KTIPL Offer AnnouncementDate).

We note that:

(i) The market price premia to the last transacted price, the 1-month VWAP and the 3-monthVWAP prior to the TCPL Offer Announcement Date implied in the Revised KTIPL OfferPrice and the Final TCPL Offer Price are above the corresponding median and meanpremia in both the successful privatisation and non-privatisation Take-over Transactions.

(ii) The P/NTA ratios of the Group implied in the Revised KTIPL Offer Price and the Final TCPLOffer Price is below the median and mean P/NTA ratios of the successful privatisation Take-over Transactions.

(iii) The P/NTA ratios of the Group implied in the Revised KTIPL Offer Price and the Final TCPLOffer Price are below the mean but equal to the median P/NTA ratios of the successful non-privatisation Take-over Transactions.

(iv) The market price premia and the P/NTA ratio of the Group implied in the Revised KTIPLOffer Price and the Final TCPL Offer Price are within the corresponding range of marketpremia and P/NTA ratios implied in both the successful privatisation and non-privatisationTake-over Transactions.

6.5 Financial Terms of the Selective Capital Reduction

In April 2006, the Company undertook a selective capital reduction (“Selective CapitalReduction”) pursuant to which the Company cancelled 30,503,000 Shares held by OCBC Bankand The Overseas Assurance Corporation Limited (representing approximately 8.6 per cent. of thethen issued share capital of the Company) and made a cash distribution at a price of S$2.966 foreach such Share cancelled.

A summary of the relevant financial terms of the Selective Capital Reduction is set out below:

Premium / (Discount) of price to

Last transacted 1-month price prior to VWAP prior to

Date of announcement announcement announcement date (1) date (1) P/book NTA P/Revalued NTA

(%) (%) (times) (times)

Selective Capital 30 December 0.2 1.1 0.9 0.8Reduction 2005

Final TCPL 6 January 35.1 30.4 1.2 1.0Offer (2) 2008

Revised KTIPL 24 January 32.1 27.5 1.2 1.0Offer (3) 2008


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Notes:

(1) In respect of the Selective Capital Reduction, the last transacted price on 29 December 2005 (being the last MarketDay prior to the announcement of the Selective Capital Reduction) is S$2.96 and the VWAP for the 1-month periodprior to 30 December 2005 is approximately S$2.933. In respect of the Selective Capital Reduction, the P/book NTAand P/Revalued NTA are computed based on the then latest available book NTA and Revalued NTA.

(2) The TCPL Offer was first announced on 6 January 2008 and was subsequently revised on 28 January 2008 and 18February 2008 respectively. In computing the market premia implied in the Final TCPL Offer, we have used the FinalTCPL Offer Price and the last transacted price and 1-month VWAP prior to the TCPL Offer Announcement Date(instead of the Second Price Revision Announcement Date on the TCPL Offer).

(3) In computing the market premia in respect of the KTIPL Offer, we have used the Revised KTIPL Offer Price and thelast transacted price and 1-month VWAP prior to the TCPL Offer Announcement Date (instead of the Revised KTIPLOffer Announcement Date).

The market price premia and the valuation ratios of the Company implied by the Offers comparefavorably to those under the Selective Capital Reduction. Shareholders should however note thatthe Selective Capital Reduction should not be taken as a direct comparison to the Offers as theSelective Capital Reduction was undertaken to enable OCBC Bank to divest part of its investmentin STC to comply with regulatory requirement. In comparison, the Offers are being made by TCPLand KTIPL to Shareholders under competing circumstances with an objective to further consolidatetheir respective interest and/or to acquire statutory control in STC. Accordingly, the intention andrationale underlying the Selective Capital Reduction and the Offers are entirely different.

6.6 Dividend Track Record of the Company

For the purpose of assessing the Revised KTIPL Offer Price and the Final TCPL Offer Price, wehave considered the dividend yield of the Shares implied in these prices and compared them withthe returns which a Shareholder may potentially obtain by re-investing the proceeds from the Offersin other comparable investments.

6.6.1 Historical dividends paid by the Company

The Company had declared the following ordinary dividends in respect of the last fivefinancial years:

Implied gross dividend Implied net dividend yield (2) yield (2)

Based on Based on Based on Based on Gross Gross Revised Final Net Net Revised Final

dividend dividend KTIPL TCPL dividend dividend KTIPL TCPL Period per Share payout (1) Offer Price Offer Price per Share payout (1) Offer Price Offer Price

(S$) (%) (%) (%) (S$) (%) (%) (%)

FY2002 0.05 54.3 0.8 0.7 0.0372 40.4 0.6 0.6

FY2003 0.06 51.7 0.9 0.9 0.0464 40.0 0.7 0.7

FY2004 0.06 38.7 0.9 0.9 0.0590 38.1 0.9 0.9

FY2005 (3) 0.06 30.6 0.9 0.9 0.0600 30.6 0.9 0.9

FY2006 (4) 0.06 10.4 0.9 0.9 0.0492 8.5 0.8 0.7

FY2007 0.08 5.0 1.1 1.1 0.0683 4.6 1.0 1.0

Notes:

(1) Based on the gross or net dividend per Share, as the case may be, divided by the consolidated basicearnings per Share as reported in the Company’s annual reports for the respective financial years. Theearnings per Share used for the purpose of the computation above have not been adjusted for any changesin the Group’s accounting policies over the years.

(2) Based on the gross or net dividend per Share, as the case may be, divided by the Final TCPL Offer Price orthe Revised KTIPL Offer Price.


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(3) The Company had also declared special net dividends of S$0.20 (in addition to the interim and final netdividend of S$0.0600) per Share in respect of FY2005.

(4) The Company had also declared special net dividends of S$0.04 (in addition to the interim and final netdividend of S$0.0492) per Share in respect of FY2006.

We note that the Company has had a consistent record of paying annual ordinary dividendswith generally increasing implied net dividend yield. The Company had also declared a firstinterim dividend of 2.5 cents per Share (less Malaysian income tax at 27%) and secondinterim dividend of 5.0 cents per Share (one-tier tax) in respect of FY2007.

The Directors have confirmed to us that, even though the Company has been consistentlydeclaring dividends in each financial year, the Company does not have a fixed rate ofdividend payments. As such, the quantum of dividends paid by the Company in any periodwould depend on various factors including but not limited to the financial performance ofthe Group, its working capital and capital expenditure needs as well as otherconsiderations.

As at 31 December 2007, the Group had revenue reserves of approximately S$1,345.4million.

6.6.2 Investment in selected alternative investments

Shareholders who accept the Offers may re-invest the proceeds from the Offers in selectedalternative equity investments including the shares of MSC, the Tin Companies, the HotelCompanies (“Alternative Companies”) and/or a broad market index instrument such asthe STI Exchange Traded Fund (“STI ETF”).

For illustration purpose, the dividend yields of these selected alternative investments basedon their ordinary dividends declared in their respective last financial year are as follows:

Financial year ended Net dividend yield (1)

(%)

MSC 31-Dec-06 2.1

Tin CompaniesMinsur 31-Dec-06 1.8PT Timah 31-Dec-06 1.6

Hotel CompaniesHotel Grand Central Limited (2) 31-Dec-06 1.4Hotel Plaza Limited (3) 31-Dec-06 1.5Hotel Properties Limited (4) 31-Dec-06 0.3L.C. Development Ltd 30-Jun-07 1.1Stamford Land Corporation Limited (5) 31-Mar-07 2.4

Average 1.5

STI ETF 30 June 2007 3.0

STC (implied in the Revised KTIPL Offer Price) 31 December 2007 0.5STC (implied in the Final TCPL Offer Price) 31 December 2007 0.5

Notes:

(1) Net dividend yield of each selected alternative investment is computed as the net dividend per share dividedby the closing market price on the last cum-dividend date (or where there was no trading on such date, thelast available closing market price prior thereto). The aforementioned net dividend yield computed may differfrom the actual dividend yield which will vary depending on the actual cost of investment paid by theindividual investor. Where both interim and final dividends were declared, the net dividend yield isdetermined using the average of the annualised net dividend yields.


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(2) Hotel Grand Central Limited also declared net special dividend of S$0.041 (in addition to the net ordinarydividend of S$0.0156) per share in respect of FY2006.

(3) Hotel Plaza Limited also declared net special dividend of S$0.275 (in addition to the net ordinary dividendper share of S$0.393) in respect of FY2006. Hotel Plaza Limited declared a net ordinary dividend of S$0.05in respect of FY2007.

(4) Hotel Properties Ltd also declared net special dividend of S$0.0193 (in addition to the net ordinary dividendof S$0.0193) per share in respect of FY2006 and another net special dividend of S$0.207 per share inrespect of FY2007.

(5) Stamford Land Corporation Limited also declared net special dividend of S$0.008 (in addition to the netordinary dividend of S$0.016) per share in respect of FY2007.

The above analysis indicates that the net dividend yield of the Company implied in theRevised KTIPL Offer Price and the Final TCPL Offer Price is lower than the net dividendyields of the Alternative Companies (other than Hotel Properties Limited) and that of theSTI ETF. This suggests that a Shareholder who accepts the Offers may potentiallyexperience an increase in investment income if he re-invests the proceeds in the shares ofthe Alternative Companies (other than Hotel Properties Limited) and the STI ETF. This iswithout regard to special dividends declared and is on the assumption that the Company,the Alternative Companies and the STI ETF maintain their respective net dividend pershare at the same level as that in their last financial year.

We wish to highlight that the above dividend analysis serves only as an illustrative guideand is not an indication of the Company’s future dividend policy nor that of any of theAlternative Companies or the STI ETF. Furthermore, an investment in the equity of theAlternative Companies or the STI ETF also presents different risk-return profiles comparedto an investment in the Shares. Moreover, there is no assurance that the Company or anyof the above selected alternative investments will continue to pay dividends in the futureand/or maintain the level of dividends paid in past periods.

7. OTHER CONSIDERATIONS

7.1 Outlook of the Group

We would like to draw the attention of Shareholders to paragraph 10 of the Company’s resultsannouncement for FY2007 wherein the Company has made a commentary of the significant trendsand competitive conditions of the industries in which the Group operates as well as factors orevents that may affect the Group.

7.2 Economic Value of Trademarks

The Revised KTIPL Offer Price represents a premium of approximately 16.6% over the NAV perShare of S$5.62 and a discount of approximately 0.9% over the revalued NAV per Share of S$6.61as at 31 December 2007. The Final TCPL Offer Price represents a premium of approximately19.2% over the NAV per Share of S$5.62 and a premium of approximately 1.4% to the revaluedNAV per Share of S$6.61 as at 31 December 2007.

The Group, through its wholly-owned subsidiary, Rendezvous Hotels International Private Limited(“RHI”), its hotel management arm, operates the “Rendezvous” chain of hotels and resorts. RHIrecently celebrated its 10th anniversary in July 2007. The Group owns the “Rendezvous & dragondevice” trademarks in Singapore, Malaysia, Australia and New Zealand which are used in theGroup’s hospitality business for hotels and resorts with a ranking of 4-star and above. The Group’sRendezvous Hotel in Singapore was recently awarded the Singapore Prestige Brand Award 2007 under the Established Brand Category, which recognises and honours Singapore brands that havedeveloped and managed their brands effectively through various brand-related initiatives. Inaddition, the Group also operates through RHI, a collection of contemporary boutique hotels with


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limited food and beverage facilities under “The Marque” brand name. “The Marque” branding waslaunched in 2006 to target a new generation of business and leisure travelers. Hotels within “TheMarque” group typically feature smaller hotels in city locations. The Group currently manages 19hotels (operating and under construction) under the “Rendezvous” and “The Marque” brandings.

While the Company has not commissioned any professional valuation of such intangible assets,Shareholders should note that the above trademarks may also be ascribed an economic value.

The Directors have confirmed to us that save for the intangible assets as recorded on theconsolidated balance sheet of the Group as at 31 December 2007 and the trademarks asdescribed above, they are not aware of any other material intangible assets owned by the Group asat the Latest Practicable Date.

7.3 Contingent Liabilities

Based on information provided by the Company, the Group has the following contingent liabilities:

(i) A claim from a party against MSC and three others, seeking a declaration that the awardfor the sale of 100% issued shares of Rahman Hydraulic Tin Sdn. Bhd. (“RHT”) to MSCpursuant to an open tender process, be declared null and void. The party also filed aninjunction to restrain the administrator of RHT from proceeding with the sale. Both the claimand the injunction were dismissed by the High Court with costs. The party had filed anappeal on 8 March 2005 and no date has been fixed for hearing.

(ii) A statement of claim for MYR45 million plus interest at 8% per annum and legal costs wasfiled against MSC for an alleged breach of a share subscription agreement made betweena plaintiff and MSC. The breach was in fact committed by the plaintiff, entitling MSC toterminate the agreement. MSC had filed its statement of defence on 18 November 2005disputing liability. As at the Latest Practicable Date, the plaintiff had not proceeded furtheron the case. MSC’s solicitors have filed an application to strike out plaintiff’s suit.

(iii) On 7 February 2006, MSC received a statement of claim from a system provider forMYR1.28 million plus interest at 8% per annum and legal costs for alleged cost overruns inthe implementation of an enterprise resource planning system. The claim came after morethan a year following the completion of the implementation. On 7 March 2006, MSC hadfiled its statement of defence disputing liability. The case has been fixed for CaseManagement on 29 April 2008.

(iv) The Indonesian Tax Office has preliminarily assessed that certain payments made by PTKoba Tin may be subject to value added taxes. PT Koba Tin has objected against thisassessment and is confident that it will prevail in this case. Preliminary review indicatesthat PT Koba Tin has been in compliance with tax laws and regulations, and accordingly, noprovisions have been made. The final outcome of this matter cannot be reasonablydetermined at the present moment.

(v) A Summon in Chambers (ex-parte) was served on RHT and 3 others by the plaintiff whoseproposal to acquire the mining lease and related assets of RHT was rejected in April 2002.The plaintiff’s application for Judicial Review was dismissed with costs but an appeal hasbeen filed against the decision, however the appeal has yet to be heard.

(vi) Two former directors of RHT have made a claim for compensation amounting toapproximately MYR2.4 million pursuant to service agreements entered on 31 March 2000between them and RHT. One of the directors has commenced proceedings in the IndustrialCourt for wrongful dismissal as the managing director of RHT, seeking reinstatement. Theclaim has been dismissed by the Industrial Court. The said director has appealed againstthe decision and no date has been fixed for hearing of the appeal.


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The Company is of the view that it is unlikely that any significant liability will arise from theaforementioned. Accordingly, no provision has been made in the financial statements of the Groupin respect of the above.

The Directors have confirmed to us that save as disclosed above and guarantees which may begranted in the ordinary course of business, the Directors are not aware of any other materialcontingent liabilities or legal or arbitration proceedings to which the Company or any of itssubsidiaries is a party, including those which are pending or known to be contemplated, which inthe opinion of the Directors, may have a material effect of the financial position or profitability of theGroup taken as a whole.

7.4 Unutilised Capital Allowances and Tax Losses

As at 31 December 2007, the Company and its subsidiaries in Singapore had in aggregateunabsorbed capital allowances and unutilised tax losses of approximately S$0.1 million and S$10.8million respectively while its overseas subsidiaries had in aggregate unabsorbed capital allowancesand unutilised tax losses amounting to approximately S$1.0 million and S$25.3 million respectively.Such unutilised capital allowances and tax losses are available for carry forward to set-off againstfuture taxable income subject to the agreement of Inland Revenue Authority of Singapore or suchother relevant tax authorities.

In connection with the Offers, there may be, as interpreted in accordance with Sections 23(4) and37 (12) of the Singapore Income Tax Act, a substantial change in the beneficial shareholders of theCompany. A substantial change in shareholders will arise where there is a greater than 50%change in the ultimate beneficial shareholders of the Company. If there is such a substantialchange, the Company will not be able to carry forward any unabsorbed capital allowances andunutilised tax losses for set-off against future taxable income. However, pursuant to Sections 23(5)and 37(15) of the Singapore Income Tax Act, the Company may be able to obtain a ministerialwaiver from the need to comply with the provisions of Sections 23(4) and 37(12), if it can besubstantiated to the satisfaction of the Minister of Finance, or such person as he may appoint, thatthe substantial change in shareholders did not occur for the purpose of deriving any tax benefit orobtaining any tax advantage.

7.5 Condition of the Offers

Both the Revised KTIPL Offer and the Final TCPL Offer are conditional upon the offeror havingreceived, by the close of the offer, valid acceptances in respect of such number of offer shareswhich, together with the Shares owned, controlled or agreed to be acquired by the offeror andparties acting in concert with it either before or during the period of the offer and pursuant to theoffer or otherwise, will result in the offeror and the parties acting in concert with it holding suchnumber of Shares carrying more than 50 per cent. of the voting rights of the Company.

The TCPL Offer Document states that as at 23 January 2008 (being the latest practicable dateprior to printing of the TCPL Offer Document), no person has given any irrevocable undertaking toTCPL or any party acting in concert with them, to accept or reject the TCPL Offer.

On 28 January 2008, SCB issued, for and on behalf of TCPL, a letter of offer to each of OCBCBank and GEH to purchase, at the Revised TCPL Offer Price, all the 20,248,704 Shares held bythe OCBC Group representing approximately 6.21 per cent. of all the issued Shares, and all the64,903,864 Shares held by the GEH Group representing approximately 19.92 per cent. of all theissued Shares. The announcement also stated that the offers to OCBC Bank and GEH areunconditional and would expire at 5.30 p.m. on 22 February 2008 if they were not accepted byOCBC Bank and/or GEH and should OCBC Bank and GEH have accepted the offers, TCPL andparties acting in concert with it would then own, control or have agreed to acquire not less than162,058,845 Shares, representing 49.73 per cent. of all the issued Shares. TCPL would thenconvert the Revised TCPL Offer into a mandatory conditional cash offer for the Shares inaccordance with the provisions of the Code.


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In response to the above mentioned TCPL’s offer, the board of OCBC Group, in the circumstancesand having regard to OCBC Group’s own considerations, has on 15 February 2008 announced thatit does not intend to accept either the Revised TCPL Offer or the Revised KTIPL Offer in respect ofits 6.2% shareholding interest in the STC.

On 18 February 2008, SCB issued, for and on behalf of TCPL, a letter of offer to each of OCBCBank and GEH to purchase, at the Final TCPL Offer Price, all the 20,248,704 Shares held by theOCBC Group representing approximately 6.21 per cent. of all the issued Shares, and all the64,903,864 Shares held by the GEH Group, including the Shares held by the participating funds ofGreat Eastern Life Assurance Company Limited and the Great Eastern Assurance (Malaysia)Berhad, representing approximately 19.92 per cent. of all the issued Shares. The offers to OCBCBank and GEH are unconditional and will expire at 5.00 p.m. (Singapore time) on 6 March 2008 ifthey are not accepted by OCBC Bank and/or GEH. Should OCBC Bank and GEH accept theoffers, TCPL and parties acting in concert with it shall then own, control or have agreed to acquirenot less than 162,205,896 Shares, representing 49.77 per cent. of all the issued Shares. TCPLshall then convert the Final TCPL Offer into a mandatory conditional cash offer for the Shares inaccordance with the provisions of the Code.

Based on publicly available information, TCPL has received 2,956,941 valid acceptances in respectof the Final TCPL Offer as at 11.30 a.m. on 18 February 2008. Accordingly, as at 18 February2008, the total number of Shares owned, controlled or agreed to be acquired by TCPL and partiesacting in concert with it (including valid acceptances in respect of the Final TCPL Offer) amount toan aggregate of 80,010,269 Shares, representing approximately 24.55% of the issued share capitalof STC.

The KTIPL Offer Document states that as at 11 February 2008 (being the latest practicable dateprior to printing of the KTIPL Offer Document), no person has given any irrevocable undertaking toKTIPL or any party acting in concert with them, to accept or reject the KTIPL Offer.

As at the Latest Practicable Date, both the Revised KTIPL Offer and the Final TCPL Offer have notbecome unconditional.

Shareholders should note that both KTIPL and TCPL have stated that they have been long timeshareholders of the Company. As at the Latest Practicable Date, KTIPL and its concert partiesown, control or have agreed to acquire approximately 33.4 per cent. of the Company while TCPLand its concert parties own, control of have agreed to acquire approximately 23.8 per cent. of theCompany. Shareholders should note that taking into account the shareholdings of the respectiveofferors, the free float of the Company would be approximately 42.6 per cent.

In the event that the Offers do not turn unconditional by their respective closing dates, allacceptances of the Offers will lapse and be returned to accepting Shareholders.

In the event that either of the Offers turns unconditional, Shareholders who accept suchunconditional offer will be assured of receiving the offer price in respect of all their acceptancesfree of transaction costs.

7.6 Control of the Company

As at the Latest Practicable Date, KTIPL and its concert parties own, control or have agreed toacquire an aggregate of 108,927,956 Shares, representing approximately 33.4 per cent. of thevoting rights of the Company.

As at the Latest Practicable Date, TCPL and its concert parties own, control or have agreed toacquire an aggregate of 77,717,348 Shares, representing approximately 23.8 per cent. of thevoting rights of the Company (excluding valid acceptances in respect of the Final TCPL Offer).


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As such, as at the Latest Practicable Date, neither KTIPL nor TCPL and their respective concertparties possess statutory control of the Company.

In the event that either of the Offers becomes unconditional, the successful offeror will be in aposition to significantly influence, inter alia, the management, operating and financial policies of theCompany and such offeror would gain statutory control of the Company which entitles it to pass allordinary resolutions on matters in which such offeror and its concert parties do not have aninterest, at general meetings of Shareholders.

7.7 Future Plans for STC

KTIPL

The Lee Family has had shareholding interests in STC for many years. KTIPL (together with theGEH Group and the OCBC Group) has effective control of STC as they control the largest singleblock of Shares. KTIPL Offer is being made in response to the TCPL Offer with the objective ofmaintaining or consolidating effective control of STC.

It is the intention of KTIPL that STC will continue to develop and grow its existing businesses.Depending on the outcome of the KTIPL Offer and the resultant shareholding of KTIPL in STCfollowing the close of the Revised KTIPL Offer, KTIPL (if appropriate together with its concertparties) intends to seek representation on the board of directors of STC.

In addition, after the close of the Revised KTIPL Offer, if KTIPL (together with the GEH Group andthe OCBC Group) continues to control the largest single block of Shares, KTIPL intends to proposeto STC to engage a financial adviser to conduct a study on the financial performance of STC andto recommend possible steps to take further unlock value in STC for the benefit of Shareholders. Inthis connection, KTIPL supports the policy of the STC board as stated on page 83 of STC’s circularto Shareholders dated 3 February 2008 in relation to the TCPL Offer, which is reproduced asfollows:

“With a clear focus on shareholders’ value, the Group will continue to review its business strategyand prioritise the allocation of funds to enhance shareholders’ value and to generate higher returnto shareholders in the long term.”

Save as disclosed above, KTIPL has no immediate plans for any major changes relating to theexisting business of the STC Group (including redeployment of fixed assets) or the employment ofthe existing employees of the STC Group, other than in the ordinary course of business.

TCPL

The companies in the Tecity Group have been shareholders of STC since the 1950s. TCPL hasstated that it does not intend to make changes to the management team of the Company. However,TCPL has further stated that in the event that it obtains control of the Company, TCPL would wishto participate with the board of directors and management of the Company in undertaking astrategic and operational review of the Group’s businesses. A director of TCPL has also stated thatthe Revised TCPL Offer Price is a reflection of TCPL’s regard for the Company and management ofSTC.

In evaluating their investment in the Shares and the prospects of the Group, Shareholders maywish to consider the contribution of the Group’s existing management team to the Group’sperformance, business and outlook.


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7.8 Impact of Change in Shareholdings on Contractual Arrangements

The Directors have confirmed to us that to the best of their knowledge and belief and based onreasonable enquiries, any resultant change in the shareholding structure of the Company pursuantto the Offers is not expected to have a material impact on the Group’s business operations andcontractual arrangements (including, inter alia, any long-term contracts, joint venture agreements,loan agreements, lease agreements and other land use rights, land titles, business licenses,grants, business incentives and employment contracts).

7.9 Limitation on Subsequent Offer

We wish to highlight that in the event that either of the Offers becomes unconditional and theofferor together with its concert parties hold Shares carrying more than 50% of the voting rights ofthe Company, Shareholders should note that under Rule 33.2 of the Code, neither the offeror norany person acting in concert with it may (except with the consent of the SIC), within 6 months ofthe closing date of the successful offer, make a second offer to, or acquire any Shares from, anyShareholder on terms better than those made available under the successful offer.

Shareholders should also note that if either of the Offers becomes unconditional, the successfulofferor and its concert parties will be free to increase their shareholding in STC after the close ofthe offer without incurring a take-over obligation under Rule 14 of the Code if their aggregate votingrights remain at above 49% in the six months prior to any such subsequent acquisition of Shares.

However, should either of the Offers fails to become unconditional by the closing date, pursuant toRule 33.1 of the Code, neither the unsuccessful offeror, its concert parties nor any person who issubsequently acting in concert with any of them may (except with the consent of the SIC) within 12months from the date on which such unsuccessful offer is withdrawn or lapses, announce an offeror possible offer for the Company or acquire any voting rights of the Company if the offeror or itsconcert parties would thereby become obliged under Rule 14 of the Code to make an offer for theCompany. Nevertheless, in accordance with Note 1 on Rule 33.1 of the Code, the SIC will normallygrant consent for an offer to be made when (i) the new offer is recommended by the board of theCompany and the offeror is not, or is not acting in concert with, a director or substantialshareholder of the Company; or (ii) the new offer follows the announcement of an offer by a thirdparty for the Company.

In the event that the Revised KTIPL Offer fails, KTIPL and its concert parties will however be freeto acquire further Shares carrying up to 1% of the voting rights in the Company in any period of sixmonths after the close of the KTIPL Offer without triggering a take-over obligation under Rule 14 ofthe Code.

In the event that the Final TCPL Offer fails, TCPL and its concert parties will however be free toacquire further Shares after the close of the Final TCPL Offer without triggering a take-overobligation under Rule 14 of the Code so long as their aggregate voting rights remain at below 30%.

7.10 Compulsory Acquisition and Trading Suspension

Each of KTIPL and TCPL has stated that it is their present intention to maintain the listing status ofthe Company on the SGX-ST. However, in the event that free float falls below 10 per cent. andtrading in the Shares is suspended or in the event that they are entitled to exercise the right ofcompulsory acquisition pursuant to Section 215(1) of the Act, KTIPL and TCPL will reassess theirposition in respect of their shareholdings in the Company.

As at the Latest Practicable Date, the free float in respect of the Shares is approximately 42.6 percent.. Free float refers to those Shares in which KTIPL, TCPL and their respective concert parties,the Directors and the substantial shareholders of the Company have no interests.


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Shareholders should note the following provisions in the Listing Manual:

(i) Rule 724 of the Listing Manual states that where the free float in the Shares falls below10%, the SGX-ST may suspend the trading of such Shares. Rule 725 of the Listing Manualstates that in such an event, the SGX-ST may allow a period of three months or suchlonger period as the SGX-ST may agree, for the free float in the Shares to be raised to atleast 10%, failing which the Company may be de-listed.

(ii) Rule 1105 of the Listing Manual states that where a takeover offer is made for the Shares,upon the announcement by the offeror that acceptances have been received that bring theholdings owned by it and parties acting in concert with it to above 90% of the total numberof issued Shares, the SGX-ST may suspend the listing of such Shares until it is satisfiedthat at least 10% of the total number of issued Shares are held by at least 500Shareholders who are members of the public.

(iii) Rule 1303 of the Listing Manual further states that the SGX-ST may at any time suspendtrading of the Shares if the percentage of the Company’s total number of issued Sharesheld in public hands falls below 10% as provided in Rule 723. However, in a take-oversituation, where the offeror succeeds in garnering acceptances exceeding 90% of theCompany’s total number of issued Shares, thus causing the percentage of Shares held inpublic hands to fall below 10%, the SGX-ST will suspend trading only at the close of thetake-over offer.

We would like to alert shareholders to certain implications and consequences which may arise inthe event of a trading suspension and/or de-listing of the Shares, as follows:

(i) There will be no ready public market for their Shares and it would be more difficult forShareholders to sell their Shares;

(ii) As the Shares become less marketable due to the absence of a ready market, the sale oftheir Shares may be transacted at discounts to the valuation of comparable listedcompanies; and

(iii) In the event that the Shares are de-listed, the Company will no longer be obliged toprovide, and Shareholders will no longer enjoy the same level of protection, transparencyand accountability afforded and imposed on the Company by the Listing Manual (includingthe requirement to have independent directors). Nonetheless, as a company incorporated inSingapore, STC will still have to comply with the requirements of the Act.

7.11 Competing Offers

The Final TCPL Offer Price of S$6.70 for each Share is S$0.15 higher than the Revised KTIPLOffer Price of S$6.55 for each Share.

As at the Latest Practicable Date, apart from the offers made by KTIPL and TCPL, there is nopublicly available evidence of any other competing offer and there is also no indication as towhether there may be a further enhancement or revision of the KTIPL Offer following the SecondPrice Revision Announcement on the TCPL Offer.

TCPL, however, has announced that it does not intend to further revise the Final TCPL Offer Price.


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8. SUMMARY OF ANALYSIS

In arriving at our advice on the Revised KTIPL Offer and the Final TCPL Offer, we have relied onthe following key considerations (which should be read in conjunction with, and in the context of,the full text of this letter):

(a) the Revised KTIPL Offer Price and the Final TCPL Offer Price falls within the range of theestimated sum-of-parts valuation of each Share.

(b) The Revised KTIPL Offer Price represents a premium of approximately 17.0% over theunaudited book NTA per Share as at 31 December 2007 but is at a discount ofapproximately 0.6% to the Revalued NTA per Share as at 31 December 2007. The FinalTCPL Offer Price represents a premium of approximately 19.6% over the unaudited bookNTA per Share as at 31 December 2007 and at a premium of approximately 1.7% to theRevalued NTA per Share as at 31 December 2007.

(c) The ex-cash Revised KTIPL Offer Price represents a premium of approximately 20.9% overthe ex-cash book NTA per Share as at 31 December 2007 but is at a discount ofapproximately 0.7% to the ex-cash Revalued NTA per Share as at 31 December 2007. Theex-cash Final TCPL Offer Price represents a premium of approximately 24.2% over the ex-cash book NTA per Share as at 31 December 2007 and is at a premium of approximately2.0% over the ex-cash Revalued NTA per Share as at 31 December 2007.

(d) The Revised KTIPL Offer Price and the Final TCPL Offer Price are at a premium over theVWAP of the Shares for all historical periods during the three years prior to the TCPL OfferAnnouncement Date. As at the Latest Practicable Date, the Shares are trading above theRevised KTIPL Offer Price but are trading at the Final TCPL Offer Price.

(e) It is highly likely that the market price of the Shares has been supported by the Offers andpurchases by KTIPL, TCPL or their respective concert parties since the TCPL OfferAnnouncement Date. As the Shares have been trading at or about the Final TCPL OfferPrice since the Second Price Revision Announcement on the TCPL Offer, there is noassurance that the market price and the trading volume of the Shares will be maintained atthe level prevailing as at the Latest Practicable Date after the closing dates of the Offers.

(f) The market price premia to the last transacted price, the 1-month VWAP and the 3-monthVWAP prior to the TCPL Offer Announcement Date implied in the Revised KTIPL OfferPrice and the Final TCPL Offer Price are above the corresponding median and meanpremia in both the successful privatisation and non-privatisation Take-over Transactionswhile the P/NTA ratios of the Group implied in the Revised KTIPL Offer Price and the FinalTCPL Offer Price are below the mean but equal to the median P/NTA ratios of thesuccessful non-privatisation Take-over Transactions.

(g) The net dividend yield of the Company implied in the Revised KTIPL Offer Price and theFinal TCPL Offer Price is lower than the net dividend yields (in respect of their last financialyear) of almost all of the Alternative Companies and that of the STI ETF.

(h) As at the Latest Practicable Date, neither KTIPL nor TCPL and their respective concertparties possess statutory control of the Company. Both the Revised KTIPL Offer and theFinal TCPL Offer have not become unconditional as at the Latest Practicable Date.

(i) It is the present intention of each of KTIPL and TCPL to maintain the listing status of theCompany on the SGX-ST. There is however no assurance that KTIPL or TCPL will preservethe listing status of the Company on the SGX-ST if free float is less than 10 per cent. orthat they will not exercise the right of compulsory acquisition under Section 215(1) of theAct.

(j) The Final TCPL Offer Price of S$6.70 for each Share is S$0.15 higher than the RevisedKTIPL Offer Price of S$6.55 for each Share.


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(k) It is stated in the Second Price Revision Announcement on the TCPL Offer that TCPL doesnot intend to further revise the Final TCPL Offer Price. The Final TCPL Offer will close at5.30 p.m. on 6 March 2008 and TCPL has stated that it does not intend to extend the FinalTCPL Offer beyond 5.30 p.m. on the Final Closing Date except where the Final TCPL Offerbecomes unconditional as to acceptances or where TCPL incurs a mandatory offerobligation under Rule 14 of the Code during the offer period through the acquisition of theShares (other than pursuant to acceptances of the Final TCPL Offer). The Revised KTIPLOffer will close at 5.30 p.m. on 13 March 2008 or such later date(s) as may be announcedfrom time to time by or on behalf of KTIPL.

In summary, based on our analysis set out above and after having considered carefully theinformation available to us, the existence of competing bids for statutory control of theCompany and based on the monetary, industry, market, economic and other relevantconditions prevailing as at the Latest Practicable Date, we are of the view that both theRevised KTIPL Offer Price and the Final TCPL Offer Price are, on balance, reasonable butnot compelling.

9. CIMB-GK’S ADVICE ON THE OFFERS

After carefully considering all available information and based on our assessment of the financialterms of the Revised KTIPL Offer and the Final TCPL Offer, we advise the Independent Directorsto make the following recommendations to Shareholders in relation to the Revised KTIPL Offer andthe Final TCPL Offer:

Shareholders who hold a long-term view of their investments in the Shares and/or who areconfident and optimistic about their equity investments in the Company and the prospects ofthe Group may wish to REJECT both the Revised KTIPL Offer and the Final TCPL Offer.

Shareholders who hold a short-term view of their investments in the Shares and who wish torealise their holdings in the Shares in the near term and/or who are not prepared to accept theuncertainties facing the future prospects of the Group or the risk that none of the Offers willbecome unconditional may wish to SELL their Shares on the open market if they can obtain aprice at about or higher than the Final TCPL Offer Price (after deducting all related expenses)by doing so as there is currently no certainty that either of the Offers will become unconditional.Shareholders should note that as at the Latest Practicable Date, the Shares are trading at theFinal TCPL Offer Price. In the event that Shareholders (in particular, those with significantholdings) are unable to sell their Shares on the open market at a price at about or higher thanthe Final TCPL Offer Price, they should REJECT the Revised KTIPL Offer but may wish toACCEPT the Final TCPL Offer but should be aware that there is currently no certainty that theFinal TCPL Offer will become unconditional. Further, such Shareholders may wish to consideraccepting the Final TCPL Offer at a later time so as to be able to take into account anyannouncements and/or documents relevant to their consideration of the Offers which may bereleased or published by or on behalf of the Company, TCPL and/or KTIPL after the LatestPracticable Date. The Final TCPL Offer will close at 5.30 p.m. on 6 March 2008 and TCPL hasstated that it does not intend to extend the Final TCPL Offer beyond 5.30 p.m. on the FinalClosing Date except where the Final TCPL Offer becomes unconditional as to acceptances orwhere TCPL incurs a mandatory offer obligation under Rule 14 of the Code during the offerperiod through the acquisition of the Shares (other than pursuant to acceptances of the FinalTCPL Offer). The Revised KTIPL Offer will close at 5.30 p.m. on 13 March 2008 or such laterdate(s) as may be announced from time to time by or on behalf of KTIPL.

Shareholders should note that (i) there is currently no indication as to whether there may be afurther enhancement or revision of the Revised KTIPL Offer following the Second PriceRevision Announcement on the TCPL Offer; and (ii) there is no assurance that the tradingvolumes and market prices of the Shares will be maintained at current levels prevailing as atthe Latest Practicable Date.


In rendering the above advice, we have not had regard to the specific investment objectives,financial situation, tax position or particular needs and constraints of any individual Shareholder. Aseach Shareholder would have different investment objectives and profiles, we would advise thatany individual Shareholder who may require specific advice in relation to his investment objectivesor portfolio should consult his stockbroker, bank manager, solicitor, accountant, tax adviser or otherprofessional adviser immediately. The Independent Directors should advise Shareholders that theopinion and advice of CIMB-GK should not be relied upon by any Shareholder as the sole basis fordeciding whether or not to accept the Revised KTIPL Offer.

Yours faithfullyFor and on behalf ofCIMB-GK SECURITIES PTE. LTD.

MAH KAH LOON ERIC WONGDIRECTOR DIRECTORHEAD, CORPORATE FINANCE CORPORATE FINANCE

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APPENDIX 1 – GENERAL INFORMATION

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1. DIRECTORS

The names, addresses and designations of the Directors as at the Latest Practicable Date are setout below:

Name Address Designation

Mr Bobby Chin Yoke Choong 7 Maple Lane ChairmanSingapore 277551

Mr Tang I-Fang 20 Jalan Merbok DirectorSingapore 598448

Mr Michael Wong Pakshong 12 Swiss Club Road DirectorSingapore 288105

Professor Lim Chong Yah 6 Caldecott Close DirectorSingapore 299114

Mr Michael Hwang 21 Chee Hoon Avenue DirectorSingapore 299752

Tan Sri Dato’ Dr Lin See-Yan 21 Jalan Setiamurni 2 DirectorBukit Damansara 50490 Kuala Lumpur, Malaysia

Mr Norman Ip Ka Cheung 38 Merryn Road President andSingapore 298487 Chief Executive Officer

Mr Razman Ariffin 145 Persiaran Zaaba DirectorTaman Tun Dr. Ismail 60000 Kuala Lumpur, Malaysia

Mr Gerard Ee Hock Kim 60 Dunbar Walk Director Singapore 459364

2. INFORMATION ON THE GROUP

The Company was incorporated in Singapore on 8 November 1887 and is listed on the SGX-ST.

The principal activities of the Company are those of an investment holding company. The Group isprimarily engaged in tin mining and smelting, investments in other metals and mineral resources,hotel investment and management, property operations and financial investments. The smeltingbusiness is conducted by its subsidiary company, MSC.

Incorporated on 8 November 1978, MSC is currently one of the largest custom tin smelters and isalso one of the top producers of high purity 4 nines (i.e. 99.99 per cent. pure) tin. In addition, MSCis the first tin smelter to achieve an ISO 9002 accreditation.

With the successful acquisitions of upstream and downstream business units in the last few years,MSC has become one of the world’s leading integrated producers of tin metal and tin-basedproducts. It operates one of the most cost-efficient smelting plants in the world, converting primary,secondary and often complex tin bearing materials into high purity tin metal for industrialapplications.

3. SHARE CAPITAL

3.1 Issued Capital

As at the Latest Practicable Date, the Company has a share capital of S$265,928,000 comprising325,897,000 Shares. The Shares are ordinary shares carrying equal ranking rights to dividend,voting at general meetings and return of capital. The Company does not have any other class ofshare capital as at the Latest Practicable Date.

There is no restriction in the Memorandum or Articles of Association of the Company on the rightto transfer any Shares, which has the effect of requiring the holders of Shares, before transferringthem, to offer them for purchase to members of the Company or to any other person.

3.2 Rights in Respect of Voting, Dividends and Capital

The rights of Shareholders in respect of voting, dividends and capital as set out in the Articles ofAssociation of the Company are as set out in Appendix 1 to the TCPL Offeree Circular, a copy ofwhich is available at the SGX-ST’s website at www.sgx.com and the Company’s website atwww.stc.com.sg.

4. CONVERTIBLE SECURITIES

As at the Latest Practicable Date, to the best of the knowledge of the Directors, there are noinstruments convertible into, rights to subscribe for, and options in respect of, securities beingoffered for or which carry voting rights affecting the Shares in the Company.

5. DISCLOSURE OF INTERESTS

5.1 Interests of Company in Shares of KTIPL

Neither the Company nor its subsidiaries have any direct or indirect interests in the shares ofKTIPL as at the Latest Practicable Date.

5.2 Dealings in Shares of KTIPL by Company

Neither the Company nor its subsidiaries have dealt in the shares of KTIPL during the periodcommencing six months prior to 24 January 2008, being the KTIPL Offer Announcement Date andending on the Latest Practicable Date.

5.3 Interests of Directors in Shares of KTIPL

None of the Directors has any direct or indirect interests in the shares of KTIPL as at the LatestPracticable Date.

5.4 Dealings in Shares of KTIPL by Directors

None of the Directors has dealt in the shares of KTIPL during the period commencing six monthsprior to 24 January 2008 being the KTIPL Offer Announcement Date, and ending on the LatestPracticable Date.


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5.5 Interests of Directors in Shares

Save as disclosed below, as at the Latest Practicable Date, none of the Directors has an interest,direct or indirect, in the Shares.

Direct DeemedDirector No. of Shares %(1) No. of Shares %(1)

Mr Michael Wong Pakshong 26,400 0.01 – –

Professor Lim Chong Yah 12,000 n.m. (2) – –

Mr Michael Hwang 55,200 0.02 86,400 0.03

Mr Norman Ip Ka Cheung 23,640 0.01 25,644 0.01

Mr Razman Ariffin 1,200 n.m. (2) – –

Notes:

(1) Percentage interest is based on 325,897,000 issued Shares as at Latest Practicable Date.

(2) n.m. means not meaningful.

5.6 Dealings in Shares by Directors

None of the Directors has dealt in the Shares during the period commencing six months prior to 24January 2008 being the KTIPL Offer Announcement Date, and ending on the Latest PracticableDate.

5.7 Interests of the IFA in Shares

None of CIMB-GK, its related corporations or funds whose investments are managed by CIMB-GKor its related corporations on a discretionary basis, owns or controls any Shares as at the LatestPracticable Date.

5.8 Dealings in Shares by the IFA

Save for the proprietary dealings by CIMB-GK which were not carried out in connection with theKTIPL Offer or the TCPL Offer as disclosed below, none of CIMB-GK, its related corporations orfunds whose investments are managed by CIMB-GK or its related corporations on a discretionarybasis has dealt for value in the Shares during the period commencing six months prior to 24January 2008 (being the KTIPL Offer Announcement Date) and ending on the Latest PracticableDate.

No. of Shares Average priceDate purchased / (sold) per Share

(S$)

25 July 2007 800 4.760026 July 2007 980 4.760026 July 2007 (1,000) 4.760027 July 2007 2,000 4.640027 July 2007 (2,600) 4.700030 July 2007 200 4.545231 July 2007 1,834 4.57841 August 2007 600 4.44001 August 2007 (2,000) 4.56002 August 2007 1,590 4.35512 August 2007 (2,000) 4.32003 August 2007 94 4.22006 August 2007 1,280 4.09256 August 2007 (1,000) 4.140013 August 2007 600 4.0400


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(S$)

13 August 2007 (1,000) 4.080016 August 2007 1,000 4.140016 August 2007 (990) 4.200017 August 2007 160 4.100020 August 2007 624 4.276020 August 2007 (1,000) 4.340022 August 2007 900 4.360622 August 2007 (1,000) 4.420023 August 2007 629 4.440027 August 2007 10 4.340028 August 2007 244 4.48004 September 2007 (500) 4.50005 September 2007 990 4.44005 September 2007 (1,000) 4.48006 September 2007 50 4.460012 September 2007 (340) 4.500014 September 2007 320 4.480017 September 2007 685 4.480017 September 2007 (1,000) 4.520019 September 2007 850 4.500019 September 2007 (1,000) 4.520021 September 2007 991 4.503921 September 2007 (1,000) 4.540025 September 2007 990 4.500026 September 2007 9 4.520026 September 2007 (1,000) 4.520028 September 2007 400 4.50001 October 2007 601 4.51341 October 2007 (1,000) 4.54002 October 2007 161 4.52003 October 2007 750 4.52003 October 2007 (750) 4.56005 October 2007 1,765 4.53135 October 2007 (1,019) 4.58008 October 2007 1,837 4.52758 October 2007 (1,872) 4.58009 October 2007 1,884 4.56909 October 2007 (2,000) 4.600010 October 2007 520 4.597710 October 2007 (1,000) 4.640011 October 2007 2,164 4.605111 October 2007 (2,000) 4.660012 October 2007 1,562 4.642212 October 2007 (2,000) 4.660015 October 2007 1,160 4.620015 October 2007 (1,000) 4.660016 October 2007 842 4.620616 October 2007 (1,000) 4.660019 October 2007 1,216 4.619819 October 2007 (1,000) 4.660022 October 2007 11 4.640025 October 2007 4,014 4.634625 October 2007 (4,000) 4.670026 October 2007 440 4.632726 October 2007 (177) 4.680029 October 2007 476 4.560030 October 2007 2,324 4.642330 October 2007 (3,000) 4.686731 October 2007 1,748 4.640031 October 2007 (2,000) 4.7000


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(S$)

1 November 2007 400 4.60392 November 2007 400 4.68005 November 2007 400 4.60005 November 2007 (1,000) 4.70006 November 2007 1,060 4.66797 November 2007 1,288 4.70117 November 2007 (2,000) 4.74009 November 2007 252 4.708312 November 2007 151 4.700012 November 2007 (1,000) 4.740013 November 2007 368 4.662515 November 2007 1,000 4.700515 November 2007 (1,000) 4.740016 November 2007 2,026 4.660516 November 2007 (2,000) 4.730019 November 2007 (197) 4.720020 November 2007 800 4.680020 November 2007 (1,000) 4.740021 November 2007 766 4.700722 November 2007 (286) 4.740023 November 2007 1,330 4.701426 November 2007 385 4.710426 November 2007 (2,000) 4.740027 November 2007 697 4.720828 November 2007 1,880 4.703028 November 2007 (2,000) 4.760029 November 2007 764 4.700029 November 2007 (1,000) 4.760030 November 2007 852 4.704930 November 2007 (1,000) 4.78003 December 2007 1,210 4.78783 December 2007 (1,026) 4.84004 December 2007 1,044 4.84094 December 2007 (1,000) 4.90005 December 2007 2,440 4.90005 December 2007 (3,000) 4.97336 December 2007 626 4.94256 December 2007 (526) 5.00007 December 2007 2,612 4.99547 December 2007 (2,161) 5.096310 December 2007 1,329 5.063110 December 2007 (1,065) 5.100011 December 2007 1,188 5.068511 December 2007 (1,000) 5.150012 December 2007 (1,000) 5.150014 December 2007 320 5.000017 December 2007 640 4.980017 December 2007 (1,000) 5.050027 December 2007 120 5.006528 December 2007 884 4.960728 December 2007 (1,000) 5.07008 January 2008 8,346 5.62788 January 2008 (8,000) 5.65009 January 2008 775 5.60459 January 2008 (1,150) 5.6600


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5.9 Accepting or Rejecting the Final TCPL Offer or the Revised KTIPL Offer

Mr Michael Wong Pakshong and Mr Norman Ip Ka Cheung do not intend to accept the Final TCPLOffer or the Revised KTIPL Offer in respect of the Shares they have an interest in (direct ordeemed).

Mr Michael Hwang has not made any decision as to whether to accept or reject the Final TCPLOffer or the Revised KTIPL Offer in respect of the Shares he has an interest in (direct or deemed).

In respect of the Shares in which they have an interest in (direct or deemed), Professor Lim ChongYah and Mr Razman Ariffin intend to accept the higher of the TCPL Offer or the KTIPL Offer (as thecase may be) or sell the Shares in the open market at a price at about or higher than the offerprice of the TCPL Offer or the KTIPL Offer then existing.

6. OTHER DISCLOSURES

6.1 Directors’ Service Contracts

There are no service contracts between any Director or proposed Director with the Company orany of its subsidiaries with more than 12 months to run and which cannot be terminated by theemploying company within the next 12 months without paying any compensation. In addition, thereare no service contracts entered into or amended between any Director or proposed Director with,the Company during the period between the start of six months preceding 24 January 2008 beingthe KTIPL Offer Announcement Date, and the Latest Practicable Date.

6.2 No Payment or Benefit to Directors

It is not proposed, in connection with the Revised KTIPL Offer, that any payment or other benefit bemade or given to any Director or to any director of any other corporation which is, by virtue ofSection 6 of the Act, deemed to be related to the Company as compensation for loss of office orotherwise in connection with the Revised KTIPL Offer.

6.3 No Agreement Conditional upon Outcome of Revised KTIPL Offer

There are no agreements or arrangements made between any Director and any other person inconnection with or conditional upon the outcome of the Revised KTIPL Offer.

6.4 Material Contracts entered into by KTIPL

There are no material contracts entered into by KTIPL in which any Director has a materialpersonal interest, whether direct or indirect.


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7. FINANCIAL INFORMATION ON THE GROUP

Set out below is certain financial information extracted from the unaudited consolidated financialstatements of the Group for FY 2007 and from the audited consolidated financial statements of theGroup for FY 2006, FY 2005 and FY 2004 respectively. The unaudited consolidated financialstatements of the Group for FY 2007 are set out in Appendix 3 to this Circular.

FY 2007 FY 2006 FY 2005 FY 2004S$’000 (Unaudited) (Audited)(2) (Audited)(2) (Audited)(2)

(Restated)

Revenue 1,109,262 924,339 744,364 237,688

Exceptional Items 420,028 139,771 33,160 (8,125)

Profit before tax 536,805 224,535 91,179 60,347

Profit after tax 497,236 197,873 72,596 50,112

Minority Interest 12,279 3,855 2,593 (5,207)

Profit after tax and minority interest(attributable to equity holders of 484,957 194,018 70,003 55,319the Company)

Basic earningsper Share (cents) (1) 148.8 57.9 19.6 15.5

Notes:

(1) Basic earnings per Share is computed based on the weighted average number of Shares in issue during the financialperiod. The weighted average number of ordinary shares represents the number of ordinary shares at the beginningof the financial period, adjusted for new ordinary shares issued during the period, multiplied by a time-weighted factor.

(2) Certain comparative figures have been reclassified to conform with FY 2007’s presentation in line with the eXtensibleBusiness Reporting Language (XBRL) format.

Set out below is also a summary of the dividend per Share declared in respect of each of FY 2007,FY 2006, FY 2005 and FY 2004 by STC.

S$ (cents) Gross Net

In respect of FY 2007 7.5 6.825

In respect of FY 2006(1) 10.0 7.84

In respect of FY 2005(1) 26.0 26.0

In respect of FY 2004 6.0 5.9

Note:

(1) Gross dividend per Share declared in respect of FY 2006 and FY 2005 include special dividends of 4 cents and 20cents per Share respectively.

8. MATERIAL CHANGES IN FINANCIAL POSITION

Save as disclosed in this Circular, the TCPL Offeree Circular, the unaudited consolidated financialresults of the Group for the three-month period ended 31 March 2007, the six-month period ended30 June 2007, the nine-month period ended 30 September 2007 and the year ended 31 December2007 as announced on 10 May 2007, 14 August 2007, 9 November 2007 and 18 February 2008respectively and any other information on the Group which is publicly available (including withoutlimitation, the announcements released by the Group on the SGX-ST), there have been no materialchanges to the financial position of the Company since 31 December 2006, being the date of thelast audited accounts of the Company laid before the shareholders of the Company in generalmeeting.


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9. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies of the Group which are disclosed in Note 2 of the auditedconsolidated financial statements of the Group for FY 2006 was reproduced in Appendix 3 to theTCPL Offeree Circular, a copy of which is available at the SGX-ST’s website at www.sgx.com andthe Company’s website at www.stc.com.sg.

10. CHANGES IN ACCOUNTING POLICIES

The changes in the significant accounting policies of the Group which are disclosed in Note 2 ofthe audited consolidated financial statements of the Group for FY 2006 was reproduced inAppendix 3 to the TCPL Offeree Circular, a copy of which is available at the SGX-ST’s website atwww.sgx.com and the Company’s website at www.stc.com.sg.

11. MATERIAL CONTRACTS

Save as disclosed below, neither the Company nor any of its subsidiaries have entered into anymaterial contracts with interested persons (other than those entered into in the ordinary course ofbusiness) during the period commencing three years before 24 January 2008, being the KTIPLOffer Announcement Date, and ending on the Latest Practicable Date.

(i) In connection with the Group’s take-over of MSC, STASB was granted a two-year term loanof MYR59,294,232 by OCBC Bank Malaysia, which was to be repaid in April 2007. The loanwas granted on normal commercial terms and was guaranteed by the Company. The interestrate ranged from 4.1 per cent. to 4.8 per cent. per annum and the interest was payable onthe last day of each interest period of three months.

This loan was renewed and based on the renewed terms of the loan, STASB was granted aone-year term loan of MYR59,294,232 by OCBC Bank Malaysia, which is to be repaid inApril 2008. The loan was granted on normal commercial terms and is guaranteed by theCompany. The interest rate ranges from 4.2 per cent. to 4.6 per cent. per annum and theinterest is payable on the last day of each interest period of one month.

(ii) In August 2005, the Company disposed of its entire 15.1 per cent. stake in Straits Lion AssetManagement Limited, at a consideration of S$43,068,000, to Orient Holdings Private Limitedand GEH, both of which are subsidiaries of OCBC Bank.

(iii) In April 2006, pursuant to Section 78G of the Act, the Company completed a selectivecapital reduction exercise. This capital reduction exercise involved the cancellation of30,503,000 shares in the issued share capital of the Company held by OCBC Bank and TheOverseas Assurance Corporation Limited (“OAC”), an indirect subsidiary of OCBC Bank. TheCompany paid OCBC Bank and OAC a cash distribution of S$2.966 for each share, totallingS$90,471,898.

12. MATERIAL LITIGATION

Save as disclosed by the Group in its annual reports or announcements, neither the Company norany of its subsidiaries are engaged in any material litigation as plaintiff or defendant which mightmaterially and adversely affect the financial position of the Group as a whole.

Save as disclosed by the Group in its annual reports or announcements, the Directors are notaware of any proceedings pending or threatened against the Company or any of its subsidiaries orof any facts likely to give rise to any proceedings which might materially or adversely affect thefinancial position of the Group taken as a whole.


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13. VALUATION REPORTS

A copy of the Valuation Reports of the Properties was reproduced in Appendix 8 to the TCPLOfferee Circular, a copy of which is available at the SGX-ST’s website at www.sgx.com and theCompany’s website at www.stc.com.sg.

14. GENERAL

14.1 Costs and Expenses

All expenses and costs incurred by the Company in relation to the KTIPL Offer and the RevisedKTIPL Offer will be borne by the Company.

14.2 Consent of the IFA

CIMB-GK has given and has not withdrawn its written consent to the issue of this Circular with theinclusion herein of its name, its letter dated 23 February 2008 relating to its advice to theIndependent Directors in respect of the Final TCPL Offer and the Revised KTIPL Offer and allreferences thereto, in the form and context in which they appear in this Circular.

14.3 Consent of the Auditors

Ernst & Young has given and has not withdrawn its written consent to the issue of this Circular withthe inclusion herein of its name, the references made to the independent auditor’s report relating tothe audited consolidated financial statements for the Group for FY 2006 as reproduced in Appendix3 to the TCPL Offeree Circular and all references thereto, in the form and context in which theyappear in this Circular.

14.4 Consent of the Valuers

The Valuers have given and have not withdrawn their written consent to the issue of this Circularwith the inclusion herein of their names, the references made to the Valuation Reports asreproduced in Appendix 8 of the TCPL Offeree Circular and all references thereto, in the form andcontext in which they appear in this Circular.

15. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the registered office of theCompany at 18 Cross Street #15-01, Singapore 048423, during normal business hours for theperiod which the Revised KTIPL Offer remains open for acceptance:

(a) the Memorandum and Articles of Association of the Company;

(b) the Annual Report of the Company for FY 2004, FY 2005 and FY 2006;

(c) the unaudited consolidated financial results for FY 2007;

(d) the IFA Letter;

(e) the Valuation Reports;

(f) the letters of consent referred to in paragraph 14 above; and

(g) the TCPL Offeree Circular.

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1. KTIPL

The following information on KTIPL has been extracted from Appendix 2 to the KTIPL OfferDocument. Unless otherwise defined, all terms and expressions used in the extract below shallhave the same meanings as those defined in the KTIPL Offer Document:

“1. Directors

The names, addresses and descriptions of the Directors as at the Latest Practicable Dateare as follows:

Name Address Description

Huang Thiay Sherng 4 Yarrow Gardens DirectorFrankel EstateSingapore 455009

Tan Khiam Hock 201 Bishan Street 23 Director#06-471Singapore 570201

2. Principal Activities and Share Capital

The Offeror is a private company limited by shares and was incorporated in Singapore on 13October 2000. Its principal activities are those of an investment holding company. As at theLatest Practicable Date, the Offeror has an issued and paid-up ordinary share capital ofS$20,000,000 comprising 20,000,000 ordinary shares, all of which are held by Lee Latex.

3. Summary of Financial Performance

The audited profit and loss statements of the Offeror for FY2004, FY2005 and FY2006 aresummarised in the table below. The summary is extracted from, and should be read inconjunction with, the annual financial statements of the Offeror for FY2004, FY2005 andFY2006 (copies of which are available for inspection as mentioned in paragraph 5 ofAppendix 6 to this Offer Document).

(Audited) For the financial year ended 31 December

(S$) 2006 2005 2004

Auditors’ remuneration (550) (1,050) (1,000)Other expenses (314) (386) (159)

Loss for the financial year (864) (1,436) (1,159)

Attributable to:Equity holders of the company (864) (1,436) (1,159)

Loss per share(1) (cents) (0.004) (0.007) (0.006)Net dividend per share (cents) – – –

Note:-

(1) This is computed based on issued share capital of 20,000,000 ordinary shares of the Offeror as at the LatestPracticable Date.

APPENDIX 2 – INFORMATION ON KTIPL AND LEE LATEX

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4. Statement of Assets and Liabilities

The audited balance sheet of the Offeror as at 31 December 2006 is summarised in thetable below. The summary is extracted from, and should be read in conjunction with, theannual financial statements of the Offeror for FY2006 (a copy of which is available forinspection as mentioned in paragraph 5 of Appendix 6 to this Offer Document).

(Audited)As at

(S$) 31 December 2006

Current AssetCash in hand 2

Current LiabilitiesAmount due to related party (17,203)Accruals (1,000)

Net Liabilities (18,201)

Equity Attributable to the Equity Holder of the CompanyShare capital 2Accumulated losses (18,203)

Net Deficit (18,201)

5. Material Changes in Financial Position

Save as disclosed in this Offer Document and save for (i) the increase in the issued andpaid-up share capital of the Offeror from S$2 to S$20,000,000 by the allotment and issue ofan additional 19,999,998 ordinary shares in the Offeror to Lee Latex on 22 January 2008,and (ii) the making and financing of the Offer, as at the Latest Practicable Date, there hasbeen no known material change in the financial position of the Offeror since 31 December2006, being the date of the last audited financial statements of the Offeror.

6. Significant Accounting Policies

The following summary of significant accounting policies of the Offeror is extracted from the“Notes to the financial statements – 31 December 2006” of the annual financial statementsof the Offeror for FY2006. A copy of the annual financial statements of the Offeror forFY2006 (which contain notes to the financial statements) is available for inspection asmentioned in paragraph 5 of Appendix 6 to this Offer Document.

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance withSingapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on a historical cost basis.

The financial statements are presented in Singapore Dollars (SGD or $).

The accounting policies have been consistently applied by the Company and areconsistent with those used in the previous financial year.


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The financial statements of the Company have been prepared on a going concernbasis notwithstanding the deficit in shareholders’ funds as a related party has agreedto subordinate its claim to the amount owing to it by the Company until all otherliabilities of the Company have been paid and has given an undertaking to providecontinuing financial support to the Company to meet its liabilities as and when they falldue.

2.2 FRS and INT FRS not yet effective

The Company has not applied the following FRS and INT FRS that have been issuedbut not yet effective:

Effective date(Annual periods

beginning on or after)

FRS 1 : Amendment to FRS 1 (revised),Presentation of Financial Statements(Capital Disclosures) 1 January 2008

FRS 40 : Investment Property 1 January 2007

FRS 107 : Financial Instruments: Disclosures 1 January 2008

FRS 108 : Operating Segments 1 January 2009

INT FRS 107 : Applying the Restatement Approachunder FRS 29, Financial Reportingin Hyperinflationary Economies 1 March 2006

INT FRS 108 : Scope of FRS 102, Share-based Payment 1 May 2006

INT FRS 109 : Reassessment of Embedded Derivatives 1 June 2006

INT FRS 110 : Interim Financial Reporting and Impairment 1 November 2006

INT FRS 111 : Group and Treasury Share Transactions 1 March 2007

INT FRS 112 : Service Concession Arrangements 1 January 2008

The Directors expect that the adoption of the above pronouncements will have nomaterial impact to the financial statements in the period of initial application, except forFRS 107 and the amendment to FRS 1 as indicated below.

FRS 107, Financial Instruments: Disclosures and amendment to FRS 1(revised), Presentation of financial statements (Capital Disclosures)

FRS 107 introduces new disclosures to improve the information on financialinstruments. It requires the disclosure of qualitative and quantitative information aboutexposure to risks arising from financial instruments, including specified minimumdisclosures about credit risk, liquidity risk and market risk, including sensitivity analysisto market risk. The amendment to FRS 1 requires the Company to make newdisclosures to enable users of the financial statements to evaluate the Company’sobjectives, policies and processes for managing capital. The Company will apply FRS107 and the amendment to FRS 1 from the annual period beginning 1 January 2008.

2.3 Financial liabilities

Financial liabilities include other amounts payable and amount due to a related party.Financial liabilities are recognised on the balance sheet when, and only when, theCompany becomes a party to the contractual provisions of the financial instrument.Financial liabilities are initially recognised at fair value of consideration received lessdirectly attributable transaction costs and subsequently measured at amortised costusing the effective interest method.


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Gains and losses are recognised in the profit and loss account when the liabilities arederecognised as well as through the amortisation process. The liabilities arederecognised when the obligation under the liability is discharged or cancelled orexpired.

There are no other accounting policies as the Company has not commencedoperations.

7. Changes in Accounting Policies

As at the Latest Practicable Date, there has been no change in the accounting policies of theOfferor since the date of its annual financial statements for FY2006 which will cause thefigures set out in paragraphs 3 and 4 above to be not comparable to a material extent.

8. Registered Office

The registered office of the Offeror is at 65 Chulia Street, #44-01 OCBC Centre, Singapore049513.”

2. LEE LATEX

The following information on Lee Latex has been extracted from Appendix 3 to the KTIPL OfferDocument. Unless otherwise defined, all terms and expressions used in the extract below shallhave the same meanings as those defined in the KTIPL Offer Document:

“1. Lee Latex Directors

The names, addresses and descriptions of the directors of Lee Latex as at the LatestPracticable Date are as follows:

Name Address Description

Lee Seng Gee 87 Meyer Road Director Singapore 437912

Lee Seng Tee 19 Chancery Lane DirectorSingapore 309509

Lee Seng Wee 17 Rochalie Drive Director Singapore 248248

Lee Yuen-Shih 4C Evans Road DirectorSingapore 259362

Huang Thiay Sherng 4 Yarrow Gardens Director Frankel EstateSingapore 455009

Lee Han-Shih 14 Bukit Tunggal Road Alternate Director to Singapore 309698 Lee Seng Gee

Lee Shih Hua 19 Chancery Lane Alternate Director to Singapore 309509 Lee Seng Tee


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2. Principal Activities and Share Capital

Lee Latex is a private company limited by shares and was incorporated in Singapore on 10June 1947. Its principal activity is that of investment holding. As at the Latest PracticableDate, Lee Latex has an issued and paid-up share capital of S$30,000,000 comprising30,000 ordinary shares.

3. Summary of Financial Performance

The audited profit and loss statements of Lee Latex for FY2004, FY2005 and FY2006 aresummarised in the table below. The summary is extracted from, and should be read inconjunction with, the annual financial statements of Lee Latex for FY2004, FY2005 andFY2006 (copies of which are available for inspection as mentioned in paragraph 5 ofAppendix 6 to this Offer Document).

(Audited) For the financial year ended 31 December

(S$) 2006 2005 2004

Sales 101,288,586 67,841,222 47,472,729 Cost of sales (98,940,247) (65,998,661) (46,574,437)

Gross profit 2,348,339 1,842,561 898,292Income from investments, gross 31,964,059 51,526,194 11,593,906Other operating income 9,421,743 743,672 124,847Administrative expenses (606,446) (577,981) (578,333)Other operating expenses (267,932) (271,662) (85,635)Finance expense (552,537) (299,605) (170,838)

Profit before taxation 42,307,226 52,963,179 11,782,239Taxation (4,259,947) (9,054,356) (2,438,715)

Profit after taxation 38,047,279 43,908,823 9,343,524Transfer to capital reserve (7,733,469) – 4,017

Retained profit for the year 30,313,810 43,908,823 9,347,541

Attributable to:Equity holders of the company 30,313,810 43,908,823 9,347,541

Earnings per share(1) (S$) 1,010.46 1,463.63 311.58Net dividend per share(1) (S$) 390.00 384.00 318.40

Note:-

(1) This is computed based on issued share capital of 30,000 ordinary shares of Lee Latex as at the LatestPracticable Date.


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4. Statement of Assets and Liabilities

The audited balance sheet of Lee Latex as at 31 December 2006 is summarised in the tablebelow. The summary is extracted from, and should be read in conjunction with, the annualfinancial statements of Lee Latex for FY2006.

(Audited)As at

(S$) 31 December 2006

Non-Current AssetsProperty, plant and equipment 739,964Investments 448,366,014

Current AssetsInventories 8,503,058Trade receivables 6,424,832Other receivables 490,315Derivative financial instruments 13,685Fixed deposits 75,194,859Cash and bank balances 835,084

91,461,833

Current LiabilitiesBank overdrafts, unsecured 9,877,859Trade payables 1,842,432Provision for taxation 474,050

12,194,341

Net Current Assets 79,267,492

Net Assets 528,373,470

Equity Attributable to the Equity Holders of the CompanyShare capital 30,000,000Reserves 498,373,470

Total Equity 528,373,470

5. Material Changes in Financial Position

Save as disclosed in this Offer Document and save for (i) the subscription of 19,999,998ordinary shares in the Offeror for a consideration of S$19,999,998 on 22 January 2008, and(ii) the making and financing of the Offer, as at the Latest Practicable Date, there has beenno known material change in the financial position of Lee Latex since 31 December 2006,being the date of the last audited financial statements of Lee Latex.


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6. Significant Accounting Policies

The following summary of significant accounting policies of Lee Latex is extracted from the“Notes to the financial statements – 31 December 2006” of the annual financial statementsof Lee Latex for FY2006. A copy of the annual financial statements of Lee Latex for FY2006(which contain notes to the financial statements) is available for inspection as mentioned inparagraph 5 of Appendix 6 to this Offer Document.

2. Summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance withSingapore Financial Reporting Standards (“FRS”).

The financial statements have been prepared on a historical cost basis, except foravailable-for-sale financial assets and derivative financial instruments that have beenmeasured at their fair value.

The accounting policies have been consistently applied by the Company and areconsistent with those used in the previous financial year.

The financial statements are presented in Singapore Dollars (SGD or $).

2.2 FRS and INT FRS not yet effective

The Company has not applied the following FRS and INT FRS that have been issuedbut not yet effective:

Effective date(Annual periods

beginning on or after) FRS 1 : Amendment to FRS 1 (revised),

Presentation of Financial Statements(Capital Disclosures) 1 January 2008

FRS 40 : Investment Property 1 January 2007

FRS 107 : Financial Instruments: Disclosures 1 January 2008

FRS 108 : Operating Segments 1 January 2009

INT FRS 107 : Applying the Restatement Approachunder FRS 29, Financial Reportingin Hyperinflationary Economies 1 March 2006

INT FRS 108 : Scope of FRS 102, Share-based Payment 1 May 2006

INT FRS 109 : Reassessment of Embedded Derivatives 1 June 2006

INT FRS 110 : Interim Financial Reporting and Impairment 1 November 2006

INT FRS 111 : Group and Treasury Share Transactions 1 March 2007

INT FRS 112 : Service Concession Arrangements 1 January 2008

The Directors expect that the adoption of the above pronouncements will have nomaterial impact to the financial statements in the period of initial application, except forFRS 107 and the amendment to FRS 1 as indicated below.


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FRS 107, Financial Instruments: Disclosures and amendment to FRS 1 (revised),Presentation of financial statements (Capital Disclosures)

FRS 107 introduces new disclosures to improve the information on financialinstruments. It requires the disclosure of qualitative and quantitative information aboutexposure to risks arising from financial instruments, including specified minimumdisclosures about credit risk, liquidity risk and market risk, including sensitivity analysisto market risk. The amendment to FRS 1 requires the Company to make newdisclosures to enable users of the financial statements to evaluate the Company’sobjectives, policies and processes for managing capital. The Company will apply FRS107 and the amendment to FRS 1 from the annual period beginning 1 January 2008.

2.3 Functional and foreign currency

Functional currency

The management has determined the currency of the primary economic environmentin which the Company operates i.e. functional currency, to be SGD. Sales and majoroperating expenses are primarily influenced by fluctuations in SGD.

Foreign currency transactions

Transactions in foreign currencies are measured and recorded on initial recognition atexchange rates approximating those ruling at the transaction dates. Monetary assetsand liabilities denominated in foreign currencies are translated at the closing rate ofexchange ruling at the balance sheet date. Non-monetary items that are measured interms of historical cost in a foreign currency are translated using the exchange ratesas at the dates of the initial transactions. Non-monetary items measured at fair valuein a foreign currency are translated using the exchange rates at the date when the fairvalue was determined.

Exchange differences arising on the settlement of monetary items or on translatingmonetary items at the balance sheet date are recognised in the profit and lossaccount.

2.4 Financial assets

Financial assets are classified as either financial assets at fair value through profit orloss, loans and receivables, held-to-maturity investments, or available-for-sale financialassets, as appropriate. Financial assets are recognised on the balance sheet when,and only when, the Company becomes a party to the contractual provisions of thefinancial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, inthe case of financial assets not at fair value through profit or loss, directly attributabletransaction costs. The Company determines the classification of its financial assetsafter initial recognition and, where allowed and appropriate, re-evaluates thisdesignation at each financial year-end.

(a) Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are notquoted in an active market are classified as loans and receivables. Such assetsare carried at amortised cost using the effective interest method. Gains andlosses are recognised in profit and loss account when the loans and receivablesare derecognised or impaired, as well as through the amortisation process.


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(b) Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets thatare designated as available-for-sale or are not classified in any of the threecategories of financial assets within the scope of FRS 39. After initialrecognition, available-for sale financial assets are measured at fair value withgains or losses being recognised in the fair value adjustment reserve until theinvestment is derecognised or until the investment is determined to be impairedat which time the cumulative gain or loss previously reported in equity isincluded in the profit and loss account.

The fair value of investments that are actively traded in organised financialmarkets is determined by reference to the relevant Exchange’s quoted marketbid prices at the close of business on the balance sheet date.

The Company has not classified any financial assets as held-to-maturity investmentsand financial assets at fair value through profit or loss.

2.5 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and short-term,highly liquid investments that are readily convertible to known amounts of cash andwhich are subjected to an insignificant risk of changes in value. These also includebank overdrafts that form an integral part of the Company’s cash management.

Cash and bank balances, fixed deposits and bank overdrafts carried in the balancesheet are classified and accounted for as loans and receivables under FRS 39. Theaccounting policy for this category of financial assets is stated in Note 2.4.

2.6 Receivables

Trade and other receivables, including amounts from related parties, are classified andaccounted for as loans and receivables under FRS 39. The accounting policy for thiscategory of financial assets is stated in Note 2.4.

An allowance is made for uncollectible amounts when there is objective evidence thatthe Company will not be able to collect the debt. Bad debts are written off whenidentified. Further details on the accounting policy for impairment of financial assetsare stated in Note 2.7 below.

2.7 Impairment of financial assets

The Company assesses at each balance sheet date whether there is any objectiveevidence that a financial asset or group of financial assets is impaired.

(a) Assets carried at amortised cost

If there is objective evidence that an impairment loss on financial assets carriedat amortised cost has been incurred, the amount of the loss is measured as thedifference between the asset’s carrying amount and the present value ofestimated future cash flow discounted at the financial asset’s original effectiveinterest rate. The carrying amount of the asset is reduced through the use of anallowance account. The amount of the loss is recognised in the profit and lossaccount.


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If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairmentwas recognised, the previously recognised impairment loss is reversed. Anysubsequent reversal of an impairment loss is recognised in the profit and lossaccount, to the extent that the carrying value of the asset does not exceed itsamortised cost at the reversal date.

(b) Available-for-sale financial assets

If an available-for-sale financial asset is impaired, an amount comprising thedifference between its cost (net of any principal payment and amortisation) andits current fair value, less any impairment loss previously recognised in the profitand loss account, is transferred from equity to the profit and loss account.Reversals in respect of equity instruments classified as available-for-sale are notrecognised in the profit and loss account. Reversals of impairment losses ondebt instruments are reversed through the profit and loss account, if theincrease in fair value of the instrument can be objectively related to an eventoccurring after the impairment loss was recognised in the profit and lossaccount.

(c) Assets carried at cost

If there is objective evidence that an impairment loss on a financial assetcarried at cost has been incurred, the amount of the loss is measured as thedifference between the asset’s carrying amount and the present value ofestimated future cash flow discounted at the current market rate of return for asimilar financial asset. Such impairment losses are not reversed in subsequentperiods.

2.8 Financial liabilities

Financial liabilities include trade and other amounts payable as well as amount due torelated parties. Financial liabilities are recognised on the balance sheet when, andonly when, the Company becomes a party to the contractual provisions of the financialinstrument. Financial liabilities are initially recognised at fair value of considerationreceived less directly attributable transaction costs and subsequently measured atamortised cost using the effective interest method.

Gains and losses are recognised in the profit and loss account when the liabilities arederecognised as well as through the amortisation process.

2.9 De-recognition of financial assets and liabilities

(a) Financial assets

A financial asset is derecognised where the contractual rights to receive cashflow from the asset have expired.

On derecognition of a financial asset, the difference between the carryingamount and the sum of the consideration received and any cumulative gain orloss that has been recognised directly in equity is recognised in the profit andloss account.

(b) Financial liability

A financial liability is derecognised when the obligation under the liability isdischarged or cancelled or expired.


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2.10 Revenue recognition

Revenue is recognised to the event that it is probable that the economic benefits willflow to the Company and the revenue can be reliably measured. The following specificrecognition criteria must also be met before revenue is recognised:

Sales of latex

Revenue from the sale of latex is recognised upon transfer of title to the customerwhich generally coincides with their delivery and acceptance. In respect of exportsales, transfer of title is at completion of the necessary sales documentation andshipping arrangement.

Dividend income

Dividend income from investments is recognised when the shareholders’ right toreceive the payment is established.

Interest income

Interest income is recognised as the interest accrues (using the effective interest ratemethod) unless collectibility is in doubt.

2.11 Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent torecognition, property, plant and equipment are stated at cost or revaluation lessaccumulated depreciation and accumulated impairment loss, if any. The cost of anasset comprises its purchase price and any directly attributable costs of bringing theasset to working condition for its intended use. Expenditure for additions,improvements and renewals are capitalised and expenditure for maintenance andrepairs are charged to the profit and loss account. When assets are sold or retired,their cost and accumulated depreciation are removed from the financial statementsand any gain or loss resulting from their disposal is included in the profit and lossaccount.

2.12 Depreciation

Depreciation of an asset begins when it is available for use and is computed on astraight line basis over the estimated useful lives of the assets as follows:-

Factory buildings - 20 yearsMachinery, motor vehicles, furniture and equipment - 10 years

Freehold land has an unlimited useful life and therefore is not depreciated.

The carrying values of property, plant and equipment are reviewed for impairmentwhen events or changes in circumstances indicate that the carrying value may not berecoverable.

The residual value, useful life and depreciation method are reviewed at each financialyear-end to ensure that the amount, method and period of depreciation are consistentwith previous estimates and the expected pattern of consumption of the futureeconomic benefits embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when nofuture economic benefits are expected from its use or disposal. Any gain or lossarising on derecognition of the asset is included in the profit and loss account in theyear the asset is derecognised.


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Fully depreciated assets are retained in the financial statements until they are nolonger in use and no further charge for depreciation is made in respect of theseassets.

2.13 Inventories

Stocks are valued at the lower of cost and net realisable value. Cost refers to averagepurchase prices, plus where applicable, an estimated cost of processing.

Working materials are valued at lower of cost and net realisable value. Cost refers tocost of purchase based on average purchase prices.

Net realisable value is the estimated selling price in the ordinary course of business,less estimated costs of completion and the estimated costs necessary to make thesale.

2.14 Employee benefits

The Company participates in the national pension schemes as defined by the laws ofthe countries in which it has operations. In particular, the Singapore companies makecontributions to the Central Provident Fund scheme in Singapore, a definedcontribution pension scheme. Contributions to national pension schemes arerecognised as an expense in the period in which the related service is performed.

2.15 Provisions

Provisions are recognised when the Company has a present obligation (legal orconstructive) where, as a result of a past event, it is probable that an outflow ofresources embodying economic benefits will be required to settle the obligation and areliable estimate can be made of the amount of the obligation.

2.16 Impairment of non-financial assets

The Company assesses at each reporting date whether there is an indication that anasset may be impaired. If any such indication exists, or when annual impairmenttesting for an asset is required, the Company makes an estimate of the asset’srecoverable amount.

An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fairvalue less costs to sell and its value in use and is determined for an individual asset,unless the asset does not generate cash inflow that are largely independent of thosefrom other assets or groups of assets. In assessing value in use, the estimated futurecash flow are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risks specificto the asset. Where the carrying amount of an asset exceeds its recoverable amount,the asset is considered impaired and is written down to its recoverable amount.Impairment losses of continuing operations are recognised in the profit and lossaccount as ‘impairment losses’ or treated as a revaluation decrease for assets carriedat revalued amount to the extent that the impairment loss does not exceed the amountheld in the asset revaluation reserve for that same asset.


An assessment is made at each reporting date as to whether there is any indicationthat previously recognised impairment losses recognised for an asset may no longerexist or may have decreased. If such indication exists, the recoverable amount isestimated. A previously recognised impairment loss is reversed only if there has beena change in the estimates used to determine the asset’s recoverable amount since thelast impairment loss was recognised. If that is the case the carrying amount of theasset is increased to its recoverable amount. That increased amount cannot exceedthe carrying amount that would have been determined, net of depreciation, had noimpairment loss been recognised for the asset in prior years. Reversal of an impairment loss is recognised in the profit and loss account unless the asset iscarried at revalued amount, in which case the reversal in excess of impairment losspreviously recognised through the profit and loss account is treated as a revaluationincrease. After such a reversal, the depreciation charge is adjusted in future periods toallocate the asset’s revised carrying amount, less any residual value, on a systematicbasis over its remaining useful life.

2.17 Income taxes

(a) Current tax

Current tax assets and liabilities for the current and prior periods are measuredat the amount expected to be recovered from or paid to the taxation authorities.The tax rates and tax laws used to compute the amount are those that areenacted or substantively enacted by the balance sheet date.

(b) Deferred tax

Deferred income tax is provided, using the liability method, on all temporarydifferences at the balance sheet date between the tax bases of assets andliabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences,except where the timing of the reversal of the temporary difference can becontrolled and it is probable that the temporary difference will not reverse in theforeseeable future.

Deferred tax assets are recognised for all deductible temporary differences,carry-forward of unused tax credits and unused tax losses, to the extent that it isprobable that taxable profit will be available against which the deductibletemporary differences, carry-forward of unused tax credits and unused taxlosses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balancesheet date and reduced to the extent that it is no longer probable that sufficienttaxable profit will be available to allow all or part of the deferred income taxasset to be utilised. Unrecognised deferred income tax assets are reassessedat each balance sheet date and are recognised to the extent that it has becomeprobable that future taxable profit will allow the deferred tax asset to berecovered.

Deferred income tax assets and liabilities are measured at the tax rates that areexpected to apply to the year when the asset is realised or the liability is settled,based on tax rates (and tax laws) that have been enacted or substantivelyenacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceableright exists to set off current tax assets against current tax liabilities and thedeferred taxes relate to the same taxable entity and the same taxation authority.

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2.18 Capital reserve

All gains or losses on disposal of immovable properties or investments are taken up inthe profit and loss account and then transferred to capital reserve.

2.19 Derivative financial instruments

Derivative financial instruments are classified as financial assets or liabilities at fairvalue through profit or loss.

The Company uses derivative financial instruments such as commodity forwardcontracts and forward currency contracts to hedge its risks associated with commodityand foreign currency fluctuations. Such derivative financial instruments are initiallyrecognised at fair value on the date on which a derivative contract is entered into andare subsequently remeasured at fair value. Derivative financial instruments are carriedas assets when the fair value is positive and as liabilities when the fair value isnegative.

Any gains or losses arising from changes in fair value on derivative financialinstruments that do not qualify for hedge accounting are taken to the profit and lossaccount for the year.

(a) Foreign exchange forward contracts

The Company uses foreign exchange forward contracts to hedge its risksassociated with foreign currency fluctuations. The foreign exchange forwardcontracts entered into by the Company are accounted as financial instrumentsand measured at fair value through the profit or loss. Details of the Company’sfinancial risk management objectives and policies are set out in Note 17.

2.20 Physical contracts

Physical unmatched forward contracts for sales and purchases of commodities arenot recognised until accrual delivery of commodities take place. Unrealised lossesarising from the forward contracts at balance sheet date which are provided byreference to the underlying forward contracted prices are recorded in the profit andloss account.

7. Changes in Accounting Policies

As at the Latest Practicable Date, there has been no change in the accounting policies ofLee Latex since the date of its annual financial statements for FY2006 which will cause thefigures set out in paragraphs 3 and 4 above to be not comparable to a material extent.

8. Registered Office

The registered office of Lee Latex is at 65 Chulia Street, #44-01 OCBC Centre, Singapore049513.”

3. HOLDINGS AND DEALINGS IN THE SHARES

The following information on the holdings of, and dealings in, the Shares by KTIPL and certainparties acting in concert with KTIPL is extracted from Appendix 5 to the KTIPL Offer Document:

“1. Holdings in the Shares

1.1 The Offeror and Lee Latex

As at the Latest Practicable Date, the Offeror owns 3,372,000 Shares representingapproximately 1.03% of the total number of issued Shares. Lee Latex does not hold anyShares as at the Latest Practicable Date.


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1.2 Directors of the Offeror

The holdings of the Directors in the Shares as at the Latest Practicable Date are set outbelow:

Name No. of Shares %

Huang Thiay Sherng 6,000 (1) n.m.Tan Khiam Hock 3,840 n.m.

Total 9,840 n.m.

Note:-

(1) Mr Huang Thiay Sherng is deemed interested in the Shares held by his children.

n.m. means not meaningful.

1.3 Directors and shareholders of Lee Latex

Save as set out above and below, none of the directors and shareholders of Lee Latex hasany holding in the Shares as at the Latest Practicable Date:


DirectorsLee Seng Wee 176,976 (1) 0.05Lee Seng Tee 222,240 (2) 0.07

Other individual shareholders (excluding directorswho are shareholders)

Lee Seok Keng 7,872 n.m.Lee Seok Chee 60,000 (3) 0.02Peen Lee, Fiona 23,760 0.01

Corporate shareholdersLee Foundation 13,252,668 (4) 4.07Lee Rubber 2,024,544 0.62Singapore Investments 566,232 0.17

Total 16,334,292 5.01

Notes:-

(1) Mr Lee Seng Wee holds 104,976 Shares and is deemed interested in the 72,000 Shares held by his spouse.

(2) Mr Lee Seng Tee is deemed interested in the Shares held by his spouse.

(3) Ms Lee Seok Chee is deemed interested in the Shares held by her spouse.

(4) This does not include Lee Foundation’s deemed interest in the 3,902,232 Shares held by Selat andSingapore Investments.



1.4 Other Concert Parties of the Offeror

The holdings of the Lee Family Companies, the OCBC Group, the GEH Group, the directorsof OCBC Bank and of GEH and a director of the CS Singapore Entities in the Shares as atthe Latest Practicable Date are set out below:


Lee Family CompaniesSelat 3,336,000 1.02Island Investment 544,440 0.17Lee Plantations 109,392 0.03

Sub-Total 3,989,832 1.22

OCBC GroupOCBC Bank 6,572,976 2.02Orient Holdings Private Limited 9,480,660 2.91Eastern Realty Company Limited 2,989,752 0.92Singapore Building Corporation Limited 1,148,352 0.35Malayan Trustees Bhd 5,364 n.m.OCBC Trustee Limited 51,600 0.02

Sub-Total 20,248,704 6.21

GEH GroupThe Great Eastern Life Assurance Company Limited 3,777,929 1.16Great Eastern Life Assurance (Malaysia) Berhad 46,309,042 14.21The Overseas Assurance Corporation Limited 8,117,637 2.49The Great Eastern Trust Private Limited 6,699,256 2.06

Sub-Total 64,903,864 19.92

Directors(2) of OCBC Bank and GEHMichael Wong Pakshong 26,400 0.01Wong Nang Jang 43,000 (1) 0.01

Sub-Total 69,400 0.02

A director of the CS Singapore EntitiesCharlie Chan 24 n.m.

Total 89,211,824 27.37

Notes:-

(1) Mr Wong Nang Jang is deemed interested in the 43,000 Shares held by his spouse.

(2) Other than Mr Lee Seng Wee whose holding is disclosed in paragraph 1.3 above.


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2. Dealings in the Shares during the Reference Period

2.1 The Offeror and Lee Latex

The details of the dealings in the Shares by the Offeror during the Reference Period are setout below:

Date of Transaction No. of Shares Transaction Price per ShareBought (S$)

14 January 2008 708,000 5.67 to 5.7515 January 2008 837,000 5.70 to 5.7516 January 2008 28,000 5.66 to 5.6921 January 2008 705,000 5.72 to 5.7422 January 2008 556,000 5.70 and 5.7123 January 2008 325,000 5.70 to 5.7424 January 2008 213,000 5.71

There were no dealings in the Shares by Lee Latex during the Reference Period.

2.2 Directors of the Offeror

There were no dealings in the Shares by the Directors during the Reference Period.

2.3 Directors and shareholders of Lee Latex

There were no dealings in the Shares by the directors and shareholders of Lee Latex duringthe Reference Period.

2.4 Other Concert Parties of the Offeror

The details of the dealings in the Shares by other Concert Parties of the Offeror during theReference Period are set out below:

Name Date of Transaction No. of Shares Transaction PriceBought per Share (S$)

The Great Eastern Trust 13 December 2007 6,310,202 5.1667Private Limited

Name Date of Transaction No. of Shares Transaction PriceSold per Share (S$)

Great Eastern Life 13 December 2007 6,310,202 5.1667Assurance (Malaysia)Berhad


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APPENDIX 3 – UNAUDITED CONSOLIDATED FINANCIAL STATEMENTSFOR THE GROUP FOR FY 2007

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The unaudited consolidated financial statements for the Group for FY 2007 set out below have beenextracted from the announcement by the Company on 18 February 2008, and was not specificallyprepared for inclusion in this Circular. The figures have not been audited.

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Documents

THE STRAITS TRADING COMPANY LIMITEDstraitstrading.listedcompany.com/newsroom/20080226... · 2008-02-26 · circular dated 23 february 2008 this circular is issued by the straits trading