Invitation in respect of 27,000,000 New Shares comprising: (a) 1,500,000 Offer Shares at S$0.22 for each Offer Share by way of public offer; and (b) 25,500,000 Placement Shares at S$0.22 for each Placement Share by way of placement, comprising: (i) 22,500,000 Placement Shares at S$0.22 for each Placement Share; and (ii) 3,000,000 Reserved Shares at S$0.22 for each Reserved Share reserved for subscription by our Directors, employees, customers and suppliers who have contributed to the success of our Group, payable in full on application. AN ESTABLISHED SPECIALIST ENGINEERING SERVICES PROVIDER IN THE FIELD OF CONTROLLED ENVIRONMENTS ACROMEC LIMITED (Company Registration Number: 201544003M) (Incorporated in the Republic of Singapore on 22 December 2015) Sponsor, Issue Manager, Underwriter and Placement Agent SAC CAPITAL PRIVATE LIMITED (Company Registration Number: 200401542N) (Incorporated in the Republic of Singapore) OFFER DOCUMENT DATED 6 APRIL 2016 (Registered by the Singapore Exchange Securities Trading Limited acting as agent on behalf of the Monetary Authority of Singapore on 6 April 2016) This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax, or other professional adviser(s). An application has been made by SAC Capital Private Limited (the “Sponsor” and “Issue Manager”) to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in and for quotation of all the ordinary shares (the “Shares”) in the capital of Acromec Limited (the “Company”) already issued, the new Shares (the “New Shares”) which are the subject of this Invitation (as defined herein) and the new Shares (the “Award Shares”) which may be issued upon the vesting of share awards granted under the Acromec Performance Share Scheme, on Catalist (as defined herein). The dealing in and quotation of our Shares, the New Shares and the Award Shares will be in Singapore dollars. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). This Invitation is made in or accompanied by this Offer Document that has been registered by the SGX-ST acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”). We have not lodged or registered this Offer Document in any other jurisdiction. Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission to Catalist but relies on the Sponsor confirming that the listing applicant is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares being offered for investment. The registration of this Offer Document by the SGX-ST does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with. Acceptance of applications will be conditional upon the allotment and issue of the New Shares and upon permission being granted by the SGX-ST for the listing and quotation of all the existing issued Shares of our Company, the New Shares and the Award Shares on Catalist. Monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom, if the admission and listing do not proceed, and you will not have any claims against us or the Sponsor, Issue Manager, Underwriter and Placement Agent (as defined herein). After the expiration of six months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document. Investing in our Shares involves risks which are described in the “RISK FACTORS” section of this Offer Document.
Transcript
Invitation in respect of 27,000,000 New Shares comprising:
(a) 1,500,000 Offer Shares at S$0.22 for each Offer Share by way of public offer; and(b) 25,500,000 Placement Shares at S$0.22 for each Placement Share by way of placement, comprising:
(i) 22,500,000 Placement Shares at S$0.22 for each Placement Share; and(ii) 3,000,000 Reserved Shares at S$0.22 for each Reserved Share reserved for subscription by our Directors, employees,
customers and suppliers who have contributed to the success of our Group,
(incorporated in the republic of Singapore on 22 december 2015)
Sponsor, Issue Manager, Underwriter and Placement Agent
SAc cApitAL privAte Limited(Company Registration Number: 200401542N)(Incorporated in the Republic of Singapore)
oFFer docUmeNt dAted 6 ApriL 2016(Registered by the Singapore Exchange Securities Trading Limited acting as agent on behalf of the Monetary Authority of Singapore on 6 April 2016)
this document is important. if you are in any doubt as to the action you should take, you should consult your legal, financial, tax, or other professional adviser(s).
An application has been made by SAC Capital Private Limited (the “Sponsor” and “issue manager”) to the Singapore Exchange Securities Trading Limited (the “SGX-St”) for permission to deal in and for quotation of all the ordinary shares (the “Shares”) in the capital of Acromec Limited (the “company”) already issued, the new Shares (the “New Shares”) which are the subject of this Invitation (as defined herein) and the new Shares (the “Award Shares”) which may be issued upon the vesting of share awards granted under the Acromec Performance Share Scheme, on Catalist (as defined herein). The dealing in and quotation of our Shares, the New Shares and the Award Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Main Board of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
This Invitation is made in or accompanied by this Offer Document that has been registered by the SGX-ST acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”). We have not lodged or registered this Offer Document in any other jurisdiction.
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission to Catalist but relies on the Sponsor confirming that the listing
applicant is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares being offered for investment.
The registration of this Offer Document by the SGX-ST does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
Acceptance of applications will be conditional upon the allotment and issue of the New Shares and upon permission being granted by the SGX-ST for the listing and quotation of all the existing issued Shares of our Company, the New Shares and the Award Shares on Catalist. Monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom, if the admission and listing do not proceed, and you will not have any claims against us or the Sponsor, Issue Manager, Underwriter and Placement Agent (as defined herein).
After the expiration of six months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of our Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document.
investing in our Shares involves risks which are described in the “riSK FActorS” section of this offer document.
AN ESTABLISHED SpecialiSt engineering ServiceSproviderIN THE FIELD oF CoNTroLLED ENvIroNmENTS
corporate proFile
We are a Singapore-based specialist engineering services provider with 20 years of experience in the field of controlled environments. Our expertise is in the design and construction of facilities requiring controlled environments such as laboratories, medical and sterile facilities and cleanrooms.
We provide integrated services including, engineering, procurement, construction and maintenance services, specialising in architectural and MEP works within controlled environments. Our business is divided into two main business segments: (1) Engineering, Procurement and Construction, and (2) Maintenance.
We serve mainly the healthcare, biomedical, research and academia, and electronics sectors. Our customers comprise mainly hospitals and medical centres, government agencies, research and development companies or agencies, research and development units of multinational corporations, tertiary educational institutions, pharmaceutical companies, semiconductor manufacturing companies, and multinational engineering companies. Some of our customers include National University of Singapore, Singapore General Hospital, A*Star, P&G and Johnson Matthey Singapore Private Limited.
CLEANroomSLABorATorIES
mAINTENANCE SErvICES
mEDICAL AND STErILE FACILITIES
our buSineSS SegmentS
maintenanceWe provide maintenance and repair services for facilities and equipment of controlled environments and their supporting infrastructure. We provide both corrective and preventive or routine maintenance services
to ensure reliability and minimal disruptions to our customers’ operations. Our corrective maintenance services are available 24 hours a day and seven days a week whereas our preventive maintenance work is carried out in accordance with an agreed schedule.
engineering, procurement & conStructionWe provide engineering, procurement and construction services, specialising in architectural and MEP works within controlled environments. We are able to design and build controlled environments for use in various industries. We have designed and built the following types of facilities:
cleanroomS
Enclosed space in which airborne
particulates, contaminants and pollutants are kept within strict limits. Cleanrooms are typically used in manufacturing and scientific research.
Types of Cleanrooms Cleanrooms of various sizes and specifications,
which comply with Class 1 or ISO 3 to Class 100,000 or ISO 8 standards.
Our Track Record Built cleanrooms for customers such as STATS
ChipPAC Ltd., A*Star and ASE Singapore Pte Ltd.
laboratorieS
E n v i r o n m e n t a l parameters in these
facilities are controlled for scientific or technological research, experiments or measurements to be performed.
Types of Laboratories Forensic and diagnostic laboratories; Containment laboratories for biomedical research, including
the more sophisticated and challenging BSL3 laboratories, which are high containment laboratories that allow work to be done with indigenous or exotic agents which may cause serious or potentially lethal disease such as severe acute respiratory syndrome, avian flu and tuberculosis; and
Laboratories for research in chemicals and materials, clean technology, electronics and pharmaceutical products.
Our Track Record Built laboratories for facility owners such as P&G, Singapore
General Hospital, National University of Singapore and Johnson Matthey Singapore Private Limited.
medical and Sterile FacilitieS
E n v i r o n m e n t a l parameters in these
facilities are controlled to provide clean environments to reduce risk of infection to patients and/or contain infectious diseases.
Types of Medical and Sterile Facilities Operating theatres; Theatre sterile services units; Intensive care units; Isolation wards; and Fertility centres.
Our Track Record Built medical and sterile facilities for hospitals
and medical centres such as National University Hospital, Singapore General Hospital, Tan Tock Seng Hospital, Changi General Hospital, Virtus Fertility Centre and Aptus Surgery Centre.
Financial highlightS
50,000
40,000
30,000
20,000
10,000
0order Book
revenue(S$’000)
TOTAL OrdEr bOOkApproximately S$40.03 million**As at Latest Practicable Date: 8 March 2016
FY: Financial Year ended 30 September
FY2013
44,872
FY2014
23,107
FY2015
35,377
3,500
3,000
2,500
2,000
1,500
1,000
500
0
proFit For the Year(S$’000)
cAGr 14.5%
FY2013 FY2014 FY2015
2,5802,769
3,381
FY: Financial Year ended 30 September
5.7%
12.0%
9.6%
NET MArGiN (%)
paSt and exiSting proJectS
1 Additional variation orders were given by the customer for this project and these works are expected to continue until may 2016.
Sep 2011 - Jul 2013
national univerSitY hoSpitalFitting-out works encompassing architectural and structural works, meP works and supply of equipment for operating theatres and theatre sterile services unit at the NUH medical centre
Singapore general hoSpitalFitting-out of a BSL3 laboratory, encompassing architectural and structural works, meP works and supply of laboratory equipment at the Academia building
Jul 2012 - maY 2013
StatS chippac ltd. Fitting-out of a testing and assembly plant comprising class 1000 cleanrooms and plant facilities, encompassing architectural and structural works, and meP works
Jun 2012 - apr 2014
a*Stardesign, supply and installation of laboratory furniture at the innovis and Kinesis buildings at Fusionopolis
Jun 2014 - oct 2015
JohnSon mattheY Singapore private limitedFitting-out of a chemical laboratory, encompassing architectural and structural works, meP works and supply of laboratory equipment at cleantech Park
apr 2015- Sep 2015
national univerSitY oF SingaporeFitting-out works for BSL3 laboratory, encompassing architectural works, meP works, and supply of laboratory equipment at the Yong Loo Lin School of medicine
aug 2013 - Feb 2014
a*StarFitting-out of class 1, class 10 and class 100 cleanrooms, encompassing architectural and structural works and meP works at the Synthesis building at Fusionopolis
aug 2015- dec 20151
p&gdesign, supply and installation of laboratory furniture and construction of laboratories at P&G Singapore innovation center
Jul 2012 - oct 2014
Singapore general hoSpital Fitting-out of new operating theatres and supporting areas, encompassing architectural works, meP works and supply of laboratory equipment at the National Heart centre
dec 2014- Feb 2016
Jul 2015- mar 2016
changi general hoSpitalinterior fit-out of new surgical procedure rooms and support areas, encompassing architectural works and meP works at changi General Hospital
aug 2015 - dec 2016
houSing & development boardFitting-out works, encompassing architectural and meP works, and supply of equipment for pre-fabricated operating theatres and theatre sterile services units for the day surgery department at Admiralty medical centre
oct 2015- Feb 2016
aptuS SurgerY centre pte ltdFitting-out works, encompassing architectural and meP works, and supply of equipment for the new surgery centre at Paragon medical
biotronik apm pte ltd Fitting-out of iSo 7 specialist medical device assembly cleanroom facility, encompassing architectural and meP works at techview
Feb 2016- Jun 2016
40,030
The following are some of our key projects during the Period Under Review and up to the Latest Practicable Date:
We have an eStabliShed track record and poSSeSS SubStantial technical expertiSe We have built laboratories, medical and sterile facilities,
and cleanrooms which comply with international guidelines or standards.
As a testament to our technical expertise, we have successfully completed projects such as Class 1 cleanrooms, BSL3 laboratories and the sniff sensory laboratory in P&G Singapore Innovation Center.
We are able to compete against our competitors because of our reputation as a reliable and established specialist engineering services provider in the field of controlled environments.
We are able to provide integrated engineering SolutionS to our cuStomerS We are able to integrate our architectural and MEP
engineering know-how to provide total engineering solutions for controlled environments.
With our in-house engineering team who have expertise in MEP engineering solutions, we are able to provide a faster turn-around time as well as provide cost and time-efficient integrated engineering solutions to our customers.
Our ability to provide integrated engineering solutions to our customers reduces our reliance on external parties and enables us to bid for more varied projects.
We have eStabliShed Strong buSineSS relationS With our cuStomerS, SupplierS and Sub-contractorS With 20 years of experience in the field of controlled
environments, we have built a strong network of customers, suppliers and sub-contractors.
our competitive StrengthS
We have maintained good relationships with our customers, suppliers and sub-contractors by delivering quality services, completing projects on time and making regular visits and having periodic meetings with our customers, suppliers and sub-contractors.
As a result, we have established strong business relations with our customers, suppliers and sub-contractors which generate repeat business.
We are able to Further Strengthen relationShipS With our cuStomerS through our maintenance ServiceS More than 80.0% of the revenue from the Maintenance
segment was derived from facilities which were built by us.
Through our maintenance services, we are able to keep abreast of changes in our customers’ business and understand and meet their needs and requirements, thereby further strengthening our position as their preferred contractor.
We have an experienced and committed management team Our management team has extensive experience,
technical expertise and valuable business relationships with the market players in the business of controlled environments.
Our Executive Chairman and Managing Director, Lim Say Chin, and our Executive Directors, Chew Chee Keong and Goi Chew Leng, are instrumental in providing our Group with their invaluable strategic leadership.
Our Directors are supported by an experienced and dedicated management team.
Order book of
S$40.03 million
as at 8 March 2016
Intend to recommend and
distribute
dividendS oF at leaSt 20% oF
net proFitSattributable to Shareholders for FY2016 and FY2017
Singaporehealthcare
In Singapore, growing affluence and better education has led to an increased awareness of health management and increased expenditure on health insurance coverage. Coupled with a rapidly ageing population, this is expected to result in an increase in demand for more and better healthcare infrastructure.
The Singapore government is expanding every aspect of the healthcare system, increasing the number of beds in acute hospitals by 25.0% by the end of the decade, doubling community hospital beds, increasing nursing home capacity by about 70.0% and investing to bring affordable care into the community so that seniors can be cared for at home.
Healthcare spending in Singapore is expected to rise from over S$9.0 billion in 2015 to over S$13.0 billion in 2020 and will continue to increase beyond this decade.
Beyond 2020, the Ministry of Health has announced that four new acute hospitals will be built, with Singapore’s next integrated hospital development in Woodlands being progressively opened from 2022.
Other announced development plans include:(i) a master plan to redevelop the 43-hectare Singapore
General Hospital (“SGH”) campus in the next 20 years, including the relocation or development of SGH’s Accident and Emergency block, the new 550-bed Outram Community Hospital, SGH Elective Care Centre, National Dental Centre Singapore and the new National Cancer Centre Singapore. The main SGH Complex will be developed in phase two of the master plan after phase one is completed. Under the master plan, provision has also been made for a new research park to further biomedical research and collaborations with industry partners;
(iii) the Centre for Oral Health at the National University Hospital is expected to open by 2019; and
(iii) a new wing will be added to the existing National Skin Centre at Tan Tock Seng Hospital.
Our Directors believe that these government initiatives will translate into opportunities for our Group to participate in the development of the new healthcare infrastructure, as our track record in building operating theatres and other medical and sterile facilities puts us in good stead to match these demands.
biomedical and reSearch and academia The Singapore government announced in January 2016
in its Research, Innovation and Enterprise 2020 plan that S$19.0 billion has been set aside over 2016-2020 for research, innovation and enterprise activities, to support and translate research, and to leverage science and technology to address national challenges. The new allocation is a 18% increase over the S$16.1 billion committed from 2011 to 2015.
We note that of the S$19.0 billion set aside, approximately S$10.1 billion will be used for academic research, health and biomedical sciences, and advanced manufacturing and engineering;
our proSpectS
Our Directors believe that the following market segments will contribute positively to the long-term prospects of our Group:
Our Directors believe that our expertise and track record in laboratory design and construction positions us well to take advantage of the opportunities created by these government initiatives including the development of new biomedical, and research and academia infrastructure.
The Singapore government’s initiatives have attracted investments from leading private institutions to set up facilities in Singapore. Based on the National Survey of Research & Development by A*Star, private sector research and development spending hit an all-time high of S$5.2 billion in 2014, up by 16.0% from 2013.
Our Directors believe that there will be opportunities for us arising from continued investments in research facilities by private institutions, including from our existing customers who will look at further opportunities to develop their research and development capabilities.
aSeanhealthcare
With the rising affluence of their people, there is a continuous drive from governments of developing countries to build and upgrade their existing healthcare infrastructure to cope with the increasing need for more and better healthcare services.
Many ASEAN countries have embarked on the process of building and upgrading their healthcare infrastructure.
In ASEAN, health expenditure per capita is about 4.0% of gross domestic product, as compared to the Organisation for Economic Co-operation and Development average of 9.5%, even though such expenditure has already increased by 250.0% from 1998 to 2013 to over US$68.0 billion.
Our Directors believe that we will be able to offer our MEP engineering solutions in countries such as Indonesia, Malaysia, Myanmar and Vietnam.
electronicS Vietnam’s electronics industry is on the rise, making up
23.4% of its gross domestic product in 2014, up from just 5.2% in 2010.
Electronics has been Vietnam’s number one export since 2013 and has increased by 78.0% during the period of 2010 and 2014, reaching US$6.9 billion in 2011, US$29.5 billion in 2012, US$32.1 billion in 2013 and US$35.0 billion in 2014.
Many high-tech electronics producers are establishing a presence in Vietnam, including Intel, LG, Panasonic and Microsoft.
Our Directors believe Vietnam will be a growing electronics manufacturing base and with our expertise in cleanroom design and construction, we will be well-positioned to take advantage of the opportunities in this market.
verticallY integrating our ServiceS
We intend to establish an in-house installation team to undertake some installation works.
We may also invest in a fabrication workshop to fabricate laboratory furniture.
We believe that when installation and fabrication works are carried out in-house, we will be able to better manage our costs and the quality of our workmanship.
expanSion through acquiSitionS, Joint ventureS and/or Strategic
allianceS and venturing into neW geographical marketS
In addition to growing organically, we may consider expanding our business through acquisitions, joint ventures or strategic alliances with parties who create synergy with our existing business.
Through such acquisitions, joint ventures and strategic alliances, we are looking to strengthen our market position, expand our network of customers as well as complement our current and future business, in order to better manage the quality of our services and increase our profitability in the longer run.
We intend to provide our MEP engineering solutions in countries that are still developing their healthcare and cleanroom infrastructure such as Indonesia, Malaysia, Myanmar and Vietnam.
We intend to use S$1.0 million of the net proceeds from the Invitation for this purpose.
capitaliSing on our eStabliShed track record to Secure more proJectS
and proJectS oF a larger Scale, particularlY in the healthcare, biomedical,
and reSearch and academia SectorS
We believe that the Singapore government’s initiatives and development plans of private institutions in the aforesaid sectors will create business opportunities for our Group.
We intend to use S$3.5 million of the net proceeds from the Invitation as working capital to allow our Group to undertake more projects and projects of a larger scale.
groWing our maintenance Segment
Our Maintenance segment provides our Group with a recurring stream of income as there is a constant need for maintenance and repair of facilities and equipment of controlled environments and their supporting infrastructure.
We intend to grow our Maintenance segment business and secure more maintenance contracts for the controlled environments and supporting infrastructure that were not built by us.
our buSineSS StrategieS and Future planS
CONTENTS
1
Page
CORPORATE INFORMATION ............................................................................................................ 4
HISTORY .............................................................................................................................................. 72
BUSINESS
BUSINESS OVERVIEW ...................................................................................................................... 75
OUR PAST AND EXISTING PROJECTS ............................................................................................ 78
WORK PROCESS................................................................................................................................ 80
QUALITY AND SAFETY ASSURANCE .............................................................................................. 84
MARKETING AND BUSINESS DEVELOPMENT................................................................................ 86
MAJOR CUSTOMERS ........................................................................................................................ 86
MAJOR SUPPLIERS............................................................................................................................ 87
PAST INTERESTED PERSON TRANSACTIONS .............................................................................. 129
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS .......................................... 131
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS ...................... 131
CONTENTS
3
POTENTIAL CONFLICTS OF INTERESTS
INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES ........ 134
INTERESTS OF EXPERTS.................................................................................................................. 134
INTERESTS OF THE SPONSOR, ISSUE MANAGER, UNDERWRITER AND PLACEMENT AGENT ................................................................................................................................................ 134
CLEARANCE AND SETTLEMENT .................................................................................................... 135
GENERAL AND STATUTORY INFORMATION
INFORMATION ON DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING SHAREHOLDERS................................................................................................................................ 136
DOCUMENTS AVAILABLE FOR INSPECTION .................................................................................. 138
RESPONSIBILITY STATEMENT BY DIRECTORS OF OUR COMPANY............................................ 139
APPENDIX A
INDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015...... A-1
APPENDIX B
INDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015 .......................................................................................................... B-1
APPENDIX C
SUMMARY OF CONSTITUTION OF OUR COMPANY ...................................................................... C-1
APPENDIX D
DESCRIPTION OF OUR SHARES...................................................................................................... D-1
In this Offer Document and the accompanying Application Forms and, in relation to ElectronicApplications, the instructions appearing on the screens of the ATMs of Participating Banks or the IBwebsites of the relevant Participating Banks, unless the context otherwise requires, the followingdefinitions apply throughout:
Companies within our Group
“Acromec Engineers” : Acromec Engineers Pte Ltd
“Company” : Acromec Limited
“Group” : Our Company and our subsidiary, Acromec Engineers
Other Corporations and Organisations
“A*Star” : Agency for Science, Technology and Research
“Authority” or “MAS” : The Monetary Authority of Singapore
“BCA” : Building and Construction Authority
“Catalist” : The sponsor-supervised listing platform of the SGX-ST
“ISO” : International Organisation for Standardisation, a worldwidefederation of national standards bodies
“MOM” : Ministry of Manpower
“P&G” : Procter & Gamble
“SGX-ST” or “Exchange” : Singapore Exchange Securities Trading Limited
“SIgN” : Singapore Immunology Network, an organisation launchedby A*Star with the aim of expanding and strengtheningimmunology research in Singapore
“Sponsor”, “Issue Manager”, : SAC Capital Private Limited“Underwriter”, “Placement Agent” or “SAC Capital”
General
“Acromec PSS” : Acromec Performance Share Scheme
“Act” or “Companies Act” : Companies Act (Chapter 50) of Singapore as amended,supplemented or modified from time to time
“Application Forms” : The printed application forms to be used for the purpose ofthe Invitation and which form part of this Offer Document
“Application List” : The list of applications for subscription of the New Shares
6
DEFINITIONS
“Associate” : (a) In relation to an entity, means:
(i) in a case where the entity is a substantialshareholder, controlling shareholder, substantialinterest-holder or controlling interest-holder, itsrelated corporation, related entity, associatedcompany or associated entity; or
(ii) in any other case, (A) a director or an equivalentperson, (B) where the entity is a corporation, acontrolling shareholder of the entity, (C) wherethe entity is not a corporation, a controllinginterest-holder of the entity, (D) a subsidiary, asubsidiary entity, an associated company, or anassociated entity, or (E) a subsidiary, asubsidiary entity, an associated company, or anassociated entity, of the controlling shareholderor controlling interest-holder, as the case maybe, of the entity; and
(b) in relation to an individual, means:
(i) his immediate family (being spouse, child,adopted child, step-child, sibling and parent);
(ii) a trustee of any trust of which the individual orany member of the individual’s immediate familyis (A) a beneficiary; or (B) where the trust is adiscretionary trust, a discretionary object, whenthe trustee acts in that capacity; or
(iii) any corporation in which he and his immediatefamily (whether directly or indirectly) haveinterests in voting shares of an aggregate of notless than 30% of the total votes attached to allvoting shares
The terms “associated company”, “associated entity”,“controlling interest-holder”, “controlling shareholder”,“related corporation”, “related entity”, “subsidiary”, “subsidiaryentity” and “substantial interest-holder” in the above definitionof “Associate” shall have the same meanings ascribed tothem respectively in the Securities and Futures (Offers ofInvestments) (Shares and Debentures) Regulations 2005
“ASEAN” : Association of Southeast Asian Nations, comprising Brunei,Cambodia, Indonesia, Laos, Malaysia, Myanmar, thePhilippines, Singapore, Thailand and Vietnam
“ATM” : Automated teller machine of a Participating Bank
“Audit Committee” : The audit committee of our Company as at the date of thisOffer Document, unless otherwise stated
“Award” : An award of Shares granted under the Acromec PSS
DEFINITIONS
7
“Award Shares” : The Shares which may be issued or transferred upon thevesting of Awards granted under the Acromec PSS
“Biopolis” : An international research and development centre forbiomedical sciences, located at One North business parksituated in Buona Vista, Singapore
“Board” or “Board of Directors” : The board of Directors of our Company as at the date of thisOffer Document, unless otherwise stated
“business trust” : Has the same meaning as provided in section 2 of theBusiness Trusts Act (Chapter 31A) of Singapore
“Catalist Rules” : The SGX-ST Listing Manual Section B: Rules of Catalist, asamended, supplemented or modified from time to time
“Constitution” : The constitution of our Company
“Controlling Shareholder” : A person who has an interest in our Shares of an aggregateof not less than 15% of the total votes attached to all ourShares, or in fact exercises control over our Company
“Director” : A director of our Company as at the date of this OfferDocument, unless otherwise stated
“Electronic Applications” : Applications for the Offer Shares made through an ATM ofone of the relevant Participating Banks or the IB website ofone of the relevant Participating Banks, or the mobilebanking interface of DBS Bank, subject to and on the termsand conditions of this Offer Document
“entity” : Includes a corporation, an unincorporated association, apartnership and the government of any state, but does notinclude a trust
“EPS” : Earnings per Share
“Executive Directors” : The executive Directors of our Company as at the date ofthis Offer Document, unless otherwise stated
“Executive Officers” : The key executives of our Group as at the date of this OfferDocument, unless otherwise stated, who make or participatein making decisions that affect the whole or a substantialpart of our business or have the capacity to make decisionswhich affect significantly our financial standing
“Fusionopolis” : A research and development complex located at One Northbusiness park situated in Buona Vista, Singapore whichhouses various research organisations, high-techcompanies, government agencies, retail outlets and servicedapartments
“FY” : Financial year ended or ending 30 September, as the casemay be
“FY2015 Final Dividend” : The final dividend of S$1,800,000 declared and paid inrespect of FY2015 by Acromec Engineers
8
DEFINITIONS
“GST” : Goods and services tax
“IB” : Internet banking
“Independent Directors” : The non-executive independent Directors of our Company asat the date of this Offer Document, unless otherwise stated
“Invitation” : The invitation by our Company to the public in Singapore tosubscribe for the New Shares at the Issue Price, subject toand on the terms and conditions of this Offer Document
“IPO” : Initial public offering
“Issue Price” : S$0.22 for each New Share
“Latest Practicable Date” : 8 March 2016, being the latest practicable date prior to thelodgement of this Offer Document with the SGX-ST acting asagent on behalf of the Authority
“Listing Manual” : The Listing Manual of the SGX-ST (including the CatalistRules), as amended, supplemented or modified from time totime
“Market Day” : A day on which the SGX-ST is open for trading in securities
“NAV” : Net asset value
“New Shares” : The 27,000,000 new Shares for which our Company invitesapplications to subscribe pursuant to the Invitation, subjectto and on the terms and conditions of this Offer Document
“Nominating Committee” : The nominating committee of our Company as at the date ofthis Offer Document, unless otherwise stated
“NTA” : Net tangible assets
“Offer” : The offer by our Company of the Offer Shares to the publicin Singapore for subscription at the Issue Price, subject toand on the terms and conditions of this Offer Document
“Offer Document” : This offer document dated 6 April 2016 issued by ourCompany in respect of the Invitation
“Offer Shares” : The 1,500,000 New Shares which are the subject of theOffer
“Participating Banks” : United Overseas Bank Limited (“UOB”) and its subsidiary,Far Eastern Bank Limited (the “UOB Group”), DBS Bank Ltd.(including POSB) (“DBS Bank”) and Oversea-ChineseBanking Corporation Limited (“OCBC”)
“PER” : Price earnings ratio
DEFINITIONS
9
“Period Under Review” : The period comprising FY2013, FY2014 and FY2015
“Placement” : The placement by the Placement Agent of the PlacementShares on behalf of our Company for subscription at theIssue Price, subject to and on the terms and conditions ofthis Offer Document
“Placement Shares” : The 25,500,000 New Shares (including the ReservedShares) which are the subject of the Placement
“Relevant Period” : The period comprising FY2013, FY2014, FY2015 and from1 October 2015 to the Latest Practicable Date
“Remuneration Committee” : The remuneration committee of our Company as at the dateof this Offer Document, unless otherwise stated
“Reserved Shares” : 3,000,000 of the Placement Shares reserved for subscriptionby our Directors, employees, customers and suppliers whohave contributed to the success of our Group
“Restructuring Agreement” : The restructuring agreement dated 15 March 2016 enteredinto by our Company for the purpose of the RestructuringExercise
“Restructuring Exercise” : The corporate restructuring exercise undertaken inconnection with the Invitation, as described in the “GeneralInformation on Our Group – Restructuring Exercise” sectionof this Offer Document
“Securities Account” : The securities account maintained by a Depositor with CDP,but does not include a securities sub-account
“Securities and Futures Act” or “SFA” : Securities and Futures Act (Chapter 289) of Singapore, asamended, supplemented or modified from time to time
“Service Agreements” : The service agreements entered into between our Companyand each of Lim Say Chin, Chew Chee Keong and Goi ChewLeng as described in the “Directors, Executive Officers andStaff – Service Agreements” section of this Offer Document
“SGXNET” : The corporate announcement system maintained by theSGX-ST for the submission of announcements by listedcompanies
“Shareholders” : Registered holders of Shares, except where the registeredholder is CDP, the term “Shareholders” shall, in relation tosuch Shares, mean the Depositors whose SecuritiesAccounts are credited with Shares
“Shares” : Ordinary shares in the capital of our Company
: The full sponsorship and management agreement dated 6April 2016 entered into between our Company and SACCapital pursuant to which SAC Capital agreed to sponsorand manage the Invitation, as described in the “Sponsorship,Management, Underwriting and Placement Arrangements”section of this Offer Document
“Sponsorship and ManagementAgreement”
10
DEFINITIONS
“Sub-Division” : The sub-division of each Share in the capital of ourCompany into 15 Shares as described in the “GeneralInformation on our Group – Restructuring Exercise” sectionof this Offer Document
“Substantial Shareholder” : A person who has an interest in our Shares the total votesattached to which is not less than 5% of the total votesattached to all our Shares
: The underwriting and placement agreement dated 6 April2016 entered into between our Company and SAC Capitalpursuant to which SAC Capital agreed to (i) underwrite ouroffer of the Offer Shares; and (ii) subscribe and/or procuresubscribers for the Placement Shares, as described in the“Sponsorship, Management, Underwriting and PlacementArrangements” section of this Offer Document
Currencies, Units and Others
“EUR” : Euro, the lawful currency of a group of European Unionnations
“S$” or “$” and “cents” : Singapore dollars and cents, respectively, the lawful currencyof Singapore
“sqm” : Square metres
“µm” : Micron or micrometre, being one millionth of a metre
“US$” : United States dollars, the lawful currency of United States ofAmerica
“%” or “per cent.” : Per centum or percentage
“N.A.” : Not applicable
The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the meanings ascribed tothem respectively in Section 81SF of the SFA.
Any discrepancies in tables included herein between the total sum of amounts listed and the totals shownare due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmeticaggregation of the figures which precede them.
Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter genders andvice versa. References to persons shall include corporations.
Any reference in this Offer Document, the Application Forms and/or the Electronic Applications to anystatute or enactment is a reference to that statute or enactment for the time being amended or re-enacted. Any word defined under the Act, the SFA, the Catalist Rules or any statutory modificationthereof and used in this Offer Document, the Application Forms and/or the Electronic Applications shall,where applicable, have the meaning ascribed to it under the Act, the SFA, the Catalist Rules or anystatutory modification thereof, as the case may be.
Any reference in this Offer Document, the Application Forms and/or the Electronic Applications to Sharesbeing allotted to an applicant includes allotment to CDP for the account of that applicant.
Any reference to a time of day in this Offer Document, the Application Forms and/or the Electronic
“Underwriting and PlacementAgreement”
DEFINITIONS
11
Applications shall be a reference to Singapore time, unless otherwise stated.
Any reference to “we”, “us”, “our”, “ourselves” or other grammatical variations thereof in this OfferDocument is a reference to our Company, our Group or any member of our Group as the contextrequires.
Any information on our website or any website directly or indirectly linked to such website does not formpart of this Offer Document and should not be relied upon by any applicant for our New Shares.
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GLOSSARY OF TECHNICAL TERMS
The glossary contains an explanation of certain terms used in this Offer Document in connection with ourGroup and our business. The terms and their assigned meanings should not be treated as being definitiveof their meanings, and may not correspond to standard industry or common meanings or usage of theseterms.
“biosafety level” : The level of bio-containment precautions required to isolatebiological agents in an enclosed laboratory facility
“BMBL” : Biosafety in Microbiological and Biomedical Laboratories (5thEdition) published by Centers for Disease Control and Preventionand National Institutes of Health of the United States of America
“BSL3” : Biosafety level 3, a level of bio-containment that is applicable toclinical, diagnostic, teaching, research, or production facilitieswhere work is performed with indigenous or exotic agents that maycause serious or potentially lethal diseases such as severe acuterespiratory syndrome, avian flu and tuberculosis
“CGMP” : Current Good Manufacturing Practice regulations enforced by theUnited States Food and Drug Administration, which provide forsystems that assure proper design, monitoring and control ofmanufacturing processes and facilities
“cleanroom” : A confined area where the humidity, temperature and particles inthe air are controlled within specified units. Please refer to the“Business Overview – Engineering, Procurement and Construction”section of this Offer Document for information on the classificationof cleanrooms
“DIN 1946-4” : Part 4 of the German national standard on ventilation and airconditioning, which prescribes the standards for ventilation inhospitals
“domestic sub-contractor” : A sub-contractor selected and engaged directly by a maincontractor to supply or fix any materials or goods or execute worksforming part of the main contract
“FED-STD-209E” : The United States Federal Standard 209E relating to airborneparticulate cleanliness classes in cleanrooms and clean zones,which establishes standard classes, and provides for alternativeclasses, of air cleanliness for cleanrooms and clean zones basedon specified concentrations of airborne particles. FED-STD-209E,although cancelled and superseded by ISO 14644-1 in 2001, is stillwidely used in the industry
“HEPA” : High-efficiency particulate air
“HTM 03-01” : Health technical memoranda 03-01, which provides guidance onthe design and management of heating and specialised ventilationin health sector buildings, as published by the Department ofHealth, United Kingdom
“ISO 9001” : A constituent part of the ISO 9000 series which specifies therequirements for a quality management system for any organisationthat needs to demonstrate its ability to consistently provideproducts that meet customer and applicable requirements and aimto enhance customer satisfaction
GLOSSARY OF TECHNICAL TERMS
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“ISO 14001” : A constituent part of the ISO 14000 series which specifies therequirements for an environmental management system to enablean organisation to develop and implement a policy and objectivesto control the impact of its activities, products or services on theenvironment
“ISO 14644-1” : A constituent part of the ISO 14644 series which specifiesclassification of air cleanliness in terms of concentration of airborneparticles in cleanrooms and clean zones, and which was firstformed from FED-STD-209E. Under ISO 14644-1, classification ofcleanrooms is based on the number and size of particles (from 0.1micron to 5 microns) permitted per volume of air
“MEP” : Mechanical, electrical and process
“nominated sub-contractor” : A sub-contractor selected by the customer to carry out an elementof the works and who is imposed upon the main contractor afterthe main contractor has been appointed
“OHSAS 18000” : An international occupational health and safety managementsystem specification
“sub-contractor” : A contractor appointed by main contractors to carry out part of theworks on their behalf
“variation order” : Variation works which are not included in the original scope ofworks and/or excluded works from the original scope of works
All statements contained in this Offer Document, statements made in press releases and oral statementsthat may be made by us or our Directors, Executive Officers or employees acting on our behalf that arenot statements of historical fact, constitute “forward-looking statements”. You can identify some of theseforward-looking statements by terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”,“may”, “plan”, “predict”, “will, and “would” or similar words and phrases. However, you should note thatthese words are not the exclusive means of identifying forward-looking statements. All statementsregarding our expected financial position, business strategy, plans and prospects are forward-lookingstatements. These forward-looking statements, including, without limitation, statements as to:
(a) our revenue and profitability;
(b) expected growth in demand;
(c) expected industry trends and development;
(d) anticipated expansion and development plans;
(e) anticipated commencement and completion dates for projects; and
(f) other matters discussed in this Offer Document regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks, uncertaintiesand other factors that may cause our actual results, performance or achievements to be materiallydifferent from any future results, performance or achievements expected, expressed or implied by theseforward-looking statements. These risks, uncertainties and other factors include, among others:
(a) changes in political, social, economic and stock or securities market conditions and the regulatoryenvironment in the countries in which we conduct business;
(b) changes in inflation, currency exchange or interest rates;
(c) our anticipated growth strategies and expected internal growth;
(d) changes in the availability and prices of raw materials, construction materials and/or equipmentwhich we require to operate our business;
(e) changes in customers’ demand;
(f) changes in competitive conditions and our ability to compete under these conditions;
(g) changes in our future capital needs and the availability of financing and capital to fund theseneeds; and
(h) other factors beyond our control.
This list of important factors is not exhaustive. Additional factors that could cause actual results,performance or achievement to differ materially include, but are not limited to, those discussed in the“Risk Factors” and “Management’s Discussion and Analysis of Results of Operations and FinancialPosition” sections of this Offer Document.
All forward-looking statements made by or attributable to us, or persons acting on our behalf, contained inthis Offer Document, press releases or oral statements are expressly qualified in their entirety by suchfactors.
Given the risks and uncertainties that may cause our actual future results, performance or achievementsto be materially different from those expected, expressed or implied by the forward-looking statements inthis Offer Document, we advise you not to place undue reliance on those statements which apply only asat the date of this Offer Document. Neither our Company, our Directors, the Sponsor, Issue Manager,Underwriter and Placement Agent nor any other person represents or warrants to you that our actualfuture results, performance or achievements will be as discussed in those statements. Further, ourCompany, our Directors and the Sponsor, Issue Manager, Underwriter and Placement Agent disclaim anyresponsibility to update any of those forward-looking statements or publicly announce any revision tothose forward-looking statements to reflect future developments, events or circumstances for any reason,even if new information becomes available or other events occur in the future.
We are, however, subject to the provisions of the SFA and the Catalist Rules regarding corporatedisclosure. In particular, pursuant to Section 241 of the SFA, if after this Offer Document is registered butbefore the close of the Invitation, we become aware of (a) a false or misleading statement in this OfferDocument; (b) an omission from this Offer Document of any information that should have been includedin it under Section 243 of the SFA; or (c) a new circumstance that has arisen since this Offer Documentwas lodged with the Exchange acting as agent on behalf of the Authority and would have been requiredby Section 243 of the SFA to be included in this Offer Document, if it had arisen before this OfferDocument was lodged, and that is materially adverse from the point of view of an investor, our Companymay lodge a supplementary or replacement offer document with the Exchange acting as agent on behalfof the Authority.
Where such changes occur and are material or are required to be disclosed by law, we will comply withthe relevant provisions of the SFA and make an announcement of the same to the SGX-ST and the publicand, if required, lodge a supplementary or replacement offer document with the SGX-ST acting as agenton behalf of the Authority pursuant to the SFA. All applicants should take note of any suchannouncement, or supplementary or replacement offer document and, upon the release of the same,shall be deemed to have notice of such changes.
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SELLING RESTRICTIONS
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for the New Sharesin any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to anyperson to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will betaken under the requirements of the legislation or regulations of, or the legal or regulatory authorities of,any jurisdiction, except for the filing and/or registration of this Offer Document in Singapore in order topermit a public offering of the New Shares and the public distribution of this Offer Document in Singapore.The distribution of this Offer Document and the offering of the New Shares in certain jurisdictions may berestricted by the relevant laws in such jurisdictions. Persons who may come into possession of this OfferDocument are required by us and the Sponsor, Issue Manager, Underwriter and Placement Agent toinform themselves about, and to observe and comply with, any such restrictions at their own expense andwithout liability to us or the Sponsor, Issue Manager, Underwriter and Placement Agent.
Persons to whom a copy of this Offer Document has been issued shall not circulate to any other person,reproduce or otherwise distribute this Offer Document or any information herein for any purposewhatsoever nor permit or cause the same to occur.
DETAILS OF THE INVITATION
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LISTING ON CATALIST
An application has been made by the Sponsor for permission to deal in and for quotation of our Sharesalready issued, the New Shares which are the subject of this Invitation and the Award Shares, onCatalist. The dealing in, and quotation of, our Shares, the New Shares and the Award Shares will be inSingapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or moreestablished companies listed on the Main Board of the SGX-ST. In particular, companies may list onCatalist without a track record of profitability and there is no assurance that there will be a liquid market inthe shares or units of shares traded on Catalist. You should be aware of the risks of investing in suchcompanies and should make the decision to invest only after careful consideration and, if appropriate,consultation with your professional adviser(s).
This Invitation is made in or accompanied by this Offer Document that has been registered by theExchange acting as agent on behalf of the Authority. We have not lodged or registered this OfferDocument in any other jurisdiction.
Neither the Authority nor the Exchange has examined or approved the contents of this Offer Document.Neither the Authority nor the Exchange assumes any responsibility for the contents of this OfferDocument, including the correctness of any of the statements or opinions made or reports contained inthis Offer Document. The Exchange does not normally review the application for admission to Catalist butrelies on the Sponsor confirming that the listing applicant is suitable to be listed and complies with theCatalist Rules. Neither the Authority nor the Exchange has in any way considered the merits of theShares being offered for investment.
The registration of this Offer Document by the Exchange does not imply that the SFA, or any other legalor regulatory requirements, or requirements under the Exchange’s listing rules, have been complied with.
Acceptance of applications will be conditional upon, inter alia, the issue of the New Shares and uponpermission being granted by the SGX-ST for the listing and quotation of all the issued Shares of ourCompany, the New Shares and the Award Shares on Catalist. Monies paid in respect of any applicationaccepted will be returned to you at your own risk, without interest or any share of revenue or other benefitarising therefrom, if the admission and listing do not proceed, and you will not have any claims against usor the Sponsor, Issue Manager, Underwriter and Placement Agent.
After the expiration of six months from the date of registration of this Offer Document, no person shallmake an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; andno officer or equivalent person or promoter of our Company will authorise or permit the offer of anysecurities or the allotment, issue or sale of any securities, on the basis of this Offer Document.
We are subject to the provisions of the SFA and the Catalist Rules regarding corporate disclosure. Inparticular, pursuant to Section 241 of the SFA, if after this Offer Document is registered but before theclose of the Invitation, we become aware of:
(a) a false or misleading statement in this Offer Document;
(b) an omission from this Offer Document of any information that should have been included in it underSection 243 of the SFA or the Catalist Rules; or
(c) a new circumstance that has arisen since this Offer Document was lodged with the Exchange andwould have been required by Section 243 of the SFA or the Catalist Rules to be included in thisOffer Document, if it had arisen before this Offer Document was lodged,
and that is materially adverse from the point of view of an investor, we may lodge a supplementary orreplacement offer document with the Exchange acting as agent on behalf of the Authority.
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DETAILS OF THE INVITATION
In the event that a supplementary or replacement offer document is lodged with the Exchange acting asagent on behalf of the Authority, the Invitation shall be kept open for at least 14 days after the lodgementof such supplementary or replacement offer document.
Where prior to the lodgement of the supplementary or replacement offer document, applications havebeen made under this Offer Document to subscribe for the New Shares and:
(a) where the New Shares have not been issued to the applicants, we shall:
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement offer document, give the applicants notice inwriting of how to obtain, or arrange to receive, a copy of the same and provide the applicantswith an option to withdraw their applications, and take all reasonable steps to make availablewithin a reasonable period the supplementary or replacement offer document to theapplicants who have indicated that they wish to obtain, or who have arranged to receive, acopy of the supplementary or replacement offer document;
(ii) within seven days from the date of lodgement of the supplementary or replacement offerdocument, give the applicants the supplementary or replacement offer document, as thecase may be, and provide the applicants with an option to withdraw their applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications shall bedeemed to have been withdrawn and cancelled, and within seven days from the date oflodgement of the supplementary or replacement offer document, pay to the applicants allmonies the applicants have paid on account of their applications for the New Shares, withoutinterest or any share of revenue or other benefit arising therefrom and at their own risk; or
(b) where the New Shares have been issued to the applicants but trading has not commenced, weshall:
(i) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement offer document, give the applicants notice inwriting of how to obtain, or arrange to receive, a copy of the same and provide the applicantswith an option to return to us the New Shares which they do not wish to retain title in, andtake all reasonable steps to make available within a reasonable period the supplementary orreplacement offer document to the applicants who have indicated they wish to obtain, or whohave arranged to receive, a copy of the supplementary or replacement offer document;
(ii) within seven days from the date of lodgement of the supplementary or replacement offerdocument, give the applicants the supplementary or replacement offer document, as thecase may be, and provide the applicants with an option to return to us the New Shareswhich they do not wish to retain title in; or
(iii) treat the issue of the New Shares as void, in which case the issue shall be deemed void andwithin seven days from the date of lodgement of the supplementary or replacement offerdocument, pay to the applicants all monies paid by them for the New Shares, without interestor any share of revenue or other benefit arising therefrom and at their own risk.
An applicant who wishes to exercise his option under paragraph (a)(i) or (ii) to withdraw his applicationshall, within 14 days from the date of lodgement of the supplementary or replacement offer document,notify us of this, whereupon we shall, within seven days from the receipt of such notification, pay to himall monies paid by him on account of his application for those Shares, without interest or any share ofrevenue or other benefit arising therefrom and at his own risk, and he will not have any claim against usor the Sponsor, Issue Manager, Underwriter and Placement Agent.
DETAILS OF THE INVITATION
19
An applicant who wishes to exercise his option under paragraph (b)(i) or (ii) to return the New Sharesissued to him shall, within 14 days from the date of lodgement of the supplementary or replacement offerdocument, notify us of this and return all documents, if any, purporting to be evidence of title to thoseNew Shares to us, whereupon we shall, subject to compliance with applicable laws and the Constitutionof our Company, within seven days from the receipt of such notification and documents, if any, pay to himall monies paid by him for those Shares, without interest or any share of revenue or other benefit arisingtherefrom and at his own risk, and he will not have any claim against us or the Sponsor, Issue Manager,Underwriter and Placement Agent, and the issue of those New Shares shall be deemed to be void.
The Authority, the Exchange or other competent authority may, in certain circumstances issue a stoporder (“Stop Order”) to our Company, directing that no or no further New Shares be allotted, issued orsold. In the event that a Stop Order is issued and applications to subscribe for the New Shares have beenmade prior to the Stop Order, then to the extent permissible under applicable laws:
(a) where the New Shares have not been issued to the applicants, the applications for the New Sharesshall be deemed to have been withdrawn and cancelled and we shall, within 14 days from the dateof the Stop Order, pay to the applicants all monies the applicants have paid on account of theirapplications for the New Shares; or
(b) where the New Shares have been issued to the applicants, but trading has not commenced, theissue of the New Shares shall be deemed to be void and we shall, within 14 days from the date ofthe Stop Order, pay to the applicants all monies paid by them for the New Shares.
Where monies are to be returned to applicants for the New Shares, it shall be paid to the applicantswithout any interest or share of revenue or other benefit arising therefrom and at the applicants’ own risk,and the applicants will not have any claim against us or the Sponsor, Issue Manager, Underwriter andPlacement Agent.
This Offer Document has been seen and approved by our Directors and they collectively and individuallyaccept full responsibility for the accuracy of the information given in this Offer Document and confirm,after making all reasonable enquiries, that to the best of their knowledge and belief, this Offer Documentconstitutes full and true disclosure of all material facts about the Invitation and our Group, and ourDirectors are not aware of any facts the omission of which would make any statement in this OfferDocument misleading. Where information in this Offer Document has been extracted from published orotherwise publicly available sources or obtained from a named source, the sole responsibility of ourDirectors has been to ensure that such information has been accurately and correctly extracted fromthese sources and/or reproduced in this Offer Document in its proper form and context.
Neither our Company, the Sponsor, Issue Manager, Underwriter and Placement Agent nor any otherparties involved in the Invitation is making any representation to any person regarding the legality of aninvestment in our Shares by such person under any investment or other laws or regulations. Noinformation in this Offer Document should be considered as being business, legal or tax advice regardingan investment in our Shares. Each prospective investor should consult his own legal, financial, tax orother professional adviser regarding an investment in our Shares.
The New Shares are offered for subscription solely on the basis of the information contained and therepresentations made in this Offer Document.
No person has been or is authorised to give any information or to make any representation not containedin this Offer Document in connection with the Invitation and, if given or made, such information orrepresentation must not be relied upon as having been authorised by us or the Sponsor, Issue Manager,Underwriter and Placement Agent. Neither the delivery of this Offer Document and the Application Formsnor any document relating to the Invitation shall, under any circumstances, constitute a continuingrepresentation or create any suggestion or implication that there has been no change or developmentreasonably likely to create any change in our affairs, condition or prospects or the New Shares or in thestatements of fact or information contained in this Offer Document since the date of this Offer Document.Where such changes occur and are material or are required to be disclosed by law, the SGX-ST and/orany other regulatory or supervisory body or agency, we will promptly make an announcement of the
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DETAILS OF THE INVITATION
same to the SGX-ST and the public and if required, we may lodge a supplementary or replacement offerdocument with the SGX-ST acting as agent on behalf of the Authority and will comply with therequirements of the SFA and/or any other requirements of the SGX-ST and/or the Authority. All applicantsshould take note of any such announcement and/or supplementary or replacement offer document and,upon the release of such an announcement and/or supplementary or replacement offer document, shallbe deemed to have notice of such changes.
Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promiseor representation as to the future performance or policies of our Company or our subsidiary.
This Offer Document has been prepared solely for the purpose of the Invitation and may not be reliedupon by any persons other than the applicants in connection with their application for the New Shares orfor any other purpose.
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for theNew Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is notauthorised or to any person to whom it is unlawful to make such offer, solicitation or invitation.
Copies of this Offer Document and the Application Forms and envelopes may be obtained on request,subject to availability, during office hours from:
SAC Capital Private Limited1 Robinson Road#21-02 AIA TowerSingapore 048542
A copy of this Offer Document is also available on the SGX-ST’s website at http://www.sgx.com.
The Invitation will be open at 9.00 a.m. on 7 April 2016 and will remain open until 12.00 noon on14 April 2016 or for such further period or periods as our Company may, in consultation with theSponsor, Issue Manager, Underwriter and Placement Agent, in its absolute discretion decide,subject to any limitation under all applicable laws. In the event a supplementary or replacementoffer document is lodged with the Exchange acting as agent on behalf of the Authority, theInvitation will remain open for at least 14 days after the lodgement of the supplementary orreplacement offer document.
Details of the procedures for applications to subscribe for the New Shares are set out in Appendix G ofthis Offer Document.
DETAILS OF THE INVITATION
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INDICATIVE TIMETABLE FOR LISTING
An indicative timetable in respect of the Invitation and the trading of our Shares is set out below for yourreference:
Indicative Date and Time Event
7 April 2016, 9.00 a.m. Commencement of Offer
14 April 2016, 12.00 noon Close of Application List
15 April 2016 Balloting of applications, if necessary
18 April 2016, 9.00 a.m. Commence trading on a “ready” basis
21 April 2016 Settlement date for all trades done on a “ready” basis
The above timetable is only indicative as it assumes that the date of closing of the Application List is14 April 2016, the date of admission of our Company to Catalist is 18 April 2016, the SGX-ST’sshareholding spread requirement will be complied with and the New Shares will be issued and fully paid-up prior to 18 April 2016. The actual date on which our Shares will commence trading on a “ready” basiswill be announced when it is confirmed by the SGX-ST.
The above timetable and procedures may be subject to such modifications as the SGX-ST may in itsdiscretion decide, including the decision to permit trading on a “ready” basis and the commencement dateof such trading.
We, with the agreement of the Sponsor, Issue Manager, Underwriter and Placement Agent, may at ourdiscretion, subject to all applicable laws and regulations and the rules of the SGX-ST, agree to extend orshorten the period during which the Invitation is open.
In the event of any changes in the closure of the Application List or the time period during which theInvitation is open, we will publicly announce the same:
(a) through a SGXNET announcement to be posted on the SGX-ST’s website at http://www.sgx.com;and
(b) in a major English newspaper in Singapore.
We will provide details of the results of the Invitation (including the level of subscription for the NewShares and the basis of allocation of the New Shares pursuant to the Invitation) as soon as practicableafter the closure of the Application List through the channels described in (a) and (b) above.
We reserve the right to reject or accept, in whole or part, or to scale down or ballot any application for theNew Shares, without assigning any reason therefor, and no enquiry and/or correspondence on ourdecision will be entertained. In deciding the basis of allotment, due consideration will be given to thedesirability of allotting the New Shares to a reasonable number of applicants with a view to establishingan adequate market for our Shares.
Investors should consult the SGX-ST’s announcement of the “ready” trading date released on theSGX-ST’s website at http://www.sgx.com or the newspapers, or check with their brokers on thedate on which trading on a “ready” basis will commence.
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OFFER DOCUMENT SUMMARY
The information contained in this summary is derived from and should be read in conjunction with the fulltext of this Offer Document. As it is a summary, it does not contain all the information that potentialinvestors should consider before investing in the Shares of our Company. Potential investors should readthis entire Offer Document carefully, especially the matters set out under the “Risk Factors” section of thisOffer Document, before deciding to invest in our Shares.
OVERVIEW OF OUR GROUP
Our Company was incorporated in Singapore on 22 December 2015 under the Act as a private companylimited by shares, under the name “Acromec Pte. Ltd.”. We were converted into a public limited companyon 16 March 2016 and our name was changed to “Acromec Limited”.
Our Company is the holding company of our subsidiary, Acromec Engineers.
Our Business
We are a Singapore-based specialist engineering services provider with 20 years of experience in thefield of controlled environments. Our expertise is in the design and construction of facilities requiringcontrolled environments such as laboratories, medical and sterile facilities and cleanrooms. We provideintegrated services including engineering, procurement, construction and maintenance services,specialising in architectural, mechanical, electrical and process works within controlled environments. Weserve mainly the healthcare, biomedical, research and academia, and electronics sectors. During thePeriod Under Review and up to the Latest Practicable Date, our customers comprise mainly hospitals andmedical centres, government agencies, research and development companies and agencies, researchand development units of multinational corporations, tertiary educational institutions, pharmaceuticalcompanies, semiconductor manufacturing companies, and multinational engineering companies.
Our services include design and/or construction of new facilities in new and existing buildings,refurbishment and upgrading of existing facilities and corrective and routine maintenance services.
Our business is divided into two main business segments as follows:
� Engineering, Procurement and Construction
We provide engineering, procurement and construction services, specialising in architectural,mechanical, electrical and process works within controlled environments. We are able to designand build controlled environments for use in various industries, utilising a wide range ofarchitectural materials, in combination with the requisite MEP systems and equipment, to achievethe technical requirements of our customers.
In particular, we have designed and/or built laboratories, medical and sterile facilities (includingoperating theatres, isolation wards and fertility centre) and cleanrooms.
� Maintenance
We provide maintenance and repair services of facilities and equipment of controlled environmentsand their supporting infrastructure. We provide both corrective and preventive or routinemaintenance services to ensure reliability and minimal disruptions to our customers’ operations. Weprovide corrective maintenance services to our customers when the customer’s facility experiencesequipment problems. This service is available 24 hours a day and seven days a week. Ourpreventive maintenance work is carried out in accordance with an agreed schedule to service theequipment to ensure it is in good condition to minimise failures, as well as to meet annualinspections of specialised facilities by relevant authorities or regulatory bodies.
Further details are set out in the “Business” section of this Offer Document.
OFFER DOCUMENT SUMMARY
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Our Competitive Strengths
Our Directors believe that our key competitive strengths are as follows:
� We have an established track record and possess substantial technical expertise
� We are able to provide integrated engineering solutions to our customers
� We have established strong business relations with our customers, suppliers and sub-contractors
� We are able to further strengthen relationships with our customers through our maintenanceservices
� We have an experienced and committed management team
Further details are set out in the “Business – Competitive Strengths” section of this Offer Document.
Our Business Strategies and Future Plans
Our business strategies and future plans are as follows:
� Capitalising on our established track record to secure more projects and projects of a larger scale,particularly in the healthcare, biomedical, research and academia sectors
� Vertically integrating our services
� Growing our Maintenance segment
� Expansion through acquisitions, joint ventures and/or strategic alliances and venturing into newgeographical markets
Further details are set out in the “Prospects, Business Strategies and Future Plans – Business Strategiesand Future Plans” section of this Offer Document.
Our Order Book
Our order book based on unfulfilled orders from signed contracts and confirmed variation orders as at 30September 2015 and signed contracts, confirmed variation orders and letters of award obtained duringthe period from 1 October 2015 and up to the Latest Practicable Date amounted to approximatelyS$40.03 million. Barring unforeseen circumstances, we expect more than 90.0% of these orders to befulfilled in FY2016.
Further details are set out in the “Prospects, Business Strategies and Future Plans – Order Book” sectionof this Offer Document.
Our Contact Details
Our registered office is located at 4 Kaki Bukit Avenue 1 #06-03, Singapore 417939. Our telephone andfacsimile numbers are (65) 6743 1300 and (65) 6743 1159, respectively. Our website address iswww.acromec.com.
Information on our website does not constitute a part of this Offer Document.
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OFFER DOCUMENT SUMMARY
SUMMARY OF OUR FINANCIAL INFORMATION
The following tables present a summary of the combined financial statements of our Group and should beread in conjunction with the full text of this Offer Document, including the “Independent Auditors’ Reportand the Audited Combined Financial Statements for the Financial Years Ended 30 September 2013, 2014and 2015” and the “Independent Auditors’ Report and the Compilation of the Unaudited Pro FormaCombined Financial Information for the Financial Year Ended 30 September 2015” as set out inAppendices A and B respectively of this Offer Document, and the “Management’s Discussion andAnalysis of Results of Operations and Financial Position” section of this Offer Document.
Selected items from the Combined Statements of Profit or Loss and Other Comprehensive Income
Audited (S$’000) FY2013 FY2014 FY2015
Revenue 44,872 23,107 35,377
Gross profit 7,781 5,772 7,468
Profit before income tax 2,911 3,182 3,961
Profit for the year, representing total comprehensive income 2,580 2,769 3,381for the year
Pre-Invitation EPS (cents)(1) 2.77 2.97 3.63
Post-Invitation EPS (cents)(2) 2.15 2.30 2.81
Notes:
(1) For comparative purposes, pre-Invitation EPS for the Period Under Review have been computed based on the profit for theyear and our pre-Invitation share capital of 93,270,645 Shares.
(2) For comparative purposes, post-Invitation EPS for the Period Under Review have been computed based on the net profit forthe year and our post-Invitation share capital of 120,270,645 Shares.
Selected items from the Combined Statements of Financial Position
Audited Unauditedas at pro forma(1) as at
(S$’000) 30 September 2015 30 September 2015
Current assets 21,121 19,321
Non-current assets 150 150
Current liabilities 13,253 13,253
Equity 8,018 6,218
NAV per Share (cents)(2) 8.60 6.67
Notes:
(1) The unaudited pro forma combined statement of financial position of our Group as at 30 September 2015 has beenprepared on the assumption that the FY2015 Final Dividend had been declared and paid at the end of the financial year.
(2) For comparative purposes, our NAV per Share as at 30 September 2015 has been computed based on the total equity andthe pre-Invitation share capital of 93,270,645 Shares.
OFFER DOCUMENT SUMMARY
25
THE INVITATION
Issue Size : 27,000,000 New Shares offered in Singapore comprising1,500,000 Offer Shares and 25,500,000 Placement Shares.
The New Shares will, upon allotment and issue, rank paripassu in all respects with the existing issued Shares.
Issue Price : S$0.22 for each New Share.
The Offer : The Offer comprises an Invitation by our Company to thepublic in Singapore to subscribe for 1,500,000 Offer Sharesat the Issue Price, subject to and on the terms andconditions of this Offer Document.
The Placement : The Placement comprises a placement by the PlacementAgent on behalf of our Company of 25,500,000 PlacementShares at the Issue Price by way of placement, subject toand on the terms and conditions of this Offer Document,comprising:
(a) 22,500,000 Placement Shares; and
(b) 3,000,000 Reserved Shares reserved for subscriptionby our Directors, employees, customers and supplierswho have contributed to the success of our Group.
Reserved Shares : Out of the 25,500,000 Placement Shares, 3,000,000Reserved Shares will be reserved for subscription by ourDirectors, employees, customers and suppliers who havecontributed to the success of our Group. These ReservedShares are not subject to any moratorium and may bedisposed of after the admission of our Company to Catalist.In the event that any of the Reserved Shares are not takenup, they will be made available to satisfy excess applicationsfor the Placement Shares, or in the event of any under-subscription for the Placement Shares, to satisfy excessapplications for the Offer Shares.
Clawback and Re-allocation : The New Shares may be re-allocated between the Offer andthe Placement tranches at the discretion of the Sponsor,Issue Manager, Underwriter and Placement Agent in theevent of an excess of applications in one and a deficit ofapplications in the other.
Purpose of the Invitation : Our Directors believe that the listing of our Company and thequotation of our Shares on Catalist will enhance our publicimage locally and internationally and enable us to tap thecapital markets to fund our business growth. The Invitationwill also provide members of the public, our employees, ourbusiness associates and others who have contributed to thesuccess of our Group with an opportunity to participate inthe equity of our Company.
26
OFFER DOCUMENT SUMMARY
In addition, the net proceeds from the Invitation will provideus with additional capital to fund our expansion. Please referto the “Use of Proceeds from the Invitation and ExpensesIncurred” section of this Offer Document for further details.
Listing Status : Prior to the Invitation, there has been no public market forour Shares. Our Shares will be quoted on Catalist inSingapore dollars, subject to the admission of our Companyto Catalist and permission for dealing in and for quotation ofour Shares being granted by the SGX-ST.
Risk Factors : Investing in our Shares involves risks which are described inthe “Risk Factors” section of this Offer Document.
PLAN OF DISTRIBUTION
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The Invitation
The Invitation is for 27,000,000 New Shares offered in Singapore comprising 1,500,000 Offer Shares and25,500,000 Placement Shares for subscription under the Offer and the Placement respectively at theIssue Price. The Invitation is managed by SAC Capital.
Prior to the Invitation, there has been no public market for our Shares. The Issue Price is determined byus in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agent after taking intoconsideration, inter alia, prevailing market conditions and estimated market demand for the New Sharesdetermined through a book-building process. The Issue Price is the same for all New Shares and ispayable in full on application.
Investors may apply to subscribe for any number of New Shares in multiples of 100 Shares, with aminimum of 1,000 Shares. In order to ensure a reasonable spread of Shareholders, we have the absolutediscretion to prescribe a limit to the number of New Shares to be allotted to any single applicant and/orallot the New Shares above or under such prescribed limit as we shall deem fit.
Subject to the terms and conditions set forth in the Sponsorship and Management Agreement and theUnderwriting and Placement Agreement entered into between us and SAC Capital as set out in the“Sponsorship, Management, Underwriting and Placement Arrangements” section of this Offer Document,our Company appointed SAC Capital to be the sponsor, manage the Invitation, underwrite the Offer andundertake the Placement on our behalf. SAC Capital will receive a management fee for its servicesrendered in connection with the Invitation.
Offer Shares
The Offer Shares are made available to members of the public in Singapore for subscription at the IssuePrice. Members of the public may apply for the Offer Shares by way of printed Offer Shares ApplicationForms or by Electronic Applications. The terms, conditions and procedures for applications andacceptance are described in Appendix G of this Offer Document.
An applicant who has made an application for Offer Shares by way of an Offer Shares Application Formmay not make another separate application for Offer Shares by way of an Electronic Application and viceversa. Such separate applications shall be deemed to be multiple applications and shall be rejected at thediscretion of our Company and the Sponsor, Issue Manager, Underwriter and Placement Agent.
In the event of an under-subscription for the Offer Shares as at the close of the Application List, thatnumber of Offer Shares not subscribed for shall be made available to satisfy excess applications for thePlacement Shares to the extent there is an over-subscription for the Placement Shares as at the close ofthe Application List.
In the event of an over-subscription for the Offer Shares as at the close of the Application List and thePlacement Shares are fully subscribed or over-subscribed as at the close of the Application List, thesuccessful applications for the Offer Shares will be determined by ballot or otherwise as determined byour Directors, in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agent, andapproved by the Exchange, if required.
Placement Shares (excluding Reserved Shares)
The Placement Shares (excluding Reserved Shares) are reserved for placement to retail and institutionalinvestors in Singapore who may apply through their brokers or financial institutions. Application for thePlacement Shares may only be made by way of printed Placement Shares Application Forms. The terms,conditions and procedures for applications and acceptance are described in Appendix G of this OfferDocument.
In the event of an under-subscription for the Placement Shares as at the close of the Application List, thatnumber of Placement Shares not subscribed for shall be made available to satisfy excess applications forthe Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of theApplication List.
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PLAN OF DISTRIBUTION
Subscribers of Placement Shares (excluding Reserved Shares) may be required to pay a brokerage of upto 1.0% of the Issue Price (plus GST thereon, if applicable) to the Placement Agent or any sub-placementagent that may be appointed by the Placement Agent.
Reserved Shares
To recognise their contributions to our Group, we have reserved up to 3,000,000 Placement Shares forsubscription at the Issue Price by our Directors, employees, customers and suppliers who havecontributed to the success of our Group. These Reserved Shares are not subject to any moratorium andmay be disposed of after the listing of our Company on Catalist. Applications for the Reserved Sharesmust be made by way of printed Reserved Shares Application Forms.
In the event that any of the Reserved Shares are not taken up, they will be made available to satisfyexcess applications for the Placement Shares (excluding the Reserved Shares) to the extent that there isan over-subscription for the Placement Shares (excluding Reserved Shares) as at the close of theApplication List, or in the event of an under-subscription for the Placement Shares (excluding ReservedShares) as at the close of the Application List, to satisfy excess applications made by members of thepublic for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at theclose of the Application List.
Subscription for New Shares
None of our Directors or Substantial Shareholders intends to subscribe for the New Shares in theInvitation.
None of our management or employees intends to subscribe for more than 5% of the New Shares in theInvitation.
To the best of our knowledge and belief, as at the date of this Offer Document, we are not aware of anyperson who intends to subscribe for more than 5% of the New Shares. However, through a book-buildingprocess to assess market demand for our Shares, there may be person(s) who may indicate his interestto subscribe for more than 5% of the New Shares. If such person(s) were to make an application for morethan 5% of the New Shares pursuant to the Invitation and were subsequently allotted such number ofShares, we will make the necessary announcements at an appropriate time. The final allotment of Shareswill be in accordance with the shareholding spread and distribution guidelines as set out in the ListingManual.
No Shares shall be allotted on the basis of this Offer Document later than six months after the date ofregistration of this Offer Document with the SGX-ST acting as agent on behalf of the Authority.
USE OF PROCEEDS FROM THE INVITATION AND EXPENSES INCURRED
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The net proceeds to be raised by our Company from the issue of the New Shares (after deductingestimated expenses in relation to the listing of approximately S$1.44 million) are approximately S$4.50million.
The allocation of each principal intended use of proceeds and estimated listing expenses is set outbelow:
Use of net proceeds
Working capital to expand our business operations through 3,500 58.92securing more projects and projects of a larger scale
Expansion through acquisitions, joint ventures and/or strategic 1,000 16.84alliances and venturing into new geographical markets
Net proceeds 4,500 75.76
Expenses to be borne by our Company in connection with the listing
Professional fees 885 14.90Underwriting commission, placement commission and brokerage 178 3.00Miscellaneous expenses (including listing fees) 377 6.34
Total listing expenses(1) 1,440 24.24
Gross proceeds from the Invitation 5,940 100.00
Note:
(1) Of the total estimated listing expenses to be borne by our Company of approximately S$1.44 million, S$0.45 million will becapitalised against share capital and the balance of the estimated listing expenses will be charged to profit or loss.
In the reasonable opinion of our Directors, there is no minimum amount which must be raised from theInvitation.
Please refer to the “Prospects, Business Strategies and Future Plans – Business Strategies and FuturePlans” section of this Offer Document for further details on our future plans. None of the proceeds fromthe Invitation will be used to discharge, reduce or retire any indebtedness of our Group.
Save as disclosed in this Offer Document, none of the proceeds of the Invitation will be used, directly orindirectly, to acquire or refinance the acquisition of an asset other than in the ordinary course of business.
Pending the deployment of the net proceeds as aforesaid, the funds will be placed in short-term depositswith financial institutions, used to invest in short-term money market instruments and/or used for workingcapital requirements as our Directors may deem appropriate.
We will make periodic announcements on the use of the net proceeds from the issue of the New Sharesas and when the funds are materially disbursed, and provide a status report on the use of the proceedsin our annual report.
Estimatedamount(S$’000)
Estimated amountallocated for each
dollar of grossproceeds raised
from the Invitation(cents)
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USE OF PROCEEDS FROM THE INVITATION AND EXPENSES INCURRED
In the event that any part of our proposed uses of the net proceeds from the issue of the New Sharesdoes not materialise or proceed as planned, our Directors will carefully evaluate the situation and mayreallocate the intended funding to other purposes and/or hold such funds on short-term deposits for solong as our Directors deem it to be in the interest of our Company and our Shareholders, taken as awhole. Any change in the use of the net proceeds will be subject to the Catalist Rules and appropriateannouncements will be made by our Company on SGXNET.
In the event that the amount set aside to meet the estimated expenses listed above is in excess of theactual expenses incurred, such excess amount will be made available for our general corporate workingcapital purposes.
SPONSORSHIP, MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
31
Pursuant to the full sponsorship and management agreement dated 6 April 2016 (the “Sponsorship andManagement Agreement”) entered into between our Company and SAC Capital as the Sponsor andIssue Manager, we appointed SAC Capital to manage the Invitation on our behalf and to provide fullsponsorship services in relation to the Invitation, subject to the terms and conditions of the Sponsorshipand Management Agreement. SAC Capital will receive a management fee for its services rendered inconnection with the Invitation and an annual sponsorship fee for at least three years from the date oflisting of our Company on Catalist.
Pursuant to the underwriting and placement agreement dated 6 April 2016 (the “Underwriting andPlacement Agreement”) entered into between our Company and SAC Capital as the Underwriter andPlacement Agent, SAC Capital agreed (i) to subscribe and/or procure subscriptions for the Offer Sharesnot subscribed for by members of the public and not allocated to satisfy excess applications forPlacement Shares, and (ii) to procure subscriptions for the Placement Shares, subject to the terms andconditions of the Underwriting and Placement Agreement.
The Underwriter will receive from our Company an underwriting commission of 3.0% of the aggregateIssue Price for the total number of Offer Shares underwritten by the Underwriter but excluding the portionof the Offer Shares which have been applied to satisfy excess applications for Placement Shares. TheUnderwriter may, at its absolute discretion, appoint one or more sub-underwriters for the Offer Shares.Payment of the underwriting commission shall be made whether or not any allotment or issue of the OfferShares is made to the Underwriter or its nominees.
The Placement Agent will receive from our Company a placement commission of 3.0% of the aggregateIssue Price for the total number of Placement Shares (including the Reserved Shares) successfullyprocured for subscription by the Placement Agent but excluding the portion of the Placement Shareswhich have been applied to satisfy excess applications for the Offer Shares. The Placement Agent may, atits absolute discretion, appoint one or more sub-placement agents for the Placement Shares. Payment ofthe placement commission shall be made whether or not any allotment or issue of the Placement Sharesis made to the Placement Agent or its nominees. Subscribers of the Placement Shares may be requiredto pay to the Placement Agent an end placees’ commission of 1.0% of the Issue Price (including GST, ifapplicable) for each Placement Share.
In the event that the market capitalisation of the Company is more than S$35.0 million (computed as theIssue Price multiplied by the total number of issued Shares immediately after the Invitation) and the grossproceeds raised exceed S$7.0 million, SAC Capital will receive from our Company an additional incentivefee of 1.0% of the aggregate Issue Price for the total number of New Shares subscribed for pursuant tothe Invitation.
Brokerage will be paid by our Company to members of the SGX-ST, merchant banks and members of theAssociation of Banks in Singapore in respect of successful applications made on Application Formsbearing their respective stamps or to Participating Banks in respect of successful applications madethrough Electronic Applications at the rate of 0.25% (or 0.75% in the case of DBS Bank Ltd.) of the IssuePrice for each Offer Share or each Placement Share applied to satisfy excess applications for the OfferShares as the case may be. In addition, DBS Bank Ltd. levies a minimum brokerage fee of S$10,000.
The Sponsorship and Management Agreement may be terminated by the Sponsor and Issue Manager atany time prior to the time and date of the commencement of trading of our Shares on Catalist, on theoccurrence of certain events including:
(a) any breach of warranties or undertakings in the Sponsorship and Management Agreement;
(b) any occurrence of a specified event (as described in the Sponsorship and ManagementAgreement) which comes to the knowledge of the Sponsor and Issue Manager;
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SPONSORSHIP, MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
(c) any material adverse change, or any development involving a prospective material adverse change,in the condition (business, trading, operational, financial or otherwise), performance or generalaffairs of our Company or of our Group as a whole;
(d) any introduction or prospective introduction of or any change or prospective change in anylegislation, regulation, order, notice, policy, rule, guideline or directive (whether or not having theforce of law and including, without limitation, any directive, notice or request issued by theAccounting and Corporate Regulatory Authority of Singapore, the Authority, the Securities IndustryCouncil of Singapore, the SGX-ST or other relevant authorities in Singapore or elsewhere) or in theinterpretation or application thereof by any court, government body, regulatory authority or othercompetent authority in Singapore or elsewhere including but not limited to foreign exchangecontrols in Singapore or overseas;
(e) any change, or any development involving a prospective change, or any crisis, in local, national,regional or international political, industrial, legal, financial, monetary or economic conditions,taxation or exchange controls (including but not limited to the conditions in the stock market,foreign exchange market, inter-bank market or interest rates or money market, in Singapore or anyother jurisdiction), or any combination of any such changes or developments or crisis, ordeterioration of any such conditions;
(f) any imminent threat or occurrence of any local, national or international outbreak or escalation ofhostilities whether war has been declared or not, terrorist attacks, or insurrection or armed conflict(whether or not involving financial markets);
(g) any regional or local outbreak of disease that may have an adverse effect on the financial markets;
(h) foreign exchange controls in Singapore and overseas or any occurrence of a combination of anysuch changes or developments or crises, or any deterioration of any such conditions;
(i) the issue by the SGX-ST of a notice of refusal to admit our Company to Catalist; or
(j) any other occurrence of any nature whatsoever,
which event or events shall in the opinion of the Sponsor and Issue Manager (i) result or be likely to resultin a material adverse fluctuation or adverse conditions in the stock market in Singapore or elsewhere; or(ii) be likely to prejudice the success of the offer, subscription or sale of the New Shares (whether in theprimary market or in respect of dealings in the secondary market); or (iii) make it impossible,impracticable or non-commercial to proceed with any of the transactions contemplated in the Sponsorshipand Management Agreement; or (iv) be likely to have a material adverse effect on the business, tradingposition, operations or prospects of our Company or of our Group as a whole; or (v) be such that noreasonable sponsor or issue manager would have entered into the Sponsorship and ManagementAgreement; or (vi) result or be likely to result in the issue by the SGX-ST of a notice of refusal to admitour Company to Catalist at any point prior to the listing of all our existing issued Shares, the New Sharesand the Award Shares; or (vii) make it non-commercial or otherwise contrary to or outside the usualcommercial practices in Singapore for the Sponsor and Issue Manager to observe or perform or beobliged to observe or perform the terms of the Sponsorship and Management Agreement.
Notwithstanding the aforesaid, the Sponsor and Issue Manager may terminate the Sponsorship andManagement Agreement if:
(a) at any time up to the commencement of trading of our Shares on the SGX-ST, a notice of refusal toadmit our Company to Catalist shall have been issued by the SGX-ST; or
SPONSORSHIP, MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS
33
(b) at any time after the registration of this Offer Document by the SGX-ST acting as agent on behalfof the Authority but before the close of the Application List, our Company fails and/or neglects tolodge a supplementary or replacement offer document (as the case may be) if we become awareof:
(i) a false or misleading statement or matter in this Offer Document;
(ii) an omission from this Offer Document of any information that should have been included in itunder the Catalist Rules and/or the SFA; or
(iii) a new circumstance that has arisen since this Offer Document was lodged with the SGX-STacting as agent on behalf of the Authority and would have been required by the CatalistRules and/or the SFA to be included in this Offer Document if it had arisen before this OfferDocument was lodged,
that is materially adverse from the point of view of an investor; or
(c) our existing issued Shares, the New Shares and the Award Shares (when issued) have not beenadmitted to Catalist on or before 18 April 2016 (or such other date as our Company and theSponsor and Issue Manager may agree).
The Underwriting and Placement Agreement is conditional upon the Sponsorship and ManagementAgreement not being terminated or rescinded pursuant to the provisions of the Sponsorship andManagement Agreement.
In the event that the Sponsorship and Management Agreement and/or the Underwriting and PlacementAgreement is terminated, our Company reserves the right, at our absolute discretion, to cancel theInvitation.
Save as aforesaid, no commission, discount or brokerage has been paid or other special terms grantedby our Company within the two years preceding the date of this Offer Document or is payable to anyDirector, promoter, expert, proposed Director or any other person for subscribing or agreeing to subscribeor procuring or agreeing to procure subscription for any shares in or debentures of our Company or oursubsidiary.
Save as disclosed above, we do not have any material relationship with the Sponsor, Issue Manager,Underwriter and Placement Agent.
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RISK FACTORS
Prospective investors should carefully consider and evaluate each of the following considerations and allother information contained in this Offer Document before deciding to invest in our Shares. Beforedeciding to invest in our Shares, you should seek professional advice from the relevant advisers aboutyour particular circumstances. To the best of our Directors’ knowledge and belief, all risk factors which arematerial to investors in making an informed judgement of our Group have been set out below. If any ofthe following considerations, uncertainties or material risks develops into actual events, our business,financial condition and/or results of operations could be materially and adversely affected. In such cases,the trading price of our Shares could decline due to any of these considerations, uncertainties or materialrisks, and investors may lose all or part of their investment in our Shares.
This Offer Document also contains forward-looking statements having direct and/or indirect implicationson our future performance. Our actual results may differ materially from those anticipated by theseforward-looking statements due to certain factors, including the risks and uncertainties faced by us, asdescribed below and elsewhere in this Offer Document.
RISKS RELATING TO OUR INDUSTRY AND BUSINESS
We are affected by Singapore government policies relating to the sectors that we serve
We are a Singapore-based specialist engineering services provider with 20 years of experience in thefield of controlled environments serving mainly the healthcare, biomedical, research and academia, andelectronics sectors. During the Period Under Review, almost all our revenue was derived from projects inSingapore. As highlighted in the “Prospects, Business Strategies and Future Plans – Business Strategiesand Future Plans” section of this Offer Document, we intend to focus on the healthcare, biomedical,research and academia sectors as we see continued support from the Singapore government in thesesectors. We are thus affected by the Singapore government’s policies relating to the healthcare,biomedical, research and academia sectors, including its expenditure on public infrastructure, as well asits efforts in attracting investments in the healthcare, biomedical, research and academia sectors. Thereis no assurance that the Singapore government will continue to pursue development plans in thesesectors or provide continued support for these sectors on the same scale. If the Singapore governmentformulates policies which reduce the support for the healthcare, biomedical, research and academiasectors, there may be a reduction in government expenditure on the sectors’ infrastructure and/or areduction in investments in new facilities, or upgrading or expansion of existing facilities, by the privatesector. This will in turn lead to a reduced number of projects available for tender and keener competition,thus adversely affecting our financial performance.
Our revenue is dependent on the capital expenditure of our customers
We design and/or build facilities requiring controlled environments mainly for the healthcare, biomedical,research and academia, and electronics sectors. Consequently, our revenue will be adversely affectedshould there be any slowdown in the growth and development of these sectors which results in areduction in the capital expenditure budgets of our customers in these sectors and a lesser number ofprojects available for tender. Accordingly, we are dependent on the growth of these sectors in Singapore,and any change or slowdown in the growth of these sectors in Singapore may have an adverse impact onour business, financial condition, results of operations and prospects.
Our business is generally project-based and we face the risk of any delay or prematuretermination of our secured projects and/or we may not be able to secure new projects
Our business is generally project-based. We therefore have to continuously secure new customers and/ornew projects. If we are unable to secure new projects of contract values, size and/or margins comparableto existing ones and/or our secured projects are delayed or prematurely terminated because of factorssuch as changes in our customers’ businesses, poor market conditions or lack of funds on the part of theproject owners, this would create idle or excess capacity and/or may expose us to liabilities to our sub-contractors and/or suppliers. This may adversely affect our business, financial performance and financialcondition. The delay or premature termination of any projects or contracts in progress or any customer’sdecision not to proceed with a contracted project may result in our Group not being adequatelycompensated. This will have a material adverse effect on our business, financial condition and results of
RISK FACTORS
35
operations. In addition, there may be a lapse of time between the completion of existing projects and thecommencement of subsequent projects which may materially and adversely affect our financialperformance and financial position.
Any cost overruns may adversely affect the financial performance of our Group
Our revenue is largely derived from project-based contracts. The contract value quoted in the tendersubmission is determined after the evaluation of our scope of work and all related costs including theindicative prices of our sub-contractors. Our contracts for project works are negotiated in advance of theactual project execution and projects can vary in duration from several months to a few years. Ourprofitability is therefore dependent on our ability to obtain competitive quotations from sub-contractors ator below our estimated costs, and our ability to execute the contracts efficiently. However, unforeseencircumstances such as logistic disruptions or unanticipated construction constraints at the work site mayarise during the course of project execution. As these circumstances may require additional work whichhas not been factored into the contract value, they may lead to cost overruns which will erode our profitmargin for the project. There is no assurance that our actual costs incurred will not exceed the estimatedcosts, due to under-estimation of costs, excessive wastage, inefficiency, damage or unforeseen additionalcosts incurred during the course of the contract. Any under-estimation of costs, delay or othercircumstances resulting in cost overruns may adversely affect our profitability. During the Period UnderReview and up to the Latest Practicable Date, we had not experienced any cost overruns which had amaterial adverse impact on our financial performance.
We may be liable for delays in the completion of projects
The contracts that we enter into with our customers typically include a provision for the payment by us ofpre-determined liquidated damages to our customers in the event the project is completed after the dateof completion stated in the contract arising from any delay caused by us. The liquidated damages payableare determined by the tender terms for public sector projects or through contractual negotiations forprivate sector projects. Delays in a project could occur from time to time due to factors such as shortagesof labour, equipment and construction materials, labour disputes, disputes with sub-contractors, industrialaccidents, work stoppages arising from accidents or mishaps at the work site or delays in the delivery ofconstruction materials and/or equipment by suppliers to our sub-contractors. In the event of any delay inthe completion of a project due to factors within our control, we could be liable to pay liquidated damagesunder the contract and incur additional overheads that will adversely affect our earnings and profitmargin, thereby materially and adversely affecting our financial condition and results of operations.Although we have not been made liable to pay any liquidated damages during the Period Under Reviewand up to the Latest Practicable Date, there is no assurance that there will not be any delays in ourexisting and future projects resulting in the payment of liquidated damages that may have a material andadverse impact on our business, financial condition and results of operations.
Defect claims and disputed variation orders can erode our Group’s profitability
In our business, claims may be made by customers against contractors or sub-contractors for defectiveworks and/or non-compliance with contract specifications. It is also common for our customers to retain acertain percentage of the contract sum as retention monies for the costs of rectifying any defective workswhich have not been rectified by us. Variation orders are usually additional works or changes requestedby the customer for specifications not included in the original contract. In such circumstances, additionaltime would be given to us to complete the project. On certain occasions, the parties may agree thatvariation orders be performed before the costs for such additional works are finalised. Thus, the finalvalues of such variation orders may be subject to dispute by our customers. In such an event, additionalcosts resulting from variation orders that could not be charged to our customers due to disputes wouldhave to be absorbed by us. As a result of absorbing such costs, we may have to suffer lower profits oreven losses for that project. During the Period Under Review and up to the Latest Practicable Date, wehave not experienced any material disputed variation orders or defect claims. However, there is noassurance that material disputed variation orders or defect claims will not arise in the future. In the eventthat we are required to bear any part of the variation costs or losses arising from defect claims, ourfinancial performance may be adversely affected.
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RISK FACTORS
We are reliant on suppliers and sub-contractors
We purchase architectural materials, MEP engineering products, cleanroom, laboratory and medicalequipment, and other hardware and materials from our suppliers. We also engage sub-contractors toprovide various services at project sites, such as architectural works, mechanical and electricalinstallation, interior decoration and other specialist works. These suppliers and sub-contractors areselected based on, amongst others, our past working experience with them, their track record, pricing andtheir ability to meet our quality and safety requirements and schedule. We cannot be assured that theproducts and services rendered by suppliers and sub-contractors will continue to be satisfactory to us orthat they will meet the quality requirements, specifications and time schedule for our projects. In the eventof any loss which arises from the default of the suppliers or sub-contractors engaged by us, we may notbe able to pass such loss on to them. Furthermore, if there are any adverse changes in our suppliers’ andsub-contractors’ conditions (financial or otherwise) which affect their ability to supply the products or carryout the work for which they were contracted for, and we are unable to find suitable alternative suppliers orsub-contractors in a timely manner and at comparable commercial terms, we may not be able tocomplete the project within the budget and time schedule. As a result, there may be cost overruns or wemay incur liquidated damages, and our financial performance will be affected. We have not encounteredany of the aforesaid incidents which had an material adverse impact on our Group during the PeriodUnder Review and up to the Latest Practicable Date.
We are subject to credit risk in relation to our customers’ obligations
Our credit terms to our customers are typically 30 days from the date of invoice. However, actualcollection may exceed 30 days. Our customers may not be able to meet their contractual paymentobligations to us, either in a timely manner or at all. The reasons for payment delays, cancellations ordefault by our customers may include, amongst others, insolvency or insufficient financing or workingcapital. In the event of default, we may have to write-off the entire amount owed, particularly if thecustomer were to run into financial difficulties or go into liquidation. There is no assurance that we will beable to collect our trade receivables fully or within a reasonable period of time and this would adverselyaffect our financial position and/or results of operations.
We are vulnerable to the availability and costs of employing foreign personnel
As at 30 September 2015, approximately 60.7% of our personnel were foreigners. Any changes in thelabour policies in Singapore and in other countries where we operate, or the foreign personnel’s countriesof origin may affect the supply of foreign labour and cause disruptions to our business operations. Inaddition, any increase in competition for foreign personnel, in particular skilled workers, may alsoincrease labour costs. As such, our business operations and financial performance are vulnerable toany shortage in the supply of foreign personnel and any increase in the cost of foreign personnel.In particular, where any of the sub-contracted works for an existing project have yet to be awarded to sub-contractors, any increase in foreign manpower costs may be factored into the sub-contractors’ quotes,and this may materially and adversely affect our profit margin for the project. Further, in the event thatthere is a shortage of foreign manpower, our operations may be disrupted and our business andprofitability may be adversely affected.
We are vulnerable to any significant increase in prices or shortage of materials
The products and equipment required for our projects generally use materials such as steel, copper andaluminium, the prices of which may fluctuate due to changes in supply and demand conditions. As such,our business operations and financial performance are vulnerable to any shortage in the aforesaidmaterials and any increase in the prices of such materials. Further, where any of the sub-contractedworks for an existing project have yet to be awarded to sub-contractors, any increase in the prices of theaforesaid materials may be reflected in the sub-contractors’ quotes to us, and this may materially andadversely affect our profit margin for the project. In the event that there is a shortage of the aforesaidmaterials, our operations may be disrupted and our business and profitability may be adversely affected.
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Our ability to secure additional financing may affect our ability to secure more projects andprojects of a larger scale
We intend to capitalise on our established track record to secure more projects and projects of a largerscale. As some of these projects may require financing such as short-term loans, letters of credit andperformance bonds, our ability to secure additional financing would determine our ability to secure andexecute such projects. In the event that we are unable to secure the requisite financing for any reason,we may not be able to secure and execute such projects and this will materially and adversely affect ourfuture growth, revenue and profitability.
Any downgrade or loss of BCA registration grades will adversely affect our ability to tender forfuture projects
Contractors in Singapore are categorised by the BCA into different BCA registration grades andregistration with the BCA is a pre-requisite for contractors to tender for contracts from the governmentsector in Singapore. We are registered under the CW01, CR06, ME01, ME05, ME06 and ME15workheads as described in the “Government Regulations” section of this Offer Document. Factors such ascapital net worth, track record and minimum number of personnel with the relevant qualifications affectthe workhead classification and grade granted by the BCA to our Group. If we are unable to meet thecriteria for the grant of our current grades, we may be downgraded or our current grading may not berenewed.
Our BCA registration grades have not been downgraded since our registration with BCA. Currently, ourDirectors are not aware of any circumstances that may result in our BCA registration grades beingdowngraded or withdrawn, or result in any difficulty in the maintenance of such grades by us.Nonetheless, there is no assurance that we can continue to maintain our existing BCA registration gradesin the future. In the event that we fail to comply with any of the requirements laid down by the BCA inrespect of those grades, we would not be able to maintain our existing gradings and our existing BCAregistration status would be downgraded or withdrawn. In such an event, we may not be able to tender forpublic sector projects in Singapore which require a specific BCA registration grade. Furthermore, anydowngrade in or loss of our BCA registration grades would adversely affect our market reputation. Thiscould have an adverse impact on the business operations and financial performance of our Group.
Changes in the relevant laws and regulations may affect our operations
Industries in Singapore are highly regulated and there can be no assurance that the regulatoryenvironment in which we operate will not change significantly in the future. We are subject to laws andregulations, including the Building Control Act (Chapter 29) and Building Control Regulations, whichrequire us to engage licensed tradesmen, adhere to applicable codes of practice and meet certainfinancial requirements.
To the best of our knowledge, we are in compliance with the applicable laws and regulations.Nevertheless, there can be no assurance that a review by the BCA or other regulatory authorities will notresult in adverse determinations against us. In addition, there is no assurance that the regulatoryenvironment in which we operate will not become more stringent. For example, the regulatory authoritiesmay increase the financial requirements required of us. Any change to the relevant laws and regulationsmay affect our business operations and financial performance.
We are dependent on our key management personnel
Our continued success is dependent to a large extent on our ability to retain our key managementpersonnel, in particular, our Executive Chairman and Managing Director, Lim Say Chin, and our ExecutiveDirectors, Chew Chee Keong and Goi Chew Leng, who have been instrumental in the growth of ourGroup, and who have been providing strategic direction and formulating business strategies for ourGroup. They are collectively responsible for implementing our expansion plans and business strategiesand driving our growth. There is no assurance that we will be able to retain our key managementpersonnel. The loss of any key management personnel without suitable and timely replacement or ourinability to attract and retain qualified personnel will have an adverse impact on our operations andperformance. Each of Lim Say Chin, Chew Chee Keong and Goi Chew Leng has entered into a serviceagreement with our Company for an initial term of three years. Notwithstanding this, there can be no
38
RISK FACTORS
assurance that we will be successful in retaining them or in hiring qualified management personnel toreplace them should the need arise. Please refer to the “Directors, Executive Officers and Staff – ServiceAgreements” section of this Offer Document for further details.
Our failure to attract and retain skilled personnel could materially affect our operations andbusiness
Our business requires highly skilled personnel such as project managers, site managers and engineers.Skilled personnel with the appropriate experience in our industries are limited and competition for theemployment of such personnel is intense. There is no assurance that we will be able to attract thenecessary skilled personnel or that we will be able to retain the skilled personnel whom we have trainedat our cost or suitable and timely replacements can be found for skilled personnel who leave us. Ourinability to continue to attract and retain skilled employees could materially affect the quality and timelinesof our services and our ability to compete effectively and to grow our business.
We may be affected by accidents at our work sites or at our premises
Accidents or mishaps may occur at our work sites or at our premises even though we have put in placesafety measures. Such accidents or mishaps may severely disrupt our operations and lead to a delay inthe completion of a project. In the event of such a delay, we could be liable for liquidated damages underthe contract with our customers, resulting in a material adverse effect on our financial performance.Further, we may be subject to personal injury claims from workers or other persons involved in suchaccidents or mishaps and any significant claims which are not covered by our insurance policies mayadversely affect our financial performance. In addition, any accidents or mishaps resulting in significantdamage to our machinery, equipment or premises may have a significant adverse effect on our business,financial position and results of operations.
We are subject to general safety regulations imposed by the MOM
The MOM places considerable emphasis on inculcating a culture of safety and health in all workplaces.The Workplace Safety and Health Act requires us to take reasonably practicable measures to ensure thesafety and health of workers at our workplace. In the event that our workplace contravenes the requisitesafety and health standards imposed by the regulatory authorities, we could be fined. In addition, in theevent that our work sites contravene the requisite safety and health standards imposed by the regulatoryauthorities, these work sites may be issued with partial or full stop-work orders. As at the LatestPracticable Date, there was no subsisting stop-work order. The issuance of such stop-work orders mayseverely disrupt our operations and lead to a delay in the completion of projects. These circumstancesmay generate negative publicity and adversely affect our market reputation as well as cause a materialadverse impact on our business, results of operations and financial position.
Our insurance coverage may not indemnify us against all potential losses
We have taken up insurance policies for risks such as contractors’ all risk and work injury compensation.However, there is no assurance that such insurance policies will compensate us for all potential losses orthat our insurers will pay out on our claims. We do not have keyman insurance coverage for our keypersonnel, including Lim Say Chin, Chew Chee Keong and Goi Chew Leng. There are also certain typesof risks that are not covered by our insurance policies because they are either uninsurable or noteconomically insurable, including acts of war and acts of terrorism. In addition, we are not insured againstbusiness disruption. If such events were to occur, we may have to bear the costs of any uninsured risk oruninsured amount, which can have a material and adverse effect on our business, results of operationsand financial condition.
We may be subject to foreign exchange transaction risks
Some of our Group’s purchases are denominated in US$ and EUR. On the other hand, our revenue isdenominated in S$. To the extent that our revenue and purchases are not naturally matched in the samecurrency and to the extent that there are timing differences between the invoicing and receipt of fundsfrom our customers or payment to our suppliers, we are exposed to foreign exchange rate fluctuationswhich may result in foreign exchange losses that may adversely affect our financial results. We currentlydo not have any formal policy for hedging against foreign exchange exposure. However, we will continueto monitor our foreign exchange exposure and may employ a formal policy to manage our foreign
RISK FACTORS
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exchange exposure should the need arise. Please refer to the “Management’s Discussion and Analysis ofResults of Operations and Financial Position – Foreign Exchange Management” section of this OfferDocument for further details.
We may not be able to maintain our competitiveness
While the field of controlled environments is a niche industry, we face competition from existing players aswell as new entrants, including that from other general engineering services providers. Contracts forservices in our industry are generally awarded on the basis of tender and the bidders are pre-qualifiedmainly based on their track records. Some of our more established competitors have greater brandrecognition, and financial, technical, marketing and other resources, which enable them to compete moreeffectively than us. If our competitors bid at reduced prices in order to gain experience or market share,we may have to offer more competitive prices to secure projects. There is no assurance that we will beable to compete successfully with our existing and future competitors and that we will be able to adapt tonew market demands and conditions. In the event that we are unable to compete successfully against ourcompetitors and to adapt to market conditions, our business, financial performance and financial positionmay be adversely affected. Competition may result in, among other things, lower profit margins anddifficulty in obtaining high quality sub-contractors and qualified employees. Any such consequences mayadversely affect our business, financial performance and financial position.
We may not be able to successfully implement our future plans
As part of our future business plans, we intend to capitalise on our established track record to securemore projects and projects of a larger scale, vertically integrate our services, grow our Maintenancebusiness segment, expand through acquisitions, joint ventures and/or strategic alliances and venture intonew geographical markets (please refer to the “Prospects, Business Strategies and Future Plans –Business Strategies and Future Plans” section of this Offer Document for further details). While we willplan such expansion based on the outlook of our business prospects, there is no assurance that theresults of such expansion plans will match our expectations. The success and viability of our expansionplans are dependent upon, inter alia, the growth and development, and the government’s expenditure andsupport, of the sectors that we serve, the availability of financial, operational and other resources, ourability to implement strategic marketing plans effectively, and our ability to hire and retain skilledmanagement to carry out our future plans.
Further, the implementation of our future plans may also require substantial capital expenditure,increased working capital requirements and additional financial resources and commitment. There is noassurance that these future plans will achieve the expected results or outcomes such as an increase inrevenue which will be commensurate with our investment costs. In the event that the results or outcomeof our future plans do not meet our expectations or if we fail to achieve a sufficient level of revenue ormanage our costs efficiently, we may not be able to recover our investment costs and our future financialperformance, business operations and financial condition may be adversely affected.
We will be subject to general risks associated with doing business outside Singapore
We plan to expand our business beyond our current presence in Singapore, and in particular, to countriessuch as Indonesia, Malaysia, Myanmar and Vietnam. There are inherent risks in doing business overseas,such as unexpected changes in regulatory requirements, difficulty in staffing and managing foreignoperations, social and political instability, labour unrest, potentially adverse tax consequences, legaluncertainty regarding liability, reduced protection for intellectual property rights in some countries, tariffsand other trade barriers, variable and unexpected changes in local law and barriers to the repatriation ofcapital or profits. In some developing countries, there may be uncertainty in the local regulatoryrequirements relating to our operations. As we embark on our expansion plans overseas, our exposure tosuch risks will increase. If any of the aforementioned events were to take place, our proposed overseasoperations, financial performance and financial condition may be materially and adversely affected.
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RISK FACTORS
We are generally subject to risks associated with future financing
We may come across potential business opportunities which are favourable for our Group’s future growthand prospects. Under such circumstances, we may need to obtain additional capital through equity ordebt financing. Raising additional equity financing may lead to a dilution in the interests of ourShareholders. Raising additional debt financing may restrict our ability to pay dividends and lower ourflexibility in utilising working capital to react to changes in the business and industry environment. Inaddition, there is no assurance that we will be able to obtain additional financing on terms acceptable tous, or at all. In the event that we are unable to secure adequate financing at acceptable costs, ourbusiness, financial performance and financial condition may be adversely affected.
GENERAL RISKS
We may be affected by disruption in the global financial markets and associated impact
Our results of operations and financial condition may be adversely affected by conditions in the globalfinancial markets and economies. In the second half of 2008, a disruption in the global credit markets andthe general slowdown in the global economy created turbulent and difficult conditions in the financialmarkets. These conditions resulted in much economic volatility, less liquidity, tightening of credit and alack of price transparency in certain markets. These conditions have also resulted in the failure of anumber of financial institutions in the United States of America and unprecedented action by governmentauthorities and central banks around the world. This economic situation has been further exacerbated bythe recent debt crises in Greece, Portugal, Spain, Ireland and Italy and the potential impact of thesecrises on the rest of Europe and the world. It is difficult to predict the extent to which global markets areaffected by these conditions and the extent and nature of such effects on our markets and business. Thecontinuation or intensification of such disruptions may lead to additional adverse effects including,amongst others, unavailability of credit to businesses, and could lead to a further weakening of the globaleconomies. Any prolonged downturn in general economic conditions would present risks for our business,such as a potential decrease in the number of projects we are able to secure. Any adverse economicdevelopments in the markets that we operate in or that have an indirect impact on our business couldhave material adverse effects on our business, results of operations and prospects.
We may be affected by terrorist attacks and other acts of violence, or outbreak of communicablediseases
Any fresh occurrence of terrorist attacks such as those which occurred in Indonesia, France and theUnited States of America or acts of violence may lead to uncertainty in the economic outlook of ourmarket. All these could have a negative impact on the demand for our services and our business.
An outbreak of infectious disease in the markets where we operate may have an adverse impact on ouroperations and our financial performance. Market sentiment and consumer confidence could be affectedand may lead to deterioration of economic conditions. Further, in the event that our employees and/orworkers or those of our suppliers are infected or suspected of being infected with any communicabledisease, our Group and/or our suppliers may be required by health authorities to temporarily shut downthe affected premises or project sites and quarantine the relevant workers to prevent the spread of thedisease. This will result in delays and may have an adverse impact on our business and financialperformance.
We may be affected by disruptions to our operations due to external factors
Our Group may face disruptions to our operations due to unforeseen external factors such as naturaldisasters, acts of God, fire, flooding, civil commotion, and other calamities or events beyond our control.This would result in delayed delivery of our products and services to our customers. Notwithstanding themeasures and steps that we have taken, there is no assurance that emergency crises would not causedisruptions to our operations. As a result of such disruptions, failure to meet our customers’ expectationsand complete our projects and deliver our services as required in our agreements with customers coulddamage our reputation and/or expose us to legal claims and may, as a result, lead to loss of businessand affect our ability to attract new business. In such events, our business and financial performance willbe adversely affected.
RISK FACTORS
41
We may be adversely affected by changes in the social, economic or political conditions globallyand in Singapore
Our business may be materially and adversely affected by local and global developments in relation toinflation, prices of raw materials, bank interest rates, government policies and regulations and otherconditions which impact on social, economic and political stability. We have no control over suchconditions and developments and there is no assurance that such conditions and developments will notoccur and adversely affect our business operations.
RISKS RELATING TO INVESTMENT IN OUR SHARES
Our Controlling Shareholders will retain significant control over our Group after the Invitationwhich will allow them to influence the outcome of matters submitted to Shareholders for approval
Upon the completion of the Invitation, our Controlling Shareholders, Ingenieur Holdings, Lim Say Chin(our Executive Chairman and Managing Director), Chew Chee Keong (our Executive Director), and GoiChew Leng (our Executive Director), will beneficially own in aggregate approximately 77.6% of ourCompany’s post-Invitation share capital. As a result, our Controlling Shareholders will be able to exercisesignificant influence over matters requiring shareholders’ approval, including the election of directors andthe approval of significant corporate transactions. Our Controlling Shareholders will also have veto powerwith respect to any corporate action requiring a majority vote of Shareholders, except where they arerequired by the Catalist Rules or other applicable regulations to abstain from voting. Such concentrationof shareholding may also have the effect of delaying, preventing or deterring a change in control of ourCompany which may benefit Shareholders. We cannot assure you that our Controlling Shareholders willact solely in our or your interest, or that any difference in interests will be resolved in our or your favour.
Future sale of our Shares could adversely affect our Share price
Any future issue of Shares by us or sale of our Shares by our existing Shareholders may have adownward pressure on our share price. The issue or sale of a significant amount of Shares in the openmarket after the Invitation, or the perception that such issues or sales may occur, could adversely affectthe market price of our Shares. These factors may also affect our ability to raise funds through the issueof additional equity securities. Except as otherwise described in the “General Information on our Group –Moratorium” section of this Offer Document, there will be no restrictions imposed on our Shareholders todispose of their shareholdings.
There has been no prior market for our Shares and the Invitation may not result in an active orliquid market for our Shares
Prior to the Invitation, there has been no public market for our Shares. There can be no assurance that anactive market for our Shares will develop or, if developed, will be sustained, or that the market price forour Shares will not decline below the Issue Price. Accordingly, investors may be unable to sell theirShares at or above the Issue Price. The Issue Price may not be indicative of the market price of ourShares after the completion of the Invitation.
Our Share price may fluctuate following the Invitation
The Issue Price was determined through a book-building exercise and arrived at by us after consultationwith the Sponsor, Issue Manager, Underwriter and Placement Agent, and after taking into consideration,amongst others, the prevailing market conditions and estimated market demand for the New Shares. TheIssue Price may not be indicative of prices which will prevail in the trading market after the Invitation andinvestors may not be able to resell their Shares at or above the Issue Price. Volatility in the market priceof our Shares may be caused by factors beyond our control and may not correlate with or beproportionate to our financial results.
The market price of our Shares may fluctuate significantly and rapidly in response to, inter alia, thefollowing factors, some of which are beyond our control:
(a) variations in our operating results;
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RISK FACTORS
(b) changes in securities analysts’ recommendations, perceptions or estimates of our financialperformance;
(c) changes in market valuations and share prices of companies with businesses that are similar tothose of our Group that may be listed in Singapore;
(d) announcements by us of significant acquisitions, strategic alliances or joint ventures;
(e) fluctuations in stock market prices and volume;
(f) our involvement in material litigation;
(g) additions or departures of key personnel;
(h) success or failure of our management in implementing business and growth strategies; and
(i) changes in conditions affecting the industry, general economic conditions or stock marketsentiments or other events or factors.
For these reasons, amongst others, our Shares may trade at prices that are higher or lower than the NAVper Share. To the extent that there is any retention of operating cash for investment purposes, workingcapital requirements or other purposes, these retained funds, while increasing the value of our underlyingassets, may not correspondingly increase the price of our Shares. Any failure on our part to meet withmarket expectations with regard to future earnings and cash distributions may adversely affect the marketprice of our Shares. In case of liquidation, investors may lose all or part of their investment in our Shares.
New investors will incur immediate dilution and may experience further dilution
Our Issue Price of 22.00 cents per Share is substantially higher than our NAV per Share of 8.91 cents(based on the NAV as referred to in the “Dilution” section of this Offer Document and as adjusted for thenet proceeds from the issue of the New Shares). If our Company is liquidated immediately following theInvitation, investors who subscribed for the New Shares would receive less than the price paid for theirShares. Please refer to the “Dilution” section of this Offer Document for further details.
Investors may not be able to participate in future issues of new Shares
In the event that our Company issues new Shares, it will be under no obligation to offer those Shares toour existing Shareholders at the time of issue, except where it elects to conduct a rights issue. However,in electing to conduct a rights issue or certain other equity issues, our Company will have discretion ormay be subject to regulations as to the procedure to be followed in making such rights offering availableto our existing Shareholders or in disposing of such rights for the benefit of such Shareholders andmaking the net proceeds available to them. In addition, our Company may not offer such rights to ourexisting Shareholders having an address in jurisdictions outside Singapore. Accordingly, holders of ourShares may be unable to participate in future offerings of our Shares and may experience dilution of theirholdings as a result.
Singapore law contains provisions that could discourage a takeover of our Company
Sections 138, 139 and 140 of the SFA and the Singapore Code on Take-overs and Mergers (collectively,the “Singapore Take-over Laws and Regulations”) contain certain provisions that may delay, deter orprevent a future takeover or change in control of our Company for so long as our Shares are listed forquotation on the SGX-ST. Any person acquiring an interest, either on his own or together with partiesacting in concert with him, in 30% or more of our Shares, or, if such person holds, either on his own ortogether with parties acting in concert with him, between 30% and 50% (both inclusive) of our Shares,and he (or parties acting in concert with him) acquires additional Shares representing more than one percent. of our voting Shares in any six-month period, must, except with the consent of the SecuritiesIndustry Council, extend a takeover offer for the remaining Shares in accordance with the provisions ofthe Singapore Take-over Laws and Regulations. While the Singapore Take-over Laws and Regulationsseek to ensure equality of treatment among Shareholders, their provisions may discourage or prevent
RISK FACTORS
43
certain types of transactions involving an actual or threatened change of control of our Company. Some ofour Shareholders, which may include you, may therefore be disadvantaged as a transaction of that kindmight have allowed the sale of Shares at a price above the prevailing market price.
Negative publicity may adversely affect our Share price
Negative publicity involving our Group or any of our Directors, Substantial Shareholders or ExecutiveOfficers may adversely affect the market perception or the stock performance of our Company, whether ornot it is justified. Some examples are unsuccessful attempts at joint ventures or takeovers or involvementin insolvency or litigation proceedings.
We do not have a fixed dividend policy and may not be able to pay dividends to our Shareholders
There is no assurance that we will pay dividends in the future or, if we pay dividends in the future, nocertainty when we will pay them. The declaration and payment of future dividends will depend upon ouroperating results and cash flow, financial condition, other cash requirements including capitalexpenditures, the terms of borrowing arrangements (if any), general economic conditions and otherfactors specific to our industry, many of which are beyond our control. Please refer to the “DividendPolicy” section of this Offer Document for further details.
22.00 cents
6.67 cents
8.91 cents
229.8%
146.9%
3.63 cents
3.00 cents
6.06 times
7.33 times
1.90 cents
1.27 cents
11.58 times
17.32 times
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INVITATION STATISTICS
ISSUE PRICE
NAV per Share
NAV per Share based on the unaudited pro forma(1) combined statement offinancial position of our Group as at 30 September 2015 and as adjusted for theRestructuring Exercise (“Adjusted NAV per Share”):
(a) before adjusting for the estimated net proceeds of the Invitation and basedon the pre-Invitation share capital of 93,270,645 Shares
(b) after adjusting for the estimated net proceeds of the Invitation and based onthe post-Invitation share capital of 120,270,645 Shares
Premium of Issue Price over the Adjusted NAV per Share as at 30 September2015:
(a) before adjusting for the estimated net proceeds of the Invitation and basedon the pre-Invitation share capital of 93,270,645 Shares
(b) after adjusting for the estimated net proceeds of the Invitation and based onthe post-Invitation share capital of 120,270,645 Shares
EPS
Historical EPS based on the audited combined statement of profit or loss and othercomprehensive income of our Group for FY2015 and the pre-Invitation sharecapital of 93,270,645 Shares
Historical EPS based on the audited combined statement of profit or loss and othercomprehensive income of our Group for FY2015 and the pre-Invitation sharecapital of 93,270,645 Shares, assuming that the Service Agreements had been inplace from the beginning of FY2015
PER
Historical PER based on the historical EPS for FY2015
Historical PER based on the historical EPS for FY2015, assuming that the ServiceAgreements had been in place from the beginning of FY2015
Net Cash Flow from Operations per Share(2)
Historical net cash flow from operations per Share of our Group for FY2015 basedon the pre-Invitation share capital of 93,270,645 Shares
Historical net cash flow from operations per Share of our Group for FY2015 andthe pre-Invitation share capital of 93,270,645 Shares, assuming that the ServiceAgreements had been in place from the beginning of FY2015
Price to Net Cash Flow from Operations per Share
Issue Price to historical net cash flow from operations per Share for FY2015
Issue Price to historical net cash flow from operations per Share for FY2015,assuming that the Service Agreements had been in place from the beginning ofFY2015
S$26.46 million
INVITATION STATISTICS
45
Market Capitalisation
Market capitalisation based on the Issue Price and the post-Invitation share capitalof 120,270,645 Shares
Notes:
(1) The unaudited pro forma combined statement of financial position of our Group as at 30 September 2015 has beenprepared on the assumption that the FY2015 Final Dividend had been declared and paid at the end of the financial year.
(2) Net cash flow from operations is defined as net cash generated from operating activities as set out in the “IndependentAuditors’ Report and the Audited Combined Financial Statements for the Financial Years Ended 30 September 2013, 2014and 2015” as set out in Appendix A of this Offer Document.
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DILUTION
Dilution is the amount by which the Issue Price to be paid by investors in our New Shares pursuant to theInvitation (“New Investors”) exceeds our NAV per Share immediately after the Invitation. Our unauditedpro forma NAV per Share as at 30 September 2015, as adjusted for the Restructuring Exercise but beforeadjusting for the estimated net proceeds from the Invitation and based on the pre-Invitation share capitalof 93,270,645 Shares, was approximately 6.67 cents.
Pursuant to the Invitation in respect of 27,000,000 New Shares at the Issue Price, our unaudited proforma NAV per Share as at 30 September 2015 after adjusting for the Restructuring Exercise and theestimated net proceeds from the Invitation and based on the post-Invitation share capital of 120,270,645Shares, would have been 8.91 cents. This represents an immediate increase in NAV per Share of 2.24cents to our existing Shareholders and an immediate dilution in NAV per Share of 13.09 cents (orapproximately 59.5%) to our New Investors.
The following table illustrates such dilution on a per Share basis:
Cents
Issue Price 22.00
Unaudited pro forma NAV per Share as at 30 September 2015, as adjusted for the 6.67Restructuring Exercise but before adjusting for the estimated net proceeds from the Invitation and based on the pre-Invitation share capital of 93,270,645 Shares
Increase in NAV per Share attributable to existing Shareholders 2.24
NAV per Share after the Invitation(1) 8.91
Dilution in NAV per Share to New Investors 13.09
Dilution in NAV per Share to New Investors as a percentage of the Issue Price 59.5%
Note:
(1) The computed NAV does not take into account our actual financial performance after 30 September 2015. Depending onour actual financial results, our NAV per Share may be higher or lower than the above computed NAV.
DILUTION
47
The following table shows the total consideration and the average effective cost per Share paid by ourDirectors and Substantial Shareholders for Shares acquired by them during the period of three yearsprior to the date of lodgement of this Offer Document (as adjusted for the Restructuring Exercise) and byour New Investors pursuant to the Invitation:
Total Average effectiveNumber of Shares consideration cost per Share
acquired (S$) (cents)
Directors
Lim Say Chin 9,000,000 600,000 6.67
Chew Chee Keong 9,000,000 600,000 6.67
Goi Chew Leng 9,000,000 600,000 6.67
Substantial Shareholders
Ingenieur Holdings(1) 66,270,645 4,418,043 6.67
New Investors 27,000,000 5,940,000 22.00
Note:
(1) Ingenieur Holdings is an investment holding company incorporated in Singapore whose shareholders are Lim Say Chin (ourExecutive Chairman and Managing Director) (33.3%), Chew Chee Keong (our Executive Director) (33.3%) and Goi ChewLeng (our Executive Director) (33.3%). As such, Lim Say Chin, Chew Chee Keong and Goi Chew Leng are deemed to beinterested in all the Shares held by Ingenieur Holdings under Section 4 of the SFA.
48
CAPITALISATION AND INDEBTEDNESS
The following table shows the cash and cash equivalents as well as capitalisation and indebtedness ofour Group:
(a) as at 30 September 2015, based on the unaudited pro forma combined financial position of ourGroup as at 30 September 2015;
(b) as at 31 January 2016, based on the unaudited consolidated management accounts of our Groupas at 31 January 2016 and as adjusted for the Restructuring Exercise; and
(c) as at 31 January 2016, based on the unaudited consolidated management accounts of our Groupas at 31 January 2016 and as adjusted for the Restructuring Exercise and the net proceeds fromthe Invitation.
You should read this in conjunction with the “Independent Auditors’ Report and the Audited CombinedFinancial Statements for the Financial Years Ended 30 September 2013, 2014 and 2015” and the“Independent Auditors’ Report and the Compilation of the Unaudited Pro Forma Combined FinancialInformation for the Financial Year Ended 30 September 2015” as set out in Appendices A and Brespectively of this Offer Document, and the “Management’s Discussion and Analysis of Results ofOperations and Financial Position” section of this Offer Document.
As at 31 January 2016
As adjusted for the Restructuring
As adjusted for Exercise andAs at the Restructuring the net proceeds
(S$’000) 30 September 2015 Exercise from the Invitation
Cash and bank balances 7,115 18,207 22,707(including fixed deposits pledged)
Indebtedness
Current
- secured and guaranteed 389 – –
- secured and non-guaranteed 11 – –
Total indebtedness 400 – –
Total shareholders’ equity 6,218 8,486 12,986
Total capitalisation and indebtedness 6,618 8,486 12,986
Cash and bank balances
As at 31 January 2016, we had cash and bank balances of approximately S$18.21 million, including fixeddeposits of S$2.53 million pledged to the bank as security for bank facilities.
Borrowings
As at 31 January 2016, we did not have any borrowings.
Bank Facilities
As at the Latest Practicable Date, our bank facilities amounted to S$6.70 million comprising:
(a) bank overdraft of S$0.40 million; and
CAPITALISATION AND INDEBTEDNESS
49
(b) trade facilities, comprising letters of credit, trust receipts, import/local bills receivable purchase,shipping guarantee, airway bill guarantees, letters of guarantee, long-term letters of guarantee andbanker’s guarantee, of S$6.30 million.
As at the Latest Practicable Date, we had bank facilities amounting to S$6.70 million, of which S$2.71million had been utilised for the issuance of bank guarantees, and S$3.99 million was unutilised. Inaddition, we have secured two foreign exchange lines amounting to S$0.50 million and US$1.00 millionrespectively for spot and forward transactions, which are unutilised. The bank facilities were secured byour fixed deposits and personal guarantees from our Executive Directors. Further details on the personalguarantees from our Executive Directors are set out in the “Interested Person Transactions” section of thisOffer Document.
The tenure of the above facilities ranged between being repayable on demand and three years. As at theLatest Practicable Date, the interest rates charged by the relevant financial institutions for the abovefacilities ranged between 0.9% and 6.5% per annum. Such interest rates may be varied by the respectivefinancial institutions from time to time in accordance with the terms of the facilities.
To the best of our Directors’ knowledge, we are not in breach of any of the terms and conditions orcovenants associated with any credit arrangement or bank loan which could materially affect our financialposition and results or business operations, or the investments of our Shareholders.
Save as aforesaid and as disclosed in the “Management’s Discussion and Analysis of Results ofOperations and Financial Position – Liquidity and Capital Resources” section of this Offer Document, ourGroup does not have any material unused sources of liquidity.
Contingent Liability
As at the Latest Practicable Date, to the best of our knowledge, information and belief, we do not haveany contingent liabilities which may have a material effect on the financial position and profitability of ourGroup.
Save as disclosed in this Offer Document, our Group has no other indebtedness (direct and indirect) orliabilities (including contingent liabilities) as at the Latest Practicable Date.
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DIVIDEND POLICY
Acromec Engineers declared an interim dividend of S$1,500,000 and a final dividend of S$1,500,000 inrespect of FY2013. It also declared final dividends of S$1,650,000 and S$1,800,000 in FY2014 andFY2015, respectively.
The FY2015 Final Dividend was approved and paid in January 2016, subsequent to the Period UnderReview. As at the date of this Offer Document, no dividend payment by our Group is outstanding. Pleaserefer to the “Independent Auditors’ Report and the Compilation of the Unaudited Pro Forma CombinedFinancial Information for the Financial Year Ended 30 September 2015” as set out in Appendix B of thisOffer Document for more details.
Save as disclosed above, no dividends have been declared or paid by our Company or our subsidiary forthe Period Under Review.
We currently do not have a fixed dividend policy. However, we intend to recommend and distributedividends of at least 20.0% of our net profits attributable to Shareholders for FY2016 and FY2017(“Proposed Dividends”). Investors should note that the foregoing statement on the Proposed Dividendsis merely a statement of our present intention and shall not constitute a legally binding obligation on ourCompany or a legally binding statement in respect of our future dividends, and may be subject tomodification (including reduction or non-declaration thereof) in our Directors’ sole and absolute discretion.Investors should not treat the Proposed Dividends as an indication of our Group’s future dividend policy.No inference should or can be made from any of the foregoing statements as to our actual futureprofitability or ability to pay dividends in any of the periods discussed. In addition, the actual dividendsthat our Directors may recommend or declare in respect of any particular financial year or period will besubject to restrictions under the applicable laws and regulations.
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we maynot pay dividends in excess of the amount recommended by our Directors. The declaration and paymentof dividends will be determined at the sole discretion of our Directors subject to the approval of ourShareholders. There can be no assurance that dividends will be paid in the future, including any certaintyas to the amount or timing of any dividends that will be paid in the future.
Our Directors may also declare an interim dividend without the approval of our Shareholders. In makingtheir recommendations or declaration of future dividends in respect of our Shares for any particularfinancial year or period, our Directors will consider, inter alia, our retained earnings and expected futureearnings, operations, cash flow, working capital requirements, projected levels of capital expenditure andother investment plans, restrictions on payment of dividends imposed on us by our financingarrangements (if any) and general financial condition, as well as general business conditions and otherfactors which our Directors determine as appropriate. Future dividends will be paid by us as and whenapproved by our Shareholders and/or Directors.
Information relating to taxes payable on dividends is set out under “Taxation” in Appendix E of this OfferDocument.
SELECTED COMBINED FINANCIAL INFORMATION
51
The following selected financial information should be read in conjunction with the full text of this OfferDocument, including the “Independent Auditors’ Report and the Audited Combined Financial Statementsfor the Financial Years Ended 30 September 2013, 2014 and 2015” and the “Independent Auditors’ Reportand the Compilation of the Unaudited Pro Forma Combined Financial Information for the Financial YearEnded 30 September 2015” as set out in Appendices A and B respectively of this Offer Document.
COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME(1)
Audited (S$’000) FY2013 FY2014 FY2015
Revenue 44,872 23,107 35,377
Cost of sales (37,091) (17,335) (27,909)
Gross profit 7,781 5,772 7,468
Other operating income 146 917 171
Administrative expenses (3,836) (3,224) (3,338)
Other operating expenses (1,122) (257) (321)
Finance costs (58) (26) (19)
Profit before income tax 2,911 3,182 3,961
Income tax expenses (331) (413) (580)
Profit for the year, representing total comprehensive 2,580 2,769 3,381income for the year
Pre-Invitation EPS (cents)(2) 2.77 2.97 3.63
Post-Invitation EPS (cents)(3) 2.15 2.30 2.81
Notes:
(1) Our combined statements of profit or loss and other comprehensive income for the Period Under Review have beenprepared on the basis that our Group had been in existence throughout the Period Under Review.
(2) For comparative purposes, pre-Invitation EPS for the Period Under Review have been computed based on the profit for theyear and our pre-Invitation share capital of 93,270,645 Shares.
(3) For comparative purposes, post-Invitation EPS for the Period Under Review have been computed based on the net profit forthe year and our post-Invitation share capital of 120,270,645 Shares.
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SELECTED COMBINED FINANCIAL INFORMATION
COMBINED STATEMENTS OF FINANCIAL POSITION(1)
Audited Unauditedas at pro forma as at
(S$’000) 30 September 2015 30 September 2015(2)
ASSETS
Current assets
Cash and bank balances 8,915 7,115
Trade receivables 5,614 5,614
Amounts due from contract customers 6,467 6,467
Other receivables, deposits and prepayments 125 125
Total current assets 21,121 19,321
Non-current asset
Plant and equipment 150 150
Total non-current assets 150 150
Total assets 21,271 19,471
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables 11,188 11,188
Bill payables 389 389
Amounts due to contract customers 945 945
Finance leases 11 11
Tax payable 720 720
Total current liabilities 13,253 13,253
Total liabilities 13,253 13,253
Capital and reserves
Share capital 1,500 1,500
Retained earnings 6,518 4,718
Total equity 8,018 6,218
Total liabilities and equity 21,271 19,471
NAV per Share (cents)(3) 8.60 6.67
Notes:
(1) Our combined statement of financial position as at 30 September 2015 has been prepared on the basis that our Group hadbeen in existence as at this date.
(2) Please refer to the “Independent Auditors’ Report and the Compilation of the Unaudited Pro Forma Combined FinancialInformation for the Financial Year Ended 30 September 2015” as set out in Appendix B of this Offer Document for the basisof preparation of the pro forma combined financial information of our Group.
(3) For comparative purposes, our NAV per Share as at 30 September 2015 has been computed based on the total equity andthe pre-Invitation share capital of 93,270,645 Shares.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
53
The following discussion of our results of operations and financial position has been prepared by ourmanagement and should be read in conjunction with the full text of this Offer Document, including the“Independent Auditors’ Report and the Audited Combined Financial Statements for the Financial YearsEnded 30 September 2013, 2014 and 2015” and the “Independent Auditors’ Report and the Compilationof the Unaudited Pro Forma Combined Financial Information for the Financial Year Ended 30 September2015” as set out in Appendices A and B respectively of this Offer Document.
This discussion contains forward-looking statements that involve risks and uncertainties. Our actualresults may differ significantly from those projected in the forward-looking statements. Factors that mightcause future results to differ significantly from those projected in the forward-looking statements include,but are not limited to, those discussed below and elsewhere in this Offer Document, particularly in the“Risk Factors” section of this Offer Document. Under no circumstances should the inclusion of suchforward-looking statements herein be regarded as a representation, warranty or prediction with respect tothe accuracy of the underlying assumption by our Company, the Sponsor, Issue Manager, Underwriterand Placement Agent or any other person. Investors are cautioned not to place undue reliance on theseforward-looking statements that speak only as at the date hereof. Please refer to the “Cautionary NoteRegarding Forward-Looking Statements” section of this Offer Document.
OVERVIEW
We are a Singapore-based specialist engineering services provider with 20 years of experience in thefield of controlled environments. Our expertise is in the design and construction of facilities requiringcontrolled environments such as laboratories, medical and sterile facilities and cleanrooms. We provideintegrated services including engineering, procurement, construction and maintenance services,specialising in architectural, mechanical, electrical and process works within controlled environments. Weserve mainly the healthcare, biomedical, research and academia, and electronics sectors. During thePeriod Under Review and up to the Latest Practicable Date, our customers comprise mainly hospitals andmedical centres, government agencies, research and development companies or agencies, research anddevelopment units of multinational corporations, tertiary educational institutions, pharmaceuticalcompanies, semiconductor manufacturing companies, and multinational engineering companies.
Our services include design and/or construction of new facilities in new and existing buildings,refurbishment and upgrading of existing facilities and corrective and routine maintenance services.
Please refer to the “Business – Business Overview” section of this Offer Document for more informationon our business operations.
Our Company was incorporated in Singapore on 22 December 2015 under the Act as a private companylimited by shares under the name “Acromec Pte. Ltd.”. We were converted into a public company limitedby shares on 16 March 2016 and our name was changed to “Acromec Limited”. Our Company is theholding company of our subsidiary, Acromec Engineers. Please refer to the “General Information on ourGroup – Group Structure” section of this Offer Document for further details on our Group structure.
Revenue
Our revenue is mainly project-based and is derived mainly from our two business segments as follows:
(a) Engineering, Procurement and Construction
Revenue from the Engineering, Procurement and Construction segment is mainly derived from theprovision of engineering, procurement and construction services for customers requiring the designand/or construction of facilities requiring controlled environments such as laboratories, medical andsterile facilities and cleanrooms. Revenue from this business segment accounted for approximately98.2%, 96.3% and 94.6% of our revenue in FY2013, FY2014 and FY2015 respectively.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
(b) Maintenance
Revenue from the Maintenance segment is mainly derived from the provision of corrective andpreventive maintenance services for facilities and equipment of controlled environments and theirsupporting infrastructure. Our clients typically award maintenance contracts with durations ofbetween one and three years. For highly specialised and containment facilities, the maintenancecontract awarded may be of a longer duration. During the Period Under Review, more than 80.0%of the revenue from the Maintenance segment was derived from facilities which were built by us.Revenue from this business segment accounted for approximately 1.8%, 3.7% and 5.4% of ourrevenue in FY2013, FY2014 and FY2015 respectively.
We recorded revenue of S$44.87 million, S$23.11 million and S$35.38 million in FY2013, FY2014 andFY2015 respectively.
Revenue is recognised when it is probable that the economic benefits associated with the transaction willflow to the enterprise and the amount of the revenue can be measured reliably.
For our Engineering, Procurement and Construction projects, revenue is usually recognised by referenceto the stage of completion at the end of the reporting period. The stage of completion is determined byreference to the value of work performed which is based on physical survey and the professionaljudgement of the architects, quantity surveyors or engineers. We recognise our revenue based on thestage of completion multiplied by the estimated total revenue of the project upon completion. Ouradditional claims for variation orders are only included in revenue when the outcome is probable and theamount can be reliably ascertained. The value of variation orders recognised is based on ourmanagement’s best estimate of the proposed work to be completed and this is in turn subject toevaluation by the architects, quantity surveyors or engineers.
For our maintenance services, revenue is recognised in the period in which the service is provided.
Revenue from the Engineering, Procurement and Construction segment is dependent on the number,scope and contract value of the projects undertaken. As such, its revenue may fluctuate according to thefactors mentioned below. Revenue from the Maintenance segment has increased steadily during thePeriod Under Review due to the execution of more corrective and preventive maintenance works.
Our revenue may be affected by, inter alia, the following factors:
(a) the Singapore government’s policies, infrastructure plans, budget and expenditure in the sectorsthat we serve in Singapore, which may affect the number of public sector projects available fortender and the capital expenditure of our private sector customers;
(b) the capital expenditure budgets of our private sector customers which is driven by the developmentand growth of the respective industries they are in, which are mainly in the healthcare, biomedical,research and academia, and electronics sectors, and which will affect the number of private sectorprojects available for tender;
(c) the number of invited tenders or referrals from customers or consultants with whom we may havedealt previously, which is affected by our past track record and business dealings with them;
(d) our ability to compete effectively with existing competitors and new market entrants to secure newprojects;
(e) our ability to continue to meet our customers’ requirements and maintain good workingrelationships with our customers, in particular our major customers;
(f) the progress of the projects on hand as revenue is usually recognised by reference to the stage ofcompletion;
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
55
(g) variation orders arising from additional works which are not included in the original specifications ofthe contracts;
(h) our ability to increase our existing customer base and expand into new markets; and
(i) the general economy.
Please refer to the “Risk Factors” section of this Offer Document for other factors which may affect ourrevenue.
Cost of Sales
Our cost of sales comprises mainly material costs, sub-contracting costs, labour costs and overheads.Our cost of sales amounted to S$37.09 million, S$17.34 million and S$27.91 million, representing 82.7%,75.0% and 78.9% of our total revenue in FY2013, FY2014 and FY2015 respectively.
Material costs include architectural materials, MEP engineering products and materials, and cleanroom,laboratory and medical equipment. Architectural materials include wall and partition systems, raised floorsystems, ceiling systems, doors and fittings. MEP engineering products and materials include air handlingunits, HEPA filters, centrifugal chillers, pipes, ducting and switch boards. Cleanroom, laboratory andmedical equipment include air showers, fan filter units, laser particle counters, bio-safety cabinets, fumecabinets and glove boxes.
Sub-contracting costs comprise the cost of engaging third party service providers whom we engage toperform architectural works, mechanical and electrical installation, interior decoration and other specialistworks.
Labour costs include the salaries and wages, overtime pay, bonuses and CPF contributions for ourproject managers, engineers, coordinators, safety and quality control personnel, technicians and skilledworkers, as well as foreign worker levies.
Overheads comprise project-related overheads including rental of project office and equipment, utilities,insurance, freight, haulage and out-of-pocket expenses.
Our cost of sales may be affected by, inter alia, the following factors:
(a) our ability to negotiate with our suppliers on the price of products and services quoted to us;
(b) our ability to manage our project costs and use of resources to avoid costs overruns;
(c) fluctuations in the prices of materials such as copper, aluminium and steel;
(d) availability of alternative suppliers;
(e) demand and supply conditions for project staff with relevant skills and experience;
(f) changes in government regulations and requirements which affect the supply and labour costs offoreign personnel;
(g) disputes and claims which may erode our profitability; and
(h) additional costs and liquidated damages arising from unforeseen project delays.
Please refer to the “Risk Factors” section of this Offer Document for other factors which may affect ourcost of sales.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
Other Operating Income
Our other operating income comprises mainly (i) government grants received, (ii) interest income fromfixed deposits and bank deposits, (iii) write-back of provision for doubtful debts, (iv) gain on disposal ofplant and equipment, (v) sale of excess or scrap materials and (vi) other sundry income.
Our other operating income amounted to S$0.15 million, S$0.92 million and S$0.17 million in FY2013,FY2014 and FY2015 respectively.
Administrative Expenses
Administrative expenses comprise mainly salaries and staff-related expenses (comprising directors’remuneration, salaries, bonuses and contributions to CPF for the administrative and general operationsfunctions, excluding direct and indirect labour costs captured under costs of sales, and other employeebenefits), professional fees, entertainment expenses, insurance expenses, printing and stationeryexpenses, office rental, telecommunication expenses, transport and travelling expenses and officeutilities.
Our administrative expenses amounted to S$3.84 million, S$3.22 million and S$3.34 million in FY2013,FY2014 and FY2015 respectively.
Other Operating Expenses
Our other operating expenses comprise mainly depreciation, rental of dormitory for workers, bankcharges, provision for doubtful debts, foreign exchange losses, tender expenses and licence and permitcosts.
Our other operating expenses amounted to S$1.12 million, S$0.26 million and S$0.32 million in FY2013,FY2014 and FY2015 respectively.
Finance Costs
Finance costs relate mainly to interest expense charged on bill payables and hire purchase.
Our finance costs amounted to S$0.06 million, S$0.03 million and S$0.02 million in FY2013, FY2014 andFY2015 respectively.
Income Tax Expenses
As our revenue was derived only from within Singapore during the Period Under Review, we were subjectto Singapore corporate tax. For the Period Under Review, the statutory corporate tax rate in Singaporewas 17.0%.
Our income tax expenses amounted to S$0.33 million, S$0.41 million and S$0.58 million in FY2013,FY2014 and FY2015 respectively, which translated to an effective tax rate of 11.4%, 13.0% and 14.6% inFY2013, FY2014 and FY2015 respectively. Our effective tax rate for each of FY2013, FY2014 andFY2015 was lower than the Singapore statutory corporate tax rate of 17.0% mainly as a result ofcorporate income tax rebates, productivity and innovation credit allowances and tax effects of Singaporestatutory stepped income exemptions.
SEASONALITY
Generally, our business activities are not subject to any significant seasonal fluctuations.
INFLATION
Our business operations are based in Singapore during the Period Under Review. Inflation in Singaporedid not have a material impact on our operating performance during the Period Under Review.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
57
REVIEW OF RESULTS OF OPERATIONS
A breakdown of our Group’s revenue, gross profit and gross profit margin by business segments for thePeriod Under Review is set out below:
Engineering, Procurement and 17.2 24.9 20.9Construction
Maintenance 26.1 26.0 25.4
Overall 17.3 25.0 21.1
Our revenue during the Period Under Review was generated in Singapore. Hence, we do not have anyother reportable geographical segments.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
FY2014 vs FY2013
Revenue
Our revenue decreased by S$21.76 million or 48.5% from S$44.87 million in FY2013 to S$23.11 millionin FY2014. The decrease in revenue in FY2014 was mainly due to a decrease in revenue of S$21.82million from the Engineering, Procurement and Construction segment, while the revenue from ourMaintenance segment remained stable.
Our revenue from the Engineering, Procurement and Construction segment decreased by S$21.82 millionor 49.5%, from S$44.06 million in FY2013 to S$22.24 million in FY2014 due to the execution of more andlarger scale projects in FY2013 as compared to FY2014. Projects that contributed significantly to ourrevenue in FY2013 include the following:
(a) the fitting-out of a testing and assembly plant for a customer in the electronics sector (the “Testingand Assembly Plant Project”), which contributed S$15.77 million of our revenue in FY2013;
(b) the fitting-out of a BSL3 high containment laboratory in the Academia building at the SingaporeGeneral Hospital, which contributed S$10.44 million of our revenue in FY2013;
(c) the fitting-out of operating theatres and a theatre sterile services unit for the ambulatory surgicalcentre at the NUH Medical Centre, which contributed S$9.26 million of our revenue in FY2013; and
(d) the design, supply and installation of laboratory furniture and construction of laboratories for P&GSingapore Innovation Center (the “P&G Project”), which contributed S$6.93 million of our revenuein FY2013.
We had fewer major projects in FY2014 as compared to FY2013. Projects that contributed significantly toour revenue in FY2014 include the following:
(a) the fitting-out of a BSL3 high containment laboratory at the Yong Loo Lin School of Medicine, whichcontributed S$8.20 million of our revenue in FY2014;
(b) the completion of the remaining works on the Testing and Assembly Plant Project in FY2014, whichcontributed S$6.31 million of our revenue in FY2014; and
(c) the completion of the remaining works on the P&G Project in FY2014, which contributed S$3.86million of our revenue in FY2014.
Gross Profit and Gross Profit Margin
Our gross profit decreased by S$2.01 million or 25.8%, from S$7.78 million in FY2013 to S$5.77 millionin FY2014, in line with the decrease in revenue. The decrease in gross profit was mainly attributable tothe decrease in gross profit from the Engineering, Procurement and Construction segment by S$2.02million, while the gross profit from the Maintenance segment remained stable.
Our gross profit margin increased by 7.7 percentage points from 17.3% in FY2013 to 25.0% in FY2014.The improvement in our gross profit margin was mainly due to an improvement in the gross profit marginof the Engineering, Procurement and Construction segment from 17.2% in FY2013 to 24.9% in FY2014.The higher gross profit margin in FY2014 for the Engineering, Procurement and Construction segmentwas mainly due to project costs relating to variation orders for one major project being recognised inFY2013 and the corresponding revenue being recognised in FY2014. The revenue from these variationorders was only recognised in FY2014 as there were uncertainties as to the amounts which would beendorsed by the customer in FY2013. On grounds of prudence, and given that the project costs had beenincurred, the project costs were recognised in FY2013. Had the revenue from these variation orders beenrecognised in FY2013, the gross profit margin for the Engineering, Procurement and Constructionsegment would have been relatively stable at 19.6% and 20.2% in FY2013 and FY2014 respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
59
Our gross profit margin for the Maintenance segment remained stable, registering 26.1% in FY2013 and26.0% in FY2014.
Other Operating Income
Our other operating income increased by S$0.77 million or 528.1%, from S$0.15 million in FY2013 toS$0.92 million in FY2014, mainly due to reversal of allowance for doubtful debts of S$0.71 million inFY2014 as the debt concerned was collected.
Administrative Expenses
Our administrative expenses decreased by S$0.62 million or 16.0%, from S$3.84 million in FY2013 toS$3.22 million in FY2014, mainly due to lower staff salary and related expenses (including directors’remuneration) of S$0.64 million as a result of lower staff bonus accrued for FY2014, in line with lowerrevenue.
Other Operating Expenses
Our other operating expenses decreased by S$0.86 million or 77.1%, from S$1.12 million in FY2013 toS$0.26 million in FY2014, mainly due to a decrease in allowance for doubtful debts and foreign exchangelosses of S$0.77 million and S$0.07 million respectively.
Finance Costs
Our finance costs decreased by S$0.03 million or 55.2%, from S$0.06 million in FY2013 to $0.03 millionin FY2014, in line with lower bill payables in FY2014 as compared to FY2013.
Income Tax Expenses
Income tax expenses increased by S$0.08 million or 24.8%, from S$0.33 million in FY2013 to S$0.41million in FY2014. The increase in income tax expenses was in line with the increase in profit beforeincome tax.
Profit For the Year
As a result of the above, our net profit increased by S$0.19 million or 7.3% from S$2.58 million in FY2013to S$2.77 million in FY2014.
FY2015 vs FY2014
Revenue
Our revenue for FY2015 increased by S$12.27 million or 53.1%, from S$23.11 million in FY2014 toS$35.38 million in FY2015. The increase in revenue in FY2015 was mainly due to increases in revenue ofS$11.22 million from the Engineering, Procurement and Construction segment and S$1.05 million fromthe Maintenance segment.
Our revenue from the Engineering, Procurement and Construction segment increased by S$11.22 millionor 50.5%, from S$22.24 million in FY2014 to S$33.46 million in FY2015 mainly due to the execution ofmore major projects in FY2015 as compared to FY2014. Projects that contributed significantly to ourrevenue in FY2015 include the following:
(a) the design, supply and installation of laboratory furniture at the Innovis and Kinesis buildings atFusionopolis, which contributed S$7.29 million of our revenue in FY2015;
(b) the fitting-out of cleanrooms at the Synthesis building at Fusionopolis, which contributed S$6.90million of our revenue in FY2015;
(c) the fitting-out of new operating theatres and supporting areas at the National Heart Centre, whichcontributed S$6.48 million of our revenue in FY2015; and
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
(d) the fitting-out of a chemical laboratory at CleanTech Park, which contributed S$4.63 million of ourrevenue in FY2015.
Revenue from the Maintenance segment increased by S$1.05 million or 120.8% from S$0.86 million inFY2014 to S$1.91 million in FY2015. The increase was mainly due to our concerted efforts to grow ourMaintenance segment which enabled our Group to execute more corrective and preventive maintenanceworks.
Gross Profit and Gross Profit Margin
Our gross profit increased by S$1.70 million or 29.4%, from S$5.77 million in FY2014 to S$7.47 million inFY2015, in line with the increase in revenue. The increase in gross profit in FY2015 was mainlyattributable to increase in gross profit of S$1.44 million from the Engineering, Procurement andConstruction segment and S$0.26 million from the Maintenance segment.
Our gross profit margin decreased by 3.9 percentage points from 25.0% in FY2014 to 21.1% in FY2015.The decrease in gross profit margin was mainly due to a decrease in the gross profit margin of theEngineering, Procurement and Construction segment from 24.9% in FY2014 to 20.9% in FY2015 and amarginal decrease in the gross profit margin of the Maintenance segment from 26.0% in FY2014 to25.4% in FY2015.
As set out in the gross profit margin analysis for FY2014 vs FY2013, the higher gross profit margin inFY2014 for the Engineering, Procurement and Construction segment was mainly due to revenue fromvariation orders of one major project being recognised in FY2014 as there were uncertainties as to theamounts which would be endorsed by the customer in FY2013, while the project costs relating to thesevariation orders were recognised in FY2013 when they were incurred. Had the revenue from thesevariation orders been recognised in FY2013, the gross profit margin for the Engineering, Procurementand Construction segment would have been relatively stable at 20.2% and 20.9% in FY2014 and FY2015respectively.
Other Operating Income
Our other operating income decreased by S$0.75 million or 81.4%, from S$0.92 million in FY2014 toS$0.17 million in FY2015 mainly due to a decrease in reversal of allowance for doubtful debts fromS$0.71 million in FY2014 to S$0.06 million in FY2015.
Administrative Expenses
Our administrative expenses increased marginally by S$0.12 million or 3.5%, from S$3.22 million inFY2014 to S$3.34 million in FY2015.
Other Operating Expenses
Our other operating expenses increased by S$0.06 million or 24.9%, from S$0.26 million in FY2014 toS$0.32 million in FY2015, mainly due to an increase in depreciation expense of S$0.03 million as a resultof purchases of fixed assets during the year, and an increase in bank charges of S$0.04 million whichwas in line with increased business activities.
Finance Costs
Our finance costs remained stable, amounting to S$0.03 million in FY2014 and S$0.02 million in FY2015.
Income Tax Expenses
Income tax expenses increased by S$0.17 million or 40.4%, from S$0.41 million in FY2014 to S$0.58million in FY2015. The increase in income tax expenses was in line with the increase in profit beforeincome tax.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
61
Profit For the Year
As a result of the above, our net profit increased by S$0.61 million or 22.1% from S$2.77 million inFY2014 to S$3.38 million in FY2015.
REVIEW OF FINANCIAL POSITION
Current Assets
As at 30 September 2015, our current assets amounted to S$21.12 million representing 99.3% of ourtotal assets. Our current assets comprised the following:
(a) cash and bank balances of S$8.92 million, representing 42.2% of our total current assets. Thisincluded fixed deposits of S$2.52 million pledged as security for bank facilities granted by ourbankers;
(b) trade receivables of S$5.61 million, representing 26.6% of our total current assets. This comprisedtrade receivables of S$4.79 million and retention receivables of S$0.82 million. Retentionreceivables relate to amounts withheld by some of our customers during the defects liability periodwhich generally lasts for 12 months from the date of project handover to the customer. Generally,retention receivables are between 2.5% and 10.0% of the contract sum;
(c) amounts due from contract customers of S$6.47 million, representing 30.6% of our total currentassets. Amounts due from contract customers relate to the total costs incurred for our on-goingprojects, adjusted for recognised profits/losses and net of progress billings as at 30 September2015 for all contracts in progress for which our total costs incurred (adjusted for recognisedprofits/losses) were in excess of our progress billings in accordance with the percentage ofcompletion method of revenue recognition; and
(d) other receivables, deposits and prepayments of S$0.12 million, representing 0.6% of our totalcurrent assets. This comprised deposits of S$0.07 million, prepayments of S$0.04 million and othersundry receivables of S$0.01 million.
Non-Current Assets
As at 30 September 2015, our non-current assets amounted to S$0.15 million representing 0.7% of ourtotal assets. Our non-current assets comprised plant and equipment which consisted of furniture andfittings and office equipment, computer equipment, and motor vehicles.
Current Liabilities
As at 30 September 2015, our current liabilities amounted to S$13.25 million representing 100.0% of ourtotal liabilities. Our current liabilities comprised the following:
(a) trade and other payables of S$11.19 million, representing 84.4% of total current liabilities. Thiscomprised mainly trade payables of S$6.80 million, accruals of S$0.80 million relating to staffbonuses, CPF and operating expenses such as professional fees, and accrued project costs ofS$3.58 million relating to products delivered and services rendered by our suppliers and sub-contractors which have not been invoiced;
(b) amounts due to contract customers of S$0.94 million, representing 7.1% of our total currentliabilities. Amounts due to contract customers related to the total costs incurred for our on-goingprojects, adjusted for recognised profits/losses and net of progress billings as at 30 September2015 for all contracts in progress for which our progress billings were in excess of our total costsincurred (adjusted for recognised profits/losses) in accordance with the percentage of completionmethod of revenue recognition;
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
(c) bill payables of S$0.39 million, representing 2.9% of our total current liabilities. This relates to trustreceipts taken up for our trade purchases, which bear an interest rate of 5.25% and have a maturityperiod of up to 120 days. Our bill payables are secured by our fixed deposits pledged to the issuingbanks and personal guarantees from our Executive Directors. Please refer to the “Capitalisationand Indebtedness” and “Interested Person Transactions – Present and On-going Interested PersonTransactions” sections of this Offer Document for further details;
(d) finance leases of S$0.01 million, representing 0.1% of our total current liabilities. Our financeleases are secured by the assets under hire purchase. As at the Latest Practicable Date, thesefinance leases had been repaid in full. The effective interest rate charged by the relevant financialinstitutions on our finance leases was 5.36% per annum; and
(e) tax payable of S$0.72 million, representing 5.4% of our total current liabilities. This relates toaccruals for income tax payable on our profits.
Non-Current Liabilities
Our Group did not have any non-current liabilities as at 30 September 2015.
Total Shareholders’ Equity
As at 30 September 2015, total shareholders’ equity amounted to S$8.02 million.
Subsequent to 30 September 2015, Acromec Engineers declared a final tax-exempt dividend of S$1.80million in respect of FY2015 on 28 January 2016, which was paid on 29 January 2016. Totalshareholders’ equity as at 30 September 2015 would have been S$6.22 million, taking into account theFY2015 Final Dividend.
LIQUIDITY AND CAPITAL RESOURCES
We financed our growth and operations through a combination of shareholders’ equity (including retainedprofits), net cash generated from operating activities and bank facilities from financial institutions. Ourprincipal uses of cash have been for financing project-related costs, capital expenditure, administrativeexpenses and other operating expenses such as staff-related costs and rental of corporate and projectoffices and dormitories, and finance costs.
Based on the audited combined statement of financial position as at 30 September 2015, ourshareholders’ equity amounted to S$8.02 million and indebtedness to financial institutions amounted toS$0.40 million (comprising trust receipts and finance leases).
As at the Latest Practicable Date, we had cash and bank balances of S$11.01 million. Our available bankfacilities amounted to S$6.70 million, of which S$2.71 million had been utilised and S$3.99 million wasunutilised. Please refer to the “Capitalisation and Indebtedness” section of this Offer Document for furtherdetails.
Our Directors are of the reasonable opinion that, after taking into account the cash flow generated fromour Group’s operations, the bank facilities available to us and our Group’s existing cash and bankbalances, the working capital available to our Group as at the date of lodgement of this Offer Document issufficient for our present requirements and for at least 12 months after the listing of our Company onCatalist.
The Sponsor is of the reasonable opinion that, after having made due and careful enquiry and aftertaking into account the cash flow generated from the Group’s operations, the credit facilities available tothe Group and the Group’s existing cash and bank balances, the working capital available to the Groupas at the date of lodgement of this Offer Document is sufficient for its present requirements and for atleast 12 months after the listing of the Company on Catalist.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
63
The following table sets out the summary of our Group’s cash flows for FY2013, FY2014 and FY2015:
Summary of Combined Statements of Cash Flows
Audited Unaudited Pro Forma
(S$’000) FY2013 FY2014 FY2015 FY2015(1)
Net cash from operating activities 3,512 4,512 1,774 1,774
Net cash used in investing activities (68) (85) (134) (134)
Net cash used in financing activities (1,610) (1,576) (1,695) (3,495)
Net increase/(decrease) in cash and cash equivalents 1,834 2,851 (55) (1,855)
Cash and cash equivalents at beginning of the year 1,764 3,598 6,449 6,449
Cash and cash equivalents at end of the year 3,598 6,449 6,394 4,594
Note:
(1) Please refer to the “Independent Auditors’ Report and the Compilation of the Unaudited Pro Forma Combined FinancialInformation for the Financial Year Ended 30 September 2015” as set out in Appendix B of this Offer Document for the basisof preparation of the pro forma combined financial information of our Group.
FY2013
In FY2013, net cash flows generated from operating activities amounted to S$3.51 million due tooperating cash flows before movements in working capital of S$3.86 million, adjusted for net cash outflowfrom working capital changes of S$0.10 million, income taxes paid of S$0.27 million and interest receivedof S$0.02 million.
Net cash outflow from working capital changes of S$0.10 million was a result of (a) an increase in tradereceivables of S$5.38 million in line with an increase in our revenue, (b) an increase in net amount duefrom contract customers of S$3.38 million, and (c) a decrease in bill payables of S$0.30 million, partiallyoffset by (a) an increase in trade and other payables of S$8.91 million due to increase in purchases inline with increased business activities, and (b) a decrease in other receivables, deposits and prepaymentsof S$0.05 million.
Net cash used in investing activities amounted to S$0.07 million due to purchase of plant and equipment,relating mainly to computer equipment, furniture and fittings and office equipment, and motor vehicles.
Net cash used in financing activities amounted to S$1.61 million due mainly to (a) dividends paid ofS$1.50 million, (b) interest paid to banks of S$0.06 million, and (c) repayment of finance leases of S$0.05million.
As a result of the above, there was a net increase of S$1.83 million in cash and cash equivalents. As at30 September 2013, our cash and cash equivalents amounted to S$3.60 million.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
FY2014
In FY2014, net cash flows generated from operating activities amounted to S$4.51 million due tooperating cash flows before movements in working capital of S$2.60 million, adjusted for net cash inflowfrom working capital changes of S$2.06 million, income taxes paid of S$0.17 million and interest receivedof S$0.02 million.
Net cash inflow from working capital changes of S$2.06 million was a result of (a) a decrease in tradereceivables of S$3.88 million mainly due to better collection of trade debts, and (b) a decrease in netamount due from contract customers of S$4.65 million, partially offset by (a) a decrease in trade andother payables of S$5.83 million mainly due to a decrease in purchases in line with lower businessactivities, (b) a decrease in bill payables of S$0.63 million, and (c) an increase in other receivables,deposits and prepayments of S$0.01 million.
Net cash used in investing activities amounted to S$0.09 million due to purchase of plant and equipment,relating mainly to computer equipment, and furniture and fittings and office equipment.
Net cash used in financing activities amounted to S$1.57 million due mainly to (a) dividends paid ofS$1.50 million, (b) interest paid to banks of S$0.03 million, and (c) repayment of finance leases of S$0.04million.
As a result of the above, there was a net increase of S$2.85 million in cash and cash equivalents. As at30 September 2014, our cash and cash equivalents amounted to S$6.45 million.
FY2015
In FY2015, net cash flows generated from operating activities amounted to S$1.77 million due tooperating cash flows before movements in working capital of S$4.04 million, adjusted for net cash outflowfrom working capital changes of S$1.89 million, income taxes paid of S$0.40 million and interest receivedof S$0.02 million.
Net cash outflow from working capital changes of S$1.89 million was a result of (a) an increase in tradereceivables of S$3.65 million in line with an increase in our revenue, (b) an increase in net amount duefrom contract customers of S$4.05 million, and (c) an increase in other receivables, deposits andprepayments of S$0.05 million, partially offset by (a) an increase in trade and other payables of S$5.71million due to an increase in purchases in line with increased business activities, and (b) an increase inbill payables of S$0.15 million.
Net cash used in investing activities amounted to S$0.13 million due to purchase of plant and equipmentof S$0.14 million, relating mainly to computer equipment, furniture and fittings and office equipment, andmotor vehicle, offset by proceeds from the disposal of a motor vehicle of S$0.01 million.
Net cash used in financing activities amounted to S$1.69 million due to (a) dividends paid of S$1.65million, (b) interest paid to banks of S$0.02 million, and (c) repayment of finance leases of S$0.02 million.
As a result of the above, there was a marginal decrease of S$0.05 million in cash and cash equivalents.As at 30 September 2015, our cash and cash equivalents amounted to S$6.39 million.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
65
FOREIGN EXCHANGE MANAGEMENT
Accounting Treatment of Foreign Currencies
The functional currency of companies in our Group is S$. Transactions in foreign currencies are recordedin the functional currency at the exchange rates prevailing on the dates of the transactions. At the end ofeach reporting period, monetary assets and liabilities denominated in foreign currencies are retranslatedat the exchange rates prevailing at the end of the reporting period. Non-monetary items that aremeasured in terms of historical cost in a foreign currency are not retranslated at the end of each reportingperiod and are translated using the exchange rates as at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange ratesat the date when the fair value was determined.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary itemsare included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differencesarising on the retranslation of non-monetary items in respect of which gains and losses are recognised inother comprehensive income. For such non-monetary items, any exchange component of that gain orloss is also recognised in other comprehensive income.
Foreign Exchange Exposure
Our reporting currency is S$. Our sales are denominated and transacted in S$, while our purchases arelargely denominated and transacted in S$. Our purchases in foreign currency, though not material, aremainly denominated and transacted in US$ and EUR.
To the extent that our Group’s sales and purchases are not naturally matched in the same currency (forinstances, due to changes in billing currency by suppliers) and to the extent that there are timingdifferences between invoicing and the payments to suppliers, we will be exposed to foreign currencyexchange gains or losses arising from transactions in currencies other than our reporting currency.Please refer to the “Risk Factors” section of this Offer Document for more details.
The net foreign exchange loss for FY2013, FY2014 and FY2015 amounted to approximately S$78,000,S$8,000 and S$12,000 respectively.
Since our foreign exchange exposure is not material, we currently do not have a formal hedging policy.We do however assess each transaction on a case-by-case basis. We continue to monitor our foreignexchange exposure and will hedge any foreign exchange exposure when the need arises. If necessary,where the foreign exchange exposure becomes material to our Group in the future, we will formalise ahedging policy to be approved by the Audit Committee and the Board.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in our accounting policies during the Period Under Review. Please refer tothe “Independent Auditors’ Report and the Audited Combined Financial Statements for the Financial YearsEnded 30 September 2013, 2014 and 2015” as set out in Appendix A of this Offer Document for detailson our Group’s accounting policies.
A number of new standards, amendments to standards and interpretations to the Singapore FinancialReporting Standards have been issued and are effective for annual periods beginning after 1 October2015, and as such, have not been applied in preparing our financial statements. Save as disclosed in the“Independent Auditors’ Report and the Audited Combined Financial Statements for the Financial YearsEnded 30 September 2013, 2014 and 2015” as set out in Appendix A of this Offer Document, none ofthese are expected to have a material impact on the combined financial statements of our Group in theperiod of their initial adoption.
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SHARE CAPITAL
Our Company was incorporated in Singapore on 22 December 2015 under the Act as a private companylimited by shares, under the name “Acromec Pte. Ltd.”. On 16 March 2016, our Company changed itsname to “Acromec Limited” in connection with its conversion to a public company limited by shares.
As at the date of incorporation of our Company, the issued and paid-up share capital of our Companywas S$3 comprising three Shares, with one share held by each of Lim Say Chin, Chew Chee Keong andGoi Chew Leng.
Pursuant to the acquisition of Acromec Engineers under the Restructuring Exercise, the issued and paid-up share capital of our Company was increased to S$6,218,043 comprising 6,218,043 Shares.
At extraordinary general meetings deemed to be held on 16 March 2016, our Shareholders approved,inter alia, the following:
(a) the sub-division of 6,218,043 Shares in the issued and paid-up share capital of our Company into93,270,645 Shares;
(b) the conversion of our Company into a public company limited by shares and the consequentialchange of name to “Acromec Limited”;
(c) the adoption of a new set of Constitution;
(d) the issue of the New Shares pursuant to the Invitation, which when allotted, issued and fully paid,will rank pari passu in all respects with the existing issued Shares;
(e) the adoption of the Acromec PSS, the rules of which are set out in Appendix F of this OfferDocument, and the authority for our Directors to allot and issue Shares upon the vesting of Awardsgranted under the Acromec PSS; and
(f) that authority be given to our Directors to:
(A) (i) allot and issue shares in the capital of our Company whether by way of rights, bonusor otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might orwould require shares to be issued, including but not limited to the creation and issueof (as well as adjustments to) warrants, debentures or other instruments convertibleinto shares,
at any time and upon such terms and conditions and for such purposes and to such personsas our Directors may in their absolute discretion deem fit; and
(B) (notwithstanding that this authority may have ceased to be in force) issue shares inpursuance of any Instrument made or granted by our Directors while this authority was inforce,
provided that:
(1) the aggregate number of shares to be issued pursuant to this authority (including shares tobe issued in pursuance of Instruments made or granted pursuant to this authority) does notexceed 100% of the total number of issued shares (excluding treasury shares) in the capitalof our Company (as calculated in accordance with sub-paragraph (2) below) (“IssuedShares”), of which the aggregate number of shares to be issued other than on a pro ratabasis to our existing Shareholders (including shares to be issued in pursuance ofInstruments made or granted pursuant to this authority) does not exceed 50% of the totalnumber of Issued Shares;
GENERAL INFORMATION ON OUR GROUP
(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purposeof determining the aggregate number of shares that may be issued under sub-paragraph (1)above, the percentage of Issued Shares shall be based on the total number of issued shares(excluding treasury shares) in the capital of our Company immediately following the close ofthe Invitation, after adjusting for:
(i) new shares arising from the conversion or exercise of any convertible securities;
(ii) new shares arising from the exercise of share options or vesting of share awardswhich are outstanding or subsisting at the time this authority is given; and
(iii) any subsequent bonus issue, consolidation or sub-division of shares;
(3) in exercising the authority conferred, our Company shall comply with the provisions of theCatalist Rules for the time being in force (unless such compliance has been waived by theSGX-ST) and the Constitution for the time being of the Company; and
(4) (unless revoked or varied by our Company in general meeting) this authority shall continue inforce until the conclusion of the next annual general meeting of our Company or the date bywhich the next annual general meeting of our Company is required by law to be held,whichever is the earlier.
As at the date of this Offer Document, our Company has only one class of shares, being ordinary shares.The rights and privileges of our Shares are stated in our Constitution. A summary of the Constitution ofour Company relating to, among others, the voting rights and privileges of our Shareholders is set out inAppendix C of this Offer Document.
There are no founder, management or deferred shares. The New Shares shall have the same interest andvoting rights as our existing issued Shares that were issued prior to the Invitation and there are norestrictions on the transferability of our Shares.
Save for the Awards which may be granted under the Acromec PSS, no person has been, or is entitled tobe, given an option to subscribe for or purchase any securities of our Company or our subsidiary. Nooption to subscribe for Shares in our Company has been granted to, or was exercised by, any of ourDirectors or Executive Officers. No participant has been identified and/or granted an Award pursuant tothe Acromec PSS.
As at the date of this Offer Document, the issued and paid-up share capital of our Company isS$6,218,043 comprising 93,270,645 Shares. Upon the allotment and issue of the New Shares which arethe subject of the Invitation, the resultant issued and paid-up share capital of our Company will beS$11,170,421 comprising 120,270,645 Shares.
Details of the changes in the issued and paid-up share capital of our Company since incorporation andimmediately after the Invitation are as follows:
Issued and paid-upshare capital
Number of Shares (S$)
Issued and paid-up Shares as at the incorporation of our Company 3 3
Issue of Shares pursuant to the Restructuring Exercise 6,218,040 6,218,040
Issued and paid-up share capital immediately after the 6,218,043 6,218,043Restructuring Exercise
Sub-Division 93,270,645 6,218,043
Issue of New Shares pursuant to the Invitation 27,000,000 4,952,378 (1)
Post-Invitation issued and paid-up share capital 120,270,645 11,170,421
GENERAL INFORMATION ON OUR GROUP
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Note:
(1) After deducting expenses incurred in relation to the Invitation of approximately S$0.45 million which is capitalised againstshare capital as described in the “Use of Proceeds from the Invitation and Expenses Incurred” section of this OfferDocument. The remaining expenses of approximately S$0.99 million will be charged to profit or loss.
Save as disclosed above, there were no changes in the issued and paid-up share capital of our Companysince incorporation.
RESTRUCTURING EXERCISE
The Restructuring Exercise, comprising the following steps, was undertaken by our Group in connectionwith the Invitation:
(a) Incorporation of our Company
On 22 December 2015, our Company was incorporated in Singapore as an investment holdingcompany with an issued and paid-up share capital of S$3 comprising 3 Shares.
(b) Acquisition of Acromec Engineers
Prior to the share swap described below, Acromec Engineers had an issued and paid-up capital ofS$1,500,000 comprising 1,500,000 ordinary shares, of which each of Lim Say Chin, Chew CheeKeong and Goi Chew Leng held 500,000 ordinary shares.
Pursuant to the Restructuring Agreement entered into among our Company, Lim Say Chin, ChewChee Keong and Goi Chew Leng:
(i) our Company acquired 1,500,000 ordinary shares, representing the entire issued and paid-up share capital of Acromec Engineers from Lim Say Chin, Chew Chee Keong and GoiChew Leng for a consideration of S$6,218,040, which was based on the audited NAV ofAcromec Engineers as at 30 September 2015 as adjusted for the payment of the FY2015Final Dividend; and
(ii) the consideration was satisfied in the following manner:
(A) our Company issued 4,418,043 Shares, credited as fully paid at S$1 per Share, toIngenieur Holdings, on the direction of Lim Say Chin, Chew Chee Keong and GoiChew Leng; and
(B) our Company issued 599,999 Shares, credited as fully paid at S$1 per Share, to eachof Lim Say Chin, Chew Chee Keong and Goi Chew Leng.
Following the completion of the Restructuring Exercise on 15 March 2016, the issued and paid-upcapital of our Company was S$6,218,043 comprising 6,218,043 Shares.
(c) Sub-Division of Shares
On 16 March 2016, our Shareholders approved the sub-division of every one Share in the issuedand paid-up capital of our Company into 15 Shares. Following this Sub-Division, the issued andpaid-up capital of our Company was S$6,218,043 comprising 93,270,645 Shares.
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GENERAL INFORMATION ON OUR GROUP
GROUP STRUCTURE
Our Group structure after the Restructuring Exercise and as at the date of this Offer Document is asfollows:
Our subsidiary
The details of our subsidiary as at the date of this Offer Document are as follows:
Date and Principal Principal Effective equity place of place of business Paid-up interest held
Name incorporation business activities capital by our Group
(1) Ingenieur Holdings, our Substantial Shareholder, is an investment holding company incorporated in Singapore whoseshareholders are Lim Say Chin (our Executive Chairman and Managing Director)(33.3%), Chew Chee Keong (our ExecutiveDirector)(33.3%) and Goi Chew Leng (our Executive Director)(33.3%). As such, Lim Say Chin, Chew Chee Keong and GoiChew Leng are deemed to be interested in all the Shares held by Ingenieur Holdings under Section 4 of the SFA.
Save as disclosed above, none of our Directors and Substantial Shareholder are related.
The Shares held by our Directors and Substantial Shareholder do not carry different voting rights from theNew Shares which are the subject of the Invitation.
Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severallyor jointly, by any person or government.
There is no known arrangement the operation of which may, at a subsequent date, result in a change inthe control of our Company.
There are no shares in our Company that are held by or on behalf of our Company or by our subsidiary.
There has not been any public take-over offer by a third party in respect of our Shares or by ourCompany in respect of the shares of another corporation or the units of a business trust which hasoccurred between 1 October 2014 and the Latest Practicable Date.
Significant Changes in Percentage of Ownership
Save as disclosed under the “General Information on Our Group – Restructuring Exercise” and “GeneralInformation on Our Group – Share Capital” sections of this Offer Document, there were no significantchanges in the percentage of ownership of Shares in our Company during the Period Under Review andup to the Latest Practicable Date.
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GENERAL INFORMATION ON OUR GROUP
MORATORIUM
In demonstration of their commitment to our Group, our Executive Chairman and Managing Director, LimSay Chin, our Executive Directors, Chew Chee Keong and Goi Chew Leng, and our ControllingShareholder, Ingenieur Holdings, who hold an aggregate of 93,270,645 Shares representing 77.6% of ourCompany’s issued share capital after the Invitation, have irrevocably and unconditionally undertaken notto, directly or indirectly:
(a) offer, sell, contract to sell, realise, transfer, assign, grant any option, right or warrant to purchase,lend, pledge, grant any security over, encumber or otherwise dispose of any part of their respectiveinterests in the issued share capital of our Company immediately after the Invitation (adjusted forany bonus issue or sub-division of Shares) (the “Lock-up Shares”);
(b) enter into any transaction or other arrangement, in whole or in part, (including any swap, hedge orderivative transaction) with a similar economic effect to the foregoing, whether such transaction isto be settled by delivery of the Lock-up Shares, in cash or otherwise;
(c) deposit all of their effective interest, in any Lock-Up Shares in any depository receipt facility;
(d) enter into a transaction which is designed or which may reasonably be expected to result in any ofthe above; or
(e) publicly announce any intention to do any of the above,
for a period of six months commencing from the date of listing of our Company on Catalist (the “FirstLock-up Period”), and they further undertake that the aforesaid restrictions shall apply to their respectiveinterests in 50% of the Lock-up Shares (adjusted for any bonus issue or sub-division of Shares) for aperiod of six months immediately following the First Lock-up Period.
Lim Say Chin, Chew Chee Keong and Goi Chew Leng, who collectively hold the entire issued sharecapital of Ingenieur Holdings, have irrevocably and unconditionally undertaken not to, directly or indirectly:
(a) offer, sell, contract to sell, realise, transfer, assign, grant any option, right or warrant to purchase,lend, pledge, grant any security over, encumber or otherwise dispose of any part of their respectiveinterests in the issued share capital of Ingenieur Holdings immediately after the Invitation (adjustedfor any bonus issue or sub-division of shares) (the “Ingenieur Shares”);
(b) enter into any transaction or other arrangement, in whole or in part, (including any swap, hedge orderivative transaction) with a similar economic effect to the foregoing, whether such transaction isto be settled by delivery of the Ingenieur Shares, in cash or otherwise;
(c) deposit all of their effective interest, in any Ingenieur Shares in any depository receipt facility;
(d) enter into a transaction which is designed or which may reasonably be expected to result in any ofthe above; or
(e) publicly announce any intention to do any of the above,
for a period of 12 months commencing from the date of listing of our Company on Catalist.
GENERAL INFORMATION ON OUR GROUP
71
The Early Years (1996-2001)
Our Group’s business may be traced back to 1996 when our founders and Executive Directors, Lim SayChin, Chew Chee Keong and Goi Chew Leng, who were university classmates, acquired Prompt BuildersPte Ltd, which was then a dormant company, from unrelated third parties. On 30 May 1996, we changedthe name of the company to “Acromec Engineers Pte Ltd”.
Our Executive Directors, who are engineers by training, decided to venture into the engineering business,specialising in architectural and mechanical works within controlled environments. We commencedbusiness from a small office at Ubi Industrial Estate, where we initially took on sub-contracting works,mainly serving the electronics sector. This was the period in the 1990s when Singapore’s growth wasdriven by the booming electronics sector, generating demand for cleanrooms.
By 2001, we had won the confidence of our customers, which was evidenced by the award of severalmajor contracts. The works carried out were for end-customers such as Chartered Silicon Partners PteLtd, Chartered Semiconductor Manufacturing Pte Ltd, CTS Singapore Pte Ltd, Hewlett PackardSingapore and NH Techno Glass Singapore Pte Ltd. At this time, our work scope also graduallyexpanded to include the full suite of engineering, procurement and construction services.
Diversifying our Business (2001-2007)
As our Executive Directors observed a decline in activities in the electronics sector around 2001, theydecided to expand our business and explore other business opportunities to reduce our dependency onthe electronics sector. Whilst continuing to serve our customers in the electronics sector, we capitalisedon our expertise as a specialist contractor for controlled environments to offer similar services to thebiomedical and research and academia sectors.
In 2002, we made a breakthrough in the biomedical and research and academia sectors by securinglaboratory fit-out projects for Viacell Singapore Research Centre and Novartis Institute of TropicalDiseases, both of which were located within the Capricorn building in Science Park II. Thereafter in 2003,we secured another project from Novartis Institute of Tropical Diseases where we were commissioned toset up their four-storey main research facility at Chromos building located in Biopolis, which included ahigh containment BSL3 laboratory. Notably, despite being new to the biomedical and research andacademia sectors, we were subsequently commissioned to build two other BSL3 laboratories for TemasekLife Science Laboratory and the National Environment Agency. At a time when there were few BSL3laboratories in Singapore, we were instrumental in setting up the majority of these laboratories andensuring that they complied with the health and safety guidelines.
Throughout this period, while we expanded our business in the biomedical and research and academiasectors, we continued to serve customers in the electronics sector, garnering repeat orders from existingcustomers and at the same time, securing orders from new customers such as ASE Singapore Pte Ltd,United Test and Assembly Center Ltd and ASM Technology Singapore Pte Ltd.
Growing our Business, Operating on a Higher Platform (2007-2011)
With our established track record, we began to operate on a higher platform by undertaking bigger scaleand more complex projects as a main contractor.
In 2007, in conjunction with the launch of SIgN by A*Star, we were appointed as main contractor to builda laboratory and support space over two levels at Immunos located in Biopolis. Thereafter, we wonseveral other major contracts, including the setting up of a drug research facility at Lilly Singapore Centrefor Drug Discovery Pte Ltd and the NUS-GE Singapore Water Technology Centre for National Universityof Singapore.
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In 2009, we secured a major contract from ASE Singapore Pte Ltd to design and build a 21,000 sqmsemiconductor testing and assembly facility, which included Class 100, Class 1,000 and Class 10,000cleanrooms, central cooling plant, process cooling system, clean compressed air system and centralvacuum system. We also secured a major contract from FormFactor Singapore Pte Ltd to construct amanufacturing facility which included Class 100 and Class 1,000 cleanrooms, waste water treatmentplant, ultra clean water plant, processed air exhaust system, and bulk and specialty gas system.
In 2011, we completed other complex projects such as a state-of-the-art cleanroom facility at the NUSGraphene Centre, where research into graphene, a new material, is conducted.
During the same period, we broadened our business scope to include the design, assembly and supply oflaboratory furniture, so as to better manage its quality. A notable contract was the teaching and laboratoryfacilities for the School of Physical and Mathematical Science at Nanyang Technological University.
Scaling New Heights through Entry into the Healthcare Sector (2011-2012)
In 2011, our Executive Directors saw tremendous growth potential in the healthcare sector due to theSingapore government’s plans to build new hospitals and upgrade existing medical facilities. Leveragingon our engineering expertise in controlled environments, we decided to capitalise on this trend andmanaged to secure a first major project in the healthcare sector where we were commissioned toconstruct ten operating theatres and a theatre sterile services unit for the ambulatory surgical centre atthe NUH Medical Centre. Subsequently, in 2012, we secured another contract for the construction of oneof the largest BSL3 laboratories in Singapore at The Academia at Singapore General Hospital.
Poised for Further Growth (After 2012)
Having established ourselves as specialist engineers in controlled environments, we were poised forfurther growth. From 2012 to 2014, we secured and completed our largest project worth more thanS$20.0 million, which involved the fitting-out of a testing and assembly plant for a customer in theelectronics sector. Other notable projects in recent years include the following:
(a) the fitting-out of the BSL3 core facility at the NUS Yong Loo Lin School of Medicine, a challengingproject wherein we transformed a double volume void space in a “live” building into a state-of-the-art research laboratory, which was delivered in February 2014;
(b) the construction of laboratories, including CGMP-compliant laboratories and a technicallychallenging sniff sensory laboratory for research of fragrances used in personal products, at theP&G Singapore Innovation Center, which were delivered in October 2014;
(c) the construction of the facilities at Virtus Fertility Centre, including a fertility clinic and anembryology laboratory, which were delivered in December 2014;
(d) the fitting-out of the chemical processing laboratory at the Johnson Matthey Singapore TechnologyCentre, which was delivered in October 2015;
(e) the fitting-out of fast-track state-of-the-art Class 1 and Class 10 cleanrooms at Fusionopolis forA*Star, which were delivered in December 2015; and
(f) the fitting-out of state-of-the-art hybrid operating theatres at the National Heart Centre at SingaporeGeneral Hospital, which were delivered in February 2016.
Through the years, our Executive Directors, Lim Say Chin, Chew Chee Keong and Goi Chew Leng, havebeen instrumental in the growth, development and success of our Group. Under their leadership, ourbusiness has steadily developed from that of a sub-contractor to a total solutions service provider in thefield of controlled environments with an established and credible track record built over the years. In 2015and 2016, we received recognition as a Singapore SME 1000 Company.
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For the purpose of our listing, our Company was incorporated on 22 December 2015 in Singapore underthe Act as a private company limited by shares under the name “Acromec Pte. Ltd.”. On 15 March 2016,pursuant to the Restructuring Exercise undertaken to rationalise the corporate structure of our Group inpreparation for the Invitation, our Company became the holding company of our Group.
On 16 March 2016, our Company was converted to a public company limited by shares and our namewas changed to “Acromec Limited”.
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BUSINESS OVERVIEW
We are a Singapore-based specialist engineering services provider with 20 years of experience in thefield of controlled environments. Our expertise is in the design and construction of facilities requiringcontrolled environments such as laboratories, medical and sterile facilities and cleanrooms. We provideintegrated services including engineering, procurement, construction and maintenance services,specialising in architectural and MEP works within controlled environments. We serve mainly thehealthcare, biomedical, research and academia, and electronics sectors. During the Period Under Reviewand up to the Latest Practicable Date, our customers comprise mainly hospitals and medical centres,government agencies, research and development companies or agencies, research and developmentunits of multinational corporations, tertiary educational institutions, pharmaceutical companies,semiconductor manufacturing companies, and multinational engineering companies.
Our services include design and/or construction of new facilities in new and existing buildings,refurbishment and upgrading of existing facilities and corrective and routine maintenance services.
Our business is divided into two main business segments as follows:
� Engineering, Procurement and Construction
� Maintenance
Engineering, Procurement and Construction
We provide engineering, procurement and construction services, specialising in architectural and MEPworks within controlled environments. We are able to design and build controlled environments for use invarious industries, utilising a wide range of architectural materials, in combination with the requisite MEPsystems and equipment, to achieve the technical requirements of our customers. We have built facilitieswhich comply with international guidelines or standards such as:
� BMBL and CGMP for laboratories
� DIN 1946-4 and HTM 03-01 for medical and sterile facilities
� ISO 14644-1 for cleanrooms
In particular, we have designed and built the following types of facilities:
(a) Laboratories
In most laboratories, environmental parameters such as temperature, humidity, pressure and airparticles are controlled for scientific or technological research, experiments or measurements to beperformed. The laboratories that we build include forensic and diagnostic laboratories, containmentlaboratories for biomedical research and laboratories for research in chemicals and materials,clean technology, electronics and pharmaceutical products.
Amongst the more sophisticated and challenging laboratories that we have built are BSL3laboratories. A BSL3 laboratory is a high containment laboratory which allows work to be done withindigenous or exotic agents which may cause serious or potentially lethal disease. To ourknowledge, it is currently the most sophisticated containment facility designed and built inSingapore and is required by the Ministry of Health to be certified before it can commenceoperations. BSL3 laboratories are highly complex and require intricate mechanical systems and airfiltration techniques. These laboratories are designed with a single-pass air flow system and acontainment filtration system, special architectural enclosures layered with multiple levels offortification which have undergone immense engineering integration to ensure that the enclosuresare capable of withstanding harsh decontamination procedures and at the same time, ensuring thatviruses can be effectively isolated within the enclosed facility. Some of the BSL3 laboratories thatwe have built are used for research in agents that may cause serious or potentially lethal diseasesin humans such as severe acute respiratory syndrome, avian flu and tuberculosis.
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As part of our suite of services, we also design and customise laboratory furniture for ourcustomers, in addition to assembly and installation works.
Some of the laboratories constructed by us include those for facility owners such as P&G,Singapore General Hospital, National University of Singapore and Johnson Matthey SingaporePrivate Limited.
(b) Medical and Sterile Facilities
In the medical and sterile facilities that we construct, environmental parameters, such astemperature, humidity and air movements, are controlled to provide clean environments to reducerisk of infection to patients and/or contain infectious diseases. Some of the medical and sterilefacilities that we build include operating theatres, theatre sterile services units, intensive care units,isolation wards and fertility centres.
As different facilities cater to different purposes and functions, the building of these facilitiesrequires different engineering and design considerations as follows:
(i) Operating theatres
Due to the high risk of infection during medical and/or surgical operating procedures, anoperating theatre should be constructed to ensure infection possibilities are kept to aminimum. Adjacent to the operating theatre, the theatre sterile services units provide safe re-processing of re-useable instruments through cleaning, disinfecting and sterilisation. Thesepurposes require us to build operating theatres in accordance with stringent technicalrequirements which include rigorous demands on air movement control.
(ii) Isolation wards
In the design and construction of isolation wards, the aim is to isolate patients suffering frominfectious diseases, to prevent infection to the larger community. Isolation wards aredesigned to run air through a single-pass air flow system and a containment filtration systembefore it is released into the atmosphere. In addition, we utilise the negative pressureprinciple to contain particles in the isolation wards and prevent them from escaping when thedoors of the isolation wards are opened.
(iii) Fertility centres
Combining the engineering techniques for building laboratories and cleanrooms, we are ableto design and build fertility centres. In fertility centres, micromanipulation for fertilisation takesplace in a certified clean laboratory that is essential for optimal embryo development. Thisclean laboratory is controlled to eliminate environmental fluctuations while keeping pollutantsto the lowest level.
As part of the design and construction of medical and sterile facilities, we also construct otherauxiliary areas such as general wards, staff offices, consultation rooms and pharmacies.
Some of the medical and sterile facilities constructed by us include those for hospitals and medicalcentres such as National University Hospital, Singapore General Hospital, Tan Tock Seng Hospital,Changi General Hospital, Virtus Fertility Centre and Aptus Surgery Centre.
(c) Cleanrooms
A cleanroom is an enclosed space in which airborne particulates, contaminants and pollutants arekept within strict limits. The classification of a cleanroom is based on the level of contamination thatis measured by the number of particles per volume of air permitted at a specified particle size. Inaddition, the temperature, humidity and room pressure may be controlled in a cleanroom.
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Cleanrooms are classified as follows:
Class Maximum number of particles per cubic feet Class(under FED- (under ISOSTD-209E) ≥0.1 µm ≥0.2 µm ≥0.3 µm ≥0.5 µm ≥5 µm 14644-1)
1 35 7.5 3 1 0.007 ISO 3
10 350 75 30 10 0.07 ISO 4
100 3,500 750 300 100 0.7 ISO 5
1,000 35,000 7,500 3,000 1,000 7 ISO 6
10,000 350,000 75,000 30,000 10,000 70 ISO 7
100,000 3,500,000 750,000 300,000 100,000 700 ISO 8
Cleanrooms are typically used in manufacturing and scientific research where small particles canadversely affect the process or result. We have built cleanrooms for use in the semiconductor,biotechnology, pharmaceutical and healthcare sectors. We are able to design and constructcleanrooms of various sizes and specifications, which comply with Class 1 or ISO 3 to Class100,000 or ISO 8 standards.
In the design and construction of cleanrooms, the key is to design such infrastructure and systemto reduce particulate contamination and control other environmental parameters such astemperature, humidity and pressure. At the heart of a cleanroom is the ceiling mounted HEPA filterthat is used to trap particles that are 0.3 micron and larger in size. All of the air delivered to acleanroom passes through HEPA filters, and in some cases where stringent cleanlinessperformance is necessary, ultra low particulate air filters are used.
In the construction of a cleanroom, we also build and/or integrate multiple systems which cater tothe needs of the facility owners. These include waste water treatment systems, solvent and acidicfumes exhaust treatments, ultra pure water systems, and bulk gases and specialty gases pipingsystems.
One of the more complex cleanrooms we have constructed was for the Centre of Advanced 2-Dimensional Material for a local tertiary educational institution. With this cleanroom, researcherswere able to commercialise graphene, a specialised material that is 100 times stronger than steel,for practical use. This particular cleanroom required precise environmental control, vibrationisolation and electromagnetic shielding. We also incorporated precision control of relative humidityand temperature with energy efficient heat recovery units to reduce electrical consumption andoperating cost.
Some of the sizeable cleanrooms constructed by us include those for customers such as STATSChipPAC Ltd., A*Star and ASE Singapore Pte Ltd.
Revenue from our Engineering, Procurement and Construction segment accounted for approximately98.2%, 96.3% and 94.6% of our total revenue in FY2013, FY2014 and FY2015, respectively.
Maintenance
We provide maintenance and repair services for facilities and equipment of controlled environments andtheir supporting infrastructure.
Our clients typically award maintenance contracts with durations of between one and three years. Forhighly specialised and containment facilities, the maintenance contract awarded may be of a longerduration.
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Under our Maintenance segment, we provide both corrective and preventive or routine maintenanceservices to ensure reliability and minimal disruptions to our customers’ operations. We provide correctivemaintenance services to our customers when the customer’s facility experiences equipment problems.This service is available 24 hours a day and seven days a week. Our preventive maintenance work iscarried out in accordance with an agreed schedule to service the equipment to ensure it is in goodcondition to minimise failures, as well as to meet annual inspections of specialised facilities by relevantauthorities or regulatory bodies.
During the Period Under Review, more than 80.0% of the revenue from the Maintenance segment isderived from facilities which were built by us. Our Maintenance segment provides our Group with arecurring stream of income and allows us to further strengthen our relationship with our customers.
Revenue from our Maintenance segment accounted for approximately 1.8%, 3.7% and 5.4% of our totalrevenue in FY2013, FY2014 and FY2015, respectively.
OUR PAST AND EXISTING PROJECTS
The following are some of our key projects during the Period Under Review and up to the LatestPracticable Date:
Project Period Project Description Project Owner
September 2011 to July Fitting-out works encompassing National University Hospital2013 architectural and structural works,
MEP works and supply of equipment for operating theatres and theatre sterile services unit at the NUH Medical Centre
June 2012 to April 2014 Fitting-out of a testing and assembly STATS ChipPAC Ltd. plant comprising Class 1000 cleanrooms and plant facilities, encompassing architectural and structural works, and MEP works
July 2012 to May 2013 Fitting-out of a BSL3 laboratory, Singapore General Hospital encompassing architectural and structural works, MEP works and supply of laboratory equipment at the Academia building
July 2012 to October 2014 Design, supply and installation of P&G laboratory furniture and construction oflaboratories at P&G Singapore Innovation Center
August 2013 to February Fitting-out works for BSL3 laboratory, National University2014 encompassing architectural works, MEP of Singapore
works, and supply of laboratory equipmentat the Yong Loo Lin School of Medicine
June 2014 to October 2015 Design, supply and installation of A*Star laboratory furniture at the Innovis and Kinesis buildings at Fusionopolis
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Project Period Project Description Project Owner
December 2014 to Fitting-out of new operating theatres and Singapore General HospitalFebruary 2016 supporting areas, encompassing
architectural works, MEP works and supply of laboratory equipment at the National Heart Centre
April 2015 to September Fitting-out of a chemical laboratory, Johnson Matthey Singapore 2015 encompassing architectural and structural Private Limited
works, MEP works and supply of laboratory equipment at CleanTech Park
July 2015 to March 2016 Interior fit-out of new surgical procedure Changi General Hospital rooms and support areas, encompassing architectural works and MEP works at Changi General Hospital
August 2015 to December Fitting-out works, encompassing Housing & Development 2016 architectural and MEP works, and supply Board
of equipment for pre-fabricated operating theatres and theatre sterile services units for the day surgery department at Admiralty Medical Centre
August 2015 to December Fitting-out of Class 1, Class 10 and Class A*Star2015(1) 100 cleanrooms, encompassing architectural
and structural works and MEP works at the Synthesis building at Fusionopolis
October 2015 to February Fitting-out works, encompassing Aptus Surgery Centre Pte 2016 architectural and MEP works, and supply of Ltd
equipment for the new surgery centre at Paragon Medical
February 2016 to June Fitting-out of ISO 7 specialist medical BIOTRONIK APM Pte Ltd2016 device assembly cleanroom facility,
encompassing architectural and MEP works at Techview
Note:
(1) Additional variation orders were given by the customer for this project and these works are expected to continue until May2016.
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WORK PROCESS
Engineering, Procurement and Construction
The key stages in a typical work process for our Engineering, Procurement and Construction businesssegment are set out below:
Invitation to tender
In general, we are required to submit tenders in order to bid for projects. We secure projects eitherthrough open or invited tenders. Open tenders are generally sourced from newspapers and the internet.In the case of invited tenders, invitations are made by customers whom we may have served previouslyor who have been referred to us by other customers whom we have worked with previously or referrals byappointed consultants or our Group’s business associates.
When required, we will register as qualified bidders by satisfying the pre-qualification criteria set by ourcustomers before such tenders. Some of these pre-qualification criteria include an established trackrecord in health, safety and environment management, registration with the BCA, ISO certification onquality management system, as well as experience and track record in relevant projects. The specificrequirements may vary, depending on the nature and complexity of the projects and contracts.
We would first evaluate the credit-worthiness of our prospective customers, our existing commitments andavailable resources, before participating in a tender.
Invitation to tender
Registration as qualified bidder (when required)
Preparation and submission of tender
Award of contract
Planning
Execution
Commissioning and handover
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Preparation and submission of tender
Once a decision has been made to participate in the tender, we will review the tender documents tounderstand the specific requirements of the project after clarifying any technical or legal ambiguities withour prospective customer. If required, we will work with our prospective customer to produce an initialdesign brief of the proposed development, taking into consideration the specific requirements. We willalso quantify the tender cost estimate for the entire project, taking into account quotes obtained from oursub-contractors and suppliers for work required to be undertaken by them. Sufficient quotes will beobtained from our suppliers and sub-contractors who are competitive in their quality, pricing andtimeliness. Further, we will consider the complexity and time frame of the project, the condition of thevicinity of the project site and applicable market conditions in determining the tender price.
Where our prospective customer has provided a concept design in the tender brief, our design team mayprovide an alternative design solution in addition to developing our prospective customer’s conceptdesign. Our alternative design solution will typically be a more cost and time efficient design solutionwhich will meet our prospective customer’s requirements.
The entire process for the above would typically take about three to four weeks depending on the sizeand complexity of the project. If our submitted tender terms are amongst the most favourable, we maythen be required to attend tender interviews to explain our pricing and materials offered, methods ofconstruction and to respond to any other queries. There may be negotiations to finalise the price andterms of the contract. Notification of a successful tender will typically take place within one to two monthsafter the close of the tender.
Where we are independently approached for a design and build proposal, we will meet with ourprospective customer to understand their requirements and budget before we prepare the design andcost proposal. This entire process would typically take about four to six weeks depending on the size andcomplexity of the project.
Award of contract
Upon award of the contract, we will form a project team and our tender team will hand over to them via aproject handover meeting, during which our project team will be briefed on, inter alia, the scope of worksrequired, specific requirements of the project such as the construction phases, project period and siteconstraints, as well as the initial budgeted costs.
Planning
For each of our projects, a Project Manager who is responsible for the operation, performance and safetyof the project will be assigned the responsibility to plan and take charge of the project with a ProjectDirector overseeing the project.
The Project Manager’s duties include preparing an execution plan before the commencement of theproject. The execution plan will set out the scope of work for the project, the project schedule whichhighlights the important stages of a project, manpower projection plan, equipment and materialsutilisation plan, project budget for cost monitoring as well as all necessary procedures and controls toensure that the project is executed in accordance with the contractual requirements, especially in relationto safety, quality and schedule.
In the process of finalising the execution plan, the Project Manager will discuss and meet our seniormanagement together with personnel from our contract and procurement department, engineeringdepartment, environment, health and safety department and quality department to seek their opinions onthe project execution plan. Upon finalisation of the execution plan, the resources required for the projectwill be allocated accordingly.
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Execution
For each of our projects, the Project Manager will manage the project in accordance with the executionplan to ensure its timely completion. He will also closely monitor and supervise manpower, equipmentand materials utilisation to minimise wastage and inefficiency, and conduct random checks on materialsupon delivery to ensure that the materials conform to our quality standards. He will conduct regularmeetings with his team members including the project engineers, supervisors, foremen, safety co-ordinator and quality engineer to track the progress of work and schedule of procurement to ensure thatthese are carried out accordingly. He will also carry out daily site inspections and resolve any problemsthat arise. The senior management will also carry out random site visits to ensure that the project iscarried out smoothly.
Throughout the project, quality assurance procedures involving stringent quality checks and inspectionsare conducted by quality control personnel to ensure that the work is carried out in accordance with ourquality standards in fulfilment of our customers’ requirements as stipulated in the contract. For furtherdetails on the quality assurance function of our Group, please refer to the “Business – Quality and SafetyAssurance” section of this Offer Document.
Our management conducts regular progress meetings with our Project Managers to ensure that ourprojects are carried out on schedule in accordance with the execution plan, and that project costs arekept under control.
In the execution of our projects, there may be variations in the scope of work or unforeseen delays due tofactors that are beyond our control. In such instances, the Project Manager will revise the projectschedule and budget and discuss with our customers to resolve the variation of works and revised projectschedule and budget.
Commissioning and handover
Upon completion of the project, our Project Manager will carry out inspection with the customer to list outand rectify defects identified. Thereafter, the Project Manager will prepare the necessary documentationto obtain the certificate of completion from the customer. This is followed by a defects liability period forworkmanship, which is typically one year from the project handover date.
Our Maintenance Department will take over from the project team and work alongside the customer toensure the smooth running of the completed facility. They will also coordinate to rectify defects, if any,found during the defects liability period.
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Maintenance
The key stages in a typical work process for our Maintenance business segment are set out below:
Proposal of maintenance contract
Towards the end of the defects liability period of our projects, we will approach our customers to proposea preventive maintenance contract. We also source for maintenance contracts for facilities that are notbuilt by us.
Each maintenance contract with our customers is generally for a period of one to three years. For highlyspecialised and containment facilities, the maintenance contract may be of a longer duration.
Award of contract
Upon award of the contract, our Maintenance Department will organise a maintenance team and preparefor a kick-off meeting with the customer, where the technical specifications, requirements and schedulefor preventive maintenance will be finalised.
Maintenance execution
For each of our maintenance contracts, a team of service engineers, supervised by the Service Manager,will be responsible for ensuring the timely provision of quality services to our customers. For facilities thatwere not built by us, on-site familiarisation will be conducted by our customer, where necessary, tofamiliarise ourselves with the protocol and equipment of the facility.
We carry out periodic preventive maintenance works based on a predetermined schedule. In cases wherea scheduled shutdown of the facility is required, our team is able to handle the quick and tight turnaroundschedule to ensure minimal downtime.
From time to time, we may receive activation calls from our customer when a problem is encountered. Wewill then despatch our standby maintenance engineers and/or technicians to investigate the root cause ofthe problem and carry out the necessary corrective maintenance works, such as replacement of defectiveparts.
Upon the completion of each preventive or corrective maintenance work, our engineers will prepare aservice report for sign off by the customer. Our customer may carry out checks to ensure that the workhas been carried out to their requirements. In periodic meetings with our customer, we discuss and reportto our customer on co-ordination matters, completed works and defect rectifications.
Proposal of maintenance contract
Award of contract
Maintenance execution
Renewal of contract
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Renewal of Contract
Towards the end of the contract period, after discussion with our customers to gather feedback on thequality of our work and to receive suggestions on how to improve our services, we will propose a renewalof the maintenance contract for their consideration.
QUALITY AND SAFETY ASSURANCE
Quality Assurance
We believe that quality control is a key factor that contributes to our growth and success. Hence, qualitycontrol is an important management philosophy as we strive to maintain our reputation as a leadingprovider of solutions in the field of controlled environments.
In order to ensure that we maintain high standards of quality and as part of our efforts to monitor qualityand service levels, we have established the following quality objectives and aim to achieve theseobjectives:
(a) to comply and continually improve the effectiveness of the quality management system whichsatisfies all requirements of ISO 9001:2008 standard, or any relevant statutory and regulatory,customer or other obligations to which the organisation subscribes;
(b) to provide total customer satisfaction and secure repeat patronage by consistently exceedingcustomer expectations with reliable quality works;
(c) to deliver projects on time and operate within an allocated budget; and
(d) to constantly provide training to all staff, and upgrade work processes to improve our work qualityprocedure so as to improve efficiency and reduce wastage of resources.
We have established a strict set of environmental, health and safety management policies applicable toour project managers, supervisors, foremen, site workers and sub-contractors for all projects. Thesepolicies cover all stages of our projects, from the time we occupy the work site, up to the point ofcompletion of the projects. In addition, all environmental aspects and occupational health safety hazardswhich are in our control or under our management, as well as those that we cannot control or directlymanage but are expected to affect our projects, are covered in the policies.
In addition to the respective project managers who ensure that our quality control policies and proceduresare adhered to and implemented, quality assurance personnel are assigned to each project andmaintenance site. Their role is to conduct inspections during the course of the project or maintenanceservice to ensure that work is carried out according to our customers’ quality requirements as well as ourquality control procedures.
In addition, we also obtain feedback from our customers on a regular basis to discuss their qualityexpectations and our quality performance. To ensure that our quality performance meets the standard thatis required by our customers, we constantly assess and improve on our quality performance based on thefeedback received from our customers and ensure that prompt corrective actions are carried out.
As part of our quality control policy, we also ensure that the sub-contractors engaged have the relevantexperience and proven track records, so that the works carried out by them meet our qualityrequirements. Our Project Managers also conduct random checks on materials upon delivery by suppliersto ensure materials delivered meet our quality standards.
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The above quality control measures seek to ensure that the quality of our solutions and services meet theexpectations of our customers. Our commitment to quality is evidenced by the following certificationsreceived by us:
Certifying Certificate Scope authority Date of expiry Company
ISO 9001:2008 Management systems AJA Registrars Ltd 16 September Acromec 2017 Engineers
ISO 14001:2004 Management systems AJA Registrars Ltd 19 December Acromec2016 Engineers
Warranty
We provide warranty for defects rectification typically for a period of 12 months after handover of eachproject. During this time, we are required to rectify all defects which are reported by our customer. At theend of the defects liability period, our customer will typically issue a final completion certificate to markthe end of our warranty in respect of the project.
To the best of our knowledge, there has not been any warranty claim of a significant value during thePeriod Under Review and up to the Latest Practicable Date.
Safety Assurance
We have put in place comprehensive safety measures to provide a safe and healthy working environmentfor all our staff. Our safety committee is responsible for ensuring that the safety measures are adhered to.Such measures include:
(a) conducting periodic and necessary risk assessments for all our projects to identify the risks andgaps, and implement mitigating procedures in order to achieve an accident-free environment orminimise risks to an acceptable level;
(b) conducting regular safety meetings and providing sufficient management support and resources toplan, implement and execute safety measures in compliance with workplace health and safetylegislations and other requirements which include directives, guidelines and standards prescribedby our Group;
(c) conducting regular tool and equipment checks;
(d) improving the competency of our staff and cultivating good safety habits through proper training,instruction and guidance and ensuring that workplace safety and health matters are effectivelycommunicated to all employees; and
(e) monitoring the effectiveness of risk control measures which have been implemented andconducting a third party audit or an internal review to ensure that safety measures are adhered to.
As a testament of our commitment to maintaining high safety standards, Acromec Engineers has receivedthe bizSAFE Level Star certification from the Workplace Safety and Health Council since 2014, inrecognition of our workplace safety and health management system. The occupational health and safetymanagement systems of Acromec Engineers has also received OHSAS 18001:2007 certification by AJARegistrars since 2011, and the current certificate expires on 23 January 2017.
During the Period Under Review and up to the Latest Practicable Date, we did not experience any majoraccidents which have resulted in serious injury or death or censuring by the relevant authorities.
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MARKETING AND BUSINESS DEVELOPMENT
Our marketing and business development activities are spearheaded by our Executive Chairman andManaging Director, Lim Say Chin. He is supported by our Executive Directors and our OperationsDirector, Peh Ee Sang, and his marketing and tender team in the execution of our marketing andbusiness development plans.
We source for new projects through open and invited tenders. There are also instances in whichcustomers approach us independently for proposals in respect of design and/or construction worksrequired. In the case of invited tenders, invitations are made by customers or consultants whom we havedealt with previously or who have been referred to us by other customers or consultants who had workedwith us previously.
With 20 years of operations, our Group has established and maintained business relationships withowners, main contractors and consultants from whom we could also directly source for new projects orwho would be in a position to refer projects to us. As we rely extensively on our business networks, weconduct informal business development sessions with our customers and consultants from existing andpast projects in order to enhance our existing relationships and source for business opportunities.
We also periodically send our employees to conferences and trade events, such as Arab Health, Medicaand Tradeline, to keep abreast of the latest developments in the industry and market trends. This alsoallows us to maintain contact with past and existing customers and consultants, as well as gives us anopportunity to develop new business contacts with potential customers or consultants and identifypotential projects.
MAJOR CUSTOMERS
Our customers comprise mainly hospitals and medical centres, government agencies, research anddevelopment companies or agencies, research and development units of multinational corporations,tertiary educational institutions, pharmaceutical companies, semiconductor manufacturing companies,and multinational engineering companies.
The customers accounting for 5% or more of our revenue during the Period Under Review are as follows:
As a percentage of revenue (%)
Name of customer FY2013 FY2014 FY2015
STATS ChipPAC Ltd. 35.1 27.3 n.m. (1)
Kajima Overseas Asia Pte Ltd(2) 23.3 2.0 0.2
Penta-Ocean Construction Co., Ltd.(3) 20.6 n.m. (1) –
CH2M HILL Singapore Pte Ltd(4) 15.4 16.7 2.8
National University of Singapore 1.1 39.4 2.1
Singapore General Hospital – 0.2 19.0
GS Engineering & Construction Corp.(5) – 0.2 20.9
A*Star – – 19.5
Johnson Matthey Singapore Private Limited – – 13.1
Notes:
(1) Not meaningful.
(2) Kajima Overseas Asia Pte Ltd is the appointed main contractor for the construction of the Academia building at theSingapore General Hospital. We were the nominated sub-contractor selected by the project owner, Singapore GeneralHospital, to construct a BSL3 high containment laboratory in the said building.
(3) Penta-Ocean Construction Co. Ltd is the appointed main contractor for the construction of the NUH Medical Centre. Wewere the nominated sub-contractor selected by the project owner, National University Hospital, to construct operatingtheatres and a theatre sterile services unit for the ambulatory surgical centre at the NUH Medical Centre.
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(4) CH2M HILL Singapore Pte Ltd is the project manager for the construction of P&G Singapore Innovation Center. We werethe nominated contractor selected by the project owner, P&G, for the supply of laboratory furniture and the construction ofvarious laboratories, including a sniff sensory laboratory.
(5) GS Engineering & Construction Corp. is the main contractor for the fitting-out of the Innovis and Kinesis buildings atFusionopolis. We were the domestic sub-contractor for the design, supply and installation of laboratory furniture and theconstruction of a cleanroom.
Our business is principally project-based and is related to our customers’ or the facility owners’infrastructure expenditure. Investments in infrastructure are typically planned for and used for a certainperiod until the facilities are obsolete or require upgrading before any upgrade or new investments aremade. Accordingly, such investments in infrastructure by each customer may not occur from year to yearand as a result, the customers that contribute to more than 5% of our revenue in each year may varyfrom year to year.
The revenue contribution from the major customers in the table above during the Period Under Reviewfluctuated in line with the number, scope, contract value and percentage of project completed in each ofthe financial years.
Our Directors are of the opinion that our business and profitability is currently not dependent on anyparticular industrial, commercial or financial contract with any customer. To the best of their knowledge,our Directors are not aware of any information or arrangement which would lead to the cessation ortermination of our current relationship with any of our major customers.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their respectiveAssociates has any interest, direct or indirect, of 5% of more in any of the above major customers. To thebest of our knowledge and belief, there are no arrangements or understanding with any customerspursuant to which any of our Directors and Executive Officers was appointed.
MAJOR SUPPLIERS
Our suppliers comprise mainly engineering services sub-contractors and suppliers of architecturalmaterials, MEP engineering products and materials, and cleanroom, laboratory and medical equipment.
The suppliers (including sub-contractors) accounting for 5% or more of our purchases (including sub-contracting costs) during the Period Under Review are as follows:
As a percentage of purchases (%)
Name of supplier Products/Services FY2013 FY2014 FY2015
HY Building & Maintenance Services Sub-contractor for 11.5 9.3 7.3Pte Ltd mechanical and architectural
Name of supplier Products/Services FY2013 FY2014 FY2015
Wholesome (S) Pte Ltd Sub-contractor for architectural 0.6 2.4 7.4installation services
Labquip (S) Pte Ltd Supplier of laboratory equipment – – 5.5
Note:
(1) Not meaningful.
Our purchases from our suppliers fluctuate from year to year as our business is principally project-basedand the type of materials and equipment used in different facilities, such as laboratories, medical andsterile facilities and cleanrooms, may be different. Further, our requirements for sub-contractingresources, materials and equipment vary according to the size and scope of our projects and the stage ofcompletion of our projects. We only place an order with our suppliers when we have secured a project.
We generally do not enter into long-term exclusive agreements with any of our suppliers as this wouldprovide us with the flexibility to evaluate and select suppliers who are able to provide us with high qualitymaterials and equipment or work at the most favourable terms. Our Directors believe that our businessand profitability will not be materially affected by the loss of any single supplier nor dependent on anyparticular industrial, commercial or financial contract with any supplier.
To the best of their knowledge, our Directors are not aware of any information or arrangement whichwould lead to the cessation or termination of our current relationship with any of our major suppliers.
As at the date of this Offer Document, none of our Directors, Substantial Shareholders or their respectiveAssociates has any interest, direct or indirect, of 5% or more in any of the above suppliers. To the best ofour knowledge and belief, there are no arrangements or understanding with any suppliers pursuant towhich any of our Directors and Executive Officers was appointed.
CREDIT MANAGEMENT
Credit terms to our customers
Generally, we issue a progress claim to our customers on a monthly basis according to the proportion ofwork completed with respect to the contract value of the project. The progress claim will be certified byour customers or the architects, quantity surveyors or engineers and an invoice will be issued based onthe agreed amount after the certification of the progress claims. Our customers usually settle paymentwithin 60 days from the date of our progress claim. This period includes the certification process,invoicing by us and payment by the customers. For some of our projects, we invoice our customers on aprogressive basis in accordance with the project milestones as prescribed in the contract. Occasionally,actual collection may exceed 60 days. This usually occurs for the final claim when a project is completedand the customer delays certification of the final claims until rectification of outstanding defect works iscompleted.
For some contracts, our customers may withhold between 2.5% and 10.0% of the contract sum asretention monies. Our customers may use the retention monies to settle the cost incurred for anyrectification works not carried out by us. The retention monies are released after the defects liabilityperiod which generally lasts for 12 months from the date of project handover. During the Period UnderReview and up to the Latest Practicable Date, we have not experienced any material claims for defectiveworks.
We have in place credit control policies and procedures to manage our credit exposure. The credit termsand limits granted to each customer are usually determined during the tender or contract negotiationstage or at contract renewal stage. The terms and limits granted are based on a number of factors suchas the customer’s financial background and creditworthiness, the transaction volume, payment historyand length of relationship with us. Our finance and project teams oversee the collection from ourcustomers closely.
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We typically grant our customers credit terms of 30 days. The finance team monitors the accountsreceivables ageing report closely and follow-up on any overdue amounts. For customers who haveexceeded their credit limits, we would increase our collection efforts by escalating the issue of the non-payment to their management. On a case-by–case basis, appropriate action will be taken for overduedebts depending on its severity, which include sending formal letters of demand by our lawyers and legalaction should all other means to recover the overdue debts fail. Our credit limits specify the maximumamount that may be owed by customers at any time and the length of credit period provided. Forcustomers who have exceeded their credit limits or periods, we would require them to settle outstandingamounts before executing additional work for the customer.
We review and assess the need to make allowance for our overdue debts on a monthly basis. Specificallowance or write-off will be made when we are of the view that the collectability of an outstanding debtis impaired or the debt is deemed uncollectible. This is usually assessed on a case-by-case basis anddepends on the age of the overdue debts and the creditworthiness of the customer. There were no badtrade debts written off during the Period Under Review. The amounts of allowance for doubtful tradereceivables for the Period Under Review were as follows:
(S$’000) FY2013 FY2014 FY2015
Allowance for doubtful trade receivables 770 62 –
The above allowances for doubtful trade receivables were made on debts which were overdue for morethan 180 days, notwithstanding efforts made to collect the debts. The allowances made in FY2013 andFY2014 were subsequently reversed in FY2014 and FY2015 respectively when the said debts werecollected.
Our trade receivables’ turnover days for the Period Under Review were as follows:
FY2013 FY2014 FY2015
Trade receivables’ turnover days(1) 48 31 49
Note:
(1) The trade receivables’ turnover days are computed based on the closing trade receivables balances of the relevant financialyear divided by revenue for the relevant financial year and multiplied by 365 days.
Revenue for engineering, procurement and construction projects is recognised based on percentage ofcompletion method. This is measured by the percentage of contract work completed as determined by thearchitects, quantity surveyors or engineers. Revenue for maintenance contracts is recognised when theservices are provided. Trade receivables are recorded when invoices are being issued to customersaccording to the billing arrangements agreed with customers. The trade receivables’ turnover daysexceeded our credit term of 30 days in FY2013 mainly due to delays in payment by a customer for amajor project. The trade receivables’ turnover days exceeded our credit term of 30 days in FY2015 mainlydue to significant billings at year-end for work executed on our major projects.
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Our trade receivables as at 30 September 2015 amounted to approximately S$5.61 million. The ageingschedule for our trade receivables as at 30 September 2015 were as follows:
Percentage of total trade receivables
Age of trade receivables (%)
Not past due 97.9
1 to 30 days overdue 1.1
31 to 60 days overdue 1.0
100.0
As at the Latest Practicable Date, all of these trade receivables had been collected.
Credit terms from our suppliers
Our suppliers comprise mainly engineering services sub-contractors and suppliers of architecturalmaterials, MEP engineering products and materials, and cleanroom, laboratory and medical equipment.
Cost of sales for engineering, procurement and construction projects is recognised based on percentageof completion method while cost of sales for maintenance contracts is recognised when goods orservices are received, which is in line with our revenue recognition policy. Trade payables are recordedwhen invoices are being received from suppliers according to the billing arrangements agreed with ourGroup.
Payment terms granted by our suppliers vary from supplier to supplier and are also dependent on,amongst others, our relationships with the suppliers and the size of the transactions. Generally, oursuppliers grant us credit terms ranging from 30 to 60 days. For our suppliers who are based outside ofSingapore, payment is effected by way of letters of credit or telegraphic transfers.
Our trade payables’ turnover days for the Period Under Review were as follows:
FY2013 FY2014 FY2015
Trade payables’ turnover days(1) 64 31 99
Note:
(1) The trade payables’ turnover days is computed based on the closing trade payables balances of the relevant financial yeardivided by cost of sales less labour costs for the relevant year and multiplied by 365 days.
The trade payables’ turnover days exceeded the credit term granted to us of up to 60 days in FY2015mainly due to significant billings by our suppliers at year-end for work executed on our major projects.
RESEARCH AND DEVELOPMENT
Due to the nature of our business, we do not carry out any research and development activities.
INTELLECTUAL PROPERTY
As at the Latest Practicable Date, we did not own, and our business or profitability was not materiallydependent on, any registered trade marks, patents, licences or other intellectual property rights.
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SUPPLIES MANAGEMENT
Due to the nature of our business, we do not in the ordinary course of business maintain an ongoinginventory. We generally purchase the materials and equipment only after we have been awarded aproject. When a contract is signed with our customers, we will assign a budget costing for the projectspecifying all materials and equipment required for the project in terms of quantities and specifications.We typically only order stocks as and when required and orders are placed with the suppliers only aftersuch materials and equipment have been approved by customers. Revenue will be recognised uponsupply and installation of the products for the customers.
To ensure smooth delivery of materials and equipment for site requirements and to avoid any potentialdelays in the project that may result in penalty charges, our project managers would work out thescheduling of orders and deliveries of materials and equipment on a just-in-time basis. The date ofdelivery would be agreed between our project managers and suppliers before an order is placed, so as toensure that our suppliers are able to fulfil the delivery requirements.
PROPERTIES AND FIXED ASSETS
We do not own any properties.
We currently lease the following properties:
Land/ built-in area
Location Tenure (sqm) Use of property Lessor
4 Kaki Bukit Avenue 1 Three years 990.1 Office and facility for DBS Trustee Limited#06-02/03/04 commencing 13 engineering designSingapore 417939 December 2013
67 Ayer Rajah Crescent Three years 181.4 Facility for engineering JTC Corporation#05-12/14 commencing designSingapore 139950 1 August 2014
Block C #02-01 12 months One dormitory Staff accommodation Aik Chuan Simpang Lodge 1 commencing 14 unit Construction Pte. Ltd.2B Yishun Avenue 7 September 2015Singapore 768929
Blk B2 #04-03 12 months One dormitory Staff accommodation Aik ChuanKranji Lodge 1 commencing unit Construction Pte. Ltd.12 Kranji Road 17 April 2015(1)
Singapore 739522
Blk B5 #02-03 12 months One dormitory Staff accommodation Aik ChuanKranji Lodge 1 commencing unit Construction Pte. Ltd.12 Kranji Road 13 August 2015 Singapore 739522
Note:
(1) We have renewed the lease for a period of 12 months from 17 April 2016.
As at 30 September 2015, the fixed assets of our Group, comprising renovations, computer equipment,factory machinery, motor vehicles, office equipment, and furniture and fittings, had a net book value ofapproximately S$0.15 million.
As at the Latest Practicable Date, none of our fixed assets were subject to any mortgage, pledge or anyother encumbrances or otherwise used as security for any bank borrowings.
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As at the Latest Practicable Date, our Directors were not aware of any breach of any obligations underthe abovementioned lease agreements that would result in their termination by the lessor or non-renewal,if required, when they expire.
To the best of our Directors’ knowledge, there are no regulatory requirements or environmental issuesthat may materially affect our utilisation of the above properties and fixed assets.
Capital Expenditures and Divestments
Our capital expenditures during the Period Under Review and for the period from 1 October 2015 to theLatest Practicable Date were as follows:
1 October 2015 to (S$’000) FY2013 FY2014 FY2015 Latest Practicable Date
Computer equipment 46 69 92 32
Furniture and fittings and office equipment 65 16 19 7
Motor vehicle 28 – 29 –
Renovation 1 – – –
Total 140 85 140 39
The above capital expenditures were financed by internal funds and hire purchase.
There were no divestments made by us during the Period Under Review and for the period from 1October 2015 to the Latest Practicable Date, other than the disposal of a motor vehicle with a net bookvalue of S$2,101 at S$6,802.
Capital Commitments
As at the Latest Practicable Date, we did not have any material capital commitments.
Operating Lease Commitments
As at the Latest Practicable Date, we had non-cancellable operating lease commitments as follows:
(S$’000)
Within one year 222
In the second to fifth year inclusive –
Our operating lease commitments comprise rent payable for the lease of our corporate and project officesand dormitories under non-cancellable operating lease agreements. We intend to finance the aboveoperating lease commitments using internal resources.
STAFF TRAINING
We believe that the technical competence and product knowledge of our staff are instrumental inmaintaining our competitive position and in the continued success of our Group. The objective of our stafftraining is to establish the training system necessary to support our quality management system, toensure that our staff are informed of the latest industry developments and are equipped with thenecessary skills and knowledge, and to enhance their work performance. This is accomplished throughthe constant upgrading of their skills to meet required standards of quality services. We tailor the trainingof our staff according to their respective job scopes. Our human resources department maintains a recordof all relevant training received by our staff in areas such as technology, safety, and accounting andfinance to further enhance their technical expertise.
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Our training programmes can be classified into the following three main categories:
(a) Orientation training
All new employees are required to undergo orientation programmes and in-house trainingconducted by our human resource, and environmental, health and safety departments and theemployees’ relevant departments to familiarise themselves with our Group’s business, corporatepolicies and practices. These programmes are conducted in-house with emphasis on mattersrelating to employees’ conduct and discipline, housekeeping, as well as quality and safetyawareness.
(b) On-the-job training
On-the-job training that our staff undergo is managed by the employees’ immediate supervisors.Immediate supervisors will closely monitor individual staff and impart practical skills and workingknowledge necessary for them to perform their tasks according to the required performancestandards. Such on-the-job training covers technical knowledge, equipment operation and qualityassurance.
(c) Continuous learning
In order to stay competitive at all times and to ensure that our employees keep abreast of newdevelopments in our industry, we send our employees to courses conducted by institutions such asBCA, Eagleson Institute, Harvard School of Public Health, Innocom Technologies (S) Pte Ltd andSQI International Pte Ltd. Further, most of our maintenance staff have received the BSL-3laboratory operations maintenance services safety training from Basler & Hofmann Singapore Pte.Ltd. in 2014.
During the Period Under Review, our staff training costs were not material.
INSURANCE
As at the Latest Practicable Date, the insurance policies maintained by us included:
(a) work injury compensation in relation to our employees;
(b) group life, total and permanent disability and crisis cover insurance for our Executive Chairman andManaging Director, and Executive Directors;
(c) contents, fire and burglary insurance;
(d) contractors’ all risks insurance in respect of certain projects undertaken by our Group;
(e) public liability insurance;
(f) electronic equipment insurance;
(g) machinery all risks insurance;
(h) foreign workers medical insurance; and
(i) group hospital and surgical plan insurance.
Our Directors are of the view that the above insurance policies are adequate for our existing operations.However, significant damage to our operations, whether as a result of fire or other causes, may still havea material adverse effect on our results of operations or financial condition. No material insurance claimswere made by us during the Period Under Review.
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CORPORATE SOCIAL RESPONSIBILITY
Our Group strives to be part of a positive change and is committed to serving and giving back to thecommunity. We recognise that for long-term sustainability, we need to achieve a balance betweenbusiness profitability and corporate social responsibility. We have taken steps to play our part incontributing to the welfare of the community. In particular, we have organised a movie screening for thechildren at Chen Su Lan Methodist Children’s Home and an outing to Gardens by the Bay for the seniorresidents of Salvation Army’s Peacehaven Nursing Home.
Based on the SGX-ST’s Guide to Sustainability Reporting for Listed Companies published on 27 June2011, our Directors will establish a corporate social responsibility policy which will formally address ourGroup’s impact on the local community and make such disclosure in our annual report.
COMPETITION
The field of controlled environments is competitive, with various small- and medium-sized engineeringcompanies and a few established players. We believe that we are able to compete effectively against ourcompetitors because of our established reputation as a reliable specialist engineering services provider inthe field of controlled environments, the consistent quality of our workmanship, our competitive pricing aswell as our good relationships with our customers.
We are of the view that the following are our main competitors in the Singapore market:
Competitors Type of facility
Dai-dan Co Ltd LaboratoriesTakasago Singapore Pte LtdKilowatts Engineering & Construction Pte LtdQuest Technology (S) Pte LtdTaikisha (Singapore) Pte. Ltd.
Draeger Medical South East Asia Pte Ltd Medical and sterile facilitiesKilowatts Engineering & Construction Pte LtdQuest Technology (S) Pte LtdShinryo Singapore Pte Ltd
We are of the view that these companies are our competitors as they provide a similar range of solutions,and compete with us for the same pool of customers. In view of the size and diversity of our industry, it isnot possible to obtain independent statistics on the market share captured by individual companies in ourindustry. There is also no published statistics that can be used to accurately measure our market share.
To the best of our Directors’ knowledge, none of our Directors, Substantial Shareholder or theirAssociates is related to or has any interest, direct or indirect, in any of our competitors listed above.
COMPETITIVE STRENGTHS
We believe our competitive strengths are as follows:
We have an established track record and possess substantial technical expertise
The controlled environments industry is competitive, with various small- to medium-sized engineeringcompanies and a few large established players. We believe that the barrier to entry into our industry issignificant due to the substantial technical expertise required to complete projects in the industry. Wehave built facilities which comply with international guidelines or standards such as BMBL and CGMP forlaboratories, DIN 1946-4 and HTM 03-01 for medical and sterile facilities, and ISO 14644-1 for
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cleanrooms. As a testament to our technical expertise, we have successfully completed projects such asClass 1 cleanrooms, BSL3 laboratories and the sniff sensory laboratory in P&G Singapore InnovationCenter. In addition, we have built new operating theatres adjacent to existing operating theatres whichwere in use during the construction period, which required stringent infection control procedures andclose coordination with the hospital. We believe that we are able to compete against our competitorsbecause of our reputation as a reliable and established specialist engineering services provider in thefield of controlled environments, the consistent quality of our services, our competitive pricing as well asour good relationships with customers. We also provide our customers with integrated solutions for theconstruction of a comprehensive range of controlled environments.
We are able to provide integrated engineering solutions to our customers
We are able to integrate our architectural and MEP engineering know-how to provide total engineeringsolutions for controlled environments. With our in-house engineering team who have expertise in MEPengineering solutions, we are able to provide a faster turn-around time as well as provide cost and time-efficient integrated engineering solutions to our customers. We believe that our ability to provideintegrated engineering solutions to our customers reduces our reliance on external parties and enablesus to bid for more varied projects.
We have established strong business relations with our customers, suppliers and sub-contractors
We believe that cultivating and maintaining good business relations with our customers, suppliers andsub-contractors is critical to our success. We are committed to consistently deliver our projects andservices to the satisfaction of our customers and to build up strong relations with our suppliers and sub-contractors. With 20 years of experience in the field of controlled environments, we have built a strongnetwork of customers, suppliers and sub-contractors. We have maintained good relationships with ourcustomers, suppliers and sub-contractors by delivering quality services, completing projects on time andmaking regular visits and having periodic meetings with our customers, suppliers and sub-contractors. Inaddition, we seek to continuously improve our service standards and operating efficiency. As a result, wehave established strong business relations with our customers, suppliers and sub-contractors whichgenerate repeat business.
We are able to further strengthen relationships with our customers through our maintenanceservices
Under our Maintenance segment, we provide both corrective and preventive or routine maintenanceservices to ensure reliability and minimal disruptions to our customers’ operations. During the PeriodUnder Review, more than 80.0% of the revenue from the Maintenance segment was derived fromfacilities which were built by us. Through our provision of maintenance services, we are able to maintainour relationships with customers through delivery of quality services, making regular on-site visits andhaving periodic meetings to provide advice on their selection of equipment and materials and to updatethem on our business offerings. We are also able to respond to the needs of our customers in a timelyand cost-effective manner. Further, through our maintenance services, we are able to keep abreast ofchanges in our customers’ business and understand and meet their needs and requirements, therebyfurther strengthening our position as their preferred contractor.
We have an experienced and committed management team
Our management team has extensive experience, technical expertise and valuable business relationshipswith the market players in the business of controlled environments. Our Executive Chairman andManaging Director, Lim Say Chin, and our Executive Directors, Chew Chee Keong and Goi Chew Leng,are instrumental in providing our Group with their invaluable strategic leadership. They have beeninstrumental in spearheading the growth of our business. Our Directors are supported by an experiencedand dedicated management team. Our Executive Officers have vast technical expertise in the business ofcontrolled environments and are responsible for various aspects of our Group’s operations. Please referto the “Directors, Executive Officers and Staff” section of this Offer Document for details of our Directorsand Executive Officers.
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PROSPECTS
Singapore
Our Directors believe that the following market segments in Singapore will contribute positively to thelong-term prospects of our Group:
(a) Healthcare
In Singapore, growing affluence and better education has led to an increased awareness of healthmanagement and increased expenditure on health insurance coverage. Coupled with a rapidlyageing population, this is expected to result in an increase in demand for more and betterhealthcare infrastructure.
To this end, the Singapore government is expanding every aspect of the healthcare system,increasing the number of beds in acute hospitals by 25.0% by the end of the decade, doublingcommunity hospital beds, increasing nursing home capacity by about 70.0% and investing to bringaffordable care into the community so that seniors can be cared for at home. These majorinvestments in Singapore’s future will mean significantly higher development expenditures.1
Healthcare spending in Singapore is expected to rise from over S$9.0 billion in 2015 to overS$13.0 billion in 2020 and will continue to increase beyond this decade.2
We note that four new hospitals will be built in Jurong, Yishun, Sengkang and Outram by 2020, inaddition to four new polyclinics. Specialist centres will also be expanded and upgraded to betterserve Singaporeans. The Ng Teng Fong General Hospital in Jurong and Yishun CommunityHospital have commenced operations.
Beyond 2020, the Ministry of Health has announced that four new acute hospitals will be built, withSingapore’s next integrated hospital development in Woodlands being progressively opened from2022.3
In addition, we note that the following development plans have been announced:
(i) Singapore General Hospital - a master plan to redevelop the 43-hectare Singapore GeneralHospital (“SGH”) campus, which houses SingHealth Duke-NUS Academic Medical Centre,the main SGX complex, five national specialty centres for cancer, dental, eye, heart andneuroscience, as well as SingHealth Polyclinic (Outram), in the next 20 years. Under themaster plan, redevelopment will take place in two phases. Under phase one, which will takeplace over 10 years, SGH’s Accident and Emergency block, the new 550-bed OutramCommunity Hospital (as mentioned above), SGH Elective Care Centre, National DentalCentre Singapore and the new National Cancer Centre Singapore will be relocated or
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1 The information was extracted from the internet website of the Ministry of Finance at http://www.singaporebudget.gov.sg/budget_2015/pb.aspx. The Ministry of Finance has not consented to the inclusion of the above information in this OfferDocument for the purpose of Section 249 of the SFA and is therefore not liable for the relevant information under Sections253 and 254 of the SFA. While our Directors have taken reasonable effort to ensure that the information is extractedaccurately and fairly, and has been included in this Offer Document in its proper form and context, they have notindependently verified the accuracy of the relevant information.
2 The information was extracted from the internet website of The Business Times at http://www.businesstimes.com.sg/government-economy/singapore-budget-2015/singapore-budget-2015-healthcare-spending-to-hit-over-s13. The BusinessTimes has not consented to the inclusion of the above information in this Offer Document for the purpose of Section 249 ofthe SFA and is therefore not liable for the relevant information under Sections 253 and 254 of the SFA. While our Directorshave taken reasonable effort to ensure that the information is extracted accurately and fairly, and has been included in thisOffer Document in its proper form and context, they have not independently verified the accuracy of the relevant information.
3 The information was extracted from the internet website of the Ministry of Health at https://www.moh.gov.sg/content/dam/moh_web/PressRoom/Highlights/2014/COS%202014/Healthcare%202020%20Update%20Highlights.pdf. The Ministry ofHealth has not consented to the inclusion of the above information in this Offer Document for the purpose of Section 249 ofthe SFA and is therefore not liable for the relevant information under Sections 253 and 254 of the SFA. While our Directorshave taken reasonable effort to ensure that the information is extracted accurately and fairly, and has been included in thisOffer Document in its proper form and context, they have not independently verified the accuracy of the relevant information.
developed. The main SGH complex will be developed in phase two of the master plan afterphase one is completed. Under the master plan, provision has also been made for a newresearch park to further biomedical research and collaborations with industry partners.4 Thenew 92,000 sqm National Cancer Centre Singapore, which is expected to be completed in2020, will house medical, educational and research activities, 12 multi-disciplinary oncologyclinics, intra-operative radiotherapy-capable operating theatres, endoscopy suites, oncologicimaging facilities, treatment facilities, and patient support and rehabilitation facilities.5 TheSGH Elective Care Centre is expected to open by 2022;
(ii) National University Hospital - the Centre for Oral Health at the National University Hospital isexpected to open by 2019;
(iii) Tan Tock Seng Hospital - a new wing will be added to the existing National Skin Centre.
Our Directors believe that these government initiatives will translate into opportunities for our Groupto participate in the development of the new healthcare infrastructure, as our track record inbuilding operating theatres and other medical and sterile facilities puts us in good stead to matchthese demands.
(b) Biomedical and research and academia
The research and development scene in Singapore is conducive for nurturing homegrown talentand attracting investments by leading public and private research institutions. Thus far, theSingapore government has been providing the infrastructure and support for the biomedical andresearch and academia sectors, building dedicated research centres such as Biopolis andFusionopolis to encourage and facilitate research and development activities.
Since 2011, the Singapore government’s public investments have catalysed S$8.6 billion ofindustry research and development, supported approximately 400 start-ups and generated 800licences. It will also step up efforts to help companies develop, test and commercialise newproducts and solutions in its next research, innovation and enterprise five-year plan as well as topup the national research fund by S$1.0 billion in 2015.6 In a bigger wave of investments, theSingapore government announced in January 2016 in its Research, Innovation and Enterprise2020 plan that S$19.0 billion has been set aside over 2016-2020 for research, innovation andenterprise activities, to support and translate research, and to leverage science and technology toaddress national challenges. The new allocation is a 18% increase over the S$16.1 billioncommitted from 2011 to 2015.7 We note that of the S$19.0 billion set aside, approximately S$10.1billion will be used for academic research, health and biomedical sciences, and advancedmanufacturing and engineering.
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4 The information was extracted from the internet website of The Business Times at http://www.businesstimes.com.sg/government-economy/sgh-campus-to-get-20-year-makeover-under-redevelopment-masterplan. The Business Times has notconsented to the inclusion of the above information in this Offer Document for the purpose of Section 249 of the SFA and istherefore not liable for the relevant information under Sections 253 and 254 of the SFA. While our Directors have takenreasonable effort to ensure that the information is extracted accurately and fairly, and has been included in this OfferDocument in its proper form and context, they have not independently verified the accuracy of the relevant information.
5 The information was extracted from the internet website of SingHealth at https://www.singhealth.com.sg/TomorrowsMed/Article/Documents/AMP_Issue_8-Infrastructure.pdf. SingHealth has not consented to the inclusion of theabove information in this Offer Document for the purpose of Section 249 of the SFA and is therefore not liable for therelevant information under Sections 253 and 254 of the SFA. While our Directors have taken reasonable effort to ensure thatthe information is extracted accurately and fairly, and has been included in this Offer Document in its proper form andcontext, they have not independently verified the accuracy of the relevant information.
6 The information was extracted from the internet website of the Ministry of Finance at http://www.singaporebudget.gov.sg/budget_2015/pd.aspx. The Ministry of Finance has not consented to the inclusion of the above information in this OfferDocument for the purpose of Section 249 of the SFA and is therefore not liable for the relevant information under Sections253 and 254 of the SFA. While our Directors have taken reasonable effort to ensure that the information is extractedaccurately and fairly, and has been included in this Offer Document in its proper form and context, they have notindependently verified the accuracy of the relevant information.
7 The information was extracted from the press release dated 8 January 2016 issued by the National Research Foundation,Prime Minister’s Office, who has not consented to the inclusion of the said information in this Offer Document for thepurpose of Section 249 of the SFA and is therefore not liable for the relevant information under Sections 253 and 254 of theSFA. While our Directors have taken reasonable effort to ensure that the information is extracted accurately and fairly, andhas been included in this Offer Document in its proper form and context, they have not independently verified the accuracyof the relevant information.
Our Directors believe that our expertise and track record in laboratory design and constructionpositions us well to take advantage of the opportunities created by these government initiatives,including the development of new biomedical, and research and academia infrastructure. Theseinitiatives have also attracted investments from leading private institutions to set up facilities inSingapore. Based on the National Survey of Research & Development by A*Star, private sectorresearch and development spending hit an all-time high of S$5.2 billion in 2014, up by 16.0% from2013.8 In October 2015, it was announced that chemicals firm, DuPont, will set up a new innovationand business headquarters in Singapore in 2016, which will operate from a 11,000 sqm facility atBiopolis.9 Also in October 2015, Applied Materials, Inc. and A*Star announced that they will set upa S$150 million laboratory with a 400 sqm Class 1 cleanroom at Fusionopolis Two.10 Our Directorsbelieve that there will be opportunities for us arising from continued investments in researchfacilities by private institutions, including from our existing customers who will look at furtheropportunities to develop their research and development capabilities, and we will be in good steadto meet their needs.
ASEAN
Our Directors believe that the following market segments in ASEAN will contribute positively to the long-term prospects of our Group:
(a) Healthcare
With the rising affluence of their people, there is a continuous drive from the governments ofdeveloping countries to build and upgrade their existing healthcare infrastructure to cope with theincreasing need for more and better healthcare services. Many ASEAN countries have embarkedon the process of building and upgrading their healthcare infrastructure. In ASEAN, healthexpenditure per capita is about 4.0% of gross domestic product, as compared to the Organisationfor Economic Co-operation and Development average of 9.5%, even though such expenditure hasalready increased by 250.0% from 1998 to 2013 to over US$68.0 billion.11 In particular, ourDirectors believe that we will be able to offer our MEP engineering solutions in countries such asIndonesia, Malaysia, Myanmar and Vietnam. This will be beneficial for our long-term growth as weexpand our business beyond our current presence in Singapore. Please refer to the “Prospects,Business Strategies and Future Plans – Business Strategies and Future Plans” section of this OfferDocument for further details.
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8 The information was extracted from the internet website of The Straits Times at http://www.straitstimes.com/business/economy/firms-spent-record-52b-on-rd-in-2014. The Straits Times has not consented to the inclusion of the aboveinformation in this Offer Document for the purpose of Section 249 of the SFA and is therefore not liable for the relevantinformation under Sections 253 and 254 of the SFA. While our Directors have taken reasonable effort to ensure that theinformation is extracted accurately and fairly, and has been included in this Offer Document in its proper form and context,they have not independently verified the accuracy of the relevant information.
9 The information was derived from an article entitled “DuPont sets up Asean innovation HQ in S’pore” published by TheBusiness Times in October 2015. The Business Times has not consented to the inclusion of the said information in this OfferDocument for the purpose of Section 249 of the SFA and is therefore not liable for the relevant information under Sections253 and 254 of the SFA. While our Directors have taken reasonable effort to ensure that the information is extractedaccurately and fairly, and has been included in this Offer Document in its proper form and context, they have notindependently verified the accuracy of the relevant information.
10 The information was extracted from the internet website of A*Star at http://www.a-star.edu.sg/media/news/press-releases/id/4314/applied-materials-and-astar-announce-new-rd-joint-lab-in-singapore-for-advanced-semiconductor-technology.aspx. A*Star has not consented to the inclusion of the above information in this Offer Document for the purposeof Section 249 of the SFA and is therefore not liable for the relevant information under Sections 253 and 254 of the SFA.While our Directors have take reasonable effort to ensure that the information is extracted accurately and fairly, and hasbeen included in this Offer Document in its proper form and context, they have not independently verified the accuracy of the relevant information.
11 The information was extracted from the internet website of Deloitte & Touche Enterprise Risk Services Pte Ltd athttps://www2.deloitte.com/content/dam/Deloitte/sg/Documents/risk/sea-risk-future-healthcare-thought-leadership-noexp.pdf.Deloitte & Touche Enterprise Risk Services Pte Ltd has not consented to the inclusion of the above information in this OfferDocument for the purpose of Section 249 of the SFA and is therefore not liable for the relevant information under Sections253 and 254 of the SFA. While our Directors have take reasonable effort to ensure that the information is extractedaccurately and fairly, and has been included in this Offer Document in its proper form and context, they have not independently verified the accuracy of the relevant information.
(b) Electronics
Vietnam’s electronics industry is on the rise, making up 23.4% of its gross domestic product in2014, up from just 5.2% in 2010. In addition, electronics have been the country’s number oneexport since 2013 and has increased by 78.0% during the period from 2010 to 2014, reachingUS$6.9 billion in 2011, US$29.5 billion in 2012, US$32.1 billion in 2013 and US$35.0 billion in2014. Many high-tech electronics producers are establishing a presence in Vietnam, including Intel,LG, Panasonic and Microsoft.12
Our Directors believe Vietnam will be a growing electronics manufacturing base and with ourexpertise in cleanroom design and construction, we will be well-positioned to take advantage of theopportunities in this market.
TREND INFORMATION
For the financial year ending 30 September 2016, barring unforeseen circumstances, our Directors notethe following trends based on the operations of our Group as at the Latest Practicable Date:
(a) Staff and raw material costs
We expect that our staff costs will gradually increase in tandem with general inflation, the tightlabour market and the expected increase in our business activities.
Our projects require products and equipment which are made of materials such as steel, copperand aluminium. The prices of steel, copper and aluminium are not expected to fluctuate significantlyin the near future. However, in the event that the prices of such materials fluctuate, we expect thatour costs will fluctuate in tandem.
(b) Increased business activities in the healthcare, biomedical, and research and academia sectors
Our Directors expect an increase in expenditure on infrastructure, especially that relating to thehealthcare, biomedical, and research and academia sectors, in line with government and privatesector initiatives. Such increase in expenditure has led to an increase in demand for controlledenvironments, and we expect that this will in turn result in an increase in demand for laboratories,medical and sterile facilities and cleanrooms.
(c) Listing expenses and ongoing compliance costs
Our Directors expect our operating expenses to increase due mainly to the listing expenses as wellas the ongoing costs to comply with our Group’s listing obligations. For further details on the listingexpenses, please refer to the “Use of Proceeds from the Invitation and Expenses Incurred” sectionof this Offer Document.
Save as discussed above and under the “Risk Factors” section of this Offer Document, and barring anyunforeseen circumstances, our Directors are not aware of any significant recent trends or any otherknown trends, uncertainties, demands, commitments or events that are reasonably likely to have amaterial effect on our revenue, profitability, liquidity or capital resources, or that would cause the financialinformation disclosed in this Offer Document to be not necessarily indicative of our future operatingresults or financial condition. Please also refer to the “Cautionary Note Regarding Forward-LookingStatements” section of this Offer Document.
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12 The information was extracted from the internet website of the Vietnam Trade Promotion Agency athttp://www.vietrade.gov.vn/en/index.php?option=com_content&view=article&id=2388:opportunities-and-challenges-for-vietnams-electronic-export&catic=27-:vietnam-industry-news&Itemid=363. The Vietnam Trade Promotion Agency has notconsented to the inclusion of the above information in this Offer Document for the purpose of Section 249 of the SFA and istherefore not liable for the relevant information under Sections 253 and 254 of the SFA. While our Directors have takereasonable effort to ensure that the information is extracted accurately and fairly, and has been included in this Offer Document in its proper form and context, they have not independently verified the accuracy of the relevant information.
ORDER BOOK
Our order book based on unfulfilled orders from signed contracts and confirmed variation orders as at 30September 2015 and signed contracts, confirmed variation orders and letters of award obtained duringthe period from 1 October 2015 to the Latest Practicable Date amounted to approximately S$40.03million. Barring unforeseen circumstances, we expect more than 90.0% of these orders to be fulfilled inFY2016. However, our order book may not be an accurate indicator of our future performance as we havenot taken into account any potential renegotiations, cancellations or deferment of orders in calculating ourorder book.
BUSINESS STRATEGIES AND FUTURE PLANS
Our business strategies and future plans for the growth and expansion of our business are as follows:
Capitalising on our established track record to secure more projects and projects of a largerscale, particularly in the healthcare, biomedical, and research and academia sectors
We are an established specialist engineering services provider in the field of controlled environments,having successfully completed projects such as Class 1 cleanrooms, BSL3 laboratories, operatingtheatres and a sniff sensory laboratory, all of which require substantial technical expertise. We intend tocapitalise on our established track record to secure more projects and projects of a larger scale,particularly in the healthcare, biomedical, and research and academia sectors. We believe that theSingapore government’s initiatives and the development plans of private institutions in the aforesaidsectors, as highlighted in the “Prospects, Business Strategies and Future Plans – Prospects” section ofthis Offer Document, will create business opportunities for our Group. We intend to use S$3.5 million ofthe net proceeds from the Invitation as working capital to allow our Group to undertake more projects andprojects of a larger scale.
Vertically integrating our services
We currently outsource the installation works for our projects as well as the fabrication of laboratoryfurniture. To vertically integrate our services, we intend to establish an in-house installation team toundertake some installation works. We may also invest in a fabrication workshop to fabricate laboratoryfurniture. We believe that when installation and fabrication works are carried out in-house, we will be ableto better manage our costs and the quality of our workmanship. We intend to use our internal resourcesand bank borrowings for this purpose.
Growing our Maintenance segment
Our Maintenance segment provides our Group with a recurring stream of income as there is a constantneed for maintenance and repair of facilities and equipment of controlled environments and theirsupporting infrastructure. It also allows us to further strengthen our relationships with our customers.During the Period Under Review, more than 80.0% of the revenue from the Maintenance segment wasderived from facilities which were built by us. We intend to grow our Maintenance segment business andsecure more maintenance contracts for the controlled environments and supporting infrastructure thatwere not built by us. We intend to use our internal resources for this purpose.
Expansion through acquisitions, joint ventures and/or strategic alliances and venturing into newgeographical markets
In addition to growing organically, we may consider expanding our business through acquisitions, jointventures or strategic alliances with parties who create synergy with our existing business. Through suchacquisitions, joint ventures and strategic alliances, we are looking to strengthen our market position,expand our network of customers as well as complement our current and future business, in order tobetter manage the quality of our services and increase our profitability in the longer run. We also believethat penetration into new geographical markets will be beneficial for our long-term growth as we expandour business beyond our current presence in Singapore. In particular, we intend to provide our MEPengineering solutions in countries that are still developing their healthcare and cleanroom infrastructuresuch as Indonesia, Malaysia, Myanmar and Vietnam. We believe that these markets are poised for growthin the foreseeable future. We intend to use S$1.0 million of the net proceeds from the Invitation for thispurpose.
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Our Directors believe that we have obtained all requisite approvals, and are in compliance with all lawsand regulations that would materially affect our business operations.
Save as disclosed below, as at the Latest Practicable Date, our business operations were not subject toany special legislations or regulatory controls in Singapore where we operate, other than those generallyapplicable to companies and businesses incorporated and/or operating in Singapore. We have thus farnot experienced any adverse effect on our business in complying with these regulations.
Licensing of Builders
The construction industry in Singapore is regulated by the BCA, whose primary role is to develop andregulate Singapore’s building and construction industry. The Building Control Act (Chapter 29) and theBuilding Control (Licensing of Builders) Regulations 2008 set out the requirements for the licensing ofbuilders. Builders who undertake all building works where plans are required to be approved by the BCAand those who undertake works in specialist areas which have a high impact on public safety and requirespecific expertise, skill or resources for their proper execution have to be licensed by the BCA. The aim oflicensing of builders is to raise professionalism among builders by requiring them to meet minimumstandards of management, safety record and financial solvency and to ensure that building works arecarried out only by builders with experienced key personnel to manage the business and properlyqualified technical personnel to supervise the execution of the works.
Builders may be licensed under two registers, each of which will be renewable on a three-yearly basis.The two registers are the General Builder Register and the Specialist Builder Register. Under the GeneralBuilder Register, there are two categories. General Builder Class 1 allows the builder to undertakegeneral building works of unlimited value and General Builder Class 2 allows the builder to undertakegeneral building works of contract value S$6 million or less.
Acromec Engineers is licensed under General Builder Class 1 until 16 June 2018.
Main contractors licensed under General Builder Class 1 will need to comply with requirements of theConstruction Registration of Tradesmen Scheme (“CoreTrade”) on construction personnel. CoreTrade is aregistration scheme, administered by the BCA, for skilled and experienced construction personnel in thevarious key construction trades. The objective of CoreTrade is to build up a core group of local andexperienced foreign workers in key construction trades to anchor and lead the workforce. All GeneralBuilder Class 1 contractors carrying out building works with project contract values of S$20 million andabove will be required to deploy a minimum number of CoreTrade personnel in such projects. The maincontractor is required to submit the manpower deployment plan within 30 days from the date of the grantof permit to carry out structural works for the project. The manpower deployment plan will set out thenumber and proportion of registered construction personnel to be deployed for the project, the trades theyare deployed in and the schedule of their deployment. The submission of the manpower deployment planis mandatory as a condition of the General Builder Class 1 licence and making false declarations couldresult in penalties being imposed on the contractor. It is the responsibility of the General Builder Class 1contractor to ensure that the deployment requirements are met.
Contractors Registry of the BCA
The Contractors Registry is administered by the BCA and was established to register contractors who areable to provide construction-related goods and services to the public sector which include governmentdepartments, statutory bodies and other public sector organisations.
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Acromec Engineers is registered with the BCA as follows:
Tender capacity forWorkhead Workhead description Grade each project
CW01 General building C1 S$4.2 million
CR06 Interior decoration and finishing works L4 S$7.0 million
ME01 Air-conditioning, refrigeration and ventilation works L6 Unlimited
ME05 Electrical engineering L4 S$7.0 million
ME06 Fire prevention and protection systems L2 S$1.4 million
ME15 Integrated building services L6 Unlimited
The grading given by BCA is subject to renewal every three years. In granting renewal, BCA will considerfactors such as our paid-up capital, net worth, and track record. Our current gradings are due for renewalon 1 November 2017.
We may lose or may not be able to renew our registration if we are not able to meet the conditions formaintaining or renewing such registration, or if we have not actively tendered for contracts. If we lose ourregistration, we will not be able to tender directly for public sector projects that require the relevant BCAgradings.
Government Supplier Registration
Business entities wishing to tender for the supply of goods or services to the public sector may berequired to have a valid Government Supplier registration (commonly known as EPPU registration) asone of the evaluation criteria for the tender. The Government Supplier registration process serves as aform of assessing a supplier’s financial capacity and other capabilities to undertake governmentcontracts.
Applicants for registration should ensure that the products/services which they are supplying fall withinthe Supply Head under which they wish to register. Registration under each Supply Head may be for acertain financial grade. The financial grade that an applicant may be eligible to register for is dependenton the applicant’s net tangible asset and turnover/sales/revenue. A supplier’s registered financial gradewill determine the tendering capacity of the supplier, ranging from S$100,000 to unlimited value. Theregistration is valid for one and a half years or three years, depending on the financial statementssubmitted.
Acromec Engineers is registered as a Government Supplier for the supply of (i) audio visual,photographic and optical products, (ii) furniture, racking, upholstery and painting, (iii) laboratoryequipment and accessories, (iv) laboratory testing and survey equipment, (v) service (consultant), and(vi) surgical consumables and instruments, under financial grade S9 which allows it to tender for contractsof up to S$30.0 million. The current registration expires on 17 September 2018.
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Workplace Safety and Health Act (Chapter 354A) (“WSHA”)
Under the WSHA, every employer has the duty to take, so far as is reasonably practicable, suchmeasures as are necessary to ensure the safety and health of his employees at work. These measuresinclude providing and maintaining for the employees a work environment which is safe, without risk tohealth, and adequate as regards facilities and arrangements for their welfare at work, ensuring thatadequate safety measures are taken in respect of any machinery, equipment, plant, article or processused by the employees, ensuring that the employees are not exposed to hazards arising out of thearrangement, disposal, manipulation, organisation, processing, storage, transport, working or use ofthings in their workplace or near their workplace and under the control of the employer, developing andimplementing procedures for dealing with emergencies that may arise while those persons are at workand ensuring that the person at work has adequate instruction, information, training and supervision as isnecessary for that person to perform his work. More specific duties imposed by the MOM on employersare laid out in the Workplace Safety and Health (General Provisions) Regulations 2006 (“WSHR”). Someof these duties include taking effective measures to protect persons at work from the harmful effects ofany exposure to any bio-hazardous material which may constitute a risk to their health.
Pursuant to the WSHR, machinery or equipment such as bar-benders and welding equipment, arerequired to be tested and examined to ensure that the machinery or equipment used is safe, and withoutrisk to health, when properly used.
In addition to the above, under the WSHA, inspectors appointed by the Commissioner for WorkplaceSafety and Health (“CWSH”) may, inter alia, enter, inspect and examine any workplace and anymachinery, equipment, plant, installation or article at any workplace, to make such examination andinquiry as may be necessary to ascertain whether the provisions of the WSHA are complied with, to takesamples of any material or substance found in a workplace or being discharged from any workplace forthe purpose of analysis or test, to assess the levels of noise, illumination, heat or harmful or hazardoussubstances in any workplace and the exposure levels of persons at work therein and to take into custodyany article in the workplace which is required for the purpose of an investigation or inquiry under theWSHA.
Under the WSHA, the CWSH may serve a remedial order or a stop-work order in respect of a workplaceif he is satisfied that (i) the workplace is in such condition, or is so located, or any part of the machinery,equipment, plant or article in the workplace is so used, that any process or work carried on in theworkplace cannot be carried on with due regard to the safety, health and welfare of persons at work; (ii)any person has contravened any duty imposed by the WSHA; or (iii) any person has done any act, or hasrefrained from doing any act which, in the opinion of the CWSH, poses or is likely to pose a risk to thesafety, health and welfare of persons at work. The remedial order shall direct the person served with theorder to take such measures, to the satisfaction of the Commissioner, to, inter alia, remedy any danger soas to enable the work or process in the workplace to be carried on with due regard to the safety, healthand welfare of the persons at work, whilst the stop-work order shall direct the person served with theorder to immediately cease to carry on any work indefinitely or until such measures as are required bythe CWSH have been taken to remedy any danger so as to enable the work in the workplace to becarried on with due regard to the safety, health and welfare of the persons at work.
During the Period Under Review and up to the Latest Practicable Date, there had been no remedialorders or stop-work orders issued to our Group under the WSHA.
Building and Construction Industry Security of Payment Act (Chapter 30B) (“BCISPA”)
The BCISPA, which is under the purview of the BCA, facilitates payments for construction work done orfor related goods or services supplied in the building and construction industry. It confers a statutoryentitlement to progress payments on any person who has carried out any construction work or suppliedany goods or services under a contract. The BCISPA also provides for, inter alia, the amount of progresspayments to which such person is entitled under a contract, the valuation of the construction work carriedout or goods or services supplied, and the date on which a progress payment becomes due and payable(even where the contract does not provide for such date). Under the BCISPA, a “pay when paid” provisionin a contract is unenforceable and has no effect in relation to any payment for construction work carriedout or for goods or services supplied under the contract.
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In addition, the BCISPA provides for the following rights:
(a) the right of a claimant (being the person who is or claims to be entitled to a progress payment)who, in relation to a construction contract, fails to receive payment by the due date of an amountthat is proposed to be paid by the respondent (being the person who is or may be liable to make aprogress payment under a contract to the claimant) and accepted by the claimant, to make anadjudication application in relation to the payment claim. The BCISPA has established anadjudication process by which a person may claim payments due under a contract and enforcepayment of the adjudicated amount;
(b) the right of a claimant to have a lien on goods supplied by the claimant to the respondent that areunfixed and which have not been paid for, to suspend the carrying out of construction work or thesupply of goods or services if the adjudicated amount has not been paid, and to enforce anadjudication determination, with leave of the court, in the same manner as a judgment or an orderof court to the same effect; and
(c) where the respondent fails to pay the whole or any part of the adjudicated amount to a claimant,the right of a principal of the respondent (being the person who is liable to make payment to therespondent for or in relation to the construction work or goods or services that is the subject of thecontract between the respondent and the claimant) to make direct payment of the amountoutstanding to the claimant, together with the right for such principal to recover such payment as adebt due from the respondent.
Employment of Foreign Workers
The employment of foreign workers in Singapore is governed by the Employment of Foreign ManpowerAct (Chapter 91A) (the “EFMA”), and regulated by the Ministry of Manpower (the “MOM”). Under Section5(1) of the EFMA, no person shall employ a foreign worker unless the foreign worker has obtained a validwork pass from the MOM. An employer of foreign workers is also subject to, amongst others, theEmployment Act (Chapter 91) (the “Employment Act”) and the Immigration Act (Chapter 133) (the“Immigration Act”).
The availability of foreign workers to the construction industry is regulated by the MOM through thefollowing requirements:
(a) Approved source countries
The approved source countries for construction workers are Malaysia, the People’s Republic ofChina (the “PRC”), Non-Traditional Sources (“NTS”) and North Asian Sources (“NAS”). NTScountries comprise India, Sri Lanka, Thailand, Bangladesh, Myanmar and the Philippines. NAScountries comprise Hong Kong Special Administrative Region, Macau Special AdministrativeRegion, South Korea and Taiwan.
(b) Dependency ceiling based on the ratio of local to foreign workers
The dependency ratio ceiling or quota for the construction industry is currently set at a ratio of onefull-time local worker for every seven foreign workers. This means that for every full-time SingaporeCitizen or Singapore Permanent Resident employed by our Company, our Company can employ upto seven foreign workers holding work permits. If the quota is exceeded, new applications for andrenewals of work passes may be rejected.
(c) Security bonds and foreign worker levies
All employers are required to deposit, for each non-Malaysian work permit holder, a S$5,000security bond with the MOM. The security bond must be furnished prior to the foreign worker’sarrival in Singapore, failing which entry into Singapore will not be allowed. The security bond will bereturned only if (i) the work permit has been cancelled, (ii) the foreign worker has returned to hishome country, and (iii) there were no breaches of the conditions of the work permit, conditions ofthe security bond and any relevant law.
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The employment of foreign workers is also subject to the payment of levies. For the constructionsector, employers pay the levy according to the qualifications of the workers and the countrieswhere they are from. The monthly levy for work permit holders ranges from S$300 to S$950.
(d) Man-year entitlement
The man-year entitlement (“MYE”) allocation system applies to construction workers from NTScountries and the PRC. One man-year is equivalent to one year of employment under a workpermit. The MYE reflects the total number of such work permit holders a main contractor is entitledto employ for a project based on the value of the project or contract awarded. Only maincontractors may apply for MYE and they may allocate their MYE to other contractors involved in thesame project. All sub-contractors must obtain their MYE allocation from the main contractor.
During the Period Under Review and up to the Latest Practicable Date, our Group has been incompliance with the Employment Act, the Employment of Foreign Manpower (Work Passes) Regulations(pursuant to the EMFA), the EMFA and the Immigration Act.
Work Injury Compensation
Work injury compensation is governed by the Work Injury Compensation Act (Chapter 354) (the “WICA”),and is regulated by the MOM. The WICA applies to employees in respect of injuries suffered by themarising out of and in the course of their employment and sets out, amongst others, the amount ofcompensation they are entitled to and the methods of calculating such compensation. The WICA providesthat if in any employment, personal injury by accident arising out of and in the course of the employmentis caused to an employee, his employer shall be liable to pay compensation in accordance with theprovisions of the WICA. The amount of compensation shall be computed in accordance with the ThirdSchedule of the WICA, subject to a maximum and minimum limit.
Further, the WICA provides that where any person (referred to as the principal) in the course of or for thepurpose of his trade or business contracts with any other person (referred to as the employer) for theexecution by the employer of the whole or any part of any work, or for the supply of labour to carry outany work, undertaken by the principal, the principal shall be liable to pay to any employee employed inthe execution of the work any compensation which he would have been liable to pay if that employee hadbeen immediately employed by the principal.
Every employer is required to maintain work injury compensation insurance for all employees doingmanual work and all employees earning less than S$1,600 per month. Failure to do so is an offencecarrying a fine of up to S$10,000 and/or imprisonment of up to 12 months.
As at the Latest Practicable Date, we had maintained work injury compensation insurance in compliancewith the WICA.
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The following is a description of the exchange controls in Singapore where our Group operates.
Singapore
There are no Singapore governmental laws, decrees, regulations or other legislation that may affect thefollowing:
(a) the import or export of capital, including the availability of cash and cash equivalents for use by ourGroup; and
(b) the remittance of dividends, interest or other payments to non-resident holders of our Company’ssecurities.
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EXCHANGE CONTROLS
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DIRECTORS
Our Directors are entrusted with the responsibility for the overall management of our Group. Theparticulars of our Directors as at the date of this Offer Document are set out below:
Name Age Address Designation
Lim Say Chin 54 4 Kaki Bukit Avenue 1 Executive Chairman and#06-03 Managing DirectorSingapore 417939
Chew Chee Keong 48 4 Kaki Bukit Avenue 1 Executive Director#06-03Singapore 417939
Goi Chew Leng 45 4 Kaki Bukit Avenue 1 Executive Director#06-03Singapore 417939
Yee Kit Hong 66 4 Kaki Bukit Avenue 1 Lead Independent Director#06-03Singapore 417939
Pan Chuan-Chih George 46 4 Kaki Bukit Avenue 1 Independent Director#06-03Singapore 417939
Elaine Beh Pur-Lin 49 4 Kaki Bukit Avenue 1 Independent Director#06-03Singapore 417939
Information on the business and working experience, education and professional qualifications, and areasof responsibilities of our Directors is set out below:
Lim Say Chin was appointed to our Board on 22 December 2015 and is our Executive Chairman andManaging Director. Lim Say Chin co-founded our Group with our Executive Directors, Chew Chee Keongand Goi Chew Leng. He started his career as an engineering assistant in Singapore Aero-ComponentsOverhaul Pte Ltd in August 1983 before he became a technical officer in INDECO Engineers Pte Ltd inMay 1985, overseeing the maintenance team at the National University Hospital. He then joined NEXUSTechnology Pte Ltd in May 1987 as a design draftsmen and left as a project engineer in February 1988.Between March 1988 and April 1991, Lim Say Chin was a project engineer at SUPERSYMMETRYServices Pte Ltd and helped to set up and operate the company’s office in Thailand. In May 1991, LimSay Chin joined Kyodo-Allied Industrials Pte Ltd as a sales manager where he was responsible for thebusiness development of the company’s cleanroom business and related products. From September 1994to August 1996, Lim Say Chin was a project manager at Hopkinson Engineering Pte Ltd where he wasresponsible for submission of tenders, design and management of projects. Since December 1996, LimSay Chin has been the Managing Director of Acromec Engineers and has been responsible forformulating corporate strategies, leading our marketing and business development activities as well asensuring the smooth operation of our Group. Lim Say Chin graduated with a Technical Diploma inMechanical Engineering in August 1983 and an Advanced Diploma in Building Services Engineering inAugust 1991, both from Ngee Ann Polytechnic. He subsequently obtained a Bachelor of Engineeringdegree with Honours in Mechanical Engineering from University of Glasgow in July 1994.
Chew Chee Keong was appointed to our Board on 22 December 2015 and is our Executive Director.Together with Lim Say Chin, our Executive Chairman and Managing Director, and Goi Chew Leng, ourExecutive Director, Chew Chee Keong co-founded our Group. He is currently responsible for projectplanning and implementation and also oversees the engineering and quality assurance functions of ourGroup. He started his career with Meindhart (Singapore) Pte Ltd in October 1994 as a mechanicalengineer and was responsible for project planning, building services system design, project coordinationas well as testing and commissioning of building services for residential and commercial buildings. In July1996, Chew Chee Keong joined Acromec Engineers as a Director. Chew Chee Keong graduated with aDiploma in Mechanical Engineering from Singapore Polytechnic in May 1989 and a Bachelor ofEngineering degree with Honours in Mechanical Engineering from University of Glasgow in July 1994. Heis currently a non-executive director of Chew’s Group Limited.
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DIRECTORS, EXECUTIVE OFFICERS AND STAFF
Goi Chew Leng was appointed to our Board on 22 December 2015 and is our Executive Director.Together with Lim Say Chin, our Executive Chairman and Managing Director, and Chew Chee Keong, ourExecutive Director, Goi Chew Leng co-founded our Group. He is currently responsible for contractmanagement, procurement and human resource functions of our Group. He also oversees themaintenance business, and environmental health and safety functions of our Group. He started his careerwith Venus Enterprises Pte Ltd in August 1994 as a project engineer where he was responsible forproject management. He then joined Acromec Engineers in January 1997 as a Director. Goi Chew Lenggraduated with a Diploma in Mechanical Engineering from Ngee Ann Polytechnic in August 1990 and aBachelor of Engineering degree with Honours in Mechanical Engineering from University of Glasgow inJuly 1994.
Yee Kit Hong is our Lead Independent Director and was appointed to our Board on 16 March 2016. Priorto joining Ernst & Young in July 1982, he worked as a project accountant at Morrison Knudsen Low KengHuat and as an accountant at Brown & Roots, as well as an audit senior at Wilson Green & Gibbs. Hewas an assurance and tax manager at Ernst & Young prior to his departure in September 1989. SinceOctober 1989, Yee Kit Hong has been a partner at Kit Yee & Co, a firm providing audit, accountancy andtaxation advice and related services. He is a principal partner responsible for providing assurance,advisory, consultancy and taxation services to clients. Yee Kit Hong is a fellow of the Institute ofChartered Accountants in England and Wales and a fellow of the Institute of Singapore CharteredAccountants. He is also admitted as an accredited tax practitioner by the Singapore Institute of AccreditedTax Professionals and a full member of the Singapore Institute of Directors. Yee Kit Hong graduated witha Bachelor of Accountancy degree from University of Singapore in June 1971. He is currently anindependent director of CMC Infocomm Limited, Global Palm Resources Holdings Limited and NamCheong Limited.
Pan Chuan-Chih George is our Independent Director and was appointed to our Board on 16 March2016. He has 20 years of experience in the heating, ventilation and air-conditioning industry. Pan Chuan-Chih George started his career as a sales engineer at York International Corporation in November 1995and held various positions before he left the company as a business manager (for high tech industry) inApril 2001. He then joined The Trane Company as a regional marketing manager for aftermarket businessunit (Asia Pacific) in April 2001 before he went on to lead different business units in the companybetween May 2003 and July 2012 to serve the Southeast Asian and Korean markets in various capacitiesincluding sales, marketing and also as an executive director. Between July 2012 and March 2016, PanChuan-Chih George worked as the general manager of the S.E.A. Distribution business at Hong LeongAsia Ltd and had been in charge of the distribution of air-conditioning and home appliance products. PanChuan-Chih George graduated with a Bachelor of Engineering degree with Honours in MechanicalEngineering from The University of Sheffield in July 1995. He also obtained a Master of BusinessAdministration degree, concentration in Executive Management from the University of La Verne inJanuary 2001.
Elaine Beh Pur-Lin is our Independent Director and was appointed to our Board on 16 March 2016.Elaine Beh Pur-Lin is currently a partner of Virtus Law LLP in Singapore and her principal areas ofpractice are in capital markets and mergers and acquisitions. She started her career as a legal assistantin Lee & Lee in 1990. She then joined Colin Ng & Partners LLP as a legal assistant in July 1991 andsubsequently left as a partner in October 2013. In February 2014, Elaine Beh Pur-Lin joined Virtus LawLLP as a partner. Elaine Beh Pur-Lin is an ordinary member of the Singapore Institute of Directors. Shegraduated with a Bachelor of Laws (Honours) degree from the National University of Singapore in 1989.Elaine Beh Pur-Lin is an advocate and solicitor of the Supreme Court of Singapore and she is also amember of the Law Society of Singapore and the Singapore Law Academy.
None of our Directors has any family relationship with another Director or with any Executive Officer orSubstantial Shareholder of our Company.
There was no agreement or arrangement with our Substantial Shareholders, customers or suppliers orother person pursuant to which we have appointed any of them or any person nominated by any of themas our Director.
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Chew Chee Keong and Yee Kit Hong have prior experience as directors of public listed companies inSingapore. Lim Say Chin, Goi Chew Leng, Pan Chuan-Chih George and Elaine Beh Pur-Lin do not haveprior experience as directors of public listed companies in Singapore. Lim Say Chin, Goi Chew Leng andPan Chuan-Chih George have received relevant training to familiarise themselves with the roles andresponsibilities of a director of a company listed on the SGX-ST. Notwithstanding that Elaine Beh Pur-Lindoes not have prior experience as a director of a public listed company in Singapore, she regularlyadvises on compliance with the SGX-ST requirements and corporate governance issues as part of herpractice as a lawyer. Accordingly, we believe that Elaine Beh Pur-Lin has the relevant knowledge andexperience to act as a director of our Company.
Save as disclosed below and excluding the directorship held in our Company, none of our Directorscurrently holds or has held any directorships in any company in the past five years preceding the date ofthis Offer Document:
Name Present directorships Past directorships
Lim Say Chin Group Companies Group Companies
Acromec Engineers –
Other Companies Other Companies
Ingenieur Holdings Engenius Pte. Ltd. Universal Video & Trading (S) Pte Ltd(struck off)
Our day-to-day operations are entrusted to our Executive Directors who are assisted by a managementteam of experienced Executive Officers. The particulars of our Executive Officers are set out below:
Name Age Address Designation
Peh Ee Sang 41 4 Kaki Bukit Avenue 1 Operations Director#06-03Singapore 417939
Tan Buck Kiang Jerry 44 4 Kaki Bukit Avenue 1 Chief Financial Officer#06-03Singapore 417939
Ng Boon Lee 54 4 Kaki Bukit Avenue 1 Engineering Director#06-03Singapore 417939
David Ng Chew Kiat 61 4 Kaki Bukit Avenue 1 Project Director#06-03Singapore 417939
Information on the business and working experience, education and professional qualifications, and areasof responsibilities of our Executive Officers are set out below:
Peh Ee Sang is our Operations Director and is currently responsible for marketing and tendersubmission, provision of maintenance services and overseeing the environmental health and safetyfunction of our Group. Peh Ee Sang joined Acromec Engineers as a manager in March 2009 and waspromoted to General Manager in July 2011 and Operations Director in October 2015. Peh Ee Sang hasmore than 18 years of experience in business development and project management. Peh Ee Sangworked as a project supervisor in Circular Airconditioning (S) Private Limited between July 1997 andSeptember 1998 before he joined A.C.E Daikin (Singapore) Private Limited in October 1998 as asales/project executive and Mitsubishi Electric Asia (Singapore) Private Limited as a sales executive inMay 2000. He then joined Daikin Asia Servicing (Singapore) Private Limited in June 2001 as a seniorexecutive engineer to support sales of energy efficient air-conditioning systems. Prior to joining AcromecEngineers in March 2009, Peh Ee Sang was an assistant manager solution business in DaikinAirconditioning (Singapore) Private Limited and was in-charge of installation of energy efficient equipmentfor operating theatres and proposing maintenance programme to potential clients. Peh Ee Sanggraduated with a Diploma in Mechatronic Engineering from Ngee Ann Polytechnic in December 1994 anda Bachelor of Business (Management) degree from Royal Melbourne Institute of Technology in August2009.
Tan Buck Kiang Jerry is our Chief Financial Officer, overseeing the overall finance, treasury, tax andaccounting functions of our Group, including internal controls and corporate governance, and ensuringcompliance with regulations. He has more than 20 years of experience spanning audit, finance,accounting and compliance, having worked in companies listed in Hong Kong and Singapore. Tan BuckKiang Jerry started his career with PricewaterhouseCoopers in July 1995 before joining Tan Chong
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International Limited, a listed company in Hong Kong, in November 1999 as a finance manager to be in-charge of its consolidation and compliance matters. In January 2008, Tan Buck Kiang Jerry joined IMCCorp Pte Ltd as a finance manager before he joined Berg Propulsion International Pte Ltd in January2009 as a group finance manager to manage the operations of both local and various overseas financeteams of the company. Between March 2011 and August 2015, he worked at Rotary Engineering Limited,a listed company in Singapore, as a senior manager (group finance) to oversee all compliance andfinancial reporting matters. He was also involved in setting up group policies and authority guidelines atRotary Engineering Limited before he joined our Group in September 2015. Tan Buck Kiang Jerrygraduated with a Bachelor of Accountancy with Honours degree from Nanyang Technological Universityin June 1995 and is a member of the Institute of Singapore Chartered Accountants.
Ng Boon Lee is our Engineering Director who leads and manages our team of engineers and designersto provide engineering design and support, technical proposals drawings and render technical advice andassistance to our project teams to execute testing and commissioning duties for our projects. He alsooversees the quality assurance functions of our Group. Ng Boon Lee has over 26 years of industryexperience in the construction, operation, maintenance and management of cleanrooms and other facilityinfrastructure for manufacturing processes. Prior to joining Chartered Semiconductor Manufacturing Ltd inJune 1996 as a manager of facilities construction and operation, Ng Boon Lee worked as a projectengineer at Cofreth Technology Singapore Pte Ltd, and as a facilities operation engineer at TechSemiconductor Pte Ltd., as well as a facilities section head at Motorola Electronic Pte Ltd. BetweenMarch 2003 and February 2013, Ng Boon Lee managed and led the facilities department of variouscompanies, including System on Silicon Manufacturing Company Pte Ltd, Symrise Asia Pacific Pte Ltdand Sora Green Technology Pte Ltd. Prior to joining our Group in September 2015, Ng Boon Lee was thefacilities director and head of department of facilities, health, safety and environment (HSE) and securityof STATS ChipPAC Ltd., leading the team to ensure compliance with relevant HSE standards and headingall new facilities project construction and set-up from March 2013 to September 2014. He took one yearoff from full-time employment between September 2014 and September 2015, during which period heprovided his services as a construction management director on a contract basis for a project inChengdu, PRC, which lasted five months. Ng Boon Lee obtained a Technical Diploma in MechanicalEngineering from Ngee Ann Polytechnic in August 1984. He also graduated with a Bachelor ofEngineering (Mechanical) degree in June 1989 and a Master of Science (Safety, Health andEnvironmental Technology) degree in June 2009, both from National University of Singapore. Ng BoonLee obtained a Certificate in Occupational Safety and Health from Singapore Polytechnic in June 2004and was a Registered Safety Officer with MOM between 2004 and 2006. He also completed the FireSafety Manager Course organised by The Training Academy of the Singapore Civil Defence Force inMarch 2005.
David Ng Chew Kiat is our Project Director who manages and oversees implementation of ourengineering, procurement and construction projects. He is responsible for the administration andoperation of such projects including project finance, project manpower deployment and overallcoordination. David Ng Chew Kiat has more than 40 years of experience in the construction industrysince he started working as a project executive at Hart Engineering Pte Ltd in October 1974, after whichhe joined Perkasa Trading Sdn Bhd in May 1981 where he supervised and arranged site work to ensuretimely completion of the projects undertaken. He then worked at Shinryo Corporation Malaysia Branchbetween May 1986 and September 1992 where he focused on business development activities before hejoined Shinryo Corporation Singapore Pte Ltd in October 1992 as a senior business developmentmanager. He subsequently rose to the rank of an assistant general manager in April 2002 when he wasin-charge of overall project implementation and management. Between April 2007 and December 2014,he spearheaded the setting up of IAQ Engineering (Singapore) Pte Ltd in Singapore and was in-charge ofits management and operation. In January 2015, David Ng Chew Kiat joined Acromec Engineers as asenior project manager and was promoted to Project Director in October 2015. David Ng Chew Kiatobtained the Trade Certificate – Practical Trade Test in Sheetmetal, from Pasir Panjang VocationalInstitute in December 1971 and he graduated with a Bachelor of Science degree in MechanicalEngineering from Wiltshire University in June 2000.
None of our Executive Officers has any family relationship with another Executive Officer or with anyDirector or Substantial Shareholder of our Company.
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There was no agreement or arrangement with our Substantial Shareholders, customers or suppliers orother person pursuant to which we have appointed any of them or any person nominated by any of themas our Executive Officer.
Save as disclosed below, none of our Executive Officers currently holds or has held any directorships inany company in the past five years preceding the date of this Offer Document:
Name Present directorships Past directorships
Peh Ee Sang Group Companies Group Companies
– –
Other Companies Other Companies
– Aim Controls Pte. Ltd.
David Ng Chew Kiat Group Companies Group Companies
(1) IAQ Engineering (Singapore) Pte Ltd (“IAQ Engineering”) was previously engaged in a similar business as our Group. IAQEngineering has ceased operations, and its shareholder has taken steps to prepare for the company’s impending strikingoff. As at the Latest Practicable Date, IAQ Engineering’s striking off had not been filed with the Accounting and CorporateRegulatory Authority and David Ng Chew Kiat remained as a director of IAQ Engineering at the request of its shareholderas he is the only Singapore resident director. David Ng Chew Kiat will cease to be a director of IAQ Engineering upon thecompany’s striking off. He has undertaken to provide updates to our Board on the completion of IAQ Engineering’s strikingoff or any significant developments relating thereto, and we will announce the completion of the striking off upon notification.David Ng Chew Kiat has also confirmed that he is currently not, and has never been a shareholder of IAQ Engineering.Under his employment contract, David Ng Chew Kiat has provided a non-competition undertaking to our Group.
STAFF
As at the Latest Practicable Date, we had a staff strength of 120 full-time employees. We do not employ asignificant number of temporary employees.
All our full-time employees are located in Singapore. The functional distributions of our full-timeemployees as at 30 September 2013, 30 September 2014 and 30 September 2015 were as follows:
As at 30 SeptemberFunction 2013 2014 2015
Management(1) 4 4 7Finance, human resource and administration 6 5 6Operations 75 73 109
Total 85 82 122
Note:
(1) Executive Directors and Executive Officers are classified under management.
The number of employees had increased from FY2014 to FY2015 in anticipation of the growth of ourbusiness operations.
Our employees are not unionised. During the Period Under Review and up to the Latest Practicable Date,our relationship with our employees has been good and there has not been any incidence of workstoppages or labour disputes that affected our operations.
Save for CPF contributions, we have not set aside or accrued any amounts to provide for pension,retirement or similar benefits for any of our employees.
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REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES
Directors and Executive Officers
The compensation paid to our Directors and Executive Officers (which includes director’s fees,allowances, bonuses and CPF contributions) for services rendered to us on an aggregate basis and inremuneration bands of S$250,000(1) during FY2014 and FY2015 (being the two most recent completedfinancial years) and as estimated for FY2016, excluding bonuses under any profit-sharing plan or anyother profit-linked agreement(s), is as follows:
FY2016Names FY2014 FY2015 (estimated)(2)
Directors
Lim Say Chin Band A Band A Band B
Chew Chee Keong Band A Band A Band B
Goi Chew Leng Band A Band A Band B
Yee Kit Hong – – Band A
Pan Chuan-Chih George – – Band A
Elaine Beh Pur-Lin – – Band A
Executive Officers
Peh Ee Sang Band A Band A Band A
Tan Buck Kiang Jerry – Band A Band A
Ng Boon Lee – Band A Band A
David Ng Chew Kiat – Band A Band A
Notes:
(1) Band A: Compensation from S$0 to S$250,000 per annum.Band B: Compensation from S$250,001 to S$500,000 per annum.
(2) The estimated amount of remuneration payable in FY2016 excludes any bonus or profit sharing (if any).
Related Employees
As at the date of this Offer Document, none of our full-time employees are related to our Directors andSubstantial Shareholders.
Any future employment of employees who are related to our Directors or Substantial Shareholders andthe proposed terms of their employment will be subject to the review and approval of our RemunerationCommittee. In addition, the remuneration of these related employees will be reviewed annually by ourRemuneration Committee to ensure that their remuneration packages are in line with our staffremuneration guidelines and commensurate with their respective job scopes and level of responsibilities.Any bonuses, pay increases and/or promotions for these related employees will also be subject to thereview and approval of our Remuneration Committee. In the event that a member of our RemunerationCommittee is related to the employee under review, he will abstain from the review.
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SERVICE AGREEMENTS
Our Company has entered into a Service Agreement with each of Lim Say Chin (our Executive Chairmanand Managing Director), Chew Chee Keong (our Executive Director) and Goi Chew Leng (our ExecutiveDirector) (the “Appointees”). Each of the Service Agreements is valid for an initial period of three yearswith effect from the date of listing of our Company on Catalist. Upon the expiry of the initial period ofthree years, the employment of each Appointee shall be automatically renewed on a year-to-year basison such terms and conditions as the parties may agree in writing. During the initial period of three years,either party may terminate the Service Agreement at any time by giving to the other party not less thansix months’ notice in writing, or in lieu of notice, payment of an amount equivalent to six months’ salarybased on the Appointee’s last drawn monthly salary. Our Group may also terminate the employment of anAppointee at any time without notice or payment in lieu of notice under, inter alia, the followingcircumstances:
(a) if the Appointee is guilty of any gross default or grave misconduct in connection with or affectingthe business of our Group;
(b) in the event of any serious or repeated breach or non-observance by the Appointee of any of thestipulations contained in the Service Agreement;
(c) if the Appointee becomes bankrupt or makes any composition or enters into any deed ofarrangement with his creditors;
(d) if the Appointee shall become of unsound mind; or
(e) if the Appointee commits any act of criminal breach of trust or dishonesty.
Pursuant to the terms of their respective Service Agreements, each of Lim Say Chin, Chew Chee Keongand Goi Chew Leng is entitled to a monthly salary of S$25,000, a monthly motor vehicle allowance ofS$3,000 and a monthly telecommunications allowance of S$200. All reasonable travelling, hotel and otherexpenses incurred by the Appointees in connection with our business will also be borne by us.
Each Appointee is also entitled to receive an annual incentive bonus based on the audited proft beforetax (“PBT”) of our Group, provided that the Appointee is under the employment of our Group on the lastday of the relevant financial year. For this purpose, “PBT” shall refer to the audited consolidated profitbefore income tax, excluding non-controlling interest and before including such incentive bonus.
The amount of incentive bonus for each Appointee will be determined as follows:
PBT Amount of Incentive Bonus
Where the PBT does not exceed S$2.0 million 2.0% of the PBT
Where the PBT exceeds S$2.0 million but does not 2.5% of the PBT in excess of S$2.0 million plus S$40,000 exceed S$4.0 million
Where the PBT exceeds S$4.0 million but does not 3.0% of the PBT in excess of S$4.0 million plus S$90,000exceed S$6.0 million
Where the PBT exceeds S$6.0 million but does not 3.5% of the PBT in excess of S$6.0 million plus S$150,000exceed S$8.0 million
Where the PBT exceeds S$8.0 million but does not 4.0% of the PBT in excess of S$8.0 million plus S$220,000exceed S$10.0 million
Where the PBT exceeds S$10.0 million 5.0% of the PBT in excess of S$10.0 million plus S$300,000
Under the Service Agreements, the salary of each Appointee is subject to annual review by theRemuneration Committee after the financial statements of our Group for the immediate precedingfinancial year have been audited. The Appointee shall abstain from voting in respect of any resolution ordecision to be made by our Board in relation to the terms and renewal of his Service Agreement.
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Under the Service Agreements, each of the Appointees shall devote his whole time and attention to thebusiness of our Group and shall not without the prior written consent of the Board engage in any otherbusiness which is wholly or partly in competition with any business carried on by our Group or beinterested in any other business of a similar nature to or competitive with that carried on by our Group orwhich is a supplier or customer of our Group, provided that he is not prohibited from being interested inthe securities of any company which are quoted on any recognised stock exchange so long as suchinterest does not extend to 5% or more of the total amount of securities of the same class in eachcorporation. In addition, each of the Appointees has covenanted not to do business with any person whohas done business with us or entice away any of our employees in connection with the carrying on of anybusiness similar to or in competition with our business for 12 months after ceasing to be employed underhis Service Agreement. Each Appointee has also covenanted not to carry on any activity or business incompetition with us within Singapore or any country in which we have operations or carried on business,for 12 months after ceasing to be employed under his Service Agreement.
Had the Service Agreements been in existence since the beginning of FY2015, the aggregateremuneration paid to the Appointees in FY2015 would have been approximately S$1.29 million instead ofS$0.61 million and our profit before tax and profit net of tax for FY2015 would have been approximatelyS$3.28 million (instead of S$3.96 million) and S$2.80 million (instead of S$3.38 million), respectively.
Save as disclosed above, there are no existing or proposed service agreements between our Company,our subsidiary and any of our Directors. There are no existing or proposed service agreements entered orto be entered into by our Directors with our Company or our subsidiary which provide for benefits upontermination of employment.
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CORPORATE GOVERNANCE
Our Directors recognise the importance of corporate governance and maintaining high standards ofaccountability to our Shareholders. Accordingly, we intend to follow the guidelines as set out in the Codeof Corporate Governance 2012 (the “Code”). Our Board of Directors has formed three committeescomprising: (i) the Audit Committee, (ii) the Remuneration Committee, and (iii) the NominatingCommittee.
In addition, as our Executive Chairman is also our Managing Director, we have appointed Yee Kit Hong asour Lead Independent Director. As Lead Independent Director, he will be the contact person forShareholders in situations where there are concerns or issues which communication with our ExecutiveChairman and Managing Director and/or Chief Financial Officer has failed to resolve, or where suchcommunication is inappropriate.
Our Independent Directors do not have any existing business or professional relationships of a materialnature with our Group, other Directors or our Substantial Shareholder. None of our Independent Directorsare related to our Executive Directors or our Substantial Shareholder.
Our Lead Independent Director, Yee Kit Hong, is a partner of Kit Yee & Co. and his immediate familymembers are shareholders of Chartwell Management Services Pte Ltd (“Chartwell”). Kit Yee & Co. andChartwell have received payment from our Group during the Relevant Period for services rendered toAcromec Engineers (please refer to the “Interested Person Transactions – Past Interested PersonTransactions” section of this Offer Document for further details). Our Nominating Committee (other thanYee Kit Hong) and our Directors (other than Yee Kit Hong) are of the view that Yee Kit Hong isindependent notwithstanding the aforesaid past relationships with our Group, having considered thefollowing:
(a) the aforesaid past relationships with our Group would not interfere with Yee Kit Hong’s exercise ofindependent business judgement with a view to the best interests of our Group;
(b) the aggregate fees paid to Kit Yee & Co. and Chartwell by our Group were less than S$15,000 ineach of FY2013, FY2014 and FY2015 and were thus insignificant;
(c) Kit Yee & Co. has ceased to be the auditors of Acromec Engineers for FY2015 (being theimmediate past financial year) and the financial statements of our Group for the Period UnderReview were audited by Deloitte & Touche LLP for the purposes of inclusion in this OfferDocument; and
(d) our Group does not intend to engage the services of Kit Yee & Co. or Chartwell in the future.
Audit Committee
Our Audit Committee comprises Yee Kit Hong (Lead Independent Director), Pan Chuan-Chih George(Independent Director) and Elaine Beh Pur-Lin (Independent Director). The Chairman of our AuditCommittee is Yee Kit Hong.
Our Audit Committee will assist our Board of Directors in discharging their responsibilities to safeguardour assets, maintain adequate accounting records and develop and maintain effective systems of internalcontrol, with the overall objective of ensuring that our management creates and maintains an effectivecontrol environment in our Group.
Our Audit Committee will provide a channel of communication between our Board of Directors, ourmanagement and our auditors on matters relating to audit.
Our Audit Committee shall meet periodically to perform the following functions:
(a) review the audit plans and scope of work of our external auditors and internal auditors, includingthe results of our external and internal auditors’ review and evaluation of our system of internalcontrols, their management letters on the internal controls and our management’s response, andmonitor our implementation of the internal control recommendations made by our external andinternal auditors;
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(b) review and report to our Board of Directors at least annually the adequacy and effectiveness of ourGroup’s internal controls, including financial, operational, compliance and information technologycontrols, prior to the incorporation of such results in our annual report;
(c) review the interim financial results and annual consolidated financial statements and our externalauditors’ report on the annual consolidated financial statements, and discuss any significantadjustments, major risk areas, changes in accounting policies and practices, significant financialreporting issues and judgements, compliance with Singapore financial reporting standards as wellas compliance with the Catalist Rules and other statutory or regulatory requirements, concerns andissues arising from their audits including any matters which the auditors may wish to discuss in theabsence of management to ensure the integrity of the financial statements of our Group and anyannouncements relating to our financial performance, where necessary, before submission to ourBoard of Directors for approval;
(d) review and discuss with our external and internal auditors, any suspected fraud, irregularity orinfringement of any relevant laws, rules or regulations, which has or is likely to have a materialimpact on our Group’s operating results or financial position and our management’s response;
(e) review and ensure the co-ordination among our internal auditors, our external auditors and ourmanagement, including assistance given by our management to the auditors;
(f) consider the independence and objectivity of the external auditors, taking into account the non-audit services provided by the external auditors, if any;
(g) review and ratify any interested person transactions falling within the scope of Chapter 9 of theCatalist Rules, and approve interested person transactions where the value thereof amount to 3%or more of the latest audited NTA of our Group (either individually or as part of a series or areaggregated with other transactions involving the same interested person during the same financialyear), or any agreement or arrangement with an interested person that is not in the ordinary courseof business of our Group, prior to our Group’s entry into the transaction, agreement orarrangement;
(h) make recommendations to our Board of Directors on the proposals to our Shareholders with regardto the appointment, re-appointment and removal of external auditors, and approve theremuneration and terms of engagement of the external auditors;
(i) review and approve our Group’s foreign exchange hedging policies (if any), and conduct periodicreviews of foreign exchange transactions and hedging undertaken by our Group;
(j) review our Group’s compliance with the relevant statutes or the Catalist Rules, including suchamendments made thereto from time to time;
(k) review any potential conflicts of interests and set out a framework to resolve or mitigate suchpotential conflicts of interests;
(l) review the policy and procedures by which employees of our Group may, in confidence, report tothe Chairman of the Audit Committee, possible improprieties in matters of financial reporting orother matters and ensure that there are arrangements in place for independent investigation andappropriate follow-up actions in relation thereto;
(m) undertake such other reviews and projects as may be requested by our Board of Directors, andreport to our Board its findings from time to time on matters arising and requiring the attention ofour Audit Committee; and
(n) undertake generally such other functions and duties as may be required by law or the CatalistRules, and by such amendments made thereto from time to time.
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Apart from the duties listed above, the Audit Committee shall commission and review the findings ofinternal investigations into matters where there is any suspected fraud or irregularity, or failure of internalcontrols or infringement of any Singapore law, rule or regulation which has or is likely to have a materialimpact on our Group’s operating results and/or financial position. Each member of the Audit Committeeshall abstain from voting on any resolutions in respect of matters in which he is interested.
Our Audit Committee shall meet, at a minimum, twice a year. Prior to the Invitation, our Company hadengaged internal auditors to perform the review and test of controls of our Group’s processes. Our AuditCommittee shall also commission an annual internal control audit until such time as our Audit Committeeis satisfied that our Group’s internal controls are robust and effective enough to mitigate our Group’sinternal control weaknesses (if any). Prior to the decommissioning of such annual audit, our Board isrequired to report to the SGX-ST and the Sponsor on how the key internal control weaknesses have beenrectified, and the basis for the decision to decommission the annual internal control audit. Thereafter,such audits may be initiated by our Audit Committee as and when it deems fit to satisfy itself that ourGroup’s internal controls remain robust and effective. Upon completion of the internal control audit,appropriate disclosure will be made via SGXNET of any material, price-sensitive internal controlweaknesses and any follow-up actions to be taken by our Board.
Our Board of Directors noted that no material control weakness has been raised by the internal auditorsin the course of its internal audit. Our Board of Directors also noted that no material internal controlweakness has been raised by our Auditors and Reporting Accountants in the course of their audit of ourGroup’s financial statements for the most recent financial year ended 30 September 2015.
Based on the internal controls established and maintained by our Group, work performed by the internaland external auditors, and reviews performed by management, our Board of Directors, after making allreasonable enquiries and to the best of their knowledge and belief, with the concurrence of our AuditCommittee, is of the opinion that the internal controls, including financial, operational, compliance andinformation technology controls, and risk management systems, of our Group were adequate andeffective as at the Latest Practicable Date.
Chief Financial Officer
Our Audit Committee, after having:
(a) conducted an interview with Tan Buck Kiang Jerry;
(b) considered the qualifications and past working experience of Tan Buck Kiang Jerry (as described inthe “Directors, Executive Officers and Staff – Executive Officers” section of this Offer Document);
(c) observed Tan Buck Kiang Jerry’s abilities, familiarity, diligence and competency in relation to thefinancial matters and information of our Group; and
(d) noted the absence of negative feedback on Tan Buck Kiang Jerry from our Group’s Auditors andReporting Accountants,
is of the view that Tan Buck Kiang Jerry is suitable for the position of Chief Financial Officer of our Groupand he will be able to discharge his duties satisfactorily.
Our Audit Committee confirms that, after making all reasonable enquiries, and to the best of theirknowledge and belief, nothing has come to their attention to cause them to believe that Tan Buck KiangJerry does not have the competence, character and integrity expected of a chief financial officer of alisted issuer.
Remuneration Committee
Our Remuneration Committee comprises Pan Chuan-Chih George (Independent Director), Yee Kit Hong(Lead Independent Director) and Elaine Beh Pur-Lin (Independent Director). The Chairman of theRemuneration Committee is Pan Chuan-Chih George.
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Our Remuneration Committee will review and recommend to our Board of Directors a framework ofremuneration for our Directors and Executive Officers and determine specific remuneration packages foreach Executive Director and Executive Officer. The recommendations of our Remuneration Committeeshould be submitted for endorsement by our Board of Directors. All aspects of remuneration, including butnot limited to Directors’ fees, salaries, allowances, bonuses, Awards to be granted under the AcromecPSS and benefits-in-kind shall be covered by our Remuneration Committee. Each member of theRemuneration Committee shall abstain from voting on any resolution in respect of his remuneration orthat of any employees who are related to him. The remuneration, bonuses, pay increase and/orpromotions of employees who are related to our Directors or Substantial Shareholders will also bereviewed annually by our Remuneration Committee to ensure that their remuneration packages are in linewith our staff remuneration guidelines and commensurate with their respective job scopes and level ofresponsibilities.
Our Remuneration Committee will also review our obligations arising in the event of termination of servicecontracts entered into between our Group and our Executive Directors or Executive Officers, as the casemay be, to ensure that the service contracts contain fair and reasonable termination clauses which arenot overly onerous to our Group. Each member of our Remuneration Committee shall abstain from votingon any resolutions in respect of his own remuneration.
If necessary, our Remuneration Committee shall seek expert advice within and/or outside our Companyon remuneration matters. Our Remuneration Committee shall ensure that existing relationships, if any,between our Company and its appointed remuneration consultants will not affect the independence andobjectivity of the remuneration consultants. Our Remuneration Committee will also perform an annualreview of the remuneration packages in order to maintain their attractiveness to retain and motivate ourDirectors and Executive Officers and to align the interests of our Directors and Executive Officers with thelong-term interests of our Company.
Nominating Committee
Our Nominating Committee comprises Elaine Beh Pur-Lin (Independent Director), Yee Kit Hong (LeadIndependent Director), Pan Chuan-Chih George (Independent Director) and Goi Chew Leng (ExecutiveDirector). The Chairman of the Nominating Committee is Elaine Beh Pur-Lin.
Our Nominating Committee shall meet periodically to perform the following functions:
(a) develop and maintain a formal and transparent process for director appointments and re-nomination and make recommendations to our Board on director appointments including theappointment of alternate directors, if any, and recommend to our Board re-nominations of existingDirectors for re-election in accordance with our Constitution, taking into account the Director’scompetencies, commitment, contribution and performance;
(b) review Board succession plans for our Directors, in particular, for our Executive Chairman andManaging Director;
(c) review and approve any new employment of related persons and the proposed terms of theiremployment;
(d) determine on an annual basis whether or not a Director is independent having regard to the Codeand any other salient factors;
(e) in respect of a Director who has multiple board representations on various companies, to reviewand decide whether or not such Director is able to and has been adequately carrying out his dutiesas a Director, having regard to the competing time commitments that are faced by the Directorwhen serving on multiple boards and discharging his duties towards other principal commitments;
(f) review training and professional development programmes for our Board; and
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(g) assess whether or not each Director of our Company is able to and has been adequately carryingout his duties as a Director.
Additionally, our Nominating Committee will decide how our Board’s performance is to be evaluated and,subject to the approval of our Board, propose objective performance criteria to address how our Boardhas enhanced long-term shareholders’ value. Our Board will also implement a process to be carried outby our Nominating Committee for assessing the effectiveness of our Board as a whole and for assessingthe contribution by each individual Director to the effectiveness of our Board. Our Executive Chairman willact on the results of the performance evaluation and, in consultation with the Nominating Committee, willpropose, where appropriate, new members to be appointed to our Board or seek the resignation of anyDirector.
Each member of our Nominating Committee shall abstain from voting on resolutions in respect of theassessment of his performance or re-nomination as a Director of our Company. In the event that anymember of our Nominating Committee has an interest in a matter being deliberated upon by ourNominating Committee, he will abstain from participating in the review and approval process relating tothat matter.
Term of Office
Our Constitution provides that our Board of Directors will consist of not fewer than two Directors. None ofour Directors is appointed for any fixed terms.
Our Directors may be appointed by our Shareholders at a general meeting, and an election of Directorstakes place annually. One-third (or the number nearest one-third) of our Directors are required to retirefrom office at each annual general meeting. Every Director must retire from office at least once everythree years. However, a retiring Director is eligible for re-election at the meeting at which he retires.
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On 16 March 2016, our Shareholders approved a share scheme known as the Acromec PerformanceShare Scheme (the “Acromec PSS”), the rules of which are set out in Appendix F of this Offer Document.Capitalised terms used throughout this section shall, unless otherwise defined, bear the meaningsascribed thereto in section 2 of Appendix F of this Offer Document. The Acromec PSS complies with therelevant rules as set out in Chapter 8 of the Catalist Rules.
Rationale for the Acromec PSS
Our Directors have implemented the Acromec PSS to:
(a) increase our Company’s flexibility and effectiveness in its continuing efforts to reward, retain andmotivate Group Employees to achieve superior performance;
(b) further strengthen our Company’s competitiveness in attracting and retaining local and foreigntalent;
(c) incentivise all Participants to excel in their performance and encourage greater dedication andloyalty to our Company.
Through the Scheme, the Company will be able to recognise and reward past contributions and servicesand motivate Participants to continue to strive for our Group’s long-term growth. In addition, the Schemeaims to foster an ownership culture within our Group which aligns the interests of the Participants with theinterests of Shareholders.
The Scheme contemplates the award of fully paid Shares when or after pre-determined performancetargets are accomplished and/or when due recognition should be given to any good work performanceand/or any significant contribution to our Group.
Further, our Directors are proposing to implement the Scheme to complement the current practice ofpaying cash bonus payments to employees of our Group. Our Company may pay a percentage of aGroup Employee’s annual cash bonus payment in the form of Shares. The value of Shares to be issuedand allotted to such Group Employees shall be based on a pre-determined percentage of the value of theGroup Employee’s annual bonus and such pre-determined percentage shall be determined at the solediscretion of the Committee. By giving the Group Employees the opportunity to participate in the equity ofour Company as opposed to providing solely cash bonus payments for their performance, the Schemeaims to cultivate a greater sense of involvement in our Company amongst the Group Employees. OurCompany hence believes that the Scheme will be more effective than pure cash bonus payments inmotivating Group Employees to put in their best efforts whilst at the same time allowing our Company tooffer incentives and remuneration packages compatible with other multi-national companies.
Summary of the Acromec PSS
A summary of the Acromec PSS is set out below:
1. Eligibility
The Scheme allows for participation by Group Employees and Non-Executive Directors who haveattained the age of 21 years on or before the relevant date of Award provided that such personsshall not be undischarged bankrupts, and who, in the absolute discretion of the Committee, will beeligible to participate in the Scheme.
Controlling Shareholders and their Associates will not be eligible to participate in the Scheme. Asour Executive Directors, Lim Say Chin, Chew Chee Keong and Goi Chew Leng, are ControllingShareholders of our Company, they will not be participating in the Scheme. Their Associates whoare Group Employees (if any) will also not be participating in the Scheme.
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Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility forparticipation in the Scheme may be amended from time to time at the absolute discretion of theCommittee.
2. Awards
Awards represent the right of a Participant to receive fully paid Shares free of charge, upon theParticipant achieving prescribed performance targets and/or when due recognition should be givento any good work performance and/or significant contribution to our Company and/or when ourCompany decides to pay part of a Group Employee’s annual cash bonus payment in the form ofShares.
The Participant’s overall job performance, including his designation and dedication, and potentialfor future development and contribution to the development and profitability of our Group will betaken into account before an Award is granted to him. In the case of a performance-related Award,the performance targets to be set are intended to be broad-based and shall take into account boththe medium-term corporate objectives of our Group and the individual performance of theParticipant. The corporate objectives shall cover market competitiveness, quality of returns,business growth and productivity growth. The performance targets could be based on criteria suchas sales growth, growth in earnings and return on investment. The performance targets are aimedat sustaining long-term growth.
Awards may only be vested and consequently any Shares comprised in such Awards shall only bedelivered upon (i) the Committee being satisfied that the Participant has achieved the performancetargets and/or due recognition should be given for good work performance and/or significantcontribution to our Company and/or (ii) our Company decides to pay part of a Group Employee’sannual cash bonus payment in the form of Shares.
Awards may be granted at any time in the course of a financial year, provided that in the event thatan announcement on any matter of an exceptional nature involving unpublished price-sensitiveinformation is imminent, Awards may only be vested and hence any Shares comprised in suchAwards may only be delivered on or after the second Market Day from the date on which theaforesaid announcement is made.
An Award letter confirming the Award will be sent to each Participant as soon as reasonablypracticable after the Award is finalised, specifying, inter alia, in relation to the Award:
(a) in relation to a performance-related Award:
(i) the performance target(s); and
(ii) the performance period during which the prescribed performance target(s) are to besatisfied;
(b) the number of Shares to be vested on the Participant; and
(c) the date by which the Award shall be vested.
The Committee will take into account various factors when determining the method to arrive at theexact number of Shares comprised in an Award. Such factors include, but are not limited to, thecurrent price of our Shares, the total issued share capital of our Company and the pre-determineddollar amount which the Committee decides that a Participant deserves for meeting hisperformance targets. For example, Shares may be awarded based on pre-determined dollaramounts such that the quantum of Shares comprised in Awards is dependent on the closing priceof Shares transacted on the Market Day the Award is vested. Alternatively, the Committee maydecide absolute numbers of Shares to be awarded to Participants irrespective of the price of ourShares. The Committee shall monitor the grant of Awards carefully to ensure that the size of theScheme will comply with the relevant rules of the SGX-ST.
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Special provisions for the vesting and lapsing of Awards apply in certain circumstances, includingthe following:
(a) the termination of the employment of a Participant;
(b) the ill health, injury, disability or death of a Participant;
(c) the bankruptcy of a Participant;
(d) the misconduct of a Participant;
(e) the Participant, being a Non-Executive Director, ceasing to be a director of our Company orthe relevant subsidiary of our Company for any reason whatsoever; and
(f) a take-over, winding up or reconstruction of our Company.
3. Size and duration of the Scheme
The total number of Shares which may be delivered pursuant to Awards granted under theScheme, when added to the number of Shares issued and issuable under other share-basedincentive schemes of our Company, shall not exceed 15% of the issued Shares excluding treasuryshares of our Company on the day preceding the relevant date of Award.
Our Directors believe that the size of the Scheme will give our Company sufficient flexibility todecide the number of Shares to be offered under the Scheme. However, it does not indicate thatthe Committee will definitely issue Shares up to the prescribed limit. The Committee will exercise itsdiscretion in deciding the number of Shares to be granted to each Participant under the Scheme.This, in turn, will depend on and be commensurate with the performance and value of theParticipant to our Group.
Our Company will deliver Shares pursuant to Awards granted under the Scheme in the form ofexisting Shares held as treasury shares and/or an issue of new Shares. In determining whether toissue new Shares or to purchase existing Shares for delivery to Participants upon the vesting oftheir Awards, our Company will take into account factors such as the number of Shares to bedelivered, the prevailing market price of our Shares and the financial effect on our Company ofeither issuing new Shares or purchasing existing Shares.
The Scheme shall continue in force at the discretion of the Committee, subject to a maximumperiod of 10 years commencing from the date the Scheme is adopted by our Company, providedalways that the Scheme may continue beyond the above stipulated period with the approval ofShareholders by ordinary resolution at a general meeting and approval of any relevant authoritieswhich may then be required.
Notwithstanding the expiry or termination of the Scheme, any Awards made to Participants prior tosuch expiry or termination will continue to remain valid.
4. Operation of the Scheme
Subject to prevailing legislation and the SGX-ST guidelines, our Company will deliver Shares toParticipants upon vesting of their Awards by way of delivery of existing Shares held as treasuryshares and/or the issue of new Shares.
New Shares allotted and issued on the vesting of an Award shall rank in full for all entitlements,excluding dividends or other distributions declared or recommended in respect of the then existingissued Shares, the record date for which is on or before the relevant vesting date of the Award, andshall in all other respects rank pari passu with other existing issued Shares.
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For purposes of the determination of Awards, the Committee has the right to make computationaladjustments to figures extracted from the audited results of our Company or our Group, as thecase may be, to take into account such factors as the Committee may determine to be relevant,including changes in accounting methods, taxes and extraordinary events, and the right to amendthe performance target(s) if the Committee decides that amended performance target(s) would bea fairer measure of performance.
5. Adjustments and alterations under the Scheme
Variation of Capital
If a variation in the issued ordinary share capital of our Company (whether by way of acapitalisation of profits or reserves or rights issue, distribution or otherwise) shall take place, then:
(a) the class and/or number of Shares which are the subject of an Award to the extent not yetvested;
(b) the class and/or number of Shares over which future Awards may be granted under theScheme; and/or
(c) the maximum number of Shares which may be issued pursuant to Awards granted under theScheme,
shall be adjusted in such manner as the Committee may determine to be appropriate, which willnot result in a Participant receiving a benefit that a Shareholder does not receive.
The issue of securities as consideration for an acquisition of any assets or a private placement ofsecurities or the cancellation of issued Shares purchased or acquired by the Company by way of amarket purchase of such Shares undertaken by the Company on the SGX-ST during the periodwhen a share purchase mandate granted by Shareholders (including any renewal of suchmandate) is in force shall not normally be regarded as a circumstance requiring adjustment.
Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by theAuditors (acting only as experts and not arbitrators) to be in their opinion, fair and reasonable.
Modifications or Alterations to the Scheme
The rules of the Scheme may be modified and/or altered from time to time by a resolution of theCommittee, subject to compliance with the Listing Manual and the requirements of such otherregulatory authorities as may be necessary.
No modification or alteration shall be made to the rules of the Scheme to the advantage of theParticipants except with the prior approval of Shareholders at a general meeting. Further, nomodification or alteration shall be made to the rules of the Scheme that will result in a Participantreceiving a benefit that a Shareholder does not receive.
6. Disclosures in annual reports
The following disclosures (as applicable) will be made by our Company in our annual report for solong as the Scheme continues in operation:
(a) the names of the members of the Committee administering the Scheme; and
(b) in respect of the following Participants of the Scheme:
(i) Directors of our Company; and
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(ii) Participants (other than those in paragraphs (i) above) who have received Sharespursuant to the vesting of Awards granted under the Scheme which, in aggregate,represent 5% or more of the aggregate of the total number of Shares available underthe Scheme,
the following information:
(1) name of the Participant;
(2) aggregate number of Shares comprised in Awards granted to such Participant duringthe financial year under review (including terms);
(3) aggregate number of Shares comprised in Awards granted to such Participant sincethe commencement of the Scheme to the end of the financial year under review;
(4) aggregate number of Shares issued or transferred to such Participant pursuant to thevesting of Awards under the Scheme since the commencement of the Scheme to theend of the financial year under review; and
(5) the aggregate number of Shares comprised in Awards which have not been vested asat the end of the financial year under review.
7. Role and composition of the Committee
The Committee shall be responsible for the administration of the Scheme and shall comprise themembers of the Remuneration Committee and one Executive Director. The Committee overseesexecutive development in our Group with the aim of building capable and committed managementteams, through focused management and progressive policies which can attract and retain a poolof talented executives to meet the current and future growth of our Group.
The Committee shall have the power from time to time to make and vary such regulations (notbeing inconsistent with the Scheme) for the implementation and administration of the Scheme as itdeems fit, provided that:
(a) any modification or alteration which would be to the advantage of Participants under theScheme shall be subject to the prior approval of Shareholders at a general meeting;
(b) the modification or alteration must be made in such a way that a Participant will not receive abenefit that a Shareholder does not receive; and
(c) no modification or alteration shall be made without due compliance with the Listing Manualand the requirements of such other regulatory authorities as may be necessary.
Any decision of the Committee made pursuant to any provision of the Scheme (other than a matterto be certified by the Auditors) shall be final and binding, including any decision pertaining todisputes as to the interpretation of the Scheme or any rule, regulations or procedure thereunder oras to any rights under the Scheme.
In compliance with the requirements of the Listing Manual, any Participant of the Scheme who is amember of the Committee shall not be involved in its deliberations in respect of Awards to begranted to or held by that member of the Committee or by his Associate.
8. Rationale for participation by Non-Executive Directors
While the Scheme caters principally to Group Employees, it is recognised that there are otherpersons who make significant contributions to our Group through their close working relationshipswith our Group, even though they are not employed by our Group. Such persons include the Non-Executive Directors.
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The Non-Executive Directors are persons from different professions and working backgrounds,bringing to our Group their wealth of knowledge, business expertise and contacts in the businesscommunity. They play an important role in helping our Group shape its business strategy byallowing our Group to draw on their diverse backgrounds and working experience. It is crucial forour Group to attract, retain and incentivise the Non-Executive Directors. By aligning the interests ofthe Non-Executive Directors with the interests of Shareholders, our Company aims to inculcate asense of commitment on the part of the Non-Executive Directors towards serving the short andlong-term objectives of our Group.
Our Directors are of the view that including the Non-Executive Directors in the Scheme will showour Company’s appreciation, and further motivate them in their contribution towards the success ofour Group. However, as their services and contributions cannot be measured in the same way asthe full-time employees of our Group, while it is desired that participation in the Scheme be madeopen to the Non-Executive Directors, any Awards that may be granted to any such Non-ExecutiveDirector would be intended only as a token of our Company’s appreciation.
For the purpose of assessing the contributions of the Non-Executive Directors, the Committee willpropose a performance framework comprising mainly non-financial performance measurementcriteria such as the extent of involvement and responsibilities shouldered by the Non-ExecutiveDirectors. In addition, the Committee will also consider the scope of advice given, the number ofcontacts and size of deals which our Group is able to procure from the contacts andrecommendations of the Non-Executive Directors. The Committee may also decide that no Awardsshall be made in any financial year or no grant of Awards shall be made at all.
It is envisaged that the vesting of Awards, and hence the number of Shares to be delivered to theNon-Executive Directors based on the criteria set out above will be relatively small, in terms offrequency and numbers. It is envisaged that the aggregate number of Shares set aside for the Non-Executive Directors (if any) will not exceed 5% of the Shares available under the Scheme. Basedon this, the Directors are of the view that the participation by the Non-Executive Directors in theScheme will not compromise the independent status of those who are Independent Directors.
9. Financial effects of the Scheme
Cost of Awards
As Participants are not required to pay for the grant of the Awards, such grant of Awards will have afinancial effect on the Company.
The Singapore Financial Reporting Standards 102, Share-based Payment, requires the recognitionof an expense in respect of Awards granted under the Scheme. The expenses will be based on thefair value of the Awards at the date of the grant and will be recognised over the expected vestingperiod.
The expense recognised in the income statement also depends on whether or not the performancetarget attached to an Award is measured by reference to the market price of our Shares. This isknown as a “market condition”. If the performance target is a market condition, the probability of theperformance target being met is taken into account in estimating the fair value of the Awardgranted at the date of grant, and no adjustments to the amounts charged to the income statementare made whether or not the market condition is met.
However, if the performance target is not a market condition, the fair value per share of the Awardsgranted at the date of grant is used to compute the expense to be recognised in the incomestatement at the end of each financial year, based on an assessment at that date of whether thenon-market conditions would be met to enable the Awards to vest. Thus, where the vestingconditions do not include a market condition, there would be no cumulative expense recognised inthe income statement if the Awards do not ultimately vest.
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Share capital
The Scheme will result in an increase in our Company’s issued share capital only if new Sharesare issued to Participants. The number of new Shares issued will depend on, inter alia, the size ofthe Awards granted under the Scheme. However, if existing Shares are purchased for delivery toParticipants in lieu of issuing new Shares to Participants, the Scheme will have no impact on ourCompany’s issued share capital.
NTA
The Scheme will result in a charge to our Company’s and Group’s income statements which isequal to the fair value of the Awards over the period from the date of grant of the Awards to thevesting date. If new Shares are issued under the Scheme, the NTA of our Group and our Companywould decrease by the amount charged. If existing Shares are purchased for delivery toParticipants, the NTA of our Group and our Company would decrease by the cost of Sharespurchased.
Although the Scheme will result in a charge to the income statement of our Company and ourGroup, it should be noted that Awards are granted only on a selective basis and will be granted toParticipants whom our Company believes have contributed or will contribute significant value to oursuccess including financial performance. In particular, the grant of Awards and delivery of Sharesto Participants of the Scheme, are contingent upon the Participants meeting prescribedperformance targets and/or delivering good work performance. Therefore Participants would havecontributed to or will contribute to significant value-add to the NTA of our Company and our Groupbefore the Awards are granted and Shares delivered.
EPS
The Scheme will result in a charge to earnings equivalent to the fair value of the Awards at thedate of grant over the period from the date of grant of the Awards to the vesting date.
Although the Scheme will have a dilutive impact (to the extent that new Shares are issued pursuantto the Scheme) on the EPS of our Company and our Group, it should again be noted that thedelivery of Shares to Participants under the Scheme will generally be contingent upon theParticipants meeting the prescribed performance targets and/or delivering good work performance.Accordingly, the earnings of our Company and our Group should have grown before the Awardsare granted and Shares delivered.
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OVERVIEW
In general, transactions between our Group and any of our interested persons, namely, our Directors,Controlling Shareholders and their respective Associates (each, an “Interested Person”) would constituteinterested person transactions for the purposes of Chapter 9 of the Catalist Rules.
Save as disclosed under the “General Information on our Group – Restructuring Exercise” section of thisOffer Document and below, there was no interested person transaction which is considered material inthe context of the Invitation within the last three financial years and for the period from 1 October 2015 tothe Latest Practicable Date (the “Relevant Period”).
Relevant Interested Persons
Interested Persons in relation to Past Interested Person Transactions
Aim Controls Pte. Ltd. (“Aim Controls”) : An Associate of our Directors and ControllingShareholders, Lim Say Chin, Chew Chee Keong andGoi Chew Leng
Engenius Pte. Ltd. (“Engenius”) : An Associate of our Directors and ControllingShareholders, Lim Say Chin, Chew Chee Keong andGoi Chew Leng
Kit Yee & Co. : An Associate of our Lead Independent Director, YeeKit Hong
Chartwell Management Services Pte Ltd : An Associate of our Lead Independent Director, Yee(“Chartwell”) Kit Hong
Interested Persons in relation to Present and On-going Interested Person Transactions
Lim Say Chin : Our Executive Chairman and Managing Director
Chew Chee Keong : Our Executive Director
Goi Chew Leng : Our Executive Director
PAST INTERESTED PERSON TRANSACTIONS
Purchases from Aim Controls
Aim Controls is a company incorporated in Singapore whose current principal activity is the design,supply, installation and servicing of building automation systems and heating, ventilation and airconditioning controls. Goi Chew Leng (our Executive Director) held 40.0% of the issued share capital ofAim Controls for himself and on trust for Lim Say Chin (our Executive Chairman and Managing Director)and Chew Chee Keong (our Executive Director), in equal shares. In December 2015, as part of the IPOpreparations, he sold the said 40.0% of the issued share capital of Aim Controls to an unrelated thirdparty, Tan Peng Yaow. The sale consideration was based on arm’s length negotiations between the partieswith reference to the adjusted NAV of Aim Controls as at 30 April 2015. Following the said sale, AimControls ceased to be an Interested Person.
During the Relevant Period, our Group purchased facility management systems, sensors, temperaturecontrol systems and programming services from Aim Controls. The aggregate amounts for suchtransactions during the Relevant Period up to the date on which Aim Controls ceased to be an InterestedPerson were as follows:
From 1 October 2015 to the Latest Practicable
(S$’000) FY2013 FY2014 FY2015 Date
Purchases from Aim Controls 755 808 473 366
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As the transactions were entered into based on terms that were not less favourable than those obtainedfrom unrelated third parties, such transactions were conducted on an arm’s length basis and were notprejudicial to the interests of our Company and our minority Shareholders. We may continue to transactwith Aim Controls subsequent to the Invitation. As Aim Controls ceased to be an Interested Personfollowing its disposal, all transactions with Aim Controls are no longer deemed to be interested persontransactions. Any transactions with Aim Controls shall be subject to our Group’s internal policies andprocedures for purchases which are applicable to all vendors of our Group.
Procurement of services from Engenius
Engenius is a company incorporated in Singapore whose current principal activity is the design andsupply of laboratory furniture. Ingenieur Holdings held 60% of the issued share capital of Engenius untilSeptember 2015, when it sold its shares to an unrelated third party, Tan Peng Yaow, as part of the IPOpreparations. The sale consideration was based on arm’s length negotiations between the parties withreference to the adjusted NAV of Engenius as at 31 March 2015. The shareholders of Ingenieur Holdingsare Lim Say Chin (our Executive Chairman and Managing Director) (33.3%), Chew Chee Keong (ourExecutive Director) (33.3%) and Goi Chew Leng (our Executive Director) (33.3%). As such, Engenius wasan Associate of our Executive Directors. Following the said sale, Engenius ceased to be an InterestedPerson.
During the Relevant Period, our Group procured the services of Engenius in respect of the design and/orsupply of laboratory furniture. The aggregate amounts for such transactions during the Relevant Period upto the date on which Engenius ceased to be an Interested Person were as follows:
From 1 October 2015 to the LatestPracticable
(S$’000) FY2013 FY2014 FY2015 Date
Procurement of services from Engenius – 100 309 –
As the transactions were entered into based on terms that were not less favourable than those obtainedfrom unrelated third parties, such transactions were conducted on an arm’s length basis and were notprejudicial to the interests of our Company and our minority Shareholders. We may continue to transactwith Engenius subsequent to the Invitation. As Engenius ceased to be an Interested Person following itsdisposal, all transactions with Engenius are no longer deemed to be interested person transactions. Anytransactions with Engenius shall be subject to our Group’s internal policies and procedures for purchaseswhich are applicable to all vendors of the Group.
Audit and tax services provided by Kit Yee & Co.
Our Lead Independent Director, Yee Kit Hong, and his wife are partners of Kit Yee & Co.. During theRelevant Period, Kit Yee & Co. provided audit and tax services to Acromec Engineers. The aggregate feespaid to Kit Yee & Co. for such services performed in respect of FY2013, FY2014 and FY2015 wereapproximately S$12,560, S$12,480 and nil respectively.
We are of the view that the fees paid to Kit Yee & Co. commensurate with the audit and tax servicesprovided by it. The transactions were entered into on an arm’s length basis and on normal commercialterms as the fees charged by Kit Yee & Co. were comparable to those charged to their other clients forsimilar services, and were not prejudicial to the interests of our Company and our minority Shareholders.Kit Yee & Co. had ceased to provide audit and tax services for FY2015 and we do not intend to engageits services in the future.
Corporate secretarial services provided by Chartwell
Chartwell is owned by the immediate family members of our Lead Independent Director, Yee Kit Hong.
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INTERESTED PERSON TRANSACTIONS
During the Relevant Period, Chartwell provided corporate secretarial services to Acromec Engineers. Theaggregate fees paid to Chartwell for such services during the Relevant Period were as follows:
From 1 October 2015 to the Latest Practicable
(S$) FY2013 FY2014 FY2015 Date
Provision of corporate secretarial services 1,245 1,415 900 2,750
We are of the view that the fees paid to Chartwell commensurate with the corporate secretarial servicesprovided by it. The transactions were entered into on an arm’s length basis and on normal commercialterms as the fees charged by Chartwell were comparable to those charged to their other clients for similarservices, and were not prejudicial to the interests of our Company and our minority Shareholders.Chartwell had ceased to provide such services to us after January 2016 and we do not intend to engageits services for as long as Yee Kit Hong remains as our Independent Director.
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS
Guarantees provided by our Directors and Controlling Shareholders
The guarantees currently provided by our Directors and Controlling Shareholders, Lim Say Chin, ChewChee Keong and Goi Chew Leng, to secure our Group’s bank facilities are listed below:
Amount of facilities Approximate amount secured by guaranteed as at the
Bank Facilities granted to guarantee Latest Practicable Date
DBS Bank Ltd Acromec Engineers S$4.90 million S$2.54 millionMalayan Banking Berhad Acromec Engineers S$1.80 million S$0.17 million
The largest aggregate amount guaranteed for bank facilities utilised during the Relevant Period, based onmonth-end balances, was approximately S$5.02 million. Please refer to the “Capitalisation andIndebtedness” section of this Offer Document for information on the interest rates applicable to thefacilities.
As no fee, commission, interest or benefit-in-kind was paid to the guarantors for the provision of theguarantees, the above arrangements were not carried out on an arm’s length basis but were beneficial toour Group. The above arrangements were not prejudicial to the interests of our Company and our minorityShareholders.
Subsequent to the Invitation, we intend to obtain the release of the said guarantees provided by theInterested Persons from the respective banks and replace them with corporate guarantees provided byour Company. In the event that we are unable to procure such release, or should there be any materialunfavourable revision in the terms and conditions of the bank facilities following the proposed release,each of Lim Say Chin, Chew Chee Keong and Goi Chew Leng have undertaken to continue to providethe respective guarantees. No fee, commission, interest or benefit-in-kind will be payable by our Group forthe aforesaid guarantees.
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS
To ensure that future transactions with Interested Persons are undertaken at arm’s length and on normalcommercial terms and are consistent with our Group’s usual business practices and policies, the followingprocedures will be implemented by our Group.
INTERESTED PERSON TRANSACTIONS
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In relation to any purchase of products or procurement of services from Interested Persons aboveS$100,000, quotations from at least two unrelated third parties in respect of the same or substantiallysimilar type of transactions are to be used as bases for comparison wherever possible. The purchaseprice or fee shall not be higher than the most competitive price or fee of the two quotations from the twounrelated third parties. In determining the most competitive price or fee, we will take into account allpertinent factors, including the suitability, credit terms, delivery time, quality and cost of the product orservice and the experience and expertise of the supplier.
In relation to any sale of products or provision of services to Interested Persons above S$100,000, theprice and terms of at least two other completed transactions of the same or substantially similar type oftransactions with unrelated third parties are to be used as bases for comparison wherever possible. TheInterested Persons shall not be charged at rates lower than those charged to the unrelated third parties.
All interested person transactions above S$100,000 (either individually or as part of a series or asaggregated with other transactions involving the same Interested Person during the same financial year)are to be approved by our Chief Financial Officer or a Director who shall not be an Interested Person inrespect of the particular transaction. Any contracts to be made with an Interested Person shall not beapproved unless the pricing is determined in accordance with our usual business practices and policies,consistent with the usual margin given or price received by our Group for the same or substantially similartype of transactions between our Group and unrelated third parties and the terms are no more favourablethan those extended to unrelated third parties or no less favourable than those received from unrelatedthird parties.
For the purposes above, where applicable, contracts for the same or substantially similar type oftransactions entered into between our Group and unrelated third parties are to be used as bases forcomparison. In the event that it is not possible to compare against the terms of other transactions withunrelated third parties, the matter will be referred to our Audit Committee and our Audit Committee willdetermine whether the price, fees and/or terms are in accordance with our usual business practices andpolicies and whether the transaction is carried out at arm’s length and on normal commercial terms.
In addition, we shall monitor all interested person transactions entered into by our Group by categorisingthe transactions as follows:
(a) all interested person transactions above S$100,000 (either individually or as part of a series or asaggregated with other transactions involving the same Interested Person during the same financialyear) shall be approved by our Chief Financial Officer or a Director prior to entry. The ChiefFinancial Officer and the Director shall be persons who have no interest, directly or indirectly, in thetransaction; and
(b) for interested person transactions where the value thereof amount to 3% or more of the latestaudited NTA of our Group, we shall obtain the approval of our Audit Committee prior to enteringinto the transaction. Where an Audit Committee member has an interest, directly or indirectly, in thetransaction, he shall abstain from participating in the review and approval of the transaction.
When renting properties from or to an Interested Person, our Directors shall take appropriate steps toensure that the rent is commensurate with the prevailing market rates, including adopting measures suchas making relevant enquiries with landlords of similar properties, obtaining suitable reports or reviewspublished by property agents, and obtaining independent valuation reports by property valuers, whereappropriate. The rent payable shall be based on the most competitive market rental rate of similarproperty in terms of size and location, based on the results of the relevant enquiries or the reports.
Before any agreement or arrangement with an Interested Person that is not in the ordinary course ofbusiness of our Group is transacted, prior approval must be obtained from our Audit Committee. Anydecision to proceed with such an agreement or arrangement would be recorded for review by our AuditCommittee. In the event that a member of our Audit Committee is interested in any interested persontransaction, he will abstain from deliberating, reviewing and/or approving that transaction. We shall
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INTERESTED PERSON TRANSACTIONS
maintain a register to record all interested person transactions which are entered into by our Group,including any quotations obtained from unrelated third parties to support the price, fees and/or terms ofthe interested person transaction, and the review and/or approval of our Audit Committee. In addition, wewill maintain a register of Interested Persons and ensure that the list is circulated to our Group’semployees whenever it is updated.
All interested person transactions shall be subject to review by our Audit Committee on a half-yearly basisto ensure that they are carried out at arm’s length and in accordance with the procedures outlined above.We will prepare the relevant information to assist our Audit Committee in its review. Furthermore, if duringthese periodic reviews, our Audit Committee believes that the guidelines and procedures as outlinedabove are not sufficient to ensure that interests of minority Shareholders are not prejudiced, ourCompany will adopt new guidelines and procedures. Our Audit Committee may request for anindependent financial adviser’s opinion on such guidelines and procedures as it deems fit.
In addition, our Audit Committee will include the review of interested person transactions as part of itsstandard procedures while examining the adequacy of our internal controls. Our Board will also ensurethat all disclosure, approval and other requirements on interested person transactions, including thoserequired by prevailing legislation, the Catalist Rules and accounting standards, are complied with. Inaddition, such transactions will also be subject to Shareholders’ approval if deemed necessary by theCatalist Rules. In accordance with Rule 919 of the Catalist Rules, Interested Persons and theirAssociates shall abstain from voting, or acting as proxies unless given specific instructions as to voting bythe shareholder(s), on resolutions approving such interested person transactions.
INTERESTED PERSON TRANSACTIONS
133
INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDERS OR THEIR ASSOCIATES
None of our Directors, Controlling Shareholders or their respective Associates has any interest, direct orindirect, in any entity carrying on the same business or dealing in similar products or services as ourGroup.
INTERESTS OF EXPERTS
None of the experts named in this Offer Document:
(i) is employed on a contingent basis by our Company or our subsidiary;
(ii) has a material interest, whether direct or indirect, in our Shares or in the shares of our subsidiary;or
(iii) has a material economic interest, whether direct or indirect, in our Company, including an interestin the success of the Invitation.
INTERESTS OF THE SPONSOR, ISSUE MANAGER, UNDERWRITER AND PLACEMENT AGENT
In the reasonable opinion of our Directors, SAC Capital does not have a material relationship with ourCompany, save as disclosed below and in the “Sponsorship, Management, Underwriting and PlacementArrangements” section of this Offer Document:
(i) SAC Capital is the Sponsor, Issue Manager, Underwriter and Placement Agent in relation to theInvitation; and
(ii) SAC Capital will be the continuing Sponsor of our Company for a period of at least three yearsfrom the date of listing of our Company on Catalist.
134
POTENTIAL CONFLICTS OF INTERESTS
Upon listing and quotation on Catalist, our Shares will be traded under the book-entry settlement systemof CDP, and all dealings in and transactions of our Shares through Catalist will be effected in accordancewith the terms and conditions for the operation of Securities Accounts with CDP, as amended, modified orsupplemented from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf ofpersons who maintain, either directly or through Depository Agents, Securities Accounts with CDP.Persons named as direct Securities Account holders and Depository Agents in the Depository Registermaintained by CDP, rather than CDP itself, will be treated, under our Constitution and the Companies Act,as members of our Company in respect of the number of Shares credited to their respective SecuritiesAccounts.
Persons holding our Shares in Securities Accounts with CDP may withdraw the number of Shares theyown from the book-entry settlement system in the form of physical share certificates. Such sharecertificates will, however, not be valid for delivery pursuant to trades transacted on Catalist, although theywill be prima facie evidence of title and may be transferred in accordance with our Constitution. A fee ofS$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal of morethan 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement system andobtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as our Directorsmay decide, is payable to the share registrar for each share certificate issued and a stamp duty ofS$10.00 is also payable where the share certificate is issued in the name of the person withdrawing ourShares or S$0.20 per S$100.00 or part thereof of the last transacted price where it is issued in the nameof a third party. Persons holding physical share certificates who wish to trade on Catalist must depositwith CDP their share certificates together with the duly executed and stamped instruments of transfer infavour of CDP, and have their respective Securities Accounts credited with the number of Sharesdeposited before they can effect the desired trades. A fee of S$10.00 is payable upon the deposit of eachinstrument of transfer with CDP. The above fees may be subject to such charges as may be inaccordance with CDP’s prevailing policies or the current tax policies that may be in force in Singaporefrom time to time. Pursuant to announced rules effective from 1 June 2014, transfers and settlementspursuant to on-exchange trades will be charged a fee of S$30.00 and transfers and settlements pursuantto off-exchange trades will be charged a fee of 0.015% of the value of the transaction, subject to aminimum of S$75.00.
Transactions in our Shares under the book-entry settlement system will be reflected by the seller’sSecurities Account being debited with the number of Shares sold and the buyer’s Securities Accountbeing credited with the number of Shares acquired. No transfer stamp duty is currently payable for ourShares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on Catalist is payable at the rate of 0.0325% of thetransaction value. The clearing fee, instrument of transfer deposit fee and share withdrawal fee may besubject to GST at the prevailing rate of 7% (or such other rate prevailing from time to time).
Dealing in our Shares will be carried out in S$ and will be effected for settlement on CDP on a scriplessbasis. Settlement of trades on a normal “ready” basis on Catalist generally takes place on the third MarketDay following the transaction date, and payment for the securities is generally settled on the followingbusiness day. CDP holds securities on behalf of investors in Securities Accounts. An investor may open adirect account with CDP or a sub-account with a Depository Agent. The Depository Agent may be amember company of the SGX-ST, bank, merchant bank or trust company.
CLEARANCE AND SETTLEMENT
135
INFORMATION ON DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING SHAREHOLDERS
1. None of our Directors, Executive Officers or Controlling Shareholders is or was involved in any ofthe following events:
(a) had at any time during the last ten years, an application or a petition under any bankruptcylaws of any jurisdiction filed against him or against a partnership of which he was a partnerat the time when he was a partner or at any time within two years from the date he ceasedto be a partner;
(b) had at any time during the last ten years, an application or a petition under any law of anyjurisdiction filed against an entity (not being a partnership) of which he was a director or anequivalent person or a key executive, at the time when he was a director or an equivalentperson or a key executive of that entity or at any time within two years from the date heceased to be a director or an equivalent person or a key executive of that entity, for thewinding up or dissolution of that entity or, where that entity is the trustee of a business trust,that business trust, on the ground of insolvency;
(c) has any unsatisfied judgment against him;
(d) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud ordishonesty, which is punishable with imprisonment, or has been the subject of any criminalproceedings (including any pending criminal proceedings of which he is aware) for suchpurpose;
(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a breach of anylaw or regulatory requirement that relates to the securities or futures industry in Singapore orelsewhere, or been the subject of any criminal proceedings (including any pending criminalproceedings of which he is aware) for such breach;
(f) had at any time during the last ten years, judgment entered against him in any civilproceedings in Singapore or elsewhere involving a breach of any law or regulatoryrequirement that relates to the securities or futures industry in Singapore or elsewhere, or afinding of fraud, misrepresentation or dishonesty on his part, or been the subject of any civilproceedings (including any pending civil proceedings of which he is aware) involving anallegation of fraud, misrepresentation or dishonesty on his part;
(g) has ever been convicted in Singapore or elsewhere of any offence in connection with theformation or management of any entity or business trust;
(h) has ever been disqualified from acting as a director or an equivalent person of any entity(including the trustee of a business trust), or from taking part directly or indirectly in themanagement of any entity or business trust;
(i) has ever been the subject of any order, judgment or ruling of any court, tribunal orgovernmental body, permanently or temporarily enjoining him from engaging in any type ofbusiness practice or activity;
(j) has ever, to his knowledge, been concerned with the management or conduct, in Singaporeor elsewhere, of the affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere;
(ii) any entity (not being a corporation) which has been investigated for a breach of anylaw or regulatory requirement governing such entities in Singapore or elsewhere;
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GENERAL AND STATUTORY INFORMATION
(iii) any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere; or
(iv) any entity or business trust which has been investigated for a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere,
in connection with any matter occurring or arising during the period when he was soconcerned with the entity or business trust; or
(k) has been the subject of any current or past investigation or disciplinary proceedings, or hasbeen reprimanded or issued any warning, by the Authority or any other regulatory authority,exchange, professional body or governmental agency, whether in Singapore or elsewhere.
Notwithstanding the aforesaid, the following disclosure is made:
Yee Kit Hong, our Lead Independent Director
Yee Kit Hong was an independent director of Scorpio East Holdings Ltd. (“SEH”) (currently knownas KOP Limited) from 9 December 2005 to 6 May 2014. In October 2011, Hady Hartanto, a non-executive director of SEH, commenced legal proceedings against the independent directors of SEHfor defamation in a SGXNET announcement made by SEH in September 2011. The defamationsuit by Hady Hartanto against the independent directors of SEH was dismissed on the grounds ofjustification and qualified privilege. In April 2014, Hady Hartanto filed an appeal, which wassubsequently dismissed by the Court of Appeal in October 2014 on the grounds of qualifiedprivilege and lack of malice.
SHARE CAPITAL
2. Save as disclosed below, there were no changes in the issued and paid-up capital of our Companyand our subsidiary within the three years preceding the date of lodgement of this Offer Document.
Number of Consideration Resultant issued Date of issue shares issued Purpose per share share capital
Our Company
22 December 2015 3 Incorporation S$1 S$3
15 March 2016 6,218,040 Restructuring Exercise S$1 S$6,218,043
3. Save as disclosed above and in the “General Information on Our Group – Restructuring Exercise”section of this Offer Document, no shares in our Company or our subsidiary have been issued for aconsideration other than cash during the three years preceding the date of lodgement of this OfferDocument.
MATERIAL CONTRACTS
4. Save for the Restructuring Agreement dated 15 March 2016 entered into among our Company, LimSay Chin, Chew Chee Keong and Goi Chew Leng for the purpose of the Restructuring Exercise,there were no contracts entered into otherwise than in the ordinary course of business by ourCompany and our subsidiary within the two years preceding the date of lodgement of this OfferDocument and which are or may be material.
LITIGATION
5. There are no legal or arbitration proceedings, including those which are pending or known to becontemplated, which may have or have had during the last 12 months before the date of this OfferDocument, a material effect on our Group’s financial position or profitability.
GENERAL AND STATUTORY INFORMATION
137
MISCELLANEOUS
6. Save as disclosed under the “Events After the Reporting Period” section in Appendix A of this OfferDocument, our Directors are not aware of any event which has occurred since 30 September 2015up to the Latest Practicable Date, which may have a material effect on the financial informationprovided in the “Independent Auditors’ Report and the Audited Combined Financial Statements forthe Financial Years Ended 30 September 2013, 2014 and 2015” and the “Independent Auditors’Report and the Compilation of the Unaudited Pro Forma Combined Financial Information for theFinancial Year Ended 30 September 2015” set out in Appendices A and B respectively of this OfferDocument.
7. We currently have no intention of changing the auditors of our Company and our subsidiary afterthe admission of our Company to Catalist.
CONSENTS
8. The Auditors and Reporting Accountants, Deloitte & Touche LLP, have given and have notwithdrawn their written consent to the issue of this Offer Document with the inclusion herein of theirname and all references thereto and the “Independent Auditors’ Report on the Audited CombinedFinancial Statements for the Financial Years Ended 30 September 2013, 2014 and 2015” and the“Independent Auditors’ Report on the Compilation of the Unaudited Pro Forma Combined FinancialInformation for the Financial Year Ended 30 September 2015” in the form and context in which theyappear in this Offer Document and to act in such capacity in relation to this Offer Document.
9. The Sponsor, Issue Manager, Underwriter and Placement Agent, SAC Capital Private Limited, hasgiven and has not withdrawn its written consent to the issue of this Offer Document, with theinclusion herein of its name and all references thereto in the form and context in which they appearin this Offer Document and to consent to act in such capacities in relation to this Offer Document.
10. Each of the Solicitors to the Invitation, the Share Registrar, the Receiving Bank and the PrincipalBankers does not make or purport to make any statement in this Offer Document and is not awareof any statement in this Offer Document which purports to be based on a statement made by it andeach of them makes no representation regarding any statement in this Offer Document and, to theextent permitted by law, expressly disclaims and takes no responsibility for any statement in oromission from this Offer Document.
DOCUMENTS AVAILABLE FOR INSPECTION
11. Copies of the following documents may be inspected at the registered address of the Companyduring normal business hours for a period of six months from the date of registration by the SGX-ST, acting as agent on behalf of the Authority, of this Offer Document:
(a) the Constitution of our Company;
(b) the “Independent Auditors’ Report and the Audited Combined Financial Statements for theFinancial Years Ended 30 September 2013, 2014 and 2015” as set out in Appendix A of thisOffer Document;
(c) the “Independent Auditors’ Report and the Compilation of the Unaudited Pro FormaCombined Financial Information for the Financial Year Ended 30 September 2015” as set outin Appendix B of this Offer Document;
(d) the material contracts referred to in paragraph 4 above;
(e) the letters of consent referred to in paragraphs 8 and 9 above; and
(f) the Service Agreements.
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GENERAL AND STATUTORY INFORMATION
RESPONSIBILITY STATEMENT BY DIRECTORS OF OUR COMPANY
12. This Offer Document has been seen and approved by our Directors and they collectively andindividually accept full responsibility for the accuracy of the information given in this OfferDocument and confirm, after making all reasonable enquiries, that to the best of their knowledgeand belief, this Offer Document constitutes full and true disclosure of all material facts about theInvitation and our Group, and our Directors are not aware of any facts the omission of which wouldmake any statement in this Offer Document misleading. Where information in this Offer Documenthas been extracted from published or otherwise publicly available sources or obtained from anamed source, the sole responsibility of our Directors has been to ensure that such informationhas been accurately and correctly extracted from these sources and/or reproduced in this OfferDocument in its proper form and context.
GENERAL AND STATUTORY INFORMATION
139
INDEPENDENT AUDITORS’ REPORT ON THE AUDITED COMBINED FINANCIAL STATEMENTS FORTHE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
6 April 2016
The Board of DirectorsAcromec Limited4 Kaki Bukit Avenue 1 #06-03Singapore 417939
Dear Sirs
Report on the Combined Financial Statements
We have audited the accompanying combined financial statements of Acromec Limited (the “Company”)and its subsidiary (collectively the “Group”). The combined financial statements comprise the combinedstatements of financial position as at 30 September 2013, 2014 and 2015, and the combined statementsof profit or loss and other comprehensive income, combined statements of changes in equity andcombined statements of cash flows of the Group for the respective years ended 30 September 2013,2014 and 2015 (the “Relevant Periods”), and a summary of significant accounting policies and otherexplanatory notes, as set out on pages A-3 to A-40.
Management’s Responsibility for the Combined Financial Statements
Management is responsible for the preparation of these combined financial statements that give a trueand fair view in accordance with the Singapore Financial Reporting Standards and for devising andmaintaining a system of internal accounting controls sufficient to provide reasonable assurance thatassets are safeguarded against loss from unauthorised use or disposition; and transactions are properlyauthorised and that they are recorded as necessary to permit the preparation of true and fair combinedfinancial statements and to maintain accountability of assets.
Auditors’ Responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether the combined financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe combined financial statements. The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement of the combined financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal controlrelevant to the entity’s preparation of the combined financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of accountingestimates made by management, as well as evaluating the overall presentation of the combined financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
A-1
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
INDEPENDENT AUDITORS’ REPORT ON THE AUDITED COMBINED FINANCIAL STATEMENTS FORTHE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015 (cont’d)
Opinion
In our opinion, the combined financial statements of the Group are properly drawn up in accordance withthe Singapore Financial Reporting Standards so as to give a true and fair view of the financial position ofthe Group as at 30 September 2013, 2014 and 2015 and the financial performance, changes in equityand cash flows of the Group for the respective years ended.
Restriction on Distribution and Use
This report has been prepared solely to you for inclusion in the offer document in connection with theproposed listing of Acromec Limited on the Catalist, the sponsor-supervised board of the SingaporeExchange Securities Trading Limited and for no other purposes.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-2
ACROMEC LIMITED AND ITS SUBSIDIARY
COMBINED STATEMENTS OF FINANCIAL POSITIONAs at 30 September 2013, 2014 and 2015
Note 2015 2014 2013S$ S$ S$
ASSETS
Current assetsCash and bank balances 6 8,915,117 8,963,855 6,106,928Trade receivables 7 5,613,618 1,900,476 5,076,370Amounts due from contract customers 8 6,466,844 1,473,698 6,127,307Other receivables, deposits and prepayments 9 124,851 72,664 61,800
Total current assets 21,120,430 12,410,693 17,372,405
Non-current assetPlant and equipment 10 149,946 164,718 202,781
Total assets 21,270,376 12,575,411 17,575,186
LIABILITIES AND EQUITY
Current liabilitiesTrade and other payables 11 11,187,695 5,476,114 11,309,881Bill payables 12 389,139 242,481 873,319Amounts due to contract customers 8 944,990 – – Finance leases 13 10,587 20,708 43,844Tax payable 719,925 539,207 299,925
Total current liabilities 13,252,336 6,278,510 12,526,969
Net cash used in financing activities (1,694,972) (1,575,874) (1,610,189)
Net (decrease) increase in cash and cash equivalents (54,857) 2,850,859 1,834,336Cash and cash equivalents at beginning of year 6,448,720 3,597,861 1,763,525
Cash and cash equivalents at end of year (Note B) 6,393,863 6,448,720 3,597,861
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-6
ACROMEC LIMITED AND ITS SUBSIDIARY
COMBINED STATEMENTS OF CASH FLOWS (Cont’d)Financial years ended 30 September 2013, 2014 and 2015
Note A:
During the financial year ended 30 September 2013, the Group acquired plant and equipment amountingto S$140,370 of which, S$72,552 were acquired under finance lease arrangements. Cash payments ofS$67,818 were made to purchase the plant and equipment.
Note B:
2015 2014 2013S$ S$ S$
Cash at bank and on hand 5,393,863 4,448,720 2,597,861Fixed deposits 1,000,000 2,000,000 1,000,000
Cash and cash equivalents at end of year (Note 6) 6,393,863 6,448,720 3,597,861
See accompanying notes to combined financial statements.
A-7
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
1 GENERAL
The Company (Registration No. 201544003M) is incorporated in the Republic of Singapore with itsregistered office and principal place of business at 4 Kaki Bukit Avenue 1 #06-03, Singapore417939. The combined financial statements are expressed in Singapore dollars.
The principal activity of the Company is that of investment holding.
The principal activities of the subsidiary are disclosed below.
RESTRUCTURING EXERCISE – In preparation for the proposed listing of the Group on theCatalist, the sponsor-supervised board of the Singapore Exchange Securities Trading Limited, theGroup undertook a restructuring exercise (the “Restructuring Exercise”) to rationalise the structureof the Group and its subsidiary (hereinafter collectively referred to as the “Group”).
The details of the Restructuring Exercise are as follows:
(A) Incorporation of the Company
On 22 December 2015, the Company was incorporated in Singapore as an investmentholding company with an issued and paid-up share capital of S$3 comprising 3 shares.
(B) Acquisition of Acromec Engineers Pte Ltd (“Acromec Engineers”)
Prior to the share swap described below, Acromec Engineers had an issued and paid-upcapital of S$1,500,000 comprising 1,500,000 ordinary shares, of which each of Lim SayChin, Chew Chee Keong and Goi Chew Leng held 500,000 ordinary shares.
Pursuant to the restructuring agreement entered into among the Company, Lim Say Chin,Chew Chee Keong and Goi Chew Leng:
(i) the Company acquired 1,500,000 ordinary shares, representing the entire issued andpaid-up share capital of Acromec Engineers from Lim Say Chin, Chew Chee Keongand Goi Chew Leng for a consideration of S$6,218,040, which was based on theaudited net asset value of Acromec Engineers as at 30 September 2015 as adjustedfor the payment of the final tax exempt dividend in respect of financial year ended 30September 2015; and
(ii) the consideration was satisfied in the following manner:
(a) the Company issued 4,418,043 ordinary shares, credited as fully paid at S$1per share, to Ingenieur Holdings Pte. Ltd., on the direction of Lim Say Chin,Chew Chee Keong and Goi Chew Leng; and
(b) the Company issued 599,999 ordinary shares, credited as fully paid at S$1 pershare, to each of Lim Say Chin, Chew Chee Keong and Goi Chew Leng.
Following the completion of the Restructuring Exercise on 15 March 2016, the issued andpaid-up capital of the Company was S$6,218,043 comprising 6,218,043 ordinary shares.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-8
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
1 GENERAL (cont’d)
(C) Sub-division of shares
On 16 March 2016, the shareholders approved the sub-division of every one share in theissued and paid-up capital of the Company into 15 shares. Following this sub-division, theissued and paid-up capital of the Company was S$6,218,043 comprising 93,270,645 shares.
Following completion of the Restructuring Exercise, details of the Company’s subsidiary is asfollows:
Country of Effective equity incorporation interest of the Group
Name of subsidiary Principal activity and operation 2013 2014 2015
% % %
Acromec Engineers Specialist engineering Singapore 100 100 100Pte Ltd (1) services in the field of
controlled environments
Note:
(1) Audited by Deloitte & Touche LLP, Singapore.
Basis of preparation of the combined financial statements
The Group resulting from the above Restructuring Exercise is regarded as a continuing entitythroughout the years ended 30 September 2013, 2014 and 2015 (“Relevant Periods”) as the Groupis ultimately controlled by the common shareholders both before and after the RestructuringExercise. Accordingly, although the Company is only incorporated on 22 December 2015, thecombined financial statements of the Group for the Relevant Periods have been prepared using theprinciples of merger accounting on the basis that the Restructuring Exercise transfers the equityinterest in the combining entity under the common control to the Company has been effected as atthe beginning of the Relevant Periods presented in these combined financial statements.
The combined financial statements of the Group for the Relevant Periods were authorised for issuein accordance with a resolution of the Board of Directors on 6 April 2016.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements have been prepared in accordance with thehistorical cost basis, except as disclosed in the accounting policies below, and are drawn up inaccordance with the Singapore Financial Reporting Standards (“FRS”).
A-9
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Historical cost is generally based on the fair value of the consideration given in exchange for goodsand services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date, regardless of whetherthat price is directly observable or estimated using another valuation technique. In estimating thefair value of an asset or a liability, the Group takes into account the characteristics of the asset orliability which market participants would take into account when pricing the asset or liability at themeasurement date. Fair value for measurement and/or disclosure purposes in these combinedfinancial statements is determined on such a basis, except for leasing transactions that are withinthe scope of FRS 17 Leases, and measurements that have some similarities to fair value but arenot fair value, such as value in use in FRS 36 Impairment of Assets.
ADOPTION OF NEW AND REVISED STANDARDS - The Group adopted all the new and revisedFRSs and Interpretations of FRS (“INT FRS”) that are effective from the respective dates and arerelevant to its operations. The adoption of these new/revised FRSs and INT FRSs does not result insignificant changes to the Group’s accounting policies and has no material effect on the amountsreported for the Relevant Periods.
At the date of authorisation of these combined financial statements, the following FRSs, INT FRSsand amendments to FRS that are relevant to the Group were issued but not effective:
� FRS 109 Financial Instruments
� FRS 115 Revenue from Contracts with Customers
� Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative
Management anticipates that the adoption of the above FRS, INT FRS and amendments to FRS infuture periods is not expected to have a material impact on the combined financial statements ofthe Group in the period of their initial adoption except for the following:
FRS 109 Financial Instruments
FRS 109 was issued in December 2014 to replace FRS 39 Financial Instruments: Recognition andMeasurement and introduced new requirements for (i) the classification and measurement offinancial assets and financial liabilities (ii) general hedge accounting (iii) impairment requirementsfor financial assets.
Key requirements for FRS 109 that may be relevant to the Group:
All recognised financial assets that are within the scope of FRS 39 are now required to besubsequently measured at amortised cost or fair value through profit or loss (FVTPL).
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-10
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
� With some exceptions, financial liabilities are generally subsequently measured at amortisedcost. With regard to the measurement of financial liabilities designated as at FVTPL, FRS109 requires that the amount of change in fair value of the financial liability that is attributableto changes in the credit risk of that liability is presented in other comprehensive income,unless the recognition of the effects of changes in the liability’s credit risk in othercomprehensive income would create or enlarge an accounting mismatch to profit or loss.Changes in fair value attributable to a financial liability’s credit risk are not subsequentlyreclassified to profit or loss. Under FRS 39, the entire amount of the change in the fair valueof the financial liability designated as at FVTPL is presented in profit or loss.
� In relation to the impairment of financial assets, FRS 109 requires an expected credit lossmodel, as opposed to an incurred credit loss model under FRS 39. The expected credit lossmodel requires an entity to account for expected credit losses and changes in thoseexpected credit losses at each reporting date to reflect changes in credit risk since initialrecognition. In other words, it is no longer necessary for a credit event to have occurredbefore credit losses are recognised.
FRS 109 will take effect from financial year beginning on or after 1 January 2018. The Group iscurrently evaluating the impact of the changes in the period of initial adoption.
FRS 115 Revenue from Contracts with CustomersIn November 2014, FRS 115 was issued which establishes a single comprehensive model forentities to use in accounting for revenue arising from contracts with customers. FRS 115 willsupersede the current revenue recognition guidance including FRS 18 Revenue, FRS 11Construction Contracts and the related interpretations when it becomes effective.
The core principle of FRS 115 is that an entity should recognise revenue to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration to which theentity expects to be entitled in exchange for those goods or services. Specifically, the standardintroduces a 5-step approach to revenue recognition:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
A-11
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Under FRS 115, an entity recognises revenue when (or as) a performance obligation is satisfied,i.e. when ‘control’ of the goods or services underlying the particular performance obligation istransferred to the customer. Far more prescriptive guidance has been added in FRS 115 to dealwith specific scenarios. Furthermore, extensive disclosures are required by FRS 115.
FRS 115 will take effect from financial year beginning on or after 1 January 2018. The Group iscurrently evaluating the potential impact of the changes in the period of initial adoption.
Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative
The amendments have been made to the following:
� Materiality and aggregation - An entity shall not obscure useful information by aggregating ordisaggregating information and materiality considerations apply to the primary statements,notes and any specific disclosure requirements in FRSs.
� Statement of financial position and statement of profit or loss and other comprehensiveincome - The list of line items to be presented in these statements can be aggregated ordisaggregated as relevant. Guidance on subtotals in these statements has also beenincluded.
� Notes - Entities have flexibility when designing the structure of the notes and guidance isintroduced on how to determine a systematic order of the notes. In addition, unhelpfulguidance and examples with regard to the identification of significant accounting policies areremoved.
Amendments to FRS 1 will take effect from financial year beginning on or after 1 January 2016.Management is currently evaluating the impact of the above amendments to FRS on the combinedfinancial statements of the Group.
BASIS OF COMBINATION – The Group resulting from the Restructuring Exercise as disclosed inNote 1, is one involving an entity under common control. Accordingly, the combined financialstatements have been accounted for using the principles of merger accounting where financialstatement items of the merged entities for the reporting periods in which the common controlcombination occurs are included in the combined financial statements of the Group as if thecombination had occurred from the date when the merged entities first came under the control ofthe same shareholders.
All significant intercompany transactions and balances between the entities in the Group areeliminated on combination.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-12
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
FINANCIAL INSTRUMENTS - Financial assets and financial liabilities are recognised on theGroup’s combined statement of financial position when the Group becomes a contractual party tothe instrument.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial instrumentand of allocating interest income or expense over the Relevant Periods. The effective interest rateis the rate that exactly discounts estimated future cash receipts or payments (including all fees onpoints paid or received that form an integral part of the effective interest rate, transaction costs andother premiums or discounts) through the expected life of the financial instrument, or whereappropriate, a shorter period. Income and expense is recognised on an effective interest basis fordebt instruments.
Financial assets
Loans and receivables
Trade and other receivables that have fixed or determinable payments that are not quoted in anactive market are classified as “loans and receivables”. Loans and receivables (including trade andother receivables and bank balances and cash) are initially measured at fair value andsubsequently measured at amortised cost using the effective interest method less impairment.Interest is recognised by applying the effective interest method, except for short-term receivableswhen the effect of discounting is immaterial.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at the end of each reporting period.Financial assets are considered to be impaired when there is objective evidence that, as a result ofone or more events that occurred after the initial recognition of the financial asset, the estimatedfuture cash flows of the investment have been impacted.
Objective evidence of impairment could include:
� Significant financial difficulty of the issuer or counterparty; or
� Default or delinquency in interest or principal payments; or
� It becoming probable that the borrower will enter bankruptcy or financial re-organisation.
The amount of the impairment is the difference between the asset’s carrying amount and thepresent value of estimated future cash flows, discounted at the original effective interest rate.
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APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
The carrying amount of the financial asset is reduced by the impairment loss directly for allfinancial assets with the exception of trade and other receivables where the carrying amount isreduced through the use of an allowance account. When a trade and other receivable isuncollectible, it is written off against the allowance account. Subsequent recoveries of amountspreviously written off are credited against the allowance account. Changes in the carrying amountof the allowance account are recognised in profit or loss.
If, in a subsequent period, the amount of impairment loss decreases and the decrease can berelated objectively to an event occurring after the impairment was recognised, the previouslyrecognised impairment loss is reversed through profit or loss to the extent that the carrying amountof the financial asset at the date the impairment is reversed does not exceed what the amortisedcost would have been had the impairment not been recognised.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows fromthe asset expire, or it transfers the financial asset and substantially all the risks and rewards ofownership of the asset to another entity. If the Group neither transfers nor retains substantially allthe risks and rewards of ownership and continues to control the transferred asset, the Grouprecognises its retained interest in the asset and an associated liability for amounts it may have topay. If the Group retains substantially all the risks and rewards of ownership of a transferredfinancial asset, the Group continues to recognise the financial asset and also recognises acollateralised borrowing for the proceeds received.
Financial liabilities and equity instruments
Classification as debt or equity
Financial liabilities and equity instruments issued by the Group are classified according to thesubstance of the contractual arrangements entered into and the definitions of a financial liabilityand an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Groupafter deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net ofdirect issue costs.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-14
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Trade and other payables
Trade and other payables are initially measured at fair value, net of transaction costs, and aresubsequently measured at amortised cost, using the effective interest method, with interestexpense recognised on an effective yield basis.
Interest-bearing borrowings are initially measured at fair value, and are subsequently measured atamortised cost, using the effective interest method. Any difference between the proceeds (net oftransaction costs) and the settlement or redemption of borrowings is recognised over the term ofthe borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations aredischarged, cancelled or they expire.
Offsetting arrangements
Financial assets and financial liabilities are offset and the net amount presented in the combinedstatements of financial position when the Group has a legally enforceable right to set off therecognised amounts; and intends either to settle on a net basis, or to realise the asset and settlethe liability simultaneously. A right to set-off must be available today rather than being contingent ona future event and must be exercisable by any of the counterparties, both in the normal course ofbusiness and in the event of default, insolvency or bankruptcy.
LEASES - Leases are classified as finance leases whenever the terms of the lease transfersubstantially all the risks and rewards of ownership to the lessee. All other leases are classified asoperating leases.
Assets held under finance leases are recognised as assets of the Group at their fair value at theinception of the lease or, if lower, at the present value of the minimum lease payments. Thecorresponding liability to the lessor is included in the combined statements of financial position as afinance lease obligation. Lease payments are apportioned between finance charges and reductionof the lease obligation so as to achieve a constant rate of interest on the remaining balance of theliability. Finance charges are charged directly to profit or loss. Contingent rentals are recognised asexpenses in the periods in which they are incurred.
Rentals payable under operating leases are charged to profit or loss on a straight-line basis overthe term of the relevant lease unless another systematic basis is more representative of the timepattern in which economic benefits from the leased asset are consumed. Contingent rentals arisingunder operating leases are recognised as an expense in the period in which they are incurred.
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APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
In the event that lease incentives are received to enter into operating leases, such incentives arerecognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rentalexpense on a straight-line basis, except where another systematic basis is more representative ofthe time pattern in which economic benefits from the leased asset are consumed.
CONSTRUCTION CONTRACTS - Where the outcome of a construction contract can be estimatedreliably, revenue and costs are recognised by reference to the percentage of completion of thecontract activity at the end of the reporting period, as measured by the percentage of the physicalproportion of the contract work completed as determined by the architects, quantity surveyors orengineers. Variations in contract work, claims and incentive payments are included to the extentthat the amount can be measured reliably and its receipt is considered probable.
Where the outcome of a construction contract cannot be estimated reliably, contract revenue isrecognised to the extent of contract costs incurred that it is probable will be recoverable. Contractcosts are recognised as expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss isrecognised as an expense immediately.
When contract costs incurred to date plus recognised profits less recognised losses exceedprogress billings, the surplus is shown as amounts due from customers for contract work. Forcontracts where progress billings exceed contract costs incurred to date plus recognised profitsless recognised losses, the surplus is shown as amounts due to contract customers (billings inexcess of costs). Amounts received before the related work is performed are included in thecombined statements of financial position, as a liability.
PLANT AND EQUIPMENT - Plant and equipment are stated at cost less accumulated depreciationand any accumulated impairment losses.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, usingthe straight-line method, on the following bases:
Renovation – 3 yearsFurniture and fittings and office equipment – 3 yearsComputer equipment – 3 yearsMotor vehicles – 6 yearsFactory machinery – 3 years
The estimated useful lives, residual values and depreciation method are reviewed at each yearend, with the effect of any changes in estimate accounted for on a prospective basis.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-16
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Assets held under finance leases are depreciated over their expected useful lives on the samebasis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end ofthe lease term, the asset shall be fully depreciated over the shorter of the lease term and its usefullife.
The gain or loss arising on disposal or retirement of an item of plant and equipment is determinedas the difference between the sales proceeds and the carrying amounts of the asset and isrecognised in profit or loss.
IMPAIRMENT OF NON-FINANCIAL ASSETS - At the end of each reporting period, the Groupreviews the carrying amounts of its tangible and intangible assets to determine whether there isany indication that those assets have suffered an impairment loss. If any such indication exists, therecoverable amount of the asset is estimated in order to determine the extent of the impairmentloss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, theGroup estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessingvalue in use, the estimated future cash flows are discounted to their present value using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risksspecific to the asset.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carryingamount of the asset is reduced to its recoverable amount. An impairment loss is recognisedimmediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased tothe revised estimate of its recoverable amount, but so that the increased carrying amount does notexceed the carrying amount that would have been determined had no impairment loss beenrecognised for the asset in prior years. A reversal of an impairment loss is recognised immediatelyin profit or loss.
PROVISIONS - Provisions are recognised when the Group has a present obligation (legal orconstructive) as a result of a past event, it is probable that the Group will be required to settle theobligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settlethe present obligation at the end of the reporting period, taking into account the risks anduncertainties surrounding the obligation. Where a provision is measured using the cash flowsestimated to settle the present obligation, its carrying amount is the present value of those cashflows.
When some or all of the economic benefits required to settle a provision are expected to berecovered from a third party, the receivable is recognised as an asset if it is virtually certain thatreimbursement will be received and the amount of the receivable can be measured reliably.
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APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
GOVERNMENT GRANTS - Government grants are recognised as income over the periodsnecessary to match them with the costs for which they are intended to compensate, on asystematic basis. Government grants that are receivable as compensation for expenses or lossesalready incurred for the purpose of giving immediate financial support to the Group with no futurerelated costs are recognised in profit or loss in the period in which they become receivable.
REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration receivedor receivable. Revenue is reduced for customer returns, rebates and other similar allowances.
Revenue from projects is recognised as described in the Note 2 to the financial statements underConstruction Contracts.
Revenue from rendering of other services that are of a short duration is measured at the fair valueof the consideration received or receivable when services are completed.
Interest income is accrued on a time basis, by reference to the principal outstanding and at theeffective interest rate applicable.
BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction orproduction of qualifying assets, which are assets that necessarily take a substantial period of timeto get ready for their intended use or sale, are added to the cost of those assets, until such time asthe assets are substantially ready for their intended use or sale. Investment income earned on thetemporary investment of specific borrowings pending their expenditure on qualifying assets isdeducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
RETIREMENT BENEFIT OBLIGATIONS - Payments to defined contribution retirement benefitplans are charged as an expense when employees have rendered the services entitling them tothe contributions. Payments made to state-managed retirement benefit schemes, such as theSingapore Central Provident Fund, are dealt with as payments to defined contribution plans wherethe Group’s obligations under the plans are equivalent to those arising in a defined contributionretirement benefit plan.
EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised whenthey accrue to employees. A provision is made for the estimated liability for annual leave as a resultof services rendered by employees up to the end of the reporting period.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-18
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferredtax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit asreported in the combined statement of profit or loss and other comprehensive income because itexcludes items of income or expense that are taxable or deductible in other years and it furtherexcludes items that are not taxable or tax deductible. The Group’s liability for current tax iscalculated using tax rates (and tax laws) that have been enacted or substantively enacted by theend of the reporting period.
Deferred tax is recognised on the differences between the carrying amounts of assets and liabilitiesin the combined financial statements and the corresponding tax bases used in the computation oftaxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilitiesare generally recognised for all taxable temporary differences and deferred tax assets arerecognised to the extent that it is probable that taxable profits will be available against whichdeductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period andreduced to the extent that it is no longer probable that sufficient taxable profits will be available toallow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liabilityis settled or the asset realised based on the tax rates (and tax laws) that have been enacted orsubstantively enacted by the end of the reporting period. The measurement of deferred taxliabilities and assets reflects the tax consequences that would follow from the manner in which theGroup expects, at the end of the reporting period, to recover or settle the carrying amount of itsassets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set offcurrent tax assets against current tax liabilities and when they relate to income taxes levied by thesame taxation authority and the Group intends to settle its current tax assets and liabilities on a netbasis.
Current and deferred tax are recognised as an expense or income in profit or loss, except whenthey relate to items credited or debited outside profit or loss (either in other comprehensive incomeor directly in equity), in which case the tax is also recognised outside profit or loss (either in othercomprehensive income or directly in equity, respectively), or where they arise from the initialaccounting for a business combination.
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APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
FOREIGN CURRENCY TRANSACTIONS - The combined financial statements of the Group aremeasured and presented in the currency of the primary economic environment in which the entityoperates (its functional currency). The combined financial statements of the Group are presented inSingapore dollars, which is the functional currency of the entities.
In preparing the combined financial statements of the Group, transactions in currencies other thanthe entity’s functional currency are recorded at the rate of exchange prevailing on the date of thetransaction. At the end of each reporting period, monetary items denominated in foreign currenciesare retranslated at the rates prevailing at the end of the reporting period. Non-monetary items thatare measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation ofmonetary items are included in profit or loss for the period. Exchange differences arising on theretranslation of non-monetary items carried at fair value are included in profit or loss for the periodexcept for differences arising on the retranslation of non-monetary items in respect of which gainsand losses are recognised in other comprehensive income. For such non-monetary items, anyexchange component of that gain or loss is also recognised in other comprehensive income.
CASH AND CASH EQUIVALENTS IN THE COMBINED STATEMENTS OF CASH FLOWS - Cashand cash equivalents in the combined statements of cash flows comprise fixed deposits, cash atbank and on hand that are readily convertible to a known amount of cash and are subject to aninsignificant risk of changes in value.
SEGMENT REPORTING – An operating segment is a component of the Group that engages inbusiness activities from which it may earn revenue and incur expenses.
Operating segments are reported in a manner consistent with the internal reporting provided tomembers of management and the chief operating decision makers who are responsible forallocating resources and assessing performance of the operating segments.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-20
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 2, managementis required to make judgements, estimates and assumptions about the carrying amounts of assetsand liabilities that are not readily apparent from other sources. The estimates and associatedassumptions are based on historical experience and other factors that are considered to berelevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimate is revised if the revisionaffects only that period, or in the period of the revision and future periods if the revision affects bothcurrent and future periods.
Critical judgements in applying the Group’s accounting policies
Management is of the opinion that there are no critical judgment that have a significant effect onthe amounts recognised in the combined financial statements, except for the key sources ofestimation uncertainty as disclosed below.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at theend of the Relevant Periods, that have a significant risk of causing a material adjustment to thecarrying amounts of assets and liabilities within the next financial year, are discussed below.
Assessment of recoverability of debts
The assessment of recoverability of trade receivables of the Group is based on the ongoingevaluation of collectability and ageing analysis of the outstanding debts and on management’sestimate of the ultimate realisation of these receivables, including creditworthiness and the pastcollection history of each debtor. An allowance is made for doubtful debts for estimated lossesresulting from the subsequent inability of the customer to make required payments. If the financialconditions of the customers were to deteriorate, resulting in an impairment of their ability to makepayments, additional allowances may be required in future period. The carrying amounts of tradereceivables at the end of the Relevant Periods are disclosed in Note 7 to the financial statements.
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APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(cont’d)
Project revenue and costs
As described in Note 2 to the combined financial statements, revenue and costs associated with aproject are recognised as revenue and expenses respectively by reference to the stage ofcompletion of a project activity at the end of the reporting period, using architects’, quantitysurveyors’ or engineers’ estimates. When it is probable that the total project costs will exceed thetotal project revenue, the expected loss is recognised as an expense immediately. Thesecomputations are based on the presumption that the outcome of a project can be estimatedreliably.
Management has performed the cost studies, taking into account the costs to date and costs tocomplete for each project. Management has also reviewed the status and the physical proportion ofthe contract work completed of such projects and is satisfied that the estimates to complete arerealistic, and the estimates of total project costs and sales proceeds indicate full project recovery.In addition, Management has assessed each project individually according to its technicalrequirements and circumstances in order to estimate project cost accrual.
Revenue arising from additional claims and variation orders, whether billed or unbilled, isrecognised when negotiations have reached an advanced stage such that it is probable that thecustomer will accept the claims or approve the variation orders, and where the amount of suchclaims and variation orders can be measured reliably.
4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT
(a) Categories of financial instruments
The following table sets out the financial instruments as at the end of the reporting period:
2015 2014 2013S$ S$ S$
Financial assets
Loans and receivables (including cash and cash equivalents) 21,075,606 12,410,693 17,372,405
Financial liabilities
Amortised cost 11,587,421 5,749,565 12,257,927
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-22
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
(b) Financial instruments subject to offsetting, enforceable master netting arrangementsand similar agreements
The Group does not have any financial instruments which are subject to offsetting,enforceable master netting arrangements or similar netting agreements.
(c) Financial risk management policies and objectives
Management monitors and manages the financial risks relating to the operations of theGroup to ensure appropriate measures are implemented in a timely and effective manner.These risks include market risk (including interest rate risk and foreign exchange risk), creditrisk and liquidity risk.
(i) Interest rate risk management
The Group’s exposure to interest rate risk are restricted to its interest bearing bankbalances, bill payables and finance leases as disclosed in Notes 6, 12 and 13respectively.
No sensitivity analysis is prepared as the Group does not expect any material effecton the Group’s profit or loss arising from the effects of changes to interest rates at theend of Relevant Periods.
(ii) Foreign exchange risk management
Foreign exchange risk arising from changes in foreign currency exchange rates has afinancial effect on the Group in the current reporting period and in future years. TheGroup’s balances and transactions are predominantly in Singapore dollars, which is itsfunctional currency.
At the end of the Relevant Periods, the carrying amounts of monetary assets andmonetary liabilities denominated in currencies other than the Group’s functionalcurrency are as follows:
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
(c) Financial risk management policies and objectives (cont’d)
(ii) Foreign exchange risk management (cont’d)
Foreign exchange risk sensitivity analysis
The sensitivity rate used when reporting foreign currency risk to key managementpersonnel is 10%, which is the change in foreign exchange rate that managementdeems reasonably possible which will affect outstanding foreign currency denominatedmonetary items at period end.
If the relevant foreign currency weakens by 10% against the functional currency of theGroup, the Group’s profit before income tax will increase (decrease) by:
2015 2014 2013S$ S$ S$
United States dollars 15,897 5,678 58,625Euro (228) (4,097) 13,949 Malaysian Ringgit 251 – –
If the relevant foreign currency strengthens by 10% against the functional currency ofthe Group, the Group’s profit before income tax will decrease (increase) by the sameamount above.
(iii) Credit risk management
Credit risk refers to the risk that a counterparty may default on its contractualobligations resulting in financial loss to the Group. The Group has adopted a policy ofonly dealing with creditworthy counterparties and obtaining sufficient collateral whereappropriate, as a means of mitigating the risk of financial loss from defaults.
There is a concentration of credit risk as 38.7% (2014 : 60.5%; 2013 : 78.8%) of theGroup’s trade receivables at the end of the Relevant Periods relates to one customer.
Further details of credit risks on trade receivables are disclosed in Note 7 to thefinancial statements
Cash and bank balances are held in creditworthy financial institutions.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-24
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (cont’d)
(c) Financial risk management policies and objectives (cont’d)
(iv) Liquidity risk management
Liquidity risk is the risk that the Group is unable to meet its obligations as and whenthey fall due. The Group monitors and maintains a level of cash and cash equivalentsdeemed adequate by management to finance the Group’s operations and mitigate theeffect of fluctuation in cash flows. All financial assets and financial liabilities as at theend of the Relevant Periods are non-interest bearing and are repayable on demand ordue within 1 year from the end of the reporting period, except for finance leasespayables as disclosed in Note 13 to the combined financial statements. Themanagement of the Group manages liquidity risk by maintaining adequate reservesand actual cash flows and matching the maturity profiles of financial assets andliabilities to the extent possible.
(v) Fair value of financial assets and financial liabilities
The carrying value of the cash and cash equivalents, trade and other receivables andpayables and other liabilities approximate their respective fair values due to therelatively short-term maturity of these financial assets and financial liabilities. The fairvalues of other classes of financial assets and liabilities are disclosed in the respectivenotes to combined financial statements.
(d) Capital risk management policies and objectives
The Group manages its capital to ensure that the Group will be able to continue as a goingconcern while maximising the return to shareholders through the optimisation of the debtand equity balance.
The capital structure of the Group consists of debt, which includes bill payables (Note 12)and finance leases (Note 13), and equity attributable to owners of the Group, comprisingissued capital and retained earnings.
The Group’s overall strategy remains unchanged during the Relevant Periods.
A-25
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
5 RELATED PARTY TRANSACTIONS
Some of the Group’s transactions and arrangements are with related parties and the effect of theseon the basis determined between the parties is reflected in these combined financial statements.The balances are unsecured, interest-free and repayable on demand unless otherwise stated.
During the Relevant Periods, the Group entered into the following transactions with related parties:
2015 2014 2013S$ S$ S$
Entities controlled by the shareholders of the Company:
Purchase of services from related parties 781,745 907,922 754,982
Compensation of directors and key management personnel
The remuneration of directors and key management personnel are as follows:
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-26
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
6 CASH AND BANK BALANCES
2015 2014 2013S$ S$ S$
Cash at bank 5,377,307 4,440,165 2,591,305 Cash on hand 16,556 8,555 6,556Fixed deposits 3,521,254 4,515,135 3,509,067
Total 8,915,117 8,963,855 6,106,928Less: Fixed deposits pledged (2,521,254) (2,515,135) (2,509,067)
Cash and cash equivalents percombined statements of cash flows 6,393,863 6,448,720 3,597,861
Certain fixed deposits are pledged as collaterals in respect of bank facilities. The fixed depositsearned interest at 0.10 % to 0.80% (2014 : 0.10% to 0.80%; 2013 : 0.08% to 1.18%) per annumand have tenures ranging from 3 to 12 months (2014 : 3 to 12 months; 2013 : 3 to 12 months).
Less: Allowance for doubtful debts – (61,642) (770,400)
Net 5,613,618 1,900,476 5,076,370
Movements in the allowance for doubtful debts:
2015 2014 2013S$ S$ S$
Balance at beginning of year 61,642 770,400 –(Decrease) Increase in allowance recognised in profit or loss (Note 18) (61,642) (708,758) 770,400
Balance at end of year – 61,642 770,400
The average credit period is 30 days (2014 : 30 days; 2013 : 30 days). No interest is charged onthe outstanding trade receivables. Retention receivables are classified as current as they areexpected to be received within the Group’s normal operating cycle.
A-27
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
7 TRADE RECEIVABLES (cont’d)
No allowance is required to be made at end of 30 September 2015. At the end of 30 September2013 and 2014, S$61,642 and S$770,400 was set up respectively. This allowance has beendetermined by reference to past default experience. The Group reviews the recoverable amount ofeach individually significant trade debt at the end of the reporting period to ensure that adequateimpairment losses are made for irrecoverable amounts.
The table below is an analysis of trade receivables as at 30 September:
2015 2014 2013S$ S$ S$
Not past due and not impaired 5,494,753 375,216 481,957Past due but not impaired (i) 118,865 1,525,260 4,594,413
5,613,618 1,900,476 5,076,370
Impaired receivables – collectively assessed (ii) – 61,642 770,400
Less: Allowance for impairment – (61,642) (770,400)
– – –
5,613,618 1,900,476 5,076,370
(i) Aging of receivables that are past due but not impaired:
2015 2014 2013S$ S$ S$
1 to 30 days overdue 60,122 103,613 331,24431 to 60 days overdue 58,743 1,187,745 427,89761 to 90 days overdue – 212,502 3,081,600More than 90 days overdue – 21,400 753,672
118,865 1,525,260 4,594,413
These receivables, which are past due and not impaired, are not secured by any collateralsor credit enhancements.
In determining the recoverability of a trade receivable, the Group considers any change inthe credit quality of the trade receivable from the date credit was initially granted up to theend of the reporting period.
Included in the Group’s trade receivables balance are debtors with a carrying amount ofS$118,865 (2014 : S$1,525,260; 2013 : S$4,594,413) which are past due at the end of thereporting period and for which the Group has not recognised an allowance for doubtfulreceivables as there has not been a significant change in credit quality and the amounts arestill considered recoverable.
(ii) These amounts are stated before any deduction for impairment losses.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-28
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
8 AMOUNTS DUE FROM (TO) CONTRACT CUSTOMERS
2015 2014 2013S$ S$ S$
Contracts in progress at end of the reporting period:
Amounts due from contract customers 6,466,844 1,473,698 6,127,307Amounts due to contract customers (944,990) – –
The staff loans and advances are unsecured, interest-free and repayable on demand.
A-29
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
AC
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,971
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946
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-30
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
10 PLANT AND EQUIPMENT (cont’d)
The carrying amount of the Group’s motor vehicles and office equipment includes an amount ofS$80,501 (2014 : S$51,784; 2013 : S$23,067) secured in respect of asset held under financeleases (Note 13).
The average credit period for trade payable is 60 days (2014 : 60 days; 2013 : 60 days).
12 BILL PAYABLES
Bill payables and other credit facilities from banks are secured on the fixed deposits pledged (Note6) and personal guarantees of directors. The bill payables bear an interest rate of 5.25% (2014:6.25%; 2013 : 5.25%) per annum and is repayable within 12 months.
A-31
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
13 FINANCE LEASES
Minimum Present value of lease payments minimum lease payments
2015 2014 2013 2015 2014 2013S$ S$ S$ S$ S$ S$
Within one year 10,711 21,966 48,091 10,587 20,708 43,844In the second to fifth
Present value of lease obligations 10,587 30,970 74,727 10,587 30,970 74,727
Less: Amount due forsettlement within 12 months (10,587) (20,708) (43,844)
Amount due for settlementafter 12 months – 10,262 30,883
It is the Group’s policy to lease certain of its office equipment and motor vehicles under financeleases. The average lease term is 4 years (2014 : 4 years; 2013 : 4 years) with an averageeffective interest rate of 5.36% (2014: 5.36%; 2013 : 4.50%) per annum. Interest rates are fixed atthe contract date, and thus expose the Group to fair value interest rate risk. All leases are on fixedrepayment basis and no arrangements have been entered into for contingent rental payments.
The fair value of the Group’s lease obligations approximates their carrying amount.
The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets(Note 10). As at 30 September 2013, certain finance leases facilities were under the personalguarantees of directors.
14 SHARE CAPITAL
The Company was incorporated on 22 December 2015. Accordingly, the share capital in thecombined financial statements as at 30 September 2013, 2014 and 2015 relates to the aggregateamounts of the Group’s share of the share capital of the subsidiary, Acromec Engineers Pte Ltd
2015 2014 2013 2015 2014 2013Number of S$ S$ S$
ordinary shares
Issued and paid up:At beginning and end of year 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-32
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
14 SHARE CAPITAL (cont’d)
Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right todividends as and when declared by the Company.
15 REVENUE
2015 2014 2013S$ S$ S$
Revenue from projects 33,465,388 22,241,181 44,056,620Revenue from other services rendered 1,911,456 866,180 815,052
Total 35,376,844 23,107,361 44,871,672
16 OTHER OPERATING INCOME
2015 2014 2013S$ S$ S$
Gain on disposal of plant and equipment 4,702 – – Reversal of allowance for doubtful debts (Note 7) 61,642 708,758 – Bank interest 363 598 182Fixed deposit interest 19,767 16,436 18,593Grants received 53,618 75,503 42,318Sundry income 31,175 115,352 85,281
(inclusive of directors’ remuneration) 4,600,699 3,949,003 4,077,160Cost of defined contribution plans
(included in employee benefit expenses) 318,644 263,860 337,313Depreciation of plant and equipment (Note 10) 153,054 123,321 137,098(Reversal of) Allowance for doubtful debts (Note 7) (61,642) (708,758) 770,400Net foreign exchange loss 11,565 8,334 77,739
19 INCOME TAX EXPENSE
2015 2014 2013S$ S$ S$
Current tax expense 580,000 424,000 379,000Over provision of prior years’ income tax – (10,902) (48,304)
580,000 413,098 330,696
Domestic income tax is calculated at 17% (2014 : 17%; 2013 : 17%) of the estimated assessableprofit for the year.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-34
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
19 INCOME TAX EXPENSE (cont’d)
The total income tax for the year can be reconciled to the accounting profit before income tax asfollows:
2015 2014 2013S$ S$ S$
Profit before income tax 3,961,401 3,182,403 2,910,808
Tax at Singapore statutory tax rate of 17% 673,438 541,009 494,837Effect of revenue that is exempt from taxation (25,925) (25,925) (25,925)Effect of expenses that are not deductible in
determining taxable profit 25,222 3,701 6,699Utilisation of capital allowance (48,981) (45,003) (30,581)Effect of tax concessions (23,542) (23,538) (21,101)Over provision of tax in respect of prior years – (10,902) (48,304)Income tax rebate (20,000) (30,000) (30,000)Others (212) 3,756 (14,929)
Income tax expense 580,000 413,098 330,696
20 EARNINGS PER SHARE
Basic and diluted earnings per share for the Relevant Periods have been calculated based on theprofit for the year attributable to owners of the Company of S$3,381,401 (2014 : S$2,769,305; 2013 : S$2,580,112) and pre-invitation share capital of 93,270,645 shares.
A-35
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
21 DIVIDENDS
During the year ended 30 September 2013, Acromec Engineers Pte Ltd paid interim one-tier taxexempt dividends of S$1,500,000 to its then shareholders.
During the year ended 30 September 2014, Acromec Engineers Pte Ltd paid final one-tier taxexempt dividends of S$1,500,000 in respect of the financial year ended 30 September 2013 to itsthen shareholders.
During the year ended 30 September 2015, Acromec Engineers Pte Ltd paid final one-tier taxexempt dividends of S$1,650,000 in respect of the financial year ended 30 September 2014 to itsthen shareholders.
22 OPERATING LEASE ARRANGEMENTS
2015 2014 2013S$ S$ S$
Minimum lease payments under operating leasesrecognised as expense in the year 311,055 322,738 300,681
At the end of the Relevant Periods, the Group has outstanding commitments under non-cancellableoperating leases which fall due after the financial year end as follows:
2015 2014 2013S$ S$ S$
Within one year 335,138 325,525 274,185In the second to fifth years inclusive 47,970 347,806 515,326
Total 383,108 673,331 789,511
Operating lease payments represent rental payable by the Group for certain of its office andwarehouse premises, dormitories and office equipment. Leases are negotiated for an average termof three years and rentals are fixed for an average of three years.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-36
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
23 SEGMENT INFORMATION
For the purpose of resource allocation and assessment of segment performance, the Group’s chiefoperating decision makers have focused on the business operating units which in turn, aresegregated based on their services. This forms the basis of identifying the segments of the Groupunder FRS 108.
Operating segments are aggregated into a single reportable operating segment if they have similareconomic characteristic, such as long-term average gross margins, and are similar in respect ofnature of services and process, type of customers, method of distribution, and if applicable, thenature of the regulatory environment.
For management purposes, the Group is currently organised into two main operating segments:(1) Engineering, Procurement and Construction segment; and (2) Maintenance segment.
The Engineering, Procurement and Construction segment provides engineering, procurement andconstruction services, specialising in architectural, mechanical, electrical and process works withincontrolled environment.
The Maintenance segment provides maintenance services for controlled environments andsupporting infrastructure.
Engineering,Procurement
& Construction Maintenance TotalS$ S$ S$
30 September 2015
Revenue 33,465,388 1,911,456 35,376,844Cost of sales (26,483,102) (1,426,228) (27,909,330)
Gross profit 6,982,286 485,228 7,467,514
Segment result 4,112,795Depreciation expense (153,054)Interest income 20,130Finance costs (18,470)
Profit before income tax 3,961,401Income tax expense (580,000)
Profit for the year 3,381,401
A-37
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
23 SEGMENT INFORMATION (cont’d)
Engineering,Procurement
& Construction Maintenance TotalS$ S$ S$
30 September 2014
Revenue 22,241,181 866,180 23,107,361Cost of sales (16,694,343) (641,113) (17,335,456)
Gross profit 5,546,838 225,067 5,771,905
Segment result 3,314,739Depreciation expense (123,321)Interest income 17,034Finance costs (26,049)
Profit before income tax 3,182,403Income tax expense (413,098)
Profit for the year 2,769,305
30 September 2013
Revenue 44,056,620 815,052 44,871,672Cost of sales (36,489,752) (601,682) (37,091,434)
Gross profit 7,566,868 213,370 7,780,238
Segment result 3,087,233Depreciation expense (137,098)Interest income 18,775Finance costs (58,102)
Profit before income tax 2,910,808Income tax expense (330,696)
Profit for the year 2,580,112
Geographical segments
The Group’s activities are located in Singapore. The geographical locations of the Group’scustomers and non-current assets are in Singapore
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-38
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
23 SEGMENT INFORMATION (cont’d)
Major customer information
The Group’s revenue derived from customers who individually account for 10% or more of theGroup’s revenue is detailed below:
2015 2014 2013S$ S$ S$
Engineering, Procurement and Construction
Top 1st customer 7,288,415 8,196,484 10,444,994Top 2nd customer 6,900,745 3,864,967 9,259,207Top 3rd customer 6,475,149 3,349,200 7,942,800Top 4th customer 4,629,847 NA 7,741,603Top 5th customer NA NA 6,927,662
24 EVENTS AFTER THE REPORTING PERIOD
Subsequent to year ended 30 September 2015, Acromec Engineers Pte Ltd declared a final taxexempt dividends of S$1,800,000 in respect of financial year ended 30 September 2015 to bepayable to its then shareholders.
At extraordinary general meetings held on 16 March 2016, the shareholders approved, inter alia,the following:
(a) the sub-division of 6,218,043 shares in the issued and paid-up share capital of the Companyinto 93,270,645 shares;
(b) the conversion of the Company into a public company limited by shares and theconsequential change of name to “Acromec Limited”;
(c) the adoption of a new set of constitution;
(d) the issue of the new shares pursuant to the invitation, which when allotted, issued and fullypaid, will rank pari passu in all respects with the existing issued shares;
(e) the adoption of the Acromec Performance Share Scheme; and
(f) that authority be given to the directors to:
(A) (i) allot and issue shares in the capital of the Company whether by way of rights,bonus or otherwise; and/or
A-39
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO COMBINED FINANCIAL STATEMENTS30 September 2013, 2014 and 2015
24 EVENTS AFTER THE REPORTING PERIOD (cont’d)
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might orwould require shares to be issued, including but not limited to the creation and issueof (as well as adjustments to) warrants, debentures or other instruments convertibleinto shares,
at any time and upon such terms and conditions and for such purposes and to suchpersons as the directors may in their absolute discretion deem fit; and
(B) (notwithstanding that this authority may have ceased to be in force) issue shares inpursuance of any Instrument made or granted by the directors while this authority was inforce,
provided that:
(1) the aggregate number of shares to be issued pursuant to this authority (including shares tobe issued in pursuance of Instruments made or granted pursuant to this authority) does notexceed 100% of the total number of issued shares (excluding treasury shares) in the capitalof the Company (as calculated in accordance with sub-paragraph (2) below) (“IssueShares”), of which the aggregate number of shares to be issued other than on a pro ratabasis to the existing shareholders (including shares to be issued in pursuance of Instrumentsmade or granted pursuant to this authority) does not exceed 50% of the total number ofissued shares;
(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purposeof determining the aggregate number of shares that may be issued under sub-paragraph (1)above, the percentage of issued shares shall be based on the total number of issued shares(excluding treasury shares) in the capital of the Company immediately following the close ofthe Invitation, after adjusting for:
(i) new shares arising from the conversion or exercise of any convertible securities;
(ii) new shares arising from the exercise of share options or vesting of share awardswhich are outstanding or subsisting at the time this authority is given; and
(iii) any subsequent bonus issue, consolidation or sub-division of shares;
(3) in exercising the authority conferred, the Company shall comply with the provisions of theCatalist Rules for the time being in force (unless such compliance has been waived by theSGX-ST) and the constitution for the time being of the Company; and
(4) (unless revoked or varied by the Company in general meeting) this authority shall continue inforce until the conclusion of the next annual general meeting of the Company or the date bywhich the next annual general meeting of the Company is required by law to be held,whichever is the earlier.
APPENDIX AINDEPENDENT AUDITORS’ REPORT AND THE AUDITED COMBINED
FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2013, 2014 AND 2015
A-40
INDEPENDENT AUDITORS’ REPORT ON THE COMPILATION OF THE UNAUDITED PRO FORMACOMBINED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015
6 April 2016
The Board of DirectorsAcromec Limited4 Kaki Bukit Avenue 1 #06-03Singapore 417939
Dear Sirs
We have completed our assurance engagement to report on the compilation of the Unaudited Pro FormaCombined Financial Information of Acromec Limited (the “Company”) and its subsidiary (the “Group”) bythe management of Acromec Limited (“Management”). The Unaudited Pro Forma Combined FinancialInformation of the Group consists of the pro forma combined statement of financial position as at 30September 2015 and the pro forma combined statement of cash flows for the financial year ended 30September 2015 (the “Unaudited Pro Forma Combined Financial Information of the Group”). TheUnaudited Pro Forma Combined Financial Information of the Group has been prepared for illustrativepurposes only and based on certain assumptions after making certain adjustments. The applicablecriteria on the basis of which the Management of the Group compiled the Unaudited Pro Forma aredescribed in Note 2.
The Unaudited Pro Forma Combined Financial Information of the Group has been compiled by theManagement to illustrate the impact of the events or transactions set out in Note 1 on:
(i) the unaudited pro forma combined statement of financial position of the Group as at 30 September2015 as if the events or transactions had occurred on 30 September 2015; and
(ii) the unaudited pro forma combined statement of cash flows of the Group for the financial yearended 30 September 2015 as if the events or transactions had occurred on 1 October 2014.
The pro forma adjustment does not have any material effect on the combined statement of profit or lossand other comprehensive income for the financial year ended 30 September 2015. Accordingly, theunaudited pro forma combined statement of profit or loss and other comprehensive income for thefinancial year ended 30 September 2015 have not been presented.
B-1
APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
INDEPENDENT AUDITORS’ REPORT ON THE COMPILATION OF THE UNAUDITED PRO FORMACOMBINED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015(cont’d)
As part of this process, information about the Group’s financial position and cash flows has beenextracted by the Management from the audited combined financial statements of Acromec Limited for thefinancial years ended 30 September 2013, 2014 and 2015 on which an audit report has been published.
The Management’s Responsibility for the Unaudited Pro Forma Combined Financial Information
The Management is responsible for compiling the Unaudited Pro Forma Combined Financial Informationof the Group on the basis of the applicable criteria as described in Note 2.
Our Independence and Quality Control
We have complied with the independence and other ethical requirement of the Accounting and CorporateRegulatory Authority Code of Professional Conduct and Ethics for Public Accountants and AccountingEntities, which is founded on fundamental principles of integrity, objectivity, professional competence anddue care, confidentiality and professional behaviour.
The firm applies Singapore Standard on Quality Control 1 and accordingly maintains a comprehensivesystem of quality control including documented policies and procedures regarding compliance with ethicalrequirements, professional standards and applicable legal and regulatory requirements.
Independent Auditors’ Responsibility
Our responsibility is to express an opinion about whether the Unaudited Pro Forma Combined FinancialInformation of the Group has been compiled, in all material respects, by the Management on the basis ofthe applicable criteria as described in Note 2.
We conducted our engagement in accordance with Singapore Standard on Assurance Engagements3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial InformationIncluded in a Prospectus (“SSAE 3420”) issued by the Institute of Singapore Chartered Accountants. Thisstandard requires that the auditors comply with ethical requirements and plan and perform procedures toobtain reasonable assurance about whether the Management has compiled, in all material respects, theUnaudited Pro Forma Combined Financial Information of the Group on the basis of the applicable criteriaas described in Note 2.
For purposes of this engagement, we are not responsible for updating or reissuing any reports oropinions on any historical financial information used in compiling the Unaudited Pro Forma CombinedFinancial Information of the Group, nor have we, in the course of this engagement, performed an audit orreview of the financial information used in compiling the Unaudited Pro Forma Combined FinancialInformation of the Group.
The purpose of the Unaudited Pro Forma Combined Financial Information of the Group included in theoffer document is solely to illustrate the impact of significant events or transactions on unadjustedfinancial information of the entity as if the event had occurred or the transaction had been undertaken atan earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance thatthe actual outcome of the events or transactions at the respective dates would have been as presented.
APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
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INDEPENDENT AUDITORS’ REPORT ON THE COMPILATION OF THE UNAUDITED PRO FORMACOMBINED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015(cont’d)
A reasonable assurance engagement to report on whether the Unaudited Pro Forma Combined FinancialInformation of the Group has been compiled, in all material respects, on the basis of the applicablecriteria involves performing procedures to assess whether the applicable criteria used by themanagement in the compilation of the Unaudited Pro Forma Combined Financial Information of theGroup provide a reasonable basis for presenting the significant effects directly attributable to the eventsor transactions, and to obtain sufficient appropriate evidence about whether:
� The related unaudited pro forma adjustment give appropriate effect to those criteria; and
� The Unaudited Pro Forma Combined Financial Information of the Group reflects the properapplication of those adjustments to the unadjusted financial information.
The procedures selected depend on the independent auditor’s judgment, having regard to hisunderstanding of the nature of the Group, the event or transaction in respect of which the Unaudited ProForma Combined Financial Information of the Group has been compiled, and other relevant engagementcircumstances.
The engagement also involves evaluating the overall presentation of the Unaudited Pro Forma CombinedFinancial Information of the Group.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for ouropinion.
Opinion
In our opinion:
(a) The Unaudited Pro Forma Combined Financial Information of the Group has been compiled:
(i) in a manner consistent with the accounting policies adopted by the Group in its latestaudited financial statements, which are in accordance with Singapore Financial ReportingStandards;
(ii) on the basis of the applicable criteria stated in Note 2 of the Unaudited Pro FormaCombined Financial Information of the Group; and
(b) each material adjustment made to the information used in the preparation of the Unaudited ProForma Combined Financial Information of the Group is appropriate for the purpose of preparingsuch unaudited financial information.
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APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
INDEPENDENT AUDITORS’ REPORT ON THE COMPILATION OF THE UNAUDITED PRO FORMACOMBINED FINANCIAL INFORMATION FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2015(cont’d)
Restriction of Use and Distribution
This report has been prepared solely to you for inclusion in the offer document in connection with theproposed listing of Acromec Limited on the Catalist, the sponsor supervised board of the SingaporeExchange Securities Trading Limited and for no other purposes.
APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
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ACROMEC LIMITED AND ITS SUBSIDIARY
UNAUDITED PRO FORMA COMBINED STATEMENT OF FINANCIAL POSITIONAs at 30 September 2015
UnauditedAudited Pro Forma
combined Unaudited combinedstatement of Pro Forma statement of
financial position adjustment financial positionS$ S$ S$
ASSETS
Current assetsCash and bank balances 8,915,117 (1,800,000) 7,115,117Trade receivables 5,613,618 – 5,613,618Amounts due from contract customers 6,466,844 – 6,466,844Other receivables, deposits and prepayments 124,851 – 124,851
Total current assets 21,120,430 (1,800,000) 19,320,430
Non-current assetPlant and equipment 149,946 – 149,946
Total assets 21,270,376 (1,800,000) 19,470,376
LIABILITIES AND EQUITY
Current liabilitiesTrade and other payables 11,187,695 – 11,187,695Bill payables 389,139 – 389,139Amounts due to contract customers 944,990 – 944,990Finance leases 10,587 – 10,587Tax payable 719,925 – 719,925
Total current liabilities 13,252,336 – 13,252,336
Capital and reservesShare capital 1,500,000 – 1,500,000Retained earnings 6,518,040 (1,800,000) 4,718,040
Total equity 8,018,040 (1,800,000) 6,218,040
Total liabilities and equity 21,270,376 (1,800,000) 19,470,376
B-5
APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
UNAUDITED PRO FORMA COMBINED STATEMENT OF CASH FLOWSFinancial year ended 30 September 2015
UnauditedAudited Pro Forma
combined Unaudited combinedstatement of Pro Forma statement ofcash flows adjustment cash flows
S$ S$ S$
Operating activitiesProfit before income tax 3,961,401 – 3,961,401Adjustments for:
Depreciation of plant and equipment 153,054 – 153,054Reversal of doubtful trade receivables (61,642) – (61,642) Interest income (20,130) – (20,130)Interest expense 18,470 – 18,470 Gain on disposal of plant and equipment (4,701) – (4,701)
Operating cash flows before movements in working capital 4,046,452 – 4,046,452
Trade receivables (3,651,500) – (3,651,500) Other receivables, deposits and prepayments (52,187) – (52,187)Amounts due from (to) contract customers - net (4,048,156) – (4,048,156)Trade and other payables 5,711,581 – 5,711,581Bill payables 146,658 – 146,658
Cash generated from operations 2,152,848 – 2,152,848
Income taxes paid (399,282) – (399,282)Interest received 20,130 – 20,130
Net cash from operating activities 1,773,696 – 1,773,696
Investing activitiesPurchase of plant and equipment (140,383) – (140,383) Proceeds on disposal of plant and equipment 6,802 – 6,802
Net cash used in investing activities (133,581) – (133,581)
Financing activitiesDividends paid (1,650,000) (1,800,000) (3,450,000)Increase in fixed deposits pledged (6,119) – (6,119) Repayment of finance leases (20,383) – (20,383)
Interest paid (18,470) – (18,470)
Net cash used in financing activities (1,694,972) (1,800,000) (3,494,972)
Net decrease in cash and cash equivalents (54,857) (1,800,000) (1,854,857)Cash and cash equivalents at beginning of year 6,448,720 – 6,448,720
Cash and cash equivalents at end of year (Note A) 6,393,863 (1,800,000) 4,593,863
APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
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ACROMEC LIMITED AND ITS SUBSIDIARY
UNAUDITED PRO FORMA COMBINED STATEMENT OF CASH FLOWSFinancial year ended 30 September 2015 (cont’d)
Note A:
UnauditedAudited Pro Forma
combined Unaudited combinedstatement of Pro Forma statement ofcash flows adjustment cash flows
S$ S$ S$
Cash at bank and on hand 5,393,863 (1,800,000) 3,593,863Fixed deposits 1,000,000 – 1,000,000
Cash and cash equivalents at end of year 6,393,863 (1,800,000) 4,593,863
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APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION30 September 2015
The Unaudited Pro Forma Combined Financial Information of the Group for the financial year ended 30September 2015 have been prepared for inclusion in the offer document in connection with the invitationof shares of Acromec Limited and should be read in conjunction with the audited combined financialstatements of Acromec Limited for the financial years ended 30 September 2013, 2014 and 2015.
1. Significant Event
Save for the following significant event relating to the distribution of dividends (the “SignificantEvent”) discussed below, the directors, as at the date of this report, are not aware of any otherSignificant Event subsequent to 30 September 2015.
Declaration and payment of final dividends
On 28 January 2016, the subsidiary, Acromec Engineers Pte Ltd, declared a final one-tier taxexempt dividends of S$1,800,000 in respect of the financial year ended 30 September 2015 to itsthen shareholders. The dividends are paid on 29 January 2016.
2. Basis of preparation of the Unaudited Pro Forma Combined Financial Information of theGroup
2.1. The Unaudited Pro Forma Combined Financial Information of the Group for the financial yearended 30 September 2015 are prepared for illustrative purposes only and are based on certainassumptions after making certain adjustments to show what:
(i) the unaudited pro forma combined statement of financial positions of the Group as at 30September 2015 would have been if the Significant Event as disclosed in Note 1, hadoccurred on 30 September 2015; and
(ii) the unaudited pro forma combined statement of cash flows of the Group for the financialyear ended 30 September 2015 would have been if the Significant Event as disclosed inNote 1, had occurred on 1 October 2014.
2.2. The Unaudited Pro Forma Combined Financial Information of the Group has been prepared basedon the audited combined financial statements of Acromec Limited for the financial year ended 30September 2015 which were prepared in accordance with the Singapore Financial ReportingStandards (“FRS”) and audited by Deloitte & Touche LLP, Singapore, in accordance with SingaporeStandards on Auditing. The auditors’ report on these financial statements was not modified.
2.3. The objective of the Unaudited Pro Forma Combined Financial Information is to show what thehistorical financial position and cash flows might have been had the Significant Event above takenplace on the respective dates. However, the Unaudited Pro Forma Combined Financial Information,by its nature, may not give a true picture of the Group’s actual financial position and cash flows andis not necessarily indicative of the results of operations or related effects on the financial positionthat would have been attained had the above mentioned events.
Saved as disclosed in Note 1, the Management, for the purpose of preparing this set of UnauditedPro Forma Combined Financial Information of the Group, have not considered the effects of otherevents.
APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
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ACROMEC LIMITED AND ITS SUBSIDIARY
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION30 September 2015
2. Basis of preparation of the Unaudited Pro Forma Combined Financial Information of theGroup (cont’d)
As the recognition of the pro forma effect of the Significant Event has no material impact on the proforma combined statement of profit or loss and other comprehensive income for the financial yearended 30 September 2015, hence no pro forma combined statement of profit or loss and othercomprehensive income is being presented.
2.4. Based on the assumptions discussed above, the following material adjustments have been made to the audited combined financial statements of Acromec Limited for the financial year ended 30 September 2015, in arriving at the Unaudited Pro Forma Combined Financial Information of theGroup included herein:
Declaration and payment of final dividends
Effect of declaration and payment of final one-tier tax exempt dividends of S$1,800,000 subsequentto 30 September 2015, adjusted for the following:
Unaudited Pro Forma combined statement of financial position
(Decrease)as at
30 September 2015S$
Cash and bank balances (1,800,000)Retained earnings (1,800,000)
Unaudited Pro Forma combined statement of cash flows
Increaseas at
30 September 2015S$
Financing activityDividends paid 1,800,000
3. Significant accounting policies
The Unaudited Pro Forma Combined Financial Information is prepared using accounting policiesconsistent with those to be applied by the Group which are described in the audited combinedfinancial statements of the Group for the financial years ended 30 September 2013, 2014 and2015.
4. Authorisation of pro forma financial information
The compilation of the unaudited pro forma combined financial information was authorised for issuein accordance with a resolution of the Board of Directors on 6 April 2016.
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APPENDIX BINDEPENDENT AUDITORS’ REPORT AND THE COMPILATION OF THE
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION FOR THEFINANCIAL YEAR ENDED 30 SEPTEMBER 2015
The discussion below provides information on certain provisions of our Constitution and the company lawof Singapore. This discussion is only a summary and is qualified by reference to Singapore law and ourConstitution.
REGISTRATION NUMBER
We are registered in Singapore under the Companies Act. Our company registration number is201544003M.
SUMMARY OF OUR CONSTITUTION
1. Directors
(a) Ability of interested directors to vote
A Director shall not vote in respect of any contract, proposed contract or arrangement inwhich he has any personal material interest, and he shall not be counted in the quorumpresent at the meeting, save that he may be counted in the quorum present at any meetingwhere he or any other Director is appointed to hold any office or place of profit under ourCompany or where the terms of any such appointment are arranged but he shall not vote inrespect of such matter.
(b) Remuneration
Fees payable to non-executive Directors shall be a fixed sum (not being a commission on ora percentage of profits or turnover of our Company) as shall from time to time be determinedby our Company in general meeting. Fees payable to Directors shall not be increased exceptat a general meeting convened by a notice specifying the intention to propose such increase.
Any Director who holds any executive office, or who serves on any committee of ourDirectors, or who performs services outside the ordinary duties of a Director, may be paidextra remuneration by way of salary (but not by way of commission on or percentage ofturnover), commission or otherwise, as our Directors may determine.
The remuneration of a Managing Director shall be fixed by our Directors and may be by wayof salary or commission or participation in profits or by any or all of these modes but shallnot be by a commission on or a percentage of turnover.
Our Directors shall have power to pay pensions or other retirement, superannuation, deathor disability benefits to (or to any person in respect of) any Director for the time being holdingany executive office and for the purpose of providing any such pensions or other benefits, tocontribute to any scheme or fund or to pay premiums.
(c) Borrowing
Our Directors may exercise all the powers of our Company to raise or borrow money, tomortgage or charge its undertaking, property and uncalled capital, and to secure any debt,liability or obligation of our Company.
(d) Retirement Age Limit
There is no retirement age limit for Directors under our Constitution.
(e) Shareholding Qualification
There is no shareholding qualification for Directors in our Constitution.
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APPENDIX CSUMMARY OF CONSTITUTION OF OUR COMPANY
2. Share rights and restrictions
Our Company currently has one class of shares, namely, ordinary shares. Only persons who areregistered on our register of members and in cases in which the person so registered is CDP, thepersons named as the depositors in the depository register maintained by CDP for the ordinaryshares, are recognised as our shareholders.
(a) Dividends and distribution
We may, by ordinary resolution of our shareholders, declare dividends at a general meeting,but we may not pay dividends in excess of the amount recommended by our Board ofDirectors. We must pay all dividends out of our profits. All dividends are paid pro rataamongst our shareholders in proportion to the amount paid up on each shareholder’sordinary shares, unless the rights attaching to an issue of any ordinary share provideotherwise. Unless otherwise directed, dividends are paid by cheque, dividend warrant or postoffice order sent through the post to each shareholder at his registered address.Notwithstanding the foregoing, the payment by us to CDP of any dividend payable to ashareholder whose name is entered in the depository register shall, to the extent of paymentmade to CDP, discharge us from any liability to that shareholder in respect of that payment.
CDP will hold all dividend unclaimed for six years after having been declared and paid beforerelease to our Directors, and our Directors may invest or otherwise make use of theunclaimed dividends for the benefit of our Company until claimed.
Our Directors may retain any dividends on which our Company has a lien, and may applythe same in or towards satisfaction of the debts, liabilities or engagements in respect ofwhich the lien exists.
(b) Voting rights
A holder of our ordinary shares is entitled to attend, speak and vote at any general meeting,in person or by proxy. Proxies need not be a shareholder. A person who holds ordinaryshares through the SGX-ST book-entry settlement system will only be entitled to vote at ageneral meeting as a shareholder if his name appears on the depository register maintainedby CDP 72 hours before the general meeting. Except as otherwise provided in ourConstitution, two or more shareholders must be present in person or by proxy to constitute aquorum at any general meeting. Under our Constitution, on a show of hands, everyshareholder present in person and by proxy shall have one vote, provided that in the case ofa shareholder who is a relevant intermediary (as defined in the Companies Act) and who isrepresented by two or more proxies, each proxy shall be entitled to vote on a show of hands,and on a poll, every shareholder present in person or by proxy shall have one vote for eachordinary share which he holds or represents. A poll may be demanded in certaincircumstances, including by the Chairman of the meeting or by any shareholder present inperson or by proxy and representing not less than 5% of the total voting rights of allshareholders having the right to attend and vote at the meeting or by any two shareholderspresent in person or by proxy and entitled to vote. In the case of a tie vote, whether on ashow of hands or a poll, the Chairman of the meeting shall be entitled to a casting vote.
3. Change in capital
Changes in the capital structure of our Company (for example, an increase, consolidation,cancellation, sub-division or conversion of our share capital) require shareholders to pass anordinary resolution. Ordinary resolutions generally require at least 14 days’ notice in writing. Thenotice must be given to each of our shareholders who have supplied us with an address inSingapore for the giving of notices and must set forth the place, the day and the hour of themeeting. However, we are required to obtain our shareholders’ approval by way of a specialresolution for any reduction of our share capital, subject to the conditions prescribed by law.
APPENDIX CSUMMARY OF CONSTITUTION OF OUR COMPANY
C-2
4. Variation of rights of existing shares or classes of shares
Subject to the Act, whenever the share capital of the Company is divided into different classes ofshares, the special rights attached to any class may be varied or abrogated either with the consentin writing of the holders of three-quarters of the issued shares of the class or with the sanction of aspecial resolution passed at a separate general meeting of the holders of the shares of the class.To every such separate general meeting the provisions of our Constitution relating to generalmeetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except thatthe necessary quorum shall be two persons at least holding or representing by proxy at least one-third of the issued shares of the class, and that any holder of shares of the class present in personor by proxy shall on a poll have one vote for every share of the class held by him, and if at anyadjourned meeting of such holders such quorum as aforesaid is not present, any two holders ofshares of the class who are personally present shall be a quorum.
The relevant provision in our Constitution does not impose more significant conditions than the Actin this regard.
5. Limitations on foreign or non-resident shareholders
There are no limitations imposed by Singapore law or by our Constitution on the rights of ourshareholders who are regarded as non-residents of Singapore, to hold or exercise voting rights ontheir shares.
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APPENDIX CSUMMARY OF CONSTITUTION OF OUR COMPANY
The following statements are brief summaries of the rights and privileges of our Shareholders conferredby the laws of Singapore, the Catalist Rules and our Constitution. These statements summarise thematerial provisions of our Constitution but are qualified in entirety by reference to our Constitution, a copyof which is available for inspection at our registered office during normal business hours for a period ofsix months from the date of this Offer Document.
Ordinary Shares
All of our Shares are in registered form. We may, subject to the provisions of the Act and the rules of theSGX-ST, purchase our own Shares. However, we may not, except in circumstances permitted by the Act,grant any financial assistance for the acquisition or proposed acquisition of our Shares.
New Shares
New Shares may only be issued with the prior approval of our Shareholders in a general meeting. Theaggregate number of Shares to be issued pursuant to a share issue mandate may not exceed 100% (orsuch other limit as may be prescribed by the SGX-ST) of the total number of our issued Shares,excluding treasury shares, of which the aggregate number of Shares to be issued other than on a prorata basis to our Shareholders may not exceed 50% (or such other limit as may be prescribed by theSGX-ST) of the total number of our issued Shares, excluding treasury shares (the percentage of the totalnumber of issued Shares, excluding treasury shares, being based on our Company’s total number ofissued Shares, excluding treasury shares, at the time such authority is given after adjusting for newshares arising from the conversion of convertible securities or employee share options on issue at thetime such authority is given and any subsequent bonus issue, consolidation or subdivision of Shares).The approval, if granted, will lapse at the conclusion of the annual general meeting following the date onwhich the approval was granted or the date by which the annual general meeting is required by law to beheld, whichever is the earlier. Subject to the foregoing, the provisions of the Act and any special rightsattached to any class of shares currently issued, all new Shares are under the control of our Board ofDirectors who may allot and issue the same with such rights and restrictions as it may think fit.
Shareholders
Only persons who are registered in our register of members and, in cases in which the person soregistered is CDP, the persons named as the Depositors in the Depository Register maintained by CDPfor the Shares, are recognised as our Shareholders. We will not, except as required by law, recognise anyequitable, contingent, future or partial interest in any Share or other rights for any Share other than theabsolute right thereto of the registered holder of that Share or of the person whose name is entered inthe Depository Register for that Share. We may close our register of members for any time or times if weprovide the SGX-ST at least five clear Market Days’ notice. However, the register of members may not beclosed for more than 30 days in aggregate in any calendar year. We typically close our register ofmembers to determine Shareholders’ entitlement to receive dividends and other distributions.
Transfer of Shares
There is no restriction on the transfer of fully paid Shares except where required by law or the CatalistRules or the rules or by-laws of any stock exchange on which our Company is listed. Our Board ofDirectors may decline to register any transfer of Shares which are not fully paid Shares or Shares onwhich we have a lien. Our Shares may be transferred by a duly signed instrument of transfer in a formapproved by the SGX-ST or any stock exchange on which our Company is listed. Our Board of Directorsmay also decline to register any instrument of transfer unless, among other things, it has been dulystamped and is presented for registration together with the share certificate and such other evidence oftitle as they may require. We will replace lost or destroyed certificates for Shares if it is properly notifiedand if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and indemnity thatour Board of Directors may require.
D-1
APPENDIX DDESCRIPTION OF OUR SHARES
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Board of Directors may convene anextraordinary general meeting whenever it thinks fit and must do so if Shareholders representing not lessthan 10% of the total voting rights of all Shareholders request in writing that such a meeting be held. Inaddition, two or more Shareholders holding not less than 10% of our issued share capital may call ameeting. Unless otherwise required by law or by our Constitution, voting at general meetings is byordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at the meeting. Anordinary resolution suffices, for example, for the appointment of directors. A special resolution, requiringthe affirmative vote of at least 75% of the votes cast at the meeting, is necessary for certain mattersunder Singapore law, including voluntary winding up, amendments to our Constitution, a change of ourcorporate name and a reduction in our share capital. We must give at least 21 days’ notice in writing forevery general meeting convened for the purpose of passing a special resolution. Ordinary resolutionsgenerally require at least 14 days’ notice in writing. The notice must be given to each of our Shareholderswho have supplied us with an address in Singapore for the giving of notices and must set forth the place,the day and the hour of the meeting and, in the case of special business, the general nature of thatbusiness.
Voting Rights
A holder of our Shares is entitled to attend, speak and vote at any general meeting, in person or by proxy.Proxies need not be Shareholders. A person who holds Shares through the SGX-ST book-entrysettlement system will only be entitled to vote at a general meeting as a Shareholder if his name appearson the depository register maintained by CDP 72 hours before the general meeting. Except as otherwiseprovided in our Constitution, two or more Shareholders must be present in person or by proxy toconstitute a quorum at any general meeting. Under our Constitution, on a show of hands, everyShareholder present in person and by proxy shall have one vote (provided that in the case of aShareholder who is a relevant intermediary (as defined in the Act) and who is represented by two or moreproxies, each proxy shall be entitled to vote on a show of hands, and on a poll, every Shareholderpresent in person or by proxy shall have one vote for each Share which he holds or represents. A pollmay be demanded in certain circumstances, including by the chairman of the meeting or by anyShareholder present in person or by proxy and representing not less than 5% of the total voting rights ofall shareholders having the right to attend and vote at the meeting or by any two Shareholders present inperson or by proxy and entitled to vote. In the case of an equality of votes, whether on a show of handsor a poll, the chairman of the meeting shall be entitled to a casting vote.
Dividends
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we maynot pay dividends in excess of the amount recommended by our Board of Directors. We must pay alldividends out of our profits. All dividends are paid pro rata among our Shareholders in proportion to theamount paid up on each Shareholder’s Shares, unless the rights attaching to an issue of any Shareprovides otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through thepost to each Shareholder at his registered address. Notwithstanding the foregoing, the payment by us toCDP of any dividend payable to a Shareholder whose name is entered in the Depository Register shall,to the extent of payment made to CDP, discharge us from any liability to that Shareholder in respect ofthat payment.
Bonus and Rights Issue
Our Board of Directors may, with approval of our Shareholders at a general meeting, capitalise anyreserves or profits (including profits or moneys carried and standing to any reserve) and distribute thesame as bonus Shares credited as paid-up to our Shareholders in proportion to their shareholdings. OurBoard of Directors may also issue rights to take up additional Shares to Shareholders in proportion totheir shareholdings. Such rights are subject to any conditions attached to such issue and the regulationsof any stock exchange on which we are listed.
APPENDIX DDESCRIPTION OF OUR SHARES
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Takeovers
Under the Singapore Code on Take-overs and Mergers (“Singapore Take-over Code”), issued by theAuthority pursuant to Section 321 of the Securities and Futures Act, any person acquiring an interest,either on his own or together with parties acting in concert with him, in 30% or more of the voting Sharesmust extend a takeover offer for the remaining voting Shares in accordance with the provisions of theSingapore Take-over Code. In addition, a mandatory takeover offer is also required to be made if aperson holding, either on his own or together with parties acting in concert with him, between 30% and50% of the voting shares acquires additional voting shares representing more than 1% of the votingshares in any six-month period. Under the Singapore Take-over Code, the following individuals andcompanies will be presumed to be persons acting in concert with each other unless the contrary isestablished:
(a) the following companies:
(i) a company
(ii) the parent company of (i);
(iii) the subsidiaries of (i);
(iv) the fellow subsidiaries of (i);
(v) the associated companies of (i), (ii), (iii) or (iv);
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and
(vii) any person who has provided financial assistance (other than a bank in the ordinary courseof business) to any of the above for the purchase of voting rights;
(b) a company with any of its directors (together with their close relatives, related trusts as well ascompanies controlled by any of the directors, their close relatives and related trusts);
(c) a company with any of its pension funds and employee share schemes;
(d) a person with any investment company, unit trust or other fund whose investment such personmanages on a discretionary basis, but only in respect of the investment account which such personmanages;
(e) a financial or other professional adviser, including a stockbroker, with its customer in respect of theshareholdings of:
(i) the adviser and persons controlling, controlled by or under the same control as the adviser;and
(ii) all the funds which the adviser manages on a discretionary basis, where the shareholdingsof the adviser and any of those funds in the customer total 10% or more of the customer’sequity share capital;
(f) directors of a company (together with their close relatives, related trusts and companies controlledby any of such directors, their close relatives and related trusts) which is subject to an offer orwhere the directors have reason to believe a bona fide offer for their company may be imminent;
(g) partners; and
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APPENDIX DDESCRIPTION OF OUR SHARES
(h) the following persons and entities:
(i) an individual;
(ii) the close relatives of (i);
(iii) the related trusts of (i);
(iv) any person who is accustomed to act in accordance with the instructions of (i);
(v) companies controlled by any of (i), (ii), (iii) or (iv); and
(vi) any person who has provided financial assistance (other than a bank in the ordinary courseof business) to any of the above for the purchase of voting rights.
Under the Singapore Take-over Code, a mandatory offer made with consideration other than cash mustbe accompanied by a cash alternative at not less than the highest price paid by the offeror or any personacting in concert with it for voting rights of the offeree company during the offer period and within sixmonths prior to its commencement.
Liquidation or Other Return of Capital
If we liquidate or in the event of any other return of capital, holders of our Shares will be entitled toparticipate in any surplus assets in proportion to their shareholdings, subject to any special rightsattaching to any other class of shares.
Indemnity
As permitted by Singapore law, our Constitution provides that, subject to the Act, our Directors andofficers shall be entitled to be indemnified by us against any losses or liabilities incurred in or about theexecution of the duties of his office or otherwise in relation thereto, and no such Directors or officers shallbe liable for any loss, damage or misfortune which may happen to or be incurred by the Company in theexecution of the duties of his office or in relation thereto. We may not exempt our Directors and officersfrom any liability that would otherwise attach to them due to their negligence, default, breach of duty orbreach of trust.
Limitations on Rights to Hold or Vote Shares
There are no limitations imposed by Singapore law or by our Constitution on the rights of non-residentshareholders to hold or vote in respect of our Shares.
Minority Rights
The rights of minority shareholders of Singapore-incorporated companies are protected under Section216 of the Act, which gives the Singapore courts a general power to make any order, upon application byany of our Shareholders, as they think fit to remedy any of the following situations where:
(a) our affairs are being conducted or the powers of our Directors are being exercised in a manneroppressive to, or in disregard of the interests of, one or more of our Shareholders; or
(b) we take an action, or threaten to take an action, or our Shareholders pass a resolution, or proposeto pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or moreof our Shareholders, including the applicant.
APPENDIX DDESCRIPTION OF OUR SHARES
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Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are in no waylimited to those listed in the Act itself. Without prejudice to the foregoing, the Singapore courts may:
(a) direct or prohibit any act or cancel or vary any transaction or resolution;
(b) regulate the conduct of our affairs in the future;
(c) authorise civil proceedings to be brought in our name, or on our behalf, by a person or personsand on such terms as the court may direct;
(d) provide for the purchase of Shares by other Shareholders or by us and, in the case of a purchaseof Shares by us, a corresponding reduction of our share capital; or
(e) provide that we be wound up.
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APPENDIX DDESCRIPTION OF OUR SHARES
The following is a discussion of certain tax matters relating to Singapore income tax, capital gains tax,stamp duty and estate duty consequences in relation to the purchase, ownership and disposal of ourShares. This discussion is not intended to be and does not constitute legal or tax advice. The discussionis limited to a general description of certain tax consequences in Singapore with respect to the ownershipof shares and is based on laws, regulations and interpretations now in effect and available as of theLatest Practicable Date. The laws, regulations and interpretations, however, may change at any time, andany change could be retroactive. These laws and regulations are also subject to various interpretationsand the relevant tax authorities or the courts of Singapore could later disagree with the explanations orconclusions set out below.
Prospective purchasers of our Shares should consult their tax advisors concerning the taxconsequences of owning and disposing of our Shares. Neither our Company, our Directors norany other persons involved in the Invitation accepts responsibility for any tax effects or liabilitiesresulting from the subscription, purchase, holding or disposal of our Shares.
SINGAPORE INCOME TAX
General
Scope of Tax
Corporate taxpayers are generally subject to Singapore income tax on all Singapore-sourced income, andon foreign-sourced income received or deemed received in Singapore (unless specifically exempted).
In general, individuals are subject to Singapore income tax only on Singapore-sourced income. However,foreign-sourced income received through a partnership may be subject to Singapore income tax if it isreceived or deemed received in Singapore (unless specifically exempted).
Rates of Tax
The prevailing corporate income tax rate is 17% with partial tax exemption for normal chargeable incomeof up to S$300,000 as follows:
� 75% exemption in respect of up to the first S$10,000; and
� 50% exemption in respect of up to the next S$290,000.
Newly incorporated Singapore tax resident companies, subject to meeting certain conditions, are eligiblefor the following exemptions on normal chargeable income applicable for the first three years ofassessment:
� 100% exemption in respect of up to the first S$100,000 and
� 50% exemption in respect of up to the next S$200,000.
An individual is regarded as tax resident in Singapore for a year of assessment if, in the preceding year,he was physically present or had exercised employment in Singapore (other than as a director of acompany) for 183 or more days, or if he resides in Singapore.
Singapore tax-resident individuals are generally subject to tax based on a progressive scale. The topmarginal rate of tax is currently 20%.
Non-Singapore resident individuals are generally subject to tax at a rate equivalent to the prevailingcorporate income tax rate. Their Singapore employment income is however taxed at a flat rate of 15% orat resident tax rates, whichever yields a higher amount of tax.
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APPENDIX ETAXATION
Dividend Distributions
Under the one-tier system, dividends paid out by our Company are exempt from income tax in the handsof the shareholders. The dividends will have no tax credit attached.
No withholding tax is imposed on dividend payments made, whether to resident or non-residentshareholders.
Gains on Disposal of Ordinary Shares
Singapore does not impose tax on capital gains. However, gains arising from the disposal of our ordinaryShares that are construed to be of an income nature will be subject to tax. Hence, any profits derivedfrom the disposal of ordinary Shares are not taxable in Singapore unless the seller is regarded as havingderived gains of an income nature, in which case the gains on disposal of the ordinary Shares will betaxable. Likewise, if the gains are regarded by the Inland Revenue Authority of Singapore as havingarisen from the carrying on of a trade or business in Singapore, such gains may be taxed as tradingincome.
STAMP DUTY
No stamp duty is payable on the subscription and issuance of our Shares.
Where existing Shares evidenced by certificates are acquired in Singapore, stamp duty is payable on theinstrument of transfer of the Shares at the rate of S$2 for every S$1,000 or any part thereof of theconsideration for or market value of, the Shares, whichever is higher. The purchaser is liable for the stampduty, unless otherwise agreed by the parties to the transaction.
No stamp duty is payable if no instrument of transfer is executed (such as in the case of scripless shares,the transfer of which does not require an instrument of transfer to be executed) or if the instrument oftransfer is executed outside Singapore. However, stamp duty may be payable if the instrument of transferwhich is executed outside Singapore is subsequently brought into Singapore.
ESTATE DUTY
The Singapore estate duty was abolished with effect from 15 February 2008.
GOODS AND SERVICES TAX (“GST”)
The sale of our Shares by an investor belonging in Singapore through the SGX-ST to another personbelonging in Singapore is an exempt supply not subject to GST. Any GST-incurred by a GST registeredinvestor in the making of such an exempt supply is generally not recoverable from the Comptroller ofGST.
Where our Shares are sold by a GST-registered investor to a person belonging outside Singapore, thesale is a taxable subject to GST at zero-rate if certain conditions are met. Any GST incurred by a GST-registered investor in the making of this supply in the course or furtherance of a business may berecovered from the Comptroller of GST.
Services such as brokerage, handling and clearing charges rendered by a GST-registered person to aninvestor belonging in Singapore in connection with the investor’s purchase, sale or holding of shares willbe subject to GST at the standard rate (currently at 7%). Similar services rendered to an investorbelonging outside Singapore may be zero-rated if certain conditions are met.
APPENDIX ETAXATION
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APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
1. Name of the Scheme
The Scheme shall be called the “Acromec Performance Share Scheme”.
2. Definitions
2.1 In this Scheme, unless the context otherwise requires, the following words and expressions shallhave the following meanings:
“Acromec Performance : The Acromec Performance Share Scheme, as modified orShare Scheme” or “Scheme” supplemented from time to time
“Adoption Date” : The date on which the Scheme is adopted by the Company ingeneral meeting
“Auditors” : The auditors for the time being of the Company
“Award” : An award of Shares granted under the Scheme
“Board” : The board of Directors of the Company for the time being
“CDP” : The Central Depository (Pte) Limited
“Commencement Date” : The date for the commencement of the Scheme
“Committee” : A committee comprising Directors duly authorised andappointed by the Board to administer the Scheme
“Companies Act” : The Companies Act (Chapter 50) of Singapore, as amended,supplemented or modified from time to time
“Company” : Acromec Limited
“Controlling Shareholder” : A Shareholder who, in relation to the Company, has control, asfurther defined in Rule 2.2
“Director” : A director of the Company for the time being
“Group” : The Company and its subsidiaries
“Group Employee” : Any employee of the Group (including any Group ExecutiveDirector) selected by the Committee to participate in theScheme in accordance with the provisions thereof
“Group Executive Director” : A director of the Company and/or any of its subsidiaries, as thecase may be, who performs an executive function
“Listing Manual” : The listing manual of the SGX-ST
“Market Day” : A day on which the SGX-ST is open for trading in securities
“New Shares” : The new Shares which may be issued from time to timepursuant to the vesting of Awards granted under the Scheme
“Non-Executive Director” : A director of the Company and/or any of its subsidiaries, as thecase may be, other than a Group Executive Director
APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
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“Participant” : A person who is selected by the Committee to participate in theScheme in accordance with the provisions of the Scheme
“Performance Targets” : The performance targets prescribed by the Committee to befulfilled by a Participant for any particular period under theScheme
“Rules” : The rules of the Scheme, as the same may be amended orsupplemented from time to time
“Shareholders” : Registered holders of Shares except that where the registeredholder is CDP, the term “Shareholders” shall, in relation to suchShares, mean the persons to whose securities accountsmaintained with CDP are credited with the Shares
“Shares” : Ordinary shares in the capital of the Company
“treasury shares” : Issued Shares of the Company which were (or are treated ashaving been) purchased by the Company in circumstanceswhich Section 76H of the Companies Act applies and havesince purchase been continuously held by the Company
“$” and “cents” : Singapore dollars and cents respectively
“%” or percent : Percentage or per centum
2.2 For the purposes of the Scheme:
(a) in relation to a Shareholder (including, where the context requires, the Company), “control”means the capacity to dominate decision-making, directly or indirectly, in relation to thefinancial and operating policies of that company;
(b) unless rebutted, a person who holds directly or indirectly, a shareholding of 15% or more ofthe Company’s total number of issued shares excluding treasury shares shall be presumedto be a Controlling Shareholder; and
(c) in relation to a Controlling Shareholder, his “associate” shall have the meaning ascribed to itby the Listing Manual or any other publication prescribing rules or regulations forcorporations admitted to the Official List of the SGX-ST (as modified, supplemented oramended from time to time).
2.3 The terms “Depositor” and “Depository Agent” shall have the meanings ascribed to themrespectively by Section 81SF of the Securities and Futures Act (Chapter 289) of Singapore.
2.4 Any reference in the Scheme or the Rules to any enactment is a reference to that enactment as forthe time being amended or re-enacted. Any word defined under the Companies Act or anystatutory modification thereof and used in the Scheme and the Rules shall have the meaningassigned to it under the Companies Act.
2.5 Words importing the singular number shall include the plural number where the context admits andvice versa. Words importing the masculine gender shall include the feminine gender where thecontext admits.
2.6 Any reference to a time of day shall be a reference to Singapore time.
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APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
3. Objectives
The purpose of the Scheme is to provide an opportunity for Group Employees and GroupExecutive Directors who have met the Performance Targets to be enumerated through an equitystake in the Company and/or when due recognition should be given to any good work performanceand/or significant contribution to the Company as well as for Group Employees to receive part oftheir annual cash bonus payment in the form of Shares. The Scheme is also extended to Non-Executive Directors.
The Company believes that the retention of outstanding employees within the Group is paramountto the Group’s long-term objectives of pursuing continuous growth and expansion in its futurebusiness and operations. Furthermore, the Group acknowledges the importance of preservingfinancial resources for future business development and to withstand difficult times. In the light ofthis, the Group’s strategy is to contain the remuneration of its employees and executives whichconstitutes a major component of the Group’s operating costs.
The Scheme is formulated with those objectives in mind. Through the Scheme, the Companyhopes to be able to remain an attractive and competitive employer, and to be better able tomanage its fixed overhead costs without compromising on performance standards and efficiency.
4. Eligibility
4.1 The following persons (provided that such persons are not undischarged bankrupts at the relevanttime and have attained the age of 21 years on or before the date of grant of the Award) shall beeligible to participate in the Scheme at the absolute discretion of the Committee:
(a) Group Employees (including Group Executive Directors); and
4.2 Controlling Shareholders and their associates shall not be eligible to participate in the Scheme.
4.3 For the purposes of determining eligibility to participate in the Scheme, the secondment of a GroupEmployee to another company within the Group shall not be regarded as a break in hisemployment or his having ceased by reason only of such secondment to be a full-time employee ofthe Group.
4.5 There shall be no restriction on the eligibility of any Participant to participate in any other shareoption or share incentive schemes implemented by the Company or any other company within theGroup.
4.6 Subject to the Companies Act and any requirement of the SGX-ST, the terms of eligibility forparticipation in the Scheme may be amended from time to time at the absolute discretion of theCommittee.
5. Limitations under the Scheme
5.1 The Company may deliver Shares pursuant to the Awards granted under the Scheme in the form ofexisting Shares held as treasury shares and/or an issue of New Shares. In determining whether toissue New Shares or to purchase existing Shares for delivery to Participants upon the vesting oftheir Awards, the Company will take into account factors such as the number of Shares to bedelivered, the prevailing market price of the Shares and the financial effect on the Company ofeither issuing New Shares or purchasing existing Shares.
5.2 Awards may only be vested and consequently any Shares comprised in such Awards shall only bedelivered upon (i) the Committee being satisfied that the Participant has achieved the PerformanceTargets and/or due recognition should be given for good work performance and/or significantcontribution to the Company and/or (ii) the Company decides to pay part of a Group Employee’sannual cash bonus payment in the form of Shares.
APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
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5.3 The aggregate number of Shares over which the Committee may grant Awards on any date, whenadded to the number of Shares issued and issuable in respect of all Awards granted under theScheme and all other Shares issued and issuable under any other share-based incentive schemesof the Company for the time being in force, shall not exceed 15% of the total number of issuedShares of the Company (excluding treasury shares) on the day preceding that date.
6. Date of Grant
The Committee may grant Awards at any time in the course of a financial year, provided that in theevent that an announcement on any matter of an exceptional nature involving unpublished pricesensitive information is imminent, Awards may only be vested and hence any Shares comprised insuch Awards may only be delivered on or after the second Market Day from the date on which theaforesaid announcement is made.
7. Awards
7.1 Awards are personal to the Participant to whom it is given and shall not be transferred (other thanto a Participant’s personal representative on the death of that Participant), charged, assigned,pledged or otherwise disposed of, in whole or in part, unless with the prior approval of theCommittee.
7.2 Once an Award is finalised by the Committee, the Committee shall send an Award letter to theParticipant confirming the said Award. The said Award letter shall specify, inter alia, the following:
(a) in relation to a performance-related Award, the Performance Target(s) for the Participant andthe period during which the Performance Target(s) shall be met;
(b) the number of Shares to be vested on the Participant; and
(c) the date on which the Award shall be vested.
7.3 The Committee shall take into account various factors when determining the method to arrive atthe exact number of Shares comprised in an Award. Such factors include, but are not limited to, thecurrent price of the Shares, the total issued share capital of the Company and the predetermineddollar amount which the Committee decides that a Participant deserves for meeting hisPerformance Targets. For example, Shares may be awarded based on predetermined dollaramounts such that the quantum of Shares comprised in Awards is dependent on the closing priceof Shares transacted on the Market Day the Award is vested. Alternatively, the Committee maydecide absolute numbers of Shares to be awarded to Participants irrespective of the price of theShares. The Committee shall monitor the grant of Awards carefully to ensure that the size of theScheme will comply with the relevant rules of the SGX-ST.
7.4 The Committee has the right to amend the Performance Target(s) if the Committee decides that itwould be a fairer measure of the performance of a Participant or for the Scheme as a whole. TheCommittee shall have the sole discretion to determine whether Performance Target(s) have beenmet (whether fully or partially) or exceeded and/or whether the Participant’s performance and/orcontribution to the Company and/or any of its subsidiaries justifies the vesting of an Award. Inmaking any such determination, the Committee shall have the right to take into account suchfactors as the Committee may in its sole discretion determine to be relevant, and further, the rightto amend the service conditions and/or Performance Target(s), if any, if the Committee decides thatit would be more equitable to do so.
8. Vesting of the Awards
8.1 Notwithstanding that a Participant may have met his Performance Targets, no Awards shall bevested:
(a) upon the bankruptcy of the Participant or the happening of any other event which results inhis being deprived of the legal or beneficial ownership of such Award; or
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APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
(b) in the event of any misconduct on the part of the Participant as determined by theCommittee in its discretion; or
(c) in the event that the Committee shall, at its discretion, deem it appropriate that such Awardto be given to a Participant shall so lapse on the grounds that any of the objectives of theScheme (as set out in Rule 3) have not been met.
8.2 A Participant shall be entitled to an Award so long as he has met the Performance Targetsnotwithstanding that he may have ceased to be employed by the Group after the fulfilment of suchPerformance Targets. For the purpose of this Rule 8.2, the Participant may cease to be soemployed in any of the following events, namely:
(a) through ill health, injury or disability (in each case, evidenced to the satisfaction of theCommittee);
(b) redundancy;
(c) retirement at or after the legal retirement age;
(d) retirement before the legal retirement age with the consent of the Committee; or
(e) any other reason approved by the Committee.
9. Take-over and winding up of the Company
9.1 Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for theShares, a Participant shall (notwithstanding that the vesting period for the Award has not expired)be entitled to the Shares under the Awards if he has met the Performance Targets which fall withinthe period commencing on the date on which such offer for a take-over of the Company is made or,if such offer is conditional, the date on which such offer becomes or is declared unconditional, asthe case may be, and ending on the earlier of:
(a) the expiry of 6 months thereafter, unless prior to the expiry of such 6-month period, at therecommendation of the offeror and with the approvals of the Committee and the SGX-ST,such expiry date is extended to a later date (in either case, being a date falling not later thanthe last date on which the Performance Targets are to be met); or
(b) the date of expiry of the period for which the Performance Targets are to be met,
provided that if during such period, the offeror becomes entitled or bound to exercise rights ofcompulsory acquisition under the provisions of the Companies Act and, being entitled to do so,gives notice to the Participants that it intends to exercise such rights on a specified date, theParticipant shall be obliged to meet such Performance Targets until the expiry of such specifieddate or the expiry date of the Performance Targets relating thereto, whichever is earlier, before anAward can be vested.
9.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for thepurposes of, or in connection with, a scheme for the reconstruction of the Company or itsamalgamation with another company or companies, each Participant who has fulfilled hisPerformance Target shall be entitled, notwithstanding the provisions herein and the fact that thevesting period for such Award has not expired but subject to Rule 9.5, to any Shares under theAwards so determined by the Committee to be released to him during the period commencing onthe date upon which the compromise or arrangement is sanctioned by the court and ending eitheron the expiry of 60 days thereafter or the date upon which the compromise or arrangementbecomes effective, whichever is later.
APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
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9.3 If an order or an effective resolution is made for the winding-up of the Company on the basis of itsinsolvency, all Awards, notwithstanding that they may have been so vested shall be deemed orbecome null and void.
9.4 In the event of a members’ voluntary winding-up (other than for amalgamation or reconstruction),the Awards shall so vest in the Participant for so long as, in the absolute determination by theCommittee, the Participant has met the Performance Targets prior to the date that the members’voluntary winding-up shall be deemed to have been commenced or effective in law.
9.5 If in connection with the making of a general offer referred to in Rule 9.1 or the scheme referred toin Rule 9.2 or the winding-up referred to in Rule 9.4, arrangements are made (which are confirmedin writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable)for the compensation of Participants, whether by the payment of cash or by any other form ofbenefit, no release of Shares under the Award shall be made in such circumstances.
10. Shares
10.1 Subject to such consents or other required action of any competent authority under any regulationsor enactments for the time being in force as may be necessary and subject to the compliance withthe terms of the Scheme and the Constitution of the Company, the Company shall within 10 MarketDays after the vesting of an Award, allot and issue the relevant Shares and despatch to CDP therelevant share certificates by ordinary post or such other mode as the Committee may deem fit, orin the case of a transfer of treasury shares, do such acts or things as may be necessary for thetransfer to be effective.
10.2 The Company shall, as soon as practicable after allotment, where necessary, apply to the SGX-STfor the permission to deal in and for quotation of the relevant New Shares.
10.3 New Shares which are the subject of an Award shall be issued in the name of CDP to the credit ofthe securities account of that Participant maintained with CDP or the securities sub-accountmaintained with a Depository Agent.
10.4 Shares delivered upon the vesting of an Award shall be subject to all the provisions of theConstitution of the Company, and shall rank in full for all entitlements, excluding dividends or otherdistributions declared or recommended in respect of the then existing issued Shares, the RecordDate for which falls on or before the date of issue of New Shares or the date of transfer of treasuryshares pursuant to the vesting of the Award, and shall in all other respects rank pari passu withother existing issued Shares. “Record Date” means the date fixed by the Company for the purposesof determining entitlements to dividends or other distributions to or rights of holders of Shares.
10.5 Shares which are allotted, and/or treasury shares which are transferred, on the vesting of an Awardto a Participant, may be subject to such moratorium as may be imposed by the Committee.
11. Variation of Capital
11.1 If a variation in the issued ordinary share capital of the Company (whether by way of acapitalisation of profits or reserves or rights issue, reduction, sub-division, consolidation,distribution or otherwise) shall take place, then:
(a) the class and/or number of Shares which are the subject of an Award to the extent not yetvested;
(b) the class and/or number of Shares over which future Awards may be granted under theScheme; and/or
(c) the maximum number of Shares which may be issued pursuant to Awards granted under theScheme,
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APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
shall be adjusted by the Committee to give each Participant the same proportion of the equitycapital of the Company as that to which he was previously entitled and, in doing so, the Committeeshall determine at its own discretion the manner in which such adjustment shall be made.
11.2 Unless the Committee considers an adjustment to be appropriate, the following shall not beregarded as a circumstance requiring adjustment under the provision of this Rule 11:
(a) the issue of securities as consideration for an acquisition of any assets or a privateplacement of securities by the Company;
(b) the cancellation of issued Shares purchased or acquired by the Company by way of amarket purchase of such Shares undertaken by the Company on the SGX-ST during theperiod when a share purchase mandate granted by Shareholders of the Company (includingany renewal of such mandate) is in force; or
(c) the issue of Shares or other securities convertible into or with rights to acquire or subscribefor Shares pursuant to any share scheme of the Company (including the Scheme).
11.3 Notwithstanding the provisions of Rule 11.1:
(a) no such adjustment shall be made if as a result, the Participant receives a benefit that aShareholder does not receive; and
(b) any determination by the Committee as to whether to make any adjustment and if so, themanner in which such adjustment should be made, must (except in relation to acapitalisation issue) be confirmed in writing by the Auditors (acting only as experts and notas arbitrators) to be in their opinion, fair and reasonable.
11.4 Any increase in the issued share capital of the Company as a consequence of the delivery ofShares pursuant to the vesting of Awards from time to time by the Company or through any othershare-based incentive schemes implemented by the Company will also not be regarded as acircumstance requiring adjustment.
11.5 Upon any adjustment required to be made pursuant to this Rule 11, the Company shall notify theParticipant (or his duly appointed personal representatives where applicable) in writing and deliverto him (or his duly appointed personal representatives where applicable) a statement setting forththe class and/or number of Shares thereafter to be issued pursuant to the grant of an Award andthe maximum entitlement in any one financial year. Any adjustment shall take effect upon suchwritten notification being given.
12. Administration of the Scheme
12.1 The Scheme shall be administered by the Committee in its absolute discretion with such powersand duties as are conferred on it by the Board, provided that no member of the Committee shallparticipate in any deliberation or decision in respect of Awards granted or to be granted to him.
12.2 The Committee shall have the power, from time to time, to make and vary such arrangements,guidelines and/or regulations (not being inconsistent with the Scheme) for the implementation andadministration of the Scheme as they think fit including, but not limited to:
(a) imposing restrictions on the number of Awards that may be vested within each financial year;and
(b) amending Performance Targets if by so doing, it would be a fairer measure of performancefor a Participant or for the Scheme as a whole.
APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
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12.3 Any decision of the Committee made pursuant to any provision of the Scheme (other than a matterto be certified by the Auditors) shall be final, binding and conclusive (including any decisionspertaining to the number of Shares to be vested or to disputes as to the interpretation of theScheme or any rule, regulation, procedure thereunder or to any rights under the Scheme). TheCommittee shall not be required to furnish any reasons for any decision or determination made byit.
13. Notices and Annual Report
13.1 Any notice required to be given by a Participant to the Company shall be sent or delivered to theregistered office of the Company or such other addresses as may be notified by the Company tothe Participant in writing.
13.2 Any notices or documents required to be given to a Participant or any correspondence to be madebetween the Company and the Participant shall be given or made by the Committee (or suchperson(s) as it may from time to time direct) on behalf of the Company and shall be delivered tohim by hand or sent to him at his home address according to the records of the Company or at thelast known address of the Participant and if sent by post, shall be deemed to have been given onthe day following the date of posting.
13.3 The Company shall in relation to the Scheme, as required by law, the SGX-ST or other relevantauthority, make the following disclosures in its annual report to shareholders:
(a) the names of the members of the Committee administering the Scheme;
(b) the information required in the table below for the following participants:
(i) Directors of the Company; and
(ii) Participants other than those in (i) above, who received Shares pursuant to the vestingof the Awards granted under the Scheme which, in aggregate, represent 5% or moreof the total number of Shares available under the Scheme; and
Aggregate number of Shares
Aggregate number comprised inAggregate number of Shares Awards which have Aggregate number
of Shares comprised in been issued and/or of Sharescomprised in Awards from transferred since comprised in
Awards during commencement commencement Awards not financial year of Scheme to end of Scheme to end vested as at end
Name of under review of financial year of financial year of financial yearParticipant (including terms) under review under review under review
(c) such other information as may be required by the Listing Manual or the Companies Act.
If any of the above is not applicable, an appropriate negative statement shall be included.
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APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
14. Modifications to the Scheme
14.1 Any or all the provisions of the Scheme may be modified and/or altered at any time and from timeto time by resolution of the Committee, except that:
(a) any modification or alteration which would be to the advantage of Participants under theScheme shall be subject to the prior approval of Shareholders at a general meeting;
(b) the modification or alteration must be made in such a way that a Participant will not receive abenefit that a Shareholder does not receive; and
(c) no modification or alteration shall be made without due compliance with the Listing Manualand the requirements of such other regulatory authorities as may be necessary.
14.2 The Committee may at any time by resolution (and without other formality, save for the priorapproval of the SGX-ST) amend or alter the rules or provisions of the Scheme in any way to theextent necessary to cause the Scheme to comply with any statutory provision or the regulations ofany regulatory or other relevant authority or body (including the SGX-ST).
14.3 Written notice of any modification or alteration made in accordance with this Rule 14 shall be givento all Participants.
15. Terms of employment unaffected
The terms of employment of a Participant (who is a Group Employee) shall not be affected by hisparticipation in the Scheme, which shall neither form part of such terms nor entitle him to take intoaccount such participation in calculating any compensation or damages on the termination of hisemployment for any reason.
16. Duration of the Scheme
16.1 The Scheme shall continue to be in force at the discretion of the Committee, subject to a maximumperiod of 10 years commencing on the Adoption Date, provided always that the Scheme maycontinue beyond the above stipulated period with the approval of the Company’s shareholders byordinary resolution at a general meeting and the approval of any relevant authorities which maythen be required.
16.2 The Scheme may be terminated at any time by the Committee or by resolution of the Company ata general meeting subject to all relevant approvals which may be required and if the Scheme is soterminated, no further Awards shall be vested by the Company thereunder.
16.3 The expiry or termination of the Scheme shall not affect Awards which have been vested prior tosuch expiry or termination, whether such Shares have been delivered or not.
17. Taxes
All taxes (including income tax) arising from the grant and/or disposal of Shares pursuant to theAwards granted to any Participant under the Scheme shall be borne by that Participant.
18. Costs and expenses
18.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issueand allotment or transfer of any Shares pursuant to the Awards in CDP’s name, the deposit ofshare certificate(s) with CDP, the Participant’s securities account with CDP or the Participant’ssecurities sub-account with a CDP Depository Agent.
18.2 Save for the taxes referred to in Rule 17 and such other costs and expenses expressly provided inthe Scheme to be payable by the Participants, all fees, costs and expenses incurred by theCompany in relation to the Scheme including but not limited to the fees, costs and expensesrelating to the allotment, issue and/or delivery of Shares pursuant to the Awards shall be borne bythe Company.
APPENDIX FRULES OF THE ACROMEC PERFORMANCE SHARE SCHEME
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19. Disclaimer of liability
Notwithstanding any provisions herein contained, the Board, the Committee and the Company shallnot under any circumstances be held liable for any costs, losses, expenses and damageswhatsoever and howsoever arising in any event, including but not limited to the Company’s delay inissuing or transferring the Shares or applying for or procuring the listing of the Shares on the SGX-ST.
20. Abstention from Voting
Shareholders who are eligible to participate in the Scheme are to abstain from voting on anyshareholders’ resolution relating to the Scheme and should not accept nominations as proxy orotherwise for voting unless specific instructions have been given in the proxy form on how the voteis to be cast. In particular, Shareholders who are eligible to participate in the Scheme shall abstainfrom voting on the resolution relating to the implementation of the Scheme.
21. Disputes
Any disputes or differences of any nature arising hereunder shall be referred to the Committee andits decision shall be final and binding in all respects.
22. Condition of Awards
Every Award shall be subject to the condition that no Shares would be issued and/or transferredpursuant to the vesting of any Award if such issue and/or transfer would be contrary to any law orenactment, or any rules or regulations of any legislative or non-legislative governing body for thetime being in force in Singapore or any other relevant country having jurisdiction in relation to theissue and/or transfer of Shares.
23. Governing Law
The Scheme shall be governed by, and construed in accordance with, the laws of the Republic ofSingapore. The Participants, by accepting Awards in accordance with the Scheme, and theCompany irrevocably submit to the exclusive jurisdiction of the courts of the Republic of Singapore.
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
You are invited to apply and subscribe for the New Shares at the Issue Price for each New Share subjectto the following terms and conditions set out below and in the relevant printed application forms to beused for the purpose of the Invitation and which forms part of the Offer Document (the “ApplicationForms”) or, as the case may be, the Electronic Applications (as defined herein):
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 100 NEW SHARES OR INTEGRALMULTIPLES THEREOF, SUBJECT TO A MINIMUM OF 1,000 NEW SHARES. YOURAPPLICATION FOR ANY OTHER NUMBER OF NEW SHARES WILL BE REJECTED.
2. Your application for Offer Shares may be made by way of printed WHITE Offer Shares ApplicationForms or by way of Electronic Applications through ATMs of the Participating Banks (“ATMElectronic Applications”) or through Internet Banking (“IB”) websites of the relevant ParticipatingBanks (“Internet Electronic Applications”), or through the mobile banking interface of DBS BankLtd. (“mBanking Applications”, which together with ATM Electronic Applications and InternetElectronic Applications, shall be referred to as “Electronic Applications”). The Participating Banksare DBS Bank Ltd. (including POSB) (“DBS Bank”), Oversea-Chinese Banking Corporation Limited(“OCBC”) and United Overseas Bank Limited and its subsidiary Far Eastern Bank Limited (“UOB”).
Your application for the Placement Shares (other than the Reserved Shares) may only be made byway of printed BLUE Placement Shares Application Forms or other such forms of application asthe Sponsor, Issue Manager, Underwriter and Placement Agent deem appropriate.
Your application for the Reserved Shares may only be made by way of printed PINK ReservedShares Application Forms or such other forms of application as the Sponsor, Issue Manager,Underwriter and Placement Agent deem appropriate.
YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE NEW SHARES.
3. You (not being an approved nominee company) are allowed to submit only one applicationin your own name for the Offer Shares or the Placement Shares (other than the ReservedShares). If you submit an application for Offer Shares by way of an Offer Shares ApplicationForm, you MAY NOT submit another application for Offer Shares by way of an ElectronicApplication and vice versa. Such separate applications shall be deemed to be multipleapplications and shall be rejected at the discretion of our Company, and the Sponsor, IssueManager, Underwriter and Placement Agent.
If you submit an application for Offer Shares by way of an ATM Electronic Application, youMAY NOT submit another application for Offer Shares by way of an Internet ElectronicApplication, or mBanking Application and vice versa. Such separate applications shall bedeemed to be multiple applications and shall be rejected at the discretion of our Company,and the Sponsor, Issue Manager, Underwriter and Placement Agent.
If you, not being an approved nominee company, have submitted an application for OfferShares in your own name, you should not submit any other application for Offer Shares,whether by way of an Offer Shares Application Form or by way of an Electronic Application,for any other person. Such separate applications shall be deemed to be multipleapplications and shall be rejected at the discretion of our Company, and the Sponsor, IssueManager, Underwriter and Placement Agent.
If you have made an application for Placement Shares (other than the Reserved Shares), youshould not make any application for Offer Shares either by way of an Offer SharesApplication Form or by way of an Electronic Application and vice versa. Such separateapplications shall be deemed to be multiple applications and shall be rejected at thediscretion of our Company, and the Sponsor, Issue Manager, Underwriter and PlacementAgent.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
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Conversely, if you have made an application for Offer Shares either by way of an ElectronicApplication or by way of an Offer Shares Application Form, you may not make anyapplication for Placement Shares (other than the Reserved Shares). Such separateapplications shall be deemed to be a multiple applications and shall be rejected at thediscretion of our Company, and the Sponsor, Issue Manager, Underwriter and PlacementAgent.
If you have made an application for Reserved Shares, you may submit one separateapplication for Offer Shares in your own name by way of an Offer Shares Application Formor by way of an Electronic Application, or submit one separate application for PlacementShares (other than Reserved Shares) by way of a Placement Shares Application Form orsuch other forms of application as the Sponsor, Issue Manager, Underwriter and PlacementAgent deem appropriate, provided that you adhere to the terms and conditions of this OfferDocument. Such separate applications shall NOT be treated as multiple applications.
Joint or multiple applications for the New Shares shall be rejected at the discretion of ourCompany, and the Sponsor, Issue Manager, Underwriter and Placement Agent. If you submitor procure submissions of multiple share applications for Offer Shares, Placement Shares(other than the Reserved Shares) or both Offer Shares and Placement Shares (other thanthe Reserved Shares), you may be deemed to have committed an offence under the PenalCode (Chapter 224) of Singapore and the SFA, and your applications may be referred to therelevant authorities for investigation. Multiple applications or those appearing to be orsuspected of being multiple shall be rejected at the discretion of our Company, and theSponsor, Issue Manager, Underwriter and Placement Agent.
4. By submitting an application for the New Shares, you declare that you do not possess more thanone individual direct Securities Account with CDP.
5. We will not accept applications from any person under the age of 18 years, undischargedbankrupts, sole-proprietorships, partnerships, or non-corporate bodies, joint Securities Accountholders of CDP and from applicants whose addresses (as furnished in their Application Forms or,in the case of Electronic Applications, contained in the records of the relevant Participating Banks,as the case may be) bear post office box numbers. No person acting or purporting to act on behalfof a deceased person is allowed to apply under the Securities Account with CDP in the name ofthe deceased at the time of the application.
6. We will not recognise the existence of a trust. Any application by a trustee or trustees musttherefore be made in his/her/their own name(s) and without qualification or where the application ismade by way of an Application Form by a nominee, in the name(s) of an approved nomineecompany or companies after complying with paragraph 7 below.
7. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BYAPPROVED NOMINEE COMPANIES ONLY. “Approved nominee companies” are defined asbanks, merchant banks, finance companies, insurance companies, licensed securities dealers inSingapore and nominee companies controlled by them. Applications made by persons acting asnominees other than approved nominee companies shall be rejected.
8. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIESACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you donot have an existing Securities Account with CDP in your own name at the time of your application,your application will be rejected (if you apply by way of an Application Form), or you will not be ableto complete your Electronic Application (if you apply by way of an Electronic Application). If youhave an existing Securities Account with CDP but fail to provide your Securities Account number orprovide an incorrect Securities Account number in the Application Form or in your ElectronicApplication, as the case may be, your application is liable to be rejected. Subject to paragraph 9below, your application shall be rejected if your particulars such as name, NRIC/passport number,
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
nationality and permanent residence status provided in your Application Form or in the case of anElectronic Application, contained in records of the relevant Participating Bank at the time of yourElectronic Application, as the case may be, differ from those particulars in your Securities Accountas maintained with CDP. If you possess more than one individual direct Securities Account withCDP, your application shall be rejected.
9. If your address as stated in the Application Form or, in the case of an Electronic Application,contained in the records of the relevant Participating Bank, as the case may be, is different fromthe address registered with CDP, you must inform CDP of your updated address promptly, failingwhich the notification letter on successful allotment and other correspondence from CDP will besent to your address last registered with CDP.
10. Our Company, in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agentreserves the right to reject any application which does not conform strictly to the instructions setout in the Application Form and in this Offer Document or which does not comply with theinstructions for Electronic Applications or with the terms and conditions of this Offer Document or,in the case of an application by way of an Application Form, which is illegible, incomplete,incorrectly completed or which is accompanied by an improperly drawn remittance or improperform of remittance or which is not honoured upon its first presentation.
Our Company, in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agentfurther reserves the right to treat as valid any applications not completed or submitted or effected inall respects in accordance with the instructions set out in the Application Forms or the instructionsfor Electronic Applications or the terms and conditions of this Offer Document and also to presentfor payment or other processes all remittances at any time after receipt and to have full access toall information relating to, or deriving from, such remittances or the processing thereof.
Without prejudice to the rights of our Company, the Sponsor, Issue Manager, Underwriter andPlacement Agent, as agent of our Company, has been authorised to accept, for and on behalf ofour Company such other forms of application as the Sponsor, Issue Manager, Underwriter andPlacement Agent deem appropriate.
11. Our Company, in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agentreserves the right to reject or to accept, in whole or in part, or to scale down or to ballot anyapplication, without assigning any reason therefor, and no enquiry and/or correspondence on thedecision of our Company will be entertained. This right applies to applications made by way ofApplication Forms and by way of Electronic Applications and by such other forms of application asthe Sponsor, Issue Manager, Underwriter and Placement Agent may, in consultation with ourCompany, deem appropriate. In deciding the basis of allotment, which shall be at the discretion ofour Company, due consideration will be given to the desirability of allotting the New Shares to areasonable number of applicants with a view to establishing an adequate market for the Shares.
12. Subject to your provision of a valid and correct CDP Securities Account number, share certificateswill be registered in the name of CDP or its nominee and will be forwarded only to CDP. It isexpected that CDP will send to you, at your own risk, within 15 Market Days after the close of theApplication List, and subject to the submission of valid applications and payment for the NewShares, a statement of account stating that your Securities Account has been credited with thenumber of New Shares allotted to you if your application is successful. This will be the onlyacknowledgement of application monies received and is not an acknowledgement by our Company.You irrevocably authorise CDP to complete and sign on your behalf, as transferee or renouncee,any instrument of transfer and/or other documents required for the issue and/or transfer of the NewShares allotted to you. This authorisation applies to applications made by way of Application Formsand by way of Electronic Applications.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
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13. In the event that our Company lodges a supplementary or replacement offer document (“RelevantDocument”) pursuant to the SFA or any applicable legislation in force from time to time prior to theclose of the Invitation, and the New Shares have not been issued, we will (as required by law andsubject to the SFA), at our Company’s sole and absolute discretion, either:
(a) within two days (excluding any Saturday, Sunday or public holiday) from the date of thelodgement of the Relevant Document, give you notice in writing of how to obtain, or arrangeto receive, a copy of the same and provide you with an option to withdraw your applicationand take all reasonable steps to make available within a reasonable period the RelevantDocument to you if you have indicated that you wish to obtain, or have arranged to receive, acopy of the Relevant Document;
(b) within seven days from the date of lodgement of the Relevant Document give you a copy ofRelevant Document and provide you with an option to withdraw your application; or
(c) deem your application as withdrawn and cancelled, in which case the applications shall bedeemed to have been withdrawn and cancelled, and we shall, within seven days from thedate of lodgement of the Relevant Document, return all monies paid in respect of anyapplication for the New Shares, without interest or any share of revenue or benefit arisingtherefrom and at your own risk.
Where you have notified us within 14 days from the date of lodgement of the Relevant Documentof your wish to exercise your option under paragraph 13(a) or (b) above to withdraw yourapplication, we shall pay to you all monies paid by you on account of your application for the NewShares without interest or any share of revenue or other benefit arising therefrom and at your ownrisk, within seven days from the receipt of such notification and you will not have any claim againstour Company, or the Sponsor, Issue Manager, Underwriter and Placement Agent.
In the event that at the time of the lodgement of the Relevant Document, the New Shares havealready been issued but trading has not commenced, we will (as required by law and subject to theSFA), at our Company’s sole and absolute discretion, either:
(d) within two days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the Relevant Document, give you notice in writing of how to obtain, or arrangeto receive, a copy of the same and provide you with an option to return to our Company theNew Shares which you do not wish to retain title in and take all reasonable steps to makeavailable within a reasonable period the Relevant Document to you if you have indicated thatyou wish to obtain, or have arranged to receive, a copy of the Relevant Document;
(e) within seven days from the date of lodgement of the Relevant Document give you a copy ofthe Relevant Document and provide you with an option to return the New Shares which youdo not wish to retain title in; or
(f) deem the issue as void and refund all monies paid in respect of any application for the NewShares (without interest or any share of revenue or other benefits arising therefrom and atyour own risk) within seven days from the date of lodgement of the Relevant Document,
and you shall not have any claim against our Company, or the Sponsor, Issue Manager,Underwriter and Placement Agent.
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
Any applicant who wishes to exercise his option under paragraph 13(d) or (e) above to return theNew Shares issued to him shall, within 14 days from the date of lodgement of the RelevantDocument, notify our Company of this and return all documents, if any, purporting to be evidenceof title of those New Shares to us, whereupon we shall, subject to compliance with applicable lawsand the Constitution of our Company, within seven days from the receipt of such notification anddocuments, pay to him all monies paid by him for the New Shares without interest or any share ofrevenue or other benefit arising therefrom and at his own risk, and the New Shares issued to himshall be void. You shall not have any claim whatsoever against our Company, or the Sponsor, IssueManager, Underwriter and Placement Agent.
Additional terms and instructions applicable upon the lodgement of the Relevant Document,including instructions on how you can exercise the option to withdraw your application or return theNew Shares allotted to you, may be found in such Relevant Document.
14. In the event of an under-subscription for the Offer Shares as at the close of the Application List,that number of Offer Shares not subscribed for shall be made available to satisfy excessapplications for the Placement Shares to the extent that there is an over-subscription for PlacementShares as at the close of the Application List.
In the event that any of the Reserved Shares are not taken up, they will be made available tosatisfy excess applications for the Placement Shares (other than Reserved Shares) to the extentthat there is an over-subscription for the Placement Shares (other than Reserved Shares) as at theclose of the Application List, or, in the event of an under-subscription for the Placement Shares asat the close of the Application List, they will be made available to satisfy excess applications madeby members of the public for the Offer Shares to the extent that there is an over-subscription for theOffer Shares as at the close of the Application List.
In the event of an under-subscription for Placement Shares as at the close of the Application List,that number of Placement Shares not subscribed for shall be made available to satisfy excessapplications for Offer Shares to the extent that there is an over-subscription for Offer Shares as atthe close of the Application List.
In the event of an over-subscription for Offer Shares as at the close of the Application List andPlacement Shares (including Reserved Shares) are fully subscribed or over-subscribed as at theclose of the Application List, the successful applications for the Offer Shares will be determined byballot or otherwise as determined by our Company, in consultation with the Sponsor, IssueManager, Underwriter and Placement Agent and/or the SGX-ST (if required).
In all the above instances, the basis of allotment of the New Shares as may be decided by ourDirectors in ensuring a reasonable spread of shareholders of our Company, shall be made publicas soon as practicable through an announcement on the SGX-ST’s website at http://www.sgx.comand through an advertisement in a local English newspaper.
You hereby consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent residency status, CDP Securities Account number and shares application amount fromyour account with the relevant Participating Bank to the Share Registrar and Share Transfer Agent,SCCS, SGX-ST, CDP, our Company, and the Sponsor, Issue Manager, Underwriter and PlacementAgent.
15. You irrevocably authorise CDP to disclose the outcome of your application, including the number ofNew Shares allotted to you pursuant to your application, to our Company, the Sponsor, IssueManager, Underwriter and Placement Agent and any other parties so authorised by the foregoingpersons. CDP shall not be liable for any delays, failures, or inaccuracies in the recording, storage,transmission or delivery of data relating to Electronic Applications.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
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16. Any reference to “you” or the “applicant” in this section shall include an individual, a corporation, anapproved nominee company and trustee applying for the Offer Shares by way of an WHITE OfferShares Application Form or by way of an Electronic Application, a person applying for thePlacement Shares (other than Reserved Shares) through the Placement Agent by way of a BLUEPlacement Shares Application Form or such other forms of application as the Sponsor, IssueManager, Underwriter and Placement Agent may, in consultation with our Company, deemappropriate, and a person applying for the Reserved Shares through the Placement Agent by wayof a PINK Application Forms for Reserved Shares or such other forms of application as theSponsor, Issue Manager, Underwriter and Placement Agent deem appropriate.
17. By completing and delivering an Application Form or by making and completing an ElectronicApplication by (in the case of an ATM Electronic Application) pressing the “Enter” or “OK” or“Confirm” or “Yes” or any other relevant key on the ATM (as the case may be) or by (in the case ofan Internet Electronic Application or mBanking Application) clicking “Submit” or “Continue” or “Yes”or “Confirm” or any other relevant button on the IB website screen of the relevant ParticipatingBanks or the mobile banking interface of DBS Bank (as the case may be) in accordance with theprovisions of this Offer Document, you:
(a) irrevocably offer, agree and undertake to subscribe for the number of New Shares specifiedin your application (or such smaller number for which the application is accepted) at theIssue Price for each New Share and agree that you will accept such New Shares as may beallotted to you, in each case on the terms of, and subject to the conditions set out in thisOffer Document and the Constitution of our Company;
(b) agree that, in the event of any inconsistency between the terms and conditions forapplication set out in this Offer Document and those set out in the IB websites or ATMs ormobile banking interface of the relevant Participating Banks, the terms and conditions set outin this Offer Document shall prevail;
(c) agree that the aggregate Issue Price for the New Shares applied for is due and payable tothe Company upon application;
(d) warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by our Company in determining whether toaccept your application and/or whether to allot any New Shares to you;
(e) (i) consent to the collection, use, processing and disclosure of your name/NRIC/passportnumber or company registration number, address, nationality, permanent resident status,CDP Securities Account number, share application amount, the outcome of your application(including the number of New Shares allotted to you pursuant to your application) and otherpersonal data (“Personal Data”) by the Share Registrar, CDP, SCCS, the SGX-ST, theParticipating Banks, our Company, the Sponsor, Issue Manager, Underwriter and PlacementAgent and/or other authorised operators (the “Relevant Parties”) for the purpose of theprocessing of your application for the New Shares, and in order for the Relevant Parties tocomply with any applicable laws, listing rules and/or guidelines (collectively, the “Purposes”)and warrant that such Personal Data is true, accurate and correct; (ii) warrant that whereyou, as an approved nominee company, disclose the Personal Data of the beneficialowner(s) for the collection, use, processing and disclosure by the Relevant Parties of thePersonal Data of such beneficial owner(s) for the Purposes; (iii) agree that the RelevantParties may do anything or disclose any Personal Data or matters without notice to you if theSponsor, Issue Manager, Underwriter and Placement Agent considers them to be required ordesirable in respect of any applicable policy, law, regulation, government entity, regulatoryauthority or similar body; and (iv) agree that you will indemnify the Relevant Parties inrespect of any penalties, liabilities, claims, demands, losses and damages as a result of yourbreach of warranties. You also agree that the Relevant Parties shall be entitled to enforce thisindemnity (collectively, the “Personal Data Privacy Terms”); and
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
(f) agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable toyour application, you have complied with all such laws and neither our Company nor theSponsor, Issue Manager, Underwriter and Placement Agent will infringe any such laws as aresult of the acceptance of your application.
18. Our acceptance of applications will be conditional upon, inter alia, our Company, the Sponsor,Issue Manager, Underwriter and Placement Agent being satisfied that:
(a) permission has been granted by the SGX-ST to deal in and for quotation for all our existingShares and the New Shares on Catalist;
(b) the Sponsorship and Management Agreement and the Underwriting and PlacementAgreement referred to in the “Sponsorship, Management, Underwriting and PlacementArrangements” section of this Offer Document have become unconditional and have notbeen terminated or cancelled prior to such date as our Company may determine; and
(c) the SGX-ST acting as agent on behalf of the Authority or other competent authority has notissued a stop order (“Stop Order”) to our Company which directs that no or no furthershares to which this Offer Document relates be allotted, issued or sold.
19. In the event that a Stop Order in respect of the New Shares is issued by the SGX-ST acting asagent on behalf of the Authority or other competent authority and applications to subscribe for theNew Shares have been made prior to the Stop Order, then to the extent permissible underapplicable laws:
(a) in the case where the New Shares have not been issued, we will deem all applicationswithdrawn and cancelled and our Company shall refund all monies paid on account of yourapplication for the New Shares (without interest or any share of revenue or other benefitarising therefrom and at your own risk) to you within 14 days from the date of the Stop Orderand you shall not have any claim whatsoever against our Company, or the Sponsor, IssueManager, Underwriter and Placement Agent; or
(b) in the case where the New Shares have already been issued but trading has notcommenced, the issue of the New Shares shall be deemed to be void and our Companyshall, within 14 days from the date of the Stop Order, refund all monies paid on account ofyour application for the New Shares (without interest or any share of revenue or other benefitarising therefrom and at your own risk) and you shall not have any claim whatsoever againstour Company, or the Sponsor, Issue Manager, Underwriter and Placement Agent.
This shall not apply where only an interim Stop Order has been served.
20. In the event that an interim Stop Order in respect of the New Shares is served by the SGX-STacting as agent on behalf of the Authority or other competent authority, no New Shares shall beissued to you during the time when the interim Stop Order is in force.
21. The SGX-ST acting as agent on behalf of the Authority or other competent authority may not servea Stop Order in respect of the New Shares if the New Shares have been issued and listed on theSGX-ST and trading in the New Shares has commenced.
In the event of any changes in the closure of the Application List or the time period during whichthe Invitation is open, we will publicly announce the same through a SGXNET announcement to beposted on the SGX-ST’s website at http://www.sgx.com and through a paid advertisement in a localnewspaper.
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22. Our Conmpany will not hold any application in reserve.
23. Our Company will not allot Shares on the basis of this Offer Document later than six months afterthe date of registration of this Offer Document by the SGX-ST, acting as agent on behalf of theAuthority.
24. Additional terms and conditions for applications by way of Application Forms are set out in“Additional Terms and Conditions for Applications Using Application Forms” of thisAppendix G.
25. Additional terms and conditions for applications by way of Electronic Applications are set out in“Additional Terms and Conditions for Electronic Applications” of this Appendix G.
26. All payments in respect of any application for the New Shares, and all refunds where (a) anapplication is rejected or accepted in part only, or (b) the Invitation does not proceed for anyreason, shall be made in Singapore dollars.
27. CDP shall not be liable for any delays, failures or inaccuracies in the recording or storage or in thetransmission or delivery of data relating to the Electionic Applications.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS
Applications by way of an Application Form shall be made on, and subject to, the terms and conditions ofthis Offer Document including but not limited to the terms and conditions appearing below as well asthose set out in this Appendix G, as well as the Constitution of our Company.
1. Your application for the New Shares must be made using the WHITE Offer Shares ApplicationForms and WHITE official envelopes “A” and “B” for Offer Shares, the BLUE Placement SharesApplication Forms for Placement Shares (other than Reserved Shares) or the PINK ReservedShares Application Forms for Reserved Shares, accompanying and forming part of this OfferDocument or such other forms of application as the Sponsor, Issue Manager, Underwriter andPlacement Agent deem appropriate without prejudice to the rights of our Company.
We draw your attention to the detailed instructions contained in the respective Application Formsand this Offer Document for the completion of the Application Forms which must be carefullyfollowed. Our Company, in consultation with the Sponsor, Issue Manager, Underwriter andPlacement Agent, reserves the right to reject applications which do not conform strictly tothe instructions set out in the Application Forms and this Offer Document or to the termsand conditions of this Offer Document or which are illegible, incomplete, incorrectlycompleted or which are accompanied by improperly drawn remittances or improper form ofremittance or which are not honoured upon their first presentation.
2. Your Application Forms must be completed in English. Please type or write clearly in ink usingBLOCK LETTERS.
3. All spaces in the Application Forms except those under the heading “FOR OFFICIAL USE ONLY”must be completed and the words “NOT APPLICABLE” or “N.A.” should be written in any spacethat is not applicable.
4. Individuals, corporations, approved nominee companies and trustees must give their names in full.If you are an individual, you must make your application using your full name as it appears in youridentity card (if you have such an identification document) or in your passports and, in the case ofa corporation, in your full name as registered with a competent authority. If you are a non-individual, you must complete the Application Form under the hand of an official who must statethe name and capacity in which he signs the Application Form. If you are a corporation completingthe Application Form, you are required to affix your Common Seal (if any) in accordance with your
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
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Constitution or equivalent constitutive documents. If you are a corporate applicant and yourapplication is successful, a copy of your Constitution or equivalent constitutive documents must belodged with our Company’s Share Registrar and Share Transfer Office. Our Company reserves theright to require you to produce documentary proof of identification for verification purposes.
5. (a) You must complete Sections A and B and sign on page 1 of the Application Form.
(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formwith particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, onpage 1 of the Application Form, your application is liable to be rejected.
6. You (whether you are an individual or corporate applicant, whether incorporated or unincorporatedand wherever incorporated or constituted) will be required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore have an interest in theaggregate of more than 50.0% of the issued share capital of or interests in such corporations.
If you are an approved nominee company, you are required to declare whether the beneficial ownerof the New Shares is a citizen or permanent resident of Singapore or a corporation, whetherincorporated or unincorporated and wherever incorporated or constituted, in which citizens orpermanent residents of Singapore or any body corporate whether incorporated or unincorporatedand wherever incorporated or constituted under any statute of Singapore have an interest in theaggregate of more than 50.0% of the issued share capital of or interests in such corporation.
7. Your application must be accompanied by a remittance in Singapore dollars for the full amountpayable, in respect of the number of New Shares applied for, in the form of a BANKER’S DRAFTor CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “ACROMEC SHAREISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, and with your name, address and CDP SecuritiesAccount number written clearly on the reverse side. Applications not accompanied by anypayment or accompanied by any other form of payment will not be accepted. No combinedBanker’s Draft or Cashier’s Order for different CDP Securities Accounts shall be accepted. We willreject remittances bearing “NOT TRANSFERABLE” or “NON TRANSFERABLE” crossings. Noacknowledgement of receipt will be issued by our Company, or the Sponsor, Issue Manager,Underwriter and Placement Agent for applications and application monies received.
8. Monies paid in respect of unsuccessful applications are expected to be returned (without interest orany share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hours ofballoting of applications at your own risk. Where your application is rejected or accepted in partonly, the full amount or the balance of the application monies, as the case may be, will be refunded(without interest or any share of revenue or other benefit arising therefrom) to you by ordinary postat your own risk within 14 days after the close of the Application List, provided that the remittanceaccompanying such application which has been presented for payment or other processes hasbeen honoured and application monies have been received in the designated share issue account.In the event that the Invitation does not proceed for any reason, the full amount of the applicationmonies received will be refunded (without interest or any share of revenue or other benefit arisingtherefrom) to you by ordinary post at your own risk within five Market Days of the termination of theInvitation. In the event that the Invitation is cancelled by us following the issuance of a Stop Orderby the SGX-ST acting as an agent on behalf of the Authority, the application monies received willbe refunded (without interest or any share of revenue or other benefit arising therefrom) to you byordinary post at your own risk within 14 days from the date of the Stop Order.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
G-10
9. Capitalised terms used in the Application Forms and defined in this Offer Document shall bear themeanings assigned to them in this Offer Document.
10. You irrevocably agree and acknowledge that your application is subject to risks of fires, acts of Godand other events beyond the control of the Participating Banks, our Company, our Directors, theSponsor, Issue Manager, Underwriter and Placement Agent and/or any other party involved in theInvitation, and if, in any such event, our Company, the Sponsor, Issue Manager, Underwriter andPlacement Agent and/or the relevant Participating Bank do not receive your Application Form, youshall have no claim whatsoever against our Company, our Directors, the Sponsor, Issue Manager,Underwriter and Placement Agent, the relevant Participating Bank and/or any other party involvedin the Invitation for the New Shares applied for or for any compensation, loss or damage.
11. By completing and delivering the Application Form, you agree that:
(a) in consideration of our Company having distributed the Application Form to you and agreeingto close the Application List at 12.00 noon on 14 April 2016 or such other time or date asour Company may, in consultation with the Sponsor, Issue Manager, Underwriter andPlacement Agent in their absolute discretion decide, subject to any limitation under allapplicable laws and regulations and the rules of the SGX-ST and by completing anddelivering the Application Form:
(i) your application is irrevocable; and
(ii) your remittance will be honoured on first presentation and that any monies returnablemay be held pending clearance of your payment without interest or any share ofrevenue or other benefit arising therefrom;
(b) neither our Company, the Sponsor, Issue Manager, Underwriter and Placement Agent norany other party involved in the Invitation shall be liable for any delays, failures orinaccuracies in the recording or storage or in the transmission or delivery of data relating toyour application to us or CDP due to breakdowns or failure of transmission, delivery orcommunication facilities or any risks referred to in paragraph 10 above or to any causebeyond their respective controls;
(c) all applications, acceptances and contracts resulting therefrom under the Invitation shall begoverned by and construed in accordance with the laws of Singapore and that youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(d) in respect of the New Shares for which your application has been received and not rejected,acceptance of your application shall be constituted by written notification and not otherwise,notwithstanding any remittance being presented for payment by or on behalf of ourCompany;
(e) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;
(f) in making your application, reliance is placed solely on the information contained in this OfferDocument and that none of our Company, the Sponsor, Issue Manager, Underwriter andPlacement Agent or any other person involved in the Invitation shall have any liability for anyinformation not so contained;
(g) you accept and agree to the Personal Data Privacy Terms set out in this Offer Document;
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
(h) you consent to the collection, use and disclosure of your name, NRIC/passport number orcompany registration number, address, nationality, permanent resident status, CDPSecurities Account number, and share application amount to our Share Registrar, CDP,SCCS, SGX-ST, our Company, the Sponsor, Issue Manager, Underwriter and PlacementAgent or other authorised operators; and
(i) you irrevocably agree and undertake to subscribe for the number of New Shares applied foras stated in the Application Form or any smaller number of such New Shares that may beallotted to you in respect of your application. In the event that our Company decides to allot asmaller number of New Shares or not to allot any New Shares to you, you agree to acceptsuch decision as final.
Applications for Offer Shares
1. Your application for Offer Shares MUST be made using the WHITE Offer Shares Application Formsand WHITE official envelopes “A” and “B”. ONLY ONE APPLICATION should be enclosed in eachenvelope.
2. You must:
(a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together withthe correct remittance in accordance with the terms and conditions of this Offer Document inthe WHITE official envelope “A” provided;
(b) in the appropriate spaces on the WHITE official envelope “A”:
(i) write your name and address;
(ii) state the number of Offer Shares applied for;
(iii) tick the relevant box to indicate the form of payment; and
(iv) affix adequate Singapore postage;
(c) seal the WHITE official envelope “A”;
(d) write, in the special box provided on the larger WHITE official envelope “B” addressed toAcromec Limited c/o Boardroom Corporate & Advisory Services Pte. Ltd., 50 RafflesPlace, #32-01 Singapore Land Tower, Singapore 048623, the number of Offer Shares youhave applied for; and
(e) insert the WHITE official envelope “A” into the WHITE official envelope “B”, seal WHITEofficial envelope “B”, affix adequate Singapore postage on the WHITE official envelope “B” (ifdespatching by ordinary post) and thereafter DESPATCH BY ORDINARY POST ORDELIVER BY HAND, at your own risk to Acromec Limited c/o Boardroom Corporate &Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower, Singapore048623, to arrive by 12.00 noon on 14 April 2016 or such other date and time as ourCompany may, in consultation with the Sponsor, Issue Manager, Underwriter andPlacement Agent, in their absolute discretion decide. Local Urgent Mail or RegisteredPost must NOT be used. No acknowledgement of receipt will be issued for any applicationor remittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or improper form of remittance or which are not honoured upon their firstpresentation are liable to be rejected.
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ACCEPTANCE
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Applications for Placement Shares (other than Reserved Shares)
1. Your application for Placement Shares (other than Reserved Shares) MUST be made using theBLUE Placement Shares Application Forms. ONLY ONE APPLICATION should be enclosed ineach envelope.
2. The completed and signed BLUE Placement Shares Application Form and the correct remittancein full in respect of the number of Placement Shares applied for (in accordance with the terms andconditions of this Offer Document) with your name, address and CDP Securities Account numberwritten clearly on the reverse side, must be enclosed and sealed in an envelope to be provided byyou. You must affix adequate Singapore postage on the envelope (if despatching by ordinary post)and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POST ORDELIVERED BY HAND at your own risk to Acromec Limited c/o Boardroom Corporate &Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower, Singapore048623, to arrive by 12.00 noon on 14 April 2016 or such other date and time as our Companymay, in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agent, intheir absolute discretion decide. Local Urgent Mail or Registered Post must NOT be used.No acknowledgement of receipt will be issued for any application or remittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or improper form of remittance or which are not honoured upon their firstpresentation are liable to be rejected.
Applications for Reserved Shares
1. Your application for Reserved Shares MUST be made using the PINK Reserved SharesApplication Form. ONLY ONE APPLICATION should be enclosed in each envelope.
2. The completed and signed PINK Reserved Shares Application Form and the correct remittance infull in respect of the number of Reserved Shares applied for (in accordance with the terms andconditions of this Offer Document) with your name, address and CDP Securities Account numberwritten clearly on the reverse side, must be enclosed and sealed in an envelope to be provided byyou. You must affix adequate Singapore postage on the envelope (if despatching by ordinary post)and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POST ORDELIVERED BY HAND at your own risk to Acromec Limited c/o Boardroom Corporate &Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore Land Tower, Singapore048623, to arrive by 12.00 noon on 14 April 2016 or such other date and time as our Companymay, in consultation with the Sponsor, Issue Manager, Underwriter and Placement Agent, intheir absolute discretion decide. Local Urgent Mail or Registered Post must NOT be used.No acknowledgement of receipt will be issued for any application or remittance received.
3. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or improper form of remittance or which are not honoured upon their firstpresentation are liable to be rejected.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS
The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM ElectronicApplications), the IB website screens (in the case of Internet Electronic Applications) and the mobilebanking interface (in the case of mBanking Applications). Currently, DBS Bank is the only ParticipatingBank through which mBanking Applications may be made. For illustration purposes, the procedures forElectronic Applications through ATMs and the IB website of the UOB Group are set out respectively in the“Steps for an ATM Electronic Application for the Offer Shares through ATMs of UOB Group” and the“Steps for an Internet Electronic Application through the IB website of UOB Group” (collectively, the“Steps”) appearing in this Appendix G.
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
The Steps set out the actions that you must take at an ATM or the IB website of the UOB Group tocomplete an Electronic Application. Please read carefully the terms of this Offer Document, the Steps andthe terms and conditions for Electronic Applications set out below before making an ElectronicApplication. Any reference to “you” or the “applicant” in this section “Additional Terms and Conditions forElectronic Applications” and the Steps shall refer to you making an application for Offer Shares throughan ATM or the IB website of a relevant Participating Bank.
Applicants applying for the Offer Shares by way of Electronic Applications may incur an administrative feeand/or such related charges as stipulated by the respective Participating Banks from time to time.
You must have an existing bank account with and be an ATM cardholder of one of the Participating Banksbefore you can make an Electronic Application at the ATMs. An ATM card issued by one ParticipatingBank cannot be used to apply for Offer Shares at an ATM belonging to other Participating Banks. For anInternet Electronic Application, you must have an existing bank account with an IB User Identification(“User ID”) and a Personal Identification Number/Password (“PIN”) given by the relevant ParticipatingBank. The Steps set out the actions that you must take at ATMs or the IB website of the UOB Group tocomplete an Electronic Application. The actions that you must take at ATMs or the IB websites of otherParticipating Banks are set out on the ATM screens or the IB website screens of the relevant ParticipatingBanks. Upon the completion of your ATM Electronic Application transaction, you will receive an ATMtransaction slip (“Transaction Record”), confirming the details of your Electronic Application. Uponcompletion of your Internet Electronic Application through the IB website of UOB Group, there will be anon-screen confirmation (“Confirmation Screen”) of the application which can be printed for your record.The Transaction Record or your printed record of the Confirmation Screen is for your retention and shouldnot be submitted with any Application Form.
You must ensure that you enter your own Securities Account number when using the ATM cardissued to you in your own name. If you fail to use your own ATM card or if you do not key in yourown Securities Account number, your application will be rejected. If you operate a joint bankaccount with any of the Participating Banks, you must ensure that you enter your own SecuritiesAccount number when using the ATM card issued to you in your own name. Using your ownSecurities Account number with an ATM card which is not issued to you in your own name willrender your ATM Electronic Application liable to be rejected.
You must ensure, when making an Internet Electronic Application, that your mailing address for theaccount selected for the application is in Singapore and the application is being made in Singapore andyou will be asked to declare accordingly. Otherwise your application is liable to be rejected. In connectionwith this, you will be asked to declare that you are in Singapore at the time when you make theapplication.
You shall make an Electronic Application in accordance with and subject to the terms and conditions ofthis Offer Document including but not limited to the terms and conditions appearing below and those setout in this Appendix G as well as the Constitution of our Company.
1. In connection with your Electronic Application for Offer Shares, you are required to confirmstatements to the following effect in the course of activating your Electronic Application:
(a) that you have received a copy of this Offer Document (in the case of ATM ElectronicApplications only) and have read, understood and agreed to all the terms and conditions ofapplication for Offer Shares and this Offer Document prior to effecting the ElectronicApplication and agree to be bound by the same;
(b) that you consent to the collection, use, processing and disclosure of your name,NRIC/passport number or company registration number, address, nationality, permanentresidence status, share application amount, CDP Securities Account number, applicationdetails and other Personal Data (the “Relevant Particulars”) with the relevant ParticipatingBank to the Relevant Parties; and
(c) that this is your only application for Offer Shares and it is made in your own name and atyour own risk.
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ACCEPTANCE
G-14
Your application will not be successfully completed and cannot be recorded as a completedtransaction in the ATM or on the IB website unless you press the “Enter” or “Confirm” or “Yes” or“OK” or any other relevant key in the ATM or click “Confirm” or “OK” or “Submit” or “Continue” or“Yes” or any other relevant button on the IB website screen or the mobile banking interface of DBSBank. By doing so, you shall be treated as signifying your confirmation of each of the above threestatements. In respect of statement 1(b) above, such confirmation shall signify and shall be treatedas your written permission, given in accordance with the relevant laws of Singapore includingSection 47(2) of the Banking Act (Chapter 19) of Singapore to the disclosure by the relevantParticipating Bank of the Relevant Particulars to the Relevant Parties.
2. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYINGFOR OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THAT ANYELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU ASTHE BENEFICIAL OWNER.
YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES ANDSHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES OR PLACEMENTSHARES, WHETHER AT THE ATMS, OR THE IB WEBSITES OR THE MBANKING INTERFACEOF THE RELEVANT PARTICIPATING BANK OR ON THE APPLICATION FORMS. IF YOU HAVEMADE AN APPLICATION FOR OFFER SHARES OR PLACEMENT SHARES (OTHER THANRESERVED SHARES) ON AN APPLICATION FORM, YOU SHALL NOT MAKE ANELECTRONIC APPLICATION FOR OFFER SHARES AND VICE VERSA.
3. You must have sufficient funds in your bank account with your Participating Bank at the time youmake your Electronic Application, failing which your Electronic Application will not be completed oraccepted. Any Electronic Application which does not conform strictly to the instructions setout in this Offer Document or on the screens of the ATM or the IB website or the mbankinginterface of the relevant Participating Bank through which your Electronic Application isbeing made shall be rejected.
You may make an ATM Electronic Application at the ATM of any Participating Bank or an InternetElectronic Application at the IB website or the mbanking interface of the relevant Participating Bankfor the Offer Shares using only cash by authorising such Participating Bank to deduct the fullamount payable from your account with such Participating Bank.
4. You irrevocably agree and undertake to subscribe for and/or to accept the number of Offer Sharesapplied for as stated on the Transaction Record or the Confirmation Screen or any lesser numberof Offer Shares that may be allotted to you in respect of your Electronic Application.
In the event that our Company decides to allot any lesser number of such Offer Shares or not toallot any Offer Shares to you, you agree to accept such decision as final. If your ElectronicApplication is successful, your confirmation (by your action of pressing the “Enter” or “Confirm” or“Yes” or “OK” or any other relevant key on the ATM or clicking “Confirm” or “OK” or “Submit” or“Continue” or “Yes” or any other relevant button on the IB website screen or the mobile bankinginterface of DBS Bank) of the number of Offer Shares applied for shall signify and shall be treatedas your acceptance of the number of Offer Shares that may be allotted to you and your agreementto be bound by the Constitution of our Company. You also irrevocably authorise CDP to completeand sign on your behalf as transferee or renouncee any instrument of transfer and/or documentsrequired for the issue and/or transfer of the Offer Shares that may be allotted to you.
5. Our Company will not keep any applications in reserve. Where your Electronic Application isunsuccessful, the full amount of the application monies will be refunded in Singapore dollars(without interest or any share of revenue or other benefit arising therefrom) to you by beingautomatically credited to your account with your Participating Bank within 24 hours of balloting ofthe applications provided that the remittance in respect of such application which has beenpresented for payment or other processes have been honoured and the application monies havebeen received in the designated share issue account. Trading on a “WHEN ISSUED” basis, ifapplicable, is expected to commence after such refund has been made.
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
Where your Electronic Application is rejected or accepted in part only, the full amount or thebalance of the application monies, as the case may be, will be refunded in Singapore dollars(without interest or any share of revenue or other benefit arising therefrom and at your own risk) toyou by being automatically credited to your account with your Participating Bank within 14 daysafter the close of the Application List provided that the remittance in respect of such applicationwhich has been presented for payment or other processes have been honoured and the applicationmonies have been received in the designated share issue account.
If the Invitation does not proceed for any reason, the full amount of the application monies receivedwill be refunded (without interest or any share of revenue arising therefrom and at your own risk) toyou within five Market Days of the termination of the Invitation.
Responsibility for timely refund of application monies from unsuccessful or partiallysuccessful Electronic Applications lies solely with the respective Participating Banks.Therefore, you are strongly advised to consult your Participating Bank as to the status ofyour Electronic Application and/or the refund of any monies to you from unsuccessful orpartially successful Electronic Application, to determine the exact number of Offer Sharesallotted to you before trading the Offer Shares on Catalist. You may also call CDP Phone at6535 7511 to check the provisional results of your application by using your T-pin (issued byCDP upon your application for the service) and keying in the stock code (that will be madeavailable together with the results of the allotment via an announcement through the SGX-ST’s website at http://www.sgx.com and by advertisement in a generally circulating dailypress). To sign up for the service, you may contact CDP’s customer service officers. Neitherthe SGX-ST, the CDP, the SCCS, the Participating Banks, our Company, nor the Sponsor,Issue Manager, Underwriter and Placement Agent assume any responsibility for any lossthat may be incurred as a result of you having to cover any net sell positions or from buy-inprocedures activated by the SGX-ST.
6. If your Electronic Application is unsuccessful, no notification will be sent by the relevantParticipating Banks.
If you make Electronic Applications through the ATMs or the IB websites of the followingParticipating Banks, you may check the provisional results of your Electronic Applications asfollows:
ServiceBank Telephone ATM/Internet Operating Hours Expected From
UOB 1800 222 2121 ATM (Other Transactions 24 hours Evening of theGroup – “IPO Results Enquiry”)/ balloting day
Phone Banking/Internet Banking
http://www.uobgroup.com(1)
DBS 1800 339 6666 Internet Banking 24 hours Evening of theBank (for POSB http://www.dbs.com(2) balloting day
account holders)
1800 111 1111(for DBS account holders)
OCBC 1800 363 3333 ATM / Phone Banking / 24 hours Evening of the Internet Banking balloting day http://www.ocbc.com(3)
Notes:
(1) If you have made your Electronic Application through the ATMs or the IB website of UOB Group, you may check theresults of your application through UOB Personal Internet Banking, UOB Group’s ATMs or UOB Phone BankingServices.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
G-16
(2) If you have made your Electronic Application through the ATMs or the IB website of DBS Bank or through themobile banking interface of DBS Bank, you may check the results of your application through the channel listedabove in relation to ATM Electronic Applications made at the ATM of DBS Bank.
(3) If you have made your Electronic Application through the ATMs or the IB websites of OCBC, you may check theresults of your application through OCBC Personal Internet Banking, OCBC’s ATMs or OCBC Phone BankingService.
7. You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God andother events beyond the control of the Participating Banks, our Company, and the Sponsor, IssueManager, Underwriter and Placement Agent and if, in any such event, our Company, the Sponsor,Issue Manager, Underwriter and Placement Agent and/or the relevant Participating Bank do notreceive your Electronic Application, or data relating to your Electronic Application or the tape or anyother devices containing such data is lost, corrupted or not otherwise accessible, whether wholly orpartially for whatever reason, you shall be deemed not to have made an Electronic Application andyou shall have no claim whatsoever against our Company, our Directors, the Sponsor, IssueManager, Underwriter and Placement Agent and/or the relevant Participating Bank for Offer Sharesapplied for or for any compensation, loss or damage.
8. Electronic Applications shall close at 12.00 noon on 14 April 2016 or such other date andtime as our Company may, in consultation with the Sponsor, Issue Manager, Underwriterand Placement Agent, in their absolute discretion decide. Subject to the paragraph above, allInternet Electronic Application and mBanking Application are deemed to be received when it entersthe designated information system of the relevant Participating Bank, that is, when there is anonscreen confirmation of the application.
9. You are deemed to have irrevocably requested and authorised our Company to:
(a) register the Offer Shares allotted to you in the name of CDP for deposit into your SecuritiesAccount as entered by you;
(b) send the relevant Share certificate(s) by ordinary post, at your own risk, to CDP;
(c) return or refund (without interest or any share of revenue earned or other benefit arisingtherefrom and at your own risk) the application monies in Singapore dollars, should yourElectronic Application be unsuccessful, by automatically crediting your bank account withyour Participating Bank with the relevant amount within 24 hours of the balloting ofapplications or within five Market Days of the termination of the Invitation if the Invitationdoes not proceed for any reason (as the case may be); and
(d) return or refund (without interest or any share of revenue or other benefit arising therefrom)the balance of the application monies, should your Electronic Application be accepted in partonly, by automatically crediting your bank account with your Participating Bank with therelevant amount within 14 days after the close of the Application List.
10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be madein your own name and without qualification. Our Company will reject any application by any personacting as nominee except those made by approved nominee companies only.
11. All your particulars in the records of your relevant Participating Bank at the time you make yourElectronic Application shall be deemed to be true and correct and your relevant Participating Bankand the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been anychange in your particulars after the time of the making of your Electronic Application, you shallpromptly notify your relevant Participating Bank.
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
12. You should ensure that your personal particulars as recorded by both CDP and the relevantParticipating Bank are correct and identical, or otherwise, your Electronic Application isliable to be rejected. You should promptly inform CDP of any change in address, failing which thenotification letter on successful allotment from the CDP will be sent to your address last registeredwith CDP.
13. By making and completing an Electronic Application, you are deemed to have agreed that:
(a) in consideration of our Company making available the Electronic Application facility, throughthe Participating Banks as the agents of our Company, at the ATMs and the IB websites ofthe relevant Participating Banks and mobile banking interface of DBS Bank:
(i) your Electronic Application is irrevocable; and
(ii) your Electronic Application, our acceptance and the contract resulting therefrom underthe Invitation shall be governed by and construed in accordance with the laws ofSingapore and you irrevocably submit to the non-exclusive jurisdiction of theSingapore courts;
(b) neither our Company, the Sponsor, Issue Manager, Underwriter and Placement Agent, theParticipating Banks nor CDP shall be liable for any delays, failures or inaccuracies in therecording or storage or in the transmission or delivery of data relating to your ElectronicApplication to our Company or CDP due to breakdowns or failure of transmission, delivery orcommunication facilities or any risks referred to in paragraph 7 above or to any causebeyond our respective controls;
(c) in respect of Offer Shares for which your Electronic Application has been successfullycompleted and not rejected, acceptance of your Electronic Application shall be constituted bywritten notification by or on behalf of our Company and not otherwise, notwithstanding anypayment received by or on behalf of our Company;
(d) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;
(e) in making your application, reliance is placed solely on the information contained in this OfferDocument and that none of our Company, the Sponsor, Issue Manager, Underwriter andPlacement Agent or any other person involved in the Invitation shall have any liability for anyinformation not so contained;
(f) you accept and agree to the Personal Data Privacy Terms set out in this Offer Document;and
(g) you irrevocably agree and undertake to subscribe for the number of New Shares applied foras stated in your Electronic Application or any smaller number of such New Shares that maybe allotted to you in respect of your application. In the event that our Company decides toallot a smaller number of New Shares or not to allot any New Shares to you, you agree toaccept such decision as final.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
G-18
Steps for Electronic Applications through ATMs and the IB website of UOB Group
The instructions for Electronic Applications will appear on the ATM screens, the IB website screens andmobile banking interface of the respective Participating Banks. For illustrative purposes, the steps formaking an Electronic Application through the ATMs or the IB website of UOB Group are shown below.Instructions for Electronic Applications appearing on the ATM screens, the IB website screens and mobilebanking interface (if any) of the relevant Participating Banks (other than UOB Group) may differ from thatrepresented below.
Owing to space constraints on UOB’s ATM screens, the following terms will appear in abbreviated form:
“&” : and
“A/C” and “A/CS” : ACCOUNT AND ACCOUNTS, respectively
“UOB/ICB CPFIS” : UOB OR ICB CPF INVESTMENT SCHEME
“YR” : YOUR
Steps for an ATM Electronic Application for the Offer Shares through ATMs of UOB Group
Step 1 : Insert your personal Unicard, Uniplus card or UOB VISA/MASTER card and key in yourpersonal identification number.
2 : Select “CASHCARD/OTHER TRANSACTIONS”.
3 : Select “SECURITIES APPLICATION”.
4 : Select “ESA-Fixed”.
5 : Select the share counter which you wish to apply for.
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APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
6 : Read and understand the following statements which will appear on the screen:
− THIS OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN,OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/OFFER INFORMATIONSTATEMENT/DOCUMENT OR SUPPLEMENTARY DOCUMENTS. ANYONEWISHING TO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES) WILL NEED TO MAKE AN APPLICATION IN THE MANNER SET OUT IN THE PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT ORSUPPLEMENTARY DOCUMENT
(Press “ENTER” key to continue)
− PLEASE CALL 1800 222 2121 IF YOU WOULD LIKE TO FIND OUT WHERE YOUCAN OBTAIN A COPY OF THE PROSPECTUS/OFFER INFORMATIONSTATEMENT/ DOCUMENT OR SUPPLEMENTARY DOCUMENT
− WHERE APPLICABLE, A COPY OF THE PROSPECTUS/OFFER INFORMATIONSTATEMENT/DOCUMENT OR SUPPLEMENTARY DOCUMENT HAS BEENLODGED WITH AND REGISTERED BY THE MONETARY AUTHORITY OFSINGAPORE WHO ASSUMES NO RESPONSIBILITY FOR THE CONTENTS OFTHE PROSPECTUS/OFFER INFORMATION STATEMENT/DOCUMENT ORSUPPLEMENTARY DOCUMENT
(Press “ENTER” key to confirm that you have read and understood the abovestatements)
7 : Read and understand the following terms which will appear on the screen:
− YOU HAVE READ, UNDERSTOOD & AGREED TO ALL TERMS OF THE PROSPECTUS/OFFER INFORMATION STATEMENT/ DOCUMENT/SUPPLEMENTARY DOCUMENT & THIS ELECTRONIC APPLICATION
(Press “ENTER” key to continue)
− YOU CONSENT TO DISCLOSE YR NAME, IC/PSS PT, NATIONALITY, ADDR,APPLN AMT, CPFINVT A/C NO & CDP A/C NO FROM YOUR A/CS TO CDP, CPF,SCCS, REGISTRARS, SGX-ST AND ISSUER
− THIS IS YOUR ONLY FIXED PRICE APPLN & IS IN YOUR NAME & AT YOURRISK
(Press “ENTER” key to continue)
8 : Screen will display:
NRIC/Passport No. XXXXXXXXXXXX
IF YOUR NRIC NO./PASSPORT NO. IS INCORRECT, PLEASE CANCEL THETRANSACTION AND NOTIFY THE BRANCH PERSONALLY.
(Press “CANCEL” or “CONFIRM”)
9 : Select mode of payment i.e. “CASH ONLY”. You will be prompted to select Cash Accounttype to debit (i.e. “CURRENT ACCOUNT/I-ACCOUNT”, “CAMPUS” OR “SAVINGSACCOUNT/TX ACCOUNT”). Should you have a few accounts linked to your ATM card, alist of linked account numbers will be displayed for you to select.
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
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10 : After you have selected the account, your CDP Securities Account number will bedisplayed for you to confirm or change (This screen with your CDP Securities Accountnumber will be shown if your CDP Securities Account number is already stored in theATM system of UOB Group). If this is the first time you are using UOB Group’s ATM toapply for Shares, your CDP Securities Account number will not be stored in the ATMsystem of UOB Group, and the following screen will be displayed for your input of yourCDP Securities Account number.
11 : Read and understand the following terms which will appear on the screen:
1. PLEASE DO NOT APPLY FOR JOINT A/C HOLDER OR OTHER THIRDPARTIES.
2. PLEASE USE YOUR OWN ATM CARD.
3. DO NOT KEY IN THE CDP A/C NO. OF YOUR JOINT A/C HOLDER OR OTHERTHIRD PARTIES.
4. KEY IN YOUR CDP A/C NO. (12 DIGITS) 1681-XXXX-XXXX
5. PRESS ENTER KEY
IF YOU WISH TO TERMINATE THE TRANSACTION, PLEASE PRESS CANCEL.
12 : Key in your CDP Securities Account number (12 digits) and press the “ENTER” key
13 : Select your nationality status
14 : Key in the number of Shares you wish to apply for and press the “ENTER” key
15 : Check the details of your Electronic Application on the screen and press the “ENTER” keyto confirm your Electronic Application
16 : Select “NO” if you do not wish to make any further transactions and remove theTransaction Record. You should keep the Transaction Record for your own reference only
Steps for an Internet Electronic Application through the IB website of UOB Group
Owing to space constraints on UOB Group’s IB website screen, the following terms will appear inabbreviated form:
“CDP” : The Central Depository (Pte) Limited
“CPF” : The Central Provident Fund
“NRIC” or “I/C” : National Registration Identity Card
APPENDIX GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATIONS AND
ACCEPTANCE
Step 1 : Connect to UOB’s website at http://www.uobgroup.com
2 : Locate the Login icon on the top right hand
3 : Click on Login and at drop list select “UOB Personal Internet Banking”
4 : Enter your Username and Password and click “Login”
5 : You will receive a SMS One-Time Password. Enter the SMS One-Time Password andclick “Submit”
6 : Click on “Investments”, followed by “Securities”, followed by “Securities Application”
7 : Read the IMPORTANT notice and complete the declarations found on the bottom of thepage by answering Yes/No to the questions
8 : Click “Continue”
9 : Select your country of residence (you must be residing in Singapore to apply), and click“Continue”
10 : Select the “Securities Counter” from the drop list (if there are concurrent IPOs) and click“Submit”
11 : Check the “Securities Counter”, select the mode of payment and account number to debitand click on “Submit”
12 : Read the important instructions and click on “Continue” to confirm that:
1. You have read, understood and agreed to all the terms of this application andProspectus/Offer Document or Supplementary Document.
2. For the purposes of facilitating your application, you consent to discloseyour name, NRIC/passport number, CDP Securities Account Number, CPFinvestment account number, application details and other personal data anddisclosing the same from our records to CDP, CPF, SCCS, share registrars,SGX-ST & Issuer/Vendor(s), the Sponsor, Issue Manager, Underwriter andPlacement Agent.
3. This application is made in your own name, for your own account and at yourown risk.
4. For FIXED/MAX price securities application, this is your only application. ForTENDER price shares application, this is your only application at the selectedtender price.
5. For FOREIGN CURRENCY securities, subject to the terms of the issue, pleasenote the following: the application monies will be debited from your bankaccount in S$, based on the Bank’s exchange profit or loss, or applicationmonies may be debited and refunds credited in S$ at the same exchangerate.
6. For 1ST-COME-1ST-SERVE securities, the number of securities applied formay be reduced, subject to the availability at the point of application.
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ACCEPTANCE
G-22
13 : Check your personal details, details of the share counter you wish to apply for andaccount to debit:
Select (a) “Nationality”;
Enter (b) your CDP Securities Account Number; and
(c) the number of shares applied for.
14 : Click “Submit”, “Clear” or “Home” as applicable
15 : Check the details of your application, your NRIC/Passport number, CDP SecuritiesAccount Number and the number of shares applied for, share counter, payment modeand account to debit
16 : Click “Confirm”, “Edit” or “Home” as applicable
17 : Print the Confirmation Screen (optional) for your own reference and retention only
Acromec Limited
4 Kaki Bukit Avenue 1, #06-03 Singapore 417939www.acromec.com
