(Incorporated in the Republic of Singapore on 27 March 2002)

Transcription

1 ECON HEALTHCARE LIMITED (Incorporated in the Republic of Singapore on 27 March 2002) PROSPECTUS Dated 2 December 2002 (registered with the Monetary Authority of Singapore on 2 December 2002) This document is important. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant, or other professional adviser. We have applied to the Singapore Exchange Securities Trading Limited ( SGX-ST ) for permission to deal in and for quotation of all the ordinary shares of S$0.06 each (the Shares ) in the capital of Econ Healthcare Limited (the Company ) already issued (including the Vendor Shares as defined on page 8 of this Prospectus), the new Shares which are the subject of the Invitation ( New Shares ) and the new Shares which may be issued upon the exercise of the options granted or to be granted pursuant to the Econ Healthcare Employees Share Option Scheme. Such permission will be granted when our Company has been admitted to the Official List of the SGX-ST Dealing and Automated Quotation System ( SGX-Sesdaq ). The dealing in and quotation of our Shares will be in Singapore dollars. Acceptance of applications will be conditional upon, inter alia, permission being granted to deal in and for quotation of all of our existing issued Shares (including the Vendor Shares as defined on page 8 of this Prospectus), the New Shares as well as the new Shares arising from the exercise of options granted under our Econ Healthcare Employees Share Option Scheme. Monies paid in respect of any application accepted will be returned to you, without interest or any share of revenue or other benefit arising therefrom and at your own risk, if the said permission is not granted and you will not have any claim against us, the Vendor or the Manager. The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-Sesdaq is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New Shares or our Econ Healthcare Employees Share Option Scheme. A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the Authority ). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act 2001 (Act 42 of 2001), or any other legal or regulatory requirements have been complied with. The Authority has not, in any way, considered the merits of the Shares, the New Shares or the new Shares arising from the exercise of options granted under our Econ Healthcare Employees Share Option Scheme, as the case may be, being offered or in respect of which an invitation is made, for investment. No Shares shall be allotted or allocated on the basis of this Prospectus later than 6 months after the date of registration of this Prospectus. INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION ENTITLED RISK FACTORS BEGINNING ON PAGE 19 OF THIS PROSPECTUS Invitation in respect of 28,000,000 ordinary Shares of S$0.06 each comprising 20,000,000 New Shares and 8,000,000 Vendor Shares: (1) 8,500,000 Offer Shares at S$0.28 for each Offer Share by way of public offer; and (2) 19,500,000 Placement Shares by way of placement, comprising: (i) (ii) 17,260,000 Placement Shares at S$0.28 for each Placement Share; 1,000,000 Placement Shares at S$0.28 for each Placement Share reserved for applications through the Internet; and (iii) 1,240,000 Reserved Shares at S$0.28 for each Reserved Share reserved for Independent Directors, employees, business associates and others who have contributed to the success of our Group, payable in full on application. Manager, Underwriter and Placement Agent

2 A provider of commercial nursing care services in Singapore Always giving you our best care and attention Operates a medicare centre and five nursing homes in Singapore which provide the following services: + Residential nursing care services + Day care services + Respite care services + Physiotherapy services + Western and Traditional Chinese Medicine ( TCM ) treatments Provides the following ancillary services: + Home care services + Extension ward management services at Tan Tock Seng Hospital + Ambulance services + Sale and rental of healthcare equipment and accessories

3 FINANCIAL HIGHLIGHTS TURNOVER (S$ million) 10 CAGR of 14.6% PROFIT BEFORE TAXATION (S$ million) CAGR of 12.4% For the financial year ended 31 March In Asia, the number of persons over 60 years old is expected to increase significantly from 2001 to 2011, especially in countries such as the PRC, Malaysia and Australia

4 COMPETITIVE STRENGTHS Established Track Record and Brand Name + About 15 years in the business + First to be invited to operate and manage an extension ward in a hospital, namely, Tan Tock Seng Hospital + To the best of our knowledge, first in the industry to be awarded the ISO 9002 certification in 1996 Wide Range of In-House Healthcare Services + From nursing services to daily in-house treatments + Western medical treatment complemented by TCM treatments Experienced Management Team + Founder has more than 15 years handson experience in running nursing homes + Supported by management team with relevant experience in their respective fields Effective Cost Management + Enjoy economies of scale through sharing of services + Bulk purchases and general operations are centralised High Barriers to Entry + Operation of nursing homes require licences from Ministry of Health + Significant investment costs in land and building Established Relationships + Enjoy an approximate 65% referral rate from residents, their friends and relatives, and other institutions in FY2002 Purpose-Built Medicare Centre + Designed with residents' needs in mind + Comprehensive physiotherapy facility supervised by full-time physiotherapist INDUSTRY PROSPECTS Rapidly Ageing Singapore Population + Proportion of Singaporeans aged 65 years and above estimated to increase at a per annum growth of 3.1%, from 7% in 1998 to 19% in Elderly population projected to increase from 220,000 as at January 2000 to 312,000 by year 2010 Demand for Nursing Home Beds Set to Increase + Increasing number of elderly Singaporeans will require long term care and support + Expect MOH to increase number of private nursing home beds from the current 25% to 40% by year 2010 Potential in Region + In Asia, the number of persons over 60 years old is expected to increase significantly from 2001 to 2011, especially in countries such as the PRC, Malaysia and Australia + Rapidly ageing population will increase demand for healthcare services FUTURE PLANS To remain competitive and take advantage of the growing need for nursing care for the ageing population, the Group plans to: Establish More Medicare Centres and Nursing Homes + Started construction for new medicare centre in Braddell Road + Obtained government approval for upgrading of Choa Chu Kang Home into a medicare centre Expansion Overseas + Conducted market surveys in the PRC, Malaysia and Australia + Set up a rep office in the PRC + In discussions for collaborations with PRC parties mainly in the areas of management, consultancy and training services for the nursing industry Increase Trading of Healthcare Equipment and Accessories + Sourcing for distributors for in-house designed beds and healthcare accessories overseas Increase Range of Services + Provide programmes based on National Skill Recognition System competencies to train nursing staff from Singapore and the PRC at our medicare centre

5 TABLE OF CONTENTS Page CORPORATE INFORMATION DEFINITIONS DETAILS OF THE INVITATION LISTING ON THE SGX-SESDAQ INDICATIVE TIMETABLE FOR LISTING PLAN OF DISTRIBUTION PROSPECTUS SUMMARY THE INVITATION RISK FACTORS CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS ISSUE STATISTICS USE OF PROCEEDS DIVIDENDS CAPITALISATION AND INDEBTEDNESS DILUTION SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION REVIEW OF RESULTS OF OPERATIONS AND FINANCIAL POSITION OVERVIEW REVIEW OF OPERATING RESULTS REVIEW OF FINANCIAL POSITION LIQUIDITY AND CAPITAL RESOURCES SHARE CAPITAL BUSINESS HISTORY BUSINESS BUSINESS STRATEGY MARKETING SERVICE QUALITY STAFF TRAINING PRODUCT DESIGN AND ENHANCEMENT

6 INTELLECTUAL PROPERTY MAJOR SUPPLIERS MAJOR CUSTOMERS GOVERNMENT REGULATIONS COMPETITION AND COMPETITIVE STRENGTHS PROSPECTS AND FUTURE PLANS PROSPECTS FUTURE PLANS CORPORATE GOVERNANCE DIRECTORS, MANAGEMENT AND STAFF DIRECTORS MANAGEMENT REPORTING STRUCTURE STAFF DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION REMUNERATION OF EMPLOYEES RELATED TO DIRECTORS AND SUBSTANTIAL SHAREHOLDERS SERVICE AGREEMENTS GENERAL INFORMATION ON OUR GROUP SHAREHOLDERS VENDOR MORATORIUM RESTRUCTURING EXERCISE GROUP STRUCTURE INTERESTED PERSON TRANSACTIONS PAST INTERESTED PERSON TRANSACTIONS PAST AND ONGOING INTERESTED PERSON TRANSACTIONS REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS.. 74 POTENTIAL CONFLICTS OF INTEREST THE ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME PROPERTIES AND FIXED ASSETS REPORT FROM REPORTING ACCOUNTANTS ON THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS OF ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES - UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS

7 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES AUDITORS REPORT ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS GENERAL AND STATUTORY INFORMATION APPENDIX A - DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES APPENDIX B - DESCRIPTION OF SINGAPORE LAW AND REGULATIONS RELATING TO TAXATION APPENDIX C - TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE APPENDIX D - RULES OF THE ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME

8 CORPORATE INFORMATION Board of Directors : Ong Chu Poh (Managing Director) Koh Hin Ling (Executive Director) Dr Vasoo Sushilan (Independent Director) Tay Joo Soon (Independent Director) Wong Kook Fei (Independent Director) Joint Company Secretaries : Lee Seng Suan (CPA) Lee Seng Hua Registered Office : 452 Upper East Coast Road Singapore Share Registrar and Share Transfer : M & C Services Private Limited Office 138 Robinson Road #17-00 The Corporate Office Singapore Manager, Underwriter, Placement : The Development Bank of Singapore Ltd Agent and Receiving Banker 6 Shenton Way DBS Building Tower One Singapore Auditors and Reporting Accountants : KPMG Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore Solicitors to the Invitation : Shook Lin & Bok 1 Robinson Road #18-00 AIA Tower Singapore Solicitors to the Manager, Underwriter : Wong Partnership and Placement Agent 80 Raffles Place #58-01 UOB Plaza 1 Singapore Principal Banker : The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore Vendor : Econ Medicare Centre Holdings Pte Ltd 16 Bukit Timah Avenue Singapore

9 DEFINITIONS In this Prospectus, the accompanying Application Forms and, in relation to Electronic Applications, the instructions appearing on the screens of ATMs of Participating Banks, the internet banking websites of the relevant Participating Banks or the internet web-site of DBS TD Waterhouse, unless the context otherwise requires, the following terms or expressions shall have the following meanings: Group Companies Company or Econ Healthcare : Econ Healthcare Limited Econ Ambulance : Econ Ambulance Services Pte Ltd Econ Careskill : Econ Careskill Training Centre Pte Ltd Econ Medicare : Econ Medicare Centre Pte Ltd ENH : Econ Nursing Home Services (1987) Pte Ltd Proforma Group or Group : The Proforma Group of companies comprises Econ Healthcare and its subsidiaries following the completion of the Restructuring Exercise. The Unaudited Proforma Consolidated Financial Statements set out on pages 83 to 98 of this Prospectus have been prepared based on certain assumptions after making certain adjustments to show what: (a) the financial results of the Proforma Group for the years ended 31 March 2000, 2001 and 2002 would have been if the group structure had been in place since the beginning of the periods being reported on; (b) the financial position of the Proforma Group as of the date of the balance sheet as at 31 March 2002 would have been if the group structure had been in place on that date; and (c) the cash flow of the Proforma Group for the financial year ended 31 March 2002 would have been if the group structure had been in place since the beginning of the period being reported on. Sunnyville : Sunnyville Nursing Home (1996) Pte Ltd Our Homes Braddell Centre : Our medicare centre at 58 Braddell Road, Singapore Bukit Timah Home : Our nursing home at 16 Bukit Timah Avenue, Singapore Choa Chu Kang Home : Our nursing home at 53 Choa Chu Kang Road, Singapore Pulasan Home : Our nursing home at 1, 1A, 3, 3A Pulasan Road, Singapore Recreation Home : Our nursing home at 25 Recreation Road, Singapore Sunnyville Home : Our nursing home at 10 Ama Keng Road, Singapore

10 Upper East Coast Centre : Our medicare centre at 452 Upper East Coast Road, Singapore Other Corporations and Agencies Authority : The Monetary Authority of Singapore CDP : The Central Depository (Pte) Limited CISCO : The Commercial & Industrial Security Corporation CPF : Central Provident Fund DBS Bank, Manager, : The Development Bank of Singapore Ltd Placement Agent or Underwriter DBS TD Waterhouse : DBS TD Waterhouse (Singapore) Pte Ltd EMCH : Econ Medicare Centre Holdings Pte Ltd FMS : FMS Tech Pte Ltd MOH : The Ministry of Health SCCS : Securities Clearing & Computer Services (Pte) Ltd SGX-ST : Singapore Exchange Securities Trading Limited SGX-Sesdaq : SGX-ST Dealing and Automated Quotation System SPRING Singapore : The Standards, Productivity and Innovation Board (SPRING Singapore), previously known as the Singapore Productivity and Standards Board (PSB) prior to 1 April 2002 TMI Holdings : TMI Holdings (1997) Pte Ltd TMI Realty : TMI Realty Pte Ltd TMI Tech : TMI Technologies Pte Ltd General Act : The Companies Act, Chapter 50 of Singapore ATM : Automated teller machine Application Forms : The official application forms to be used for the purpose of the Invitation and which form part of this Prospectus Application List : List of applications for subscription and/or purchase of the Invitation Shares Audit Committee : The audit committee of our Company Directors : Directors of our Company as at the date of this Prospectus, unless otherwise stated EPS : Earnings per Share Electronic Applications : Applications for the Invitation Shares through an ATM of one of the Participating Banks or the internet banking web-site of one of the relevant Participating Banks or through the website of DBS TD Waterhouse, in accordance with the terms and conditions of this Prospectus 6

11 Executive Officers : Executive officers of our Company as at the date of this Prospectus, unless otherwise stated FY : Financial year ended or ending 31 March Independent Directors : Independent Directors of our Company as at the date of this Prospectus, unless otherwise stated Internet Placement Shares : The 1,000,000 Placement Shares for applications through the internet web-site of DBS TD Waterhouse, subject to and on the terms and conditions of this Prospectus Invitation : The invitation to the public in respect of the Invitation Shares, subject to and on the terms of this Prospectus Invitation Shares : The New Shares and the Vendor Shares Issue Price : S$0.28 for each Invitation Share ISO 9000 : Series of international standards on quality management and quality assurance developed by the ISO Technical Committee 176 in 1987, which has been adopted by more than 30 countries, including the United Kingdom and United States of America, as their national quality system standard ISO 9002 Certification : A constituent part of the ISO 9000 series which covers the following nineteen areas: management responsibility; quality system; contract review; document and data control; purchasing; control of customer-supplied product; product identification and traceability; process control; inspection and testing; control of inspection; measuring and test equipment; inspection and test status; control of non-conforming products; corrective and preventive action; handling, storage, packaging, preservation and delivery; control of quality records; internal quality audits; training; servicing and statistical techniques Listing Manual : SGX-ST Listing Manual Market Day : A day on which the SGX-ST is open for trading in securities NA : Not applicable NTA : Net tangible assets New Shares : The 20,000,000 new Shares for which our Company invites applications to subscribe, subject to and on the terms of this Prospectus Offer : The offer by our Company of the Offer Shares to the public for subscription and/or purchase at the Issue Price Offer Shares : The 8,500,000 Invitation Shares which are the subject of the Offer Participating Banks : The Development Bank of Singapore Ltd (including POSB) ( DBS Bank ), Oversea-Chinese Banking Corporation Limited ( OCBC ) and United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited (the UOB Group ) Placement : The placement of the Placement Shares by the Placement Agent on behalf of our Company for subscription and/or purchase at the Issue Price 7

12 Placement Shares : The 19,500,000 Invitation Shares which are the subject of the Placement (including the Reserved Shares) PRC or China : People s Republic of China Prospectus : This prospectus dated 2 December 2002 Reserved Shares : 1,240,000 Placement Shares reserved for Independent Directors, employees, business associates and those who have contributed to the success of our Group Restructuring Exercise : The restructuring exercise of our Group undertaken in connection with the Invitation, as described on pages 67 and 68 of this Prospectus Securities Account : Securities account maintained by a depositor with CDP but does not include a securities sub-account Service Agreements : The service agreements entered into between our Company and certain key management staff, as described on pages 64 and 65 of this Prospectus SFA : The Securities and Futures Act 2001 (Act 42 of 2001) Shares : Ordinary shares of S$0.06 each in the capital of our Company Vendor : EMCH Vendor Shares : 8,000,000 Shares for which the Vendor invites applications to purchase subject to and on the terms of this Prospectus Currencies, Units and Others S$ or $ and cents : Singapore dollars and cents respectively, unless otherwise stated % or per cent : Per centum or percentage sq m : Square metre wef : With effect from The terms Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Any reference in this Prospectus and the Application Forms to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act and the SFA or any statutory modification thereof and used in this Prospectus and the Application Forms shall have the meaning assigned to it under the said Act and the SFA or statutory modification as the case may be. Any reference in this Prospectus and the Application Forms to shares being allotted to an applicant includes allotment to CDP for the account of that applicant. A reference to a time of day in this Prospectus and the Application Forms shall be a reference to Singapore time. 8

13 DETAILS OF THE INVITATION LISTING ON THE SGX-SESDAQ Application has been made to the SGX-ST for permission to deal in and for quotation of our Shares already issued (including the Vendor Shares), the New Shares which are the subject of the Invitation, as well as the new Shares arising from the exercise of options granted under our Econ Healthcare Employees Share Option Scheme, on the SGX-Sesdaq. Such permission will be granted when our Company has been admitted to the Official List of the SGX-Sesdaq. Acceptance of applications will be conditional upon, inter alia, permission being granted to deal in and for quotation of all the issued Shares, the New Shares which are the subject of the Invitation, as well as the new Shares arising from the exercise of options granted under our Econ Healthcare Employees Share Option Scheme. Moneys paid in respect of any application accepted will be returned, without interest or any share of revenue or benefit arising therefrom and at the applicant s own risk, if the said permission is not granted and you will not have any claim against us, the Vendor or the Manager. The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX- Sesdaq is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares, the New Shares or our Econ Healthcare Employees Share Option Scheme. A copy of this Prospectus has been lodged with and registered by the Authority. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the SFA, or any other legal or regulatory requirements have been complied with. The Authority has not, in any way, considered the merits of the Shares, the New Shares or the new Shares arising from the exercise of options granted under our Econ Healthcare Employees Share Option Scheme, as the case may be, being offered or in respect of which an invitation is made, for investment. Our Directors and the Vendor individually and collectively accept full responsibility for the accuracy of the information given in this Prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief the facts contained in this Prospectus are true and accurate and not misleading, all expressions of opinion, intention and expectation contained in this Prospectus are fair and accurate in all material respects as at the date of this Prospectus, there are no other material facts the omission of which would make any statement in this Prospectus misleading. No person is authorised to give any information or to make any representation not contained in this Prospectus in connection with the Invitation and, if given or made, such information or representation must not be relied upon as having been authorised by our Company, the Vendor, the Manager, the Underwriter or the Placement Agent. Neither the delivery of this Prospectus and the Application Forms nor the Invitation shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change in the affairs of our Company or of our subsidiaries or in any statements of fact or information contained in this Prospectus since the date of this Prospectus. Where such changes occur, our Company may lodge a supplementary or replacement prospectus with the Authority and make an announcement of the same to the SGX-ST and the public and will comply with the requirements of the SFA. All applicants should take note of any such announcement and, upon release of such an announcement, shall be deemed to have notice of such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to the future performance or policies of our Company or our subsidiaries. None of our Company, the Vendor and DBS Bank is making any representation to any person regarding the legality of an investment in our Shares by such person under any investment or any other laws or regulations. No information in this Prospectus should be considered to be business, legal or tax advice. Each prospective investor should consult his own professional or other advisers for business, legal or tax advice regarding an investment in our Shares. This Prospectus has been prepared solely for the purpose of the Invitation and may not 9

14 be relied upon by any persons other than the applicants in connection with their application for the Invitation Shares or for any other purpose. This Prospectus does not constitute an offer of, or invitation to subscribe for, the Invitation Shares in any jurisdiction in which such offer or invitation is unauthorised or unlawful nor does it constitute an offer or invitation to any person to whom it is unlawful to make such offer or invitation. In the event that a supplementary or replacement prospectus is lodged with the Authority, our Invitation shall be kept open for at least 14 days after the lodgement of such supplementary or replacement prospectus. Where prior to the lodgement of the supplementary or replacement prospectus, applications have been made under this Prospectus to subscribe for our Invitation Shares and: (a) where our Shares have not been issued to the applicants, our Company shall either: (i) within 7 days from the date of lodgement of the supplementary or replacement prospectus, give the applicants the supplementary or replacement prospectus, as the case may be, and provide the applicants with an option to withdraw their applications; or (ii) treat the applications as withdrawn and cancelled, in which case the applications shall be deemed to have been withdrawn and cancelled, and our Company shall, within 7 days from the date of lodgement of the supplementary or replacement prospectus, return all moneys paid in respect of any application to, without interest or a share of revenue or benefit arising therefrom; or (b) where our Shares have been issued to the applicants, our Company shall either: (i) within 7 days from the date of lodgement of the supplementary or replacement prospectus, give the applicants the supplementary or replacement prospectus, as the case may be, and provide the applicants with an option to return to our Company our Shares, which they do not wish to retain title in; or (ii) treat the issue of our Shares as void, in which case the issue shall be deemed void and our Company shall, within 7 days from the date of lodgement of the supplementary or replacement prospectus, return all moneys paid in respect of any application, without interest or a share of revenue or benefit arising therefrom. An applicant who wishes to exercise his option under paragraph (a)(i) to withdraw his application shall, within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify our Company of this, whereupon our Company shall, within 7 days from the receipt of such notification, pay to him all moneys paid by him on account of his application for those Shares without interest or a share of revenue or benefit arising therefrom, at the applicant s risk. An applicant who wishes to exercise his option under paragraph (b)(i) to return our Shares issued to him shall, within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify our Company of this and return all documents, if any, purporting to be evidence of title to those Shares, to our Company, whereupon our Company shall, within 7 days from the receipt of such notification and documents, if any, pay to him all moneys paid by him for those Shares and the issue of those Shares shall be deemed to be void. Under the SFA, the Authority may, in certain circumstances issue a stop order (the Stop Order ) to our Company, directing that no or no further Shares to which this Prospectus relates, be allotted, issued or sold. Such circumstances will include a situation where this Prospectus (i) contains a statement or matter, which in the opinion of the Authority is false or misleading, (ii) omits any information that should be included in accordance with the SFA or (iii) does not, in the opinion of the Authority, comply with the requirements of the SFA. 10

15 Where applications to subscribe for our Shares to which this Prospectus relates have been made prior to the Stop Order, and: (a) where our Shares have not been issued to the applicants, the applications shall be deemed to have been withdrawn and cancelled and our Company shall, within 14 days from the date of the Stop Order, pay to the applicants all moneys the applicants have paid on account of their applications for our Shares; or (b) where our Shares have been issued to the applicants, the issue of our Shares shall be deemed to be void and our Company shall, within 14 days from the date of the Stop Order, pay to the applicants all moneys paid by them for our Shares. Copies of this Prospectus and the Application Forms and envelopes may be obtained free of charge on request, subject to availability, during office hours from: The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore and from DBS Bank (including POSB) branches and, where available, from members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in Singapore. The Application List will open at a.m. on 9 December 2002 and will remain open until noon on the same day or for such further period or periods as our Directors and the Vendor, in consultation with the Manager, may decide, subject to any limitation under all applicable laws. Where a supplementary document or replacement document has been lodged with the Authority, the Application List shall be kept open for at least 14 days after the lodgment of the supplementary document or replacement document. 11

16 INDICATIVE TIMETABLE FOR LISTING In accordance with the SGX-ST s News Release of 28 May 1993 on the trading of initial public offering shares on a when issued basis, an indicative timetable is set out below for the reference of applicants: Indicative date/time Event 9 December 2002, 12 noon Close of Application List 10 December 2002 Balloting of applications, if necessary (in the event of an oversubscription for the Offer Shares) 11 December 2002, 9.00 a.m. Commence trading on a when issued basis 19 December 2002 Last day of trading on a when issued basis 20 December 2002, 9.00 a.m. Commence trading on a ready basis 26 December 2002 Settlement date for all trades done on a when issued basis and for all trades done on a ready basis on 20 December 2002 The above timetable is only indicative as it assumes that the closing of the Application List is 9 December 2002, the date of admission of our Company to the Official List of the SGX-Sesdaq will be 11 December 2002, the shareholding spread requirement will be complied with and the Invitation Shares will be issued and fully paid up prior to 11 December The actual date on which our Shares will commence trading on a when issued basis will be announced when it is confirmed by the SGX-ST. The above timetable and procedure may be subject to such modifications as the SGX-ST may in its discretion decide, including the decision to permit trading on a when issued basis, and the commencement date of such trading. All persons trading in our Shares on a when issued basis do so at their own risk. In particular, persons trading in our Shares before their Securities Accounts with CDP are credited with the relevant number of Shares do so at the risk of selling Shares which neither they nor their nominees, if applicable, have been allotted with or are otherwise beneficially entitled to. Such persons are also exposed to the risk of having to cover their net sell positions earlier if when issued trading ends sooner than the indicative date mentioned above. Persons who have a net sell position traded on a when issued basis should close their position on or before the first day of ready basis trading. The Invitation will open from 3 December 2002 to 9 December Investors should consult the SGX-ST s announcement on the ready listing date on the Internet (at the SGX-ST website INTV or the newspapers, or check with their brokers on the date on which trading on a ready basis will commence. We will publicly announce the level of subscription for the Invitation Shares and the basis of allocation of the Invitation Shares pursuant to the Invitation, as soon as it is practicable after the closing date for applications: (i) through a MASNET announcement to be posted on the Internet at the SGX-ST website (ii) a local English newspaper, namely, The Straits Times; and (iii) a local Chinese newspaper, namely, LianHe ZaoBao. In the event of any changes in the closure of the Application List or the time period during which the Invitation is open, we will also announce the same through the channels in (i), (ii) and (iii) above. 12

17 PLAN OF DISTRIBUTION The Issue Price of $0.28 is determined by us and the Vendor, in consultation with DBS Bank, based on market conditions and the market demand for our Shares determined through a book-building process. The Issue Price is the same for all Invitation Shares and is payable in full on application. Offer Shares The Offer Shares are made available to the members of the public in Singapore for subscription at the Issue Price. The terms and conditions and procedures for application and acceptance are described in Appendix C on pages 152 to 168 of this Prospectus. Pursuant to the terms and conditions contained in the Management and Underwriting Agreement signed between our Company and DBS Bank dated 2 December 2002, DBS Bank has agreed to underwrite our Offer Shares. 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 excess application for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List. In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the Placement Shares are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for the Offer Shares will be determined by ballot or otherwise as determined by our Directors and the Vendor and approved by the SGX-ST. Placement Shares (excluding Reserved Shares) Application for the Placement Shares may only be made by way of application form or through the web-site of DBS TD Waterhouse. The terms and conditions and procedures for application and acceptance are described in Appendix C on pages 152 to 168 of this Prospectus. Pursuant to the terms and conditions in the Placement Agreement signed between our Company and the Placement Agent dated 2 December 2002, the Placement Agent has agreed to subscribe for or procure subscriptions for the Placement Shares at the Issue Price. In the event of an under-subscription for the Placement Shares as at the close of the Application List, that number of Placement Shares not subscribed for shall be made available to satisfy excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. In the event of an under-subscription for the Internet Placement Shares to be applied for through the web-site of DBS TD Waterhouse as at the close of the Application List, that number of Internet Placement Shares not subscribed for shall be made available to satisfy excess applications for the Placement Shares by way of Placement Shares application forms to the extent that there is an oversubscription for such Placement Shares as at the close of the Application List or to satisfy excess applications for the Offer Shares, to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. Allocation for Internet Placement Shares through the web-site of DBS TD Waterhouse will be made on a first-come-first serve basis. 13

18 Reserved Shares To recognise contributions to our Group, we have reserved 1,240,000 Placement Shares for subscription by our Independent Directors, employees, business associates and others who have contributed to the success of our Group at the Issue Price. These Reserved Shares are not subject to any moratorium and may be disposed of after the admission of our Company to the Official List of the SGX-Sesdaq. In the event that any of the Reserved Shares are not taken up, they will be made available to satisfy excess applications for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List or, in the event of an under-subscription for the Placement Shares as at the close of the Application List, to satisfy excess applications made by members of the public for the Offer Shares to the extent there is an over-subscription for the Offer Shares as at the close of the Application List. Save as disclosed in respect of the Reserved Shares, none of our Directors or substantial shareholder intends to subscribe for the Invitation Shares in the Invitation. To the best of our knowledge, we are unaware of any person who intends to subscribe for more than 5% of the Invitation Shares. Further, no Shares shall be allocated or allotted on the basis of this Prospectus later than six months after the date of registration of this Prospectus. 14

19 PROSPECTUS SUMMARY The information contained in this summary is derived from and should be read in conjunction with the full text of this Prospectus. COMPANY Our Company was incorporated in the Republic of Singapore under the Act on 27 March 2002 as a private limited company under the name of Econ Healthcare Pte. Ltd.. Our Company was subsequently converted to a public limited company on 5 November 2002 and changed its name to Econ Healthcare Limited. To prepare for a listing on the SGX-Sesdaq pursuant to the Invitation, the Restructuring Exercise was undertaken to rationalise our shareholding structure and to consolidate the principal entities of our Group as wholly-owned subsidiaries under our Company. Our company registration number is K. Our registered office is located at 452 Upper East Coast Road, Singapore Our telephone number is (65) and our facsimile number is (65) Our web-site is at Information at our web-site does not constitute a part of this Prospectus. BUSINESS We operate a medicare centre and five nursing homes in Singapore which provide the following services: (i) residential nursing care to provide nursing services and to assist residents in all areas of personal care and hygiene; (ii) day care services for residents who do not have a requisite caregiver in their homes during the day; (iii) short-term respite care services; (iv) daily group or individual physiotherapy services; and (v) regular western and Traditional Chinese Medicine ( TCM ) treatments from our appointed doctor and full-time TCM physician respectively. We also provide the following ancillary services: (i) home care services whereby our full range of nursing services are provided to customers who prefer to reside at home; (ii) extension ward management services at Tan Tock Seng Hospital ( TTSH ). The Extension Ward is a transit point for patients who are due for discharge to nursing homes or return to their homes; (iii) non-emergency ambulance services for our residents and the public; and (iv) sale and rental of healthcare equipment and accessories. As part of our continuous efforts to improve our services, we had converted one of our six nursing homes into a purpose-built medicare centre in

20 STRATEGY Our business strategy includes the following: (i) (ii) (iii) (iv) strategic positioning to expand our existing geographical coverage within Singapore and regionally and increasing the capacity of our nursing homes; emphasis on quality management to ensure quality services; promoting the awareness of our services; and our branding as a leading premium healthcare brand synonymous with quality healthcare and management services. Please refer to Business Strategy on pages 48 and 49 of this Prospectus for more details. GROUP STRUCTURE Our current Group structure is as shown below: Econ Healthcare 100% 100% 100% 100% 100% Econ Medicare Econ Careskill ENH Econ Ambulance Sunnyville SUMMARY OF SELECTED FINANCIAL INFORMATION Proforma profit and loss statements of our Group Financial year ended 31 March S$ Revenue 6,704 7,461 8,849 Other operating income Profit from ordinary activities before taxation 1,862 1,740 2,416 Net profit attributable to shareholders of our Company 1,348 1,298 1,843 Proforma balance sheet of our Group S$ 000 As at 31 March 2002 Non-current assets 10,077 Net current assets 22 Non-current liabilities (4,719) 5,380 Share capital 5,385 Merger deficit (1,485) Accumulated profits 1,480 5,380 16

21 COMPETITIVE STRENGTHS Our competitive strengths are: an established track record and brand name; our ability to provide a wide range of in-house healthcare services for the convenience of our residents; an experienced and professional management team who is familiar with the business and whom we believe would be well-positioned to lead our Group forward to continued growth and profitability; effective cost management which allows us to enjoy economies of scale in respect of marketing, purchasing and other operating costs; high barriers to entry; established relationships with our residents and referring institutions; and our purpose-built medicare centre which takes into account the needs of our residents and exceeding, in some instances, the requisite government regulatory requirements. Please refer to Competition and Competitive Strengths on pages 52 to 54 of this Prospectus for more details. FUTURE PLANS Our future plans are: to establish more medicare centres and nursing homes; to expand regionally; to increase the sales of our in-house designed healthcare equipment and accessories; and to increase our range of services to include training of nursing staff at our medicare centre. Please refer to Prospects and Future Plans on pages 55 and 56 of this Prospectus for more details. 17

22 THE INVITATION Size : 28,000,000 Invitation Shares, comprising 20,000,000 New Shares and 8,000,000 Vendor Shares. The Vendor Shares and the New Shares will, upon allotment and issue, rank pari passu in all respects with the then existing issued Shares. Issue Price : S$0.28 for each Invitation Share. The Offer : The Offer comprises an offering of 8,500,000 Offer Shares to members of the public. The Placement : The Placement comprises an offering of 19,500,000 Invitation Shares by way of private placement comprising:- (i) 17,260,000 Placement Shares at S$0.28 for each Placement Share; (ii) 1,000,000 Placement Shares at S$0.28 for each Placement Share reserved for applications through the Internet; and (iii) 1,240,000 Reserved Shares at S$0.28 for each Reserved Share reserved for the Independent Directors, employees, business associates and others who have contributed to the success of our Group. Reserved Shares : 1,240,000 of the 19,500,000 Placement Shares will be reserved for our Group s Independent Directors, employees, business associates and others who have contributed to the success of our Group. In the event that any of the Reserved Shares are not taken up, they will be made available to satisfy excess applications for the Placement Shares, or in the event of an under-subscription for the Placement Shares, to satisfy excess applications made by members of the public for the Offer Shares. Purpose of the Invitation : Our Directors consider that the listing of our Company and the quotation of our Shares on the SGX-Sesdaq will enhance our Company s public image. It will also provide members of the public, the management, staff and business associates of our Group an opportunity to participate in the equity of our Company. Listing Status : Our Shares will be quoted on the SGX-Sesdaq, subject to admission of our Company to the Official List of the SGX- Sesdaq, permission for dealing in and quotation of our Shares being granted by the SGX-ST and the Authority not issuing a Stop Order. 18

23 RISK FACTORS You should carefully evaluate each of the following considerations and all of the other information set forth in this Prospectus before deciding to invest in our Company s Shares. The following considerations relate principally to the industry in which our Group operates and its business in general. If any of the following considerations and uncertainties develop into actual events, our business, financial conditions or results of operations could be materially adversely affected. In such cases, the trading price of our Shares could decline due to any of these considerations, and you may lose all or part of your investment. This Prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Prospectus. RISKS RELATED TO OUR GROUP We are subject to government policies on the provision of healthcare services. Any adverse changes in existing policies will have consequential effects on our business Our nursing homes are governed by the Private Hospitals and Medical Clinics Act (Cap. 248) (as amended by the Private Hospitals and Medical Clinics (Amendment) Act 1999). This regulates matters relating to the issuance, suspension and revocation of licences, duties of persons managing private hospitals, the establishment of quality assurance committees by the licensees of private hospitals or healthcare establishments and the powers of the Director of Medical Services. This and other government regulations or policies which may be introduced from time to time will affect the way we operate and may result in increased cost of compliance. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies, could require substantial expenditure by us and will have a negative impact on our operations and financial results. There is also no assurance that our licences will be renewed or that new licences will be granted to us for any future new nursing homes which we may establish. Failure to renew or obtain such licences will materially and adversely affect our business operations and financial condition. We are dependent on the continued employment and performance of our key personnel and the availability of adequately skilled nursing staff. Inability to retain or attract these personnel will adversely affect our operations Our success has largely been due to the contributions of our Managing Director, Mr Ong Chu Poh and our management team. The loss of services of any of these individuals without suitable and timely replacements will adversely affect our operations. Additionally, as a service provider, we depend on our nursing staff for the quality of services rendered. Competition for qualified nurses and nursing aides in the healthcare industry is intense and we may not be able to retain or recruit suitably qualified personnel to replace those who resign. Our inability to retain our existing staff or attract new staff will adversely affect our operations and hence our performance. As at 30 September 2002, foreign workers accounted for more than half of our total workforce. Due to the shortage of qualified nurses and nursing aides in Singapore, we are expected to continue to rely on foreigners for our operations. These foreign workers are regulated by our government authorities which set a limit to the number we may hire and also impose levies on each foreign worker hired by our Group. As such, any change in government policies to lower the limit of the number of foreign workers our Group may employ or an increase in levy may adversely affect our operations and profitability. 19

24 We face potential competition from other healthcare providers. Their ability to successfully provide services similar to those provided by our Group will adversely affect our business Despite the high barriers to entry, other healthcare providers have the facilities and personnel to provide healthcare services similar to that of our Group s. This would, should our competitors become more successful in meeting the needs of potential or our existing customers, decrease the demand for our services hence adversely affecting our business. In particular, we have currently entered into a two-year Extension Ward Management Services Agreement with TTSH for the operation and management of an extension ward (Please refer to Business on page 46 of this Prospectus for more details). There is no assurance that this agreement will be extended on favourable terms or that it will not be terminated prior to its expiry. The non-renewal, renewal on unfavourable terms or early termination will have an adverse effect on our business. We are dependent on referrals and any cessation or reduction thereof will adversely affect our financial performance Our marketing activities are limited as a result of the stringent MOH Promotion Guidelines. Consequently, we rely on personal references from our existing network of residents and their family members, relatives, friends and from doctors. References are also received from other institutions such as hospitals, voluntary welfare organisations and community clubs. Any cessation or reduction of these referrals, whether due to a decline in quality services that we provide or otherwise, will adversely affect our financial performance. Damages assessed or harmful market reputation resulting from potential litigation will adversely affect our financial performance We are a healthcare service provider and are therefore exposed to the risk of litigation arising from the performance of our services. Our financial performance will be adversely affected if (a) any damages are assessed against us and the legal costs incurred in connection with the legal action are substantial and/or (b) judgement is made against us which harms our professional standing and market reputation. Currently, our Group does not have and does not intend to obtain any professional indemnity insurance. Failure to procure lease renewal of existing sites will adversely affect our operations Currently, we own Braddell Centre and Choa Chu Kang Home. Recreation Home, Pulasan Home and Upper East Coast Centre are leased from our related person, EMCH. Bukit Timah Home is leased from our related person, TMI Tech (Please refer to Interested Person Transactions on pages 73 and 74 of this Prospectus for more details of the leases). Our Sunnyville Home is leased from the Singapore Land Office (now known as Singapore Land Authority). There is no assurance that the lease agreements will be extended on favourable terms or that none of them will be terminated prior to its expiry. The non-renewal, renewal on unfavourable terms or early termination will have an adverse effect on our business. Sunnyville Home has 49 beds. In accordance with the Singapore Land Office s (now known as Singapore Land Authority) letter to Sunnyville dated 20 March 2001, a Temporary Occupation Licence ( TOL ) was issued for a period of three years commencing 1 August 2000 at a monthly rental of S$5,440. It is a term of the TOL that the TOL may be cancelled or revoked at any time. Further, we have been informed by the Singapore Land Office to make full use of this three-year period to seek other alternative permanent premises. Bukit Timah Home has 190 beds. In accordance with the Singapore Land Authority s letter to ENH (as sub-lessor of TMI Tech) dated 4 July 2001, a TOL was issued for a period of two years commencing 1 February 2001 at a monthly rental of S$16,404 which is to be paid by TMI Tech. It is a term of the TOL that the TOL may be cancelled or revoked at any time. 20

25 There is no assurance that the TOLs of these two properties will be renewed on favourable terms or that they will not be terminated prior to the expiry of the respective TOLs. The non-renewal, renewal on less favourable terms or early termination, will have a material adverse effect on our operations and profitability. Additionally, no compensation or alternative site will be given upon termination of the respective TOLs. Failure to secure new sites for the construction of new homes will affect our future growth As part of our future plans, we intend to expand our existing geographical coverage within Singapore. We will continue to source for suitable locations for new medicare centres and nursing homes. However, there can be no assurance that we will be able to identify suitable locations for this purpose, or successfully secure such sites owing to, inter-alia, government regulations on the use of such land and other more competitive bids for such land. In our effort to expand, we may be unable to meet our future funding requirements and may require additional funding, which may not be available to us. The raising of additional capital may also dilute your ownership in us As part of our business strategy to expand and grow our business, we will need to raise additional funds therefor. If we require additional funding, we may have to raise capital by issuing equity or debt securities or by borrowing funds from banks or other sources. We cannot assure you that any additional financing we may need will be available on terms favourable to us, or at all. In addition, any additional capital raised through the sale of equity may dilute your ownership interest in us. Furthermore, if we need additional capital and cannot raise it on acceptable terms, we may not be able to fully realise our expansion plans or respond to competitive pressures or unanticipated requirements, in which case, our business results would suffer. There is no assurance that our future plans will be commercially successful As part of our future plans, we intend to enter into new markets such as the PRC, Malaysia and Australia. Our ability to expand into these new geographical regions will depend on the level of acceptance and use of our products and services. There is no assurance that such expansion plans can be commercially successful. We will need to increase our marketing activities to develop market awareness and relationships with potential customers. Such activities will consume financial resources. An increase in these expenses without a corresponding increase in revenue would have an adverse impact on our future financial performance. RISKS RELATED TO OUR INVITATION No prior market for our Shares Prior to this Invitation, there has been no public market for our Shares. The Issue Price may not be indicative of the market price for our Shares after the completion of this Invitation. We have applied to the SGX-ST for the listing and quotation of our Shares on the Official List of the SGX-Sesdaq. However, no assurance can be given that an active trading market for our Shares will develop or, if developed, will be sustained. Certain of our major shareholders own a large percentage of our Company and could hence significantly influence the outcome of corporate actions in a manner which may conflict with our interests and the interests of our other shareholders Upon completion of this Invitation, our Directors and substantial shareholder, EMCH, will, in aggregate, beneficially own approximately 70.4% of our enlarged share capital after the Invitation. These shareholders, if acting together, would be able to significantly influence all matters requiring approval by our shareholders. This concentration of ownership will place these major shareholders in a position to affect significantly our corporate actions such as mergers or takeover attempts (notwithstanding that the same may be synergistic or beneficial to our Group) in a manner that could conflict with the interests of our public shareholders. 21

26 Shares eligible for future sale by our current shareholders may decrease the price of our Shares There will be 109,756,000 Shares immediately following the Invitation. Such Shares, subject to those under moratorium, may be sold in the public market in Singapore. Please refer to Moratorium on page 67 of this Prospectus for more details. Sale of substantial numbers of Shares in the public market following the Invitation could adversely affect the price of our Shares. In addition, if our substantial shareholders sell substantial amounts of our Shares in the public market following the expiry of the moratorium, the market price of our Shares could fall. Investors in our Shares would face immediate and substantial dilution in the book value per Share and may experience future dilution Our Issue Price of S$0.28 is substantially higher than our Group s NTA per Share of S$0.09 (adjusted for the Subscription, the Restructuring Exercise, the Consolidation, the Stock Split and net proceeds from the Invitation) as at 31 March Thus, there is an immediate and substantial dilution in the book value per Share for investors who purchase our Shares. Please refer to Dilution on page 30 of this Prospectus for more details. Our share price may be volatile, which could result in substantial losses for investors purchasing our Shares pursuant to this Invitation The market price of our Shares may fluctuate significantly and rapidly as a result of, inter alia, the factors mentioned below:- announcements by us or our competitors of significant contracts, acquisitions, strategic alliances or capital commitments; fluctuations of share price and volume of companies in industries similar to ours in Singapore and the region; changes in our operating results; changes in securities analysts estimates of our financial performance and recommendations; changes in market valuation of similar companies; and our involvement in litigation. 22

27 CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS All statements contained in this Prospectus, statements made in the press releases and oral statements that may be made by our Company or our officers, Directors or employees acting on our behalf, that are not statements of historical fact, constitute forward-looking statements. Some of these statements can be identified by words that have a bias towards, or are, forward-looking such as anticipate, believe, could, estimate, expect, forecast, if, intend, may, plan, possible, probable, project, should, will and would or similar words. However, these words are not the exclusive means of identifying forward-looking statements. All statements regarding our Group s expected financial position, business strategy, plans and prospects and future prospects of our Group s industry are forward-looking statements. These forward-looking statements, including statements as to our Group s revenue and profitability, prospects, future plans and other matters discussed in this Prospectus regarding matters that are not historic facts, are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our Group s actual future results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by such forward-looking statements. Given the risks and uncertainties that may cause our Group s actual future results, performance or achievements to be materially different from that expected, expressed or implied by the forwardlooking statements in this Prospectus, undue reliance must not be placed on these statements. Our actual results may differ materially from those anticipated in these forward looking statements. Neither our Company, the Vendor, the Manager, the Placement Agent, the Underwriter nor any other person represents or warrants that our Group s actual future results, performance or achievements will be as discussed in those statements. Further, our Company, the Vendor and the Manager disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances for any reason, even if new information becomes available or other events occur in the future. We are, however, required by section 241 of the SFA to lodge a supplementary or replacement document in respect of future developments, events or circumstances that occur prior to the close of the Invitation and that are required to be disclosed pursuant to law. We are also subject to the provisions of the Listing Manual regarding corporate disclosure upon our admission to the Official List of the SGX-Sesdaq. 23

28 ISSUE STATISTICS Issue Price for each Invitation Share S$0.28 NET TANGIBLE ASSETS NTA per Share based on the consolidated balance sheet of our Proforma Group as at 31 March 2002, after taking into account the Restructuring Exercise: (a) before adjusting for the estimated net proceeds from the issue of the New Shares and based on the pre-flotation share capital of 89,756,000 Shares (b) after adjusting for the estimated net proceeds from the issue of the New Shares and based on the post-flotation share capital of 109,756,000 Shares 6.0 cents 9.1 cents Premium of Issue Price of S$0.28 per Share over the NTA per Share as at 31 March 2002: (a) before adjusting for the estimated net proceeds from the issue of the New Shares and based on the pre-flotation share capital of 89,756,000 Shares 366.7% (b) after adjusting for the estimated net proceeds from the issue of the New Shares and based on the post-flotation share capital of 109,756,000 Shares 207.7% EARNINGS PER SHARE Historical net EPS of our Proforma Group for FY2002 based on the pre-flotation share capital of 89,756,000 Shares Historical net EPS of our Proforma Group for FY2002 based on the pre-flotation share capital of 89,756,000 Shares, assuming the Service Agreements had been in place in FY cents 1.8 cents PRICE EARNINGS RATIO Historical price earnings ratio based on the historical net EPS of our Proforma Group for FY2002 based on the pre-flotation share capital of 89,756,000 Shares Historical price earnings ratio based on the historical net EPS of our Proforma Group for FY2002 based on the pre-flotation share capital of 89,756,000 Shares, assuming the Service Agreements had been in place in FY times 15.6 times NET OPERATING CASH FLOW (1) Historical net operating cash flow per Share for FY2002 based on the pre-flotation share capital of 89,756,000 Shares Historical net operating cash flow per Share for FY2002 based on the pre-flotation share capital of 89,756,000 Shares, assuming the Service Agreements had been in place in FY cents 4.2 cents 24

29 PRICE TO NET OPERATING CASH FLOW RATIO Historical price to net operating cash flow based on the historical net operating cash flow per Share for FY2002 based on the pre-flotation share capital of 89,756,000 Shares 6.2 times Historical price to net operating cash flow based on the historical net operating cash flow per Share for FY2002 based on the pre-flotation share capital of 89,756,000 Shares, assuming the Service Agreements had been in place in FY times MARKET CAPITALISATION Market capitalisation based on the post-invitation share capital of 109,756,000 Shares and the Issue Price S$30.7 million Note: (1) Net operating cash flow is defined as profit before tax adjusted for non-cash operating activities such as accrual for interest expense and provision for depreciation, changes in working capital and taxes paid. 25

30 USE OF PROCEEDS The net proceeds attributable to us from the issue of the New Shares (after deducting the estimated expenses in relation to the Invitation of approximately $1.0 million) will be approximately $4.6 million. This will be used to finance our growth and development and for the expansion of our business operations. We intend to use the net proceeds for the following purposes: (a) approximately $2.2 million for the construction and set up costs of Braddell Centre; and (b) the remaining $2.4 million as working capital for our Group. Pending the deployment of the net proceeds from the Invitation as aforesaid, the net proceeds may be placed in short-term time deposits with financial institutions, used to invest in short-term money market instruments and/or used for working capital requirements as our Directors may deem appropriate. 26

31 DIVIDENDS We do not have a fixed dividend policy. Our Company has not declared any dividends since our incorporation on 27 March For FY2002, our subsidiaries, ENH and Sunnyville, have declared and paid interim net dividends of S$2.2 million and S$0.6 million respectively. We may by ordinary resolution of our shareholders, declare annual dividends at a general meeting but the amount of dividends may not exceed the amount recommended by our Directors. Our Directors may declare an interim dividend without seeking shareholders approval. We must pay all dividends out of our profits or pursuant to Section 69 of the Act. In considering the level of our dividend payments, we intend to take into account various factors, including: (a) the levels of our cash and retained earnings; (b) our expected financial performance; (c) our projected levels of capital expenditure and other investment plans; (d) dividend yield of comparable companies (if any) listed in Singapore; (e) our results of operations, cash flows and financial conditions; (f) our future prospects; and (g) other factors deemed relevant by our Directors. Therefore, there can be no assurance that dividends will be paid in the future or as to the amount or timing of any dividends that are to be paid in the future. We will pay cash dividends, if any, in Singapore dollars. 27

32 CAPITALISATION AND INDEBTEDNESS The following table shows our cash and cash equivalents and capitalisation as at 30 September You should read this table in conjunction with our Unaudited Proforma Consolidated Financial Statements which appears elsewhere in this Prospectus and the section Review of Results of Operations and Financial Position on pages 34 to 39 of this Prospectus. As at 30 September 2002 (S$ 000) Actual (1) Adjusted (2) Cash and cash equivalents 1,882 6,472 Indebtedness: Current: interest-bearing bank loans (secured) (3) finance lease liabilities (secured) Non-current: interest-bearing bank loans (secured) (3) 4,242 4,242 Total Indebtedness 4,930 4,930 Shareholders Equity: Issued and fully paid up share capital 5,385 6,585 Share premium 3,390 Merger deficit (1,485) (1,485) Accumulated profits (4) 2,586 2,586 Total Shareholders Equity 6,486 11,076 Total Capitalisation and Indebtedness 11,416 16,006 Notes: (1) The actual cash and cash equivalents and capitalisation as at 30 September 2002 has been prepared based on the unaudited proforma consolidated financial statements, including the effects of the Subscription (as hereinafter defined) and the issue of 4,305,368 ordinary shares of $1.00 each pursuant to the Restructuring Exercise. (2) The adjusted cash and cash equivalents and capitalisation as at 30 September 2002 has been adjusted to give effect to the issue of 20,000,000 New Shares pursuant to the Invitation and the net proceeds from the Invitation, after deducting underwriting and placement commissions, brokerage and other estimated expenses related to the Invitation. (3) For the purposes of calculation, an interest rate of 5% per annum is assumed. Please refer to page 29 for more details on the term loans. (4) As the term loans have not commenced, no interest expense relating to the term loans have been included. Please refer to page 29 for more details on the term loans. 28

33 We have on 23 October 2002 entered into a sale and purchase agreement to acquire from EMCH the two properties at 53 Choa Chu Kang Road, Singapore and 58 Braddell Road, Singapore The transfer of the said properties is in the process of being completed. We will obtain term loans based on the terms of the offer letters from the relevant banks to finance the purchase of the properties. Such term loans will be secured by a legal mortgage on the respective properties and/or corporate guarantees as may be required by the relevant banks. In accordance with the terms of the sale and purchase agreement, the transfer of the properties is effective 1 April Accordingly, the above term loans are based on the estimated outstanding amounts of the loans taken out by EMCH of S$4,913,000 as at 30 September Current interest-bearing bank loans comprise current portion of term loans required to finance the purchase of the properties at 53 Choa Chu Kang Road, Singapore and 58 Braddell Road, Singapore Current finance lease liabilities comprise current portion of finance leases obtained to finance the purchase of ambulances. Non-current interest-bearing bank loans comprise non-current portion of term loans required to finance the properties at 53 Choa Chu Kang Road, Singapore and 58 Braddell Road, Singapore The finance leases are repayable over 36 monthly instalments and bear interest at 3.25% per annum. 29

34 DILUTION Dilution is the amount by which the Issue Price paid by the subscribers/purchasers of our Shares in this Invitation exceeds our NTA per Share after the Invitation. NTA per Share is determined by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of Shares deemed to be outstanding on the date as of which the book value is determined. Our NTA per Share as at 31 March 2002 and based on pre-invitation issued and paid-up share capital of 89,756,000 Shares was 6.0 cents per Share. Our NTA as at 31 March 2002, adjusted to give effect to the Subscription, the issue of 4,305,368 ordinary shares of $1.00 each pursuant to the Restructuring Exercise and the issue of 20,000,000 New Shares pursuant to the Invitation at the Issue Price of $0.28 per Share, after deducting underwriting and placement commissions, brokerage and estimated expenses paid by us in relation to the Invitation would be 9.1 cents per Share. This represents an immediate increase in NTA per Share of 3.1 cents per Share to our existing shareholders and an immediate dilution in NTA per Share of 18.9 cents per Share or 67.5% to new public investors. The following table illustrates the dilution per Share: As at 31 March 2002 Cents Issue Price 28.0 NTA per Share as at 31 March 2002, based on the pre-invitation issued share capital of 89,756,000 Shares 6.0 Increase in NTA per Share attributable to existing shareholders 3.1 NTA per Share after the Invitation based on the post-invitation issued share capital of 109,756,000 Shares 9.1 Dilution in NTA per Share to new public investors 18.9 The following table summarises as of the date of this Prospectus, the total number of Shares issued by us, the total consideration paid and the average price per Share paid by our existing shareholders and by our new public investors pursuant to the Invitation. Number of Consideration Average price Shares % (S$) % per Share (cents) Existing shareholders 81,756,000 (1) ,905,360 (1) New public investors (include both New Shares and Vendor Shares) 28,000, ,840, Total 109,756, ,745, Note: (1) This is determined after adjusting for the dilution arising from the sale of Vendor Shares. 30

35 SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION The following selected financial information should be read in conjunction with the full text of this Prospectus, including the Unaudited Proforma Consolidated Financial Statements set out on pages 83 to 98 of this Prospectus. The unaudited proforma consolidated financial statements of the Group have been prepared from consolidated financial statements of EMCH which were prepared in accordance with Singapore Statements of Accounting Standard and presented on the following bases:- (a) the profit and loss statements are for the three financial years ended 31 March 2002; (b) the balance sheet is as at 31 March 2002; and (c) the cash flow statement is for the financial year ended 31 March Operating Results of the Proforma Group (1) Financial year ended 31 March S$ Revenue 6,704 7,461 8,849 Other operating income Supplies and consumables (786) (902) (857) Staff costs (2,316) (2,962) (3,217) Depreciation of property, plant and equipment (163) (186) (280) Operating lease expenses (880) (737) (1,327) Other operating expenses (479) (752) (575) Profit from operations 2,087 1,927 2,600 Finance costs (225) (187) (184) Profit from ordinary activities before taxation 1,862 1,740 2,416 (2) Taxation (514) (442) (573) Net profit attributable to shareholders of the Company 1,348 1,298 1,843 (2) EPS (cents) (3) (2) Notes: (1) The financial results of the Proforma Group for the period under review have been prepared on the basis that the Proforma Group had been in existence throughout the period under review. (2) Had the Service Agreements been effected on 1 April 2001, the profit before taxation, the profit after taxation and EPS for FY2002 would have been $2.2 million, $1.6 million and 1.8 cents respectively. (3) For comparative purposes, the EPS is calculated using net profit attributable to shareholders of the Company divided by the pre-flotation share capital of 89,756,000 Shares. 31

36 Financial Position of the Proforma Group (1) 31 March 2002 S$ 000 Property, plant and equipment 10,077 Current assets Trade and other receivables 569 Cash and cash equivalents 1,219 1,788 Less: Current liabilities Trade and other payables 1,064 Current portion of interest-bearing bank loans 211 Current portion of finance lease liabilities 32 Liability for short-term accumulating compensated absences 36 Provision for taxation 423 1,766 Net current assets 22 Less: Non-current liabilities Interest-bearing bank loans 4,702 Finance lease liabilities 4 Deferred taxation 13 4,719 5,380 Share capital 5,385 Merger deficit (1,485) Accumulated profits 1,480 5,380 NTA per Share (cents) (2) 6.0 Notes: (1) The financial position of the Proforma Group has been prepared on the basis that the Proforma Group was in existence as at 31 March (2) The NTA per Share is calculated based on the pre-flotation share capital of 89,756,000 Shares. 32

37 Past Performance By Activity Revenue S$ 000 FY2000 % FY2001 % FY2002 % Operation of medicare centre and 5, , , nursing homes Other ancillary services 1, , , , , , Profit Before Taxation S$ 000 FY2000 % FY2001 % FY2002 % Operation of medicare centre and 1, , , nursing homes Other ancillary services , , , Profit Before Taxation Margin % FY2000 FY2001 FY2002 Operation of medicare centre and nursing homes Other ancillary services Past Performance by Geographical Regions For the past three financial years, all our operations were in Singapore, therefore, all our revenue was derived from Singapore. 33

38 REVIEW OF RESULTS OF OPERATIONS AND FINANCIAL POSITION This discussion and analysis should be read in conjunction with the Unaudited Proforma Consolidated Financial Statements of the Group which are included elsewhere in this Prospectus. OVERVIEW Revenue We operate a medicare centre and five nursing homes in Singapore. In addition, we also provide other ancillary services such as home care services, hospital extension ward management services, ambulance services and sale and rental of healthcare equipment and accessories. Revenue derived from the operation of our medicare centre and nursing homes are classified under Operation of medicare centre and nursing homes whilst revenue derived from our ancillary services are classified under Other ancillary services. As all our operations are located in Singapore, all our revenue is received in Singapore dollars. (i) Operation of medicare centre and nursing homes Upon admission, each of our residents undergoes a medical assessment by a doctor and the resident is classified into one of the four functional categories (please refer to Admission Process/Functional Categorisation of Residents on page 47 of this Prospectus for more details). Based on the results of this assessment and residents requests, we will determine the home fee of the respective residents. Home fees for residents in the higher categories are higher than home fees payable by residents in the lower categories. Residents may request for specific room types (1/2/3-bed rooms or dormitory), air-conditioned facilities or specific nursing home/medicare centre. Home fees for our medicare centre are generally higher than the home fees for our nursing homes by 20% to 40%, depending on the needs of the resident and type of room. This is because our medicare centre is a purpose-built centre. Furthermore, we have a TCM physician available and a more comprehensive physiotherapy facility that is supervised by our full time physiotherapist. Home fees comprise charges for accommodation and meals, basic nursing care, laundry services, as well as social and recreational activities such as physical exercises, gardening, games, karaoke and calligraphy. These home fees are billed at the beginning of each month. We also collect a standard admission fee, which varies for our medicare centre and nursing homes. As an added service to our residents, we provide ancillary services such as acupuncture and physiotherapy at our medicare centre and nursing homes. These services are provided upon request by our residents and are billed together with the following month s home fees. In addition to the above, we charge our residents for medical consultancy services and for certain supplies and consumables used such as diapers and dressing materials. These are also billed together with the following month s home fees. We grant all of our residents a grace period of 10 days from the date of billing. We may, in certain cases, extend the grace period granted to residents, subject to our management s review of the nature of the delay and taking into consideration the resident s payment history and the outstanding amount. For late payments, we may levy a late payment administrative charge of $20 and/or impose a surcharge of 1.5% per month on the outstanding amount. Our average debtors turnover for the last three financial years are as follows: FY2000 FY2001 FY2002 Average debtors turnover days

39 We do not have a general provision policy for doubtful debts or receivables, however, we have made specific provisions for doubtful debts on a case-by-case basis depending on our assessment of the doubtful receivables. In the last three financial years, we have not experienced any material collection and/or doubtful debt problems. Our provisions for doubtful debts for the last three financial years are as follows:- ($ 000) FY2000 FY2001 FY2002 Provision for doubtful debts 6 39 A significant portion of our revenue is on a recurrent basis as almost 95% of our residents are staying without a specific date of discharge. (ii) Other ancillary services Other ancillary services comprise mainly home care services, hospital extension ward management services, ambulance services and sale and rental of healthcare equipment and accessories. Home care services We provide home care services to clients who prefer to reside at their own homes. Such services are provided on an hourly, daily or monthly basis. Payment for our services is on a cash term basis. For clients who require our home care services on a monthly basis, invoices are sent at the beginning of the following month and a 10-day grace period is granted. Extension ward management services Under our existing two-year Extension Ward Management Services Agreement with TTSH which expires on 16 November 2003, we are required to provide nursing staff to TTSH to manage an extension ward. These nursing staff provide nursing care in the extension ward which is a transit point for patients who are due for discharge to nursing homes or return to their homes. Pursuant to this agreement, we receive a fixed monthly management fee. Ambulance services Currently, we have six non-emergency ambulances that are equipped with clinical equipment which are used to transport our residents and provide services to the public. We bill our residents on a monthly basis and the invoices are sent at the beginning of the following month with a 10-day credit period. As for non-resident customers, they are billed upon completion of services. Sale and rental of healthcare equipment and accessories As an additional service, we also rent or sell in-house designed healthcare equipment and accessories to both residents and non-residents. We bill these customers upon delivery of such equipment or accessories. The major factors that will affect our revenue are mainly: (a) inability to renew our current leases for our Bukit Timah Home, Sunnyville Home, Recreation Home, Pulasan Home and Upper East Coast Centre; (b) changes in regulatory requirements resulting in the loss of our nursing home licences; (c) the demand for our extension ward management services arising from changes to the terms of the current agreement or the cessation of the agreement; and (d) an increase in competition which results in a decrease in demand for our services. We do not experience any significant seasonality effect. 35

40 Other operating income Our other operating income comprise mainly interest income, gain on sale of fixed assets and donations received from the public. Expenses Our expenses comprise mainly supplies and consumables, staff costs, depreciation charges, operating lease expenses and other operating expenses. As our business is essentially servicebased, our major overhead is staff costs, representing 50.0%, 53.5% and 51.4% of our total expenses in FY2000, FY2001 and FY2002 respectively. As our operations are all based in Singapore, all our expenses are incurred in Singapore dollars. Supplies and consumables comprise mainly purchases of food and other related consumables for residents and staff, diapers, dressing material and bed linen for residents, and uniforms. We typically pay cash for such purchases and are generally granted credit terms of up to 30 days by our suppliers for credit purchases. Our staff costs comprise mainly staff salaries and bonuses, directors remuneration, CPF and foreign worker levies. As at 31 March 2002, we had 219 staff of which more than half were foreigners. We engage foreign staff such as nursing aides and health attendants mainly from the Philippines, Myanmar, China and Sri Lanka for a tenure of between two to four years, subject to renewal thereafter for a maximum duration of eight years. We incur depreciation charges mainly on our nursing home equipment, ambulances and medical equipment and furniture and fittings. Our operating lease expenses comprise rental paid for the premises used as our medicare centre and nursing homes. Our other operating expenses comprise mainly utility charges, advertising and promotion expenses, professional fees and repair and maintenance charges. Our finance costs arise from interest paid on bank loans for the acquisition of Braddell Centre and Choa Chu Kang Home and finance leases obtained for the purchase of our ambulances. The major factor that will affect our operating expenses is the increase in cost of operating leases and our staff costs arising from, inter alia, increase in CPF rate, foreign worker levy or inability to secure adequate foreign nursing staff for our operations. Credit policy on sales and purchases Generally, all our services rendered are on cash terms. The credit term given by our suppliers is up to 30 days. REVIEW OF OPERATING RESULTS FY2000 to FY2001 Revenue Our revenue increased from $6.70 million in FY2000 to $7.46 million in FY2001 representing an increase of 11.3% or $0.76 million. The increase was mainly due to the commencement of business of Upper East Coast Centre in October 2000 which contributed to an increase of $0.44 million to our Group s revenue. As at 31 March 2001, we had achieved an occupancy rate of 43.4%, or 59 residents for the medicare centre. 36

41 In addition, we were able to secure higher home fees from new residents who replaced existing residents in our nursing homes who had been discharged and the higher proportion of residents in the higher categories of III and IV. This resulted in an increase of $0.13 million in our Group s revenue. Besides increases in our home fees, revenue from our ambulance services increased by $0.11 million due mainly to the increased demand for our ambulance services and the purchase of two new ambulances, one at the end of FY2000 and the other in FY2001. We also recorded an increase of $0.08 million in our Group s revenue from the higher demand for our home care services arising from increased marketing and promotional activities for such services. Supplies and consumables Supplies and consumables increased by $0.11 million or 13.9% from $0.79 million in FY2000 to $0.90 million in FY2001 due mainly to increases in residents arising from the commencement of business of our Upper East Coast Centre. Staff costs Staff costs increased by 27.6% or $0.64 million from $2.32 million in FY2000 to $2.96 million in FY2001 due mainly to the increase of (i) $0.30 million arising from the new nursing staff employed for our new medicare centre and existing nursing homes; (ii) $0.27 million arising from the employment of more head office staff to cater for the increase in business; and (iii) $0.07 million arising from employment of additional staff to operate the new ambulances purchased. As at 31 March 2001, we had 29 operations staff working at our medicare centre. Depreciation of property, plant and equipment Depreciation charges increased by 18.8% or $0.03 million from $0.16 million in FY2000 to $0.19 million in FY2001 due mainly to the purchase of a new ambulance and nursing home equipment, and furniture and fittings for the medicare centre. Operating lease expenses Our operating lease expenses decreased by 15.9% or $0.14 million from $0.88 million in FY2000 to $0.74 million in FY2001. This was attributed mainly to the return of excess rented office space at Bukit Timah Home to TMI Tech. In addition, we did not pay any rent to EMCH in FY2001 for Upper East Coast Centre despite the commencement of business in October This was due to a six-month rent-free period granted by EMCH. Other operating expenses Our other operating expenses increased by $0.27 million or 56.3% from $0.48 million in FY2000 to $0.75 million in FY2001. This was attributed mainly to the cost of $0.15 million incurred to set up our medicare centre in October We also incurred a one-off consultancy fee of $0.04 million as well as an increase in specific provision for doubtful debts of $0.04 million. Finance costs Finance costs declined by 17.4% or $38,000 from approximately $225,000 in FY2000 to approximately $187,000 in FY2001 mainly due to the lower outstanding loan amount arising from repayments and lower interest rates. 37

42 Profit after taxation Our effective tax rate decreased from 27.6% in FY2000 to 25.4% in FY2001 arising from higher tax deductible expenses. Despite this decline, our profit after taxation decreased by 3.7% or $0.05 million from $1.35 million in FY2000 to $1.30 million in FY2001 due mainly to the costs incurred for the set-up and operation of Upper East Coast Centre and recruitment of new staff to cater for our business expansion. FY2001 to FY2002 Revenue Our revenue increased by 18.6% or $1.39 million from $7.46 million in FY2001 to $8.85 million in FY2002. This increase was attributed mainly to the increase in occupancy at our medicare centre which contributed an increase in our Group s revenue of $1.24 million. As at 31 March 2002, the number of residents at our medicare centre stood at 79 or an occupancy rate of 58.1%, compared to 59 residents or an occupancy rate of 43.4% as at 31 March As the occupancy rate of our nursing homes remained around 94%, we did not experience any significant changes in revenue from our nursing homes. In addition, our continuing marketing and promotional activities for our home care services resulted in an increase in revenue derived from our home care services of $0.12 million in FY2002. Supplies and consumables Notwithstanding the higher occupancy at our medicare centre in FY2002, our purchases for supplies and consumables decreased by $0.04 million or 4.4% from $0.90 million in FY2001 to $0.86 million in FY2002. With the increase in our total number of residents to 450 as at 31 March 2001, we set up a purchasing department at the end of FY2001 to centralise purchases. As a result, we were able to better monitor our purchases and enjoy economies of scale through bulk purchases in FY2002. Staff costs Staff costs increased by 8.8% or $0.26 million from $2.96 million in FY2001 to $3.22 million in FY2002 due mainly to increases in staff costs at our medicare centre of $0.15 million as we employed an additional 14 nursing staff to cater to the higher occupancy level. In view of the expansion in our business, we also employed more head office staff in FY2002 and this increased staff costs by $0.07 million. Staff costs relating to our ambulance crew increased by $0.03 million in FY2002 due to the full-year effect of salaries of new ambulance crew employed at the end of FY2001. Depreciation of property, plant and equipment Depreciation charges increased by 47.4% or $0.09 million from $0.19 million in FY2001 to $0.28 million in FY2002 due mainly to a change in accounting estimate of useful life for renovations of properties under operating leases which accelerated the depreciation of the renovations. Operating lease expenses Operating lease expenses increased by 79.7% or $0.59 million from $0.74 million in FY2001 to $1.33 million in FY2002. This was due mainly to payment of rental to EMCH for the leased premises for Upper East Coast Centre which commenced only in FY2002. Other operating expenses The decrease of $0.17 million or 22.7% from $0.75 million in FY2001 to $0.58 million in FY2002 was attributed mainly to the cost of $0.15 million incurred to set up our medicare centre in FY

43 Finance costs Finance costs decreased by 1.6% or $3,000 from approximately $187,000 in FY2001 to approximately $184,000 in FY2002 as the finance lease for an existing ambulance was fully repaid. Profit after taxation Our effective tax rate decreased from 25.4% in FY2001 to 23.7% in FY2002 arising from higher tax deductible expenses. Coupled with the increase in our profit before taxation of 39.1% or $0.68 million from $1.74 million in FY2001 to $2.42 million in FY2002, our profit after taxation increased from $1.30 million in FY2001 to $1.84 million in FY2002. REVIEW OF FINANCIAL POSITION Property, plant and equipment Property, plant and equipment comprised mainly freehold property, nursing home equipment, computer hardware, and furniture and fittings. As at 31 March 2002, the net book value of property, plant and equipment amounted to $10.08 million of which $9.50 million related to freehold land and buildings, $0.32 million to nursing home equipment and the balance of $0.26 million to ambulances and medical equipment, office equipment, renovations, motor vehicles, furniture and fittings, and computer and accessories. Current assets Current assets comprised trade and other receivables and cash and cash equivalents. As at 31 March 2002, our current assets amounted to $1.79 million comprising $0.57 million of trade and other receivables and $1.22 million of cash and cash equivalents. Current liabilities Current liabilities comprised bank overdrafts, trade and other payables, current portion of interestbearing bank loans, current portion of finance lease liabilities, liability for short-term accumulating compensated absences and provision for taxation. As at 31 March 2002, our current liabilities amounted to $1.77 million comprising $1.06 million of trade and other payables, $0.21 million of current portion of interest-bearing bank loans, $0.03 million of current portion of finance lease liabilities, $0.04 million of liability for short-term accumulating compensated absences and $0.42 million of provision for taxation. Non-current liabilities Non-current liabilities comprised interest-bearing bank loans, finance lease liabilities and deferred taxation. As at 31 March 2002, our non-current liabilities amounted to $4.72 million comprising mainly interest-bearing bank loans of $4.70 million, deferred taxation of approximately $13,000 and finance lease liabilities of approximately $4,000. Shareholders equity Shareholders equity comprised share capital, merger deficit and accumulated profits. 39

44 LIQUIDITY AND CAPITAL RESOURCES Our growth has been financed through a combination of shareholders equity, retained earnings and external borrowings from financial institutions. Our principal uses of cash have mainly been for meeting capital expenditures, operating expenses and financial expenses. Our capital expenditures, operating expenses and financial leases have been financed mainly by cash from our operations and external borrowings. Group Cash Flow Summary (S$ 000) FY2002 Cash flows from operating activities 3,996 Cash flows from investing activities (25) Cash flows from financing activities (2,848) Net increase in cash and cash equivalents 1,123 We generated cash from operating activities of $4.00 million due mainly to $2.42 million of profits from ordinary activities before taxation, payment of income taxes of $0.12 million and decreases in working capital arising mainly from a decrease of $1.39 million in our trade and other receivables. Arising from the purchase of new furniture and fittings which was offset by proceeds from disposal of nursing home equipment, we recorded a net cash used in investing activities of $0.03 million in FY2002. Net cash used in financing activities amounted to $2.85 million due mainly to payment of $2.80 million in dividends. As at 30 September 2002, our Proforma Group had total borrowings of S$4.93 million comprising finance leases of $0.02 million and interest-bearing bank loans of S$4.91 million. Please refer to Capitalisation and Indebtedness on pages 28 and 29 of this Prospectus for more details. Save as disclosed, there have been no material changes to our Proforma Group s banking facilities since 30 September Based on our Proforma Group s shareholders equity of S$5.38 million as at 31 March 2002, our gearing stood at approximately 0.9 times. As at 31 March 2002, our net current assets was approximately $22,000 and working capital ratio was 1.01 times. We have been able to service our interest commitment on a timely basis and our interest cover ratio was approximately 14.1 times. Our consolidated cash and cash equivalents stood at $1.95 million as at 31 October Based on the above, our Directors are of the opinion that, after taking into account our present cash position, we have sufficient working capital for our present requirements. Save as disclosed above, since 31 March 2002 to the date of this Prospectus, there were no material changes to our total liquidity and capital resources, save for changes arising from the dayto-day operations in the ordinary course of our business. COMMITMENTS Between 1 April 2002 and 31 October 2002, we have incurred approximately $319,000 for the construction of our Braddell Centre. As at 31 October 2002, we have capital commitments amounting to $1.92 million for the construction of the Braddell Centre. We expect to fund the capital commitments from the net proceeds of the Invitation. The total construction and set-up costs of Braddell Centre is estimated at approximately S$2.5 million. 40

45 SHARE CAPITAL Our Company was incorporated in the Republic of Singapore under the Act as a private limited company on 27 March 2002 under the name of Econ Healthcare Pte. Ltd.. On 5 November 2002, we were converted into a public limited company and changed our name to Econ Healthcare Limited. As at 31 March 2002, our authorised share capital was S$5,000,000, consisting of 5,000,000 ordinary shares of S$1.00 each, and our issued and paid-up share capital was S$2.00 consisting of 2 ordinary shares of S$1.00 each. At an Extraordinary General Meeting held on 23 October 2002, our shareholders approved, inter alia, the following: (i) an increase in the authorised share capital from S$5,000,000 to S$30,000,000 comprising 30,000,000 ordinary shares of S$1.00 each; (ii) subscription at par of 1,079,990 ordinary shares of S$1.00 each in the capital of our Company by Messrs Ong Chu Poh (683,990 shares), Koh Hin Ling (162,000 shares), Lim Mui Hong (186,000 shares) and Chan Sau Wai (48,000 shares) for working capital purposes (the Subscription ); (iii) issue of 4,305,368 new ordinary shares of S$1.00 each pursuant to the Restructuring Exercise; (iv) the consolidation of three ordinary shares of S$1.00 each into one ordinary share of S$3.00 each (the Consolidation ); (v) the sub-division of each ordinary share of S$3.00 in our authorised as well as our issued and paid-up share capital into 50 ordinary shares of S$0.06 each (the Stock Split ); (vi) our conversion into a public limited company and the change of our name to Econ Healthcare Limited ; (vii) the adoption of a new set of Articles of Association; (viii) the adoption of the Econ Healthcare Employees Share Option Scheme and that the Directors of our Company be authorised to allot and issue Shares upon the exercise of options granted under the Econ Healthcare Employees Share Option Scheme; (ix) the issue of 20,000,000 New Shares pursuant to the Invitation. The New Shares, when issued and fully paid, will rank pari passu in all respects with our existing Shares; and (x) the authorisation of our Directors, pursuant to Section 161 of the Act, to issue Shares in our Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as our Directors may in their absolute discretion deem fit provided that the aggregate number of Shares issued pursuant to such authority shall not exceed 50% of the issued share capital (1) of our Company and provided that the aggregate number of such Shares to be issued other than on a pro rata basis to the existing shareholders shall not exceed 20% of the issued share capital of our Company, and, unless revoked or varied by our Company in general meeting, such authority shall continue in force until the conclusion of the Annual General Meeting of our Company or the date by which the next Annual General Meeting of our Company is required by law to be held, whichever is the earlier. 1 The percentage of issued share capital is calculated based on the maximum potential share capital at the time that the mandate is passed (taking into account the conversion or exercise of any convertible securities and employee share options in issue at the time that the mandate is passed, which were issued pursuant to previous shareholders approval), adjusted for any subsequent consolidation or subdivision of shares. 41

46 Details of the changes in the issued and paid-up share capital of our Company since 27 March 2002, being the date of the incorporation of our Company, and our issued and paid-up share capital immediately after the Invitation, are as follows: Number of shares S$ Issued and fully paid-up ordinary shares of S$1.00 each 2 2 as at 27 March 2002 Issue of ordinary shares of S$1.00 each pursuant to the 1,079,990 1,079,990 Subscription Issue of ordinary shares of S$1.00 each pursuant to the 4,305,368 4,305,368 Restructuring Exercise 5,385,360 5,385,360 Consolidation of three ordinary shares of S$1.00 each 1,795,120 5,385,360 into one ordinary share of S$3.00 each Subdivision of one ordinary share of S$3.00 each into 89,756,000 5,385, shares of S$0.06 each Issue of New Shares pursuant to Invitation 20,000,000 1,200,000 Issued and paid-up capital after the Invitation 109,756,000 6,585,360 The authorised share capital and the shareholders funds of our Company as at 27 March 2002, before and after adjustments to reflect the Subscription, the Restructuring Exercise, the Consolidation, the Stock Split and the issue of New Shares are set out below. These statements should be read in conjunction with the Unaudited Proforma Consolidated Financial Statements set out on pages 83 to 98 of this Prospectus. After Subscription, Restructuring Exercise, As at Consolidation 27 March 2002 and Stock Split After Invitation (S$) (S$) (S$) Authorised Share Capital Ordinary shares of S$1.00 each 5,000,000 Ordinary shares of S$0.06 each 30,000,000 30,000,000 Shareholders Funds Share capital 2 5,385,360 6,585,360 Share premium 3,390, ,385,360 9,975,360 42

47 BUSINESS HISTORY Our Group was founded in 1987 with the setting up of our first nursing home at 134, Lorong J, Telok Kurau through a sole proprietorship of our founder, Mr Ong Chu Poh, Econ Nursing Home. Prior to establishing Econ Nursing Home, Mr Ong Chu Poh had already been actively involved in community work for several years and identified a growing demand for quality nursing care for the ageing population in Singapore. Our first nursing home had a capacity for 21 residents in a tidy, clean, spacious and well-ventilated environment with qualified staff to provide nursing care and attention to our residents. Following the success of this nursing home, a second nursing home with a capacity for approximately 50 residents was established at 89 Lorong H, Telok Kurau in April By the third quarter of 1989, both homes were operating at almost full capacity. With the increase in demand for our nursing home services and consequently the need for larger premises, we shifted from 89, Lorong H, Telok Kurau to 16 Bukit Timah Avenue in the first half of The new premises had a capacity for approximately 100 residents. Between 1991 and 1995, we underwent a corporate restructuring exercise which resulted in ENH taking over the nursing home business from the sole proprietorship Econ Nursing Home. ENH was a wholly-owned subsidiary of EMCH, an investment holding company of our founder Mr Ong Chu Poh and his spouse Mdm Koh Hin Ling. With the expansion of our business, new premises were also purchased by EMCH in 1991, 1992, 1994 and Nursing homes were set up at these new premises at 25 Recreation Road, 1/1A/3/3A Pulasan Road, 452 Upper East Coast Road and 53 Choa Chu Kang Road respectively and operated by ENH. In 1996, ENH also acquired Sunnyville which operated a nursing home at 10 Ama Keng Road. By then, we had a total bed capacity of 475. ENH was awarded the ISO 9002 Certificate in 1996 by the then National Productivity Board. Since 1997, ENH has been appointed by TTSH to manage and operate an extension ward which is a transit point for patients who are due for discharge to nursing homes or return to their homes. A secondary service which ENH has been providing since 1993 is the operation of a nonemergency ambulance service for the residents of our nursing homes. In 1997, this operation was taken over by Econ Ambulance which now also offers non-emergency ambulance services to the public for a fee. In order to improve the quality of our nursing services, we decided to operate medicare centres and accordingly established Econ Medicare in 1999 (please refer to Principal Activities on pages 44 to 46 of this Prospectus for a discussion on differences between a medicare centre and a nursing home). We demolished the existing building and rebuilt a purpose-built medicare centre at 452 Upper East Coast Road. This medicare centre commenced operations under Econ Medicare in October Our founder, Mr Ong Chu Poh, was one of the top ten finalists for the 2002 Entrepreneur of the Year Award organised jointly by The Association of Small and Medium Enterprises and The Rotary Club of Singapore. To rationalise our Group structure, we undertook the Restructuring Exercise, described on pages 67 and 68 of this Prospectus upon receipt of the Eligibility Letter from the SGX-ST for the Invitation, whereby Econ Healthcare became the holding company of our Group. 43

48 BUSINESS Industry Overview Depending on medical needs, there are four principal types of healthcare institutions: (i) hospitals, which are institutions providing specialised medical treatments and nursing care for the acutely sick and/or active rehabilitation for patients with stabilised acute medical conditions to regain mobility and functional independence; (ii) nursing homes, which provide basic medical and comprehensive nursing care for persons suffering or convalescing from any sickness, injury or infirmity. These persons do not require hospitalisation but require subsequent or follow-up attention after their discharge from the hospital; (iii) homes for the aged, which provide food and lodging for the aged; and (iv) hospices, which provide basic medical and nursing care for the terminally ill in their final stages of life. To the best of our knowledge, there are currently 53 nursing homes in Singapore comprising: (a) 28 nursing homes operated by voluntary welfare organisations ( VWO ) such as Lions Nursing Home For The Elders and Ling Kwang Home for Senior Citizens. These VWOs obtain grants and subsidies from the government for their capital expenditure and recurrent expenses. Residents of VWOs are mainly those who receive social aids from the Ministry of Community Development and Sports. In general, VWOs only accept residents who qualify to receive government subsidies. Residents must go through a means test and those who come from a family with a current average per capita income of not more than S$1,000 per month will qualify for the subsidy. The amount of subsidy will depend on the amount of the per capita income. (b) 25 nursing homes operated by private companies and sole proprietorships such as our Company. These nursing homes have a total capacity of about 25% of approximately 6,700 nursing home beds in Singapore. Pursuant to a joint effort by both the National Healthcare Group and Singapore Health Services, Integrated Care Services ( ICS ) was set up to centrally co-ordinate and facilitate the placement of the elderly sick to step-down services including nursing homes such as ours. This function was formerly under the charge of MOH until May The new ICS also takes further steps to enhance the care provided to its patients by working closely with healthcare professionals. Principal Activities We operate a medicare centre and five nursing homes in Singapore and are licensed by MOH. Our nursing homes provide the following services: (i) Residential nursing care services We employ nursing staff to assist residents in all areas of personal care and hygiene. They also provide nursing services such as monitoring of body vital signs, blood pressure, glucose level, wound care and serving of medication. Each of our residents has a detailed individual care plan as assessed by our appointed doctor which includes the daily routine for each resident encompassing areas such as medical, dietary and physical care requirements. (ii) Day care services We open our homes to the aged who may be alone during the day to provide a source of interaction and support. It is their home away from home while their family members are at work. 44

49 (iii) Respite care services Our range of services are provided on a short-term basis under our respite care services and residents may stay for a few days to a few weeks. (iv) Physiotherapy services As part of our routine, daily group physiotherapy sessions are held at all our homes. In addition, individual physiotherapy sessions by our in-house physiotherapist are available, if required. Some of the physiotherapy equipment used are provided by a third party. Payment for the use of the equipment is based on profits generated from the physiotherapy sessions. Other equipment are purchased by our Group. (v) Western and TCM treatments We have appointed a medical doctor to provide regular medical treatments to our residents. In addition, to complement the western treatments, we have also engaged a full-time TCM physician to provide TCM treatments which include medical consultations with our TCM physician, acupuncture and tonic foods. We conduct daily activities to stimulate the physical and mental health of our residents such as gardening, calligraphy and games. Additionally, there are weekly activities such as karaoke sessions and cultural performances by various groups. All our homes cater for five daily meals. All meals are prepared in-house according to the advice of a consultant dietician. We strive to provide balanced and healthy meals including the use of Chinese herbs to ensure that all residents are adequately nourished and hydrated. We are also able to cater to special dietary requirements such as diabetic, vegetarian and liquid diets. To ensure a comfortable and friendly home environment, our nursing homes are spacious, wellventilated and clean. As part of our continuous efforts to improve our services, we demolished and rebuilt one of our existing nursing homes in 2000 into a purpose-built nursing home which we term as a medicare centre. Our medicare centre at 452 Upper East Coast Road, Singapore , is purpose-built taking into account the needs of the residents such as non-slip tiles, support railings and in-house designed mechanical beddings and exceeding, in some instances, the requisite government regulatory requirements such as dimensional measurements of exits, space allocation and fire safety measures. Our medicare centre is further differentiated from a nursing home as it: (a) houses a more comprehensive physiotherapy facility supervised by our full-time physiotherapist; (b) employs an in-house TCM physician to provide TCM treatments; and (c) has a higher staff to resident ratio than that recommended by MOH. In addition, our medicare centre has recently received in-principle approval to operate a clinic within its premises subject to certain conditions. 45

50 The details of our medicare centre and nursing homes are as follows: Total bed capacity Total beds utilised Year (as at (as at Medicare Centre/Nursing Homes established 31 October 2002) 31 October 2002) Bukit Timah Home Choa Chu Kang Home Pulasan Home Recreation Home Sunnyville Home Upper East Coast Centre Other Activities We also provide the following ancillary services: (i) Home care services Our full range of nursing services are available upon request for clients who prefer to reside at home. (ii) (iii) Extension ward management services We operate and manage an extension ward at TTSH which is a transit point for patients who are due for discharge to nursing homes or return to their homes. We have been providing such a service to TTSH since The current two-year services agreement ( TTSH Agreement ) expires on 16 November 2003 with an option to renew for another term of one year. Under the TTSH Agreement, ENH is the sole and exclusive manager and operator of the extension ward, acting as TTSH s agent to supervise, direct and control the management and operation of the extension ward. In consideration thereof, ENH receives a monthly management fee. Under the TTSH Agreement, TTSH may terminate the TTSH Agreement upon giving ENH immediate notice in the following circumstances: (a) on grounds of gross negligence, acts of fraudulent nature or corrupt practices; (b) where ENH becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceedings relating to, inter alia, insolvency and judicial management and such petition or proceedings is not dismissed within 60 days of filing; (c) where ENH is in material breach of the TTSH Agreement and such breach is not remedied within 30 days of written notice from TTSH; or (d) the extension ward is closed or its authorised use changed by MOH for any reason whatsoever. The TTSH Agreement may be modified upon written agreement by the parties. Ambulance services Initially, we acquired ambulances to transport our nursing home residents. In 1997, we extended our ambulance services to the public for non-emergency purposes and have since participated in international air evacuation and ambulance services. Our Group currently owns six ambulances. We are part of the CISCO non-emergency ambulance service network catering mainly to the Bukit Timah, Hougang and Choa Chu Kang areas. In addition, we also respond to direct calls from the public through our listing in the Yellow Pages. 46

51 (iv) Sale and rental of healthcare equipment and accessories As an additional service, we rent or sell in-house designed healthcare equipment and accessories such as mechanised beds, over-bed tables, walking aids and bedside cabinets. We also sell or rent Handicare wheelchairs and are able to source for other specific equipment or accessories upon request. The sale and rental of healthcare equipment and accessories accounted for 0.2% of our Group s turnover for FY2002. Admission Process/Functional Categorisation Of Residents Upon admission, each of our residents undergoes a medical assessment by our appointed doctor utilising the Resident Assessment Form ( RAF ) to assess the physical, psychological, emotional and social needs of the residents. Based on the results of this RAF, the residents in our medicare centre and nursing homes are classified into four functional categories: (a) Category I Physically and mentally independent. These residents may or may not use walking aids but do not need or need minimal assistance in activities of daily living. (b) (c) Category II Semi-ambulant. These residents require some physical assistance and supervision in activities of daily living. Category III Wheelchair/bed bound. These residents may have dementia and need help in activities of daily living and supervision most of the time. (d) Category IV Highly dependent. These residents require total assistance and supervision for every aspect of activities of daily living. We will not admit a person in a condition more severe than Category IV and would transfer any of our residents whose condition worsens above Category IV to a hospital. After the medical assessment, an individual care plan is mapped out based on the above categorisation by the centre/home manager and nursing care is then provided to the residents according to their individual care plan. Based on the feedback from our nursing staff, the individual care plans are reviewed by the centre/home manager daily. The care plans may also be revised upon the advice of our appointed doctor. All medicine for the residents are prescribed by our appointed doctor and administered by our staff nurses. Our residents have a choice of being housed in 1/2/3-bedrooms or dormitories. All our rooms and dormitories have attached facilities. In addition, residents have a choice of diet which may include TCM. 47

52 BUSINESS STRATEGY We seek to develop and operate a network of medicare centres and nursing homes which provide a wide range of quality healthcare services to meet the expectations of our residents with the following strategies: Expansion of our geographic coverage and increasing the capacity of our medicare centre and nursing homes We intend to expand our existing geographical coverage within Singapore through acquisitions of appropriate sites. To this end, we have acquired a piece of land at 58 Braddell Road for the construction of a medicare centre with a capacity of approximately 70 beds. The total construction and set-up costs of Braddell Centre is estimated at approximately S$2.5 million and will be funded by proceeds from the Invitation (other than the sum of approximately S$319,000 which has already been expended up to 31 October 2002). We expect the construction to be completed by Additionally, we will explore expanding the capacity of our existing medicare centre and nursing homes to meet any increase in demand. We also plan to seek further growth through regional expansion and have been conducting preliminary market surveys in the PRC, Malaysia and Australia to ascertain the demand for our services in these countries. With respect to the PRC, we have identified certain parties to collaborate with and are currently in discussions, mainly in the areas of management, consultancy and training services. Emphasis on quality service We believe in providing quality services to our residents. Our emphasis on quality involves both infrastructure and the services provided by our staff. In terms of infrastructure, we have already converted our nursing home at 452 Upper East Coast Road in 2000 into a medicare centre. We will continue in our bid to improve our infrastructure by upgrading our nursing homes into medicare centres where feasible and setting up new medicare centres in the future. In recognition that human resource is an important asset for us, we will continue to train our staff to upgrade their competency and skills. Besides in-house training, we have sponsored training programmes and conducted seminars and workshops. Our medicare centre and nursing homes comply with the relevant and applicable government quality requirements. ENH was awarded the ISO 9002 certification in 1996 by the then National Productivity Board, now known as the Standards, Productivity and Innovation Board ( SPRING Singapore ). To the best of our Directors knowledge, this award was the first in the nursing home industry. Our subsidiary, Econ Careskill, has entered into a non-binding Memorandum of Understanding (the MOU ) with PSB Corporation, a member of the SPRING Singapore group of companies, to jointly collaborate in the development and conducting of training programmes in healthcare services and nursing under the National Skill Recognition System ( NSRS ). The NSRS is a national framework for establishing work performance standards, identifying job competencies and certifying skills acquisition. It is implemented by SPRING Singapore. The system requires organisations to establish work performance standards to consistently deliver quality goods and services. Using the established standards, the system helps an organisation identify the competencies required for carrying out the work and the training needed by the staff to perform the work according to the stipulated standards. Our Managing Director, Mr Ong Chu Poh, is the appointed Chairman of the NSRS committee for the nursing home industry. Under the MOU, Econ Careskill is to develop the modules for training, sourcing for suitable trainers, facilitate attachments or on the-job-training for trainees and arrange for suitable training facilities. The training programmes will be certified by PSB Corporation. To-date, six modules have been identified for implementation by the end of this year. The MOU also provides that the parties may explore the possibility of conducting such training programmes overseas. 48

53 Promoting awareness of our services We intend to increase awareness of our medicare centre and nursing homes through referrals from our existing network of residents and their relatives and friends, and from hospitals. In order to increase these referrals, we continually seek to maintain and improve our rapport through our quality services and continual communication. Public awareness is increased through our public seminars. We cover topics such as stroke management and TCM treatments. These seminars are either conducted by our in-house staff or invited speakers. We also advertise in the Yellow Pages and relevant professional magazines such as Hospital Guide. Having operated an extension ward at TTSH for the last five years, we intend to approach other hospitals to set up similar wards. Branding Our Group will continue to strive to develop the Econ name into a leading premium healthcare brand synonymous with quality healthcare services and management. The operations of our medicare centre and nursing homes are led by our management team which includes our Nursing Quality Manager, Operations Manager and Marketing Manager, each of whom has more than seven years of relevant experience. With the assistance of our experienced staff and our existing quality procedures in accordance with the ISO 9002 certification, we intend to maintain and upgrade our existing infrastructure and services to enhance our image and brand name. MARKETING Our marketing activities are overseen by our Managing Director, Mr Ong Chu Poh, and our team of three marketing personnel. As part of our business strategy to expand regionally, one of our marketing personnel is stationed in Beijing to explore business opportunities in the PRC. Our marketing activities in Singapore are conducted within the ambit of applicable guidelines issued by MOH. We therefore, rely on personal references from our existing network of residents and their family members, relatives, friends and from doctors. References are also received from other institutions such as hospitals, voluntary welfare organisations, community clubs and CISCO. Additionally, we employ a variety of other techniques such as conducting public seminars and advertising in brochures, medical journals and the Yellow Pages. SERVICE QUALITY We believe that quality customer service is important in establishing leadership in our area of business. We seek to provide quality services throughout our entire service cycle and also seek to ensure that our equipment is properly maintained and upgraded to meet the needs of our residents. With respect to our employees, we continue to upgrade their knowledge and skills via on-the-job training programmes and sponsoring them for local and overseas courses, conferences, seminars and workshops. To the best of our Directors knowledge, we were the first in the nursing home industry to obtain the ISO 9002 certification in 1996 by the then National Productivity Board. The ISO 9002 certification is an internationally recognised award that gives recognition to companies with well-structured policies and procedures for quality control and customer service. We therefore set out clear guidelines in accordance with the ISO requirements to ensure that service quality is maintained. Our Nursing Quality Manager, together with our Operations Manager, formulate these guidelines which are enforced and implemented by the managers of our nursing homes and medicare centre. Daily briefings are conducted by the respective managers whereby quality is emphasised. Additionally, we have been invited by SPRING Singapore to take the lead in establishing quality standards and operational procedures for the Singapore nursing home industry as part of the NSRS (Please refer to Business Strategy on page 48 of this Prospectus for more details). 49

54 STAFF TRAINING As a service provider, we recognise that human resource is an important asset. All employees undergo an orientation programme to instil our philosophy and corporate culture which is to provide quality nursing care. Although most of our training is completed on the job, we also provide continuing education for our staff through local and overseas courses, conferences, seminars and workshops to equip them professionally. Our training programmes are designed to: (a) encourage nursing and support staff to view training and education as a continuing process in order to maintain and upgrade their competence level and to remain relevant in a highly competitive environment; (b) ensure that changes in technology and knowledge are updated and disseminated; (c) ensure that our staff are orientated to our policies and operating procedures; and (d) provide career advancement. With an effective training and development programme, employees would be in a better position to support our Group s continued expansion. For the past three financial years ended 31 March 2002, the amount we had spent on training has not been significant as most of our training is completed on the job. PRODUCT DESIGN AND ENHANCEMENT Our development activities are focused on upgrading and improving the layout of our nursing homes and medicare centre as well as the design and functions of equipment and accessories used by our nursing homes and medicare centre. Our Managing Director, Mr Ong Chu Poh, spearheads this activity. To-date, we have designed our own healthcare equipment and accessories, such as mechanised beds, over-bed tables, walking aids and bedside cabinets. INTELLECTUAL PROPERTY Other than disclosed below, we do not use or own any other patents, trademarks or intellectual property which are material to our business. Our substantial shareholder, EMCH, has filed applications for trademark registration of the Econ logo, details of which are as follows: Mark Country of Registration Class (1) Status Singapore 42 Registered in Singapore and is valid for a period of 10 years from 12 October 1998 to 12 October 2008 PRC 42 Registered in the PRC and is valid for a period of 10 years from 21 January 2002 to 20 January 2012 Malaysia 44 Pending acceptance Note: (1) Class 42 and class 44 refers to the specification of services under the International Classification of Goods and Services by the World Intellectual Property Organisation. Some of the services classified under the respective classes that are relevant to our Company include the provision of nursing care, nursing services, nursing homes, medical counselling and provision of medical assistance. 50

55 Pursuant to a Deed of Assignment dated 23 October 2002, EMCH has assigned the Singapore and PRC trademark registrations to our Company and will upon receipt of the registration certificate, assign the Malaysian trademark registration, at a nominal consideration of $1.00. MAJOR SUPPLIERS Our purchases comprise mainly consumables such as food, diapers, dressing material and bed linen for our residents. In order to enjoy economies of scale in our purchases, we have set up a central purchasing department to take charge of purchasing for our medicare centre and homes. For the past three financial years ended 31 March 2002, there was no single supplier who accounted for 5% or more of our Group s purchases except for Drypers Singapore Pte Ltd which supplied us adult diapers. The percentage of costs incurred to purchase diapers to total supplies and consumables expenses for FY2000, FY2001 and FY2002 were 17%, 14% and 18% respectively. None of our Directors or substantial shareholders have any interest, direct or indirect, in Drypers Singapore Pte Ltd. MAJOR CUSTOMERS Most of our customers are individuals who require nursing care at our medicare centre or one of our homes or at their own homes except for TTSH which contracted us to manage and operate an extension ward. Therefore, our customers do not individually account for 5% or more of our Group s turnover in each of the past three financial years except for TTSH whose percentage of management fees received by us as compared to our total Group revenue in FY2000, FY2001 and F2002 was 9%, 8% and 7% respectively. None of our Directors or substantial shareholders have any interest, direct or indirect, in TTSH. GOVERNMENT REGULATIONS We are subject to all relevant laws and regulations of Singapore where our business operations are based. We identify the main laws and regulations that affect our operations and the relevant regulatory bodies as follows: Private Hospitals and Medical Clinics Act (Cap. 248) ( Hospitals Act ) Private Hospitals and Medical Clinics Regulations ( Hospital Regulations ) Econ Medicare, Sunnyville and ENH hold licences issued by MOH which are subject to the provisions of the Hospitals Act, the Hospital Regulations and any directions or guidelines as may be given or issued from time to time by the Director of Medical Services ( DMS ). The Hospitals Act and Hospital Regulations provide for, inter alia, the factors that determine when a licence may be issued or refused, persons who may manage, inter alia, private hospitals and their duties, the suspension or revocation of licences, the establishment of quality assurance committees by the licensees of private hospitals or healthcare establishments and the powers of the DMS. In determining whether to issue or refuse to issue a licence, the DMS shall have regard to: (a) the character and fitness of the applicant to be issued with a licence or, where the applicant is a body corporate, the character and fitness of the members of the board of directors or committee or board of directors or committee or board of trustees or other governing body of the body corporate; (b) the ability of the applicant to operate and maintain a healthcare establishment in accordance with the prescribed standards as may be given or issued by the DMS from time to time in respect of any matter relating to the management, operation, maintenance or use of a healthcare establishment; 51

56 (c) (d) the suitability of the premises or conveyance (including the facilities and equipment therein) to be licensed for use as a healthcare establishment; and the adequacy of the nursing and other staff that are to be employed at the premises or conveyance to be licensed. Nurses and Midwives Act (Cap. 209) ( Nurses Act ) Nurses and Midwives Regulations ( Nurses Regulations ) The nurses working in our medicare centre and nursing homes are regulated by the Nurses Act and the Nurses Regulations. The Nurses Act and Nurses Regulations provide for the registration and enrolment of nurses and for matters connected therewith. Under the Nurses Act, no person shall employ or engage a person who is not a qualified nurse to carry out any act of nursing. Any person who contravenes the abovementioned will be guilty of an offence and liable on conviction to a fine and/or imprisonment. In any proceedings for such an offence, it is a defence for the employer to prove that he did not know that the person concerned was not a qualified nurse and that he had exercised due diligence to ascertain if that person was a qualified nurse. To the best of our knowledge, we have not encountered any violation of the abovementioned legislation. Traditional Chinese Medicine Practitioners Act 2000 ( TCM Act ) Traditional Chinese Medicine Practitioners (Register and Practising Certificates) Regulations 2001 ( TCM Regulations ) Under the TCM Act, a TCM practitioner is required to be registered. Upon registration, a certificate of registration specifying the prescribed practice or practices of TCM for which the person is registered will be issued. In addition, in order for the registered person to practise TCM, a practising certificate must be obtained. When issued, the practising certificate will be valid for a period not exceeding two years from the date of issue. Our TCM physician is registered and has a valid practising certificate issued pursuant to the TCM Act and TCM Regulations. COMPETITION AND COMPETITIVE STRENGTHS To the best of our knowledge, there are currently 25 commercial nursing homes in Singapore with an estimated total capacity of 1,660 beds. Based on our licences from MOH, our Group is licensed to have a total capacity of 553 beds. We therefore believe that we have approximately 33% of the total bed capacity of commercial nursing homes. In addition, we believe that there are currently 28 VWO nursing homes (non-commercial nursing homes). However, as VWO nursing homes only accept residents who are eligible for government subsidy, we do not consider VWO nursing homes as our direct competitors. All commercial nursing homes in Singapore are our competitors, the largest of which has approximately 240 beds. Our Directors however believe that we are well-positioned to compete with the other nursing homes for the following reasons: (a) Established track record and brand name With about 15 years of experience in the nursing home industry, we have built up our reputation by maintaining an effective quality control system for our services. As a testimony of our good track record, we were the first to be invited to operate and manage an extension ward at TTSH. We have also attended to well known personalities and foreigners through the years. Our Directors believe that we were the first in this field to be awarded the ISO 9002 certification in

57 (b) Wide range of in-house services One of our key strengths is our ability to provide a wide range of in-house healthcare services for the convenience of our residents. In addition to nursing services, we are able, through our appointed medical doctor and physiotherapist, to offer daily in-house treatments. This eliminates the need for our residents to seek such treatments elsewhere. Additionally, as a complement to our existing western medical treatments, we are able, upon request, to provide TCM treatments, such as acupuncture, by our in-house TCM physician. We also provide meals cooked with Chinese herbs. (c) Experienced and professional management team We have an experienced management team who is familiar with the business and whom we believe would be able to lead our Group forward to continued growth and profitability. Our founder and Managing Director, Mr Ong Chu Poh, has more than 15 years of hands-on experience in all aspects of our business. Believing that a strong management team is a key factor in ensuring our continued success, Mr Ong Chu Poh has also groomed a dedicated and dynamic management team to assist him in the daily management of our business. In particular, our Nursing Quality Manager, Operations Manager and Marketing Manager each has more than seven years of relevant experience. Details of the responsibilities and experience of our management team are disclosed on pages 59 to 63 of this Prospectus. (d) Effective cost management With a medicare centre and five nursing homes and an average occupancy rate of more than 80%, we are able to enjoy economies of scale in respect of marketing, purchasing and other operating costs. For example, each of our six facilities need not carry out similar marketing events separately. We can organise one marketing event from which all our centre/homes would benefit. Similarly, all bulk purchases and general operations are centralised and overseen by our head office. (e) Barriers to entry We operate in an industry that has high barriers to entry. The operation of nursing homes requires the issue of a licence from MOH. A potential operator has to meet certain requirements before the licence is issued (Please refer to Government Regulations on pages 51 and 52 of this Prospectus for more details). Additionally, significant investments for the acquisition of land and the construction of the centre/home will be required. We believe the requirement for a licence and the high start-up costs create barriers to entry for potential competitors. (f) Established relationships with residents and referring institutions As part of our objective to provide quality healthcare services, we strive to build and maintain good relationships with our residents, their friends and relatives, and referring institutions. All our staff interact with our residents and their friends and family members to further understand their needs in order to provide a friendly and homely environment. Our successful execution of the above has resulted in, to the best knowledge of our Directors, approximately 65% of our residents being referred and recommended by our residents, their friends and relatives, and other institutions in FY

58 (g) Purpose-built medicare centre In our strive to be a leading premium healthcare brand, we have begun operating a medicare centre. Our medicare centre is purpose-built taking into account the needs of the residents such as non-slip tiles, support railings and in-house designed mechanical beddings and exceeding, in some instances, the requisite government regulatory requirements such as dimensional measurements of exits, space allocation and fire safety measures. In addition, our medicare centre also houses a more comprehensive physiotherapy facility supervised by our full-time physiotherapist. 54

59 PROSPECTS AND FUTURE PLANS PROSPECTS We believe that the proportion of Singaporeans aged 65 years and above is estimated to increase from 7% in 1998 to 19% in 2030, a per annum growth of 3.1%. We also estimate that Singapore s elderly population will increase from 220,000 as at January 2000 (representing 7% of Singapore s population) to 312,000 by the year 2010 (estimated to represent about 8% of Singapore s population). As a result, a total of 8,800 nursing home beds will be required by the year To the best of our knowledge, there are currently about 6,700 nursing home beds in Singapore. To ensure an adequate number of private nursing home beds, we believe that MOH will take steps to increase the number of private nursing home beds from the current 25% to 40% by This is in response to the expected demand from Singaporeans who would prefer to have more choices and be cared for in more comfortable surroundings. This would mean that private nursing home operators will provide about 3,500 beds out of the total requirement of 8,800 nursing home beds by year 2010 in comparison with the current estimated capacity of 1,660 beds. Further, the Lions Home at Toa Payoh, which has recently commenced operations, will be the last of the VWO nursing homes to be built. With Singapore s ageing population, an increasing number of elderly Singaporeans will require long term care and support. We estimate that about 8% of the elderly today suffer from disabilities which make them incapable of handling the activities of daily living. Of this 8%, about 2.7% of the elderly will require residential long-term care, and another 5.3% will require non-residential long-term care. As a larger proportion of the population work full-time, there is also an increasing demand for caregivers for their elderly family members who are sick. Together with increasing acceptance, the use of nursing homes has grown during the last few years. We also believe that the number of persons over the age of 60 will increase significantly from 2001 to 2011 in Asia, especially in countries such as the PRC, Malaysia and Australia. The rapid ageing of the population will increase demand for healthcare services and pose a challenge to healthcare planners to provide adequate healthcare facilities, services and support systems. FUTURE PLANS To remain competitive and take advantage of the growing need for nursing care for the ageing population, our Group has the following on-going and future plans: Establish more medicare centres and nursing homes Currently we operate and manage a medicare centre and five nursing homes. In order to meet anticipated increasing demand for nursing care, we intend to develop more medicare centres and nursing homes to cater to the different needs of customers. In this respect, we will continue to source for suitable locations for new medicare centres and nursing homes. In addition, where feasible, we intend to convert our existing nursing homes into medicare centres in phases. To this end, we have acquired a property located at 58 Braddell Road, Singapore and have commenced the construction of a purpose-built medicare centre. This new medicare centre will have a bed capacity of approximately 70. The total construction and set-up costs for this new medicare centre is approximately $2.5 million and will be funded by proceeds from the Invitation, except for amounts which have been expended. We have also obtained government approvals for the upgrading of our Choa Chu Kang Home into a purpose-built medicare centre. The upgrading works will commence on or after April 2004 and the estimated total upgrading cost is approximately $2.0 million. We expect to finance this upgrading cost via bank loans and/or internal sources. 55

60 Expansion overseas In our bid to seek further growth through regional expansion, we have been conducting preliminary market surveys in the PRC, Malaysia and Australia to ascertain the demand for our services in these countries. As a result of these preliminary market surveys, we set up a representative office in Beijing in September 2001 and one of our marketing personnel is stationed in this representative office to explore business opportunities for our Group. We have also identified certain parties in the PRC to collaborate with and are in discussions with them, mainly in the areas of management, consultancy and training services for the nursing industry. Increase trading of healthcare equipment and accessories Our in-house designed beds are manufactured in the PRC and the healthcare accessories such as walking aids and bedside cabinets are manufactured in Taiwan. Other than in Singapore, these equipment and accessories are currently marketed in the PRC. We are also currently sourcing for distributors in other jurisdictions, such as Taiwan, Malaysia and the Middle East. Increase range of services With our 15 years of experience in managing and operating nursing homes, we plan to capitalise on our experience and facilities and provide programmes based on the NSRS competencies to train nursing staff from Singapore and the PRC at our medicare centre. We are in the process of obtaining clearance and approvals from the relevant authorities. 56

61 CORPORATE GOVERNANCE The business and operations of our Group are presently under the management and close supervision of our executive Directors. The overall management of our Group is overseen by Mr Ong Chu Poh. Our Directors recognise the importance of corporate governance and the offering of high standards of accountability to the shareholders of our Company. Nominating Committee Our Nominating Committee comprises Messrs Ong Chu Poh, Tay Joo Soon and Wong Kook Fei. The Chairman of the Nominating Committee is Mr Wong Kook Fei. Our Nominating Committee will be responsible for: (i) re-nomination of our Directors having regard to the Director s contribution and performance; (ii) determining annually whether or not a Director is independent; and (iii) deciding whether or not a Director is able to and has been adequately carrying out his duties as a director. The Nominating Committee will decide how the board s performance is to be evaluated and propose objective performance criteria, subject to the approval of the board, which address how the board has enhanced long-term shareholders value. The board will also implement a process to be carried out by the Nominating Committee for assessing the effectiveness of the board as a whole and for assessing the contribution of each individual Director to the effectiveness of the board. Each member of the Nominating Committee shall abstain from voting any resolutions in respect of the assessment of his performance or re-nomination as Director. Remuneration Committee Our Remuneration Committee comprises Messrs Ong Chu Poh and Wong Kook Fei and Dr Vasoo Sushilan. The Chairman of the Remuneration Committee is Dr Vasoo Sushilan. Our Remuneration Committee will recommend to our board a framework of remuneration for the Directors and key executives, and determine specific remuneration packages for each executive Director. The recommendations of our Remuneration Committee should be submitted for endorsement by the entire board. All aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefits-in-kind shall be covered by our Remuneration Committee. The committee administering our Econ Healthcare Employees Share Option Scheme shall grant options as recommended by the Remuneration Committee for Directors and key executives. Each member of the Remuneration Committee shall abstain from voting any resolutions in respect of his remuneration package. Audit Committee The Audit Committee comprises our Independent Directors, Dr Vasoo Sushilan, Messrs Tay Joo Soon and Wong Kook Fei. The Audit Committee will be chaired by Mr Tay Joo Soon. The Audit Committee will meet periodically to discuss and review the following: (a) review with the external auditors the audit plan, their evaluation of the system of internal controls, their audit report, their management letter and the management s response; (b) review the interim and annual financial statements and balance sheet and profit and loss accounts before submission to the board for approval, focusing in particular, on changes in accounting policies and practices, major risk areas, significant adjustments resulting from the audit, the going concern statement, compliance with accounting standards as well as compliance with any stock exchange and statutory/regulatory requirements; 57

62 (c) (d) (e) (f) (g) (h) review the internal control and procedures and ensure co-ordination between the external auditors and the management, review the assistance given by the management to the auditors, and discuss problems and concerns, if any arising from the interim and final audits, and any matters which the auditors may wish to discuss (in the absence of the management where necessary); review and discuss with the external auditors any suspected fraud or irregularity, or suspected infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on our Group s operating results or financial position, and the management s response; consider the appointment or re-appointment of the external auditors and matters relating to resignation or dismissal of the auditors; review transactions falling within the scope of Chapter 9 of the Listing Manual; undertake such other reviews and projects as may be requested by the board and will report to the board its findings from time to time on matters arising and requiring the attention of the Audit Committee; and generally undertake such other functions and duties as may be required by statute or the Listing Manual, and by such amendments made thereto from time to time. The board is bound by all relevant Singapore legislation. Beyond this, they intend to adopt the Best Practices of Singapore with regard to corporate governance. 58

63 DIRECTORS, MANAGEMENT AND STAFF DIRECTORS The board of Directors is responsible for the overall management of our Company. Our Directors particulars are listed below: Name Age Address Current Occupation Ong Chu Poh Veeragoo Close Managing Director Singapore Koh Hin Ling Veeragoo Close Executive Director Singapore Dr Vasoo Sushilan Dedap Place Associate Professorial Fellow Singapore (NUS) Tay Joo Soon 61 3 Jalan Gendang Practising Certified Public Singapore Accountant Wong Kook Fei Tanjong Rhu Road #05-16 Director, Bayerische Hypo-Und Singapore Vereinsbank AG The business and working experience of our Directors are as follows: Mr Ong Chu Poh is our Managing Director and the founder of our Group. He has been our Director since 23 March 1991 and his current term of office will expire on 6 November As the founder of our Group, Mr Ong Chu Poh is responsible for the overall management, operations and the charting and reviewing of corporate directions and strategies of our Group. Mr Ong Chu Poh set up our first nursing home in 1987 and has since managed the expansion and business of our Group. Mr Ong Chu Poh has also been the Managing Director of TMI Holdings, an investment holding and management services company, and its subsidiaries since Between 1978 and 1984, Mr Ong Chu Poh held marketing and general management positions with Fraser & Neave Ltd, Malayan Breweries Ltd, Beecham Manufacturing (S) Pte Ltd and Provision Suppliers Corporation Ltd. Mr Ong Chu Poh graduated in 1978 with a Bachelor of Arts from the then Nanyang University, Singapore and has a Diploma in Marketing Management from Ngee Ann Polytechnic. He is also a graduate of the Singapore Staff and Command College. Mdm Koh Hin Ling is an executive Director of our Group. She has been our Director since 23 March 1991 and her current term of office will expire on 6 November Mdm Koh Hin Ling is responsible for our Group s human resource and administrative matters and also assists our Managing Director in the supervision of the day-to-day operations of our Group. In addition, she spearheads the development and management of the TCM Department of our Group. Mdm Koh Hin Ling has also been the executive Director of TMI Holdings, and its subsidiaries since Mdm Koh Hin Ling holds a Bachelor of Arts from the then Nanyang University, Singapore and has a Diploma in Chinese Medicines from the Singapore Chinese Physicians Training College. She also holds a practising certificate for TCM. Dr Vasoo Sushilan was appointed as an Independent Director of our Company on 7 November Dr Vasoo Sushilan was a Member of Parliament in Singapore from 1985 to He sits on various committees of social service organisations including the Movement of the Intellectually Disabled of Singapore (MINDS), the Down s Syndrome Association and the Central Community Development Council. Dr Vasoo Sushilan was the Head of the Department of Social Work and Psychology at the National University of Singapore ( NUS ) from 1987 until 2000 and continued as Associate Professorial Fellow after his retirement in June Dr Vasoo Sushilan is currently the Chairman of Global Resources & Consultants Pte. Ltd., a management and training consultancy. Dr Vasoo Sushilan holds a Masters of Social Work and a Doctorate from the University of Hong Kong. 59

64 Mr Tay Joo Soon was appointed as an Independent Director of our Company on 7 November He is a Certified Public Accountant of Singapore and is a member of the Fellowship of Institute of Chartered Accountants in Australia, the Malaysian Association of Certified Public Accountants and CPA Australia. He has more than 30 years of experience in accounting, auditing, taxation and company secretarial work. Mr Tay Joo Soon is currently a proprietor of his own firm, Tay Joo Soon & Co., a public accounting firm in Singapore established since He graduated with a Diploma of Accountancy from the South Australian Institute of Technology in 1966 and obtained his professional qualification as an Associate Chartered Accountant of the Institute of Chartered Accountants in Australia in Mr Wong Kook Fei was appointed as an Independent Director of our Company on 7 November After the integration of Bank Austria with Bayerische Hypo-Und Vereinsbank AG in April 2001, Mr Wong Kook Fei is currently Director of Bayerische Hypo-Und Vereinsbank AG. He was a Deputy General Manager and the Head of Corporate and Institution Banking at Bank Austria AG, Singapore Branch from 1996 to Prior to that, Mr Wong Kook Fei was an Audit Assistant at Ernst & Young from 1985 to 1990, Assistant Vice President of the Corporate Banking Division at Overseas Union Bank Limited from 1990 to 1992 and Vice President and Regional Manager of Corporate and Institution Banking at Credit Agricole Indosuez from 1992 to Mr Wong Kook Fei holds a Bachelor of Commerce (Honours) from the Mc Master University, Ontario, Canada. Mdm Koh Hin Ling is the spouse of Mr Ong Chu Poh. Save as disclosed, none of our Directors or substantial shareholders are related to one another. The list of present directorships and past directorships of each Director (other than our Company) as at the date of this Prospectus and over the five years preceding the date of this Prospectus is set out as follows: Name Present Directorships Past Directorships Ong Chu Poh Group Companies Group Companies Econ Ambulance Services Pte Ltd Econ Careskill Training Centre Pte Ltd Econ Medicare Centre Pte Ltd Econ Nursing Home Services (1987) Pte Ltd Sunnyville Nursing Home (1996) Pte Ltd Nil Other Companies Taising Marketing & Industries Pte Ltd (liquidated) Other Companies Chuang Xin Technology Pte Ltd Econ Medicare Centre Holdings Pte Ltd Econ Medicare Village (S) Pte Ltd FMS Tech Pte Ltd Tat Ming Management Services Pte Ltd TMI Holdings (1997) Pte Ltd TMI Realty Pte Ltd TMI Technologies Pte Ltd TMI Technologies (M) Sdn Bhd Vitacare Chinese Medical Services Pte Ltd 60

65 Name Present Directorships Past Directorships Koh Hin Ling Group Companies Group Companies Econ Ambulance Services Pte Ltd Econ Careskill Training Centre Pte Ltd Econ Medicare Centre Pte Ltd Econ Nursing Home Services (1987) Pte Ltd Sunnyville Nursing Home (1996) Pte Ltd Nil Other Companies Nil Other Companies Econ Medicare Centre Holdings Pte Ltd Econ Medicare Village (S) Pte Ltd FMS Tech Pte Ltd Tat Ming Management Services Pte Ltd TMI Holdings (1997) Pte Ltd TMI Realty Pte Ltd TMI Technologies Pte Ltd Vitacare Chinese Medical Services Pte Ltd Dr Vasoo Sushilan Group Companies Group Companies Nil Other Companies Global Resources & Consultants Pte. Ltd. PAP Community Foundation Sino-Sing Center Pte. Ltd. Nil Other Companies Nil Tay Joo Soon Group Companies Group Companies Nil Other Companies Asiaco Region Sdn Bhd Jurong Cement Limited New Toyo International Holdings Ltd Smurfit Toyo Holdings Pte Ltd Nil Other Companies Asiaco (Private) Limited Wong Kook Fei Group Companies Group Companies Nil Other Companies Nil Nil Other Companies Nil 61

66 MANAGEMENT The day-to-day operations of our Group are entrusted to our executive Directors and an experienced and qualified team of Executive Officers responsible for the different functions of our Group. The particulars of our Executive Officers are set out below: Name Age Address Current Occupation Teo Sock Koen Lorong Kismis #03-03 Nursing Quality Manager Singapore Tan Eng Chuan 48 Block 2 Delta Avenue #12-38 Operations Manager Singapore Wong Kok Cheong 36 Block 269 Yishun Street 22 #11-10 Marketing Manager Singapore Chan Sau Wai Shelford Road #01-09 Group Accountant Singapore Shi Hao 33 Block 221A Jurong East Street 21 # Trade Development Singapore Manager Dr Gan Qinghui Jalan Eunos #07-07 Deputy Operations Singapore Manager The business and working experience of our Executive Officers are as follows: Ms Teo Sock Koen is our Nursing Quality Manager and is responsible for the day-to-day management, operations and maintenance of our medicare centre and nursing homes. She ensures that our medicare centre and nursing home residents receive quality services and treatment. She also organises training courses for our staff. Ms Teo Sock Koen was a Nursing Officer with MOH between 1972 to She joined our Group in 1992 as Nurse-in-charge of our Bukit Timah Home and was promoted to Senior Home Manager in In 2000, she was further promoted to Nursing Quality Manager. Mr Tan Eng Chuan is our Operations Manager and is responsible for the smooth operations and profitability of our Group as well as for the management of the operations personnel. He implements policies and procedures and oversees the maintenance of the ISO 9002 standards. Prior to joining our Group in August 1995, Mr Tan Eng Chuan was with Stolt Comex Seaway (S) Pte Ltd from 1978 to 1995 and last held the position of Personnel and Administration Manager. Mr Tan Eng Chuan holds a Bachelor of Commerce degree from the then Nanyang University, Singapore and a Graduate Diploma in Personnel Management from the Singapore Institute of Management. He has also received a Professional Certificate in Compensation and Benefits Management from the Singapore Human Resources Institute. Mr Wong Kok Cheong is our Marketing Manager and is responsible for the planning, development, implementation and evaluation of the marketing strategies of our Group. He also assists in developing new services for our Group and identifies training needs and recommends training programmes. Mr Wong Kok Cheong was with various institutions of MOH under a Public Service Commission scholarship attachment scheme from 1992 to 2000 as a staff nurse and subsequently a Nursing Officer. He joined Econ Medicare as an Operations Manager in September 2000 and was later appointed as Marketing Manager in January Mr Wong Kok Cheong holds a Bachelor of Science (Honours) degree in Nursing Studies from University of Surrey in the United Kingdom and a Graduate Diploma in Business Administration from the Singapore Institute of Management. He is a state registered nurse. 62

67 Ms Chan Sau Wai is our Group Accountant. She is primarily responsible for the financing and accounting matters of our Group, including analysis and reporting, budgeting and cash flow forecasting, systems review and project and cost management. She also reviews and improves on financial procedures and internal controls and supervises the accounts staff. Prior to joining our Group in February 2001, Ms Chan Sau Wai was a Senior Associate with PricewaterhouseCoopers from August 2000 to January Between July 1995 to July 2000, she was with BDO Binder, Malaysia, where she last held the position of Audit Senior. She is an associate member of the Association of Chartered Certified Accountants (ACCA) and a Registered Accountant of the Malaysian Institute of Accountants. Mr Shi Hao joined our Company in 2001, as our Trade Development Manager. He is responsible for corporate business activities in the PRC. Prior to joining our Company, Mr Shi Hao was a pharmacist with Wisco Hospital from 1991 to 1995, a Factory Manager with Wu-Gang Medical Factory from 1995 to 1996, a Marketing Executive with Xian-Janssen Pharmaceutical Ltd from 1996 to 1998 and a Marketing Manager with Danli Pharmaceutical Group from 1998 to Mr Shi Hao holds a Bachelor of Science from Tongji Medical University and a Master of Science from Nanyang Technological University. Dr Gan Qinghui is our Deputy Operations Manager. He assists the Operations Manager in the daily operations of the medicare centre. In addition, he is responsible for developing and promoting new clinical and non-clinical products and services for the Singapore and China markets. He also trains our staff to upgrade their skills and knowledge. Prior to joining our Group in 2002, Dr Gan Qinghui was with the Affiliated Hospital of Shanghai Medical University as Physician-in-charge and Pathologist from 1987 to Between 1997 to 2001, he joined the Singapore Dawyn Group of Companies, International Business Development Division as a Manager for Product Development and Training. Dr Gan Qinghui holds a degree in Medicine from Shanghai Medical University and a Postgraduate Diploma in Marketing from the Chartered Institute of Marketing in the United Kingdom. None of our Executive Officers is a director of any company as at the date of this Prospectus and over the five years preceding the date of this Prospectus. None of our Executive Officers are related to each other or to any Director or substantial shareholder of our Company. REPORTING STRUCTURE The following chart shows our current management reporting structure. Ong Chu Poh Managing Director Koh Hin Ling Executive Director Teo Sock Koen Nursing Quality Manager Tan Eng Chuan Operations Manager Wong Kok Cheong Marketing Manager Shi Hao Trade Development Manager Chan Sau Wai Group Accountant Dr Gan Qinghui Deputy Operations Manager 63

68 STAFF As at 30 September 2002, our Group had a total of 217 full-time employees, all of whom are based in Singapore except for our Trade Development Manager, who is based in the PRC. Approximately 7% of our employees are engaged at the management level. None of our employees are unionised. The number of full-time employees of our Group as at the end of the last three financial years are as follows: Segmented by Activity End of FY2000 End of FY2001 End of FY2002 Management Administration Nursing staff Support staff Total Our Group does not experience any significant seasonal fluctuations in the number of employees. Relationship between management and staff is good and there have not been any industrial disputes in our Company or our subsidiaries. DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION The remuneration of each of our Directors and top five Executive Officers was below S$250,000 for each of the last two financial years and will be below S$250,000 for the current financial year. No sum has been set aside or accrued for the provision of any pension, retirement or similar benefits. REMUNERATION OF EMPLOYEES RELATED TO DIRECTORS AND SUBSTANTIAL SHAREHOLDERS None of our employees are related to our Directors and substantial shareholders. In the event that any of our employees are related to our Directors and substantial shareholders in the future, the total remuneration of such employees who are related to the Directors and substantial shareholders shall be subject to the annual review and majority approval of the Remuneration Committee. The total remuneration paid to our Directors, substantial shareholders and employees who are related to our Directors and substantial shareholders will be disclosed in the annual report of our Company. SERVICE AGREEMENTS On 7 November 2002, our Company entered into separate service agreements with each of our executive Directors, Messrs Ong Chu Poh and Koh Hin Ling (the Executives ). The Service Agreements will continue for a term of three years unless otherwise terminated by either party giving not less than six months notice in writing to the other. The Service Agreements may also be terminated if any of the Executives commits a breach of the Service Agreements, such as being convicted of any offence involving fraud or dishonesty or being adjudicated bankrupt. Except where the Service Agreements are terminated due to a breach of the Service Agreements as mentioned above, upon termination, the Executives will be entitled to receive the Incentive Bonus (as hereinafter defined) in an amount pro-rated for the period commencing on the first day of the financial year in which his/her employment is terminated to the last day of the employment in that financial year. There are no other benefits payable to the Executives upon termination of their employment with our Company. The Service Agreements cover the terms of employment, specifically salaries and bonuses. Directors fees do not form part of the terms of the Service Agreements as these require the approval of shareholders in our Company s annual general meeting. 64

69 Under the Service Agreements, Messrs Ong Chu Poh and Koh Hin Ling will be paid S$22,800 and S$9,000 per month respectively. Thereafter, they will each be entitled to annual increments as may be approved by our board of Directors. In addition, Messrs Ong Chu Poh and Koh Hin Ling shall each be entitled to participate in a profit sharing scheme ( PSS ). Under the terms of the PSS, an amount equivalent to 2% of our Group s audited profit before tax and extraordinary items and after minority interests and exceptional items for that particular financial year ( Profit ) will be set aside. Mr Ong Chu Poh and Mdm Koh Hin Ling shall be entitled to 70% and 30% respectively of the Profit (collectively, the Incentive Bonus ). Mr Ong Chu Poh s Service Agreement states that he will be entitled to a chauffeur-driven car. Mdm Koh Hin Ling will also be entitled to a car. All travelling and travel-related expenses, entertainment expenses and other out-of-pocket expenses reasonably incurred by them in the process of discharging their duties on our behalf will be borne by our Company. Save as disclosed above, there are no other existing or proposed service agreements between our Company and any Director of our Company. 65

70 GENERAL INFORMATION ON OUR GROUP SHAREHOLDERS The shareholders of our Company and their respective direct shareholdings immediately before and after the Invitation are set out below: Directors Before Invitation After Invitation Number of Shares % Number of Shares % Ong Chu Poh (1), (2) 10,789, ,789, Koh Hin Ling (1), (2) 2,700, ,700, Dr Vasoo Sushilan (3) Tay Joo Soon (3) Wong Kook Fei (3) Substantial Shareholders (5% or more) other than Directors EMCH (1), (2) 71,756, ,756, Employees (47 persons) 1,370, ,370, Others (three persons) 3,140, ,140, Public (including Reserved Shares) 28,000, ,756, ,756, Notes: (1) Mr Ong Chu Poh and Mdm Koh Hin Ling are husband and wife. They are therefore deemed interested in each other s shareholdings in the Company. (2) EMCH is an investment holding company which is a wholly-owned subsidiary of TMI Holdings. Mr Ong Chu Poh and Mdm Koh Hin Ling hold 95.6% and 4.4% of the shareholdings in TMI Holdings respectively. They are deemed interested in the Shares of our Company held by EMCH by virtue of their shareholdings in TMI Holdings. (3) Dr Vasoo Sushilan, Mr Tay Joo Soon and Mr Wong Kook Fei, our Independent Directors, will be allocated 200,000, 200,000, and 100,000 Reserved Shares respectively. If they subscribe for the said Reserved Shares, they may dispose of, or transfer all or part of their shareholdings in our Company after our admission to the Official List of the SGX- Sesdaq. VENDOR EMCH, our substantial shareholder, will offer 8,000,000 Vendor Shares pursuant to the Invitation. Details of EMCH and its shareholdings prior to and after the Invitation are as follows: No. of Shares held No. of Shares held Name before the Invitation No. of Vendor Shares after the Invitation EMCH 71,756,133 8,000,000 (1) 63,756, Bukit Timah Avenue Singapore Note: (1) This represents 8.9% of our pre-invitation share capital of 89,756,000 Shares. 66

71 MORATORIUM To demonstrate their commitment to our Group, each of Mr Ong Chu Poh, Mdm Koh Hin Ling and EMCH who will collectively own 77,246,000 Shares representing approximately 70.4% of our Company s issued share capital immediately after the Invitation, has undertaken not to sell, transfer, assign or otherwise dispose of any part of his/her/its interests in our Company for a period of six months from our Company s date of admission to the Official List of the SGX-Sesdaq (the Initial Period ) and for a period of six months after the Initial Period, not to sell, transfer, assign or otherwise dispose of more than 50% of each of their respective shareholdings held in our Company immediately after the Invitation. The shareholder of EMCH, namely TMI Holdings, which owns 100% of EMCH, has undertaken not to dispose of or transfer any part of its interest in EMCH for a period of 12 months from the date of our Company s admission to the Official List of the SGX-Sesdaq. The shareholders of TMI Holdings, namely Mr Ong Chu Poh and Mdm Koh Hin Ling, who collectively own 100% of TMI Holdings, have each undertaken not to dispose of or transfer any part of their respective interests in TMI Holdings for a period of 12 months from the date of our Company s admission to the Official List of the SGX-Sesdaq. RESTRUCTURING EXERCISE To streamline and rationalise our corporate structure and shareholding structure, the Restructuring Exercise was carried out. 1. Pursuant to sale and purchase agreement dated 23 October 2002, our Company acquired from EMCH the entire issued and paid-up share capital of the following companies wef 1 April 2002: (a) 2 ordinary shares of S$1.00 each in the capital of Econ Medicare at a consideration of S$24,317. The purchase consideration was satisfied by the issue of 24,317 ordinary shares of S$1.00 each as fully paid at par in the capital of our Company. The said purchase consideration of S$24,317 was based on the audited NTA of Econ Medicare of S$24,317 as at 31 March (b) 2 ordinary shares of S$1.00 each in the capital of Econ Careskill at a consideration of S$2. The purchase consideration was satisfied by the issue of 2 ordinary shares of S$1.00 each as fully paid at par in the capital of our Company. Econ Careskill had net tangible liabilities of S$5,850 as at 31 March 2002 arising from pre-operating expenses. (c) 100,000 ordinary shares of S$1.00 each in the capital of ENH at a consideration of S$904,609. The purchase consideration was satisfied by the issue of 904,609 ordinary shares of S$1.00 each as fully paid at par in the capital of our Company. The said purchase consideration of S$904,609 was based on the audited NTA of ENH of S$904,609 as at 31 March (d) 50,000 ordinary shares of S$1.00 each in the capital of Econ Ambulance at a consideration of S$330,659. The purchase consideration was satisfied by the issue of 330,659 ordinary shares of S$1.00 each as fully paid at par in the capital of our Company. The said purchase consideration of S$330,659 was based on the audited NTA of Econ Ambulance of S$330,659 as at 31 March (e) 10,000 ordinary shares of S$1.00 each in the capital of Sunnyville at a consideration of S$385,781. The purchase consideration was satisfied by the issue of 385,781 ordinary shares of S$1.00 each as fully paid at par in the capital of our Company. The said purchase consideration of S$385,781 was based on the audited NTA of Sunnyville of S$385,781 as at 31 March

72 2. Our Company also acquired 58 Braddell Road, Singapore and 53 Choa Chu Kang Road, Singapore for a total consideration of S$9,500,000 based on a valuation by DTZ Debenham Tie Leung (SEA) Pte Ltd as at 1 April The said consideration was satisfied by: (a) the issue of 2,660,000 ordinary shares of S$1.00 each as fully paid at par in the capital of our Company; (b) the repayment of S$1,927,000 owed by EMCH to our Company (the said S$1,927,000 was previously owed by EMCH to ENH, Sunnyville and Econ Ambulance and assigned by ENH, Sunnyville and Econ Ambulance to our Company pursuant to the sale and purchase agreement dated 23 October 2002); and (c) cash amounting to S$4,913,000 raised through bank loans. Pursuant to the acquisition, the construction agreement for Braddell Centre has also been assigned to us and we will bear the total cost of construction amounting to approximately S$1.92 million. We have also reimbursed EMCH for prior piling costs of approximately S$0.32 million as at 31 October Mr Ong Chu Poh transferred an aggregate of 36,600 ordinary Shares of S$1.00 each to 49 persons comprising 47 employees of our Group and two other individuals in appreciation of their past contributions to our Group. GROUP STRUCTURE Our Group structure before the Restructuring Exercise is as shown below: EMCH (1) 100% 100% 100% 100% 100% Econ Medicare Econ Careskill ENH Econ Ambulance Sunnyville Our Group structure after the Restructuring Exercise and prior to listing is as shown below: EMCH (1) Ong Chu Poh Koh Hin Ling Others (2) 80% 12% 3% 5% Econ Healthcare 100% 100% 100% 100% 100% Econ Medicare Econ Careskill ENH Econ Ambulance Sunnyville Notes: (1) EMCH is an investment holding company which is a wholly-owned subsidiary of TMI Holdings. Mr Ong Chu Poh and Mdm Koh Hin Ling hold 95.6% and 4.4% of the shareholdings in TMI Holdings respectively. (2) Refers to 47 employees and three other individuals as shown in the Shareholders section on page 66 of this Prospectus. 68

73 Subsidiaries The details of our Company s subsidiaries are as follows: Effective Issued and interest Date and place paid-up owned by Name of company of incorporation capital our company Principal business Econ Medicare 30 January 1999 S$2 100% Providing healthcare and Republic of Singapore rehabilitation services Econ Careskill 9 September 2000 S$2 100% Currently dormant. Its proposed Republic of Singapore activities are providing human resource recruitment and training services and conducting accredited nursing care and skill training programmes ENH 30 August 1994 S$100, % Providing nursing home Republic of Singapore services Econ Ambulance 14 April 1994 S$50, % Providing ambulance services Republic of Singapore Sunnyville 3 December 1996 S$10, % Providing nursing home services Republic of Singapore None of our subsidiaries are listed on any stock exchange. 69

74 INTERESTED PERSON TRANSACTIONS PAST INTERESTED PERSON TRANSACTIONS Save as disclosed in this Prospectus, none of our Directors, substantial shareholders or Executive Officers or their respective associates (as defined in the Listing Manual) was or is interested in any material transactions entered into by us within the past three financial years ended 31 March The following past interested person transactions were conducted on arms length basis and, where applicable, on normal commercial terms which we transact with other unrelated third parties. Transactions with EMCH EMCH is a wholly-owned subsidiary of TMI Holdings. TMI Holdings is wholly-owned by our Executive Directors and substantial shareholders, Messrs Ong Chu Poh (95.6%) and Koh Hin Ling (4.4%). (i) By Econ Medicare (a) Advances to and from EMCH Econ Medicare has received advances from EMCH in FY2000 in the amount of approximately S$10,000 for working capital. This advance was unsecured, interest-free and had no fixed terms of repayments. The amount has been fully repaid prior to the Invitation. Econ Medicare has made advances to EMCH in FY2001 and FY2002 amounting to approximately S$100,000 and S$368,000 respectively. These advances were unsecured, interest-free and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. (b) Management fees paid to EMCH Econ Medicare has paid to EMCH a management fee of S$120,000 for FY2002 in payment of its share of all management staff supporting our Group, other than our Group Accountant, who were employed by EMCH. The fee was arrived at based on cost plus a mark up of approximately 20%. For the purpose of this Invitation, the management staff have been put under the payroll of our Company. Payment of this management fee has ceased since 31 March (ii) By ENH (a) Advances to EMCH (non-trade) ENH has made advances to EMCH in FY2000, FY2001 and FY2002 amounting to approximately S$919,000, S$52,000 and S$702,000 respectively. These advances were unsecured, interest-free and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. (b) Management fees paid to EMCH ENH has paid to EMCH a management fee of approximately S$458,000 per annum for FY2000 and FY2001. The management fee paid for FY2002 was approximately S$722,000. Up to FY2002, all management staff supporting our Group, other than our Group Accountant, were employed by EMCH. The said management fee was in payment for such services. The fee was arrived at based on cost plus a mark up of approximately 20%. For the purpose of the Invitation, the management staff have been put under the payroll of our Company. Payment of this management fee has ceased since 31 March

75 (iii) By Econ Ambulance Econ Ambulance has made advances to EMCH in FY2000, FY2001 and FY2002 amounting to S$47,000, S$75,000 and S$115,000 respectively. These advances were unsecured, interestfree and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. (iv) By Sunnyville (a) Advances to EMCH Sunnyville has made advances to EMCH in FY2000, FY2001 and FY2002 amounting to approximately S$250,000, S$220,000 and S$268,000 respectively. These advances were unsecured, interest-free and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. (b) Management fees paid to EMCH Sunnyville has paid to EMCH a management fee of S$12,000 for FY2002 in payment of its share of all management staff supporting our Group, other than our Group Accountant, who were employed by EMCH. The fee was arrived at based on cost plus a mark up of approximately 20%. For the purpose of this Invitation, the management staff have been put under the payroll of our Company. Payment of this management fee has ceased since 31 March (v) By Econ Healthcare Pursuant to a Deed of Assignment dated 23 October 2002, EMCH has assigned the Singapore and PRC trademark registrations to our Company and will upon receipt of the registration certificate, assign the Malaysian trademark registration, at a nominal consideration of $1.00. Transactions with TMI Holdings TMI Holdings is wholly-owned by our Executive Directors and substantial shareholders, Messrs Ong Chu Poh (95.6%) and Koh Hin Ling (4.4%). (i) By ENH (a) Advances to TMI Holdings (non-trade) ENH had made an advance expense payment on behalf of TMI Holdings in FY2000 amounting to S$250. This advance was unsecured, interest-free and had no fixed terms of repayments. The amount has been fully repaid prior to the Invitation. (b) Management fees paid to TMI Holdings ENH has paid to TMI Holdings an administrative and management fee of S$72,000 per annum in FY2001. Up to FY2002, our Group Accountant, the personal assistant of our executive Directors and chauffeur were employed by TMI Holdings. The administrative and management fee of S$72,000 per annum was in payment for such services. For the purpose of the Invitation, the said three personnel have been put under the payroll of our Company. Payment of this administrative and management fee has ceased since 31 March (ii) By Econ Ambulance Econ Ambulance has made an advance to TMI Holdings in FY2001 in the amount of S$10,000. This advance was unsecured, interest-free and had no fixed terms of repayments. The amount has been fully repaid prior to the Invitation. 71

76 (iii) By Sunnyville (a) Advances to TMI Holdings (non-trade) Sunnyville has made advances to TMI Holdings in FY2001 in the amount of S$38,000. These advances were unsecured, interest-free and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. (b) Management fees paid to TMI Holdings Sunnyville has paid to TMI Holdings an administrative and management fee of S$12,000 per annum in FY2001. Up to FY2002, our Group Accountant, the personal assistant of our executive Directors and chauffeur were employed by TMI Holdings. The administrative and management fee of S$12,000 per annum was in payment for such services. For the purpose of the Invitation, the said three personnel have been put under the payroll of our Company. Payment of this administrative and management fee has ceased since 31 March (iv) By Econ Medicare TMI Holdings had made an advance payment for an expense on behalf of Econ Medicare in FY2001 in the amount of S$210. The advance was unsecured, interest-free and had no fixed terms of repayments. The amount has been fully repaid prior to the Invitation. Transactions with TMI Tech TMI Tech is 49% owned by TMI Holdings. Our executive Directors and substantial shareholders, Messrs Ong Chu Poh and Koh Hin Ling own 48.9% and 1.5% respectively of TMI Tech. The other shareholder of TMI Tech is an unrelated third party. TMI Holdings is wholly-owned by Messrs Ong Chu Poh (95.6%) and Koh Hin Ling (4.4%). (i) By ENH ENH has made advances to TMI Tech in FY2001 amounting to approximately S$49,000. These advances were unsecured, interest-free and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. (ii) By Econ Ambulance As at 31 March 2001, there is an outstanding amount of approximately S$2,700 owing by Econ Ambulance to TMI Tech for advances for working capital received from TMI Tech in FY1995. The advances were unsecured, interest-free and had no fixed terms of repayments. The amount has been fully repaid prior to the Invitation. (iii) By Econ Medicare TMI Tech has made an advance payment for an expense on behalf of Econ Medicare in FY2001 in the amount of S$230. The advance was unsecured, interest-free and had no fixed terms of repayments. The amount has been fully repaid prior to the Invitation. Transactions with TMI Realty TMI Realty is wholly-owned by our executive Directors and substantial shareholders, Messrs Ong Chu Poh (50%) and Koh Hin Ling (50%). ENH has made advances to TMI Realty in FY2000 and FY2001 amounting to approximately S$1,000 and S$172 respectively. These advances were unsecured, interest-free and had no fixed terms of repayments. The amounts have been fully repaid prior to the Invitation. 72

77 Transactions with FMS FMS is 50% owned by our executive Director and substantial shareholder, Mr Ong Chu Poh. The other 50% is owned by an unrelated third party. Mr Ong Chu Poh is also a director of FMS. FMS is in the business of general trading. Our in-house designed beds were originally sub-contracted by FMS for manufacture in Taiwan. Econ Medicare had purchased beds from FMS in FY2001. The total value of these purchases is approximately S$300,000. The said transactions were conducted on an arms-length basis and on normal commercial terms which we would transact with other unrelated third parties. These purchases had ceased when our Group took over the sub-contract for the manufacture of these beds in FY2002. Restructuring Exercise The transactions carried out as part of the Restructuring Exercise are interested person transactions. For details on the Restructuring Exercise, please see pages 67 and 68 of this Prospectus. PAST AND ONGOING INTERESTED PERSON TRANSACTIONS The following interested person transactions were conducted on arms length basis and, where applicable, on normal commercial terms which we transact with other unrelated third parties. All future interested person transactions with the following persons will be conducted at arms length and based on market rates, and will be reviewed by our Audit Committee in accordance with the procedures and guidelines for interested person transactions set out on pages 74 and 75 of this Prospectus. Transactions with EMCH EMCH is a wholly-owned subsidiary of TMI Holdings. TMI Holdings is wholly-owned by our executive Directors and substantial shareholders, Messrs Ong Chu Poh (95.6%) and Koh Hin Ling (4.4%). (i) By Econ Medicare Since 1 April 2001, Econ Medicare has leased the property at 452 Upper East Coast Road from EMCH for one (1) year terms. In FY2002, the total rental paid to EMCH was S$600,000, based on a monthly rental of S$50,000. Under the current lease, the monthly rental is S$55,000 per month. Based on the valuation by DTZ Debenham Tie Leung (SEA) Pte Ltd dated 4 September 2002, the open market rental value as at 1 April 2002 was $70,000 per month. The building, with a gross floor area of approximately 32,075 sq ft is currently being leased by Econ Medicare as a medicare centre. Pursuant to a shareholders resolution dated 23 October 2002, our Company has on 23 October 2002 entered into a three-year option ( Option ), for a nominal consideration of $8.00, to acquire the property at 452 Upper East Coast Road (the Property ) at the prevailing market value at the time of exercise of the Option based on an independent valuation. Salient terms of the Option are as follows: (a) the Option will be effective upon the listing and quotation of our Shares on the SGX-Sesdaq and will continue thereafter; (b) the Property is sold subject to the existing Tenancy Agreement dated 1 April 2002; (c) the Option will expire at 4.00 p.m. on 22 October 2005 ( Expiry Date ); 73

78 (d) if the Option is not validly exercised on or before the Expiry Date, the Option shall lapse and the option monies paid shall be forfeited and neither party shall have any claim against the other; and (e) the purchase of the Property is conditional upon, inter alia, approval from our shareholders (if required under the Listing Manual at the time of exercise of the Option), satisfactory interpretation plans and replies to the requisitions sent to the various governmental departments and the Land Transport Authority. The purchase of the Property will be subject to the Review Procedures For Future Interested Person Transactions as set out below. (ii) By ENH ENH leases the following properties from EMCH for one (1) year terms. The rental amounts were arrived based on the number of beds, location and condition of the respective properties. The approximate rental amounts paid to EMCH for the past three financial years are as follows: FY2000 FY2001 FY2002 Current rental per month Property (S$ 000) (S$ 000) (S$ 000) (S$ 000) 25 Recreation Road ,1A,3,3A Pulasan Road Choa Chu Kang Road To be transferred pursuant to Restructuring Exercise 58 Braddell Road To be transferred pursuant to Restructuring Exercise Upon expiry of the above leases, the rentals will be negotiated based on an independent valuation report commissioned at the relevant time. Transactions with TMI Tech TMI Tech is 49% owned by TMI Holdings. Our executive Directors and substantial shareholders, Messrs Ong Chu Poh and Koh Hin Ling own 48.9% and 1.5% respectively of TMI Tech. The other shareholder of TMI Tech is an unrelated third party. TMI Holdings is wholly-owned by Messrs Ong Chu Poh (95.6%) and Koh Hin Ling (4.4%). ENH leases the property at 16 Bukit Timah Avenue from TMI Tech for one (1) year terms. The rental paid in FY2000 was S$271,000 and that for each of FY2001 and FY2002 was S$156,000. The current rental is S$13,000 per month. The rentals were based on rental charged by the Singapore Land Authority to TMI Tech and office maintenance costs. The property was shared by ENH, TMI Holdings, TMI Tech, TMI Realty and FMS. A lower rental was paid in FY2001 and FY2002 and the current year as the area occupied by TMI Holdings, TMI Tech, TMI Realty and FMS increased. REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS Our Audit Committee, when formed, will review and approve all interested person transactions as defined by the Listing Manual ( Interested Person Transactions ) to ensure that they are on arms length basis, that is, the transactions are transacted on terms and prices not more favourable to the interested person than if they were transacted with a third party and we have not been disadvantaged in any other way as follows: (i) All Interested Person Transactions above S$100,000 are to be approved by a Director who shall not be an interested person in respect of the particular transaction. Any contracts to be made with an interested person shall not be approved unless the pricing is determined in accordance with our usual business practices and policies, consistent with the usual margin given or price received by us for the same or substantially similar type of transactions between 74

79 us and unrelated parties and the terms are no more favourable to the interested person than those extended to or received from unrelated parties. With respect to the transactions with EMCH and TMI Tech, the lease agreements will not be approved unless the terms of the leases are not less favourable compared to what our Company would obtain from any third party landlords. Rentals shall be negotiated based on prevailing market rates comparable to the rental rates applied in the same area. For the purposes above, where applicable, contracts for the same or substantially similar type of transactions entered into between us and unrelated third parties will be used as a basis for comparison to determine whether the price and terms offered to or received from the interested person are no more favourable than those extended to unrelated parties. (ii) In addition, we shall monitor all related Interested Person Transactions entered into by us categorising the transactions as follows: (a) a category one Interested Person Transaction is one where the value thereof is in excess of 5% of the NTA of our Group; and (b) a category two Interested Person Transaction is one where the value thereof is below or equal to 5% of the NTA of our Group. Category one Interested Person Transaction must be approved by the Audit Committee prior to entry. Category two Interested Person Transaction need not be approved by the Audit Committee prior to entry but shall be reviewed on a quarterly basis by the Audit Committee. We will prepare relevant information to assist our Audit Committee in its review. Before any agreement or arrangement that is not in the ordinary course of business of our Group is transacted, prior approval must be obtained from our Audit Committee. In the event that a member of our Audit Committee is interested in any of the Interested Person Transactions, he will abstain from reviewing that particular transaction. Any decision to proceed with such an agreement or arrangement would be recorded for review by our Audit Committee. We will also comply with the provisions in Chapter 9 of the Listing Manual in respect of all future Interested Person Transactions, and if required under the Listing Manual, the Act or the SFA, we will seek our shareholders approval for such transactions. POTENTIAL CONFLICTS OF INTEREST Save as disclosed above, (a) No Director, substantial shareholder or Executive Officer of our Group has any interest, direct or indirect, in any material transactions to which our Group was or is to be a party. (b) No Director, substantial shareholder or Executive Officer of our Group has any interest, direct or indirect, in any company carrying on the same business or carrying on a similar trade as our Group. (c) No Director, substantial shareholder or Executive Officer of our Group has any interest, direct or indirect, in any enterprise or company that is our Company s customer or supplier of goods or services. 75

80 THE ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME We have implemented a share option scheme that will be in place after the Invitation known as the Econ Healthcare Employees Share Option Scheme (the Scheme ). The following is a summary of the principal terms of the Scheme adopted by our Company at an extraordinary general meeting held on 23 October 2002 in conjunction with the listing of the Shares of our Company on the Official List of the SGX-Sesdaq. The terms and the rules of the Scheme are more particularly set out in Appendix D of this Prospectus (the Rules ), and are in compliance with Chapter 8 of the Listing Manual. Capitalised terms used in this summary which are not otherwise defined in this summary bear the same meaning as ascribed to in the Rules. Purpose of the Scheme The Scheme, when adopted, will provide an opportunity for Employees (as defined in the Rules) and Directors (whether serving in an executive or non-executive capacity) who meet the eligibility criteria and who have contributed to the growth and development of our Company to participate in the equity of our Company as well as to motivate these Participants (the Participants ) to optimise their performance. The Scheme is a share incentive scheme. The Scheme is proposed on the basis that it is important to acknowledge the contributions made by the Participants, who are essential to the growth and development of our Company, and to give recognition to such Participants. Our Company, by adopting the Scheme, will give the Participants an opportunity to have a personal stake in our Company, thereby aligning the interests of the Participants with those of our shareholders. The Scheme will also help to achieve the following objectives: (a) attract and retain key Employees and Directors whose contributions are important to the longterm growth and profitability of our Company; (b) motivate the staff to optimise their performance, efficiency and productivity; (c) develop a participatory style of management that will instil loyalty among our Employees and Directors and motivate them to work towards the growth and prosperity of our Company; and (d) foster an ownership culture within our Company which aligns the interests of the Participants with the interests of our shareholders. Certain Employees who are not Directors or who do not hold the rank of executives may also contribute to the success of our Company by contributing their experience, knowledge and expertise to the development of our Company. Allowing them to participate in the Scheme is an effective way of providing such motivation by ensuring that the interest of such persons are aligned with the interests of our Company which includes, inter alia, maintaining a sustainable increase in value over time. Eligibility Confirmed full-time Employees of our Company (including Employees of our subsidiaries, when applicable) who have attained the age of 21 years and above on or before the relevant date of offer of an Option and who meet the Performance Criteria will be eligible to participate in the Scheme. Our Directors (whether serving in an executive or non-executive capacity), all of whom have attained the age of 21 years, will also be eligible to participate in the Scheme, except for Controlling Shareholders and their Associates, who will not be participating in the Scheme. 76

81 Rationale for participation of non-executive Directors Directors serving in a non-executive capacity bring to our Company their wealth of knowledge, business expertise and contacts in the business community. They play an important role in helping our Company shape our business strategy by allowing us to draw on the backgrounds and diverse working experience of these individuals. It is crucial for our Company to attract, retain and incentivise our non-executive Directors, especially when our Company has to compete with other locally listed companies for a limited pool of talented individuals to serve as non-executive Directors. By aligning the interests of our non-executive Directors with the interests of our shareholders in this manner, our Company aims to inculcate a sense of commitment on the part of our non-executive Directors towards serving the short and long-term objectives of our Company. Further, by granting our Company the ability to supplement the current cash based remuneration by way of director s fees to non-executive Directors for their services, our Company will be able to remain competitive in the total remuneration of our non-executive Directors when other listed companies offer share options to their non-executive Directors. Our Directors are of the view that including them in the Scheme will show our Company s appreciation for, and further motivate them in, their contribution towards the success of our Company. However, as their services and contributions cannot be measured in the same way as those of full-time employees of our Company while it is desired that participation in the Scheme be made open to non-executive Directors of our Company, any Options that may be offered and granted to any such Director 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 may adopt a performance framework which incorporates financial and/or non-financial performance measurement criteria. As such, our Company proposes to issue not more than 3% of the Shares available under the Scheme to each non-executive Director. This token sum will also ensure that grants to non-executive Directors who are in our Company s Audit Committee will not compromise their independent status. Administration The Scheme shall be administered by the Committee, which comprises Directors of the Company appointed by the board of Directors to administer the Scheme. The Committee will consist of Directors who may be Participants in the Scheme. The first Committee shall be appointed by the board of Directors and shall consist of Messrs Ong Chu Poh, Koh Hin Ling and Wong Kook Fei. A member of the Committee who is also a Participant must not be involved in its deliberations in respect of Options granted or to be granted to him. Size of the Scheme The total number of Scheme Shares in respect of which Options may be granted on any date, when added to the number of Scheme Shares issued and issuable in respect of all Options granted under this Scheme, shall not exceed 15% (the Scheme Size ) of the issued share capital of the Company on the day preceding that date. We believe this Scheme Size to be reasonable, taking into account the size of our share capital, the nature of our business, and the need to reward and retain our key Employees and Directors. Based on the post flotation share capital of 109,756,000 Shares, 16,463,400 Shares will be available under this Scheme. Our Company believes that the Scheme should be of a sufficient size to enable us to have the flexibility to structure remuneration and incentive packages and to offer Options over a significant number of Shares to new and existing employees. Such number of Shares ought to be significant enough to serve as a meaningful incentive in the recruitment of new employees as well as a reward to existing employees for their contribution to our Company. If the number of Shares available under the Scheme is too small, the number of Options available may not be sufficiently attractive to achieve the objectives of the Scheme. Taking into account the current issued share capital of our Company, the number of employees (217 as at 30 September 2002) and the possible increase in headcount should the business activities of our Company increase in the future during the duration of the Scheme, our Directors estimate that 15% of the issued share capital would be required to provide sufficient Shares over which Options may be granted to achieve the objectives of the Scheme. 77

82 Offer date Offers may be made at such time as the Committee may determine. Exercise price Under the rules of the Scheme, Options will be granted at exercise prices: (i) at the prevailing market price of our Shares based on the average of the last dealt price per Share as indicated in the daily official list or any other publication published by the SGX-ST for the 5 consecutive trading days immediately preceding the Date of Grant (the Market Price ); or (ii) at a price which is set at a discount to the Market Price, provided that: (1) the maximum discount shall not exceed 20% of the Market Price; (2) the Committee shall exercise any decision to offer Options with an exercise price set at a discount in good faith and only when circumstances require; (3) if and only if the Committee verily believes that the discount and the quantum thereof would be in furtherance of the core objectives of the Scheme and would be in the best interests of our Company and the prevailing market conditions. In making any determination as to the actual discount applicable to any Option, the Committee shall take into account such criteria as the Committee may, in its absolute discretion, deem appropriate, in particular: (a) the performance of our Company, on the basis of our Company s sales, revenues, profit and/or any other financial parameters as the Committee may, in its absolute discretion, deem appropriate; (b) the individual performance of the Participant, his effectiveness and contribution to the success and development of our Company; and/or (c) the potential for future development of the Participant to the success and development of our Company. The grant of Options at discounts to the Market Price is intended to achieve the following objectives: (a) to give the Committee the flexibility to cushion against the volatility and uncertainty inherent in the stock market which may not always be related to the financial performance of our Company; (b) the perception that the exercise of Options with discounted subscription prices would be more likely to result in a gain in the future is expected to provide greater motivation to the grantees who would be encouraged to continually work towards improving the performance of our Company in order to realise their Options at a higher value; (c) to reward or incentivise key Participants, with a view to optimising their performance standards, dedication and efficiency, or to attract key individuals to join our Company to enhance the overall performance of our Company; and (d) to enable our Company to maintain competitive remuneration packages to our employees should the practice of granting options with discounted subscription prices become common among local listed companies. Where the exercise price as determined above is less than the par value of our Share, the exercise price shall be the par value. 78

83 Option period Options granted with the exercise price set at Market Price shall only be exercisable, in whole or in part (provided that an option may be exercised in part only in respect of 1,000 Shares or any multiple thereof) as follows: (i) up to 50% of the Option at any time after 12 months of the Date of Grant of that Option; and (ii) the balance 50% of the Option at any time after 24 months of the Date of Grant of that Option. Provided Always that an Option shall be exercised before the end of 120 months (or 60 months where the Participant is a non-executive Director) of the Date of Grant of that Option and subject to such other conditions as may be introduced by the Committee from time to time. Options granted with the Exercise Price set at a discount to Market Price shall only be exercisable by a Participant, in whole or in part (provided that an Option may be exercised in part only in respect of 1,000 Shares or any multiple thereof) as follows: (i) up to 50% of such Option any time after 36 months from the Date of Grant of that Option; and (ii) the balance 50% of the Option at any time after 48 months of the Date of Grant of that Option. Provided Always that such Option shall be exercised before the end of 120 months (or 60 months where the Participant is a non-executive Director) of the Date of Grant of that Option and subject to such other conditions as may be introduced by the Committee from time to time. We believe that these option periods will promote staff retention as the cost of leaving our Company would be compounded by the loss of unvested Options. In addition, as we intend to issue further Options on a regular basis throughout the duration of Scheme, we believe that the Scheme should encourage our employees and Directors to continue with us thereby promoting our interests in the long term. Special provisions deal with the lapse or earlier exercise of Options in circumstances which include: (i) upon the Employee ceasing to be in the employment of the Company; (ii) upon the bankruptcy of the Participant; (iii) in the event of any misconduct on the part of the Participant, as determined by the Committee in its absolute discretion; (iv) death of a Participant; (v) a take-over of the Company; (vi) a compromise or arrangement, proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with another company or companies; (vii) a members solvent voluntary winding-up (other than for amalgamation or reconstruction) of the Company; or (viii) if an order or an effective resolution is passed for the winding-up of the Company on the basis of its insolvency. 79

84 Duration of the share option scheme Our Scheme shall be in force up to a maximum period of 10 years from the date on which the Scheme was implemented. The Scheme may continue beyond the said stipulated period or terminated at any time with the approval of shareholders by way of an ordinary resolution passed at a general meeting and of any relevant authorities which may then be required. Financial Effects of the Scheme The Scheme will increase our issued share capital to the extent of the new Shares that will be issued and allotted pursuant to the exercise of Options. The grant of the Options will have no impact on our profitability under the current Singapore Statements of Accounting Standard ( SAS ). Current SAS does not require companies to account for share-based awards granted to their employees. Accordingly, companies have not recognised any compensation expenses related to share options granted to their employees in their financial statements. If the SAS is revised such that companies are required to account for share-based awards granted to employees, the cost of granting the Option will affect our financial results. There will be no cash outlay expended by us at the time of grant of such Options as compared with the payment of cash bonuses. However, as shareholders may be aware, any Options granted to subscribe for new Shares (whether the exercise price is set at the market price of the Shares at the date of grant or otherwise) have a fair value at the time of grant. The fair value of an Option is an estimate of the amount that a willing buyer would pay a willing seller for the Option on the grant date. Options are granted to Participants at a nominal consideration of $1.00. Insofar as such Options are granted at a consideration that is less than their fair value at the time of grant, there will be a cost to our Company in that we will receive from the Participant upon the grant of the Option a consideration that is less than the fair value of the Option. As and when the Options are exercised, the cash flow will add to our NTA and our issued share capital base will grow. The effect of the issue of new Shares upon the exercise of the Options on our NTA per Share is accretive if the exercise price is above the NTA per Share, but dilutive otherwise. The SGX-ST Requirements While the Scheme is structured such that we have the discretion to make the appropriate allotments depending on the prevailing circumstances of our Company, the Scheme conforms with the requirements as set out in the Listing Manual for employees share option schemes. In-principle approval has been obtained from the SGX-ST for the listing and quotation of the new Shares to be issued pursuant to the Scheme. This is not an indication of the merits of the Scheme or the new Shares to be issued pursuant to the Scheme. Details of the number of Options granted, the number of Options exercised, and the subscription price will be disclosed in our annual report. 80

85 PROPERTIES AND FIXED ASSETS Our Group currently owns the following properties for use as medicare centre/nursing homes: Description/Location Gross Area Tenure Encumbrance (sq m) 53 Choa Chu Kang Road Freehold Mortgaged to DBS Bank under an Singapore (1) (Estate in Fee Simple) all monies mortgage to secure banking facilities granted to EMCH. This is to be refinanced with DBS Bank upon completion of the transfer of the property to our Company 58 Braddell Road Freehold Currently mortgaged to OUB Bank Singapore (1),(2) (Estate in Fee Simple) under an all monies mortgage to secure banking facilities granted to EMCH. This is to be refinanced with Hongkong and Shanghai Banking Corporation upon completion of the transfer of the property to our Company Our Group currently rents/leases the following properties for use as medicare centre/nursing homes: Notes: Land area/ Tenure Lessor Annual Built-in area Rental Description/Location (sq m) (S$ 000) 16 Bukit Timah Avenue, 4,711/1,324 1 year TMI Tech 156 Singapore (3) commencing 1 April Upper East Coast Road, 1,421/2, year EMCH 660 Singapore (4) commencing 1 April Recreation Road, 763.3/ year EMCH 328 Singapore commencing 1 April , 1A, 3, 3A Pulasan Road, 734.7/ year EMCH 202 Singapore commencing 1 April Ama Keng Road 2,730/320 3 years Government of 68 Singapore (3) commencing the Republic of 1 August 2000 Singapore (1) Sale and Purchase Agreement signed on 23 October 2002 and transfer currently being completed. (2) Currently under construction. (3) The properties at 16 Bukit Timah Avenue, Singapore and 10 Ama Keng Road, Singapore are leased from the Government of the Republic of Singapore subject to the provisions of the State Land Rules, We are bound by the standard terms and conditions of the Land Office under these tenancy agreements. (4) Our Company has on 23 October 2002 entered into a three-year option to acquire the property at 452 Upper East Coast Road, Singapore Please refer to Past and Ongoing Interested Person Transactions Transactions with EMCH on pages 73 and 74 of this Prospectus for more details of the said option. 81

86 REPORT FROM REPORTING ACCOUNTANTS ON THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS OF ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES 2 December 2002 The Board of Directors Econ Healthcare Limited 452 Upper East Coast Road Singapore Dear Sirs Econ Healthcare Limited We report on the unaudited proforma consolidated financial statements set out on pages 83 to 98 of the Prospectus dated 2 December 2002, which has been prepared for illustrative purposes only and based on certain assumptions after making certain adjustments to show what: (a) the financial results of Econ Healthcare Limited and its subsidiaries (collectively, the Group ) for the years ended 31 March 2000, 2001 and 2002 would have been if the group structure as of the date of lodgement of the Prospectus had been in place since the beginning of the periods being reported on; (b) the financial position of the Group as of the date of the balance sheet as at 31 March 2002 would have been if the group structure as of the date of lodgement of the Prospectus had been in place on that date; and (c) the cash flow of the Group for the financial year ended 31 March 2002 would have been if the group structure as of the date of lodgement of the Prospectus had been in place since the beginning of the period being reported on. The unaudited proforma consolidated financial statements, because of their nature, may not give a true picture of the Group s actual financial position or results. The unaudited proforma consolidated financial statements are the responsibility of the directors of Econ Healthcare Limited (the Company ). Our responsibility is to express an opinion on the unaudited proforma consolidated financial statements based on our work. We carried out procedures in accordance with generally accepted auditing principles. Our work, which involved no independent examination of the unaudited proforma consolidated financial statements, consisted primarily of comparing such financial statements to the consolidated financial statements of Econ Medicare Centre Holdings Pte Ltd ( EMCH ), considering the evidence supporting the adjustments and discussing the proforma financial information with the directors of the Company. In our opinion: (a) the unaudited proforma consolidated financial statements have been properly prepared from consolidated financial statements of EMCH which were prepared in accordance with Singapore Statements of Accounting Standard; (b) the unaudited proforma consolidated financial statements have been properly prepared in a manner consistent with both the format of the consolidated financial statements of EMCH and the accounting policies of the Company; (c) each material adjustment made to the information used in the preparation of the unaudited proforma consolidated financial statements is appropriate for the purpose of preparing such financial statements; and (d) the unaudited proforma consolidated financial statements have been properly prepared on the basis of the assumptions set out on page 83 after making the adjustments described on pages 84 to 88. This report has been prepared for inclusion in the Prospectus dated 2 December 2002 in relation to the proposed issue by the Company of 28,000,000 Invitation Shares of S$0.06 each comprising 20,000,000 New Shares and 8,000,000 Vendor Shares. Yours faithfully KPMG Certified Public Accountants Singapore Tan Wah Yeow Partner-in-charge 82

87 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 1. INTRODUCTION Econ Healthcare Limited ( Econ Healthcare ) is incorporated in the Republic of Singapore with its registered office at 452 Upper East Coast Road, Singapore The principal activities of Econ Healthcare are those relating to investment holding, provision of management services and letting of properties. The principal activities of the subsidiaries are set out in Note 22 to the unaudited proforma consolidated financial statements. The unaudited proforma consolidated financial statements have been prepared to reflect the effect of the Restructuring undertaken by Econ Medicare Centre Holdings Pte Ltd ( EMCH ) on 1 April The audited consolidated financial statements of EMCH are set out on pages 100 to 119 of the Prospectus and relate to financial periods prior to the Restructuring. Accordingly, these financial statements do not reflect the effect of the Restructuring. The Restructuring comprised the following transactions: the transfer by EMCH of all its equity interests in all of its wholly owned subsidiaries, namely: Econ Nursing Home Services (1987) Pte Ltd ( ENH ) Econ Ambulance Services Pte Ltd ( Econ Ambulance ) Sunnyville Nursing Home (1996) Pte Ltd ( Sunnyville ) Econ Medicare Centre Pte Ltd ( Econ Medicare ) Econ Careskill Training Centre Pte Ltd ( Econ Careskill ) to Econ Healthcare in a share-for-share exchange in which Econ Healthcare issued 1,645,368 ordinary shares of $1 each to EMCH; and the transfer by EMCH of a piece of freehold land and a freehold nursing home to Econ Healthcare satisfied by the repayment of an amount due from EMCH to Econ Healthcare of $1,927,000 (the said $1,927,000 was previously owed by EMCH to ENH, Sunnyville and Econ Ambulance and assigned by ENH, Sunnyville and Econ Ambulance to Econ Healthcare pursuant to the sale and purchase agreement dated 23 October 2002), issue of 2,660,000 ordinary shares of $1 each, and cash of $4,913,000 raised through bank loans. The unaudited proforma consolidated financial statements, which are expressed in Singapore dollars, have been prepared from consolidated financial statements of EMCH which were prepared in accordance with Singapore Statements of Accounting Standard and audited by KPMG. In preparing the unaudited proforma consolidated financial statements, proforma adjustments have been made to the audited consolidated financial statements of EMCH to reflect the effect of the Restructuring on Econ Healthcare as if Econ Healthcare had been in existence and the Restructuring had been in place: (i) for all the periods presented in the case of the proforma profit and loss statements and the proforma cash flow statement; and (ii) as at the date of the balance sheet in the case of the proforma balance sheet. The proforma effects on income taxes resulting from the proforma adjustments have also been reflected. The unaudited proforma consolidated financial statements, because of their nature, may not give a true picture of the actual financial position or results of Econ Healthcare and its subsidiaries (the Group ). 83

88 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 2. PROFORMA BALANCE SHEET OF THE GROUP The Proforma Balance Sheet of the Group as at 31 March 2002 is set out below: Audited EMCH Notes on Proforma Adjustments Proforma Note Group Group $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Non-current assets Property, plant and equipment 7 20,201 9,500 (19,624) 10,077 Investment properties 295 (295) Other assets 163 (163) 20,659 10,077 Current assets Trade and other receivables 8 2,465 (1,927) (1,896) 1, Cash and cash equivalents (28) 1,080 1,219 2,632 1,788 Less: Current liabilities Bank overdrafts 3,779 (3,779) Trade and other payables (58) 252 1,064 Current portion of interest-bearing bank loans 14 1, (1,035) 211 Current portion of finance lease liabilities Liability for short-term accumulating compensated absences Provision for taxation 873 (450) 423 6,625 1,766 Net current (liabilities)/assets (3,993) 22 Less: Non-current liabilities Interest-bearing bank loans 14 8,820 4,702 (8,820) 4,702 Finance lease liabilities Deferred taxation (10) 13 8,847 4,719 Net Assets 7,819 5,380 Capital and Reserves Share capital ,660 1,645 (528) 1,080 5,385 Capital reserve 1,860 (1,860) Merger deficit* (1,645) (1,515) 1,675 (1,485) Accumulated profits 5,431 (3,951) 1,480 7,819 5,380 * Please refer to Note 2.6 on proforma adjustments. 84

89 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 2. PROFORMA BALANCE SHEET OF THE GROUP (cont d) 2.1 Reflects the transfer by EMCH of a piece of freehold land and a freehold nursing home to Econ Healthcare satisfied by the repayment of an amount due from EMCH to Econ Healthcare of $1,927,000 (the said $1,927,000 was previously owed by EMCH to ENH, Sunnyville and Econ Ambulance and assigned by ENH, Sunnyville and Econ Ambulance to Econ Healthcare pursuant to the sale and purchase agreement dated 23 October 2002), issue of 2,660,000 ordinary shares of $1 each, and cash of $4,913,000 raised through bank loans; and the subsequent revaluation of these properties to their open market value of $9,500, Reflects the transfer by EMCH of its equity interests in all of its subsidiaries to Econ Healthcare in a share-for-share exchange in which Econ Healthcare issued 1,645,368 ordinary shares of $1 each to EMCH. 2.3 Elimination of assets, liabilities and reserves of EMCH which were not transferred to Econ Healthcare in the Restructuring. 2.4 Reflects the reinstatement of intercompany balances between EMCH and the subsidiaries, previously eliminated on consolidation, upon exclusion of EMCH from the Group. 2.5 Reflects the issue of shares by Econ Healthcare for cash of $2 and $1,079,990 on incorporation and 23 October 2002 respectively. 2.6 The merger deficit represents the excess of the $1,645,368 of par value of Econ Healthcare shares issued over the $160,004 of par value of the shares of subsidiaries acquired in the Restructuring, under the pooling-of-interests method of accounting. 3. PROFORMA PROFIT AND LOSS STATEMENTS OF THE GROUP The Proforma Profit and Loss Statements of the Group for each of the three financial years ended 31 March 2000, 2001 and 2002 are as set out below: Year ended 31 March 2000 Audited EMCH Notes on Proforma Adjustments Proforma Note Group Group $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue 17 6,722 (18) 6,704 Other operating income Supplies and consumables (786) (786) Staff costs 18 (2,365) 49 (2,316) Depreciation of property, plant and equipment (263) 114 (14) (163) Operating lease expenses (329) (551) (880) Other operating expenses 18 (913) 434 (479) Profit from operations 2,073 2,087 Finance costs 18 (718) 710 (217) (225) Profit from ordinary activities before taxation 18 1,355 1,862 Taxation 19 (434) 90 (170) (514) Net profit attributable to shareholders of the Company 921 1,348 85

90 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 3. PROFORMA PROFIT AND LOSS STATEMENTS OF THE GROUP (cont d) Year ended 31 March 2001 Audited EMCH Notes on Proforma Adjustments Proforma Note Group Group $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue 17 7,479 (18) 7,461 Other operating income Supplies and consumables (902) (902) Staff costs 18 (3,019) 57 (2,962) Depreciation of property, plant and equipment (314) 142 (14) (186) Operating lease expenses (233) (504) (737) Other operating expenses 18 (1,210) (752) Profit from operations 1,806 1,927 Finance costs 18 (821) 813 (179) (187) Profit from ordinary activities before taxation ,740 Taxation 19 (282) 38 (198) (442) Net profit attributable to shareholders of the Company 703 1,298 Year ended 31 March 2002 Audited EMCH Notes on Proforma Adjustments Proforma Note Group Group $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue 17 8,874 (25) 8,849 Other operating income Supplies and consumables (857) (857) Staff costs 18 (3,271) 54 (3,217) Depreciation of property, plant and equipment (465) 199 (14) (280) Operating lease expenses (223) (1,104) (1,327) Other operating expenses 18 (758) 183 (575) Profit from operations 3,307 2,600 Finance costs 18 (759) 755 (180) (184) Profit from ordinary activities before taxation 18 2,548 2,416 Taxation 19 (671) 321 (223) (573) Net profit attributable to shareholders of the Company 1,877 1, Elimination of revenue and expenses of EMCH and reinstatement of operating lease expenses previously paid to EMCH. 3.2 Depreciation expense relating to a freehold nursing home acquired from EMCH. 3.3 Elimination of management fees paid to the ultimate holding company, TMI Holdings (1997) Pte Ltd, and no longer payable. 3.4 Reflects the finance costs relating to the bank loans taken up to finance the acquisition of a piece of freehold land and a freehold nursing home transferred from EMCH, based on actual rates of interest for EMCH s borrowings. 3.5 Reflects the tax effect relating to proforma adjustments based on statutory tax rate of 26%, 25.5% and 24.5% for the years ended 31 March 2000, 2001 and 2002 respectively. 86

91 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 4. PROFORMA MOVEMENT IN RESERVES OF THE GROUP The Proforma Movement in Reserves of the Group not reflected in the Proforma Profit and Loss Statements of the Group for the financial years reported on is as set out below: Years Ended 31 March $ 000 $ 000 $ 000 Dividends 2, PROFORMA CASH FLOW STATEMENT OF THE GROUP The Proforma Cash Flow Statement of the Group for the financial year ended 31 March 2002 is set out below: Audited EMCH Notes on Proforma Adjustments Proforma Group Group $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Operating activities Profit from ordinary activities before taxation 2,548 2,416 Adjustments for: Interest expense 759 (755) Interest income (1) (1) Depreciation of property, plant and equipment 465 (199) Gain on sale of property, plant and equipment (4) (4) Operating profit before working capital changes 3,767 2,875 Changes in working capital: Trade and other receivables 839 (732) 1,278 1,385 Trade and other payables (1,124) (121) Employee benefits (27) (27) Cash generated from operations 3,455 4,112 Income taxes paid (124) 8 (116) Cash flows from operating activities 3,331 3,996 Investing activities Interest received 2 2 Purchase of property, plant and equipment (180) 131 (49) Proceeds from sale of property, plant and equipment Cash flows from investing activities (156) (25) Financing activities Interest paid (759) 755 (4) Dividends paid (453) 453 (2,800) (2,800) Payment of finance lease liabilities (44) (44) Repayment of bank loans (1,087) 1,087 Cash flows from financing activities (2,343) (2,848) Net increase in cash and cash equivalents 832 1,123 87

92 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 5. PROFORMA CASH FLOW STATEMENT OF THE GROUP (cont d) During the year, the Group acquired property, plant and equipment with an aggregate cost of $9,549,000, which was satisfied as follows: $ 000 Repayment of amount due from EMCH 1,927 Issue of shares 2,660 Cash raised through bank loans 4,913 Cash 49 9, Elimination of balances, expenses, transactions and dividend appropriation of EMCH. 5.2 Reflects the finance costs relating to the bank loans taken up to finance the acquisition of a piece of freehold land and a freehold nursing home transferred from EMCH and the depreciation expense on the freehold nursing home. 5.3 Reflects the reinstatement of intercompany balances between EMCH and the subsidiaries, previously eliminated on consolidation, upon exclusion of EMCH from the Group. 5.4 Reflects dividends paid by subsidiaries to EMCH prior to their transfer to Econ Healthcare. 88

93 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 6.1 Basis of Consolidation (i) Subsidiaries Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the proforma consolidated financial statements from the date that control commences until the date that control ceases. Where the acquisitions of subsidiaries constitute a uniting of interests and meet the criteria set out in Section 69B of the Companies Act, and in Statement of Accounting Standard 22, the pooling of interests method is adopted in respect of these acquisitions. Any excess or deficiency of the nominal value of the shares issued by the Company in exchange for the nominal values of the shares acquired is taken to the merger reserve. Where the acquisitions of subsidiaries are accounted for by the use of the purchase method of accounting, any excess or deficiency of the purchase consideration over the fair values (as assigned by the directors) of the underlying net assets of subsidiaries acquired is accounted for as goodwill or negative goodwill respectively. (ii) Transactions Eliminated on Consolidation All significant intra-group transactions, balances and unrealised gains are eliminated on consolidation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (iii) Disposals On disposal of a subsidiary, any attributable amount of purchased goodwill not previously amortised through the profit and loss account or which has previously been dealt with as a movement in Group reserves is included in the calculation of the profit or loss on disposal. (iv) Accounting Policies of Subsidiaries Where necessary, accounting policies for subsidiaries have been changed to be consistent with the policies adopted by the Group. 89

94 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 6.2 Property, Plant and Equipment (i) Owned Assets Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. (ii) Disposal Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the profit and loss account on the date of retirement or disposal. (iii) Depreciation No depreciation is provided on freehold land and building under construction. Depreciation is provided on a straight-line basis so as to write off items of property, plant and equipment over their estimated useful lives at the following annual rates: Freehold buildings 2% Nursing home equipment 10% Ambulance and medical equipment 20% Furniture and fittings 10% Office and other equipment 20% Renovations 20% Motor vehicles 20% Computers and accessories % During the financial year ended 31 March 2002, the Group changed its depreciation rate for office and other equipment from 10% to 20%. The impact of the change in depreciation rate on the profit and loss for that year is not significant. 6.3 Trade and Other Receivables Trade and other receivables are stated at cost less allowance for doubtful receivables. 6.4 Impairment The carrying amounts of the Group s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. All impairment losses are recognised in the profit and loss account. 90

95 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 6.4 Impairment (cont d) (i) Calculation of Recoverable Amount The recoverable amount is the greater of the asset s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. (ii) Reversal of Impairment Loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. All reversals of impairment are recognised in the profit and loss account. 6.5 Trade and Other Payables Trade and other payables are stated at cost. 6.6 Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of the previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets and liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. 91

96 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 6. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 6.7 Foreign Currencies Monetary assets and liabilities in foreign currencies are translated into Singapore dollars at rates of exchange approximate to those ruling at the balance sheet date. Transactions in foreign currencies are translated at rates ruling on transaction dates. Translation differences are included in the profit and loss account. 6.8 Dividends Dividends on ordinary shares are recognised as a liability in the period in which they are declared. 6.9 Revenue Recognition Revenue is recognised upon services rendered Finance Costs Interest expense and similar charges are expensed in the profit and loss account in the period in which they are incurred. 7. PROPERTY, PLANT AND EQUIPMENT Freehold Nursing Ambulance Furniture Office Computers land and home and medical and and other Motor and building equipment equipment fittings equipment Renovations vehicles accessories Total 2002 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Cost 9, ,949 Accumulated Depreciation Carrying amount 9, ,077 Cost The Group s freehold land and buildings are pledged as security for bank loans (refer to Note 14). The carrying amount of property, plant and equipment of the Group includes amounts totalling approximately $77,000 as at 31 March 2002 held under finance leases. 8. TRADE AND OTHER RECEIVABLES Note 2002 $ 000 Trade receivables Deposits, prepayments and other receivables

97 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 9. TRADE RECEIVABLES Note 2002 $ 000 Trade receivables 617 Less: Home fees billed in advance 38 Allowance for doubtful receivables DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES 2002 $ 000 Deposits 26 Prepayments 3 Other receivables 4 Staff advances HOLDING COMPANY The immediate and ultimate holding companies are Econ Medicare Centre Holdings Pte Ltd and TMI Holdings (1997) Pte Ltd respectively. Both companies are incorporated in the Republic of Singapore. The non-trade amount due to the immediate holding company is interest-free and unsecured CASH AND CASH EQUIVALENTS Note 2002 $ 000 Fixed deposits Cash at bank and in hand 1,200 1, TRADE AND OTHER PAYABLES Note 2002 $ 000 Trade payables and accrued operating expenses 196 Refundable deposits 543 Home fees collected in advance 10 Retention monies Amounts due to immediate holding company (non-trade) Other payables 63 1,064 93

98 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 14. INTEREST-BEARING BANK LOANS AND BORROWINGS This note provides information about the contractual terms of the Group s interest-bearing bank loans and borrowings. For more information about the Group s exposure to interest rate and currency risk, refer to Note 21. Terms and debt repayment schedule After 1 year Within but within After 2002 Note Total 1 year 5 years 5 years $ 000 $ 000 $ 000 $ 000 Secured bank loans: S$ floating rate at 5.00% 21 4, , Finance lease liabilities , , The secured bank loans were transferred by EMCH together with the freehold land and freehold nursing home to Econ Healthcare. These loans were then refinanced by Econ Healthcare. The bank loans (refer to Note 2.1 on proforma adjustments) are secured on the freehold land and building (refer to Note 7). Finance lease liabilities The Group had obligations under finance leases that are repayable as follows: Payments Interest Principal $ 000 $ 000 $ Repayable within 1 year Repayable after 1 year but within 5 years DEFERRED TAXATION Deferred tax assets and liabilities are attributable to the following: Assets Liabilities Net $ 000 $ 000 $ March 2002 Property, plant and equipment Trade and other receivables (8) (8) Liability for short-term accumulating compensated absences (9) (9) (17) SHARE CAPITAL The share capital represents 2 subscribers shares of $1 each, subscription at par of 1,079,990 ordinary shares of $1 each in the capital of Econ Healthcare by four individuals for working capital purposes and the issue of 4,305,368 ordinary shares of $1 each by Econ Healthcare in connection with the Restructuring. 94

99 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 17. REVENUE $ 000 $ 000 $ 000 Operation of medicare centre and nursing homes 5,608 6,170 7,394 Other ancillary services 1,096 1,291 1,455 6,704 7,461 8,849 The Group operates in only one significant domestic segment. All significant activities relate to nursing home, healthcare and rehabilitation services provided in the Republic of Singapore. 18. PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION Profit from ordinary activities before taxation includes the following: (a) $ 000 $ 000 $ 000 Other operating income Gain on sale of property, plant and equipment 4 Interest income Donation Others (b) Staff costs Wages and salaries 2,201 2,841 3,133 Contributions to defined contribution plans Liability for short-term accumulating compensated absences (27) 2,316 2,962 3,217 Number of employees as at 31 March (c) Other operating expenses Allowance made for doubtful trade receivables 6 39 Auditors remuneration Bad debts written off (mainly non-trade) 11 Management fee paid to immediate holding company Loss on sale of property, plant and equipment Pre-operating expenses 4 Software licence fee 5 Others

100 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 18. PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION (cont d) (d) Directors remuneration Remuneration of directors of the Company is recognised in the following line items in the profit and loss account: $ 000 $ 000 $ 000 Staff costs (e) Finance costs Interest paid and payable to: Banks Finance lease creditors TAXATION $ 000 $ 000 $ 000 Based on results for the year: Current taxation Deferred taxation 1 13 Under/(over) provision in respect of prior years: Current taxation 3 (10) Deferred taxation (4) (26) Reconciliation of effective tax rate % $ 000 % $ 000 % $ 000 Profit before taxation 1,862 1,740 2,416 Income tax using the corporation tax rate Non-deductible expenses Temporary differences not recognised (0.1) (1) Exempt income (1.6) (28) (0.4) (10) Others (0.8) (14) SIGNIFICANT RELATED PARTY TRANSACTIONS For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. 96

101 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 20. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont d) The Group s in-house designed beds were originally sub-contracted by a related corporation for manufacture in Taiwan. During the year ended 31 March 2001, the Group purchased beds from this related corporation amounting to approximately $300,000. The Group leases a property from another related corporation for one year terms. The rental amounted to approximately $271,000 for the year ended 31 March 2000 and $156,000 per annum for each of the years ended 31 March 2001 and FINANCIAL INSTRUMENTS (a) Financial risk management objectives and policies The risk management policies and guidelines which set out the Group s overall business strategies, its tolerance of risk and its general risk management philosophy are determined at the Group level. Such written policies are reviewed periodically by management to ensure that the Group s policy guidelines are adhered to. (b) Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. (c) Interest rate risk The Group s exposure to market risk for changes in interest rates relates primarily to the Group s secured bank loans. (d) Effective interest rates and repricing analysis In respect of interest-bearing financial liabilities, the following table indicates their effective interest rates at balance sheet date and the periods in which they reprice. After Effective 1 year Interest Within but within After Note Rate Total 1 year 5 years 5 years 2002 $ 000 $ 000 $ 000 $ 000 Financial Asset Fixed deposits % Financial Liabilities Secured bank loans: S$ floating rate loans % 4, , Total (4,894) (192) (4,285) (417) 97

102 ECON HEALTHCARE LIMITED AND ITS SUBSIDIARIES NOTES TO THE UNAUDITED PROFORMA CONSOLIDATED FINANCIAL STATEMENTS 21. FINANCIAL INSTRUMENTS (cont d) (e) Foreign currency risk Virtually all transactions entered into by the Group are denominated in Singapore dollars. The Group has no significant exposure to foreign currency risk. (f) Fair values The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable and willing parties in an arm s length transaction. The fair values of the Group s financial assets and liabilities approximate their carrying values. 22. SUBSIDIARIES Details of the subsidiaries held by the Group are as follows: Place of Effective Equity Incorporation held by the Name of Subsidiary Principal Activities and Business Group 2002 % Econ Nursing Home Services Provision of nursing Singapore 100 (1987) Pte Ltd home services Econ Ambulance Services Provision of Singapore 100 Pte Ltd ambulance services Sunnyville Nursing Home Provision of nursing Singapore 100 (1996) Pte Ltd home services Econ Medicare Centre Provision of healthcare Singapore 100 Pte Ltd and rehabilitation services Econ Careskill Training Dormant Singapore 100 Centre Pte Ltd 23. SUBSEQUENT EVENTS Subsequent to 31 March 2002, the Group made a capital commitment of approximately $1,920,000 for the construction of a new medicare centre. At an Extraordinary General Meeting held on 23 October 2002, the shareholders of Econ Healthcare approved, inter alia, the following: (a) the consolidation of three ordinary shares of $1.00 each into one ordinary share of $3.00 each; (b) the sub-division of each ordinary share of $3.00 in the authorised as well as the issued and paid-up share capital into 50 ordinary shares of $0.06 each; and (c) the issue of 20,000,000 New Shares pursuant to the Invitation. The New Shares, when issued and fully paid, will rank pari passu in all respects with the existing Shares. 98

103 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES AUDITORS REPORT 2 December 2002 The Board of Directors Econ Medicare Centre Holdings Pte Ltd 16 Bukit Timah Avenue Singapore Dear Sirs We report on the consolidated financial statements of Econ Medicare Centre Holdings Pte Ltd (the Company ) and its subsidiaries (collectively, the Group ), comprising the Group s consolidated balance sheets as at 31 March 2000, 2001 and 2002, its consolidated profit and loss accounts, and consolidated statements of changes in shareholders equity and cash flows for each of the financial years ended 31 March 2000, 2001 and These consolidated financial statements of the Group are the responsibility of the Company s directors. Our responsibility is to express an opinion on these financial statements based on our audit or other procedures carried out. We conducted our audit in accordance with Singapore Standards on Auditing issued by the Institute of Certified Public Accountants of Singapore. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit, the abovementioned consolidated financial statements of the Group present fairly, in all material respects, the consolidated financial position of the Group as at 31 March 2000, 2001 and 2002, and of its consolidated results, changes in shareholders equity and cash flows for the financial years ended 31 March 2000, 2001 and 2002, in accordance with Singapore Statements of Accounting Standard. This report has been prepared for inclusion in the Prospectus dated 2 December 2002 in relation to the proposed issue by the Company s subsidiary, Econ Healthcare Limited, of 28,000,000 Invitation Shares of S$0.06 each comprising 20,000,000 New Shares and 8,000,000 Vendor Shares. The Company had not prepared consolidated financial statements for statutory purposes for the financial years ended 31 March 2000, 2001 and 2002, as it is itself a wholly owned subsidiary of another company incorporated in Singapore. No audited financial statements of the Group have been prepared for any period subsequent to 31 March Yours faithfully KPMG Certified Public Accountants Singapore Tan Wah Yeow Partner-in-charge 99

104 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS AT 31 MARCH 2000, 2001 AND 2002 Note $ 000 $ 000 $ 000 Non-current assets Property, plant and equipment 3 18,226 20,504 20,201 Investment properties Other assets ,684 20,962 20,659 Current assets Trade and other receivables 6 2,999 3,304 2,465 Cash and cash equivalents ,104 3,427 2,632 Less: Current liabilities Bank overdrafts (secured) 12 2,792 4,567 3,779 Trade and other payables 13 1,807 1, Current portion of interest-bearing bank loans and borrowings 14 1,710 1,144 1,067 Liability for short-term accumulating compensated absences Provision for taxation ,862 8,081 6,625 Net current liabilities (3,758) (4,654) (3,993) 14,926 16,308 16,666 Less: Non-current liabilities Interest-bearing bank loans and borrowings 14 9,194 9,878 8,824 Deferred taxation ,234 9,913 8,847 Net Assets 5,692 6,395 7,819 Capital and Reserves Share capital Capital reserve 1,860 1,860 1,860 Accumulated profits 3,304 4,007 5,431 5,692 6,395 7,819 The accompanying notes form an integral part of these financial statements. 100

105 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES CONSOLIDATED PROFIT AND LOSS ACCOUNTS FOR THE YEARS ENDED 31 MARCH 2000, 2001 AND 2002 Note $ 000 $ 000 $ 000 Revenue 18 6,722 7,479 8,874 Other operating income Supplies and consumables (786) (902) (857) Staff costs 19 (2,365) (3,019) (3,271) Depreciation of property, plant and equipment 3 (263) (314) (465) Operating lease expenses (329) (233) (223) Other operating expenses 19 (913) (1,210) (758) Profit from operations 2,073 1,806 3,307 Finance costs 19 (718) (821) (759) Profit from ordinary activities before taxation 19 1, ,548 Taxation 20 (434) (282) (671) Net profit for the year transferred to accumulated profits ,877 The accompanying notes form an integral part of these financial statements. 101

106 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED 31 MARCH 2000, 2001 AND 2002 Share Capital Accumulated capital reserve profits Total $ 000 $ 000 $ 000 $ 000 At 1 April ,860 2,383 4,771 Net profit for the year At 31 March ,860 3,304 5,692 Net profit for the year At 31 March ,860 4,007 6,395 Net profit for the year 1,877 1,877 Interim dividend paid of % less tax at 24.5% (453) (453) At 31 March ,860 5,431 7,819 The accompanying notes form an integral part of these financial statements. 102

107 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 MARCH 2000, 2001 AND 2002 Note $ 000 $ 000 $ 000 Operating activities Profit from ordinary activities before taxation 1, ,548 Adjustments for: Interest expense Interest income (1) (1) (1) Depreciation of property, plant and equipment Loss/(Gain) on sale of property, plant and equipment 6 (4) Amortisation of goodwill 13 Operating profit before working capital changes 2,354 2,119 3,767 Changes in working capital: Trade and other receivables (201) (305) 839 Trade and other payables (1,124) Employee benefits (27) Cash generated from operations 2,632 2,018 3,455 Income taxes paid (287) (480) (124) Cash flows from operating activities 2,345 1,538 3,331 Investing activities Interest received 1 2 Purchase of property, plant and equipment (4,965) (2,510) (180) Proceeds from sale of property, plant and equipment Cash flows from investing activities (4,943) (2,510) (156) Financing activities Interest paid (718) (821) (759) Dividends paid (453) Payment of finance lease liabilities (100) (74) (44) Proceeds from bank loans 3,962 1,168 Repayment of bank loans (945) (1,058) (1,087) Cash flows from financing activities 2,199 (785) (2,343) Net (decrease)/increase in cash and cash equivalents (399) (1,757) 832 Cash and cash equivalents at beginning of the year (2,288) (2,687) (4,444) Cash and cash equivalents at end of the year 12 (2,687) (4,444) (3,612) The Group acquired property, plant and equipment with an aggregate cost of approximately $5,047,000, $2,592,000 and $180,000 of which approximately $82,000, $82,000 and $Nil were acquired by means of finance leases for each of the financial years ended 31 March 2000, 2001 and 2002 respectively. The accompanying notes form an integral part of these financial statements. 103

108 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND 2002 These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Directors on 2 December DOMICILE AND ACTIVITIES Econ Medicare Centre Holdings Pte Ltd (the Company ) is incorporated in the Republic of Singapore with its registered office at 16 Bukit Timah Avenue, Singapore The principal activities of the Company are those relating to investment holding, provision of management services and letting of properties. The principal activities of the subsidiaries are set out in Note 24 to the financial statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Statement of Compliance The financial statements have been prepared in accordance with Singapore Statements of Accounting Standard ( SAS ) (including Interpretations of Statements of Accounting Standard) issued by the Institute of Certified Public Accountants of Singapore and the applicable requirements of the Singapore Companies Act, Chapter 50. (b) Basis of Preparation The financial statements, which are expressed in Singapore dollars, are prepared on the historical cost basis except that certain property, plant and equipment are stated at valuation. (c) Basis of Consolidation (i) Subsidiaries Subsidiaries are those companies controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. (ii) Transactions Eliminated on Consolidation All significant intra-group transactions, balances and unrealised gains are eliminated on consolidation. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (iii) Disposals On disposal of a subsidiary, any attributable amount of purchased goodwill not previously amortised through the profit and loss account or which has previously been dealt with as a movement in Group reserves is included in the calculation of the profit or loss on disposal. 104

109 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) (c) Basis of Consolidation (cont d) (iv) Accounting Policies of Subsidiaries Where necessary, accounting policies for subsidiaries have been changed to be consistent with the policies adopted by the Group. (d) Property, Plant and Equipment (i) Owned Assets Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses except for those land and buildings which are stated at their revalued amounts. The revalued amount is the fair value determined on the basis of existing use at the date of revaluation less any subsequent accumulated depreciation. Revaluations are performed by independent professional valuers with sufficient regularity to ensure that the carrying amount of these assets does not differ materially from that which would be determined using fair values at the balance sheet date. (ii) Revaluation Surplus Any increase on revaluation is credited to revaluation surplus unless it offsets a previous decrease in value recognised in the profit and loss account. A decrease in value is recognised in the profit and loss account where it exceeds the increase previously recognised in the revaluation surplus. (iii) Disposal Gains or losses arising from the retirement or disposal of property, plant and equipment are determined as the difference between the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the profit and loss account on the date of retirement or disposal. (iv) Depreciation No depreciation is provided on freehold land and building under construction. Depreciation is provided on a straight-line basis so as to write off items of property, plant and equipment over their estimated useful lives at the following annual rates: Freehold buildings 2% Nursing home equipment 10% Ambulance and medical equipment 20% Furniture and fittings 10% Office and other equipment 20% Renovations 20% Motor vehicles 20% Computers and accessories % During the financial year ended 31 March 2002, the Group changed its depreciation rate for office and other equipment from 10% to 20%. The impact of the change in depreciation rate on the profit and loss for that year is not significant. 105

110 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) (e) Investment Properties Investment properties are stated at cost less impairment losses. (f) Trade and Other Receivables Trade and other receivables are stated at cost less allowance for doubtful receivables. (g) Impairment The carrying amounts of the Group s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. All impairment losses are recognised in the profit and loss account. (i) Calculation of Recoverable Amount The recoverable amount is the greater of the asset s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. (ii) Reversal of Impairment Loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. All reversals of impairment are recognised in the profit and loss account. (h) Trade and Other Payables Trade and other payables are stated at cost. (i) Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of the previous years. 106

111 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) (i) Income Tax (cont d) Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes, the initial recognition of assets and liabilities that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend. (j) Foreign Currencies Monetary assets and liabilities in foreign currencies are translated into Singapore dollars at rates of exchange approximate to those ruling at the balance sheet date. Transactions in foreign currencies are translated at rates ruling on transaction dates. Translation differences are included in the profit and loss account. (k) Dividends Dividends on ordinary shares are recognised as a liability in the period in which they are declared. (l) Revenue Recognition Revenue is recognised upon services rendered. (m) Finance Costs Interest expense and similar charges are expensed in the profit and loss account in the period in which they are incurred. 107

112 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND PROPERTY, PLANT AND EQUIPMENT Valuation Cost Freehold Freehold Freehold building Nursing Ambulance Furniture Office Computers land and land and under home and medical and and other Motor and buildings buildings construction equipment equipment fittings equipment Renovations vehicles accessories Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Cost/Valuation At 1 April , ,948 Additions 2,890 2, ,047 Disposals/Write-off (20) (17) (37) At 31 March ,780 2,890 2, ,958 Additions 20 1, ,592 Transfer 4,192 (4,192) At 31 March ,800 7, ,550 Additions Disposals/Write-off (19) (1) (94) (114) At 31 March ,800 7, ,616 Depreciation At 1 April Depreciation charge for the year Disposals/Write-off (10) (10) At 31 March Depreciation charge for the year At 31 March ,046 Depreciation charge for the year Disposals/Write-off (2) (94) (96) At 31 March ,415 Carrying amount 31 March ,742 2,832 2, , March ,724 6, , March ,686 6, ,

113 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND PROPERTY, PLANT AND EQUIPMENT (cont d) The Group s revalued freehold properties are stated at valuation which were arrived at by a firm of professional valuers, Messrs Knight Frank Cheong Hock Chye & Ballieu based on the open market value of the respective properties as at 31 March The surplus arising from the revaluation amounting to $1,860,411 had been included in capital reserve. The carrying amounts of the revalued freehold land and buildings of the Group would have been approximately $10,352,000, $10,301,000 and $10,250,000 as at 31 March 2000, 2001 and 2002 respectively had these freehold land and buildings been carried at cost less accumulated depreciation. The Group s freehold land and buildings are pledged as security for bank overdrafts and bank loans (refer to Notes 12 and 14). The carrying amount of property, plant and equipment of the Group includes amounts totalling approximately $95,000, $128,000 and $77,000 as at 31 March 2000, 2001 and 2002 respectively held under finance leases. 4. INVESTMENT PROPERTIES $ 000 $ 000 $ 000 Leasehold apartments, at cost The Group s investment properties are pledged as security for a bank loan (refer to Note 14). 5. OTHER ASSETS $ 000 $ 000 $ 000 Transferable club membership, at cost TRADE AND OTHER RECEIVABLES Note $ 000 $ 000 $ 000 Trade receivables Deposits, prepayments and other receivables Amounts due from: Immediate holding company (non-trade) 9 2,186 2,223 1,831 Related corporations trade 49 non-trade Director ,999 3,304 2,

114 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND TRADE RECEIVABLES Note $ 000 $ 000 $ 000 Trade receivables Less: Home fees billed in advance Allowance for doubtful receivables: At 1 April Allowance made during the year At 31 March DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES $ 000 $ 000 $ 000 Deposits Prepayments Other receivables Staff advances HOLDING COMPANY The immediate and ultimate holding company is TMI Holdings (1997) Pte Ltd, a company incorporated in the Republic of Singapore. The non-trade amounts due from the holding company are interest-free and unsecured. 10. AMOUNTS DUE FROM AND TO RELATED CORPORATIONS The non-trade amounts due from and to related corporations are interest-free and unsecured. 11. AMOUNTS DUE FROM AND TO DIRECTORS The amounts due from and to directors are interest-free and unsecured. 12. CASH AND CASH EQUIVALENTS Note $ 000 $ 000 $ 000 Fixed deposits Cash at bank and in hand Bank overdrafts (secured) 23 (2,792) (4,567) (3,779) (2,687) (4,444) (3,612) The bank overdrafts are secured by legal mortgages over the Group s freehold land and freehold buildings and personal guarantees of the directors (refer to Note 14). 110

115 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND TRADE AND OTHER PAYABLES Note $ 000 $ 000 $ 000 Trade payables and accrued operating expenses Refundable deposits Home fees collected in advance Retention monies Amounts due to: Immediate holding company (trade) 2 Related corporations trade 71 non-trade Directors Other payables ,807 1, INTEREST-BEARING BANK LOANS AND BORROWINGS This note provides information about the contractual terms of the Group s interest-bearing bank loans and borrowings. For more information about the Group s exposure to interest rate and currency risk, refer to Note $ 000 $ 000 $ 000 Current liabilities Current portion of: Secured bank loans 1,660 1,100 1,035 Finance lease liabilities ,710 1,144 1,067 Non-current liabilities Secured bank loans 9,172 9,842 8,820 Finance lease liabilities ,194 9,878 8,

116 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND INTEREST-BEARING BANK LOANS AND BORROWINGS (cont d) Terms and debt repayment schedule After 1 year Within but within After 2002 Note Total 1 year 5 years 5 years $ 000 $ 000 $ 000 $ 000 Secured bank loans: S$ floating rate at 4.50% to 5.25% 23 9,823 1,003 5,246 3, : 3.80% to 7.75%; 2000: 3.75% to 7.75% US$ floating rate at 3.81% to 6.25% : 7.56% to 8.94%; 2000: 7.03% to 7.56% Finance lease liabilities ,891 1,067 5,250 3,574 The secured bank loans and bank overdrafts (refer to Note 12) are secured on the personal guarantees of the directors and on the following assets (refer to Notes 3 and 4): $ 000 $ 000 $ 000 Freehold land and buildings valuation 12,742 12,724 12,686 cost 5,073 6,931 6,857 Investment properties ,110 19,950 19,838 Finance lease liabilities The Group had obligations under finance leases that are repayable as follows: Payments Interest Principal $ 000 $ 000 $ Repayable within 1 year Repayable after 1 year but within 5 years Repayable within 1 year Repayable after 1 year but within 5 years Repayable within 1 year Repayable after 1 year but within 5 years

117 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND PROVISION FOR TAXATION Note $ 000 $ 000 $ 000 At 1 April Payments made during the year (287) (480) (124) Provision made during the year At 31 March DEFERRED TAXATION Deferred tax assets and liabilities are attributable to the following: 31 March 2000 Assets Liabilities Net $ 000 $ 000 $ 000 Property, plant and equipment Trade and other receivables (4) (4) (4) March 2001 Property, plant and equipment Trade and other receivables (4) (4) (4) March 2002 Property, plant and equipment Trade and other receivables (8) (8) Liability for short-term accumulating compensated absences (9) (9) (17) SHARE CAPITAL No. of No. of No. of Shares ( 000) $ 000 Shares ( 000) $ 000 Shares ( 000) $ 000 Authorised: Ordinary shares of $1 each 1,000 1,000 1,000 1,000 1,000 1,000 Issued and fully paid: Ordinary shares of $1 each

118 18. REVENUE ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND $ 000 $ 000 $ 000 Home fees 4,769 5,243 6,308 Other ancillary services 1,935 2,218 2,542 Rental income Administration and consultancy fees 7 4 6,722 7,479 8,874 The Group operates in only one significant domestic segment. All significant activities relate to nursing home, healthcare and rehabilitation services provided in the Republic of Singapore. 19. PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION Profit from ordinary activities before taxation includes the following: (a) $ 000 $ 000 $ 000 Other operating income Gain on sale of property, plant and equipment 4 Interest income Donation Others (b) Staff costs Wages and salaries 2,235 2,876 3,143 Contributions to defined contribution plans Liability for short-term accumulating compensated absences (27) 2,365 3,019 3,271 Number of employees as at 31 March (c) Other operating expenses Allowance made for doubtful trade receivables Auditors remuneration Bad debts written off (mainly non-trade) 48 Management fee paid to immediate holding company 264 Loss on sale of property, plant and equipment 6 Pre-operating expenses 4 Software licence fee 5 Others ,

119 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION (cont d) (d) Directors remuneration Remuneration of directors of the Company is recognised in the following line items in the profit and loss account: $ 000 $ 000 $ 000 Staff costs (e) Finance costs Interest paid and payable to: Banks terms loans (secured) bank overdrafts (secured) Finance lease creditors TAXATION $ 000 $ 000 $ 000 Based on results for the year: Current taxation Deferred taxation 4 13 Under/(over) provision in respect of prior years: Current taxation 3 (10) Deferred taxation 6 (4) (26) Reconciliation of effective tax rate % $ 000 % $ 000 % $ 000 Profit before taxation 1, ,548 Income tax using the corporation tax rate Non-deductible expenses Temporary differences not recognised (0.1) (3) Exempt income (4.1) (40) (0.8) (19) Under/(over) provision in respect of prior year (1.4) (36)

120 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND CAPITAL COMMITMENTS $ 000 $ 000 $ 000 Contracted but not provided for 2, SIGNIFICANT RELATED PARTY TRANSACTIONS For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Administrative and management fees of $162,000 and $264,000 were paid to the immediate holding company for the years ended 31 March 2000 and 2001 respectively. The Group s in-house designed beds were originally sub-contracted by a related corporation for manufacture in Taiwan. During the year ended 31 March 2001, the Group purchased beds from this related corporation amounting to approximately $300,000. The Group leases a property from another related corporation for one year terms. The rental amounted to approximately $271,000 for the year ended 31 March 2000 and $156,000 per annum for each of the years ended 31 March 2001 and FINANCIAL INSTRUMENTS (a) Financial risk management objectives and policies The risk management policies and guidelines which set out the Group s overall business strategies, its tolerance of risk and its general risk management philosophy are determined at the Group level. Such written policies are reviewed periodically by management to ensure that the Group s policy guidelines are adhered to. (b) Credit risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet. (c) Interest rate risk The Group s exposure to market risk for changes in interest rates relates primarily to the Group s secured bank loans and bank overdrafts. 116

121 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND FINANCIAL INSTRUMENTS (cont d) (d) Effective interest rates and repricing analysis In respect of interest-bearing financial liabilities, the following table indicates their effective interest rates at balance sheet date and the periods in which they reprice. After Effective 1 year Interest Within but within After Note Rate Total 1 year 5 years 5 years 2002 $ 000 $ 000 $ 000 $ 000 Financial Asset Fixed deposits % Financial Liabilities Secured bank loans: S$ floating rate loans % to 5.25% 9,823 1,003 5,246 3,574 US$ floating rate loan % to 6.25% Bank overdrafts (secured) % to 6.25% 3,779 3,779 13,634 4,814 5,246 3,574 Total (13,615) (4,795) (5,246) (3,574) (e) Foreign currency risk Virtually all transactions entered into by the Group are denominated in Singapore dollars. The Group has no significant exposure to foreign currency risk. (f) Fair values The fair value of a financial instrument is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable and willing parties in an arm s length transaction. The fair values of the Group s financial assets and liabilities approximate their carrying values. 117

122 24. SUBSIDIARIES ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND 2002 Details of the subsidiaries held by the Group are as follows: Place of Effective Equity Incorporation held by the Name of Subsidiary Principal Activities and Business Group % % % Econ Nursing Home Provision of nursing Singapore Services (1987) home services Pte Ltd Econ Ambulance Provision of Singapore Services Pte Ltd ambulance services Sunnyville Nursing Provision of nursing Singapore Home (1996) home services Pte Ltd Econ Medicare Provision of healthcare Singapore Centre Pte Ltd and rehabilitation services Econ Careskill Dormant Singapore Training Centre Pte Ltd 25. SUBSEQUENT EVENTS Subsequent to the financial year ended 31 March 2002: (a) The Company entered into an Agreement to dispose its entire interest in the following wholly owned subsidiaries: Econ Nursing Home Services (1987) Pte Ltd ( ENH ) Econ Ambulance Services Pte Ltd ( Econ Ambulance ) Sunnyville Nursing Home (1996) Pte Ltd ( Sunnyville ) Econ Medicare Centre Pte Ltd ( Econ Medicare ) Econ Careskill Training Centre Pte Ltd ( Econ Careskill ) to Econ Healthcare Pte. Ltd. ( EHPL ) with effect from 1 April 2002, for an aggregate consideration of $1,645,368. The purchase consideration for ENH, Econ Ambulance, Sunnyville and Econ Medicare was based on the value of the net tangible assets of these subsidiaries as at 31 March 2002 of $1,645,366 and was satisfied by the allotment and issue of 1,645,366 ordinary shares of $1 each at par in the share capital of EHPL to the Company. Econ Careskill, which had net tangible liabilities of $5,850, was disposed for a consideration of $2, satisfied by the allotment and issue of 2 ordinary shares of $1 each at par in the share capital of EHPL to the Company. EHPL was converted into a public limited company and changed its name to Econ Healthcare Limited ( EHL ) on 5 November

123 ECON MEDICARE CENTRE HOLDINGS PTE LTD AND ITS SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 31 MARCH 2000, 2001 AND SUBSEQUENT EVENTS (cont d) (b) The Company entered into a Sale and Purchase Agreement to dispose its freehold properties at 53 Choa Chu Kang Road and 58 Braddell Road to EHL with effect from 1 April 2002 at a purchase price of $9,500,000. In consideration of the Company agreeing to sell the properties to EHL, ENH, Sunnyville and Econ Ambulance assigned the debt due and owing to them by the Company and the full advantage of it to EHL. The purchase price of the properties was satisfied by the issue of 2,660,000 ordinary shares of $1 each as fully paid at par in the capital of EHL to the Company, the off-set of $1,927,000 owed by the Company to EHL and cash amounting to $4,913, CONSOLIDATED FINANCIAL STATEMENTS The Company had not prepared consolidated financial statements for statutory purposes for the financial years ended 31 March 2000, 2001 and 2002, as it is itself a wholly owned subsidiary of another company incorporated in Singapore. The financial statements of the Group and the Company prior to the financial year ended 31 March 2000 were audited by another firm of Certified Public Accountants. 119

124 GENERAL AND STATUTORY INFORMATION 1. SHARE CAPITAL (a) As at the date of this Prospectus, there is only one class of shares in the capital of our Company. There are no founder, management or deferred shares. Our existing Shares do not carry voting rights which are different from the New Shares. The rights of and privileges attached to the Shares are stated in the Articles of Association of our Company. (b) Our Company was incorporated on 27 March It presently has an authorised share capital of S$30,000,000 divided into 500,000,000 ordinary shares of S$0.06 each. (c) Upon completion of the Invitation, the issued and paid-up share capital of our Company will be increased to S$6,585,360 divided into 109,756,000 Shares. (d) Save as disclosed below, there were no changes in the issued and paid-up share capital of our Company or our subsidiaries within the three years preceding the date of this Prospectus: Number of Issue Purpose Resultant Issued Shares Price of Issue/ Share Capital Company Date of Issue Issued (S$) Consideration (S$) Econ 27 March ordinary 1.00 Incorporation 2 Healthcare shares of S$1.00 each 23 October ,079, Working capital 1,079,992 ordinary shares of S$1.00 each 23 October ,305, Pursuant to 5,385,360 ordinary shares Restructuring of S$1.00 each Exercise Econ 9 September ordinary 1.00 Incorporation 2 Careskill shares of S$1.00 each (e) (f) Save as disclosed in paragraph (d) above, no shares in or debentures of our Company or any of our subsidiaries have been issued, or is proposed to be issued, as fully or partly paid-up for cash, or for a consideration other than cash, within the three years preceding the date of this Prospectus. Save for our Econ Healthcare Employees Share Option Scheme, no person has been granted or is entitled to be granted an option to subscribe for shares in, or debentures of, our Company or any of our subsidiaries. 2. INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS (a) The names, addresses, ages, principal occupations and business and working experience of all of our Directors and Executive Officers are set out on pages 59 to 63 of this Prospectus. (b) The list of present and past directorships of each Director for the last five years is set out on pages 60 and 61 of this Prospectus. (c) (d) None of our Executive Officers is a director of any Company as at the date of this Prospectus and over the five years preceding the date of this Prospectus. Save as disclosed in this Prospectus, none of our Directors and Executive Officers is related to one another or to any substantial shareholder of our Company. 120

125 (e) The interests of our Directors and substantial shareholders in the Shares as at the date of this Prospectus and as recorded in the Register of Shareholdings maintained under the provisions of the Act are as follows: Shares in which the Shares registered in the Directors and substantial names of Directors and shareholders are deemed substantial shareholders to have an interest No. of shares % No. of shares % Directors Ong Chu Poh (1), (2) 10,789, ,456, Koh Hin Ling (1), (2) 2,700, ,545, Dr Vasoo Sushilan Tay Joo Soon Wong Kook Fei Substantial shareholders (5% or more) other than Directors EMCH (1),(2) 71,756, Notes: (1) Mr Ong Chu Poh and Mdm Koh Hin Ling are husband and wife. They are therefore deemed interested in each other s shareholdings in the Company. (2) EMCH is an investment holding company which is a wholly-owned subsidiary of TMI Holdings. Mr Ong Chu Poh and Mdm Koh Hin Ling hold 95.6% and 4.4% of the shareholdings in TMI Holdings respectively. They are deemed interested in the Shares of our Company held by EMCH by virtue of their shareholdings in TMI Holdings. (f) (g) There is no shareholding qualification for directors in the Articles of Association of our Company. None of our Directors or Executive Officers is or was involved in any of the following events: (i) a petition under any bankruptcy laws filed in any jurisdiction against him or any partnership in which he was a partner in the last 10 years; (ii) a petition under any law filed in any jurisdiction against a corporation of which he was a director or key executive for the winding up of that corporation on the ground of insolvency in the last 10 years; (iii) unsatisfied judgements outstanding against him; (iv) a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty punishable with imprisonment for three months or more, or has been the subject of any criminal proceedings (including any pending criminal proceedings which he is aware of) for such purpose; (v) a conviction of any offence, in Singapore or elsewhere, involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or been the subject of any criminal proceedings (including any pending criminal proceedings which he is aware of) for such breach; (vi) the subject of judgement in any civil proceeding in Singapore or elsewhere in the last 10 years involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or a finding of fraud, misrepresentation or dishonesty or been the subject of any civil proceedings (including any pending civil proceedings which he is aware of) involving an allegation of fraud, misrepresentation or dishonesty on his part; 121

126 (vii) a conviction in Singapore or elsewhere of any offence in connection with the formation or management of any corporation; (viii) disqualification from acting as a director of any corporation, or from taking part directly or indirectly in the management of any corporation; (ix) the subject of any order, judgement or ruling of any court, tribunal or governmental body, permanently or temporarily enjoining him from engaging in any type of business practice or activity; and (x) been, to his knowledge, concerned with the management or conduct, in Singapore or elsewhere, of the affairs of: (1) any corporation which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere; or (2) any corporation or partnership which has been investigated for a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere; in connection with any matter occurring or arising during the period when he was so concerned with the corporation or partnership. (h) Save as disclosed on pages 64 and 65 of this Prospectus, there are no existing or proposed service contracts between the Directors and our Company or any of our subsidiaries. (i) The aggregate emoluments (including CPF thereon) paid or distributed by our Group to the Directors for services rendered in all capacities to our Company and our subsidiaries for FY2001 and FY2002 amounted to approximately S$199,000 and S$218,000 respectively. For FY2002, had the Service Agreements been in place, the aggregate fees and remuneration payable to our Directors under the arrangements with our Company in force as at the date of this Prospectus are estimated to be approximately S$453,000 (including profit sharing and CPF thereon). (j) No option to subscribe for securities of our Company or any of our subsidiaries has been granted to, or was exercised by, any Director or Executive Officer within the two years preceding the date of this Prospectus. (k) Save as disclosed on pages 70 to 74 of this Prospectus, none of our Directors or substantial shareholders is interested, directly or indirectly, in the promotion of, or in any assets acquired or disposed of by, or leased to, our Company or any of our subsidiaries within the two years preceding the date of this Prospectus, or in any proposal for such acquisition or disposal or lease as aforesaid. (l) None of our Directors, Executive Officers or substantial shareholders has any interest, direct or indirect, in any company carrying on the same trade as our Company or any of our subsidiaries taken as a whole. (m) Save as disclosed on pages 70 to 74 of this Prospectus, none of our Directors is materially interested in any existing contract or arrangement subsisting at the date of this Prospectus which is significant in relation to the business of our Company and our subsidiaries. (n) No sum or benefit has been paid or has been agreed to be paid to any Director or to any firm in which a Director is a partner or corporation in which such Director holds shares or debentures in cash or in shares or otherwise by any person to induce him to become, or to qualify him as, a Director or otherwise for services rendered by him or such firm or corporation in connection with the promotion or formation of our Company. 122

127 3. MEMORANDUM AND ARTICLES OF ASSOCIATION Memorandum of Association Objects and Purposes The Memorandum of Association of our Company states, among others, that the liability of members of our Company is limited, and that the objects for which our Company is established include those of a holding and investment company. The objects of our Company are set out in full in Clause 3 of the Memorandum of Association which is available for inspection at our registered office as stated in the section titled Documents Available for Inspection. The complete listing of our objects and purposes can be found at pages 1 to 3 of our Company s Memorandum of Association. Articles of Association The provisions in the Articles of Association with respect to: (a) a director s power to vote on a proposal, arrangement or contract in which the director is materially interested; (b) the directors power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body; (c) borrowing powers exercisable by the directors and how such borrowing powers can be varied; (d) retirement or non-retirement of directors under an age limit requirement; (e) number of shares, if any, required for director s qualification; and (f) directors remuneration, are as follows: Article 75 Subject as hereinafter provided, our Directors, all of whom shall be natural persons, shall not be less than 2 nor more than 9 in number. Our Company may by Ordinary Resolution from time to time vary the maximum number of Directors. Article 76 A Director shall not be required to hold any shares of our Company by way of qualification. A Director who is not a member of our Company shall nevertheless be entitled to receive notice of and to attend and speak at General Meetings. Article 77 The ordinary remuneration of our Directors, which shall from time to time be determined by an Ordinary Resolution of our Company, shall not be increased except pursuant to an Ordinary Resolution passed at a General Meeting where notice of the proposed increase shall have been given in the notice convening the General Meeting and shall (unless such resolution otherwise provides) be divisible among our Directors as they may agree, or failing agreement, equally, except that any Director who shall hold office for part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for a proportion of remuneration related to the period during which he has held office. The ordinary remuneration of an executive Director may not include a commission on or a percentage of turnover and the ordinary remuneration of a non-executive Director shall be a fixed sum, and not by a commission on or a percentage of profits or turnover. 123

128 Article 78 Any Director who holds any executive office, or who serves on any committee of our Directors, or who otherwise performs services which in the opinion of our Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or otherwise as our Directors may determine, other than by a commission on or percentage of commission or turnover, Provided that such extra remuneration (in case of an executive Director) shall not by way of commission on or a percentage of turnover and (in the case of a non-executive Director) shall be by a fixed sum, and not by a commission on or a percentage of profits or turnover. Article 79 Our Directors may repay to any Director all such reasonable expenses as he may incur in attending and returning from meetings of our Directors or of any committee of our Directors or General Meetings or otherwise in or about the business of our Company. Article 80 Our Directors shall have power to pay and agree to pay pensions or other retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director for the time being holding any executive office and for the purpose of providing any such pensions or other benefits to contribute to any scheme or fund or to pay premiums. Article 81 A Director may be party to or be in any way interested in any contract or arrangement or transaction to which our Company is a party or in which our Company is in any way interested and he may hold and be remunerated in respect of any office or place of profit (other than the office of Auditor of our Company or any subsidiary thereof) under our Company or any other company in which our Company is in any way interested and he (or any firm of which he is a member) may act in a professional capacity for our Company or any such other company and be remunerated therefor and in any such case as aforesaid (save as otherwise agreed) he may retain for his own absolute use and benefit all profits and advantages accruing to him thereunder or in consequence thereof. Article 86 The remuneration of a Managing Director shall from time to time be fixed by our Directors and may subject to these presents be by way of salary or commission or participation in profits or by any or all these modes but he shall not under any circumstances be remunerated by a commission on or a percentage of turnover. Article 88 Our Company may by Ordinary Resolution appoint any person to be a Director either as an additional Director or to fill a casual vacancy. Without prejudice thereto our Directors shall also have power at any time so to do, but so that the total number of Directors shall not thereby exceed the maximum number fixed by or in accordance with these presents. Any person so appointed by our Directors shall hold office only until the next Annual General Meeting and shall then be eligible for re-election, but shall not be taken into account in determining the number of Directors who are to retire by rotation at such meeting. Article 89 At each Annual General Meeting, one-third of our Directors for the time being (or, if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation, Provided that no Director holding office as Managing Director shall be subject to retirement by rotation or be taken into account in determining the number of Directors to retire. For the avoidance of doubt, each Director (other than a Director holding office as Managing Director) shall retire at least once every three (3) years. 124

129 Article 90 Our Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to offer himself for re-election. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last re-elected Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by ballot. A retiring Director shall be eligible for re-election. Article 91 Our Company at the meeting at which a Director retires under any provision of these presents may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director or some other person eligible for appointment. In default, the retiring Director shall be deemed to have been re-elected except in any of the following cases: (a) where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost; or (b) where such Director has given notice in writing to our Company that he is unwilling to be re-elected; or (c) where the default is due to the moving of a resolution in contravention of the next following Article; or (d) where such Director has attained any retiring age applicable to him as Director. The retirement shall not have effect until the conclusion of the meeting except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break. Article 92 A resolution for the appointment of 2 or more persons as Directors by a single resolution shall not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it, and any resolution moved in contravention of this provision shall be void. Article 93 No person other than a Director retiring at the meeting shall, unless recommended by our Directors for election, be eligible for appointment as a Director at any General Meeting unless not less than eleven (11) clear days and not more than forty-two (42) days (inclusive of the date on which the notice is given) before the date appointed for the meeting there shall have been lodged at the Office notice in writing signed by some member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected, Provided that in the case of a person recommended by our Directors for election, not less than nine (9) clear days notice shall be necessary and notice of each and every such person shall be served on the members at least seven (7) days prior to the meeting at which the election is to take place. Article 94 The office of a Director shall be vacated in any of the following events, namely: (a) if he shall become prohibited or disqualified by the Statutes or any other law from acting as a Director; or 125

130 (b) (c) (d) (e) (f) if (not being a Director holding any executive office for a fixed term) he shall resign by writing under his hand left at the Office or if he shall in writing offer to resign and our Directors shall resolve to accept such offer; or if he shall become bankrupt or have a receiving order made against him or shall make arrangement or composition with his creditors generally; or if he becomes of unsound mind, or if in Singapore or elsewhere an order shall be made by any court claiming jurisdiction in that behalf on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or for the appointment of a receiver or other person (by whatever name called) to exercise powers with respect to his property or affairs; or is absent, for more than six (6) months and without leave of our Directors, from meetings of our Directors held during that period; or if he is removed by our Company in General Meeting pursuant to these presents. Article 95 Our Company may in accordance with and subject to the provisions of the Statutes, by Ordinary Resolution of which special notice has been given, remove any Director from office (notwithstanding any provision of these presents or of any agreement between our Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and appoint another person in place of a Director so removed from office, and any person so appointed shall be treated for the purpose of determining the time at which he or any other Director is to retire by rotation as if he had become a Director on the day on which our Director in whose place he is appointed was last appointed a Director. Article 96 (A) Any Director may at any time by writing under his hand and deposited at the Office, or delivered at a meeting of our Directors, appoint any person (other than another Director or a person who has already been appointed alternate for another Director) to be his alternate Director and may in like manner at any time terminate such appointment. Such appointment, unless previously approved by a majority of our Directors, shall have effect only upon and subject to being so approved. (B) The appointment of an alternate Director shall determine on the happening of any event which if he were a Director would cause him to vacate such office or if our Director concerned (below called his principal ) ceases to be a Director. (C) An alternate Director shall (except when absent from Singapore) be entitled to receive notices of meetings of our Directors and shall be entitled to attend and vote as a Director at any such meeting at which his principal is not personally present and generally at such meeting to perform all functions of his principal as a Director, and for the purposes of the proceedings at such meeting the provisions of these presents shall apply as if he (instead of his principal) were a Director. If his principal is for the time being absent from Singapore or temporarily unable to act through ill health or disability, his signature to any resolution in writing of our Directors shall be as effective as the signature of his principal. To such extent as our Directors may from time to time determine in relation to any committees of our Directors, the foregoing provisions of this paragraph shall also apply mutatis mutandis to any meeting of any such committee of which his principal is a member. An alternate Director shall not (save as aforesaid) have any power to act as a Director nor shall he be deemed to be a Director for any other purposes of these presents. (D) An alternate Director shall be entitled to contract and be interested in and benefit from contract s or arrangements or transactions and to be repaid expenses and to be indemnified to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to receive from our Company in respect of his appointment as alternate Director any remuneration except only such part (if any) of the remuneration otherwise payable to his principal as such principal may by notice in writing to our Company from time to time direct. 126

131 Article 100 A Director shall not vote in respect of any contract or arrangement or any other proposal whatsoever in which he has any interest, directly or indirectly. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting. Article 108 Subject as hereinafter provided and to the provisions of the Statutes, our Directors may exercise all the powers of our Company to borrow money, to mortgage or charge its undertaking, property and uncalled capital and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of our Company or of any third party. Provisions relating to rights, preferences and restrictions attaching to Shares The provisions in the Articles of Association relating to the rights, preferences and restrictions attaching to each class of our shares, including: (a) dividend rights, including the time limit after which dividend entitlement lapses and an indication of the party in whose favour this entitlement operates; (b) voting rights, including whether directors stand for re-election at staggered intervals and the impact of that arrangement where cumulative voting is permitted or required; (c) rights to share in our Company s profits; (d) rights to share in any surplus in the event of liquidation; (e) redemption provisions; (f) sinking fund provisions; (g) liability to further capital calls by our Company; and (h) any provision discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares, are as follows: Article 4(A) (A) Subject to these presents, no shares may be issued by our Directors without the prior approval of our Company in General Meeting pursuant to Section 161 of the Act, but subject thereto and the terms of such approval, and to Article 5, and to any special rights attached to any shares for the time being issued, our Directors may allot (with or without conferring a right of renunciation) or grant options over or otherwise dispose of the same to such persons on such terms and conditions and for such consideration and at such time and whether or not subject to the payment of any part of the amount thereof in cash or otherwise as our Directors may think fit, and any shares may, subject to compliance with Sections 70 and 75 of the Act, be issued with such preferential, deferred, qualified or special rights, privileges, conditions or restrictions, whether as regards dividend, return of capital, participation in surplus assets and profits, voting, conversion or otherwise, as our Directors may think fit, and preference shares may be issued which are or at the option of our Company are liable to be redeemed, the terms and manner of redemption being determined by our Directors in accordance with the Act, Provided Always that: (a) no shares shall be issued to transfer a controlling interest in our Company without the specific prior approval of our Company in General Meeting; and (b) no shares shall be issued at a discount or options granted over unissued shares except in accordance with the Act. 127

132 Article 8 (A) The rights attached to shares issued upon special conditions shall be clearly defined in the Memorandum and Articles and the rights attaching to shares of a class other than ordinary shares shall be expressed. In the event of preference shares being issued, the total nominal value of issued preference shares shall not at any time exceed the total nominal value of the issued ordinary shares and preference shareholders shall have the same rights as ordinary shareholders as regards receiving of notices, reports and balancesheets and attending General Meetings of our Company, and preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing capital or winding-up or sanctioning a sale of the undertaking of our Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six (6) months in arrear. (B) Our Company has power to issue further preference capital ranking equally with, or in priority to, preference shares already issued. Article 9 (A) Whenever the share capital of our Company is divided into different classes of shares, the variation or abrogation of the special rights attached to any class may, subject to the provisions of the Act, be made either with the consent in writing of the holders of threequarters in nominal value of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of the holders of our shares of the class (but not otherwise) and may be so made either whilst our Company is a going concern or during or in contemplation of a winding-up. To every such separate General Meeting all the provisions of these presents relating to General Meetings of our Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be 2 or more persons holding at least one-third in nominal value of the issued shares of the class present in person or by proxy or attorney and that any holder of shares of the class present in person or by proxy or attorney may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him where the class is a class of equity shares within the meaning of Section 64(1) of the Act or at least one vote for every share of the class where the class is a class of preference shares within the meaning of Section 180(2) of the Act, Provided Always that where the necessary majority for such a Special Resolution is not obtained at such General Meeting, the consent in writing, if obtained from the holders of three-quarters in nominal value of the issued shares of the class concerned within two (2) months of such General Meeting, shall be as valid and effectual as a Special Resolution carried at such General Meeting. (B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference capital (other than redeemable preference capital) and any variation or abrogation of the rights attached to preference shares or any class thereof. (C) The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of our Company in some or all respects pari passu therewith but in no respect in priority thereto. Article 18 Our Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of our shares or, when permitted, by way of premium) but subject always to the terms of issue of such shares. A call shall be deemed to have been made at the time when the resolution of our Directors authorizing the call was passed and may be made payable by instalments. 128

133 Article 19 Each member shall (subject to receiving at least fourteen (14) days notice specifying the time or times and place of payment) pay to our Company at the time or times and place so specified the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be revoked or postponed as our Directors may determine. Article 21 Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of issue of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these presents be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable. In the case of non-payment, all the relevant provisions of these presents as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. Article 23 Our Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of our shares or by way of premium) uncalled and unpaid upon our shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon our shares in respect of which it is made and upon the moneys so received (until and to the extent that the same would but for such advance become payable) our Company may pay interest at such rate (not exceeding eight (8) per cent. per annum) as the member paying such sum and our Directors may agree. Capital paid on shares in advance of calls shall not, whilst bearing interest, confer a right to participate in profits. Article 42 A reference to a member shall be a reference to a registered holder of shares in our Company, or where such registered holder is CDP, the Depositors on behalf of whom CDP holds our shares, Provided that: (a) a Depositor shall only be entitled to attend any General Meeting and to speak and vote thereat if his name appears on the Depository Register maintained by CDP forty-eight (48) hours before the General Meeting as a Depositor on whose behalf CDP holds shares in our Company, our Company being entitled to deem each such Depositor, or each proxy of a Depositor who is to represent the entire balance standing to the Securities Account of the Depositor, to represent such number of shares as is actually credited to the Securities Account of the Depositor as at such time, according to the records of CDP as supplied by CDP to our Company, and where a Depositor has apportioned the balance standing to his Securities Account between 2 proxies, to apportion the said number of shares between the 2 proxies in the same proportion as previously specified by the Depositor in appointing the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the proportion of Depositor s shareholding specified in the instrument of proxy, or where the balance standing to a Depositor s Securities Account has been apportioned between 2 proxies the aggregate of the proportions of the Depositor s shareholding they are specified to represent, and the true balance standing to the Securities Account of a Depositor as at the time of the General Meeting, if the instrument is dealt with in such manner as is provided above; (b) the payment by our Company to CDP of any dividend payable to a Depositor shall to the extent of the payment discharge our Company from any further liability in respect of the payment; 129

134 (c) (d) the delivery by our Company to CDP of provisional allotments or share certificates in respect of the aggregate entitlements of Depositors to new shares offered by way of rights issue or other preferential offering or bonus issue shall to the extent of the delivery discharge our Company from any further liability to each such Depositor in respect of his individual entitlement; and the provisions in these presents relating to the transfers, transmissions or certification of shares shall not apply to the transfer of book-entry securities (as defined in the Statutes). Article 46 The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regards dividend, return of capital, voting and other matters, as if they held our shares from which the stock arose; but no such privilege or advantage (except as regards participation in the profits or assets of our Company) shall be conferred by an amount of stock which would not, if existing in shares, have conferred such privilege or advantage, and no such conversion shall affect or prejudice any preference or other special privileges attached to our shares so converted. Article 59 At any General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded by: (a) the chairman of the meeting; or (b) not less than 2 members present in person or by proxy and entitled to vote; or (c) any member present in person or by proxy, or where such a member has appointed 2 proxies any one of such proxies, or any number or combination of such members or proxies, holding or representing as the case may be not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or (d) any member present in person or by proxy, or where such a member has appointed 2 proxies any one of such proxies, or any number or combination of such members or proxies, holding or representing as the case may be shares in our Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid on all our shares conferring that right, Provided Always that no poll shall be demanded on the choice of the chairman of the meeting or on a question of adjournment. A demand for a poll may be withdrawn only with the approval of the meeting. Article 60 Unless a poll is required, a declaration by the chairman of the meeting that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution. If a poll is required, it shall be taken in such manner (including the use of ballot or voting papers or tickets) as the chairman of the meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll. Article 61 In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote. 130

135 Article 62 A poll demanded on any question shall be taken either immediately or at such subsequent time (not being more than thirty (30) days from the date of the meeting) and place as the chairman of the meeting may direct. No notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded. Article 63 Subject to any special rights or restrictions as to voting attached by or in accordance with these presents to any class of shares, on a show of hands every member who is present in person or by proxy shall have one vote, the chairman of the meeting to determine which proxy shall be entitled to vote where a member is represented by 2 proxies, and on a poll every member who is present in person or by proxy shall have one vote for every share of which he is the holder. A member who is bankrupt shall not, while his bankruptcy continues, be entitled to exercise his rights as a member, or attend, vote or act at any meeting of our Company. Article 64 In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members or, as the case may be, the order in which the names appear in the Depository Register in respect of the joint holding. Article 65 Where in Singapore or elsewhere a receiver or other person (by whatever name called) has been appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, our Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as our Directors may require, permit such receiver or other person on behalf of such member, to vote in person or by proxy at any General Meeting, or to exercise any other right conferred by membership in relation to meetings of our Company. Article 66 No member shall be entitled in respect of shares held by him to vote at a General Meeting either personally or by proxy or to exercise any other right conferred by membership in relation to meetings of our Company if any call or other sum payable by him to our Company in respect of such shares remains unpaid. Article 67 No objection shall be raised as to the admissibility of any vote except at the meeting or adjourned meeting at which the vote objected to is or may be given or tendered and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the meeting whose decision shall be final and conclusive. Article 68 On a poll, votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. Article 69 (A) A member shall not be entitled to appoint more than 2 proxies to attend and vote at the same General Meeting, Provided that if a member shall nominate 2 proxies then the member shall specify the proportion of his shares to be represented by each such proxy, failing which the nomination shall be deemed to be alternative. (B) A proxy need not be a member of our Company. 131

136 Article 70 (A) An instrument appointing a proxy for any member shall be in writing in any usual or common form or in any other form which our Directors may approve and: (a) in the case of an individual member, shall be signed by the member or his attorney duly authorised in writing; and (b) in the case of a member which is a corporation shall be either given under its common seal or signed on its behalf by an attorney duly authorised in writing or a duly authorised officer of the corporation. (B) The signatures on an instrument of proxy need not be witnessed. Where an instrument appointing a proxy is signed on behalf of a member by an attorney, the letter or power of attorney or a duly certified copy thereof shall (failing previous registration with our Company) be lodged with the instrument of proxy pursuant to the next following Article, failing which the instrument of proxy may be treated as invalid. Article 71 An instrument appointing a proxy must be left at such place or one of such places (if any) as may be specified for that purpose in or by way of note to or in any document accompanying the notice convening the meeting (or, if no place is so specified, at the Office) not less than forty-eight (48) hours before the time appointed for the holding of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used, and in default shall not be treated as valid. The instrument shall, unless the contrary is stated thereon, be valid as well for any adjournment of the meeting as for the meeting to which it relates, Provided that an instrument of proxy relating to more than one meeting (including any adjournment thereof) having once been so delivered for the purposes of any meeting shall not require again to be delivered for the purposes of any subsequent meeting to which it relates. Article 72 An instrument appointing a proxy shall be deemed to include the right to demand or join in demanding a poll and to speak at the meeting. Article 73 A vote cast by proxy shall not be invalidated by the previous death or insanity of the principal or by the revocation of the appointment of the proxy or of the authority under which the appointment was made provided that no intimation in writing of such death, insanity or revocation shall have been received by our Company at the Office at least one hour before the commencement of the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) the time appointed for the taking of the poll at which the vote is cast. Article 74 Any corporation which is a member of our Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of our Company or of any class of members of our Company. The person so authorised shall be entitled to exercise the same powers on behalf of such corporation as the corporation could exercise if it were an individual member of our Company and such corporation shall for the purposes of these presents be deemed to be present in person at any such meeting if a person so authorised is present thereat. 132

137 Article 122 Our Directors may from time to time set aside out of the profits of our Company and carry to reserve such sums as they think proper which, at the discretion of our Directors, shall be applicable for any purpose to which the profits of our Company may properly be applied and pending such application may either be employed in the business of our Company or be invested. Our Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. Our Directors may also, without placing the same to reserve, carry forward any profits. In carrying sums to reserve and in applying the same, our Directors shall comply with the provisions of the Statutes. Article 124 If and so far as in the opinion of our Directors, the profits of our Company justify such payments, our Directors may declare and pay the fixed dividends on any class of shares carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for the payment thereof and may also from time to time declare and pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit. Article 125 Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on our shares during any portion or portions of the period in respect of which the dividend is paid. For the purposes of this Article, no amount paid on a share in advance of calls shall be treated as paid on the share. Article 126 No dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes or, pursuant to Section 69 of the Act and in the form of stock dividends, out of the share premium account. Any dividend unclaimed after six (6) years from the date of declaration shall be made forfeit and revert to our Company. Article 129 The waiver in whole or in part of any dividend on any share by any document (whether or not under seal) shall be effective only if such document is signed by the member (or the person entitled to the share in consequence of the death or bankruptcy of the holder) and delivered to our Company and if or to the extent that the same is accepted as such or acted upon by our Company. Article 130 Our Company may upon the recommendation of our Directors by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company) and our Directors shall give effect to such resolution. Where any difficulty arises with regard to such distribution, our Directors may settle the same as they think expedient and in particular, may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, may determine that cash payments shall be made to any member upon the footing of the value so fixed in order to adjust the rights of all parties and may vest any such specific assets in trustees as may seem expedient to our Directors. 133

138 Article 132 If 2 or more persons are registered in the Register of Members or (as the case may be) the Depository Register as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share. Article 133 Any resolution declaring a dividend on shares of any class, whether a resolution of our Company in General Meeting or a resolution of our Directors, may specify that the same shall be payable to the persons registered as the holders of such shares in the Register of Members or (as the case may be) the Depository Register at the close of business on a particular date and thereupon the dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares. Article 134 Our Directors may, with the sanction of an Ordinary Resolution of our Company (including any Ordinary Resolution passed pursuant to Article 4(A)), capitalise any sum standing to the credit of any of our Company s reserve accounts as representing profits available for distribution under the provisions of the Statutes or, pursuant to Sections 69 or 70 of the Act, our Company s share premium account or capital redemption reserve, by appropriating such sum to the persons registered as the holders of shares in the Register of Members or (as the case may be) the Depository Register at the close of business on the date of the resolution (or such other date as may be specified therein or determined as therein provided) in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full unissued shares or (subject to any special rights previously conferred on any shares or class of shares for the time being issued) unissued shares of any other class not being redeemable shares, for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. Our Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation, with full power to our Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to our Company rather than to the members concerned). Our Directors may authorise any person to enter on behalf of all the members interested into an agreement with our Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. Article 146 If our Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the court) the Liquidator may, with the authority of a Special Resolution, divide among the members in specie or in kind the whole or any part of the assets of our Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the members of different classes of members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit, and the liquidation of our Company may be closed and our Company dissolved, but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability. Provisions relating to variation of rights of shareholders The provisions in the Articles of Association relating to the actions necessary to change the rights of holders of the stock, are as follows: 134

139 Article 9 (A) Whenever the share capital of our Company is divided into different classes of shares, the variation or abrogation of the special rights attached to any class may, subject to the provisions of the Act, be made either with the consent in writing of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of the holders of our shares of the class (but not otherwise) and may be so made either whilst our Company is a going concern or during or in contemplation of a winding-up. To every such separate General Meeting all the provisions of these presents relating to General Meetings of our Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be 2 or more persons holding at least one-third in nominal value of the issued shares of the class present in person or by proxy or attorney and that any holder of shares of the class present in person or by proxy or attorney may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him where the class is a class of equity shares within the meaning of Section 64(1) of the Act or at least one vote for every share of the class where the class is a class of preference shares within the meaning of Section 180(2) of the Act, Provided Always that where the necessary majority for such a Special Resolution is not obtained at such General Meeting, the consent in writing, if obtained from the holders of three-quarters in nominal value of the issued shares of the class concerned within two (2) months of such General Meeting, shall be as valid and effectual as a Special Resolution carried at such General Meeting. (B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference capital (other than redeemable preference capital) and any variation or abrogation of the rights attached to preference shares or any class thereof. (C) The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of our Company in some or all respects pari passu therewith but in no respect in priority thereto. Provisions relating to Annual General Meeting and Extraordinary General Meetings The provisions in the Articles of Association relating to the manner in which annual general meetings and extraordinary general meetings of shareholders are convoked, including the conditions of admission, are as follows: Article 42 A reference to a member shall be a reference to a registered holder of shares in our Company, or where such registered holder is CDP, the Depositors on behalf of whom CDP holds our shares, Provided that: 135

140 (A) a Depositor shall only be entitled to attend any General Meeting and to speak and vote thereat if his name appears on the Depository Register maintained by CDP forty-eight (48) hours before the General Meeting as a Depositor on whose behalf CDP holds shares in our Company, our Company being entitled to deem each such Depositor, or each proxy of a Depositor who is to represent the entire balance standing to the Securities Account of the Depositor, to represent such number of shares as is actually credited to the Securities Account of the Depositor as at such time, according to the records of CDP as supplied by CDP to our Company, and where a Depositor has apportioned the balance standing to his Securities Account between 2 proxies, to apportion the said number of shares between the 2 proxies in the same proportion as previously specified by the Depositor in appointing the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the proportion of Depositor s shareholding specified in the instrument of proxy, or where the balance standing to a Depositor s Securities Account has been apportioned between 2 proxies the aggregate of the proportions of the Depositor s shareholding they are specified to represent, and the true balance standing to the Securities Account of a Depositor as at the time of the General Meeting, if the instrument is dealt with in such manner as is provided above; (B) the payment by our Company to CDP of any dividend payable to a Depositor shall to the extent of the payment discharge our Company from any further liability in respect of the payment; (C) the delivery by our Company to CDP of provisional allotments or share certificates in respect of the aggregate entitlements of Depositors to new shares offered by way of rights issue or other preferential offering or bonus issue shall to the extent of the delivery discharge our Company from any further liability to each such Depositor in respect of his individual entitlement; and (D) the provisions in these presents relating to the transfers, transmissions or certification of shares shall not apply to the transfer of book-entry securities (as defined in the Statutes). Article 47 An Annual General Meeting shall be held once in every year, at such time (within a period of not more than fifteen (15) months after the holding of the last preceding Annual General Meeting) and place as may be determined by our Directors. All other General Meetings shall be called Extraordinary General Meetings. Article 48 Our Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed with proper expedition to convene an Extraordinary General Meeting. Article 49 Any Extraordinary General Meeting at which it is proposed to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to our Company, shall be called by twenty-one (21) days notice in writing at the least and an Annual General Meeting or any other Extraordinary General Meeting, by fourteen (14) days notice in writing at the least. The period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held and shall be given in manner hereinafter mentioned to all members other than such as are not under the provisions of these presents entitled to receive such notices from our Company, Provided that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed: (A) in the case of an Annual General Meeting by all the members entitled to attend and vote thereat; and (B) in the case of an Extraordinary General Meeting by a majority in number of the members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent. in nominal value of our shares giving that right; 136

141 Provided also that the accidental omission to give notice to or the non-receipt of notice by any person entitled thereto shall not invalidate the proceedings at any General Meeting. At least fourteen (14) days notice of any General Meeting shall be given by advertisement in the daily press and in writing to any stock exchange upon which our shares in our Company may be listed, Provided Always that in the case of any Extraordinary General Meeting at which it is proposed to pass a Special Resolution, at least twenty-one (21) days notice in writing of such Extraordinary General Meeting shall be given to any stock exchange upon which our shares in our Company may be listed. Article 50 (A) Every notice calling a General Meeting shall specify the place and the day and hour of the meeting, and there shall appear with reasonable prominence in every such notice a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him and that a proxy need not be a member of our Company. (B) In the case of an Annual General Meeting, the notice shall also specify the meeting as such. (C) In the case of any General Meeting at which business other than routine business ( special business ) is to be transacted, the notice shall specify the general nature of such business, and if any resolution is to be proposed as a Special Resolution, the notice shall contain a statement to that effect. Article 52 Any notice of a General Meeting to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution on our Company in respect of such special business. Provisions relating to rights of non-resident or foreign shareholders The provisions in the Articles of Association relating to the rights to own Shares, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on their Shares, are as follows: Article 5 (A) Subject to any direction to the contrary that may be given by our Company in General Meeting and as permitted by the rules of the Designated Stock Exchange, all new shares shall before issue be offered to such persons who as at the date (as determined by our Directors) of the offer are entitled to receive notices from our Company of General Meetings in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept our shares offered, our Directors may dispose of those shares in such manner as they think most beneficial to our Company. Our Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of our Directors, be conveniently offered under this Article 5(A). (B) Our Company may, notwithstanding Article 5(A) above, authorise our Directors not to offer new shares to members to whom by reason of foreign securities laws, such offers may not be made without registration of our shares or a prospectus or other document, but to sell the entitlements to the new shares on behalf of such members on such terms and conditions as our Company may direct. 137

142 Article 35 (A) There shall be no restriction on the transfer of fully paid up shares (except where required by law or by the rules, bye-laws or listing rules of any stock exchange on which our shares in our Company may be listed) but our Directors may in their discretion decline to register any transfer of shares upon which our Company has a lien, and in the case of shares not fully paid up, may refuse to register a transfer to a transferee of whom they do not approve, Provided Always that in the event of our Directors refusing to register a transfer of shares, our Company shall within ten (10) Market Days after the date on which the application for a transfer of shares was made, serve a notice in writing to the applicant stating the facts which are considered to justify the refusal as required by the Statutes. (B) Our Directors may decline to register any instrument of transfer unless: (a) such fee not exceeding S$2.00 as our Directors may from time to time require is paid to our Company in respect thereof; (b) the instrument of transfer, duly stamped in accordance with any law for the time being in force relating to stamp duty, is deposited at the Office or at such other place (if any) as our Directors may appoint accompanied by the certificates of our shares to which it relates, and such other evidence as our Directors may reasonably require to show the right of the transferor to make the transfer and, if the instrument of transfer is executed by some other person on his behalf, the authority of the person so to do; and (c) the instrument of transfer is in respect of only one class of shares. Article 43 Except as required by the Statutes or law, no person shall be recognised by our Company as holding any share upon any trust, and our Company shall not be bound by or compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share, or any interest in any fractional part of a share, or (except only as by these presents or by the Statutes or law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the registered holder and nothing in these presents contained relating to CDP or to Depositors or in any depository agreement made by our Company with any common depository for shares shall in any circumstances be deemed to limit, restrict or qualify the above. Provisions relating to delay, deferment or prevention of a change in control our Company The provision of our Articles of Association that would have an effect of delaying, deferring or preventing a change in control of our Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving our Company is as follows: Article 4(A) Subject to these presents, no shares may be issued by our Directors without the prior approval of our Company in General Meeting pursuant to Section 161 of the Act, but subject thereto and the terms of such approval, and to Article 5, and to any special rights attached to any shares for the time being issued, our Directors may allot (with or without conferring a right of renunciation) or grant options over or otherwise dispose of the same to such persons on such terms and conditions and for such consideration and at such time and whether or not subject to the payment of any part of the amount thereof in cash or otherwise as our Directors may think fit, and any shares may, subject to compliance with Sections 70 and 75 of the Act, be issued with such preferential, deferred, qualified or special rights, privileges, conditions or restrictions, whether as regards dividend, return of capital, participation in surplus assets and profits, voting, conversion or otherwise, as our Directors may think fit, and preference shares may be issued which are or at the option of our Company are liable to be redeemed, the terms and manner of redemption being determined by our Directors in accordance with the Act, Provided Always that: 138

143 (a) (b) no shares shall be issued to transfer a controlling interest in our Company without the specific prior approval of our Company in General Meeting; and no shares shall be issued at a discount or options granted over unissued shares except in accordance with the Act. 4. MATERIAL CONTRACTS The following contracts, not being contracts entered into in the ordinary course of business, have been entered into by our Group within the two years preceding the date of this Prospectus and are or may be material: (a) Renewal of Temporary Occupation Licence (TOL) dated 20 March 2001 between Singapore Land Office and Sunnyville at 10 Ama Keng Road for a period of three years with effect from 1 August 2000 to 31 July 2003 at a monthly rent of S$5,660 (excluding 3% GST). (b) Tenancy agreement dated 1 April 2001 between TMI Tech as landlord and ENH as tenant for the lease of premises at 16 Bukit Timah Avenue at a monthly rent of S$13,390 (inclusive of 3% GST) for a period of one year commencing 1 April (c) Tenancy agreement dated 1 April 2001 between EMCH as landlord and Econ Medicare as tenant for the lease of premises at No. 452 Upper East Coast Road at a monthly rent of S$51,500 (inclusive of 3% GST) for a period of one year commencing 1 April (d) Tenancy agreement dated 1 April 2001 between EMCH as landlord and ENH as tenant for a period of one year commencing 1 April 2001 at the following monthly rent (inclusive of 3% GST) for the respective premises known as: (i) No. 25 Recreation Road S$26,780 (ii) No. 1 Pulasan Road S$16,480 (iii) No. 58 Braddell Road S$23,690 (iv) No. 53 Choa Chu Kang Road S$30,900 (e) (f) (g) (h) (i) Tenancy agreement dated 1 April 2002 between TMI Tech as landlord and ENH as tenant for the lease of premises at 16 Bukit Timah Avenue at a monthly rent of S$13,390 (inclusive of 3% GST) for a period of one year commencing 1 April Tenancy agreement dated 1 April 2002 between EMCH as landlord and Econ Medicare as tenant for the lease of premises at No. 452 Upper East Coast Road at a monthly rent of S$56,650 (inclusive of 3% GST) for a period of one year commencing 1 April Tenancy agreement dated 1 April 2002 between EMCH as landlord and ENH as tenant for a period of one year commencing 1 April 2002 at the following monthly rent (exclusive of 3% GST) for the respective premises known as: (i) No. 25 Recreation Road S$27,300 (ii) No. 1 Pulasan Road S$16,800 The above rentals are subject to 3% GST from 1 April 2002 to 31 December 2002 and 5% GST from 1 January 2003 to 31 March Deed of Assignment dated 23 October 2002 between EMCH as transferor and our Company as transferee, wherein EMCH has assigned the Singapore and PRC trademark registrations to our Company and will upon receipt of the registration certificate, assign the Malaysian trademark registration, at a nominal consideration of $1.00. Sale and purchase agreement dated 23 October 2002 between our Company and EMCH for the acquisition with effect from 1 April 2002 of 100% of the issued and paid-up capital of Econ Medicare, Econ Careskill, ENH, Econ Ambulance and Sunnyville at an aggregate consideration of S$1,645,368, satisfied by the issue of 1,645,368 ordinary shares of S$1.00 each in the capital of our Company. 139

144 (j) Agreement dated 23 October 2002 between EMCH, Econ Healthcare, ENH, Sunnyville and Econ Ambulance for the acquisition of the properties at 58 Braddell Road, Singapore and 53 Choa Chu Kang Road, Singapore at an aggregate consideration of S$9,500,000. (k) Option agreement dated 23 October 2002 between EMCH and our Company pursuant to which our Company has been granted a three-year option at an option fee of S$8.00 to acquire the property at 452 Upper East Coast Road, Singapore at the then prevailing market value. (l) Receiving Banker s Agreement dated 7 November 2002 entered into between our Company, the Vendor and DBS Bank for DBS Bank to act as the receiving banker in relation to the Invitation. (m) An agreement dated 26 November 2002 made between our Company and CDP pursuant to which CDP agreed to act as central depository for our Company s securities for trades in the securities of our Company through the SGX-ST. (n) Management and Underwriting Agreement dated 2 December 2002 made between our Company, the Vendor and DBS Bank for the management and underwriting of the Invitation. (o) Placement Agreement dated 2 December 2002 made between our Company, the Vendor and DBS Bank for the placement of the Placement Shares. 5. WORKING CAPITAL (a) Our Directors are of the opinion that, after taking into account the present banking facilities and the net proceeds from the issue of the New Shares by our Company, we will have adequate working capital for our present requirements. (b) In the opinion of the Directors, there are no minimum amounts which must be raised by the issue of the New Shares. Although no minimum amount must be raised by the Invitation, amounts which are proposed to be provided out of the proceeds of the Invitation shall, in the event the Invitation is cancelled, be provided out of other sources of funding including banking facilities or internal funds. 6. LOAN CAPITAL AND OTHER BORROWINGS Save as disclosed on pages 28 and 29 of this Prospectus and in the Unaudited Proforma Consolidated Financial Statements, we had no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits, mortgages, charges, hire-purchase commitments, guarantees or other material contingent liabilities. 7. FINANCIAL CONDITION AND OPERATIONS OF THE GROUP (a) Save as disclosed in this Prospectus, our Directors are not aware of any material information including trading factors or risks which are unlikely to be known or anticipated by the general public and which could materially affect the profits of our Company and our subsidiaries. (b) Save as disclosed in this Prospectus, our financial condition and operations are not likely to be affected by any of the following: (i) known trends or known demands, commitments, events or uncertainties that will result in or are reasonably likely to result in our liquidity increasing or decreasing in any material way; (ii) material commitments for capital expenditure; (iii) unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from operations; and (iv) known trends or uncertainties that have had or that our Group expects to have a material favourable or unfavourable impact on revenues or operating income. 140

145 (c) Save as disclosed on page 98 of this Prospectus, there were no events which have occurred since the end of the financial years covered which may have a material effect on the proforma financial statements of our Group. 8. LITIGATION We are not engaged in any litigation or arbitration proceedings, either as plaintiff or defendant, in respect of any claims or amounts which is material in the context of the Invitation, and our Directors have no knowledge of any proceedings pending or threatened against us or any facts likely to give rise to any litigation, claims or proceedings which might have a material effect on our financial position or business in the last 12 months before the date of lodgement of this Prospectus. 9. GENERAL (a) (b) (c) (d) (e) (f) (g) The nature of the business of our Company has been stated earlier in this Prospectus. The corporations which, by virtue of Section 6 of the Act, are deemed to be related to our Company are set out under Subsidiaries on page 69 of this Prospectus. No application for Shares will be allotted or issued on the basis of this Prospectus later than six months after the date of this Prospectus. The time of opening of the Application List is stated on page 11 of this Prospectus. The amount payable on application and allotment is S$0.28 for each Offer and Placement Share. Save as disclosed on page 120 of this Prospectus, there has been no previous issue of Shares by our Company or offer for sale of our Shares to the public within the two years preceding the date of this Prospectus. No sums have been paid or are agreed to be paid to any Director or any firm in which a Director is a partner in cash or in shares or otherwise or to any person to induce him to become a Director or in connection with the promotion of our Company. Except for stamp duties payable in connection with the Restructuring Exercise which shall be borne solely by our Company, the other estimated expenses payable by our Company and the Vendor in connection with the Invitation, including underwriting and placement commission, brokerage, professional fees (including management fees) and all other incidental expenses in relation to this Invitation, are approximately S$1.0 million which will be borne by our Company and the Vendor in the proportion in which the number of Invitation Shares offered by each of them pursuant to the Invitation bears to the total number of Invitation Shares. The breakdown of these estimated expenses is as follows: S$ 000 Listing fees 2 Professional fees 630 Underwriting commission, placement commission and brokerage 216 Stamp duties (not apportioned to Vendor) 283 Miscellaneous expenses 169 Total estimated expenses of the Invitation 1,300 (h) No amount of cash or securities or benefit has been or is intended to be paid or given to any promoter within the two years preceding the date of this Prospectus or is proposed or intended to be paid or given to any promoter at any time in respect of this Invitation. 141

146 (i) (j) Application monies received by our Company and the Vendor in respect of successful applications (including successfully balloted applications which are subsequently rejected) will be placed in a separate non-interest bearing account with DBS Bank (the Receiving Bank ). In the ordinary course of its business, the Receiving Bank may deploy these monies in the interbank money market. Pursuant to an agreement entered into between our Company, the Vendor and the Receiving Bank contained in a letter dated 7 November 2002, our Company, the Vendor and the Receiving Bank may receive for their own account, part of the net revenue earned by the Receiving Bank from the deployment of such monies in the interbank money market. Any refund of all or part of the application monies to unsuccessful or partially successful applicants will be made without any interest or any share of such net revenue. We intend to continue to recommend KPMG for appointment as Auditors of our Company in the foreseeable future. 10. MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS, AND BROKERAGE (a) Pursuant to the management and underwriting agreement dated 2 December 2002 made between our Company, the Vendor and DBS Bank (the Management and Underwriting Agreement ), our Company and the Vendor appointed DBS Bank to manage the Invitation. DBS Bank will receive a management fee from our Company. (b) Pursuant to the Management and Underwriting Agreement, the Underwriter has agreed to underwrite the Offer Shares for a commission of 1.75% of the Issue Price for each Offer Share, payable by our Company and the Vendor in the proportion in which the number of Offer Shares offered by each of them pursuant to the Invitation bears to the total number of Offer Shares. (c) Pursuant to the placement agreement dated 2 December 2002 made between our Company, the Vendor and DBS Bank (the Placement Agreement ), DBS Bank agreed to subscribe or procure subscriptions for the Placement Shares for a placement commission of 1.75% of the Issue Price for each Placement Share, to be paid by our Company and the Vendor in the proportion in which the number of Offer Shares offered by each of them pursuant to the Invitation bears to the total number of Offer Shares. (d) Brokerage will be paid by our Company and the Vendor in the proportion in which the number of Offer Shares offered by each of them pursuant to the Invitation bears to the total number of Offer Shares in respect of successful applications on Application Forms or through the web-site of DBS TD Waterhouse, at the rate of 1.0% of the Issue Price for each Offer Share and 1.0% of the Issue Price for each Placement Share. For the Offer Shares, brokerage will be paid to members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in respect of successful applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through Electronic Applications at their respective ATMs and Internet Banking web-sites. For the Placement Shares, the brokerage will be paid to the Placement Agent in accordance with the Placement Agreement. (e) Save as aforesaid, no commission, discount or brokerage, has been paid or other special terms granted within the preceding two years or is payable to any Directors, promoter, expert, proposed Director or any other person for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in or debentures of our Company or our subsidiaries. (f) The Management and Underwriting Agreement may be terminated by DBS Bank at any time before the close of the Application List on the occurrence of certain events including, inter alia: (i) any adverse change or crisis or any development likely to lead to an adverse change or crisis in national or international political, financial, monetary or economic conditions (including but without limitation conditions in the stock market, foreign exchange market, conditions with respect to interest rates and money markets, in Singapore or any other jurisdiction) or a combination of any such changes or 142

147 (g) (h) (i) development or crisis, or deterioration thereof and any such conditions which in the opinion of the Manager results or is likely to result in: (aa) adverse fluctuations in the stock market in Singapore or the conditions in the stock market in Singapore being adversely affected; or (bb) the success of the Invitation being prejudiced; or (cc) the listing and quotation of the Shares on the Official List of the SGX-Sesdaq being adversely affected; or (dd) the business, operations, financial condition, performance or prospects of the Company or the Group being adversely affected; or (ii) any change or introduction, or any prospective change or introduction of any legislation, regulation, policy, directive, order, guideline, request or interpretation or application thereof, by any government body in Singapore or elsewhere, the Securities Industry Council of Singapore, the SGX-ST or the Authority whether or not having the force of law, which, in the opinion of the Manager: (aa) adversely affects or is likely to adversely affect the listing and quotation of the Shares on the Official List of the SGX-Sesdaq; or the business, operations, financial condition, performance or prospects of our Company or our Group; or (bb) results or is likely to result in the success of the Invitation being prejudiced; or (cc) the issue of a stop order by the Authority in accordance with Section 242 of the Securities and Futures Act The Placement Agreement is conditional upon the Management and Underwriting Agreement not having been terminated or rescinded pursuant to the provisions of the Management and Underwriting Agreement. In the event the Management and Underwriting Agreement is terminated, our Company reserves the right, at the absolute discretion of the Directors, to cancel the Invitation. Save as disclosed above, we and the Vendor do not have any material relationship with the Manager, Underwriter or Placement Agent. 11. CONSENTS (a) KPMG has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion herein of the Report from Reporting Accountants on the Unaudited Proforma Consolidated Financial Statements of Econ Healthcare Limited and its Subsidiaries and the Auditors Report on Econ Medicare Centre Holdings Pte Ltd and its Subsidiaries in the form and context in which they appear in this Prospectus and references to its name in the form and context in which it appears in this Prospectus and to act in such capacity in relation to this Prospectus. (b) The Manager, the Underwriter, the Placement Agent, the Solicitors to the Invitation, the Solicitors to the Manager, Underwriter and Placement Agent, the Share Registrar and the Principal Banker have each given and have not withdrawn their respective written consents to the issue of this Prospectus with the inclusion herein of their respective names and references to their respective names in the forms and context in which they respectively appear in this Prospectus and to act in such respective capacities in relation to this Prospectus. (c) Each of the Solicitors to the Invitation, the Solicitors to the Manager, Underwriter and Placement Agent, the Share Registrar and the Principal Banker do not make, or purport to make, any statement in this Prospectus or any statement upon which a statement in this Prospectus is based and, to the maximum extent permitted by law, expressly disclaim and take no responsibility for any liability to any person which is based on, or arises out of, the statements, information or opinions in this Prospectus. 143

148 12. STATEMENT BY THE MANAGER The Manager confirms that, to the best of its knowledge and belief, and having made due and careful enquiry, based on the information made available to it by the Company, this Prospectus constitutes a full and true disclosure of all material facts about the Invitation and the Company and its subsidiaries and it is not aware of any other material facts the omission of which would make any statements herein misleading. 13. STATEMENT BY THE DIRECTORS OF OUR COMPANY AND THE VENDOR This Prospectus has been seen and approved by our Directors and the Vendor and they collectively and individually accept full responsibility for the accuracy of the information given herein and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts contained in this Prospectus are true and accurate and not misleading, all expressions of opinion, intention and expectation contained in this Prospectus are fair and accurate in all material respects as at the date of this Prospectus and that there are no other material facts the omission of which would make any statement in this Prospectus misleading. 14. DOCUMENTS FOR INSPECTION The following documents may be inspected at the Registered Office of our Company during normal business hours for a period of six (6) months from the date of this Prospectus: (a) the Memorandum and Articles of Association of our Company; (b) the Report from Reporting Accountants on the Unaudited Proforma Consolidated Financial Statements of our Company and our subsidiaries; (c) the Audited Consolidated Financial Statements of EMCH and its subsidiaries for FY2000, FY2001 and FY2002; (d) the Audited Financial Statements of our subsidiaries for FY2000, FY2001 and FY2002; (e) the material contracts referred to in paragraph 4 on pages 139 and 140 of this Prospectus; (f) the Service Agreements referred to on pages 64 and 65 of this Prospectus; (g) the letters of consent referred to on page 143 of this Prospectus; (h) the valuation report for 58 Braddell Road, Singapore ; (i) the valuation report for 53 Choa Chu Kang Road, Singapore ; and (j) the valuation report for 452 Upper East Coast Road, Singapore

149 APPENDIX A DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES The following statements are brief summaries of the rights and privileges of shareholders conferred by the laws of Singapore and the Articles of Association (the Articles ) of our Company. These statements summarise the material provisions of the Articles but are qualified in entirety by reference to the Articles. Ordinary Shares All of our Shares are in registered form. We may, subject to the provisions of the Act and the rules of the SGX-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 in a general meeting of the shareholders of our Company. The aggregate number of Shares to be issued pursuant to such approval may not exceed 50% (or such other limit as may be prescribed by the SGX-ST) of our issued share capital for the time being, of which the aggregate number of Shares to be issued other than on a pro-rata basis to our shareholders may not exceed 20% (or such other limit as may be prescribed by the SGX-ST) of our issued share capital for the time being. The approval, if granted, will lapse at the conclusion of the annual general meeting following the date on which the approval was granted or the date by which the annual general meeting is required by law to be held, whichever is the earlier. Subject to the foregoing, the provisions of the Act and any special rights attached to any class of shares currently issued and all new Shares are under the control of the board of Directors who may allot and issue the same with such rights and restrictions as it may think fit. Shareholders Only persons who are registered in the register of shareholders of our Company and, in cases in which the person so registered is CDP, the persons named as the depositors in the depository register maintained by CDP for the Shares, are recognised as shareholders of our Company. Our Company will not, except as required by law, recognise any equitable, contingent, future or partial interest in any Share or other rights for any Share other than the absolute right thereto of the registered holder of that Share. We may close the register of shareholders for any time or times if we provide the SGX-ST at least 10 clear market days notice. However, the register may not be closed for more than 30 days in aggregate in any calendar year. We typically close the register to determine shareholders entitlement to receive dividends and other distributions. Transfer of Shares There is no restriction on the transfer of fully paid Shares except where required by law or the listing rules or the rules or by-laws of any stock exchange on which our Company is listed. The board of Directors may decline to register any transfer of Shares which are not fully paid Shares or Shares on which we have a lien. Shares may be transferred by a duly signed instrument of transfer in a form approved by any stock exchange on which our Company is listed. The board of Directors may also decline to register any instrument of transfer unless, among other things, it has been duly stamped and is presented for registration together with the share certificate and such other evidence of title as they may require. We will replace lost or destroyed certificates for Shares if we are properly notified and if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and indemnity that the board of Directors may require. 145

150 General Meeting of Shareholders We are required to hold an annual general meeting every year. The board of Directors may convene an Extraordinary General Meeting whenever it thinks fit and must do so if shareholders representing not less than 10% of the total voting rights of all shareholders request in writing that such a meeting be held. In addition, two or more shareholders holding not less than 10% of our issued share capital may call a meeting. Unless otherwise required by law or by the Articles, voting at general meetings is by ordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at the meeting. An ordinary resolution suffices, for example, for the appointment of directors. A special resolution, requiring the affirmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters under Singapore law, including voluntary winding up, amendments to the Memorandum of Association and the Articles, a change of the corporate name and a reduction in the share capital, share premium account or capital redemption reserve fund. Our Company must give at least 14 days notice in writing for every general meeting convened for the purpose of passing an ordinary resolution. Special resolutions generally require at least 21 days notice in writing. The notice must set forth the place, the day and the hour of the meeting and, in the case of special business, the general nature of that business. Voting Rights A shareholder 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 Shares through the SGX-ST book-entry settlement system will only be entitled to vote at a general meeting as a shareholder if his name appears on the depository register maintained by CDP 48 hours before the general meeting. Except as otherwise provided in the Articles, two or more shareholders must be present in person or by proxy to constitute a quorum at any general meeting. Under the Articles, on a show of hands, every shareholder present in person and by proxy shall have one vote, and on a poll, every shareholder present in person or by proxy shall have one vote for each Share which he holds or represents. A poll may be demanded in certain circumstances, including by the chairman of the meeting or by any shareholder present in person or by proxy and representing not less than 10% of the total voting rights of all shareholders having the right to attend and vote at the meeting or any two shareholders present in person or by proxy and entitled to vote. Dividends Our Company 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 the board of Directors. We must pay all dividends out of our profits; however, we may capitalise our share premium account and apply it to pay dividends, if such dividends are satisfied by the issue of Shares to our shareholders. See Bonus and Rights Issue. The board of Directors may also declare an interim dividend without the approval of our shareholders. All dividends are paid pro rata among our shareholders in proportion to the amount paid up on each shareholder s Shares, unless the rights attaching to an issue of any Share provides otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to each shareholder at his registered address. Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable to a shareholder whose name is entered in the depository register shall, to the extent of payment made to CDP, discharge us from any liability to that shareholder in respect of that payment. Bonus and Rights Issues The Board of Directors may, with approval of our shareholders at a general meeting, capitalise any reserves or profits (including profit or moneys carried and standing to any reserve or to the share premium account) and distribute the same as bonus shares credited as paid-up to our shareholders in proportion to their shareholdings. The board of Directors may also issue rights to take up additional Shares to shareholders in proportion to their shareholdings. Such rights are subject to any conditions attached to such issue and the regulations of any stock exchange on which we are listed. 146

151 Takeovers From 1 January 2002, a revised Singapore Code on Take-overs and Mergers ( Revised Take-over Code ) issued by the Monetary Authority of Singapore pursuant to Section 321 of the Securities and Futures Act 2001 has come into effect. Under the Revised Take-over Code, any person acquiring an interest, either on his own or together with persons acting in concert with him, in 30% (instead of 25% under the Singapore Take-over Code) or more of our voting shares must extend a takeover offer for the remaining voting shares in accordance with the provisions of the Revised Take-over Code. In addition, a mandatory takeover offer is also required to be made if a person holding, either on his own or together with persons acting in concert with him, between 30% and 50% of the voting shares acquires additional voting shares representing more than 1% of the voting shares in any 6- month period. Under the Revised Take-over Code, the following individuals and companies will be presumed to be persons acting in concert with each other unless the contrary is established: (a) the following companies: (i) a company; (ii) the parent company of (i); (iii) the subsidiaries of (i); (iv) the fellow subsidiaries of (i); (v) the associated companies of any of (i), (ii), (iii) or (iv); and (vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); (b) a company with any of its directors (together with their close relatives, related trusts as well as companies controlled by any of the directors, their close relatives and related trusts); (c) a company with any of its pension funds and employee share schemes; (d) a person with any investment company, unit trust or other fund whose investment such person manages on a discretionary basis, but only in respect of the investment account which such person manages; (e) a financial or other professional adviser, including a stockbroker, with its client in respect of the shareholdings of: (f) (g) (h) (i) the adviser and persons controlling, controlled by or under the same control as the adviser; and (ii) all the funds which the adviser manages on a discretionary basis, where the shareholdings of the adviser and any of those funds in the client total 10% or more of the client s equity share capital; directors of a company (together with their close relatives, related trusts and companies controlled by any of such directors, their close relatives and related trusts) which is subject to an offer or where the directors have reason to believe a bona fide offer for their company may be imminent; partners; and 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); and (v) companies controlled by any of (i), (ii), (iii), or (iv). 147

152 Under the Revised Take-over Code, a mandatory offer made with consideration other than cash must be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person acting in concert with the offeror within the preceding 6 months. Liquidation or Other Return of Capital If our Company liquidates or in the event of any other return of capital, holders of Shares will be entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special rights attaching to any other class of shares. Indemnity As permitted by Singapore law, the Articles provide that, subject to the Act, the board of Directors and officers shall be entitled to be indemnified by our Company against any liability incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to have been done as an officer, director or employee and in which judgement is given in their favour or in which they are acquitted or in connection with any application under any statute for relief from liability in respect thereof in which relief is granted by the court. We may not indemnify directors and officers against any liability which by law otherwise attach to them in respect of any negligence, default, breach of duty or breach of trust of which they may be guilty in relation to our Company. Limitations on Rights to Hold or Vote Shares Except as described in Voting Rights and Takeovers above, there are no limitations imposed by Singapore law or by the Articles on the rights of non-resident shareholders to hold or vote Shares. Minority Rights The rights of minority shareholders of Singapore-incorporated companies are protected under Section 216 of the Act, which gives the Singapore courts a general power to make any order, upon application by any of our shareholders, as they think fit to remedy any of the following situations: (a) the affairs of our Company are being conducted or the powers of the board of Directors are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of the shareholders; or (b) our Company takes an action, or threatens to take an action, or the shareholders pass a resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant. Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no way limited to those listed in the Act itself. Without prejudice to the foregoing, Singapore courts may: (i) direct or prohibit any act or cancel or vary any transaction or resolution; (ii) regulate the conduct of the affairs of our Company in the future; (c) authorise civil proceedings to be brought in our name, or on our behalf, by a person or persons and on such terms as the court may direct; (d) provide for the purchase of a minority shareholder s Shares by the other shareholders or by our Company and, in the case of a purchase of Shares by our Company, a corresponding reduction of our share capital; (e) provide that the Memorandum of Association or the Articles be amended; or (f) provide that our Company be wound up. 148

153 DESCRIPTION OF SINGAPORE LAW AND REGULATIONS RELATING TO TAXATION APPENDIX B The discussion below is not intended to constitute a complete analysis of all tax consequences relating to ownership of our Shares. Prospective purchasers of our Shares should consult their tax advisors concerning the tax consequences of their particular situations. This description is based on laws, regulations and interpretations now in effect and available as of the date of this Prospectus. The laws, regulations and interpretations, however, may change at any time, and any change could be retroactive to the date of issuance of our Shares. These laws and regulations are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. Singapore Taxation The following discussion describes the material Singapore income tax, capital gains tax, stamp duty and estate duty consequences of the purchase, ownership and disposal of our Shares. Income Tax General Singapore resident taxpayers, which include individuals who are residing in Singapore and companies which are controlled or managed in Singapore, are subject to Singapore income tax on: (a) income accruing in or derived from Singapore; and (b) foreign income received in Singapore. A company will be regarded as being resident in Singapore if the control and management of its business is exercised in Singapore (for example, if the company s board of directors meets and conducts the business of the company in Singapore). An individual will be regarded as being resident in Singapore in a year of assessment if, in the preceding year, he was physically present in Singapore or exercised employment in Singapore (other than as a director of a company) for 183 days or more, or if he ordinarily resides in Singapore. Non-Singapore resident corporate taxpayers, subject to certain exceptions, are subject to Singapore income tax on: (a) income that is accrued in or derived from Singapore; and (b) foreign income received in Singapore. Non-Singapore resident individuals, subject to certain exceptions, are subject to Singapore income tax only on income accruing in or derived from Singapore. The corporate tax rate in Singapore is 24.5 per cent. for the year of assessment 2002 (ie financial year ended 2001). In addition, three quarters of up to the first $10,000 of a company s chargeable income, and one half of up to the next $90,000 will be exempt from corporate tax with effect from the year of assessment The remaining chargeable income (after the tax exemption) will be taxed at 24.5 per cent.. Pursuant to the Second Off-Budget Measures announced on 12 October 2001, a 5% tax rebate will be given on the tax payable for the year of assessment The above tax exemption and tax rebate will not apply to Singapore dividends received by companies. On 3 May 2002, the Finance Minister has also announced in the Financial Year 2002 Budget that the corporate tax rate will be reduced to 22% with effect from the year of assessment 2003 (i.e. financial year ending 31 December 2002). The government also announced its intention to reduce the corporate tax rate to 20% by the Financial Year 2004 Budget. 149

154 For a Singapore tax resident individual, the rate of tax will vary according to the individual s circumstances but is subject to a maximum rate of 26% with effect from the year of assessment 2002, i.e. calendar year Pursuant to the second off-budget measures announced on 12 October 2001, a 10% tax rebate will be granted for the year of assessment On 3 May 2002, the Finance Minister has also announced in the Financial Year 2002 Budget that, with effect from the year of assessment 2003, the highest tax bracket will be reduced from 26% to 22%. Subject to any applicable tax treaty, non-singapore resident taxpayers are subject to a withholding tax at the Singapore corporate tax rate on certain types of income derived from Singapore or generally 15% in the case of interest, royalty and rental of movable equipment. Dividend Distributions Current Tax System Under Singapore s taxation system, the tax paid by our Company at the prevailing corporate tax rate is in effect imputed to, and deemed to be paid on behalf of our shareholders. Shareholders receive dividends net of such tax. Shareholders are taxed on the gross amount of dividends (that is, on the amount of net dividends plus an amount equal to the amount of gross dividends multiplied by the prevailing corporate tax rate). The tax paid by our Company effectively becomes available to our shareholders as a tax credit to offset their Singapore income tax liability on the gross amount of dividends paid by our Company. Singapore does not impose withholding tax on dividends paid to Singapore citizen or non-singapore resident shareholders. As the tax paid by our Company at the prevailing corporate tax rate is deemed to be paid by our shareholders, no further Singapore income tax liability is imposed on dividends received by such non-resident shareholders. Conversely, such non-resident shareholders who do not have deductible expenses which are accepted by the Inland Revenue Authority of Singapore ( IRAS ) as attributable to such dividend income will normally not receive any refund from the IRAS. Singapore taxpayers are taxed on dividends received from our Company at the income tax rates applicable to each taxpayer. Where their income tax liabilities on the dividends are lower (or, as the case may be, higher) than the tax deducted at source from such dividends at the prevailing corporate rate, such resident shareholders may receive a refund from (or, as the case may be, have to pay further tax to) the IRAS. Where our Company receives foreign income that qualifies for double taxation relief, unilateral tax relief or Commonwealth tax relief, our Company may pay tax exempt dividends out of the foreign income received in Singapore. The amount of tax exempt dividend is equal to (i) the foreign tax credit allowed divided by the prevailing corporate tax rate less (ii) the foreign tax paid. Our Company will credit such amounts to a special account (known as the Section 13E account ). Any subsequent dividends paid by our Company out of this account to our shareholders (other than on any shares of a preferential nature) will be tax exempt subject to certain conditions. Proposed Tax System On 3 May 2002, the Finance Minister announced in the Financial Year 2002 Budget that Singapore will move to a one-tier corporate tax system with effect from 1 January Under this proposed system, the tax collected from corporate profits is final and Singapore dividends are tax exempt in the hands of the shareholder, regardless of whether this is a corporate or individual shareholder and whether the shareholder is a Singapore tax resident. To enable companies to make full use of the unutilised dividend franking credits as at 31 December 2002, the Minister proposed to introduce a 5 year transition period from 1 January 2003 to 31 December 2007 for such companies to pay franked dividends out of its unutilised dividend franking credits. During this period, the shareholders will continue to receive these dividends with credits attached as mentioned above under the current tax system. 150

155 Gains on disposal of the ordinary shares Singapore does not impose tax on capital gains. However, gains may be construed to be of an income nature and subject to tax if they arise from activities which the IRAS regards as the carrying on of a trade in Singapore. Any profits from the disposal of ordinary shares are not taxable in Singapore unless the seller is regarded as having derived gains of an income nature, in which case, the disposal profits would be taxable. Stamp Duties No stamp duty is payable on the issue of new Shares of our Company. Stamp duty is payable on the instrument of transfer of Shares of our Company at the rate of S$2.00 for every S$1,000 market value of such Shares. Pursuant to the Second Off-Budget Measures announced on 12 October 2001, the stamp duty rate will be reduced by 30% in respect of the instrument of transfer of shares executed during the period from 13 October 2001 to 31 December 2002 (both dates inclusive). Effectively, the applicable stamp duty on the instrument of transfer of our Shares will be S$1.40 for every S$1, market value of the Shares registered in Singapore if the instrument is effected from 13 October 2001 to 31 December The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty is payable if no instrument of transfer is executed or the instrument of transfer is executed outside Singapore. However, stamp duty may be payable if the instrument of transfer which is executed outside Singapore is received in Singapore. The above stamp duty is not applicable to electronic transfer of our Shares through CDP. Estate Duties Singapore estate duty is imposed on the value of most movable and immovable property situated in Singapore owned by individuals who are not domiciled in Singapore, subject to specific exemption limits. On 3 May 2002, the Finance Minister announced in the Financial Year 2002 Budget that these movable assets of non-domiciles will be exempt from stamp duty. Singapore estate duty is imposed on the value of most immovable property situated in Singapore and on most movable property, wherever it may be, owned by individuals who are domiciled in Singapore, subject to specific exemption limits. Our Company s Shares are considered to be movable property situated in Singapore as our Company is a company incorporated in Singapore and the share register is maintained in Singapore. Accordingly, our Company s Shares held by an individual are subject to Singapore estate duty upon such individual s death, whether or not such individual is domiciled in Singapore. Singapore estate duty is payable to the extent that the value of the Shares aggregated with any other assets subject to Singapore estate duty exceeds S$600,000. Unless other exemptions apply to the other assets, for example, the separate exemption limit for residential properties, any excess beyond S$600,000 will be taxed at 5% on the first S$12,000,000 of the individual s Singapore chargeable assets and thereafter at 10%. Individuals should consult their own tax advisors regarding the Singapore estate duty consequences of their ownership of our Company s Shares. 151

156 TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE APPENDIX C Applications are invited for the subscription and/or purchase of the Invitation Shares at the Issue Price, subject to the following terms and conditions: 1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 INVITATION SHARES OR INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF INVITATION SHARES WILL BE REJECTED. 2. Your application for the Offer Shares may be made by way of the printed WHITE Offer Shares Application Forms or by way of Automated Teller Machine ( ATMs ) belonging to the Participating Banks ( ATM Electronic Applications ) or the Internet Bank ( IB ) web-sites of the relevant Participating Banks ( Internet Electronic Applications ). Application for Internet Placement Shares (also Internet Electronic Applications) may only be made by way of an Internet Electronic Application through the web-site of DBS TD Waterhouse (Singapore) Pte Ltd ( DBS TD Waterhouse ) at if you have an internet trading account with DBS TD Waterhouse. Internet Electronic Applications, both through the IB web-sites of the relevant Participating Banks and the web-site of DBS TD Waterhouse, and together with ATM Electronic Applications, shall be referred to as Electronic Applications. Application for Reserved Shares may only be made by way of printed PINK Reserved Shares Application Forms. Applications for Placement Shares (other than the Internet Placement Shares through the website of DBS TD Waterhouse and Reserved Shares) may only be made by way of the printed BLUE Placement Shares Application Forms. You may not use your CPF funds to apply for the Invitation Shares. 3. Only one application may be made for the benefit of one person for either the Offer Shares or the Placement Shares (other than the Reserved Shares) in his own name. A person submitting an application for the Offer Shares by way of the Offer Shares Application Form may not submit another application for Offer Shares by way of Electronic Application and vice versa. A person submitting an application for the Offer Shares by way of an ATM Electronic Application may not submit another application for Offer Shares by way of an Internet Electronic Application through the IB web-sites of the relevant Participating Banks and vice versa. Such separate applications will be deemed to be multiple applications and shall be rejected. A person, other than an approved nominee company, who is submitting an application in his own name should not submit any other applications, whether on a printed Application Form or through an Electronic Application, for any other person. Such separate applications will be deemed to be multiple applications and shall be rejected. 152

157 An applicant who has made an application for the Internet Placement Shares by way of an Internet Electronic Application through the web-site of DBS TD Waterhouse shall not make another application for the Placement Shares by way of a printed Placement Shares Application Form or by way of another Internet Electronic Application through the web-site of DBS TD Waterhouse. Conversely, a person submitting an application for the Placement Shares by way of a printed Placement Shares Application Form shall not make another application for Placement Shares using another printed Placement Shares Application Form or by way of Internet Electronic Application through the web-site of DBS TD Waterhouse. Such separate applications shall be deemed to be multiple applications and shall be rejected. An applicant who has agreed with the Placement Agent to subscribe for Placement Shares (other than the Reserved Shares) or who otherwise subscribes for Placement Shares shall not make or procure any separate application for Offer Shares either by way of the Offer Shares Application Form or through an Electronic Application. Such separate applications will be deemed to be multiple applications and shall be rejected. Conversely, an applicant who has made an application for Offer Shares either by way of the Offer Shares Application Form or through an Electronic Application shall not make any separate application for the Placement Shares (other than the Reserved Shares) whether by way of a printed Placement Shares Application Form or by way of an Internet Electronic Application through the web-site of DBS TD Waterhouse. Such separate applications will be deemed to be multiple applications and shall be rejected. Joint or multiple applications will be rejected. Persons submitting or procuring submissions of multiple share applications (whether for Offer Shares, Placement Shares or both Offer Shares and Placement Shares) may be deemed to have committed an offence under the Penal Code (Chapter 224) of Singapore and the Securities Industry Act (Chapter 289) of Singapore and such applications may be referred to the relevant authorities for investigation. Multiple applications or those appearing to be or suspected of being multiple applications will be liable to be rejected at the discretion of our Company and the Vendor. An applicant who has made an application for Reserved Shares using the Reserved Shares Application Form may submit one separate application for Offer Shares in his own name either by way of an Offer Shares Application Form or through an Electronic Application or submit one separate application for Placement Shares (other than Reserved Shares) by way of a Placement Shares Application Form, or by way of Internet Electronic Application through the web-site of DBS TD Waterhouse provided he adheres to the terms and conditions of this Prospectus. Such separate applications will not be treated as multiple applications. 4. We will not accept applications from any person under the age of 21 years, undischarged bankrupts, sole-proprietorships, partnerships, chops or non-corporate bodies, joint Securities Account holders of CDP and from applicants whose addresses (furnished in their printed Application Forms or, in the case of Electronic Applications, contained in the records of the relevant Participating Banks or DBS TD Waterhouse, as the case may be) bear post office box numbers. In addition, applicants who wish to subscribe for the Placement Shares through the web-site of DBS TD Waterhouse (a) must not be corporations, sole-proprietorships, partnerships, chops or any other business entities; (b) must be over the age of 21 years; (c) must not be undischarged bankrupts; (d) must apply for the Placement Shares in Singapore; (e) must have a mailing address in Singapore; and (f) must be customers who maintain trading accounts with DBS TD Waterhouse. 153

158 5. We will not recognise the existence of a trust. Any application by a trustee or trustees must be made in his/their own name(s) and without qualification or, where the application is made by way of a printed Application Form by a nominee, in the name(s) of an approved nominee company or approved nominee companies after complying with paragraph 6 below. 6. WE WILL ONLY ACCEPT NOMINEE APPLICATIONS FROM APPROVED NOMINEE COMPANIES. Approved nominee companies are defined as banks, merchant banks, finance companies, insurance companies, licensed securities dealers in Singapore and nominee companies controlled by them. Applications made by nominees other than approved nominee companies will be rejected. 7. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do not have an existing Securities Account with CDP in your own name at the time of application, your application will be rejected (if you apply by way of an Application Form) or you will not be able to complete your Electronic Application (if you apply by way of an Electronic Application). If you have an existing Securities Account but fail to provide your Securities Account number or provide an incorrect Securities Account number in section B of the Application Form or in your Electronic Application, as the case may be, your application is liable to be rejected. Subject to paragraph 8 below, your application shall be rejected if your particulars such as name, NRIC/passport number, nationality and permanent residence status provided in your Application Form, or in the case of an Electronic Application, contained in the records of the relevant Participating Bank or DBS TD Waterhouse at the time of your Electronic Application, as the case may be, differ from those particulars in your Securities Account as maintained by CDP. If you have more than one individual direct Securities Account with CDP, your application shall be rejected. 8. If your address as stated in the Application Form or, in the case of an Electronic Application, contained in the records of the relevant Participating Bank or DBS TD Waterhouse, as the case may be, is different from the address registered with CDP, you must inform CDP of your updated address promptly, failing which the notification letter on successful allocation will be sent to your address last registered with CDP. 9. Our Company and the Vendor reserves the right to reject any application which does not conform strictly to the instructions set out in the Application Forms and this Prospectus or which does not comply with the instructions for Electronic Applications or with the terms and conditions of this Prospectus or, in the case of an application by way of an Application Form, which is illegible, incomplete, incorrectly completed or which is accompanied by an improperly drawn up or improper form of remittance. Our Company and the Vendor further reserve the right to treat as valid any applications not completed or submitted or effected in all respects in accordance with the instructions set out in the Application Forms or the instructions for Electronic Applications or the terms and conditions of this Prospectus, and also to present for payment or other processes all remittances at any time after receipt and to have full access to all information relating to, or deriving from, such remittances or the processing thereof. 10. Our Company and the Vendor reserve the right to reject or to accept, in whole or in part, or to scale down or to ballot any application, without assigning any reason therefor, and we will not entertain any enquiry and/or correspondence on the decision of our Company and the Vendor except in respect of applications which have been ballotted but subsequently rejected where the reasons for such rejection will be provided to the Applicant. This right applies to applications made by way of Application Forms and by way of Electronic Applications. In deciding the basis of allotment, our Company and the Vendor will give due consideration to the desirability of allotting the Invitation Shares to a reasonable number of applicants with a view to establishing an adequate market for the Shares. 154

159 11. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the Application List, a statement of account stating that your Securities Account has been credited with the number of Invitation Shares allotted to you. This will be the only acknowledgement of application moneys received and is not an acknowledgement by our Company and the Vendor. You irrevocably authorise CDP to complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or other documents required for the issue or transfer of the Invitation Shares allotted to you. This authorisation applies to applications made by way of printed Application Forms and by way of Electronic Applications. 12. In the event of an under-subscription for the Offer Shares as at the close of the Application List, that number of Offer Shares under-subscribed shall be made available to satisfy excess applications for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List. In the event of an under-subscription for the Placement Shares as at the close of the Application List, that number of Placement Shares under-subscribed shall be made available to satisfy applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. In the event of an under-subscription for the Internet Placement Shares to be applied for through the web-site of DBS TD Waterhouse as at the close of the Application List, that number of Internet Placement Shares under-subscribed shall be made available to satisfy applications for the Placement Shares by way of Placement Shares Application Forms to the extent that there is an over-subscription for such Placement Shares as at the close of the Application List or to satisfy applications for the Offer Shares, to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the Placement Shares (including the Internet Placement Shares) are fully subscribed or over-subscribed as at the close of the Application List, the successful applications for the Offer Shares will be determined by ballot or otherwise as determined by our Directors and the Vendor and approved by the SGX-ST. 13. You irrevocably authorise CDP to disclose the outcome of your application, including the number of Invitation Shares allotted to you pursuant to your application, to authorised operators. 14. Any reference to you or the Applicant in this section shall include an individual, a corporation, an approved nominee company and trustee applying for the Offer Shares by way of an Application Form or by way of an Electronic Application and a person applying for the Placement Shares (including the Internet Placement Shares). 15. By completing and delivering an Application Form and, in the case of an ATM Electronic Application, by pressing the Enter or OK or Confirm or Yes key or any other relevant key on the ATM or in the case of an Internet Electronic Application, by clicking Submit or Continue or Yes or Confirm or any other button on the IB web-site of the relevant Participating Banks or the web-site of DBS TD Waterhouse in accordance with the provisions herein, you: (a) irrevocably offer to subscribe for the number of Invitation Shares specified in your application (or such smaller number for which the application is accepted) at the Issue Price for each Invitation Share and agree that you will accept such Invitation Shares as may be allocated to you, in each case on the terms of, and subject to the conditions set out in, this prospectus and the Memorandum and Articles of Association of the Company; (b) agree that in the event of any inconsistency between the terms and conditions for application set out in this Prospectus and those set out in the web-site of DBS TD Waterhouse, or the IB web-sites or ATMs of the Participating Banks, the terms and conditions set out in this Prospectus shall prevail; 155

160 (c) (d) agree that the aggregate Issue Price for the Invitation Shares applied for is due and payable to the Company and the Vendor forthwith; and warrant the truth and accuracy of the information in your application. 16. Our acceptance of applications will be conditional upon, inter alia, our Company and the Vendor being satisfied that: (a) permission has been granted by the SGX-ST to deal in, and for quotation of, all our existing Shares (including the Vendor Shares) and the New Shares on the Official List of the SGX-Sesdaq; and (b) the Management and Underwriting Agreement, and the Placement Agreement referred to on pages 142 and 143 of this Prospectus have become unconditional and have not been terminated. 17. We will not hold any application in reserve. 18. We will not allot any Shares on the basis of this Prospectus later than six months after the date of registration of this Prospectus. 19. Additional terms and conditions for applications by way of Application Forms are set out in the section entitled Additional Terms and Conditions for Application Using Printed Application Forms on pages 157 to 160 of this Prospectus. 20. Additional terms and conditions for applications by way of Electronic Applications are set out in the section entitled Additional Terms and Conditions for Electronic Applications on pages 161 to 168 of this Prospectus. 156

161 ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION FORMS You shall make an application by way of an Application Form. Such application shall be made on and subject to the terms and conditions of this Prospectus, including but not limited to the terms and conditions appearing below as well as those set out under the section on TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE on pages 152 to 156 of this Prospectus, as well as the Memorandum and Articles of Association of our Company. 1. Your application for the Offer Shares must be made using the WHITE Application Forms for Offer Shares and WHITE official envelopes A and B for Offer Shares, accompanying and forming part of this Prospectus. Applications for Placement Shares (other than Internet Placement Shares) by way of Application Forms must be made using the BLUE Application Forms for Placement Shares, and applications for Reserved Shares must be made using the PINK Application Forms accompanying and forming part of this Prospectus. We draw your attention to the detailed instructions contained in the respective Application Forms and this Prospectus for the completion of the Application Forms which must be carefully followed. Our Company and the Vendor reserve the right to reject applications which do not conform strictly to the instructions set out in the Application Forms and this Prospectus or to the terms and conditions of this Prospectus or which are illegible, incomplete, incorrectly completed or which are accompanied by improperly drawn remittances. 2. You must complete your Application Forms in English. Please type or write clearly in ink using BLOCK LETTERS. 3. You must complete all spaces in your Application Forms except those under the heading FOR OFFICIAL USE ONLY and you must write the words NOT APPLICABLE or N.A. in any space that is not applicable. 4. Individuals, corporations, approved nominee companies and trustees must give their names in full. If you are an individual, you must make your application using your full name as it appears in your identity card (if you have such an identification document) or in your passport and, in the case of corporations, in your full names as registered with a competent authority. If you are not an individual, you must complete the Application Form under the hand of an official who must state the name and capacity in which he signs the Application Form. If you are a corporation completing the Application Form, you are required to affix your Common Seal (if any) in accordance with your Memorandum and Articles of Association or equivalent constitutive documents of the corporation. If you are a corporate Applicant and your application is successful, a copy of your Memorandum and Articles of Association or equivalent constitutive documents must be lodged with our Company s Share Registrar and Share Transfer Office. Our Company and the Vendor reserve the right to require you to produce documentary proof of identification for verification purposes. 5. (a) You must complete Sections A and B and sign page 1 of the Application Form. (b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form. Where paragraph 7(a) is deleted, you must also complete Section C of the Application Form with particulars of the beneficial owner(s). (c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, on page 1 of the Application Form, your application is liable to be rejected. 157

162 6. You (whether an individual or corporate Applicant, whether incorporated or unincorporated and wherever incorporated or constituted), will be required to declare whether you are a citizen or permanent resident of Singapore or a corporation in which citizens or permanent residents of Singapore or any body corporate constituted under any statute of Singapore having an interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in such corporations. If you are an approved nominee company, you are required to declare whether the beneficial owner of the Invitation Shares is a citizen or permanent resident of Singapore or a corporation, whether incorporated or unincorporated and wherever incorporated or constituted, in which citizens or permanent residents of Singapore or any body corporate incorporated or constituted under any statute of Singapore have an interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in such corporation. 7. You may apply for the Invitation Shares using only cash. Each application must be accompanied by a cash remittance in Singapore currency for the full amount payable, in respect of the number of Invitation Shares applied for, in the form of a BANKER S DRAFT, CASHIER S ORDER or POSB CASHIER S ORDER drawn on a bank in Singapore, made out in favour of ECON SHARE ISSUE ACCOUNT crossed A/C PAYEE ONLY, or in the form of a DBS AUTOBANK CASHIER S ORDER EQUIVALENT, with your name and address written clearly on the reverse side. Applications not accompanied by any payment or accompanied by any other form of payment will not be accepted. Remittances bearing Not Transferable or Non Transferable crossings will be rejected. No acknowledgement of receipt will be issued by the Company, the Vendor or the Manager for applications or application moneys received. 8. Monies paid in respect of unsuccessful applications are expected to be returned (without interest or any share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hours of the balloting at your own risk. Where your application is rejected or accepted in part only, the full amount or the balance of the application moneys, as the case may be, will be refunded (without interest or any share of revenue or other benefit arising therefrom) to you by ordinary post at your own risk within 14 Market Days after the close of the Application List, provided that the remittance accompanying such application which has been presented for payment or other processes has been honoured and the application moneys received in the designated share issue account. Unsuccessful applicants using DBS Autobank Cashier s Order Equivalent will have the full amount of their application moneys (without interest or any share of revenue or other benefit arising therefrom) automatically credited to their accounts maintained with DBS Bank. 9. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the meanings assigned to them in this Prospectus. 10. By completing and delivering the Application Form, you agree that: (a) in consideration of our Company having distributed the Application Form to you and agreeing to close the Application List at 12:00 noon on 9 December 2002 or such other time or date as our Directors and the Vendor may, in consultation with the Manager decide and by completing and delivering this Application Form: (i) your application is irrevocable; and (ii) your remittance will be honoured on first presentation and that any moneys returnable may be held pending clearance of your payment without interest or any share of revenue or other benefit arising therefrom; (b) all applications, acceptances or contracts resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and that you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts; 158

163 (c) (d) (e) in respect of the Invitation Shares for which your application has been received and not rejected, acceptance of your application shall be constituted by written notification by or on behalf of our Company and the Vendor and not otherwise, notwithstanding any remittance being presented for payment by or on behalf of our Company and the Vendor; you will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of your application; and reliance is placed solely on information contained in this Prospectus and that none of our Company, the Vendor, the Manager, the Underwriter, the Placement Agent, or any other person involved in the Invitation shall have any liability for any information not so contained. Applications for Offer Shares 1. Your application for Offer Shares MUST be made using the WHITE Offer Shares Application Forms and WHITE official envelopes A and B. 2. You must: (a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together with your correct remittance in accordance with the terms and conditions of this Prospectus, in the WHITE official envelope A provided; (b) in appropriate spaces on the WHITE official envelope A : (i) write your name and address; (ii) state the number of Offer Shares applied for; (iii) tick the relevant box to indicate the form of payment; and (iv) affix adequate Singapore postage; (c) SEAL THE WHITE OFFICIAL ENVELOPE A ; (d) write, in the special box provided on the larger WHITE official envelope B addressed to The Development Bank of Singapore Ltd, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore , the number of Offer Shares you have applied for; and (e) insert WHITE official envelope A into WHITE official envelope B, seal WHITE official envelope B, affix adequate Singapore postage on WHITE official envelope B (if despatching by ordinary post) and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND the documents at your own risk to The Development Bank of Singapore Ltd, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore , so as to arrive by 12:00 noon on 9 December 2002 or such other time as our Directors and the Vendor may, in consultation with the Manager, 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 improperly drawn remittances or which are not honoured upon their first presentation are liable to be rejected. 4. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receipt will be issued for any application or remittance received. 159

164 Applications for Placement Shares 1. Your application for Placement Shares must be made using the BLUE Placement Shares Application Forms. 2. The completed BLUE Placement Shares Application Form and your remittance, in accordance with the terms and conditions of the Prospectus, for the full amount payable in respect of the number of Placement Shares applied for with your name and address written clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by you. You must affix adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter the sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own risk to The Development Bank of Singapore Ltd, 6 Shenton Way, #36-01 DBS Building Tower One, Singapore , for the attention of Equity Capital Markets, to arrive by 12:00 noon on 9 December 2002 or such other time as our Directors and the Vendor may, in consultation with the Manager decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement receipt will be issued for any application or remittance received. 3. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receipt will be issued for any application or remittance received. 4. Alternatively, you may remit your application moneys by electronic transfer to the account of DBS Bank, Shenton Way Branch, Current Account No in favour of ECON SHARE ISSUE ACCOUNT for the number of Placement Shares applied for by noon on 9 December Applicants who remit their application moneys via electronic transfer should send a copy of the telegraphic transfer advice slip to DBS Bank, 6 Shenton Way #36-01, DBS Building Tower One, Singapore , for the attention of Equity Capital Markets, to arrive by noon on 9 December Applications for Reserved Shares 1. Your application for Reserved Shares must be made using the PINK Application Forms. 2. The completed and signed PINK Reserved Shares Application Form and the applicant s remittance in accordance with the terms and conditions of this Prospectus for the full amount payable in respect of the number of Reserved Shares applied for must be enclosed and sealed in an envelope to be provided by the applicant. You must affix adequate Singapore postage on the envelope (if despatching by ordinary post) and thereafter despatch by ORDINARY POST OR DELIVER BY HAND at your own risk to our Company s registered office presently at 452 Upper East Coast Road, Singapore , so as to arrive by noon on 9 December 2002 or such later time or date as our Directors and the Vendor may, in their absolute discretion, decide. Local Urgent Mail or Registered Post must NOT be used. 3. ONLY ONE APPLICATION may be enclosed in each envelope. No acknowledgement of receipt will be issued for any application or remittance received. 160

165 ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS The procedures for Electronic Applications are set out on the ATM screens (in the case of ATM Electronic Applications) and in the case of Internet Electronic Applications on the IB web-site screens of the relevant Participating Banks and the web-site screen of DBS TD Waterhouse (the Steps ). Currently, DBS Bank and UOB Group are the only Participating Banks through which the Internet Electronic Applications through the IB web-sites may be made. For illustration purposes, the procedures for Electronic Applications through ATMs, the IB web-site of DBS Bank and the website of DBS TD Waterhouse are set out in the Steps for Electronic Applications for Offer Shares through ATMs of DBS Bank (including POSB) and the Steps for Internet Electronic Applications for Offer Shares through the IB web-site of DBS Bank and the Steps for Internet Electronic Applications for Placement Shares through the web-site of DBS TD Waterhouse appearing on pages 166 to 168 of this Prospectus. Please read carefully the terms of this Prospectus, the Steps and the terms and conditions for Electronic Applications set out below carefully before making an Electronic Application. Any reference to you or the Applicant in the Additional Terms and Conditions for Electronic Applications and the Steps shall refer to you making an application for Offer Shares through an ATM or the IB web-site of a relevant Participating Bank, or Placement Shares through the web-site of DBS TD Waterhouse. The Steps set out the actions that you must take at ATMs or the IB web-site of DBS Bank or the web-site of DBS TD Waterhouse to complete an Electronic Application. The actions that you must take at the ATMs or the IB web-sites of the other Participating Banks are set out on the ATM screens or the IB web-site screens of the relevant Participating Banks. You must have an existing bank account with and be an ATM cardholder of one of the Participating Banks before you can make an Electronic Application at the ATMs. An ATM card issued by one Participating Bank cannot be used to apply for the Invitation Shares at an ATM belonging to other Participating Banks. Upon the completion of your ATM Electronic Application transaction, you will receive an ATM transaction slip ( Transaction Record ), confirming the details of your ATM Electronic Application. The Transaction Record is for your retention and should not be submitted with any printed Application Form. You must ensure that you enter your own Securities Account Number when using the ATM card issued to you in your own name. If you fail to use your own ATM card or do not key in your own Securities Account number, your application will be rejected. If you operate a joint bank account with any of the Participating Banks, you must ensure that you enter your own Securities Account number when using the ATM card issued to you in your own name. Using your own Securities Account number with an ATM card which is not issued to you in your own name will render your Electronic Application liable to be rejected. For an Internet Electronic Application, you must have a bank account with and a User Identification ( User ID ) and a Personal Identification Number ( PIN ) given by the relevant Participating Banks or DBS TD Waterhouse, in the case of you applying for Placement Shares through DBS TD Waterhouse. Upon completion of your Internet Electronic Application through the IB web-site of DBS Bank, there will be an on-screen confirmation ( Confirmation Screen ) of the application which can be printed out by you for your record. This printed record of the Confirmation Screen is for your retention and should not be submitted with any printed Application Form. If you are making an Internet Electronic Application, you must ensure that the mailing address of your account selected for the application is in Singapore and you must declare that the application is being made in Singapore. Otherwise, your application is liable to be rejected. In this connection, you will be asked to declare that you are in Singapore at the time when you make the application. Your Electronic Application shall be made on the terms and, subject to the conditions of this Prospectus, including but not limited to, the terms and conditions appearing below and those set out under the section on TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE on pages 152 to 156 of this Prospectus, as well as the Memorandum and Articles of Association of our Company. 161

166 1. In connection with your Electronic Application for the Offer Shares or Placement Shares in the case of you applying for Placement Shares through DBS TD Waterhouse, you are required to confirm statements to the following effect in the course of activating the Electronic Application: (a) that you have received a copy of this Prospectus (in the case of ATM Electronic Applications only) and have read, understood and agreed to all the terms and conditions of application for the Offer Shares or Placement Shares and this Prospectus prior to effecting the Electronic Application and agree to be bound by the same; (b) that you consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent resident status, CDP Securities Account number, and security application amount (the Relevant Particulars ) from your account with the relevant Participating Bank or DBS TD Waterhouse, as the case may be, to our Share Registrar, CDP, SCCS, our Company, and the Manager (the Relevant Parties ); and (c) that this is your only application for the Offer Shares or Placement Shares (other than for the Reserved Shares), as the case may be, and it is made in your name and at your own risk. Your application will not be successfully completed and cannot be recorded as a completed transaction unless you press the Enter or OK or Confirm or Yes or any other relevant key in the ATM or click Confirm or OK or Submit or Continue or Yes or any other relevant button on the Internet screen. By doing so, you shall be treated as signifying your confirmation of each of the above three statements. In respect of statement 1(b) above, your confirmation, by pressing the Enter or OK or Confirm or Yes or any other relevant key or by clicking Confirm or OK or Submit or Continue or Yes or any other relevant button, shall signify and shall be treated as your written permission, given in accordance with the relevant laws of Singapore, including Section 47(2) of the Banking Act (Chapter 19) of Singapore, to the disclosure by that Participating Bank or DBS TD Waterhouse, as the case may be, of the Relevant Particulars of your account(s) with that Participating Bank or DBS TD Waterhouse to the Relevant Parties. 2. By making an electronic application you confirm that you are not applying for Offer Shares or Placement Shares as a nominee of any other person and that any electronic application that you make is the only application made by you as the beneficial owner. You shall make only one electronic application and shall not make any other application for Offer Shares or Placement Shares (other than for the Reserved Shares) whether at the ATMs of any Participating bank or the IB web-sites of the relevant Participating Banks or the web-site of DBS TD Waterhouse, as the case may be, or on the Application Forms. Where you have made an application for Invitation Shares on an application form, you shall not make an Electronic Application for Invitation Shares and vice versa. 3. You must have sufficient funds in your bank account with your Participating Bank at the time you make your Electronic Application at the ATM or IB web-sites of the relevant Participating Banks, failing which your Electronic Application will not be complete. Any Electronic Application which does not conform strictly to the instructions set out in this Prospectus or on the screens of the ATM or IB web-sites of the relevant Participating Banks through which your Electronic Application is being made shall be rejected. You may make an ATM Electronic Application at the ATM of any Participating Bank or an Internet Electronic Application at the IB web-sites of the relevant Participating Banks for Offer Shares, using only cash by authorising such Participating Bank to deduct the full amount payable from your account with such Participating Bank. If you make an application to subscribe for Internet Placement Shares through the website of DBS TD Waterhouse, you must have sufficient funds in your nominated Automatic Payment account with an Automatic Payment Facility (direct debit/credit authorisation or GIRO ) with DBS TD Waterhouse. Your application will be rejected if there are insufficient funds in your account for DBS TD Waterhouse to deduct the full amount payable from your account for your application. 162

167 4. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares or Placement Shares, as the case may be, applied for as stated on the Transaction Record or the Confirmation Screen or any lesser number of such Offer Shares or Placement Shares that may be allotted to you in respect of your Electronic Application. In the event that our Company and the Vendor decide to allot any lesser number of such Offer Shares or Placement Shares or not to allot any Offer Shares or Placement Shares to you, you agree to accept such decision as final. If your Electronic Application is successful, your confirmation (by your action of pressing the Enter or OK or Confirm or Yes or any other relevant key on the ATM or clicking Confirm or OK or Submit or Continue or Yes or any other relevant button on the Internet screen) of the number of Offer Shares or Placement Shares applied for shall signify and shall be treated as your acceptance of the number of Offer Shares or Placement Shares that may be allotted to you and your agreement to be bound by the Memorandum and Articles of Association of our Company. 5. We will not keep any application in reserve. Where your Electronic Application is unsuccessful, the full amount of the application moneys will be refunded (without interest or any share of revenue or other benefit arising therefrom) to you by being automatically credited to your account with your Participating Bank or if you have applied for the Internet Placement Shares through DBS TD Waterhouse, by ordinary post or such other means as DBS TD Waterhouse may agree with you, at your risk within 24 hours of the balloting provided that the remittance in respect of such application which has not been presented for payment or other processes has been honoured and the application monies received in the designated share issue account. Trading on a when-issued basis, if applicable, is expected to commence after such refund has been made. Where your Electronic Application is rejected or accepted in part only, the full amount or the balance of the application moneys, as the case may be, will be refunded (without interest or any share of revenue or other benefit arising therefrom) to you by being automatically credited to your account with your Participating Bank or if you have applied for the Internet Placement Shares through DBS TD Waterhouse, by ordinary post or such other means as DBS TD Waterhouse may agree with you, at your own risk, within 14 Market Days after the close of the Application List provided that the remittance in respect of such application which has been presented for payment or other processes has been honoured and the application monies received in the designated share issue account. Responsibility for timely refund of application moneys from unsuccessful or partially successful Electronic Applications lies solely with the respective Participating Banks and with DBS TD Waterhouse. Therefore, you are strongly advised to consult your Participating Bank or DBS TD Waterhouse as to the status of your Electronic Application and/or the refund of any money to you from unsuccessful or partially successful Electronic Application, to determine the exact number of Shares allotted to you before trading the Shares on the SGX-ST. Neither the SGX-ST, the CDP, the SCCS, the Participating Banks, DBS TD Waterhouse, our Company, the Vendor nor the Manager assume any responsibility for any loss that may be incurred as a result of you having to cover any net sell positions or from buy-in procedures activated by the SGX-ST. If your Electronic Application is unsuccessful, no notification will be sent by the relevant Participating Bank or DBS TD Waterhouse. It is expected that successful applicants who applied for Internet Placement Shares through the web-site of DBS TD Waterhouse will be notified of the results of their application through the web-site of DBS TD Waterhouse no later than the evening of the day immediately prior to the commencement of trading of the Shares on the SGX-ST. 163

168 6. Applicants who make ATM Electronic Applications through the ATMs of the following banks may check the provisional results of their ATM Electronic Applications as follows: Bank Telephone Other Channels Operating Hours Service expected from DBS Internet Banking or Internet 24 hours a day 7.00 p.m. on the Bank (for POSB account Kiosk balloting day holders) (1) (for DBS account holders) OCBC ATM ATM: 24 hours a day Evening of the balloting day Phone Banking: 24 hours a day UOB ATM (Other Transactions Phone Banking/ 6.00 p.m. on the Group IPO Enquiry ) (2) ATM: balloting day 24 hours a day (1),(2) Internet Banking Evening of the 24 hours a day balloting day Notes: (1) Applicants who have made Internet Electronic Applications through the Internet Banking websites of DBS Bank or UOB Group may check the results of their applications through the same channels listed in the table above in relation to ATM Electronic Applications made at the ATMs of DBS Bank or UOB Group. (2) Applicants who have made Electronic Applications through the ATMs or the Internet Banking web-site of UOB Group may check the results of their applications through UOB Personal UniBanking, UOB ATMs or UOB PhoneBanking services. 7. Electronic Applications shall close at 12:00 noon on 9 December 2002 or such other time as our Directors and the Vendor may, in consultation with the Manager decide. All Internet Electronic Applications must be received by 12:00 noon on 9 December An Internet Electronic Application is deemed to be received when it enters the designated information system of the relevant Participating Bank or DBS TD Waterhouse, as the case may be. 8. You are deemed to have irrevocably requested and authorised our Company and the Vendor to: (a) register the Offer Shares or Placement Shares, as the case may be, allotted to you in the name of CDP for deposit into your Securities Account; (b) send the relevant share certificate(s) to CDP; (c) return or refund (without interest or any share of revenue earned or other benefit arising therefrom) the application moneys, should your Electronic Application be unsuccessful, by automatically crediting your bank account with your Participating Bank or if you have applied for the Internet Placement Shares through DBS TD Waterhouse, by ordinary post or such other means as DBS TD Waterhouse may agree with you, at your risk, within 24 hours of the balloting; and (d) return or refund (without interest or any share of revenue or other benefit arising therefrom) the balance of the application moneys, should your Electronic Application be accepted in part only, by automatically crediting your bank account with your Participating Bank or if you have applied for the Internet Placement Shares through DBS TD Waterhouse, by ordinary post or such other means as DBS TD Waterhouse may agree with you, at your risk, within 14 Market Days after the close of the Application List. 164

169 9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks of electrical, electronic technical and computer-related faults and breakdown, fires, acts of God and other events beyond the control of the Participating Banks, DBS TD Waterhouse, the Company, the Vendor and the Manager, and in any such event our Company, the Vendor, the Manager, DBS TD Waterhouse and/or the relevant Participating Bank do not receive your Electronic Application, or data relating to your Electronic Application or the tape or any other devices containing such data is lost, corrupted or not otherwise accessible, whether wholly or partially for whatever reason, you shall be deemed not to have made an Electronic Application and you shall have no claim whatsoever against our Company, the Vendor, the Manager, DBS TD Waterhouse and/or the relevant Participating Bank for Offer Shares or Placement Shares, as the case may be, applied for or for any compensation, loss or damage. 10. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be made in his own name and without qualification. Our Company and the Vendor will reject any application by any person acting as nominee. 11. All your particulars in the records of your Participating Bank or DBS TD Waterhouse at the time you make your Electronic Application shall be deemed to be true and correct and your Participating Bank, DBS TD Waterhouse and the relevant parties shall be entitled to rely on the accuracy thereof. If there has been any change in your particulars after making your Electronic Application, you shall promptly notify your Participating Bank or DBS TD Waterhouse. 12. You should ensure that your personal particulars as recorded by both CDP and the relevant Participating Bank or DBS TD Waterhouse are correct and identical, otherwise, your Electronic Application is liable to be rejected. You should promptly inform CDP of any change in address, failing which the notification letter on successful allotment will be sent to your address last registered with CDP. 13. By making and completing an Electronic Application, you are deemed to have agreed that: (a) in consideration of our Company and the Vendor making available the Electronic Application facility, through the Participating Banks and DBS TD Waterhouse acting as agents of our Company and the Vendor, at the ATMs and the IB web-sites of the relevant Participating Banks and at the web-site of DBS TD Waterhouse: (i) your Electronic Application is irrevocable; and (ii) your Electronic Application, the acceptance by our Company and the Vendor and the contract resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and you irrevocably submit to the nonexclusive jurisdiction of the Singapore courts; (b) none of our Company, the Vendor, the Manager, the Participating Banks or DBS TD Waterhouse shall be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to your Electronic Application to our Company or CDP due to breakdowns or failure of transmission, delivery or communication facilities or any risks referred to in paragraph 9 above or to any cause beyond their respective controls; (c) in respect of the Offer Shares or the Placement Shares, as the case may be, for which your Electronic Application has been successfully completed and not rejected, acceptance of your Electronic Application shall be constituted by written notification by or on behalf of our Company and the Vendor and not otherwise, notwithstanding any payment received by or on behalf of our Company and the Vendor; (d) you will not be entitled to exercise any remedy for rescission for misrepresentation at any time after acceptance of your application; and (e) reliance is placed solely on information contained in this Prospectus and that none of our Company, the Vendor, the Manager, the Underwriter, the Placement Agent nor any other person involved in the Invitation shall have any liability for any information not so contained. 165

170 Steps for Electronic Applications for Offer Shares through ATMs of DBS Bank (including POSB) Instructions for ATM Electronic Applications will appear on the ATM screens of the Participating Bank. For illustration purposes, the steps for making an ATM Electronic Application through a DBS Bank or POSB ATM are shown below. Certain words appearing on the screen are in abbreviated form ( A/c, amt, appln, &, I/C and No. refer to Account, amount, application, and, NRIC and Number respectively. Instructions for ATM Electronic Applications on the ATM screens of Participating Banks (other than DBS Bank (including POSB)), may differ slightly from those represented below. Step 1: Insert your personal DBS or POSB ATM Card 2: Enter your Personal Identification Number 3: Select CASHCARD & MORE SERVICES 4: Select ESA-IPO SHARE/BOND/RIGHTS 5: Select ELECTRONIC SECURITY APPLICATION (IPO-SHARE/BOND) to ECON 6: Press the ENTER key to acknowledge: (i) (ii) (iii) (iv) You have read, understood and agreed to all terms of the application & the Prospectus. You consent to disclose your name, I/C/Passport No., address, nationality, CDP Securities A/c No., CPF Investment A/c No. and security application amount from your Bank Account(s) to share registrars, SGX, SCCS, CDP, CPF, issuer. For FIXED price share application, this is your only application and it is made in your own name and at your own risk. You are not a US Person as referred to in the Prospectus/Document, where applicable. 7: Select your nationality 8: Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSB account (current/savings) from which to debit your application moneys 9: Enter the number of securities you wish to apply for using cash 10: Enter your own 12-digit CDP Securities Account number. (Note: This step will be omitted automatically if your CDP Securities Account number has already been stored in the Bank s records) 11: Check the details of your share application, your I/C/passport number and CDP Securities Account number and number of securities on the screen and press the ENTER key to confirm application 12: Remove the Transaction Record for your reference and retention only 166

171 Steps for Internet Electronic Applications for Offer Shares through the IB web-site of DBS Bank For illustrative purposes, the steps for making an Internet Electronic Application through the DBS Bank IB web-site is shown below. Certain words appearing on the screen are in abbreviated form ( A/C, amt, &, I/C and No. refer to Account, Amount, and, NRIC and Number respectively), Step 1: Click on to DBS Bank web-site ( 2: Login to Internet banking 3: Enter your User ID and PIN 4: Select Electronic Security Application 5: Click Yes to proceed and to warrant that you have observed and complied with all applicable laws and regulations 6: Click on ECON and click the Submit button 7: Click Confirm to confirm: (a) (b) (c) (d) (e) You have read, understood and agreed to all terms of application and the Prospectus You consent to disclose your name, I/C/Passport No., address, nationality, CDP Securities A/C No., CPF Investment A/C No. and share application amount from your DBS/POSBank Account(s) to share registrars, SCCS, CDP, CPF Board and issuer(s) This application is made in your own name and at your own risk For FIXED price share application, this is your only application. For TENDER price securities application, this is your only application at the selected tender price. You are not a US Person as referred to in the Prospectus/Document, where applicable 8: Fill in details for share application and click Submit 9: Check the details of your share application, your I/C/passport No. and click OK to confirm your application 10: Print Confirmation Screen (optional) for your reference & retention only 167

172 Steps for Internet Electronic Applications for Placement Shares through the web-site of DBS TD Waterhouse For illustrative purposes, the steps for making an application through the web-site of DBS TD Waterhouse is shown below.: Step 1: Access the web-site at 2: Login with user ID and password 3: Click on IPO Centre hyperlink to go to the IPO Section 4: Click on the IPO issue hyperlink 5: Click Yes to confirm, inter alia, that you are in Singapore 6: Confirm the IPO applying for and its details by clicking on the Next button 7: Click Yes and click Submit to confirm, inter alia: (a) (b) (c) (d) (e) (f) You have read a copy of this Prospectus and understood and agreed to all the terms and conditions of application for the shares pursuant to the invitation ( Shares ) and this Prospectus prior to effecting the Electronic Application and agree to be bound by the same. You consent to the disclosure of your name, NRIC or passport number, address, nationality and permanent resident status, CDP Securities Account number, CPF Investment Account number (if applicable) and share application amount from your account with DBS TD Waterhouse to the Share Registrar, SCCS, CDP, CPF, and the Issuer and the Manager. This application is your only application for the Shares and is made in your own name and at your own risk. This application is made in Singapore. You understand that these are not deposits or other obligations of or guaranteed or insured by DBS TD Waterhouse and are subject to investment risks, including the possible loss of the principal amount invested. You are not a US Person. 8: Fill in amount of share applied for and click Submit 9: Check and verify the details of your share application and your personal particulars on the screen 10: Enter your password and click Submit to continue 11: Click on Application Status to check your IPO application details 12: Print page for your reference and retention only 168

173 APPENDIX D RULES OF THE ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME 1. NAME OF SCHEME This Scheme shall be called the Econ Healthcare Employees Share Option Scheme. 2. DEFINITIONS In this Scheme, unless the context otherwise requires, the following words and expressions shall have the following meanings: Act Aggregate Subscription Cost Associate Auditors Board of Directors Committee Controlling Shareholder Date of Grant Director Econ or the Company Econ Group Employee Executive Director Market Day The Companies Act (Chapter 50) of Singapore, as amended or modified from time to time The total amount payable for Scheme Shares which may be acquired on the exercise of an Option shall bear the meaning assigned to it by the Listing Manual of the SGX-ST The auditors of the Company for the time being The board of Directors of the Company The committee comprising the Committee of Directors of the Company appointed by the Board of Directors to administer the Scheme A person who: (a) holds directly or indirectly 15% or more of the nominal amount of all voting Shares in the Company. The SGX- ST may determine that a person who satisfies this paragraph is not a controlling shareholder; or (b) in fact exercises control over the Company The date on which an Option is granted to an Employee pursuant to Rule 5 A Director of the Company for the time being Econ Healthcare Limited, a company incorporated in the Republic of Singapore The Company and its Subsidiaries for the time being An employee (including an employee holding a nonmanagerial position) of the Econ Group including any Executive Director and Non-Executive Director, but excluding any Controlling Shareholder and his Associate, selected by the Committee to participate in the Scheme in accordance with Rule 5(a) of the Scheme A Director who performs an executive function A day on which the Stock Exchange is open for trading in securities 169

174 Market Price Non-Executive Director Offer Option Option Period Participant Performance Criteria Rules Scheme Scheme Shares Selected Employee Shares Shareholders Stock Exchange or SGX-ST Subscription Price The average of the last dealt prices per Share determined by reference to the daily official list published by the Stock Exchange for a period of five (5) consecutive market days immediately prior to the relevant Date of Grant provided always that in the case of a Market Day on which the Shares of the Company are not traded on the Stock Exchange, the last dealt price for Shares on such Market Day shall be deemed to be the last dealt price of the Shares on the immediately preceding Market Day on which the Shares were traded A Director of the Company who does not perform an executive function The Company s offer to a Selected Employee of an Option to subscribe for Shares under the Scheme The right to subscribe for Shares granted or to be granted pursuant to the Scheme Subject as provided in Rule 7, Rule 9(b) and Rule 12 and any other additional conditions as may be introduced by the Committee from time to time, a period commencing the date as provided in Rule 7(a) and expiring at the end of one hundred and twenty (120) months (or sixty (60) months where the Participant is a Non-Executive Director) after such Date of Grant The holder of an Option The performance criteria from time to time approved by the Chairman of the Board of Directors for the determination of the eligibility of Employees to participate in the Scheme Rules of the Scheme and any reference to a particular Rule shall be construed accordingly The Econ Healthcare Employees Share Option Scheme, as the same may be amended from time to time pursuant to the terms and conditions set out herein Shares to be issued under the Scheme An Employee eligible under Rule 5 below and who has been selected by the Committee for the purposes of making an Offer Fully-paid ordinary shares of par value $0.06 each (or such other par value) in the capital of the Company The registered holders of the Shares and in the case of Depositors, Depositors who have Shares entered against their names in the Depository Register The Singapore Exchange Securities Trading Limited The price at which a Participant shall subscribe for each Share upon the exercise of an Option as determined in accordance with Rule 9 170

175 Subsidiaries The subsidiaries of a company (as defined in Section 5 of the Act) and Subsidiary shall be construed accordingly $ and cents Singapore dollars and cents respectively The terms Depositor, Depository, Depository Agent and Depository Register shall have the meanings ascribed to them respectively by Section 130A of the Act. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders. Any reference in this Scheme to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in this Scheme shall have the meaning assigned to it under the said Act. Any reference to a time of a day in the Scheme is a reference to Singapore time. 3. DURATION OF THE SCHEME This Scheme shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten (10) years commencing on the date upon which the Scheme is adopted by the Shareholders at a general meeting; Provided Always that the Scheme may continue beyond the above stipulated period with the approval of the Shareholders by way of an ordinary resolution passed at a general meeting and of any relevant authorities which may then be required. The Scheme may be terminated at any time by the Committee or by an ordinary resolution passed by the Shareholders at a general meeting subject to all other relevant approvals which may be required and if the Scheme is so terminated no further Options shall be offered by the Company hereunder. The termination or discontinuance or expiry of the Scheme, for any reason, shall not affect Options which have been granted and accepted as provided in Rule 5(f) and 5(g) respectively, whether such Options have been exercised (whether fully or partially) or not. 4. LIMITATION ON THE SIZE OF THE SCHEME The total number of Scheme Shares in respect of which Options may be granted on any date, when added to the number of Scheme Shares issued and issuable in respect of all Options granted under this Scheme, shall not exceed fifteen per cent (15%) of the issued share capital of the Company on the day preceding that date. The Options which have already been granted shall not be invalidated in the event that a reduction of the Company s capital or a buy back of its Shares results in the Shares issuable under outstanding Options exceeding fifteen per cent (15%) of the Company s issued share capital. 5. GRANT OF OPTIONS (a) The following persons shall be eligible to participate in the Scheme at the absolute discretion of the Committee: (i) confirmed Employees (including confirmed part-time Employees) who have attained the age of twenty-one (21) years and above on or before the Date of Grant and who meet the Performance Criteria, if applicable; (ii) any Employee who has been selected by the Committee shall be eligible to participate in this Scheme Provided That an Employee who is a member of the Committee shall not be involved in the Committee s deliberations in respect of Options granted or to be granted to that Employee. 171

176 (b) (c) (d) (e) (f) (g) (h) (i) Persons who are Controlling Shareholders or their Associates shall not be eligible to participate in this Scheme (notwithstanding that they meet the eligibility criteria in Rule 5(a)). An Employee shall be entitled to participate in more than one share option scheme of the Company or any of its Subsidiaries. An Employee shall, at the discretion of the Committee, be entitled to participate in the share option scheme of companies in which he is not principally employed. Subject to such adjustment pursuant to Rule 10, the number of Scheme Shares to be offered to an Employee in accordance with the Scheme shall be determined at the absolute discretion of the Committee. In determining the extent of participation of an eligible Employee, the Committee shall take into account criteria such as the seniority of position, performance, length of service and potential for future development of the Employee, Provided Always That: (i) the maximum number of Scheme Shares in respect of which Options may be granted on any date, when added to the number of Scheme Shares issued and issuable in respect of all Options granted under the Scheme, shall not exceed fifteen per cent (15%) of the issued share capital of the Company on the day preceding the Date of Grant of the Options. (ii) any grant of Options to a director or employee of the Company s Subsidiaries together with Options already granted to the Employee under the Scheme, represents five per cent (5%) or more of the total number of Options available to such directors and Employees, must be approved by independent Shareholders. A separate resolution must be passed for each such person and to approve the aggregate number of Options to be made available for grant to all directors and Employees of the Company s Subsidiaries. The Committee shall exercise its discretion in deciding the number of Scheme Shares to grant to each Employee which will depend on the performance and value of the Employee to the Group and shall have the flexibility in deciding whether to issue Shares up to this prescribed limit. Offers may be made at such time as the Committee may determine. The Letter of Offer to grant the Option shall be in or substantially in the form set out in Appendix I (subject to such modifications as may be made by the Committee from time to time). An Option granted to an Employee by the Committee must be accepted by the Employee within fourteen (14) days from the Date of Grant of that Option, and in any event not later than 5.00 p.m. on the fourteenth (14th) day from such Date of Grant, by completing, signing and returning the Acceptance Form in or substantially in the form set out in Appendix II (subject to such modifications as may be made by the Committee from time to time), accompanied by the payment of $1.00 as consideration. The Employee may accept or refuse the whole or any part of the offer. The Committee shall within fifteen (15) Market Days of receipt of the Acceptance Form and consideration thereof, acknowledge receipt of the same. An Option which is granted to a Participant is personal to him and may not be transferred, charged, assigned, pledged or otherwise disposed of or encumbered in whole or in part without the prior written approval of the Committee. Offers shall cease and lapse forthwith automatically and shall no longer be available for acceptance in the following events: (i) the Offer is not accepted within the time stated therein; (ii) the death of the Selected Employee prior to his acceptance of the Offer; (iii) the Selected Executive ceases to be in the employment of the Econ Group for any reason whatsoever; or (iv) the liquidation of the Company. 172

177 (j) (k) Failure by the Selected Executive to complete the Company s prescribed Acceptance Form in accordance with its requirements may render invalid the Selected Executive s acceptance of an Offer. Any Acceptance Form received after the closing date shall not be valid. The Offer is deemed not accepted until actual receipt by the Company of the Acceptance Form. In the event that a grant of an Option results in a contravention of any applicable law or regulation, such grant shall be null and void and of no effect and the relevant Participant shall have no claims whatsoever against the Company. 6. ADMINISTRATION OF SCHEME (a) The Scheme shall be administered by the Committee in its absolute discretion with such powers and duties as are conferred on it by the Board of Directors. (b) The Committee shall have the power, from time to time, to make and vary such regulations (not being inconsistent with this Scheme) for the implementation and administration of the Scheme as they deem fit. (c) Any decision of the Committee, made pursuant to any provisions of the Scheme (other than a matter to be certified by the Auditors), shall be final and binding (including any decisions pertaining to disputes as to interpretation of the Scheme or any rule, regulation, or procedure thereunder as to any rights under the Scheme). The Company shall make the following disclosure in its annual report: (i) The names of the members of the Company administering the scheme; (ii) The information required in the table below for the following Participants: (1) Directors; and (2) Participants, other than those in (1) above, who receive five per cent (5%) or more of the total number of Options available under the Scheme. Name of Participant Options granted Aggregate Options Aggregate Options Aggregate Options during granted since exercised since outstanding as at financial year commencement commencement end of financial under review of Scheme to of Scheme to year under review (including terms) end of financial end of financial year under review year under review (iii) (1) The names of and number and terms of Options granted to each director or employee of the Company s Subsidiaries who receives five per cent (5%) or more of the total number of Options available to all directors and employees of the Company s Subsidiaries under the Scheme, during the financial year under review; and (2) The aggregate number of Options granted to the directors and employees of the Company s Subsidiaries for the financial year under review, and since the commencement of the Scheme to the end of the financial year under review. (iv) In respect of Options granted at a discount, the following disclosure shall be made: (1) the number and proportion of Options granted at a discount of ten per cent (10%) or less during the financial year under review; and (2) the number and proportion of Options granted at a discount of more than ten per cent (10%) during the financial year under review. 173

178 7. RIGHTS TO EXERCISE OPTION (a) A Participant may exercise an Option (other than an Option granted at a discount) in whole or in part as follows: (i) up to fifty per cent (50%) of the Option at any time after twelve (12) months of the Date of Grant of that Option; and (ii) the balance fifty per cent (50%) of the Option at any time after twenty four (24) months of the Date of Grant of that Option. Provided Always that an Option shall be exercised before the end of one hundred and twenty (120) months (or sixty (60) months where the Participant is a Non-Executive Director) of the Date of Grant of that Option and subject to such other conditions as may be introduced by the Committee from time to time. (b) (c) (d) An Option shall, to the extent unexercised, immediately lapse without any claim against the Company: (i) subject to Rules 7(c), (d) and (e), upon the Participant ceasing to be in the employment of any member of the Econ Group for any reason whatsoever; (ii) upon the bankruptcy of the Participant or the happening of any other event which results in his being deprived of the legal or beneficial ownership of or interest in such Options; (iii) in the event of any misconduct on the part of the Participant, as determined by the Committee in its absolute discretion or any breach of any regulation of the Company or Econ Group, such breach being regarded as serious by the Committee in its absolute discretion; or (iv) in the event the Participant ceases to be an employee and joining a competitor or competitors of the Econ Group. For the purpose of Rule 7(b)(i) above, a Participant shall be deemed to have ceased to be so employed as of the date the notice of termination of employment is tendered by or is given to him, unless such notice shall be withdrawn prior to its effective date. If a Participant ceases to be employed by the Econ Group by reason of ill-health, injury, disability (in each case, as evidenced to the satisfaction of the Committee), redundancy, retirement or for any other reason approved in writing by the Committee, he may, at the discretion of the Committee, but subject to Rule 7(a), exercise any unexercised Option within the period of thirty (30) days after the date of such cessation of employment or before the end of one hundred and twenty (120) months (or sixty (60) months where the Participant is a Non-Executive Director) of the Date of Grant of that Option, whichever is earlier, or such other period as approved by the Committee in writing. Upon expiry of such period, the Option shall lapse. If a Participant ceases to be employed by the Econ Group by reason of the company in which he is principally employed ceasing to be a member of the Econ Group or the undertaking or part of the undertaking of such company being transferred otherwise than to another company within the Econ Group, provided the Committee gives its consent in writing, he may, at the discretion of the Committee, exercise any unexercised Option(s) within the period of thirty (30) days after the date of such cessation of employment or before the end of one hundred and twenty (120) months (or sixty (60) months where the Participant is a Non-Executive Director) of the Date of Grant of that Option, whichever is earlier, or such other period as approved by the Committee in writing. Upon the expiry of such period, the Option shall lapse. 174

179 (e) If a Participant dies and at the date of his death the Participant holds any unexercised Option, such Option may at the absolute discretion of the Committee, but subject to Rule 7(a), be exercised by the duly appointed personal representative(s) of the Participant within the period of twelve (12) months after his death or before the end of one hundred and twenty (120) months (or sixty (60) months where the Participant is a Non-Executive Director) of the Date of Grant, whichever is earlier. Upon the expiry of such period, the Option shall lapse. 8. EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES AND NON-EXERCISE OF OPTIONS IN CERTAIN SITUATIONS (A) Exercise of Options, Allotment and Listing of Shares (a) An Option may be exercised in multiples of 1,000 Scheme Shares only and may be exercised, in whole or in part, by a Participant giving notice in writing to the Company in the form or substantially in the form set out in Appendix Ill (subject to such modifications as may be made by the Committee from time to time). Such notice must be accompanied by a remittance for the Aggregate Subscription Cost, the relevant Depository charges and such other documentation as the Committee may require. An Option shall be deemed to be exercised only upon the receipt by the Company of the said notice duly completed and the Aggregate Subscription Cost, the relevant Depository charges and such other documentation as the Committee may require. All payments pursuant to this Clause shall be made by cheque, cashier s order, bank draft or postal order made out in favour of the Company. (b) The Company shall, as soon as practicable after the exercise of an Option allot and issue the relative Scheme Shares to the Participant and shall apply to the Stock Exchange for permission to deal in and for quotation of such Scheme Shares. Scheme Shares which are allotted and issued on the exercise of an Option by a Participant shall be issued, as the Participant may elect, in the Participant s name or in the name of the Depository and credited to the securities account of that Participant or that Participant s securities sub-account with a Depository Agent. Subject to such consents or other required action of any competent authority under such regulations or enactments for the time being in force as may be necessary and subject to compliance with the rules of the Scheme and the Memorandum and Articles of Association of the Company, the Company shall, within ten (10) Market Days after the exercise of an Option, allot and issue the relative Scheme Shares and, within five (5) Market Days after the date of such allotment and issue, despatch to the Participant or the Depository (as the case may be) the relative share certificates by ordinary post or such other mode as the Committee may deem fit. (c) The Scheme Shares shall be subject to all the provisions of the Articles of Association of the Company and shall rank in full for all dividends declared or recommended in respect of the then issued Shares the Record Date of which is on or after the date of the exercise of the Option. The Scheme Shares will rank pari passu in all respects with the then issued Shares of the Company. Record Date means the date on which Shareholders must be registered in order to participate in any dividends or other distributions or other rights. (d) The Company shall maintain sufficient unissued reserved Shares to satisfy the exercise in full of all Options for the time being remaining capable of being exercised. (B) Non-exercise of Options in Certain Situations Upon the expiry of any Option to which a Participant is entitled (which Option has not been exercised or fully exercised), or upon receipt of an irrevocable notice in writing from a Participant to the effect that he does not wish to exercise his entitlement or balance of his entitlement to any Option granted to and accepted by him, the Company shall forthwith cancel the relevant Option or Options and refund to that Participant all monies (if any) paid under Rule 5(g) without interest, benefit, compensation or other share of revenue (if any) arising from the use of the said monies for the meantime. 175

180 9. DETERMINATION OF SUBSCRIPTION PRICE (a) Subject to the provisions of Rules 9(b) and 10 below, the Subscription Price per Share to be paid by way of subscription upon exercise of an Option shall be equal to the Market Price. (b) The Subscription Price of the Options may, at the discretion of the Committee, be set at such discount as may be determined by the Committee, subject to the following conditions: (i) the maximum discount shall not be at a discount rate exceeding twenty per cent (20%) of the Market Price; (ii) the Committee shall exercise any decision to offer Options with an exercise price set at a discount in good faith and only when circumstances require; (iii) if and only if the Committee verily believes that the discount and the quantum thereof would be in furtherance of the core objectives of the Scheme and would be in the best interests of the Company and the prevailing market conditions. In making any determination as to the actual discount applicable to any Option, the Committee shall take into account such criteria as the Committee may, in its absolute discretion, deem appropriate, in particular: (1) the performance of the Company and its Subsidiaries, on the basis of the Econ Group s sales, revenues, profit and/or any other financial parameters as the Committee may, in its absolute discretion, deem appropriate; (2) the individual performance of the Participant, his effectiveness and contribution to the success and development of the Econ Group; and/or (3) the potential for future development of the Participant to the success and development of the Econ Group; and (vi) the Options may only be exercised after two (2) years from the Date of Grant as follows: (1) up to fifty per cent (50%) of such Option any time after thirty six (36) months from the Date of Grant of that Option; and (2) the balance fifty per cent (50%) of the Option at any time after forty eight (48) months of the Date of Grant of that Option; Provided Always that such Option shall be exercised before the end of one hundred and twenty (120) months (or sixty (60) months where the Participant is a Non-Executive Director) of the Date of Grant of that Option and subject to such other conditions as may be introduced by the Committee from time to time. 10. VARIATION OF CAPITAL (a) If a variation in the issued share capital of the Company (whether by way of a capitalisation of profits or reserves or rights issue, capital reduction, sub-division or consolidation of Shares or distribution) shall take place or if there is an offer or invitation made by the Company to Shareholders whereunder they may acquire rights to acquire or subscribe for Shares, then: (i) the Subscription Price; (ii) the nominal value, class and/or number of Scheme Shares comprised in an Option to the extent unexercised; and/or (iii) the nominal value, class and/or number of Scheme Shares over which additional Options may be granted to the Participants; may be adjusted in such manner as the Committee may determine to be appropriate, except in relation to a capitalisation issue, upon the written confirmation of the Auditors (acting only as experts and not as arbitrators) that in their opinion, such adjustment is fair and reasonable. 176

181 (b) Notwithstanding the provisions of Rule 10(a) above, no such adjustment shall be made if, as a result: (i) the Subscription Price shall fall below the nominal value of a Share (in which event the Subscription Price shall be the nominal value of a Share) unless the Committee, after considering all relevant circumstances, considers it just and equitable to do so; and/or (ii) a Participant will not receive a benefit that a Shareholder does not receive. (c) The issue of securities as consideration for an acquisition will not be regarded as a circumstance requiring adjustment. In addition, the cancellation of issued Shares purchased or acquired by the Company by way of a market purchase of such Shares undertaken by the Company on SGX-ST during the period when a share purchase mandate granted by Shareholders of the Company (including any renewal of such mandate) is in force shall not be regarded as a circumstance requiring adjustment. Upon any adjustment made pursuant to this Rule 10, the Company shall notify the Participants (or their duly appointed legal personal representatives) in writing of the Subscription Price thereafter in effect and the nominal value, class and/or number of Scheme Shares thereafter to be issued on the exercise of the Option. Any adjustment shall take effect upon such written notification being despatched. 11. ALTERATION OF THE SCHEME Subject to the Rules, the Scheme may be modified or amended in any respect by a resolution of the Committee except that: (a) no modification or amendment shall alter adversely the rights attaching to any Options granted prior to such modification or alteration except with the consent in writing of such number of Participants who, if they exercised their Options in full, would thereby become entitled to not less than three-quarters (3/4) in nominal amount of all the Scheme Shares which would fall to be issued and allotted upon exercise in full of all outstanding Options; (b) the definitions of Committee, Employee, Option Period, Participant, Subscription Price and the provisions of Rules 4, 5(a), 5(b), 5(c), 5(d), 5(e), 5(f), 6, 7, 8(A)(c), 8(A)(d), 9, 10 and this Rule 11 shall not be altered to the advantage of Participants except with the prior sanction of the Shareholders at a general meeting; and (c) no modification or amendment shall be made without the prior approval of the Stock Exchange and/or any other relevant competent regulatory authorities. Written notice of any modification or alteration made in accordance with this Rule shall be given to all Participants. Shareholders who are eligible to participate in the Scheme must abstain from voting on any resolution relating to the Scheme (other than a resolution relating to the participation of, or grant of, Options to, directors and employees of the Company s Subsidiaries). Directors and employees of the Subsidiaries of the Company, who are also Shareholders and are eligible to participate in the Scheme must abstain from voting on any resolution relating to the participation of, or grant of Options to, directors and employees of the Subsidiaries of the Company. 177

182 12. TAKE-OVER AND WINDING UP OF THE COMPANY (a) In the event of a take-over offer being made for the Company, a Participant holding an Option shall, subject to Rule 7, Rule 9(b) and Rule 12(e), be entitled within six (6) months of the date on which such offer is made or, if such offer is conditional, within six (6) months of the date on which the offer becomes or is declared unconditional (but not after the expiry of the Option Period relating thereto), to exercise in full or in part any Option as yet unexercised. However, if during such period of six (6) months, a party becomes entitled or bound to exercise rights of compulsory acquisition of the Shares under the provisions of any applicable law and gives notice to the Participant that it intends to exercise such rights on a specified date, the Option shall remain exercisable by the Participant until the expiry of such specified date or the expiry of the Option Period relating thereto, whichever is earlier. Any Option not so exercised shall lapse unless the rights of acquisition or obligations to acquire shall have been exercised or performed, as the case may be. If such rights or obligations have not been exercised or performed, the Option shall, subject to Rule 7, Rule 9(b) and Rule 12(e), remain exercisable until the expiry of the Option Period relating thereto. For the avoidance of doubt, the provisions of this Rule 12(a) shall not come into operation in the event that a take-over offer which is conditional does not become or is not declared unconditional. (b) If under any applicable law, the court sanctions a compromise or arrangement, proposed for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with another company or companies, each Participant shall be entitled, subject to Rule 7, Rule 9(b) and Rule 12(e), to exercise any Option then held by him during the period commencing on the date upon which the compromise or arrangement is sanctioned by the court and ending either on the expiry of sixty (60) days thereafter or the date upon which it becomes effective, whichever is later (but not after the expiry of the Option Period relating thereto), whereupon the Option shall automatically lapse and so thereafter become null and void. (c) In the event of a members solvent voluntary winding-up (other than for amalgamation or reconstruction) of the Company, the Participant shall be entitled within thirty (30) days of the passing of the resolution of such winding-up (but in any event prior to the expiration of the Option Period relating thereto) to exercise in full any unexercised Option, after which such unexercised Option shall, subject to Rules 7, 9(b) and 12(e), lapse and become null and void. (d) If an order or an effective resolution is passed for the winding-up of the Company on the basis of its insolvency, all Options, to the extent unexercised, shall automatically lapse and thereafter be null and void. (e) If in connection with the making of a general offer referred to in Rule 12(a) or the scheme referred to in Rule 12(b) or the winding up referred to in Rule 12(c), arrangements are made (which are confirmed in 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 continuation of their Options or the payment of cash or the grant of other options or otherwise, a Participant holding an Option, which is not then exercised, shall not, except at the discretion of the Committee, be permitted to exercise that Option as provided for in this Rule 12. (f) To the extent that an Option is not exercised within the periods referred to in this Rule 12, it shall lapse. 13. RIGHTS AND OBLIGATIONS OF EXECUTIVES AS EMPLOYEES UNAFFECTED The terms of employment of a Participant shall not be affected by his participation in this Scheme which shall neither form part of such terms nor entitle him to take into account such participation in calculating any compensation or damages on the termination of such Participant s employment for any reason. 178

183 14. NOTICES (a) Any notice required to be given by a Participant to the Company shall be sent or made to the registered office of the Company or such other address as may be notified by the Company to him in writing. (b) Participants shall be entitled to receive copies of all notices, reports and accounts of the Company sent to Shareholders. Such notices or documents required to be given to a Participant shall be delivered to him by hand or sent to him at his home address according to the records of the Company and if delivered personally, shall be deemed to have been given on the date of delivery and if sent by post, shall be deemed to have been given on the day following the date of posting. 15. TAXES All taxes (including income tax) arising from the exercise of any Option granted to any Participant under the Scheme shall be borne by that Participant. 16. COSTS AND EXPENSES OF SCHEME (a) Each Participant shall be responsible for all fees of the Depository relating to or in connection with the issue and allotment of any Scheme Shares, the deposit of share certificate(s) with the Depository, the Participant s securities account with Depository, or the Participant s securities sub-account with a Depository Agent (collectively, the Depository Charges ). (b) Save for the taxes referred to in Rule 15 and the fees referred to in Rule 16(a), all fees, costs and expenses incurred by the Company in relation to the Scheme including but not limited to the fees, costs and expenses relating to the issue and allotment of the Shares of the Company pursuant to the exercise of any Option shall be borne by the Company. 17. DISPUTES Any disputes or differences of any nature arising thereunder shall be referred to the Committee and its decision shall be final and binding in all respects. 18. DISCLAIMER OF LIABILITY Notwithstanding any provisions contained herein and subject to applicable laws, the Committee and the Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to the Company s delay in issuing the Scheme Shares or procuring the listing of the Scheme Shares on the Stock Exchange in accordance with Rule 8A(b) (and any other stock exchange on which the Shares are quoted or listed). 19. CONDITION OF OPTION Every Option shall be subject to the condition that no Shares shall be issued pursuant to the exercise of an Option if such issue would be contrary to any law or enactment, or any rules or regulations of any legislative or non-legislative governing body for the time being in force in the jurisdiction of Singapore or any other relevant country. 20. GOVERNING LAW This Scheme shall be governed by and construed in accordance with the laws of Singapore. The Participants, by accepting Options in accordance with the Scheme, and the Company irrevocably submit to the exclusive jurisdiction of the courts of Singapore. 179

184 APPENDIX I ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME LETTER OF OFFER Serial No. Private & Confidential Date: To: Name Designation Address Dear Sir/Madam We have the pleasure of informing you that you have been nominated by the Committee of Directors of Econ Healthcare Limited (the Company ) to participate in the Econ Healthcare Employees Share Option Scheme (the Scheme ). Accordingly, an offer is hereby made to grant you an Option (as defined in the Scheme), in consideration of the payment of a sum of $1.00, to subscribe for and be allotted ordinary shares of $0.06 each in the issued and paid-up share capital of Company (the Shares ) at the price of $ per Share. The Option shall be subject to the rules of the Scheme, a copy of which is enclosed herewith. The Option is personal to you and shall not be transferable, assignable or chargeable to any other person in whole or in part save as provided in the Scheme. If you wish to accept the offer, please sign and return the enclosed Acceptance Form with a sum of $ not later than (a.m./p.m.) on, failing which this offer shall automatically lapse and shall thereafter be null and void. Yours faithfully The Committee ECON HEALTHCARE LIMITED Employees Share Option Scheme 180

185 APPENDIX II ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME ACCEPTANCE FORM Private & Confidential Serial No.: To: The Company Secretary Econ Healthcare Limited 452 Upper East Coast Road Singapore Closing Time and Date for Acceptance of Offer : Number of Shares offered : Subscription Price per Share : $ Total Amount Payable for the Shares (exclusive of the relevant Charges) : $ I have read your Letter of Offer dated (Date of Grant) and agree to be bound by the Rules of the Econ Healthcare Employees Share Option Scheme stated therein. I hereby accept the Option to subscribe for Shares at $ for each Share and enclose a *cheque/cashier s order/banker s draft postal order for $ as consideration for the grant of the Option. I am aware that I am not obliged to exercise my I acknowledge and confirm that I shall be responsible for the payment (if any) of all fees of the Depository relating to or in connection with the allotment and issue of any Shares in the Depository s name, the deposit of share certificate(s) with the Depository, my securities account with the Depository or my securities sub-account with a Depository Agent (as the case may be)(collectively, the Depository Charges ). I further acknowledge and confirm that you have not made any representation to induce me to accept this offer in respect of the said Option and that the terms of the Letter of Offer and this Acceptance Form constitute the entire agreement between us relating to the offer. 181

186 Please print in block letters Name in Full : Designation : Address : Nationality : *NRIC/Passport No. : Signature : Date : Notes: 1. Shares must be accepted in full or in multiples of 1, The Acceptance Form must be forwarded to the Company Secretary in an envelope marked Private and Confidential. 3. The Participant shall be informed by the Company of the relevant Depository Charges payable at the time of the exercise of an option, if any. *Delete applicable 182

187 APPENDIX III ECON HEALTHCARE EMPLOYEES SHARE OPTION SCHEME EXERCISE NOTICE Serial No.: Private & Confidential To: The Company Secretary Econ Healthcare Limited 452 Upper East Coast Road Singapore Total number of ordinary shares of $ each (the Shares ) offered at $ for each Share under the Scheme on (Date of Grant) : Number of Shares previously allotted and issued thereunder : Outstanding balance of Shares to be allotted and issued thereunder : Number of Shares now to be subscribed : 1. Pursuant to your Letter of Offer dated (Date of Grant) and my acceptance thereof, I hereby exercise the Option to subscribe for Shares in the capital of Econ Healthcare Limited at $ per Share. 2. I hereby request the Company to allot and issue the number of Shares specified in paragraph 1 above *in my name/in the name of to the credit of my securities account with the Depository or my securities sub-account with the Depository Agent specified below and to deliver the share certificate(s) relating thereto to me/the further agree to bear such fees or other charges as may be imposed by the Depository (the Depository Charges ) in respect thereof: *(a) Direct Securities Account Number or *(b) Sub-Account Number Name of Depository Agent 3. I enclose a *cheque/cashier s order/bank draft/postal order no. of $ in payment for the following: (a) Subscription of $ for the total number of the said shares; and Charges of $. 4. I agree to subscribe for the said Shares subject to the terms of the Letter of Offer, the Econ Healthcare Employees Share Option Scheme and the Memorandum and Articles of Association of the Company. 5. I declare that I am subscribing for the said Shares for myself and not as a nominee for any other person. 183

188 Please print in block letters Name in Full : Designation : Address : Nationality : *NRIC/Passport No. : Signature : Date : Notes: 1. An Option may be exercised, in whole or in part, provided that an Option may be exercised in part only in respect of 1,000 Shares or any multiple thereof. 2. The Exercise of Option to Subscribe must be forwarded to the Company Secretary in an envelope marked Private and Confidential. *Delete applicable 184

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190 Always giving you our best care and attention ECON HEALTHCARE LIMITED 452 Upper East Coast Road Singapore Tel: (65) Fax: (65) Website: