Etika Ipo PDF

PROSPECTUS DATED 13 DECEMBER 2004
(Registered by the Monetary Authority

of Singapore on 13 December 2004)
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 (the "SGX-ST") for permission to deal in, and for quotation of, all the ordinary shares of
S$0.06 each (our "Shares") in the capital of Etika International Holdings Limited (our "Company") already issued, the new Shares which are the subject of the
Invitation (the "New Shares") as well as the new Shares to be allotted and issued pursuant to the exercise of options granted under the Etika Employee Share
Option Scheme ("ESOS Shares"). Such permission will be granted when we have been admitted to the Official List of the SGX-ST Dealing and Automated Quotation
System (the "SGX-SESDAQ"). Acceptance of applications will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in and for quotation
of all our existing issued Shares, the New Shares and the ESOS Shares. If the completion of the Invitation does not occur because the SGX-STs permission is not
granted, or if the Monetary Authority of Singapore (the Authority) refuses to register this Prospectus or for any other reasons, monies paid in respect of any
application accepted will be returned to you, at your own risk, without interest or any share of revenues or other benefit arising therefrom and you will not have
any claims whatsoever against us or the Manager, the Underwriter, the Placement Agent and the Sub-Placement Agent. The dealing in and quotation of the
Shares will be in Singapore dollars.
The SGX-ST assumes no responsibility for the correctness of any of the statements or opinions made or reports contained 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 subsidiary, our Shares, the New Shares or the ESOS Shares.
A copy of this Prospectus together with copies of the Application Forms (as defined herein) has been lodged
with and registered by the Authority. The Authority assumes no responsibility for the contents of this Prospectus.
Registration of the Prospectus by the Authority does not imply that the Securities and Futures Act (Chapter
289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority
has not, in any way, considered the merits of
our Shares, the New Shares or the ESOS
Shares, 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 six 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 29 OF THIS
PROSPECTUS.
Etika International Holdings Limited

(Incorporated in the Republic of Singapore on 23 December 2003)
(Registration Number: 200313131Z)
Invitation in respect of 43,000,000 New Shares of S$0.06 each comprising:(1) 2,000,000 Offer Shares at S$0.21 for each Offer Share by way of
public offer; and
(2) 41,000,000 Placement Shares by way of placement, comprising:(a) 37,500,000 Placement Shares at S$0.21 for each Placement
Share; and
(b) 3,500,000 Reserved Shares at S$0.21 for each Reserved Share
reserved for our Independent Directors, employees, business
associates and others who have contributed to the success of
our Group,
payable in full on application.
Manager
PrimePartners Corporate Finance Pte. Ltd.
Underwriter and Placement Agent
Sub-Placement Agent
DMG & Partners Securities Pte. Ltd.
Corporate Profile
Etika International Holdings Limited is a manufacturer and distributor
of sweetened condensed milk and evaporated milk, as well as
a repacker and distributor of complementary products such as
full cream and instant high-calcium non-fat milk powder, instant
coffee powder and tea dust.
Our Brands & Products

Dairy Champ
- Sweetened condensed milk
Sweetened condensed
filled milk
Sweetened creamer
- Evaporated milk
Evaporated filled milk
Evaporated creamer
- Full cream milk powder
- Instant high-calcium non-fat
milk powder
* Teh Tarik Champ
Tea Dust
* Kopi Champ
Instant coffee powder
We also manufacture,
through OEM arrangements, a range of products
under at least 12 third-party brands which are sold domestically
as well as exported to countries shown below.
Distribution
Network
CENTRAL
AMERICA
MIDDLE
EAST
WEST
AFRICA
EAST & WEST

MALAYSIA
EAST
AFRICA
OEM
- ASEAN,
Africa, Central and
South America,
Middle East, Asia Pacific and
others
Malaysian
Distribution Network
Alor Setar
Sungai Petani
Butterworth
For Dairy Champ

- East & West Malaysia,
Indonesia, Brunei, Myanmar,
New Zealand, Middle East,
Central America, East Africa
and West Africa
Kota
Kinabalu
Ipoh
Miri
Klang
Kuantan
Seremban
Malacca
Mentakab
Batu Pahat
Johor Bahru
Competitive Strengths
Experienced management team
- Experienced team which is familiar with the milk product industry
- Together, our management possesses a wide range of expertise
including strategic planning, business development and indepth operational and production expertise specific to the
milk product industry
Brand Recognition
- Dairy Champ brand is one of the more
recognisable brands in Malaysia, known for
its price competitiveness and high quality
- Sponsor of Teh Tarik competitions, social
and charity events, Ministry of Culture and
Tourism's Malaysian open house events
- Awarded Superbrands Status 2003/2004
Extensive distribution network and well-diversified

customer base
- Sells and distributes directly to wholesalers, dealers, retailers
and on-premise business operators such as Mamak
stalls/Restaurants, coffee shops and Teh Tarik stalls throughout
Malaysia
- Our products are also distributed through Carrefour and Giant
(under in-house brands) as well as the Makro chain of
hypermarkets (under the Dairy Champ brand)
- Exporting products under our Dairy Champ brand and at least

12 third-party brands under OEM arrangements to various
countries
Quality Products
- Our HACCP and Quality Assurance programs are monitored
by the Department of Veterinary Services, Ministry of Agriculture,
Malaysia
- Several large hypermarket chains such as Carrefour and Giant
have approached our Group to retail our products under OEM
arrangements
Cost Efficient Operations

- Adoption of a cost-focused approach to preserve and/or grow
our gross profit margin
- Proximity to Port Klang allows savings on haulage charges for
the import and export of raw materials and products
- The implementation of HACCP in our production processes has
enabled us to achieve greater productivity and profitability
through, inter alia, wastage reduction
Established customer relationships

- We have good long-term customer relationships, the majority
of whom are dealers and wholesalers who have been dealing
with us since the Company started its operations.
Prospects
Domestic market
- Healthy economic and population growth in Malaysia
- We enjoy popular consumption of and a strong demand
for, our products in households and restaurants, which are
driven by the proliferation of Mamak stalls/Restaurants
throughout Malaysia
- High traffic outlets such as supermarkets or megamarkets
have been identified as an additional channel to boost
domestic sales going forward
Export market
- Continuing high level of demand for sweetened condensed
milk and evaporated milk in developing countries in tandem
with population growth and economic developments.
- Exploring new markets such as PRC and Hong Kong
- Maintaining export sales of at least one-third of total revenue
Business Strategy
Increase production capacity
- Install steriliser for evaporated milk
- New production line for sweetened condensed milk
- Factory extension for additional warehousing space
Expand overseas market

Export sales expected to grow at a higher rate than domestic
sales
Move the sale of products through current OEM arrangements
under third-party brands to focus on sales of products under
Dairy Champ brand
Expansion of the overseas markets through the setting up of
overseas subsidiaries or through more co-packing arrangements
Expand breadth & depth of Malaysian market

Expand product range (in terms of pack sizes)
Increase sales and marketing team in existing sales offices
Financial Highlights
Year ended 30 September
RM million
Profit after income tax
Revenue
8
7.3
120
116.4
100
80
77.0
71.4
4.0
71.1
60
40
2
1.3
20
0.008
0
FY2001
FY2002
FY2003
*FY2004
* Based on unaudited management accounts for FY2004
FY2001
FY2002
FY2003
*FY2004
CONTENTS
Page
CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . .
14
DETAILS OF THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Listing on the SGX-SESDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
Indicative Timetable for Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Overview of Our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
22
Summary Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24
THE INVITATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
SELLING RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27
EXCHANGE RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
Risks Related to Our Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29
Risks Related to Political and Economic Considerations . . . . . . . . . . . . . . . . . . . . . . . .
34
Risks Related to Our Securities and Our Trading Market . . . . . . . . . . . . . . . . . . . . . . .
36
INVITATION STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
40
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41
SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48
RESTRUCTURING EXERCISE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
49
GROUP STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . .
51
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND

FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
Review of Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57
Review of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64
CONTENTS
Capital Expenditure and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
Foreign Exchange Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71
Credit Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
Inventory Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73
Profit Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
Significant Changes in Accounting Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
74
HISTORY AND BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
History and Development of Our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77
Quality and Reliability Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
Awards and Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84
Customers and Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
Marketing and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
Suppliers and Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
88
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
89
Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
Training Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94
Competitive Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
95
Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
Properties and Fixed Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
99
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . . . . . .
102
Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Business Strategies and Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
104
DIRECTORS, MANAGEMENT AND STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
Management Reporting Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
106
Senior Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
109
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
110
Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
111
Service Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
113
Etika Employee Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114
CONTENTS
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
Ownership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
Moratorium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
118
INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS . . . . . . . . . .
119
Past Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
119
Existing and Future Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
Review Procedures for Future Interested Person Transactions . . . . . . . . . . . . . . . . . . .
122
Potential Conflict of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124
DESCRIPTION OF ORDINARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
EXCHANGE CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
Exchange Controls in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
129
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
130
CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
133
INDEPENDENT COMPILATION REPORT IN RELATION TO THE PROFORMA FINANCIAL

INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
134
GENERAL AND STATUTORY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
162
APPENDIX A
: TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND

ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A-1
APPENDIX B : AUDITED FINANCIAL STATEMENTS OF ETIKA DAIRIES SDN. BHD.

FOR THE FINANCIAL YEARS ENDED 30 SEPTEMBER 2001, 2002 AND
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B-1
APPENDIX C : AUDITED FINANCIAL STATEMENTS OF ETIKA DAIRIES SDN. BHD.

FOR THE EIGHT MONTHS FINANCIAL PERIOD ENDED 31 MAY 2004
C-1
APPENDIX D : THE LETTER FROM THE REPORTING ACCOUNTANTS IN RELATION

TO THE EXAMINATION OF THE PROFIT ESTIMATE FOR THE
FINANCIAL YEAR ENDED 30 SEPTEMBER 2004 . . . . . . . . . . . . . . . . .
D-1
APPENDIX E
E-1
: RULES OF ETIKA EMPLOYEE SHARE OPTION SCHEME. . . . . . . . . . .
CORPORATE INFORMATION
BOARD OF DIRECTORS
Dato Jaya J B Tan (Non-Executive Chairman)

Kamal Y P Tan (Executive Director)
Tajuddin Joe Hok Tan (Non-Executive Director)
Mah Weng Choong (Non-Executive Director)
Khor Sin Kok (Alternate Director to Mah Weng Choong)
Teo Chee Seng (Independent Director)
John Lyn Hian Woon (Independent Director)
COMPANY SECRETARY
Julie Koh Ngin Joo, ACIS
REGISTERED OFFICE
10 Collyer Quay #19-08

Ocean Building
Singapore 049315
MANAGER AND
SUB-PLACEMENT AGENT

1 Raffles Place #30-03
OUB Centre
Singapore 048616
UNDERWRITER AND
PLACEMENT AGENT

Ocean Towers
Singapore 048620
REPORTING ACCOUNTANTS
AND AUDITORS OF THE
COMPANY
BDO International
Certified Public Accountants
5 Shenton Way #07-00
UIC Building
Singapore 068808
AUDITORS OF THE
MALAYSIAN SUBSIDIARY
BDO Binder
Chartered Accountants
12th Floor, Menara Uni Asia
1008 Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
SOLICITORS TO THE
INVITATION
Stamford Law Corporation

Republic Plaza
Singapore 048619
LEGAL ADVISERS TO THE

COMPANY ON MALAYSIAN
LAW
Shearn Delamore & Co.

7th Floor, Wisma Hamzah-Kwong Hing
No. 1, Leboh Ampang
50100 Kuala Lumpur
Malaysia
SHARE REGISTRAR FOR THE

INVITATION AND SHARE
TRANSFER AGENT
Lim Associates (Pte) Ltd

Ocean Building
Singapore 049315
CORPORATE INFORMATION
PRINCIPAL BANKER OF THE
COMPANY
Malayan Banking Berhad

Maybank Tower
2 Battery Road
Singapore 049907
PRINCIPAL BANKER OF THE

MALAYSIAN SUBSIDIARY

50-52 Jalan Sultan
46200 Petaling Jaya
Malaysia
RECEIVING BANKER

Maybank Tower
2 Battery Road
Singapore 049907
DEFINITIONS
In this Prospectus and the accompanying Application Forms, and, in relation to the Electronic
Applications, the instructions appearing on the screens of ATMs or the IB websites of the relevant
Participating Banks unless the context otherwise requires, the following terms or expressions shall
have the following meanings:
Group Companies
Company or Etika
International Holdings
Limited
Etika International Holdings

Corporation Private Limited)
Limited
(formerly
Etika
Group or the Etika Group
Etika International Holdings Limited and its wholly owned

subsidiary, Etika Dairies Sdn. Bhd.
Proforma Group
Our Group, assuming that it had been in place since 1 October

2000
EDSB
Etika Dairies Sdn. Bhd.
Other Companies, Organisations and Agencies

AFTA
ASEAN Free Trade Agreement
ASEAN
Association of Southeast Asian Nations (member countries

being Brunei Darussalam, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Philippines, Singapore, Thailand and
Vietnam)
CDP or Depository
The Central Depository (Pte) Limited
Danaharta
Pengurusan Danaharta Nasional Berhad
DMG or Underwriter
and/or Placement Agent
PHIM
Perbadanan Harta Intelek Malaysia or Intellectual Property

Corporation of Malaysia
MAS or Authority
Monetary Authority of Singapore
Maybank Malaysia
Maybank Singapore
Malayan Banking Berhad (Singapore branch)
MIDA
Malaysia Industrial Development Authority
MITI
Ministry of International Trade and Industry, Malaysia
PPCF or Manager or
Sub-Placement Agent
SGX-SESDAQ
SGX-ST Dealing and Automated Quotation System
SGX-ST
Singapore Exchange Securities Trading Limited
DEFINITIONS
General
Application Forms
The printed application forms to be used for the purpose of the

Invitation and which form part of this Prospectus
Application List
The list of applications for subscription of the New Shares
Associate(s)
(a)
(b)
Associated Company
In relation to any director, chief executive officer or

substantial shareholder (being an individual) means:
(i)
his immediate family;
(ii)
the trustees, acting in their capacity as such

trustees, of any trust of which he or his immediate
family is a beneficiary or, in the case of a
discretionary trust, is a discretionary object; and
(iii)
any company in which he and his immediate family

together (directly or indirectly) have an interest of
30% or more.
in relation to a substantial shareholder (being a

company) means any other company which is its
subsidiary or holding company or is a fellow subsidiary of
any such holding company or one in the equity of which
it and/or such other company or companies taken
together (directly or indirectly) have an interest of 30% or
more
In relation to a corporation, means:

(a)
any corporation in which the corporation or its subsidiary

has, or the corporation and its subsidiary together have,
a direct interest of not less than 20% but not more than
50% of the aggregate of the normal amount of all the
voting shares; or
(b)
any corporation, other than a subsidiary of the

corporation or a corporation which is an associated
company by virtue of paragraph (a), the policies of which
the corporation together with its subsidiary, is able to
control or influence materially
ATM
An automated teller machine of a Participating Bank
Audit Committee
The audit committee of our Board
Board or Board of
Directors
The board of Directors of our Company
Companies Act
The Companies Act (Chapter 50) of Singapore
Directors
The directors of our Company as at the date of this Prospectus
Electronic Applications
Applications for the Offer Shares made through an ATM or

through the IB websites of the relevant Participating Banks in
accordance with the terms and conditions set out in this
Prospectus
DEFINITIONS
EPF
Employees Provident Fund
EPS
Earnings per Share
ESOS
The Etika Employee Share Option Scheme
ESOS Shares
The new Shares to be allotted and issued pursuant to the

exercise of options granted under the ESOS
Executive Directors
The executive directors of our Company as at the date of the

Prospectus, unless otherwise stated
Executive Officers
The executive officers of our Group as at the date of this

Prospectus, unless otherwise stated
Founding Members
Collectively the Tan Brothers, Messrs Mah Weng Choong,

Khor Sin Kok and Chung Chee Fook
FP
Financial period for eight months beginning from 1 October

and ending on 31 May
FY
Financial year ended 30 September
IB
Internet Banking
Independent Directors
The independent Directors of our Company as at the date of

the Prospectus, unless otherwise stated
Invitation
Our invitation to the public in Singapore to subscribe for the

New Shares at the Issue Price, on the terms and subject to the
conditions of this Prospectus
Issue Price
S$0.21 for each New Share
Latest Practicable Date
22 October 2004, being the latest practicable date prior to the

lodgement of this Prospectus with the Authority
Listing Manual
The Listing Manual of the SGX-ST, as may be amended from

time to time
Market Day
A day on which the SGX-ST is open for trading in securities
New Shares
The 43,000,000 new Shares for which we invite applications

for subscription, on the terms and subject to the conditions of
this Prospectus
Nominating Committee
The nominating committee of our Board
Non-Executive Directors
The non-executive Directors of our Company (including our

Independent Directors) as at the date of this Prospectus
NTA
Net tangible assets
Offer
The offer by us of the Offer Shares to the public in Singapore

for subscription at the Issue Price on the terms and subject to
the conditions set out in this Prospectus
DEFINITIONS
Offer Shares
The 2,000,000 New Shares which are the subject of the Offer
p.a.
Per annum
Participating Banks
DBS Bank Ltd (including POSB) (DBS Bank), OverseaChinese Banking Corporation Limited (OCBC), and United
Overseas Bank Limited and its subsidiary, Far Eastern Bank
Limited (the UOB Group)
PER
Price earnings ratio
Placement
The placement of the Placement Shares by the Placement

Agent on our behalf for subscription at the Issue Price, on the
terms and subject to the conditions of this Prospectus
Placement Shares
The 41,000,000 New Shares which are the subject of the

Placement
PRC
The Peoples Republic of China
Prospectus
This Prospectus dated 13 December 2004 issued by our

Company in respect of the Invitation
Remuneration Committee
The remuneration committee of our Board
Restructuring Exercise
The restructuring exercise undertaken by our Group as

described under the section entitled Restructuring Exercise
of this Prospectus
SARS
Severe Acute Respiratory Syndrome
Sale and Purchase

Agreement
The Sale and Purchase Agreement dated 5 November 2004

made between our Company and the shareholders of EDSB
Securities Account
The securities account maintained by a Depositor with CDP

but does not include a securities sub-account
Securities and Futures Act
Securities and Futures Act (Chapter 289) of Singapore
SGX-ST Listing Manual
The listing manual issued by the SGX-ST, as amended or

modified from time to time
Share Registrar
Lim Associates (Pte) Ltd
Share Transfer Agreements
The share transfer agreements dated 5 November 2004 and 8

November 2004 respectively, made between our Company
and all the shareholders of EDSB (being shareholders of
EDSB prior to the Restructuring Exercise)
Shares
Ordinary shares of S$0.06 each in the share capital of our

Company
Shareholders
Shareholders of our Company
DEFINITIONS
Share Consolidation
The consolidation of three ordinary shares of S$1.00 each in

the authorised and issued and paid-up share capital of our
Company into one ordinary share of S$3.00 each, as
described under the section entitled Share Capital of this
Prospectus
Sub-division
The sub-division of one ordinary share of S$3.00 each in the

authorised and issued and paid-up share capital of our
Company into 50 ordinary shares of S$0.06 each, as
described under the section entitled Share Capital of this
Prospectus
Substantial Shareholder
A person who has an interest in Shares, the nominal amount of

which is 5% or more of the nominal amount of all the Shares
of our Company
Tan Brothers
Dato Jaya J B Tan, Kamal Y P Tan and Tajuddin Joe Hok Tan
UK
United Kingdom
US or USA
United States of America
% or per cent.
Per centum or percentage
Gram
kg
Kilogram
sq ft
Square feet
B$
Bruneian dollars and cents respectively
Euro
The currency used by members of the European Union
RM and sen
Malaysian Ringgit and cents respectively
SGD or $ or S$ and
cents
Singapore dollars and cents respectively
USD or US$ and US

cents
United States dollars and cents respectively
Currencies and Units
The expressions Depositor, Depository Agent and Depository Register shall have the meanings
ascribed to them respectively in Section 130A of the Companies Act.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders and
vice versa. References to persons shall include corporations.
Any reference in this Prospectus, the Application Forms and Electronic Applications to any statute or
enactment is a reference to that statute or enactment as for the time being amended or re-enacted. Any
word defined under the Companies Act and the Securities and Futures Act or any statutory modification
thereof or the SGX-ST Listing Manual and used in this Prospectus, the Application Forms and the
10
DEFINITIONS
Electronic Applications shall, where applicable, have the meaning assigned to it under the Companies
Act and the Securities and Futures Act, or such statutory modification, or the SGX-ST Listing Manual
as the case may be.
Any reference in this Prospectus, the Application Forms and Electronic Applications to Shares being
allotted to an applicant includes allotment and/or allocation to CDP for the account of that applicant.
Any reference to a date or time of day in this Prospectus, the Application Forms and Electronic
Applications shall be a reference to Singapore date or time, as the case may be, unless otherwise
stated.
Any references to our, ourselves, us and we or other grammatical variations thereof in this
Prospectus shall, unless otherwise stated, mean our Company, our Group or any member of our Group
as the context requires.
Any discrepancies in the tables included in this Prospectus between the listed amounts and the totals
thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures which precede them.
11
GLOSSARY OF TECHNICAL TERMS

To facilitate a better understanding of the business of our Group, the following glossary provides a
description of some of the technical terms and abbreviations commonly found in our industry and/or
used in this Prospectus. The terms and their assigned meaning may not correspond to standard
industry meanings or usage of these terms.
De-aeration
The process in which a machine/de-aerator equipment

removes air bubbles trapped in our milk products during the
mixing process
Evaporation
The process in which water in our milk product is transformed

into vapour, in order that the fixed matter contained in the
product can achieve a desired level of consistency and density
HACCP
An acronym for Hazard Analysis Critical Control Points, which

is a management system for the assurance of food safety that
identifies, evaluates and controls hazards to ensure food
safety. It is a standard commonly utilised by the food
processing industry to safeguard the quality and processing of
food products and can be applied throughout the food chain
from primary production to final consumption
Homogenisation
The process of blending one liquid into another or uniformly

dispersing solid particles throughout a liquid to improve
consistency, stability, shelf life, flavour and a host of other
important product qualities such as enhanced texture and
taste, batch-to-batch consistency and uniformity, among
others
Mamak Stalls/Restaurants
Roadside food stalls and/or restaurants found throughout

Malaysia
OEM
An acronym for Original Equipment Manufacturers. In the

context of this Prospectus, this refers to contract
manufacturers of milk products
Pasteurisation
The process of heating certain food products or beverages to

a certain temperature for a fixed length of time to kill any
harmful bacteria and micro-pathogens, without deteriorating
the quality and flavour of the product
QAP
An acronym for Quality Assurance Program, which is a

program monitored by the Ministry of Agriculture, Malaysia
Seaming
In the context of this Prospectus, a term used to refer to the

process of sealing an open-top can with a lid. The filled cans
of sweetened condensed milk from the filling machine are
passed through a seaming machine where sterilised lids are
coded, capped and seamed around the open end of the cans.
The lids are embossed with our product code and expiry date,
capped and ultimately seamed around the open end of the
cans
Standardisation
In the context of this Prospectus, it refers to a process by

which our milk products contained in our storage tanks, having
passed through a laboratory analysis, may be standardised to
our required percentage of fat and total solids
12
GLOSSARY OF TECHNICAL TERMS

Sterilisation
The process of removing any and all bacteria and other

micro-organisms in our milk products
Teh Tarik
Tea normally prepared with condensed milk, cooled by the

process of continuously pouring tea from one pot to another
and subsequently served to consumers
UHT Beverage
Beverage prepared by an ultra high temperature heat

treatment process and subsequently packed in paper cartons
13
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

All statements contained in this Prospectus, statements made in press releases and oral statements
that may be made by our Group or our officers, Directors or employees acting on our behalf, that are
not statements of historical fact, constitute forward-looking statements. We use words such as
estimate, if, possible, probable, project, forecast, anticipate, believe, expect, future,
intend, may, will, should, would, could, plan and similar expressions to identify forwardlooking statements. However, you should note that these words are not exclusive means of identifying
forward-looking statements. All statements regarding our Groups expected financial position, operating
results, profit estimate, business strategy, plans and future prospects, or the future prospects of our
industry are forward-looking statements. These forward-looking statements, including statements as to
our Groups revenue, profitability, prospects, future plans, expected growth in our industry and other
expected industry trends and other matters discussed in this Prospectus that are not historical fact, are
only predictions. These forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our Groups actual results, performance or achievements to be
materially different from any future results, performance or achievements expected, expressed or
implied by these forward-looking statements. These risks, uncertainties and other important factors
include, amongst others, the following:
changes in the political, social and economic conditions and regulatory environment in Singapore,
Malaysia and other countries in which we conduct business or expect to conduct business;
the risk that we may be unable to realise our anticipated growth strategies and expected internal
growth;
changes in currency exchange or interest rates;
changes in customer preferences and needs;
demographic changes;
changes in competitive conditions in our Groups industry and our ability to compete under these
conditions;
changes in our future capital needs and the availability of financing and capital to fund these
needs;
factors described under the section entitled Risk Factors of this Prospectus; and
other factors beyond our control.
All forward-looking statements by or attributable to us, or persons acting on our behalf, contained in this
Prospectus are expressly qualified in their entirety by such factors.
Given the risks and uncertainties that may cause our Groups future results, performance or
achievements to be materially different from that expected, expressed or implied by the forward-looking
statements in this Prospectus (including the profit estimate in the section entitled Managements
Discussion and Analysis of Results of Operations and Financial Position Profit Estimate of this
Prospectus), undue reliance must not be placed on these statements. Neither we, the Manager, the
Underwriter, the Placement Agent and the Sub-Placement Agent nor any other person represents or
warrants that our Groups actual future results, performance or achievements will be as discussed in
those statements.
Our actual future results may differ materially from those anticipated in these forward-looking
statements as a result of the risks and uncertainties faced by us. We, the Manager, the Underwriter, the
Placement Agent and the Sub-Placement Agent disclaim any responsibility to update any of those
forward -looking statements or publicly announce any revisions to any forward-looking statements to
reflect future developments, events or circumstances. We are, however, subject to the provisions of the
SGX-ST Listing Manual regarding corporate disclosure and the requirements of the Securities and
14
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Futures Act. In particular, pursuant to Section 241 of the Securities and Futures Act, if after the
Prospectus is registered but before the close of the Offer, our Company becomes aware of: (a) a false
or misleading statement or matter in the Prospectus; (b) an omission in this Prospectus of any
information that should have been included in it under Section 243 of the Securities and Futures Act;
or (c) a new circumstance that has arisen since this Prospectus was lodged with the Authority and
would have been required by Section 243 of the Securities and Futures Act to be included in this
Prospectus, if it had arisen before this Prospectus was lodged and that is materially adverse from the
point of view of an investor, we may lodge a supplementary or replacement prospectus with the
Authority.
15
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 on the SGX-ST
of all our Shares already issued, the New Shares and the ESOS Shares on the SGX-SESDAQ. Such
permission will be granted when our Company has been admitted to the Official List of the SGXSESDAQ.
Acceptance of applications will be conditional upon, inter alia, permission being granted to deal in and
for quotation of all the existing issued Shares, the New Shares which are the subject of the Invitation,
as well as the ESOS Shares. Monies paid in respect of any application accepted will be returned,
without interest or any share of revenue or benefit arising therefrom and at the applicants own risk, if
the said permission is not granted, and the applicant will not have any claim against us, the Manager,
the Underwriter, the Placement Agent and the Sub-Placement Agent.
The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions
expressed or reports contained in this Prospectus. Admission to the Official List of the SGX-SESDAQ
is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiary, our
Shares, the New Shares or the ESOS Shares.
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 Securities and Futures Act, or any other legal or regulatory requirements, have
been complied with. The Authority has not, in any way, considered the merits of our Shares, the New
Shares and the ESOS Shares, as the case may be, being offered or in respect of which the Invitation
is made, for investment. 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.
This Prospectus has been seen and approved by our Directors and they 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 stated and the
opinions expressed in this Prospectus are true, accurate and not misleading and all expression of
opinion, intention and expectation contained in this Prospectus are fair and accurate in all material
respects as of the date of this Prospectus and there are no material facts the omission of which would
make any statements in this Prospectus misleading and that this Prospectus constitutes full and true
disclosure of all material facts about the Invitation, our Company, our subsidiary, our Shares, the New
Shares and the ESOS Shares.
No person has been or 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 us, the Manager, the
Underwriter, the Placement Agent and the Sub-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 or
development reasonably likely to involve a change in our affairs or in the statements of fact or
information contained in this Prospectus since the date of this Prospectus.
Where such changes occur, we may lodge a supplementary or replacement prospectus with the
Authority and make an announcement of the same to the SGX-ST and/or the Authority and the public
and will comply with the requirements of the Securities and Futures Act . All applicants should take note
of any such announcements and/or supplementary or replacement documents or prospectuses and,
upon the release or issue of such announcements and/or supplementary or replacement documents or
prospectuses, 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 our future
performance or policies of our Company or our subsidiary.
16

Neither we, the Manager, the Underwriter, the Placement Agent and the Sub-Placement Agent nor any
other parties involved in the Invitation is making any representation to any person regarding the legality
of an investment in our Shares by such person under any investment or other laws or regulations. No
information in this Prospectus should be considered to constitute business, financial, 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.
We are subject to the provisions of the Securities and Futures Act and the SGX-ST Listing Manual
regarding corporate disclosure. In particular, pursuant to Section 241 of the Securities and Futures Act,
if after this Prospectus is registered but before the close of the Invitation, we become aware of:
(a)
a false or misleading statement or matter in this Prospectus;
(b)
an omission from this Prospectus of any information that should have been included in it under
Section 243 of the Securities and Futures Act; or
(c)
a new circumstance that has arisen since this Prospectus was lodged with the Authority and which
would have been required by Section 243 of the Securities and Futures Act to be included in this
Prospectus, if it had arisen before the Prospectus was lodged,
and that is materially adverse from the point of view of an investor, we will lodge a supplementary or
replacement prospectus with the Authority.
Where the Authority issues a stop order pursuant to Section 242 of the Securities and Futures Act, and
applications to subscribe for the New Shares have been made prior to the stop order, then:
(a)
in the case where the New Shares have not been issued, we will (as required by law) deem all
applications as withdrawn and cancelled and we shall refund the application monies paid on
account of your application for the New Shares to you within 14 days of the date of the stop order;
or
(b)
in the case where the New Shares have been issued but trading has not commenced, the issue
of the New Shares will (as required by law) be deemed void and we shall refund the application
monies paid on account of your application for the New Shares to you within 14 days of the date
of the stop order.
Monies paid on account of your application for the New Shares will be returned to you at your own risk,
without interest or any share of revenue or benefit arising therefrom, and you will not have any claim
against us, the Manager, the Underwriter, the Placement Agent or the Sub-Placement Agent.
This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon
by any other persons other than the applicants in connection with their application for the New Shares
or for any other purpose.
Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,
from:
OUB Centre
Singapore 048616

Ocean Towers
Singapore 048620
and from members of the Association of Banks in Singapore, members of the SGX-ST and merchant
banks in Singapore. A copy of this Prospectus is also available on the SGX-ST website, http://
www.sgx.com and the MAS website, http://www.mas.gov.sg.
17

The Application List will open at 10.00 a.m. on 21 December 2004 and will remain open until
12.00 noon on the same day or for such further period or periods as our Directors may, in
consultation with the Manager, decide, subject to any limitation under all applicable laws. Where
a supplementary or replacement prospectus has been lodged with the Authority, the Application
List shall be kept open for at least 14 days after the lodgement of the supplementary or
replacement prospectus.
Details for the procedure for application to subscribe for and/or purchase the New Shares are set out
in Appendix A: Terms, Conditions and Procedures for Application and Acceptance of this Prospectus.
INDICATIVE TIMETABLE FOR LISTING
The Invitation shall be open from 14 December 2004 to 21 December 2004. Applications may be
submitted to the persons and by the means as described in Appendix A: Terms, Conditions and
Procedures for Application and Acceptance.
In accordance with the SGX-STs 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 for your reference:
Indicative time/date
Event
21 December 2004, 12.00 noon
Close of Application List
22 December 2004
Balloting of applications, if necessary (in the event of oversubscription for the Offer Shares)
23 December 2004, 9.00 am
Commence trading on a when issued basis
30 December 2004
Last day of trading on a when issued basis
31 December 2004, 9.00 am
Commence trading on a ready basis
5 January 2005
Settlement date for all trades done on a when issued basis

and for trades done on a ready basis on 31 December 2004
The above timetable is only indicative as it assumes that the date of closing of the Application List is
21 December 2004, the date of admission of our Company to the Official List of the SGX-SESDAQ will
be 23 December 2004, the shareholding spread requirement will be complied with and the New Shares
will be issued and fully paid-up prior to 23 December 2004. 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 procedures may be subject to such modification as the SGX-ST may,
in its absolute 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, as the case may be, 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 shown 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.
18

Investors should consult the SGX-STs announcement on the ready trading date on the Internet (at
SGX-ST website http://www.sgx.com) or the newspapers or check with their brokers on the date on
which trading on a ready basis will commence.
We will make public the results of the level of subscription for the New Shares and the basis of
allocation of the New Shares, as soon as it is practicable after the close of the Application List:
(a)
through SGXNET announcement to be posted on the Internet at the SGX-ST website, http://
www.sgx.com; and
(b)
in a local English newspaper.
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 publicly announce the same through the channels in (a) and (b) above.
19
PLAN OF DISTRIBUTION
The Issue Price of S$0.21 is determined by us after discussion with the Manager, the Underwriter and
the Placement Agent, after taking into consideration, inter alia, prevailing market conditions and
estimated market demand for our New Shares determined through a book-building process. The Issue
Price is the same for all New 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, conditions and procedures for application and acceptance are described in
Appendix A of this Prospectus. Pursuant to the Management Agreement dated 13 December 2004, our
Company appointed PPCF to manage the Invitation and pursuant to the Underwriting Agreement dated
13 December 2004, our Company appointed DMG to underwrite our Offer Shares. DMG may, at its
absolute discretion, appoint one or more sub-underwriters for the 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 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 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 approved by the SGX-ST.
Placement Shares (excluding the Reserved Shares)
Application for the Placement Shares (excluding Reserved Shares) are made available for subscription
by retail and institutional investors who may apply by way of the Application Forms. The terms,
conditions and procedures for application and acceptance are described in Appendix A of this
Prospectus. Subscribers of Placement Shares (excluding Reserved Shares) may be required to pay a
brokerage of 1.0% of the Issue Price to the Placement Agent or the Sub-Placement Agent, as the case
may be (subject to Singapore Goods and Services Tax of 5.0% if applicable).
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 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.
Pursuant to the Placement Agreement signed between our Company and the Placement Agent dated
13 December 2004, the Placement Agent, DMG has agreed to subscribe for and/or procure
subscriptions for the Placement Shares at the Issue Price. DMG may, at its absolute discretion, appoint
one or more sub-placement agents for the Placement Shares, including PPCF.
Reserved Shares
To recognise their contributions to our Group, we have reserved 3,500,000 Placement Shares for
subscription by our Independent Directors, employees, business associates and those who have
contributed to the success of our Group. The Reserved Shares will be offered at the Issue Price and
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.
Application for the Reserved Shares may only be made by way of the Application Forms. The terms ,
conditions and procedures for application and acceptance are described in Appendix A of this
Prospectus.
20
PLAN OF DISTRIBUTION
In the event that any of the Reserved Shares are not taken up, they will be made available first to satisfy
excess applications for the Placement Shares to the extent that there is an over-subscription for the
Placement Shares as at the close of the Application List, and then to satisfy excess application 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.
Subscription for New Shares
Save for the Independent Directors, Messrs Teo Chee Seng and John Lyn Hian Woon, who will be
offered 50,000 and 200,000 Reserved Shares respectively, none of our Directors or Substantial
Shareholders intend to subscribe for the New Shares.
To the best of our knowledge, we are not aware of any person who intends to subscribe for more than
5% of the New Shares. However, through a book-building process to assess market demand for our
Shares, there may be person(s) who may indicate an interest to subscribe for more than 5% of the New
Shares. If such person(s) were to make an application for more than 5% of the New Shares and
subsequently be allocated or allotted such number of Shares, we will make the necessary
announcements at an appropriate time.
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.
21
PROSPECTUS SUMMARY
The following summary highlights certain information found in greater detail elsewhere in this
Prospectus. Terms defined elsewhere in this Prospectus have the same meanings when used herein.
Prospective investors should carefully consider the information presented in this Prospectus,
particularly the matters set out under the section entitled Risk Factors of this Prospectus, before
deciding to invest in our Shares.
OVERVIEW OF OUR GROUP
Our Group
Our Company was incorporated in Singapore on 23 December 2003 under the Companies Act as a
private limited company. On 8 November 2004, pursuant to a Restructuring Exercise, our Company
became the holding company of EDSB and of our Group and was converted into a public limited
company on 10 November 2004. Please refer to the section entitled Group Structure of this
Prospectus for a diagrammatic representation of our Group.
Our Business
We are principally a manufacturer and distributor of sweetened condensed milk and evaporated milk.
We also repack and distribute complementary products such as full cream and instant high calcium
non-fat milk powder, instant coffee powder and tea dust. We operate out of a production and
warehousing facility located at Lot. LS-1, Persiaran Satu, Meru Industrial Park, Persiaran Hamzah
Alang, 42200 Klang, Selangor Darul Ehsan, Malaysia and the facility occupies an industrial freehold
land of approximately 348,916 sq ft, with a built-up area of approximately 84,000 sq ft.
Currently, we have sales offices and warehousing facilities throughout Malaysia to facilitate the
distribution of our products. We have expanded our distribution business by exporting our products to
ASEAN, East and West Africa, Central and South America, Middle East, and other Asia-Pacific
countries.
Apart from products exported under our own brand DAIRY CHAMP, we also export to various
countries under at least 12 third-party brands which are manufactured by us under OEM arrangements.
We have contractual arrangements with hypermarkets, namely, Carrefour and Giant respectively, to
co-pack our sweetened condensed milk under their in-house brand names. Our sweetened condensed
milk is co-packed for Carrefour under their in-house 1 brand and for Giant under their in-house Giant
brand, to be sold through their retail market outlets in Malaysia.
We had also entered into an arrangement with the Makro chain of hypermarkets, to retail the products
under our DAIRY CHAMP brand throughout Malaysia.
Our business is mainly divided into three geographical segments, namely domestic sales in Malaysia,
export sales to ASEAN and export sales to other countries.
Competitive Strengths
We consider the following to be our competitive strengths:
(a)
we have an experienced and strong management team with a collective experience of more than
100 years in the milk product industry;
(b)
we have distinguished ourselves from our competitors and established our reputation as a reliable
manufacturer of quality milk products which are competitively priced. We believe our DAIRY
CHAMP brand to be one of the more recognisable brands in Malaysia;
(c)
we have an extensive sales and marketing network and a well diversified customer base. Our
Group adopts a direct marketing and distribution strategy for the sales of our products directly to
end consumers which include Mamak Stalls/Restaurants, coffee shops and other road side Teh
22
PROSPECTUS SUMMARY
Tarik stalls throughout Malaysia. This approach has generated good market acceptance of our
range of DAIRY CHAMP products among our dealers, wholesalers and retailers in most urban
and rural areas in Malaysia;
(d)
we consistently produce quality products which are manufactured under stringent quality control
procedures and which adheres to internationally recognised quality standards such as the
HACCP monitored by the Veterinary Services Department of the Ministry of Agriculture in
Malaysia;
(e)
we run a cost efficient operation by managing the costs of our raw materials and our pricing policy;
and
(f)
we have established and maintained good business relationships with our customers.
Our Business Strategies and Future Plans

We plan to do the following:
(a)
increase our production capacity through the installation of new product manufacturing lines;
(b)
expand the breadth and depth of the Malaysian milk product market through the expansion of both
our product range (in terms of pack size) and to increase the number of our sales and marketing
personnel in our existing sales offices;
(c)
expand our overseas market; and
(d)
identify new investments for acquisition to expand and/or diversify our product base and/or
potential strategic alliances and/or joint ventures in existing or new markets where we are
interested, to further expand our business.
Our Contact Details

Malaysia
Suite B-12-01
Plaza Mont Kiara
No. 2 Jalan Kiara
Mont Kiara
50480 Kuala Lumpur
Malaysia
Tel: (603) 6203 1727
Fax: (603) 6203 1737
Malaysia
Lot. LS-1, Persiaran Satu
Meru Industrial Park
Persiaran Hamzah Alang
42200 Klang
Selangor Darul Ehsan
Malaysia
Tel: (603) 3392 2988
Fax: (603) 3393 1688
and our registered office is located at:
and our registered office is located at:
Singapore
Ocean Building
Singapore 049315
Tel: (65) 6230 9508/6536 5355
Fax: (65) 6536 1360
Malaysia
Suite B-12-01
Plaza Mont Kiara
No. 2 Jalan Kiara
Mont Kiara
50480 Kuala Lumpur
Malaysia
Tel: (603) 6203 1727
Fax: (603) 6203 1737
Our Company registration number is 200313131Z. Our internet website addresses are
http://www.etikadairies.com.my and http://www.dairychamp.com. Information contained in our
website does not constitute part of this Prospectus.
23
PROSPECTUS SUMMARY
SUMMARY FINANCIAL DATA

You should read the following summary financial data in conjunction with the sections entitled
Managements Discussion and Analysis of Results of Operations and Financial Position and
Independent Compilation Report in Relation to the Proforma Financial Information of this
Prospectus.
Selected profit and loss
account items of our Proforma
Group(1):
RM000
FY2001
FY2002
FY2003
8 months
>
FP2003
FP2004
(Unaudited)
Revenue
71,434
71,121
76,993
68,231
47,911
7,191
11,654
16,344
12,442
10,114
(Loss)/Profit from operations
(1,041)
3,638
6,991
6,089
3,996
(Loss)/Profit before income tax
(2,715)
2,051
5,508
5,334
2,988
1,289
4,007
4,662
2,174
0.01
1.00
3.12
3.62
1.69
<
Gross profit

EPS (sen)
> <
12 months
(2)
Selected balance sheet items of our

Proforma Group(3):
RM000
As at 30 September 2003
As at 31 May 2004
23,982
30,020
460
Property, plant and equipment

Other non-current assets
Net current liabilities
(8,664)
(7,720)
Non-current liabilities
(3,164)
(5,024)
Proforma shareholders equity
12,614
17,276
9.81
13.43
NTA per Share (sen)(4)
Notes:
(1)
The financial results of our Proforma Group have been prepared on the basis that our Proforma Group had been in place
since 1 October 2000.
(2)
For comparative purposes, EPS is calculated using profit after income tax and divided by the pre-Invitation share capital of
128,630,152 Shares.
(3)
The balance sheets of our Proforma Group have been prepared on the basis that our Proforma Group had been in place
as at the balance sheet dates.
(4)
The NTA per Share is calculated based on the pre-Invitation share capital of 128,630,152 Shares.
24
THE INVITATION
Issue Size
43,000,000 New Shares, offered in Singapore by way of public

offer and placement, comprising 2,000,000 Offer Shares and
41,000,000 Placement Shares.
The New Shares, upon issue and allotment, will rank pari
passu in all respects with the existing issued Shares.
Issue Price
S$0.21 for each New Share.
The Offer
The Offer comprises an offering of 2,000,000 Offer Shares to

members of the public in Singapore.
The Placement
The Placement comprises 41,000,000 Placement Shares by

way of placement comprising:
(a)
37,500,000 Placement Shares for each Placement

Share; and
(b)
3,500,000 Reserved Shares for each Reserved Share

reserved for our 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 applications made for the
Placement Shares at the Issue Price or, in the event of an
under-subscription for the Placement Shares, to satisfy
applications made by the members of the public for the Offer
Shares at the Issue Price.
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
public image regionally and overseas and enable us to tap the
capital markets for the expansion of our operations. It will also
provide members of the public, our Independent Directors,
employees and business associates an opportunity to
participate in the equity of our Company. The Invitation will
also enlarge our capital base for continued expansion of our
business.
Use of proceeds
The net proceeds from the issue of the New Shares (after
deducting estimated issue expenses of S$1.3 million or RM2.8
million) is estimated to be S$7.8 million or RM17.4 million. We
intend to utilise the net proceeds from the issue of the New
Shares as follows:
(a)
approximately RM14.1 million for the expansion and

improvement of our manufacturing at our factory in Meru,
Klang, in Malaysia. The facilities are described in the
section entitled Prospects, Business Strategies and
Future Plans of this Prospectus; and
(b)
the balance of approximately RM3.3 million to be used as

general working capital requirements for the expansion
of our Groups business.
25
THE INVITATION
Pending the deployment of the net proceeds from the issue of
New Shares as aforesaid, the funds will be placed in shortterm deposits or money market instruments as our Directors
may, in their absolute discretion, deem fit.
Details are set out under the section entitled Use of Proceeds
of this Prospectus.
Listing status
Prior to the Invitation, there has been no public market for our
Shares. Our Shares will be quoted on the SGX-SESDAQ of
the SGX-ST, subject to the admission of our Company to the
Official List of the SGX-SESDAQ, and permission for dealing
in and for quotation of our Shares being granted by the
SGX-ST.
Risk factors
Investing in our Shares involves risks which are described in

the section entitled Risk Factors of this Prospectus.
26
SELLING RESTRICTIONS
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for our New Shares
in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any
person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be
taken under the requirements of the legislation or regulations of, or of the legal or regulatory authorities
of, any jurisdiction, except for the lodgement and/or registration of this Prospectus in Singapore in order
to permit a public offering of our New Shares and the public distribution of this Prospectus in Singapore.
The distribution of this Prospectus and the offering of our New Shares in certain jurisdictions may be
restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this
Prospectus are required by us, the Manager, the Underwriter, the Placement Agent and the
Sub-Placement Agent to inform themselves about, and to observe and comply with any such
restrictions at their own expense and without liability to us, the Manager, the Underwriter, the
Placement Agent and the Sub-Placement Agent.
27
EXCHANGE RATES
The following table sets forth the high and low exchange rates for Malaysian Ringgit and the Singapore
Dollar for each month for the past six months. The table indicates how many Malaysian Ringgit it would
take to buy one Singapore Dollar.
RM/S$
High
Low
May 2004
2.2538
2.2000
June 2004
2.2306
2.2080
July 2004
2.2402
2.1990
August 2004
2.2250
2.2043
September 2004
2.2565
2.2268
October 2004
2.2843
2.2467
The following table sets forth, for the financial years/periods indicated, the average and closing
exchange rates between the Malaysian Ringgit and the Singapore Dollar. The average exchange rates
are calculated using the average closing exchange rates on the last day of each month during each
financial year/period. Where applicable, the exchange rates in this table are used for the translation of
our Proforma Groups financial information disclosed elsewhere in this Prospectus.
RM/S$
Average
Closing
FY2001
2.1409
2.2124
FY2002
2.1044
2.1354
FY2003
2.1696
2.1994
FP2004
2.2310
2.2385
The above exchange rates have been calculated with reference to the exchange rates quoted from
Bloomberg Professional.
As at the Latest Practicable Date, the closing exchange rate between the Malaysian Ringgit/Singapore
Dollar is RM2.2802.
For certain parts of the Prospectus, we have converted Malaysian Ringgit into Singapore dollars for the
convenience of the potential investors of our Company. Unless otherwise stated, the exchange rate
used for conversion for Malaysian Ringgit/Singapore dollar is 2.2385, which is the exchange rate as at
31 May 2004.
28
RISK FACTORS
An investment in our Shares involves risks. You should carefully evaluate each of the following risk
factors (which are not intended to be exhaustive) and all of the other information set forth in this
Prospectus before deciding to invest in our Shares. Some of the following risk factors relate principally
to the industry in which we operate and our business in general. Other considerations relate principally
to general economic and political conditions, the securities market and ownership of the Shares,
including possible future sales of our Shares.
If any of the following risks actually occur, our business, financial condition, results of operations and/or
prospects could be materially and adversely affected. In such circumstances, the market price of our
Shares could decline and you may lose all or part of your investment. To the best of our Directors
knowledge and belief, all risk factors which are material to investors in making an informed judgement
on our Group have been set out below.
RISKS RELATED TO OUR BUSINESS
We face intense competition in our business
The industry in which we operate is highly competitive and we face competition from other
manufacturers of milk products and other complementary products in both the local and foreign
markets. The milk product industry is a matured industry with relatively lower and stable annual growth
rates as compared to other industries. This industry is also dominated by only a handful of
manufacturers in Malaysia and in the overseas markets that we export to. Some of these manufacturers
have fundamentally similar capabilities and compete with each other on key attributes which include
manufacturing competency, reliability and quality of products and services, pricing, time-to-market and
available production capacity. As such, leading brand manufacturers are expected to respond
aggressively to new market entrants and the developments of existing competitors, since their
respective market share may be eroded. Although our Group has successfully developed and
maintained the brand name DAIRY CHAMP, there can be no assurance that we can compete
successfully in the future and maintain or increase our market share. Should we be unable to compete
effectively, our business will be adversely affected.
Any significant increase in the prices of our raw materials would have an adverse impact on our
profitability
The raw materials we utilise for the manufacture of our products comprise substantially of milk powder,
sugar, palm oil, vitamins and packaging material (such as tin cans, labels and cartons). In order to
ensure that we are able to efficiently deliver quality products to our customers at competitive prices, we
need to obtain sufficient quantities of good quality raw materials at acceptable prices and in a timely
manner. As such, we typically enter into forward supply contracts of between three to six months with
our suppliers. However, there is no assurance that we will always be able to obtain sufficient quantities
of raw material of an acceptable quality from our suppliers at an acceptable price upon the expiry of our
supply contracts. In the event that our suppliers are unable to fulfil our raw material needs, we may not
be able to seek alternative sources of supply in a timely manner or we may be subject to higher costs
from alternative suppliers. This may adversely affect our ability to meet our customers orders and our
profitability in the event that we are unable to pass on such costs to our customers. Please see the
section entitled History and Business Suppliers and Raw Materials of this Prospectus for more
details.
Our failure to meet adequate health and hygiene standards will lead to a loss in customer
confidence
Our products are manufactured under very stringent quality control processes and our Group stresses
quality and hygiene as a top priority. While we have not encountered any incidence of contamination
or food poisoning thus far, if such incidences do occur, our Group may face criminal prosecution under
the Food Act 1983 in Malaysia or other relevant regulations in jurisdictions to which our products are
29
RISK FACTORS
exported, a loss in customer confidence and a negative impact on our reputation. Accordingly, our
prospects as well as our financial condition will be adversely affected.
The relevant authorities may impose directives as a result of health and hygiene issues to carry out
certain remedial actions which may impact on our operations. Failure to comply with such directives
may result in our licences being suspended and/or revoked, which will have a material adverse impact
on our financial performance.
We may be subject to product liability claims if our products are found to be unfit for
consumption
If our products are found to be unfit for consumption and consumers suffer damage, injury or death as
a result of consuming or coming into contact with our products, then we may be required to compensate
the consumer for any injury or death. Our Groups profitability would be adversely affected if the amount
payable under the insurance policies covering our Group is not sufficient to meet the compensation
amount payable. Accordingly, our reputation, prospects and financial condition will also be adversely
affected.
We may be affected by complaints from customers and negative publicity
We may be subjected to complaints from consumers with regards to the quality of our products. Our
business may also be adversely affected by negative publicity resulting from the publication of any
industry findings or research reports, regardless of their accuracy or validity. Such negative publicity
may reduce the number of consumers purchasing our food products and hence reduce the number of
orders which we would otherwise receive from our customers.
Possible changes in consumer taste may lead to lower demand and sales of our milk products
The success of our Group in the domestic market is driven largely by the proliferation of Mamak
Stalls/Restaurants throughout Malaysia. Our milk products are mainly utilised by these operators to
brew tea (commonly known in Malaysia as Teh Tarik), coffee and other beverages for consumption by
the majority of Malaysias population. The consumption of Teh Tarik has become part of the traditional
lifestyle habits of the average Malaysian, developed over the course of many generations. However, we
cannot guarantee that consumer tastes will remain unchanged in the future and any changes in
customers consumption patterns, for example, consumption of carbonated drinks in the cities, may
cause the domestic growth of our Group to slow down.
An outbreak of disease in livestock, such as cows and goats, and food scares may lead to loss
of consumer confidence in our products
Any outbreak of disease in livestock and food scares may have an adverse impact on the business of
our Group as it may lead to loss in consumer confidence and reduction in consumption of the particular
food or related product concerned. It may also affect our Groups sources of supply of raw materials,
such as milk powder, from that particular area, resulting in our Group having to source for alternative
supplies which may be more costly or have a negative impact on our production processes/output.
Outbreaks of SARS, avian influenza or other contagious or virulent diseases may lead to lower
revenue and production of our products
A resurgence of SARS, avian influenza or other contagious or virulent diseases could have a significant
adverse effect on our operations. The spread of such contagious or virulent diseases may result in
quarantine restrictions on the affected groups of people, facilities of our business as well as those of
our customers. Any such resulting quarantine restrictions imposed will cause a disruption in revenue
and production and will have a negative impact on our business.
30
RISK FACTORS
Delivery disruptions can have a negative impact on our image and reputation and result in
delayed or lost deliveries
Delivery disruptions for various reasons including weather conditions, political turmoil, social unrest and
strikes may lead to delayed or lost deliveries, and may have a negative impact on our image and
reputation. As a result of any disruption, our customers may seek alternative suppliers and
subsequently reduce or cease their orders for our products.
We depend on key management personnel and the loss of such personnel may adversely affect
our operations
Our future performance will depend largely on our ability to retain our key management personnel,
comprising our Directors and Executive Officers, who are collectively responsible for our overall
management. In particular, we depend to a significant extent on Messrs Mah Weng Choong, Kwong
Yuen Seng, Khor Sin Kok and Chung Chee Fook, all of whom have played instrumental roles in charting
the business direction and spearheading the growth of our Group. Although we practise succession
planning and have identified successors for all key management personnel responsible for the
day-to-day management of our Group, we cannot assure you that we will be able to retain our key
management personnel and the loss of their services without suitable replacements may have a
material adverse effect on our business, financial condition, results of operations and/or prospects.
Fire or other calamities or a disruption in the supply of utilities at one of our facilities could
disrupt production of our products and adversely affect our revenue
We conduct our operations at one manufacturing facility. As such, we are dependent on a continual
supply of utilities such as electricity and water in order to operate. Fire or other calamities or any
breakdown in the supply of utilities, resulting in significant damage at this facility would affect the
production of our milk products and will have a material adverse effect on our business, financial
conditions and results of operations. While we maintain insurance policies covering, inter alia, losses
due to fire, we cannot assure you that our insurance coverage would be sufficient to cover all of our
potential losses.
Terrorist attacks and other acts of violence or armed conflict may adversely affect our
operations and profitability
Terrorist attacks such as those that occurred in the USA on 11 September 2001, in Bali on 12 October
2002 and in Jakarta on 5 August 2003 or armed conflicts may adversely affect our operations and
profitability and your investment.
Such terrorist attacks or armed conflicts may directly impact our physical facilities or those of our
suppliers or customers. They may also have an adverse effect on the demand for our products, our
supply chain and, our production and execution capability. This could in turn have a material adverse
impact on our operations and financial condition.
Political and economic instability in some regions of the world may also result from such terrorist
attacks and armed conflicts and could have a negative impact on our operations. The consequences
of any of these terrorist attacks or armed conflicts are unpredictable, and we may not be able to foresee
events that could have an adverse effect on our operations or your investment.
We are exposed to the credit risks of our customers
Our trade receivables were RM18.2 million as at 30 September 2003 and RM20.2 million as at 31 May
2004 and accounted for approximately 34.9% and 30.9% respectively of our total assets as at the
aforesaid balance sheet dates. Our financial performance is, to a large extent, dependent on the credit
worthiness of our customers. We usually extend credit terms of 60 to 90 days to our customers. From
time to time, certain of our customers may default on their payment to us. Although we regularly review
31
RISK FACTORS
our credit exposure to our customers, credit risk will nevertheless arise from events or circumstances
that are difficult to anticipate or detect, including, but not limited to, political, social, legal, economic and
foreign exchange risks, that may have an impact on our customers ability to make timely payment and
our enforcement for payments may not be effective.
Our allowance for doubtful trade receivables and bad trade receivables written off amounted to RM0.9
million, RM0.8 million, RM0.6 million and RM0.3 million for FY2001, FY2002, FY2003 and FP2004
respectively. To the best of their knowledge, our Directors are not aware of any information or
development which may require us to make additional allowance for doubtful trade receivables.
Nonetheless, a delay or default in payment and/or significant increase in the incidence of bad trade
receivables would have a material and adverse impact on our financial position and performance.
Please refer to the section entitled Managements Discussion and Analysis of Results of Operations
and Financial Position Credit Policy of this Prospectus for more details.
We are exposed to interest rate risk
Our Group finances its operations through a mixture of accumulated profits and bank borrowings.
Borrowings are in Malaysian Ringgit at both fixed and floating rates of interest to manage our Groups
exposure to interest rate fluctuations. Please refer to the section entitled Capitalisation and
Indebtedness of this Prospectus for more details.
The objectives for the mix between fixed and floating rate borrowings are set to reduce the impact of
an upward change in interest rates while enabling benefits to be enjoyed if the interest rates fall.
In the event of any substantial increase in interest rates, cash borrowings obligations may be extended
and our financial performance may be affected.
We are exposed to the risks of price erosion of our products
Our products typically have a shelf life of 12 months from the date of manufacture. Intense competition
from our competitors and the gradual maturity of each product line would generally lead to price erosion
over the shelf life of our products. We attempt to balance this downward pressure on the selling prices
by maintaining a stock rotation policy in addition to managing and lowering our overall manufacturing
costs through measures such as rationalising our manufacturing process and improving the design and
manufacturing of our products. However, should we fail to do so, this will result in lower profit margins
and our financial performance will be adversely affected.
We maintain a product return and exchange policy for our Malaysian customers as part of our customer
relations exercise, to assist the merchant in maintaining a reasonable shelf life of its products. If there
are increases in merchants request for such exchange, our financial performance may be affected.
Negative working capital position and high debt financing
We were in a negative working capital position of RM8.7 million as at 30 September 2003 and RM7.7
million as at 31 May 2004. The main reason for the negative working capital position was due to the
high amount of current liabilities comprising mainly of trade payables of RM17.9 million as at 30
September 2003 and RM22.7 million as at 31 May 2004, other payables and accruals of RM2.9 million
as at 30 September 2003 and RM3.4 million as at 31 May 2004, hire purchase payables of RM0.6
million as at 30 September 2003 and RM0.5 million as at 31 May 2004, and secured bank borrowings
of RM15.2 million as at 30 September 2003 and RM16.4 million as at 31 May 2004 which exceeded our
current assets.
Part of the above negative working capital position is funded by our external debt. Our total external
debt owing to banks and financial institutions outstanding amounted to RM18.9 million as at 30
September 2003 and RM21.7 million as at 31 May 2004 and representing a debt to equity ratio of 1.5
32
RISK FACTORS
times as at 30 September 2003 and 1.3 times as at 31 May 2004 (defined as total indebtedness to
shareholders equity). These obligations including bank loans and hire purchases were undertaken in
the past by our Group to fund the expansion of our factory to accommodate the acquisition of our
manufacturing equipment. Please refer to the sections entitled Capitalisation and Indebtedness and
Managements Discussion and Analysis of Results of Operations and Financial Position Working
Capital Management respectively of this Prospectus for further details.
Our obligations mentioned above have been met through a combination of our internal operating cash
flows and financing activities. As such, we are subject to risks normally associated with debt financing,
including the risk that our cash flows will be insufficient to meet required payment of principals and
interests. In addition, while in the past our cash flows from our operations and financing activities had
been sufficient to meet our payments obligations for borrowings and interest, there is however no
assurance that we are able to do so in the future. In such event, we may be required to raise additional
capital, debt or other forms of financing for our working capital. If any of the aforesaid events occur and
we are unable for any reason to raise additional funds to meet our working capital requirements, our
business, financial performance and position will be adversely affected.
We expect to incur significant capital expenditure in the future in connection with our growth
plans and therefore may require additional financing in the future
To grow our business, we intend to increase our production capacity. This will require substantial capital
expenditure for additional equipment. Such expenditure will likely be made in advance of increased
revenue. However, we cannot assure you that our revenue will increase after such expenditure. Our
failure to increase our revenue after these expenditures could reduce our profitability.
In addition, we may need to obtain additional debt or equity financing to fund our capital expenditure.
Additional equity financing may result in dilution to the holders of our Shares. Additional debt financing
may be required which, if obtained, may:
limit our ability to pay dividends or require us to seek consent for the payment of dividends;
increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flows from operations to payments on our
debt, thereby reducing the availability of our cash flows to fund capital expenditure, working
capital and other general corporate purposes; and/or
limit our flexibility in planning for, or reacting to, changes in our business and our industry.
We cannot assure you that we will be able to obtain the additional financing on terms that are
acceptable to us or at all. For more information on our capital expenditures, please see the sections
entitled Capitalisation and Indebtedness and Managements Discussion and Analysis of Results of
Operations and Financial Position Capital Expenditure and Commitments of this Prospectus.
We do not have any long-term contracts with our customers
We do not have any long-term contractual agreements with any of our customers to purchase our
products, which is the norm in our industry. Our customers also do not provide us with binding forecasts
of their purchases from us for any period. Our customers have in the past varied and may continue to
vary order levels significantly from period to period. Accordingly, we cannot assure you that our
customers will continue to place orders with us in the future at the same levels as they had in prior
periods. In such event, our financial position and profitability will be affected.
33
RISK FACTORS
RISKS RELATED TO POLITICAL AND ECONOMIC CONSIDERATIONS
We are dependent on the political, economic, regulatory and social conditions in the countries
in which we operate
Our existing manufacturing operations are based solely in Malaysia. Accordingly, our business and
future growth is dependent on the political, economic, regulatory and social conditions of Malaysia. Any
changes in the policies implemented by the government of Malaysia which result in currency and
interest rate fluctuations, capital restrictions, and changes in duties and taxes detrimental to our
business could materially and adversely affect our operations, financial performance and future growth.
Risks relating to Malaysia
As at the Latest Practicable Date, pursuant to the Guidelines for the Acquisition of Assets, Mergers and
Take-overs of Companies and Businesses issued by the Foreign Investment Committee (the FIC) of
Malaysia (the FIC Guidelines), the prior approval of the FIC is required, inter alia, for any proposed
acquisition of 15% or more of the voting power of a Malaysian company or business by any one foreign
interest or by any associated group or non-associated group of foreign interests. A foreign interest
includes companies or institutions incorporated outside Malaysia. Although the FIC Guidelines do not
have the force of law (as they are not legislation passed by Parliament or regulations under any existing
laws) and do not impose any penalty for non-compliance, there are indirect sanctions that the FIC can
impose. For example, the FIC could persuade local authorities (such as the immigration department or
the local town council) not to grant to companies who are not in compliance with the FIC Guidelines,
licences or permits that may be required under Malaysian law for the Companys operations.
However, the FIC Guidelines do not apply to manufacturing companies licensed by the Ministry of
International Trade and Industry (MITI). Pursuant to the Industrial Co-ordination Act 1975 (ICA) of
Malaysia, persons involved in any manufacturing activity in Malaysia must obtain a licence from the
Secretary General of MITI in respect of such manufacturing activity if the manufacturing companys
shareholders funds exceed RM2.5 million and it employs 75 or more full time employees.
Although the FIC Guidelines do not apply to manufacturing companies licensed by MITI, the FIC
Guidelines will apply to the Group in the event that the Group engages in non-manufacturing
businesses in the future.
The MITI may, in their discretion, impose certain conditions including equity conditions for the issue of
the manufacturing licence and non-compliance with such terms may result in the manufacturing licence
being revoked.
Any future changes to existing FIC Guidelines or the introduction of new regulations governing foreign
ownership could affect our investments in our Malaysian subsidiary as we may be required by the
Malaysian authorities to restructure our equity interest in our Malaysian subsidiary. This may result in
a loss of management and operational control, which would in turn materially and adversely affect the
operations and performance of our Group.
Risks relating to foreign exchange controls
In some countries in which we operate, we are subject to foreign exchange controls or restrictions
imposed by the government and relevant authorities. Such foreign exchange controls or restrictions
may affect our operations, for example, our ability to convert these currencies as and when required to
make payments.
For instance, in September 1998, the Malaysian government imposed new currency controls and
pegged the RM against the USD at RM3.80 to USD1.00. Among other changes, a new levy was also
introduced in relation to the repatriation of certain funds. This levy does not cover dividends, interest
and rental income received under foreign direct investments. While there are presently no restrictions
on the repatriation of such non-leviable funds from Malaysia, Bank Negara Malaysia requires
information including relevant documentary evidence to be furnished to the remitting banks if the funds
34
RISK FACTORS
to be remitted are in excess of RM50,000. There is also no assurance that the pegging of the RM to
the USD will be maintained in the future. Should this peg be removed, our financial results may be
adversely affected.
To date, we have not been subjected to adverse exchange control requirements in respect of the
repatriation of capital, profits, dividends or interest from our overseas subsidiary to us with respect to
the exchange control requirements. However, should governmental policies relating to the foreign
exchange controls in the jurisdictions in which we operate or in which we intend to expand our business
tighten or where there is an adverse change in the regulations regarding repatriation of their local
currency, such policies may affect our ability to receive funds where we have investments in overseas
companies or to receive capital, profits, interest or dividends from them. In such event, our earnings,
cash flow and ability to pay dividends may be affected. Please refer to the section entitled Exchange
Controls of this Prospectus for further details.
We require various licences and permits to operate our business
We hold various licences and permits issued by various governmental authorities or departments in
Malaysia to conduct our operations such as, inter alia, manufacturing licences, licence to purchase
sugar (being a controlled item under the Control of Supply Act 1961), export licences and purchase of
palm oil licence. These licences and permits are necessary to enable us to carry on our operations and
business in Malaysia. The licences and permits are generally subject to conditions stipulated in the
licences and permits and/or in the relevant laws or regulations under which such licences and permits
are issued.
Failure to comply with such conditions could result in the revocation of the relevant licence or permit.
As such, we have to constantly monitor and ensure that we comply with such conditions. Should there
be any failure to comply with such conditions resulting in the revocation of any of the licences and
permits, we may not be able to carry out our operations. If so, there would be an adverse impact on our
operations and financial performance.
In addition, sweetened condensed milk and evaporated milk comes within the Price Control Act 1946
subject to which our retailers cannot sell these products above the maximum price fixed by the relevant
authority in Malaysia. Our profit margin would thus be affected if the prices of the raw material increases
without a corresponding adjustment of the ceiling price set by the relevant authority. As sugar is also
a price-controlled item and if we are not given permission by the relevant authority to buy sugar at the
free market price which is currently lower than the controlled price, we would have to absorb the
difference in pricing between the free market price and the controlled price.
We are affected by regional and worldwide social, political and economic conditions
Globalisation has resulted in our dependence on global social, political and economic conditions. In
particular, the uncertainties arising from the recent war in Iraq as well as the increased threat of
terrorism may cause our customers to take a cautious approach to business. Such adverse changes
in social, political and economic conditions may result in higher costs of raw materials or a cancellation,
reduction or delay in orders, which will have an adverse effect on our financial performance.
Our future performance will depend on our ability to implement our expansion plans
successfully
We have plans to expand and improve our existing production facilities. For further details, please refer
to the section entitled Prospects, Business Strategies and Future Plans Business Strategies and
Future Plans of this Prospectus. While we have planned such expansion based on an expectancy of
increased business from our customers, there is no assurance that we will be able to secure new
business from our customers. We expect to incur substantial capital expenditure and other expenses
in connection with the implementation of these plans. In addition, our expansion will result in an
increase in the fixed costs of our operations. Our ability to maintain or increase our profitability will be
dependent, in part, upon our ability to generate increasing revenues and to maintain or increase the
utilisation rates of our machines and production lines. The expansion of our manufacturing facilities, if
not well managed, may result in inefficient use of the expanded capacity. This may adversely affect our
35
RISK FACTORS
results of operations. Any failure on our part to successfully manage our expansion plans could have
an adverse impact on our business, financial condition and results of operations.
We are subject to foreign exchange rate fluctuations
Our foreign currency denominated revenue are mainly denominated in USD and to a smaller extent in
B$ whilst the majority of our foreign currency denominated purchases are denominated in USD and to
a smaller extent in SGD or Euro. To the extent that our Groups sales and purchases are not naturally
matched in the same currency and to the extent that there are timing differences between invoicing and
collection/payment, our Group will be exposed to foreign currency exchange gains and losses arising
from transactions in currencies other than our functional currency, RM. We are not able to assure you
that we will be able to successfully manage our foreign exchange risks. Accordingly, any significant
adverse foreign currency fluctuations may adversely impact on our financial performance.
The financial statements of our Group are reported in RM. The Companys financial statements are
prepared in S$ and will be translated to our reporting currency based on the relevant exchange rates.
These are then consolidated and reported in RM at our Group level. Any significant adverse fluctuation
in the exchange rates between RM vis-a`-vis S$ would have a negative impact on our Groups
consolidated financial statements.
Our Group has minimum transactional foreign currency exposures from its external trading activities
where the currency denomination are in USD, as USD is pegged at USD1 to RM3.80. Foreign
exchange exposures may arise from purchases of materials or revenues which are not denominated
in USD or RM. Our Groups policy is to enter into forward currency contracts whenever necessary. Our
Group may be exposed to foreign exchange exposure in the event that the Malaysian government
decides to remove the RM peg against the USD.
Please refer to the section entitled Managements Discussion and Analysis of Results of Operations
and Financial Position Foreign Exchange Exposure of this Prospectus for further information.
RISKS RELATED TO OUR SECURITIES AND OUR TRADING MARKET
Our Shares have never been publicly traded. The prices of our Shares might be volatile
Prior to the Invitation, there has not been a public market for our Shares. Although we have made an
application to SGX-ST to list our Shares on the SGX-SESDAQ, there is no assurance that an active
trading market price for our Shares will develop or if it develops, will be sustainable.
The trading prices of our Shares could be subject to fluctuations in response to variations in our results
of operations, changes in general economic conditions, changes in accounting principles or other
developments affecting us, our suppliers, our customers or our competitors, our involvement in
litigation, additions or departures in key personnel, any announcements by us of corporate
developments, changes in financial estimates by securities analysts, the operating and stock price
performance of other companies and other events or factors. The global financial markets have
experienced significant price and volume fluctuations and market prices of shares may continue to be
volatile. Volatility in the price of our Shares may be caused by factors outside our control and may be
unrelated or disproportionate to our operating results.
An active or liquid market for our Shares is not assured
We cannot predict the extent to which the Invitation will result in the development of an active, liquid
public trading market for our Shares offered pursuant to the Invitation or how liquid any public trading
market will be. Active, liquid trading markets generally result in lower price volatility and more efficient
execution of buy and sell orders for investors. Liquidity in the market for a particular security is often
a function of the volume of the underlying shares that are publicly held by unrelated parties.
36
RISK FACTORS
Future sales of our Shares by our Company or existing Shareholders may adversely affect the
price of our Shares
The market price of our Shares could decline after the Invitation as a result of sales of a large number
of Shares or the perception that these sales could occur. These sales might also make it more difficult
for us to offer Shares in the future at a time and at a price that we deem appropriate. Upon completion
of the Invitation, we will have a post Invitation share capital of 171,630,152 Shares. Except as
described under the section entitled Principal Shareholders Moratorium of this Prospectus, there
are no restrictions on the ability of our existing shareholders to sell their Shares.
Investors in our Shares will face immediate and substantial dilution in our NTA per Share and
may experience future dilution
Our Issue Price of 21.00 cents is higher than our Groups NTA per Share of approximately 9.03 cents
based on our share capital immediately after the Invitation. As such, there is an immediate and
substantial dilution in our NTA per Share. Please refer to the section entitled Dilution of this
Prospectus. In addition, we intend to issue options under our ESOS. To the extent that such options are
ultimately exercised and new Shares are issued pursuant to such exercise at below the Issue Price,
there will be further dilution to entitled investors participating in the Invitation. Further details of the
ESOS are described under the section entitled Directors, Management and Staff Etika Employee
Share Option Scheme of this Prospectus and in Appendix E where the rules of the ESOS are set out.
If we were to raise funds in the future by way of a placement of Shares or rights issue or other
equity-linked securities, if any shareholders are unable or unwilling to participate in such fund-raising,
such shareholders will suffer dilution in their shareholdings.
Our existing Shareholders will retain significant control over our Group after the Invitation,
which will allow them to influence the outcome of the matters submitted to shareholders for
approval
Upon completion of the Invitation, Messrs Dato Jaya J B Tan, Kamal Y P Tan, Tajuddin Joe Hok Tan,
Abd Hamid bin Mohamed, Mah Weng Choong, Kwong Yuen Seng, Khor Sin Kok and Chung Chee Fook
will beneficially own in aggregate approximately 74.9% of our post-Invitation share capital and are
subject to moratorium. Please refer to the section entitled Principal Shareholders Moratorium of
this Prospectus for details of the shareholdings. As a result, the existing Shareholders, if they act
together, will be able to exercise significant influence over matters requiring shareholders approval,
including the election of Directors and approval of significant corporate transactions, and will have veto
power with respect to any shareholders action or approval requiring a majority vote.
Our subsidiary is not incorporated in Singapore and those rights and protection accorded may
not be the same as those applicable to a Singapore incorporated company.
Our Malaysian subsidiary is not incorporated in Singapore and is subject to the relevant Malaysian laws
and regulations. The Companies Act may provide certain rights and protection to Singapore
incorporated companies of which there may be no corresponding or similar provision under the relevant
Malaysian laws and regulations. As such, our subsidiary may or may not enjoy the same level of rights
and protection that a Singapore incorporated company would be accorded under the Companies Act.
We have set out in the section entitled History and Business Government Regulations of this
Prospectus, a summary of the relevant Malaysian laws and regulations and in the section entitled
General and Statutory Information Articles of Association of this Prospectus, extracts from our
Companys Articles of Association. These summaries are not intended to be and do not constitute legal
advice and any person wishing to have advice on the differences between the relevant Malaysian laws
and regulations and the Companies Act and/or the laws or any jurisdiction with which he is not familiar
is recommended to seek independent legal advice. Copies of our Memorandum and Articles of
Association are available for inspection at such time and place as set out in the section entitled
General and Statutory Information Documents Available for Inspection of this Prospectus.
37
INVITATION STATISTICS
Issue Price
21.00 cents
NTA
NTA per Share based on our Proforma Group balance sheet as at 31 May
2004, adjusted for the Restructuring Exercise, Share Consolidation and the
Sub-division (the Adjusted NTA):
(a)
before adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Companys pre-Invitation issued share
capital of 128,630,152 Shares
6.00 cents
(b)
after adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Companys post-Invitation issued share
9.03 cents
Premium of Issue Price of 21.00 cents over the Adjusted NTA per Share:
(a)
before adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Companys pre-Invitation share capital
of 128,630,152 Shares
250.00 %
(b)
after adjusting for the estimated net proceeds from the issue of the
New Shares and based on our Companys post-Invitation issued share
132.56 %
Earnings
Historical EPS based on our Proforma Groups results for FY2003 and our
Companys pre-Invitation share capital of 128,630,152 Shares
1.39 cents
Historical EPS based on our Proforma Groups results for FY2003 and our
Companys pre-Invitation share capital of 128,630,152 Shares had the
Service Agreement been in effect for FY2003
1.33 cents
Estimated EPS based on our estimated Proforma Groups results for

FY2004 and our Companys pre-Invitation share capital of 128,630,152
Shares
2.53 cents
Estimated EPS based on our estimated Proforma Groups results for

FY2004 and our Companys pre-Invitation share capital of 128,630,152
Shares had the Service Agreement been in effect for FY2004
2.47 cents
PER
Historical PER based on the Issue Price and historical EPS of our Group for
FY2003 based on the pre-Invitation share capital of 128,630,152 Shares
15.11 times
Historical PER based on the Issue Price and the historical EPS of our Group
for FY2003 based on the pre-Invitation share capital of 128,630,152 Shares
had the Service Agreement been in effect for FY2003
15.79 times
Estimated PER based on the Issue Price and the estimated EPS of our
Group for FY2004 based on the pre-Invitation share capital of 128,630,152
Shares
8.30 times
38
INVITATION STATISTICS
Estimated PER based on the Issue Price and the estimated EPS of our
Group for FY2004 based on the pre-Invitation share capital of 128,630,152
Shares had the Service Agreement been in effect for FY2004
8.50 times
Net Operating Cash Flows(1)

Historical net operating cash flows per Share for FY2003, based on our
2.47 cents
Historical net operating cash flows per Share for FY2003, based on our
2.39 cents
Estimated net operating cash flows per Share for FY2004 based on our
3.66 cents
Estimated net operating cash flows per Share for FY2004 based on our
3.58 cents
Price to Net Operating Cash Flows Ratio

Ratio of Issue Price to historical net operating cash flows per Share for
FY2003
8.50 times
Ratio of Issue Price to historical net operating cash flows per Share for
FY2003, had the Service Agreement been in effect for FY2003
8.79 times
Ratio of Issue Price to the estimated net operating cash flows per Share for
FY2004
5.74 times
Ratio of Issue Price to the estimated net operating cash flows per Share for
FY2004 had the Service Agreement been in effect for FY2004
5.87 times
Market Capitalisation
Based on the Issue Price of 21.00 cents per Share and our Companys
post-Invitation issued share capital of 171,630,152 Shares
S$36.0 million
Note:
(1)
Net operating cash flows is defined as profit before income tax with property, plant and equipment written off and
depreciation expenses added back.
39
USE OF PROCEEDS
The net proceeds from the sale of New Shares are estimated to be approximately S$7.8 million or
RM17.4 million. The net proceeds represent the amount that we will receive after payment of
underwriting commissions and other transaction expenses related to the Invitation (estimated to be
approximately S$1.3 million or RM2.8 million).
We intend to use the net proceeds for the purposes set out below:
(a)
approximately RM14.1 million to be used for the expansion and improvement of our
manufacturing facilities at our factory in Meru, Klang, in Malaysia, as described in the section
entitled Prospects, Business Strategies and Future Plans Business Strategies and Future
Plans of this Prospectus; and
(b)
the balance of approximately RM3.3 million to be used as general working capital requirements
for the expansion of our Groups business.
Pending the deployment of the net proceeds from the issue of New Shares as aforesaid, the funds will
be placed in short-term deposits or money market instruments as our Directors may, in their absolute
discretion, deem fit.
In the opinion of our Directors, no minimum amount must be raised by the issue of the New Shares.
40
DIVIDEND POLICY
Our Company and our subsidiary, Etika Dairies Sdn. Bhd. have not distributed any dividends since their
incorporation. Currently, our Group does not have a fixed dividend policy. However, our Group intends
to formulate a dividend policy in the future. The declaration and payment of future dividends will be
determined at the sole discretion of the Board of Directors subject to Shareholders approval, and will
depend upon our Groups operating results, financial condition, other cash requirements including
capital expenditure, the terms of the borrowing arrangements, dividend yield of comparable companies
(if applicable) listed in Singapore and other factors deemed relevant by our Directors.
There is no assurance that dividends will be paid in future. Also, there is no assurance regarding the
amount or timing of any dividends that will be paid in future.
Our Company may, by ordinary resolution, declare dividends at a general meeting, but it may not pay
dividends in excess of the amount recommended by our Directors. Our Directors may declare an
interim dividend without seeking shareholders approval. Our Company must pay all dividends out of its
profits or pursuant to Section 69 of the Companies Act.
41
SHARE CAPITAL
Etika International Holdings Limited was incorporated in Singapore on 23 December 2003 under the
Companies Act as a private limited company under the name of Etika Corporation Private Limited. Etika
Corporation Private Limited subsequently changed its name to Etika International Holdings Private
Limited on 6 July 2004.
As at incorporation, our authorised share capital was S$100,000 comprising 100,000 ordinary shares
of S$1.00 each and our issued and paid-up share capital was S$3.00 comprising three ordinary shares
of S$1.00 each.
As at the date of Lodgement of this Prospectus, our authorised share capital was S$48,000,000
comprising 800,000,000 Shares and our issued and paid-up capital was S$7,717,809 comprising
128,630,152 Shares of S$0.06 each pursuant to the Restructuring Exercise, and we have only one
class of shares in the capital of our Company, being the Shares. Except as disclosed under the section
entitled Directors, Management and Staff Etika Employee Share Option Scheme of this
Prospectus, there are no founder, management, deferred or unissued shares reserved for issue for any
purpose. The rights and privileges of our Shares are stated in our Articles of Association.
At an annual general meeting held on 22 October 2004, our Shareholders approved, inter alia, the
following:
(a)
the increase in the authorised share capital of the Company from S$100,000 comprising 100,000
ordinary shares of S$1.00 each to S$48,000,000 comprising 48,000,000 shares of S$1.00 each;
and
(b)
the consolidation of three ordinary shares of par value S$1.00 each in the authorised and issued
share capital of our Company into one ordinary share of par value S$3.00 each (the Share
Consolidation) and the subsequent division thereof into 50 ordinary shares of par value S$0.06
each (the Sub-division).
Further, at an extraordinary general meeting held on 8 November 2004, our Shareholders approved,
inter alia, the following:
(a)
the conversion of our Company into a public company limited by shares and the change of our
name in connection therewith to Etika International Holdings Limited;
(b)
the adoption of a new set of Articles of Association;
(c)
the issue of up to 43,000,000 New Shares pursuant to the Invitation which when fully paid, allotted
and issued, will rank pari passu in all respects with the existing issued Shares;
(d)
the establishment of the ESOS, the rules of which are set out in Appendix E of this Prospectus;
and
(e)
that our Directors be authorised, pursuant to Section 161 of the Companies Act and the Articles
of Association of our Company, to allot and issue new Shares in our Company (whether by way
of rights, bonus or otherwise) or convertible securities at any time and upon such terms and
conditions whether for cash or otherwise with such rights and restrictions and for such purposes
and to such persons as our Directors shall in their absolute discretion deem fit, provided that the
aggregate number of Shares and convertible securities to be issued pursuant to such authority
shall not exceed 50 per cent. of the issued share capital of our Company, of which the aggregate
number of Shares and convertible securities issued other than on a pro-rata basis to the existing
Shareholders of our Company shall not exceed 20 per cent. of the issued share capital of our
Company (the percentage of issued share capital being based on the post-Invitation issued share
capital of our Company after adjusting for new Shares arising from the conversion or exercise of
any convertible securities or employee share options on issue at the time such authority is given,
and for any consolidation or sub-division of shares), and unless revoked or varied by our
Company in general meeting, such authority shall continue to be in force until the conclusion of
our next Annual General Meeting or the date by which our next Annual General Meeting is
required by law to be held, whichever is earlier.
42
SHARE CAPITAL
Details of the changes in our issued and paid-up share capital since our incorporation and the 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 as at date of

incorporation
Share Consolidation
50
128,630,102
7,717,806
128,630,152
7,717,809
128,630,152
7,717,809
43,000,000
2,580,000
171,630,152
10,297,809
Sub-division
Issue of new ordinary shares of S$0.06 each pursuant to the Restructuring
Exercise
Pre-Invitation share capital

New ordinary shares of S$0.06 each issued pursuant to the Invitation
Post-Invitation share capital
The authorised share capital and shareholders funds of our Company as at incorporation, before and
after adjustments to reflect the increase in authorised share capital, the Restructuring Exercise, the
Share Consolidation, the Sub-division and the Invitation are set out below. These statements should be
read in conjunction with the section entitled Independent Compilation Report in Relation to the
Proforma Financial Information of this Prospectus.
As at date of
Incorporation
S$
After adjusting for the

increase in the authorised
share capital, the
Restructuring Exercise, the
Share Consolidation and
the Sub-division
S$
After Invitation
S$
Authorised Share Capital

100,000 ordinary shares of S$1.00 each
800,000,000 ordinary shares of S$0.06
each
100,000
48,000,000
48,000,000
7,717,809
10,297,809
5,200,000
7,717,809
15,497,809
Shareholders Funds
Issued and paid-up share capital
Share premium
Total Shareholders Funds
43
CAPITALISATION AND INDEBTEDNESS

You should read this table in conjunction with the sections entitled Summary of Proforma Group
Financial Information, Managements Discussion and Analysis of Results of Operations and Financial
Position and Independent Compilation Report in Relation to the Proforma Financial Information of
this Prospectus.
The following table shows the cash and bank balances, indebtedness and capitalisation of our Group:
(a)
as at 30 September 2004, based on our Proforma Group management accounts after taking into
account the Restructuring Exercise, the Share Consolidation and the Sub-division referred to
under the section entitled Share Capital of this Prospectus, but before adjusting for the net
proceeds from the Invitation; and
(b)
as at 30 September 2004, based on our Proforma Group management accounts after taking into
account the Restructuring Exercise, the Share Consolidation and the Sub-division referred to
under the section entitled Share Capital of this Prospectus, after adjusting for the net proceeds
from the Invitation.
(a)
Proforma as at 30
September 2004
RM000
Cash and bank balances
(b)
As adjusted for net
proceeds from the
Invitation
33
17,449
2,101
2,101
11,371
11,371
1,213
1,213
533
533
15,218
15,218
4,388
4,388
816
816
5,204
5,204
Total Indebtedness
20,422
20,422
19,902
37,318
Total Capitalisation and Indebtedness
40,324
57,740
Indebtedness
Current-secured
Bank overdraft
Bankers acceptances
Term loans
Hire purchase payables
Non-current-secured
Term loans
44

Bank Borrowings and Gearing
As at 30 September 2004, our Group had available credit facilities amounting to approximately RM24.6
million(1) granted by various financial institutions of which approximately RM20.4 million has been
utilised as set out below:
RM000
Available credit
facility
Balance as at
30 September 2004
4,000
2,101
11,500
11,371
1,349
1,349
7,701
5,601
24,550
20,422
Bank overdraft(2)
Bankers acceptances
(3)
(4)
Term loans(2)
Total
Notes:
(1)
Amount of available credit facilities excludes foreign exchange facility.
(2)
Effective interest rates charged at 7.75% p.a.
(3)
Effective interest rates range from at 2.64% to 2.93% p.a.
(4)
Effective interest rates range from at 6.09% to 11.52% p.a.
Our bank overdraft, bankers acceptances and term loans are secured against the following:
(a)
supplemental loan agreement cum assignment over land and factory building currently being
developed into an industrial park held under a Master Title No. Geran 24082, Lot. 7215, Mukim
of Kapar, Daerah of Kelang, Selangor Darul Ehsan, Malaysia;
(b)
debentures on EDSBs past, present, fixed and floating assets (excluding machineries and
vehicles financed by hire purchase agreements); and
(c)
joint and several guarantees provided by our Directors and/or Substantial Shareholders.
Joint and several guarantees provided by our Directors and/or Substantial Shareholders to secure
EDSBs credit facilities are listed below:
Party to whom
guarantee is
given
Amount of loan
outstanding as
at 30 September
2004
RM000
Amount of
facility
RM000
Effective
interest rate
charged
p.a.
Nature of
facilities
Guarantees
provided by
Maybank Malaysia
2,101
4,000
7.75%
Overdraft
Tan Brothers, Messrs

Mah Weng Choong
and Khor Sin Kok
Maybank Malaysia
11,371
11,500
2.64% to
2.93%
Bankers
acceptances

Mah Weng Choong
and Khor Sin Kok
Maybank Malaysia
3,205
3,200
7.75%
Term Loan 3

Mah Weng Choong
and Khor Sin Kok
Maybank Malaysia
2,100
7.75%
Term Loan 4

Mah Weng Choong
and Khor Sin Kok
45
Party to whom
guarantee is
given
Amount of loan
outstanding as
at 30 September
2004
RM000
Amount of
facility
RM000
Effective
interest rate
charged
p.a.
Maybank Malaysia
2,397
8,200
Aseam Credit Sdn

Bhd
161
Aseamlease
Berhad
Nature of
facilities
Guarantees
provided by
7.75%
Term Loans 1
and 2
Tan Brothers
5,520
6.40% to
9.10%
Hire Purchase
Tan Brothers
393
755
5.75%
(flat rate)
Hire Purchase
Tan Brothers
28
60
4.8%
(flat rate)
Hire Purchase
Mr Khor Sin Kok
EON Finance
Berhad
159
239
3.75%
(flat rate)
Hire Purchase Mr Mah Weng Choong
Mayban Finance
Berhad
190
93
3.10%
(flat rate)
Hire Purchase
Sime Credit (M)

Sdn. Bhd.
Mr Kamal Y P Tan
Based on our proforma shareholders equity of approximately RM19.9 million and total indebtedness of
approximately RM20.4 million as at the 30 September 2004 our gearing ratio, defined by total
indebtedness divided by proforma shareholders equity, was approximately 1.03 times.
In addition, with the expected net proceeds from the Invitation, our Groups working capital position and
gearing level will improve. As an illustration, based on net proceeds of S$7.8 million or RM17.4 million
and its balance sheet as at 30 September 2004, our Groups proforma shareholders equity and gearing
level immediately after the Invitation will improve to RM37.3 million and 0.5 times respectively. Despite
a negative working capital and current gearing level, our Group is, at the date of this Prospectus,
however, not under any pressure from our bankers to repay our bank borrowings.
The details of the repayment schedule for term loans are as follows:
Repayment period
(years)
Commencement of term
loan repayment
Monthly instalment
RM
Term Loan 1
10
01/07/1999
73,999
Term Loan 2
01/04/1999
62,108
Term Loan 3(1)
term loan repayment has

not commenced
65,114
Term Loan 4(1)
not drawn down
29,847
Note:
(1)
Repayment of term loans 3 and 4 will commence six months from date of full drawdown subject to the facility being drawn
down 12 months from the date of the first drawdown.
The term loans were used to finance the purchase of land and machineries, the construction of building
and utilities, office and factory equipment.
46

Hire purchase obligations
As at 30 September 2004, our financial obligations relating to the hire purchase of equipment and motor
vehicles were as follows:
RM000
Due within one financial year
533
Due after one financial year but within five financial years
816
Total
1,349
Hire purchase obligations are repayable over 36 to 60 monthly instalments and bear an effective
interest rate ranging from 6.09% to 11.52% p.a. The hire purchase obligations were used to finance the
purchase of office and factory equipment and motor vehicles. The outstanding amounts totalling
approximately RM1.3 million as at 30 September 2004 are secured by way of charges over the
respective assets and, as the case may be, personal guarantees by Directors and/or Substantial
Shareholders.
After the Invitation, we intend to write to the relevant financial institutions to discharge the guarantees
provided by the Directors and/or Substantial Shareholders. If we are unable to obtain a discharge of the
guarantees, the Directors and/or Substantial Shareholders will continue to provide the guarantees. Our
Directors are of the view that revisions to the terms and conditions of our banking facilities, if any, are
unlikely to be material and would not adversely affect our operations and financial performance.
Capital commitments
As at the Latest Practicable Date, we had the following capital expenditure commitments:
RM000
Capital commitments in respect of property, plant and equipment contracted but not
provided for
4,371
As at the Latest Practicable Date, we have a commitment for capital expenditure of approximately
RM4.4 million for the acquisition of a land adjacent to the existing land and orders for new machineries,
intended to be financed by internal funds and bank borrowings.
Save for the foregoing, we do not have any material commitment for capital expenditure as at the Latest
Practicable Date.
Contingent liabilities
Save as disclosed above and in the sections entitled Managements Discussion and Analysis of
Results of Operations and Financial Position Liquidity and Capital Resources and the Independent
Compilation Report in Relation to the Proforma Financial Information of this Prospectus, we have no
other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities
under acceptance or acceptance credits, mortgages, charges, hire purchase commitments, guarantees
or other material contingent liabilities as at the Latest Practicable Date.
Save as disclosed above, since the Latest Practicable Date to the date of this Prospectus, there were
no material changes in our capitalisation or indebtedness other than the scheduled monthly
repayments of our term loans and changes in our retained earnings arising from the day to day
operations in the ordinary course of our business.
47
DILUTION
Dilution is the amount by which the Issue Price to be paid by the subscribers of our New Shares
exceeds our NTA per Share after the Invitation. The proforma NTA per Share as at 31 May 2004
adjusted for the Restructuring Exercise, Share Consolidation and Sub-division but before adjusting for
the net proceeds from the Invitation and based on the pre-Invitation issued and paid-up share capital
of 128,630,152 Shares was 6.00 cents per Share.
Based on the issue of 43,000,000 New Shares at the Issue Price of 21.00 cents per Share pursuant to
the Invitation, and after deducting estimated issue expenses payable by our Company, our NTA per
Share of our Group as at 31 May 2004 and based on the post-Invitation issued and paid-up share
capital of 171,630,152 Shares, would have been 9.03 cents per Share. This represents an immediate
increase in NTA per Share of 3.03 cents per Share to our existing shareholders and an immediate
dilution in NTA per Share of 11.97 cents or approximately 57.0% to our new investors pursuant to the
Invitation. The following table illustrates the dilution per Share:
cents
Issue Price(1)
21.00
NTA per Share as at 31 May 2004, before adjusting for the Invitation(1)
6.00
Increase in NTA per Share attributable to existing shareholders attributable to the

Invitation(1)
3.03
NTA per Share after the Invitation(1)
9.03
Dilution in NTA per Share to new investors
(1)
11.97
Dilution in NTA per Share to new investors as a percentage of Issue Price(1)
57.0%
Note:
(1)
Based on the exchange rate of S$1.00: RM2.2385 as at 31 May 2004.
The following table summarises the total number of Shares acquired by our Directors and/or
Substantial Shareholders during the period of three years prior to the date of lodgement of this
Prospectus, the total consideration paid to us and the average price per Share paid by our Directors
and Substantial Shareholders (after adjusting for the Restructuring Exercise, Share Consolidation and
Sub-division), and by our new investors pursuant to the Invitation:
Number of
Shares acquired
Existing shareholders(1)
New investors
128,630,152
43,000,000
Total
consideration
S$
7,717,809(2)
9,030,000
Average price
per Share
cents
6.00
21.00
Notes:
(1)
Existing shareholders include our Directors (Messrs Dato Jaya J B Tan, Kamal Y P Tan, Tajuddin Joe Hok Tan, Mah Weng
Choong and Khor Sin Kok), our Executive Officers (Messrs Kwong Yuen Seng and Chung Chee Fook) and our Substantial
Shareholder (Mr Abd Hamid bin Mohamed).
(2)
Based on the exchange rate of S$1.00: RM2.2385 as at 31 May 2004.
48
RESTRUCTURING EXERCISE
Prior to the Invitation, a restructuring exercise (the Restructuring Exercise) was carried out to
rationalise and streamline our corporate structure, resulting in our Company becoming the holding
company of our Group.
Pursuant to a Sale and Purchase Agreement dated 5 November 2004 (which was rescinded on 5
November 2004 and superseded by two Share Transfer Agreements dated 5 November 2004 and 8
November 2004 respectively) and made between our Company, the Tan Brothers, Messrs Abd Hamid
bin Mohamed, Mah Weng Choong, Kwong Yuen Seng, Khor Sin Kok and Chung Chee Fook (the
Sellers), our Company acquired the entire issued and paid-up share capital of EDSB from the Sellers
for a total consideration of S$7,717,806, based on the audited net book value of EDSB as at 31 May
2004. The consideration was satisfied by the issue and allotment of an aggregate of 128,630,102
fully-paid new ordinary shares of S$0.06 each in the capital of our Company to the Sellers.
The Share Transfer Agreement dated 5 November 2004 was for the sale of 1,256 shares in the issued
and paid-up capital of EDSB to the Company for a total consideration of S$596, satisfied by the issue
and allotment of 9,930 fully-paid ordinary shares of S$0.06 each in the capital of our Company to the
Sellers.
The Share Transfer Agreement dated 8 November 2004 was for the sale of 16,284,459 shares in the
issued and paid-up capital of EDSB to the Company for a total consideration of S$7,717,210, satisfied
by the issue and allotment of 128,620,172 fully-paid ordinary shares of S$0.06 each in the capital of our
Company to the Sellers.
Our Company was incorporated on 23 December 2003 as the holding company for our Group.
Following the completion of the Restructuring Exercise, the structure of our Group is as set out in the
section entitled Group Structure of this Prospectus.
49
GROUP STRUCTURE
As at the date of this Prospectus, our Group structure is as set out below:
ETIKA INT ERNATIONAL HO LDINGS
LIM ITED
100%
ETIKA DAIRIES SDN. BHD.
Our Company currently has one subsidiary, the details of which are set out below.
Name
Date and place

of incorporation Principal business
Principal place of
business
Etika Dairies
Sdn. Bhd.
22 March 1996,
Malaysia
Lot. LS-1,
Persiaran Satu,
Meru Industrial Park.
Persiaran Hamzah
Alang, 42200 Klang
Selangor Darul Ehsan
Malaysia
Engaged in the
manufacturing and
distribution of milk
products and the
repacking and
distribution of
complementary
products
Issued and
paid-up
capital
Percentage
owned
RM16,285,715 100%
Other than the companies in our Group described above, we do not have any associated companies.
50
SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION

You should read the following in conjunction with the full text of this Prospectus, including the sections
entitled Managements Discussion and Analysis of Results of Operations and Financial Position and
Independent Compilation Report in Relation to the Proforma Financial Information of this Prospectus.
OPERATING RESULTS OF OUR PROFORMA GROUP(1)
<
RM000
Revenue
Cost of goods sold
Gross profit
Other operating income
FY2001
12 months
FY2002
>
FY2003
<
8 months
>
FP2004
FP2003
(unaudited)
71,434
71,121
76,993
68,231
47,911
(64,243)
(59,467)
(60,649)
(55,789)
(37,797)
7,191
11,654
16,344
12,442
10,114
98
35
10
16
Administrative expenses
(2,020)
(2,003)
(2,606)
(1,916)
(1,770)
Marketing and distribution expenses
(4,715)
(4,688)
(5,559)
(3,694)
(3,594)
Other operating expenses
(1,595)
(1,360)
(1,198)
(759)
(760)
(1,041)
3,638
6,991
Finance costs
(1,674)
(1,587)
(1,483)
(2,715)
2,051
5,508
Income tax
EPS (in sen)(2)
2,723
(762)
1,289
0.01
1.00
(1,501)
4,007
3.12(3)
6,089
(755)
5,334
(672)
3,996
(1,008)
2,988
(814)
4,662
2,174
3.62
1.69
Notes:
(1)
The financial results for our Proforma Group have been prepared on the basis that our Proforma Group had been in place
(2)
For comparative purposes, EPS for the financial years and period under review have been computed based on the profit
after income tax and the pre-Invitation share capital of 128,630,152 Shares.
(3)
Had the Service Agreement been in place with effect from 1 October 2002, the profit after income tax for FY2003 would have
been RM3.8 million. The EPS would have been 2.98 cents instead of 3.12 cents.
51
SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION

Financial Position of our Proforma Group(1)
Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
Non-current assets
Deferred tax assets
23,982
30,020
460
24,442
30,020
Current assets
Inventories at cost
Trade receivables
Other receivables, deposits and prepayments
8,674
13,847
18,236
20,181
928
1,260
33
34
27,871
35,322
17,937
22,729
2,896
3,387
552
537
15,150
16,389
36,535
43,042
(8,664)
(7,720)
Less:Current liabilities
Trade payables
Other payables and accruals
Bank borrowings secured

Less:Non-current liabilities
750
902
2,414
3,910
212
3,164
5,024
Net assets
12,614
17,276
12,614
17,276
9.81
13.43

Deferred tax liabilities
NTA per Share (in sen)(2)
Notes:
(1)
The financial positions of our Proforma Group have been prepared on the basis that our Proforma Group had been in place
as at the balance dates.
(2)
For comparative purposes, the NTA per Share as at the balance sheet dates have been computed based on the NTA and
the pre-Invitation share capital of 128,630,152 Shares.
52
MANAGEMENTS DISCUSSION AND ANALYSIS OF

RESULTS OF OPERATIONS AND FINANCIAL POSITION
The following discussion of our results of operations and financial position should be read in
conjunction with the section entitled Independent Compilation Report in Relation to the Proforma
Financial Information of this Prospectus. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results may differ significantly from those projected in the
forward-looking statements. Factors that might cause future results to differ significantly from those
projected in the forward-looking statements include, but are not limited to, those discussed below and
elsewhere in this Prospectus, particularly in the section entitled Risk Factors of this Prospectus.
Under no circumstances should the inclusion of such forward-looking statements herein be regarded
as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions
by our Company, the Manager, the Underwriter, the Placement Agent and the Sub-Placement Agent or
any other person. Investors are cautioned not to place undue reliance on these forward-looking
statements that speak only as of the date hereof. Please refer to the section entitled Cautionary Note
on Forward-Looking Statements of this Prospectus.
The figures in this section are approximate figures only and where appropriate, for ease of reference,
we have rounded the figures to one decimal place.
OVERVIEW
non-fat milk powder, instant coffee powder and tea dust. Our products are packed in tin cans ranging
from 388g to 1kg in size, depending on the needs of our customers and the geographical markets that
we export to.
Apart from products exported under our own brand DAIRY CHAMP, we also export to various
countries under at least 12 different third-party brands which are manufactured by us under OEM
arrangements.
As of 4 November 2000 and 18 October 2003, we have entered into contractual arrangements with
hypermarkets, namely, Carrefour and Giant respectively, to co-pack our sweetened condensed milk
under their in-house brand names. Our sweetened condensed milk is co-packed for Carrefour under
their in-house 1 brand and for Giant under their in-house Giant brand, to be sold through their retail
market outlets in Malaysia.
In addition, as of 12 April 2002, we had also entered into an arrangement with the Makro chain of
hypermarkets, to retail the products under our DAIRY CHAMP brand throughout Malaysia.
We operate out of a production and warehousing facility located at Lot. LS-1, Persiaran Satu, Meru
Industrial Park, Persiaran Hamzah Alang, 42200 Klang, Selangor Darul Ehsan, Malaysia and the facility
occupies an industrial freehold land of approximately 348,916 sq ft, with a built-up area of
approximately 84,000 sq ft which also serves as our headquarters. This is supported by our sales
offices and warehouses located in Alor Setar, Sungei Petani, Butterworth, Ipoh, Seremban, Malacca,
Batu Pahat, Johor Bahru, Kuantan, Mentakab and Kota Kinabalu.
Our factory accommodates three production lines, catering to the production of our main products
namely, sweetened condensed milk and evaporated milk, and an additional repacking line for our
complementary products.
Sources of Our Revenue
Our revenue is derived principally from the sale and distribution of sweetened condensed milk and
evaporated milk, as well as the repack and distribution of complementary products.
53

Our products are either sold domestically or exported. Our three principal geographical markets are as
follows:
Malaysia;
ASEAN; and
Other regions which include East and West Africa, the Middle East, Central and South America
and other Asia-Pacific countries.
Revenue from the sale of our products is recognised upon delivery and customers acceptance. The
customers acceptance is generally confirmed upon receipt of the delivery orders for domestic sales
and the bills of lading for export sales. The lead time between the confirmation of orders and the
delivery is between one to three days for the domestic sales and one to two weeks for export sales.
Factors that can affect our revenue include the following:
(a)
changes in consumer tastes, preferences and lifestyles that may have an impact on the demand
for our products;
(b)
changes in government policies or guidelines that may have an impact on the pricing of certain
of our products;
(c)
the extent of competition from existing and new competitors, including the introduction of new
brands and products, trade discounts and trade offers, that may exert downward pressure on the
pricing of our products;
(d)
the product mix, quantities and prices that we are able to secure;
(e)
our ability to maintain and improve the quality of our products and deliver them on a timely basis
to our customers;
(f)
our ability to preserve our product formulation and keep up with the development of new products
and packaging as our competitors may be able to develop products or product packaging which
are more appealing to the consumers;
(g)
the production capacity utilisation and efficiency of our manufacturing plant;
(h)
changes in local and overseas import and export regulations pertaining to our products;
(i)
our ability to promote our brand recognition and customer loyalty in order to increase our existing
customer base and market share in Malaysia as well as in the overseas markets; and
(j)
the fluctuation of foreign exchange rates on our foreign currency denominated sales.
The above should be read in conjunction with the section entitled Risk Factors of this Prospectus.
Cost of Goods Sold (COGS)
The main components of our COGS were cost of materials, production labour and factory overheads
incurred to manufacture the finished products as well as trading purchases. Our COGS accounted for
89.9%, 83.6%, 78.8% and 81.8% of our revenue in FY2001, FY2002, FY2003 and FP2004
respectively.
54

Breakdown of our COGS are as follows:
<
12 months
FY2001
FY2002
> <
FY2003
8 months
>
FP2003
(Unaudited)
FP2004
RM
million
RM
million
RM
million
RM
million
RM
million
50.5
91.8
53.3
92.9
53.2
92.0
50.3
92.6
32.9
91.6
Production Labour cost
0.9
1.6
0.9
1.6
1.1
1.9
1.1
2.0
0.7
1.9
Factory Overheads
3.6
6.5
3.2
5.6
3.5
6.1
2.9
5.3
2.3
6.4
55.0
100.0
57.4
100.0
57.8
100.0
54.3
100.0
35.9
100.0
Material Cost
COGS(1)
COGS (trading)
Total COGS
(2)
9.2
2.1
2.8
1.5
1.9
64.2
59.5
60.6
55.8
37.8
Notes:
(1)
Total may not add up due to rounding.
(2)
COGS (trading) relates to the cost of trading of skimmed milk powder (SMP) and contract packing for evaporated milk,
which are separately highlighted in order to better reflect the cost component of our manufactured products.
The cost of materials comprised mainly milk powder, sugar, palm oil, vitamins and packaging materials
such as tin cans, labels and cartons. Material costs accounted for a significant portion of our cost of
sales for FY2001, FY2002 and FY2003 and FP2004, averaging 92.3% of the COGS as shown in the
table above. Measured against revenue, our total material costs (which include the COGS of our
manufactured products and COGS relating to the cost of trading of SMP and contract packing for
evaporated milk) accounted for approximately 83.6%, 77.9%, 72.7% and 76.0% of our revenue for
FY2001, FY2002, FY2003 and FP2004 respectively. In FY2001, the Group was engaged in the trading
sale of SMP due to a favourable opportunity available in the export markets. This led to a revenue
contribution of RM7.3 million from the trading sales of SMP and the corresponding COGS amounted
to RM6.4 million or 10.0% of the Groups total COGS. Save for FY2001, the trading of SMP did not
contribute materially to our revenue for FY2002, FY2003 and FP2004.
Production labour costs comprised mainly salary, bonus, EPF and overtime expenses related to
production operators. Production labour costs constituted less than 2.0% of our COGS for FY2001,
FY2002 and FY2003 and had marginally increased to 2.0% of our COGS in FP2004. Against our
revenue, production labour costs accounted for approximately 1.3%, 1.3%, 1.4% and 1.6% for FY2001,
FY2002, FY2003 and FP2004 respectively. The increasing trend of production labour costs expressed
as a percentage of our revenue was mainly related to the increase in overtime expenses and the
increase in the number of operators required since the commencement of the commercial production
of the 1kg pack size for the African market in April 2003.
Factory overheads comprised mainly utilities, consumables, repair and maintenance, depreciation
expenses for property, plant and equipment and personnel expenses. Factory overheads accounted for
approximately 3.3% of our COGS on average. Factory overheads accounted for approximately 5.0%,
4.5%, 4.5% and 4.3% of our revenue for FY2001, FY2002, FY2003 and FP2004 respectively. The
decreasing trend of our factory overheads expressed as a percentage of our revenue was attributable
to the implementation of cost control measures to contain our factory overheads.
55

Factors that can affect our COGS include the following:
(a)
our ability to procure raw materials at competitive prices;
(b)
the number of employees we hire, labour market conditions, changes in government policies and
regulations such as EPF contributions and quota will affect our labour costs;
(c)
our ability to maintain our plant and equipment at a satisfactory condition for the continuity and
maximisation of our production capacity, to provide assurance for the quality of our products and
to minimise wastage in our production;
(d)
our ability to manage and control our factory overheads; and
(e)
the fluctuation of foreign exchange rates on our foreign currency denominated purchases.
The above should be read in conjunction with the section entitled Risk Factors of this Prospectus.
Other Operating Income
Other operating income comprised mainly foreign exchange gains, sales of scrap materials, and other
miscellaneous income. Our other operating income had been insignificant in FY2001, FY2002 and
FY2003 and FP2004.
Operating Expenses
Operating expenses comprised mainly of administrative expenses, marketing and distribution
expenses and other operating expenses.
Administrative expenses constituted 2.8%, 2.8%, 3.4% and 2.8% of our revenue in FY2001, FY2002,
FY2003 and FP2004, respectively, and comprised mainly of administrative and management personnel
expenses, directors remuneration, insurance premium and other expenses related to employee
benefits, telecommunication, depreciation of property, plant and equipment and other miscellaneous
expenses.
Marketing and distribution expenses constituted 6.6%, 6.6%, 7.2% and 5.4% of our revenue in FY2001,
FY2002, FY2003 and FP2004, respectively, and comprised mainly of delivery cost of our products, cost
incurred for participating in trade exhibitions, salaries and commissions, related travelling and other
expenses incurred by our sales and marketing personnel.
Other operating expenses constituted 2.2%, 1.9%, 1.6% and 1.1% of our revenue in FY2001, FY2002,
FY2003 and FP2004, respectively, and comprised mainly of laboratory and engineering staff costs.
Finance Costs
Finance costs comprised interest arising from bankers acceptance, bank overdraft, term loans and hire
purchase. Finance costs constituted 2.3%, 2.2%, 1.9% and 1.1% of our revenue in FY2001, FY2002,
FY2003 and FP2004, respectively.
Income Tax
Income tax constituted 3.8%, 1.1%, 1.9% and 1.0% of our revenue in FY2001, FY2002, FY2003 and
FP2004, respectively.
In FY2001, there was a tax credit due to the underprovision of deferred tax assets which arose as a
result of unutilised tax losses brought forward from prior years. The unutilised tax losses are available
for utilisation in the subsequent financial years/period.
56

Inflation
The impact of inflation on our financial performance over the periods under review was not significant.
REVIEW OF RESULTS OF OPERATIONS
Analysis of Performance by Product Segment
No product segment breakdown was presented for the financial years/period under review as our
revenue is derived principally from the manufacture and distribution of milk products comprising of
sweetened condensed milk and evaporated milk. Repacking and distribution of complementary
products such as full cream and instant high calcium non-fat milk powder, instant coffee powder and tea
dust did not generally represent a significant percentage of our revenue.
Analysis of Performance by Geographical Region
We segment our revenue by geographical region based on the delivery/location of our customers,
which in turn could be different from the invoicing address of our customers. A breakdown of our
revenue by geographic regions for the financial years/period under review is presented below. Although
it was possible to segment our revenue by geographical regions, the allocation of costs cannot be done
in a similar manner with reasonable accuracy. This was because our operating costs such as
administrative costs, distribution costs and other operating costs are general costs that were pooled
and used to serve all our customers. We did not track the allocation of our COGS and operating costs
by geographical regions and any attempt to match these expenses to revenue to the various
geographical regions may not be meaningful.
Revenue by geographical region
<
12 months
FY2001
Geographical
regions
Domestic
(1)
>
FY2002
FY2003
<
8 months
FP2004
>
FP2003
(unaudited)
RM
million
RM
million
RM
million
RM
million
RM
million
55.9
78.3
65.5
92.1
67.2
87.3
47.2
69.2
43.2
90.2
7.7
10.8
4.3
6.1
6.4
8.3
4.5
6.6
3.9
8.1
7.8
10.9
1.3
1.8
3.4
4.4
16.5
24.2
0.8
1.7
15.5
21.7
5.6
7.9
9.8
12.7
21.0
30.8
4.7
9.8
71.4
100.0
71.1
100.0
77.0
100.0
68.2
100.0
47.9
100.0
Export
~ ASEAN(2)
~ Others
TOTAL
(3)
Notes:
(1)
Domestic means Malaysia.
(2)
In the context of this table, ASEAN excludes Malaysia.
(3)
Others include mainly East and West Africa, Central and South America, Middle East and Asia-Pacific countries. For more
details, please refer to the section entitled History and Business Marketing & Distribution of this Prospectus.
Domestic sales accounted for 78.3%, 92.1%, 87.3% and 69.2% of our revenue in FY2001, FY2002,
FY2003 and FP2004, respectively. Export sales accounted for 21.7%, 7.9%, 12.7% and 30.8% of our
revenue in FY2001, FY2002, FY2003 and FP2004, respectively. The increasing trend in export sales
was related to our efforts to expand into new export markets.
57

Export sales in FY2001 were higher as compared to FY2002 due to the trading sales of SMP amounting
to RM7.3 million.
For FY2003, the domestic sales accounted for 87.3% and the export sales accounted for 12.7%, but
export sales had increased markedly in FP2004 to 30.8%. Going forward, at least in the immediate
future, we expect export sales to contribute to approximately a third of our total revenue.
FY2002 vs FY2001
Revenue
Overall revenue decreased marginally by RM0.3 million or 0.4% from RM71.4 million in FY2001 to
RM71.1 million in FY2002.
Domestic sales increased by RM9.6 million or 17.2% from RM55.9 million in FY2001 to RM65.5 million
in FY2002 mainly attributable to the higher acceptance of DAIRY CHAMP products which was
evidenced by a 12.1% increase in net sales quantities. In addition, our Group also recorded higher
average net selling price per carton as a result of the increase in the selling price of sweetened creamer
in May 2001.
FY2001 revenue included trading sales of SMP amounting to RM7.3 million as a result of an opportunity
available in the export markets.
Excluding this sale, revenue for FY2002 was actually higher by RM7.0 million or 10.9%, while export
sales decreased by RM2.6 million or 31.7% from RM8.2 million to RM5.6 million. This was the result
of the utilisation of our available capacity to fulfil the strong domestic sales orders in FY2002. The
domestic sales also resulted in better profit margin generated especially after the upward revision of the
average net selling price per carton.
COGS and Gross Profit
COGS decreased by RM4.8 million or 7.4% from RM64.2 million in FY2001 to RM59.5 million in
FY2002.
Total revenue decreased by 0.4% compared to the 7.4% decrease in COGS. This was mainly
attributable to improvements in cost structure which were led by the following factors:
lower production costs which decreased in line with lower raw material price. SMP price
decreased from approximately USD2,200 per metric tonne in late FY2001 to approximately
USD1,300 per metric tonne in mid FY2002;
improvement in production utilisation due to increase in sales volume which led to lower factory
overheads per unit produced;
implementation of cost control measures; and
the above cost savings was offset by an increase in trade offers which was led by competitive
pressures.
As a result of the factors mentioned above, our gross profit margin improved from 10.1% in FY2001 to
16.4% in FY2002.
58

Other operating income decreased by RM63,000 or 64.3% from RM98,000 in FY2001 to RM35,000 in
FY2002 mainly due to the reduction in realised foreign exchange gains and hire purchase interest
rebates.
Operating Expenses
Administrative expenses decreased by RM17,000 or 0.8%, from RM2,020,000 in FY2001 to
RM2,003,000 in FY2002. Despite the revenue increase, the administrative expenses remained stable
as a result of the implementation of cost control measures. The decrease in administrative expenses
were mainly due to the following:
decreases in directors remuneration of RM133,000 and insurance of RM31,000 which offset

against;
increases in personnel expenses of RM106,000 as a result of salary adjustments, professional

fees of RM20,000, depreciation expenses of RM11,000 and travelling expenses of RM10,000.
Marketing and distribution expenses decreased by RM27,000, or 0.6% from RM4,715,000 in FY2001
to RM4,688,000 in FY2002. Despite the revenue increase (excluding the revenue from the trading sales
of SMP), the marketing and distribution expenses decreased due to the following:
decreases in personnel expenses of RM172,000, commission expenses of RM92,000, freight

charges of RM123,000 which offset against;
increases in transportation expenses of RM283,000, depreciation expenses of RM24,000,

advertising and promotional expenses of RM18,000 and sales incentives of RM35,000.
Other operating expenses decreased by RM0.2 million or 14.7% from RM1.6 million in FY2001 to
RM1.4 million in FY2002 mainly due to the decrease of allowance of RM0.2 million for doubtful trade
receivables and bad trade receivables written off. This was due to our improved credit control efforts.
Finance Costs
Finance costs decreased by RM0.1 million or 5.2% from RM1.7 million in FY2001 to RM1.6 million in
FY2002 mainly due to lower interest rates and loan repayment. Effective interest rates for term loans
was 8.4% in FY2002 compared to 8.7% in FY2001 attributed to lower base lending rates charged by
Maybank Malaysia.
Profit before Income Tax
Profit before income tax increased by RM4.8 million or 175.5% from loss before income tax of RM2.7
million in FY2001, to a profit before income tax of RM2.1 million in FY2002. This was the first time our
Group recorded a profit since its commencement of operations in 1999.
The improvements in our operating results were led by higher domestic sales, an improvement of gross
profit margin and a tight control on operating expenses.
Income Tax
Income tax increased by RM3.5 million or 128.0% from a tax credit of RM2.7 million in FY2001, to a tax
charge of RM0.8 million in FY2002. The tax credit in FY2001 was mainly due to unutilised tax losses
brought forward from previous financial years.
59

In FY2002, our income tax expense was RM0.8 million and our effective tax rate was 37.2% which was
higher than the Malaysian income tax statutory rate of 28.0% on our profit before income tax mainly as
a result of expenses not deductible for tax purposes.
FY2003 vs FY2002
Revenue
Total revenue increased by RM5.9 million or 8.3% from RM71.1 million in FY2002 to RM77.0 million in
FY2003.
Domestic sales increased marginally by RM1.7 million or 2.6% from RM65.5 million in FY2002 to
RM67.2 million in FY2003. The increase in domestic sales was mainly led by the 3.9% increase in sales
quantities albeit at a lower average net selling price. This decrease in average net selling price during
the financial year was due to the increase in trade discounts as a result of competitive pressures.
Export sales increased by RM4.2 million or 75.0% from RM5.6 million in FY2002 to RM9.8 million in
FY2003. This was mainly due to the increased sales to Indonesia and the introduction of 1kg pack size
for the African market upon the commencement of the commercial production of an additional
production line in April 2003.
COGS increased marginally by RM1.2 million or 2.0% from RM59.5 million in FY2002 to RM60.7 million
in FY2003.
Total revenue increased by 8.3% compared to the 2.0% increase in COGS. This was mainly attributable
to the following factors:
production cost continued to decrease, corresponding with the decline of the price of SMP and up
to the fourth quarter of FY2003, the price of SMP remained approximately below USD1,400 per
metric tonne;
due to competitive pressures, our Group had given a higher trade offer (in terms of quantities) to
wholesalers and dealers as an incentive for them to increase sales. However, the average cost
of trade offers per unit had decreased as a result of lower production costs incurred; and
production utilisation continued to improve due to the increase in volume of production to meet
higher sales demand.
Though the net average selling price was lower in FY2003, the favourable factors mentioned above
resulted in a better gross profit margin of 21.2% in FY2003 compared to 16.4% in FY2002.
Other operating income decreased by RM25,000 or 71.4% from RM35,000 in FY2002 to RM10,000 in
FY2003 due to contributions received from our business associates for the placement of a
congratulatory advertisement for our achievement of the Veterinary Health Mark certification in
FY2002.
Operating Expenses
Administrative expenses recorded an increase of RM0.6 million or 30.1% from RM2.0 million in FY2002
to RM2.6 million in FY2003.
60

The increase in expenses were mainly due to:
higher directors remuneration of RM0.3 million due to better performance achieved by our Group;
higher professional fees of RM0.1 million mainly for legal and stamp duties incurred in relation to
the new term loan facilities granted for the additional production line and for factory extension;
higher personnel expenses of RM0.1 million as a result of increased headcounts and salary
increments;
higher entertainment and travelling expenses of RM37,000; and
higher repair and maintenance expenses of RM24,000.
Marketing expenses also increased by RM0.9 million or 18.6% from RM4.7 million in FY2002 to RM5.6
million FY2003 in line with the increase in revenue. Higher marketing expenses were incurred as a
result of the following:
increase in freight cost of RM0.2 million due to higher export sales and higher proportion of
exports sales in Carriage and Freight shipment terms (where the freight cost is borne by our
Group and included in the amount invoiced to customers);
increase in transportation cost of RM0.2 million due to higher domestic quantities delivered and
overall increase in transport rates;
increase in personnel expenses of RM0.3 million from increments and bonus; and
increase in staff welfare expenses of RM0.2 million due to accrued expenses for our Groups
incentive trip for staff.
Other operating expenses decreased by RM0.2 million or 11.9% from RM1.4 million in FY2002 to
RM1.2 million in FY2003.
Finance Costs
Finance costs decreased by RM0.1 million or 6.6% from RM1.6 million in FY2002 to RM1.5 million in
FY2003 mainly due to lower interest rates and loan repayment. The banks base lending rate continued
to reduce further resulting in the decrease in our Groups effective interest rate from 8.4% in FY2002
to an effective interest rate ranging from 7.75% to 8.15% in FY2003.
Arising from the above, profit before income tax increased by RM3.5 million or 168.6% from RM 2.1
million in FY2002, to RM5.5 million in FY2003. This was mainly due to positive factors like strong export
growth, which contributed to the significant improvement in profit before income tax and gross margin
of our Group.
Income Tax
In FY2003, our income tax expense was RM1.5 million and our effective tax rate was 27.3% which was
slightly lower than the Malaysian income tax statutory rate of 28.0%. This was mainly due to the double
tax deduction available for a portion of expenses incurred during the financial year.
61

FP2004 vs FP2003
Revenue
Our revenue increased substantially by RM20.3 million or 42.4% from RM47.9 million in FP2003 to
RM68.2 million in FP2004.
Our domestic sales increased by RM4.0 million or 9.3% from RM43.2 million in FP2003 to RM47.2
million in FP2004 and our domestic net sales quantities has also increased at a higher rate of 12.3%.
This was mainly attributable to a 2.6% decrease in average net selling price per carton. The decrease
in average net selling price per carton was due to our Groups strategy of giving higher trade discounts
as an attempt to defend their market share against their competitors.
Our export sales increased by RM16.3 million or 346.8% from RM4.7 million in FP2003 to RM21.0
million in FP2004. The increase is a result of the introduction of new pack size of 1kg for our sweetened
creamer which was introduced in July 2003 and the increase in sales for our existing pack size of 388g
for sweetened creamer.
COGS increased by RM18.0 million or 47.6% from RM37.8 million in FP2003 to RM55.8 million in
FP2004.
Total revenue increased by 42.4% compared to the increase in COGS at 47.6%. This can be
attributable to the higher production cost which was led by higher average raw material price and was
offset by lower trade offer. SMPs price started to increase from approximately USD1,400 per metric
tonne during the fourth quarter of FY2003 to approximately USD1,700 per metric tonne in the second
quarter of FY2004.
As a result, our Group achieved a lower gross profit margin of 18.2% in FP2004 compared to 21.1%
in FP2003.
Other operating income increased by RM10,000 or 166.7% from RM6,000 in FP2003 to RM16,000 in
FP2004.
Operating Expenses
Administrative expenses increased by RM0.1 million or 8.2%, from RM1.8 million in FP2003 to RM1.9
million in FP2004. The increase in administrative expenses was mainly due to:
increase in insurance expense of RM27,000 as a result of our additions in property, plant and
equipment;
increase in professional fees of RM32,000; and
increase in stamp duty and filing fees of RM42,000.
62

Marketing expenses also increased by RM0.1 million or 2.8% from RM3.6 million in FP2003 to RM3.7
million in FP2004 in line with the increase in revenue. Higher marketing expenses were due mainly to:
increase in repairs and maintenance expenses of RM25,000 due to expenses incurred to service
motor vehicles which are more than five years old;
increase in advertising and entertainment expenses of RM35,000 due to increase marketing

efforts to procure new customers;
increase in rental of storage and premises of RM41,000 due to additional warehouse space in
Meru, Klang, in Malaysia, for storage of raw materials;
increase in personnel expenses of RM0.2 million due to increase in headcounts, salary

increments, bonus and accrued expenses for our Groups incentive trip for staff; and
the aforementioned increases in marketing expenses were offset by a decrease in freight and
transportation cost by RM0.2 million as a result of an improvement in the cost efficiency of our
inventory distribution network.
Other operating expenses (mainly comprising laboratory and engineering expenses) decreased slightly
by RM1,000 or 0.1% from RM760,000 in FP2003 to RM759,000 in FP2004.
Finance Costs
Finance costs decreased by RM0.3 million or 25.1% from RM1.0 million in FP2003 to RM0.7 million in
FP2004 mainly due to lower interest rates charged and loan principal repayment during the financial
period.
Effective interest rate for term loan was 7.75% in FP2004 compared to an effective interest rate ranging
from 7.75% to 8.15% in FP2003 attributed to lower base lending rates charged by Maybank Malaysia.
Arising from the above, profit before income tax increased by RM2.3 million or 78.5% from RM3.0
million in FP2003 compared to RM5.3 million in FP2004.
Income Tax
In FP2003, our income tax expense was RM0.8 million and our effective tax rate was 27.2% which was
lower than the Malaysian income tax statutory rate of 28.0%.
In FP2004, our income tax expense was RM0.7 million and our effective tax rate was 12.6% which was
lower than the Malaysian income tax statutory rate of 28.0% mainly due to the utilisation of
reinvestment allowances.
63

REVIEW OF FINANCIAL POSITION
Non-Current Assets
Non-current assets comprised of deferred tax assets and property, plant and equipment.
As at 30 September 2003 and 31 May 2004, we had deferred tax assets of RM0.5 million and deferred
tax liabilities of RM0.2 million respectively. The deferred tax assets of RM0.5million arose mainly as a
result of the recognition of unutilised tax losses and unabsorbed capital allowances brought forward
from prior years of RM1.8 million, and other deductible temporary differences of RM0.1 million which
were offset by the excess of capital allowances over corresponding depreciation expenses claimed of
RM1.5 million.
Our property, plant and equipment as at the respective balance sheet dates are detailed below:
Balance as at
30 September 2003
RM000
At cost:
Freehold land
Factory building
Motor vehicles
Office and factory equipment
Furniture and fittings
Renovation
Balance as at
31 May 2004
6,830
5,624
2,648
15,371
321
420
8,248
5,675
3,331
20,364
345
439
Total cost
Less:
Accumulated depreciation
31,214
38,402
(7,232)
(8,382)
Net book value
23,982
30,020
The net book value of our property, plant and equipment increased by RM6.0 million from RM24.0
million to RM30.0 million mainly due to our acquisition of property, plant and equipment of RM7.2 million
for the eight months period ended 31 May 2004, for land improvement and earthwork on existing land
(in preparation for factory extension), motor vehicles and office and factory equipment.
As at 30 September 2003 and 31 May 2004, the net book value of the motor vehicles and office and
factory equipment which were acquired under hire purchase agreements amounted to RM2.9 million
and RM2.5 million respectively. Other than the motor vehicles, and office and factory equipment under
hire purchase agreements, the remaining property, plant and equipment as at 30 September 2003 and
31 May 2004, are charged to Maybank Malaysia for our Groups banking facilities.
As at 30 September 2003, and 31 May 2004, four and seven units of motor vehicles with net book
values of RM39,000 and RM747,000, respectively, were held in trust for our Group under Messrs Mah
Weng Choong, Khor Sin Kok and Kwong Yuen Seng.
Current Assets
Current assets comprised of inventories, trade receivables, other receivables, deposits and
prepayments and cash and bank balances.
As at 30 September 2003, our current assets comprised of inventories of RM8.7 million, trade
receivables of RM18.2 million, other receivables, deposits and prepayments of RM0.9 million and cash
and bank balances of RM33,000.
As at 31 May 2004, our current assets comprised of inventories of RM13.8 million, trade receivables
of RM20.2 million, other receivables, deposits and prepayments of RM1.3 million and cash and bank
balances of RM34,000.
64

Our current assets increased by RM7.5 million or 26.7% from RM27.9 million as at 30 September 2003
to RM35.3 million as at 31 May 2004. The increase was mainly due to the following:
(a)
increase in inventories of RM5.2 million or 59.6% from RM8.7 million as at 30 September 2003
to RM13.8 million as at 31 May 2004 mainly due to increase in finished goods, raw materials and
packaging materials by RM0.7 million, RM4.3 million and RM0.1 million respectively. The increase
in inventories was in line with our anticipated increase in revenues.
(b)
increase in trade receivables of RM1.9 million or 10.7% from RM18.2 million as at 30 September
2003 to RM20.2 million as at 31 May 2004 mainly due to increase in average monthly revenue for
FP2004 compared to FY2003.
(c)
increase of other receivables, deposits and prepayment by RM0.3 million or 35.8% from RM0.9
million as at 30 September 2003 to RM1.3 million as at 31 May 2004 mainly due to increase in
prepayment of motor vehicles and general insurance of RM0.1 million, advances paid for the
purchase of raw materials of RM0.1 million, unamortised portion of bonus paid of RM0.1 million
and prepaid listing expenses of RM0.1 million.
(d)
cash and bank balances increased slightly from RM33,000 as at 30 September 2003 to RM34,000
as at 31 May 2004.
Current Liabilities
Our current liabilities comprised of trade payables, other payables and accruals, hire purchase
payables and secured bank borrowings.
As at 30 September 2003, our current liabilities comprised of trade payables of RM17.9 million, other
payables and accruals of RM2.9 million, hire purchase payables of RM0.6 million and secured bank
borrowings of RM15.2 million.
As at 31 May 2004, our current liabilities comprised of trade payables of RM22.7 million, other payables
and accruals of RM3.4 million, hire purchase payables of RM0.5 million and secured bank borrowings
of RM16.4 million.
Our current liabilities increased by RM6.5 million or 17.8% from RM36.5 million as at 30 September
2003 to RM43.0 million as at 31 May 2004. The increase in our current liabilities was mainly due to the
following:
(a)
increase in trade payables of RM4.8 million or 26.7% from RM17.9 million as at 30 September
2003 to RM22.7 million as at 31 May 2004 mainly due to higher cost of milk powder and higher
volume of raw material purchases to meet the higher production demands;
(b)
increase in other payables and accruals of RM0.5 million or 17.0% from RM2.9 million as at 30
September 2003 to RM3.4 million as at 31 May 2004 mainly due to expenses incurred for the
installation of the new production line;
(c)
increase in the current portion of the secured bank borrowings of RM1.2 million or 8.2% from
RM15.2 million as at 30 September 2003 to RM16.4 million as at 31 May 2004 mainly due to
additional term loan facility granted of RM3.2 million, of which RM2.8 million was drawn down,
which was offset by repayments during the financial period;
(d)
and offset by decrease in hire purchase payables of RM15,000 or 2.7% from RM552,000 as at 30
September 2003 to RM537,000 as at 31 May 2004.
Non-Current Liabilities
Our non-current liabilities comprised of hire purchase payables, secured bank borrowings and deferred
tax liabilities.
As at 30 September 2003, our non-current liabilities comprised of hire purchase payables of RM0.7
million and secured bank borrowings of RM2.4 million.
65

As at 31 May 2004, our non-current liabilities comprised of hire purchase payables of RM0.9 million,
secured bank borrowings of RM3.9 million and deferred tax liabilities of RM0.2 million.
Our non-current liabilities increased by RM1.9 million or 58.8% from RM3.2 million as at 30 September
2003 to RM5.0 million as at 31 May 2004 mainly due to the following:
(a)
increase in secured bank borrowings of RM1.5 million or 62.0% from RM2.4 million as at 30
September 2003 to RM3.9 million as at 31 May 2004 mainly due to additional term loan facility
granted of RM3.2 million, of which RM2.8 million was drawn down as at 31 May 2004;
(b)
increase in hire purchase payables of RM0.2 million or 20.3% from RM0.7 million as at 30
September 2003 to RM0.9 million as at 31 May 2004 as a result of an increase in additions of
motor vehicles of RM0.7 million during the financial period; and
(c)
deferred tax liabilities of RM0.2 million as at 31 May 2004 which arose mainly as a result of the
excess of capital allowances claimed over corresponding depreciation expenses which amounted
to RM1.9 million and was offset by the unutilised tax losses brought forward from prior years of
RM1.6 million.
Proforma Shareholders Equity

Our proforma shareholders equity as at 30 September 2003 and 31 May 2004 were RM12.6 million and
RM17.3 million respectively.
CAPITAL EXPENDITURE AND COMMITMENTS
Our capital expenditure for FY2001, FY2002, FY2003 and FP2004 is as follows:
<
RM000
FY2001
12 months
FY2002
>
FY2003
8 months
FP2004
Freehold land
1,418
Factory building
18
62
51
Motor vehicles
217
414
683
578
419
2,437
5,035
Others
124
74
72
43
Total
937
555
2,932
7,230
From 1 June 2004 to the Latest Practicable Date, we have incurred a total of RM3.0 million for additions
to our property, plant and equipment.
We had invested in manufacturing plant and equipment to expand and enhance our production
capabilities in our effort to minimise delivery lead-time and to meet our customers demands. We intend
to use the net proceeds from the Invitation for expansion and improvement of our facilities in Malaysia
as further described in the section entitled Prospects, Business Strategies and Future Plans
Business Strategies and Future Plans of this Prospectus.
As at the Latest Practicable Date, we have capital commitments of RM4.4 million to purchase property
plant and equipment, the capital commitment is expected to be funded through internal funds and bank
borrowings.
We have not made any material capital divestment for the past three financial years ended 30
September 2003, for the eight months financial period ended 31 May 2004 and up to the Latest
Practicable Date.
66

LIQUIDITY AND CAPITAL RESOURCES
Our growth and operations had been funded through a combination of Shareholders equity, cash flows
from operations, hire purchase and bank borrowings. Our principal use of cash had been for capital
expenditure, working capital requirements, repayment of bank borrowings and finance expenses.
As at 30 September 2003 and 31 May 2004, our Groups proforma cash and cash equivalents stood
at RM(2.5) million and RM(3.2) million respectively.
The following table provides a summary of our cash flows for FY2003 and FP2004:
12 months
FY2003
8 months
FP2004
Cash flows from operating activities
3,808
4,717
Cash flows used in investing activity
(1,878)
(6,650)
Cash flows (used in)/from financing activities
(1,482)
1,259
RM000
Increase/(Decrease) in cash and cash equivalents
448
(674)
Cash and cash equivalents at beginning of financial year/period
(2,945)
(2,497)
Cash and cash equivalents at the end of financial year/period
(2,497)
(3,171)
Cash Flows From Operating Activities

FY2003
Our Group generated cash from operating activities before changes in working capital of RM9.0 million.
Net cash used in working capital amounted to RM4.7 million which was due to cash outflows arising
from:
(a)
an increase in inventories of RM3.6 million;
(b)
an increase in trade receivables of RM1.5 million; and
(c)
increase in other receivables, deposits and prepayments of RM0.3 million.
Offset by cash inflows from:

(a)
an increase in trade payables of RM0.4 million mainly due to purchase of raw materials; and
(b)
an increase in other payables and accruals of RM0.4 million mainly due to payment of staff related
After the payment of interest expense of RM0.5 million, net cash from operating activities amounted to
RM3.8 million.
67

FP2004
Our Group generated cash from operating activities before changes in working capital of RM7.4 million.
Net cash used in working capital amounted to RM2.5 million which was due to cash outflows arising
from:
(a)
an increase in inventories of RM5.2 million;
(b)
an increase in trade receivables of RM2.2 million;
(c)
increase in other receivables, deposits and prepayments of RM0.3 million; and
Offset by cash inflows from:

(a)
an increase in trade payables of RM4.7 million mainly due to purchase of raw materials; and
(b)
an increase in other payables and accruals of RM0.5 million mainly due to payment of staff related
After the payment of interest expense of RM0.2 million, net cash from operating activities amounted to
RM4.7 million.
Cash Flows Used In Investing Activity
FY2003
Net cash used in investing activity amounted to RM1.9 million, arising from cash outflows as a result
of the purchase of property, plant and equipment.
Our Group acquired property, plant and equipment with an aggregate cost of RM2.9 million, of which
RM1.9 million were paid in cash and RM1.0 million were acquired under hire purchase.
FP2004
Net cash used in investing activity amounted to RM6.7 million, arising from cash outflows for the
purchase of property, plant and equipment.
Our Group acquired property, plant and equipment with an aggregate cost of RM7.2 million, of which
RM6.7 million were paid in cash and RM0.5 million were acquired under hire purchase.
Cash Flows (Used In)/From Financing Activities
FY2003
Net cash used in financing activities amounted to RM1.5 million and was due to cash inflows arising
from:
(a)
net drawdown of bank borrowings of RM0.6 million; and
Offset by cash outflows from:

(a)
interest paid of RM0.8 million; and
(b)
repayments of hire purchase obligations of RM1.3 million.
68

FP2004
Net cash from financing activities amounted to RM1.3 million and was due to cash inflows arising from:
(a)
net drawdown of bank borrowings of RM2.1 million; and
Offset by cash outflows from:

(a)
interest paid of RM0.4 million; and
(b)
repayments of hire purchase obligations of RM0.4 million.
Working Capital Management

Our negative working capital position as at the respective balance sheet dates were as follows:
<
12 months
>
8 months
30 September
2001
30 September
2002
30 September
2003
31 May
2004
13,173
11,683
8,664
7,720
7,278
5,072
8,674
13,847
Trade receivables
15,936
17,278
18,236
20,181
Trade payables
17,065
17,570
17,937
22,729
1,214
1,029
552
537
16,589
13,592
15,150
16,389
1,371
6,149
3,808
4,717
764
555
1,878
6,650
RM000
Mainly comprising:
Inventories

Bank Borrowings secured
Net cash from operating activities
Cash used for the purchase of property,
plant and equipment
Since the commissioning of our first sweetened condensed milk production line in February 1999, our
Group had incurred losses in the earlier years of operation as most of the cash flows from operations
were utilised for capital expenditure for the expansion of our production facilities. Our negative working
capital position arose as a result of the accumulated losses which had reduced our proforma
shareholders equity. Consequently, we had relied mainly on suppliers financing and bank borrowings
to meet our working capital needs.
Since FY2001 when Proforma Group began to show profits, we have continued to sustain and grow our
profitable position. This has helped to improve our negative working capital position in the past three
financial years and for FP2004.
The main reason for our negative working capital position as at 31 May 2004 was due to the utilisation
of cash and short term liabilities such as short term hire purchase and term loans to fund the acquisition
of non-current assets such as property, plant and equipment for our expansion.
Notwithstanding our negative working capital position for the past three financial years and for FP2004,
our Group was still able to generate positive cash flows from its operations to meet its working capital
requirements and repayment commitments. Our Group manages its current assets so that it takes
advantage of the strong cash flows of the business to meet its liabilities as they fall due. In addition, we
also utilised short term funding such as bank overdrafts and bankers acceptances to meet our
operating requirements. We utilise more trade financing such as bankers acceptances over bank
overdraft as they offer a more attractive financing cost.
69

Bank Borrowings and Gearing
We set out our gearing ratio (defined as total bank borrowings and total hire purchase obligations
divided by proforma shareholders equity) and interest cover ratio (defined as EBITDA(1) divided by
interest expense) as follows:
<
FY2001
12 months
FY2002
FY2003
8 months
FP2004
24,422
18,941
18,866
21,738
6,531
8,606
12,614
17,276
185
4,892
8,329
7,073
1,503
1,395
1,280
589
Gearing ratio (times)
3.7
2.2
1.5
1.3
Interest cover ratio (times)
0.1
3.5
6.5
12.0
Total borrowings (in RM000)

Proforma shareholders equity (in RM000)
EBITDA
(1)
(in RM000)
(2)
Interest expense (in RM000)
>
Note:
(1)
EBITDA is defined as profit before interest, income tax and depreciation expenses.
(2)
Excluding bank charges and commitment fees.
Despite the negative working capital position and current gearing level, our Group is, at the date of this
Prospectus, however, not under any pressure from our trade creditors and bankers to repay any of our
existing current liabilities and bank borrowings. All our bank borrowings are secured. We are able to
service our borrowings and repay our liabilities on a timely basis.
As at the Latest Practicable Date, our Group also had available funds of RM2,565,000 comprising
unutilised banking facilities of RM2,532,000 and cash and bank balances of RM33,000 which our
Group can draw upon to meet any short term operational needs.
Please refer to the section entitled Capitalisation and Indebtedness of this Prospectus for details on
our bank borrowings and gearing.
In addition, with the expected net proceeds from the Invitation, our Groups working capital position and
gearing level will improve. As an illustration, based on net proceeds of S$7.8 million or RM17.4 million
and its balance sheet as at 30 September 2004, our Groups shareholders equity and gearing level
immediately after the Invitation will improve to RM37.3 million and 0.5 times respectively.
Based on our cash and bank balances, our cash flows from operations and our existing banking
facilities, our Directors are of the opinion that we have sufficient resources to meet our working capital
needs and service our debt obligations as and when they fall due without foregoing any necessary
future capital expenditure.
70

FOREIGN EXCHANGE EXPOSURE
Our functional currency has been in RM since our operations are mainly in Malaysia and our operating
expenses incurred are denominated in RM. We are also preparing our Groups consolidated financial
statements in RM, which is our reporting and functional currency.
The percentage of our Groups sales and purchases in RM and foreign currencies for FY2001, FY2002,
FY2003 and FP2004 were as follows:
<
% sales denominated in
12 months
>
8 months
FY2001
FY2002
FY2003
FP2004
RM
78.9
95.4
95.1
76.7
USD
20.5
4.1
4.4
22.7
0.6
0.5
0.5
0.6
100.0
100.0
100.0
100.0
B$
<
% purchases denominated in
12 months
>
8 months
FY2001
FY2002
FY2003
FP2004
RM
58.9
76.5
68.8
63.6
USD
36.5
20.0
28.0
34.2
SGD
2.8
2.9
3.2
1.7
Euro
1.8
0.6
0.5
100.0
100.0
100.0
100.0
The majority of our export sales is denominated in USD and to a smaller extent in B$ whilst the majority
of our import purchases are denominated in USD and to a smaller extent in SGD or Euro. To the extent
that our Groups sales and purchases are not naturally matched in the same currency and to the extent
that there are timing differences between invoicing and collection/payment, our Group will be exposed
to foreign currency exchange gains and losses arising from transactions in currencies other than our
functional currency. As RM is pegged to the USD, any foreign currency exchange exposure risk arising
from the adverse fluctuation of the USD is minimal, assuming that there are no changes to the existing
Malaysian currency policy. However, our Group will still be exposed to adverse fluctuations of the
various other currencies against the RM which may affect our Groups earnings.
Our net foreign currency exchange gains for FY2001, FY2002, FY2003 and FP2004 were as follows:
<
RM000
FY2001
12 months
FY2002
FY2003
>
8 months
FP2004
15
Foreign exchange gains, net
54
% of revenue
0.1
n.m
n.m
n.m
% of (loss)/profit before income tax
n.m
0.1
n.m
0.2
Note:
n.m means not meaningful and denotes percentage of not less than 0.1.
From time to time, we utilise forward foreign exchange contracts to minimise our exposure to specific
currency risks related to our foreign currency denominated sale and purchase commitments. Where
possible, our Group typically hedges 100% of its foreign currency exposure. Our Group will also roll
over forward exchange contracts at maturity at the prevailing market rates where necessary. As at 30
September 2004 our outstanding foreign exchange contracts amounted to approximately RM5.9
million.
71

CREDIT POLICY
We normally grant our customers credit terms ranging between 60 to 90 days. The actual credit terms
granted to a customer depends on our assessment of the customers credit worthiness and the
customers conduct of account. Upon our customers request, we may extend the credit terms granted
based on case-by-case reviews.
Allowance for bad trade receivables are made against our profit for any unrecovered trade receivables
defaulted by our customers. In order to minimise the risk of unrecoverable trade receivables, the
management has in place a stringent credit control policy to assess, evaluate and monitor new and
existing customers. All new customers will commence with a temporary credit limit for a period of six
months before final credit is approved by the management. Temporary credit is based on the graduated
pre-approved limits granted to its sales force.
Credit limits are processed based on the submission of duly completed credit application forms and
approved based on the authority table approved by the management before any new credit accounts
are approved.
Credit control procedures are in place to monitor the outstanding balances of customers. Customers
outstanding balances are compared against their respective set credit limits and ageing of the
outstanding balances are also monitored on a monthly basis by the credit controller. Any new orders will
not be accepted when outstanding balances exceed 90 days (for customers in Peninsular Malaysia) or
120 days (for customers in East Malaysia) or when credit limits are exceeded, except on a
case-by-case basis approved by the management. Monthly statements are issued to customers. Upon
the expiry of the credit period, a past due notice will be issued to each overdue account after a period
of 30 days, and this will be followed by three reminder letters at 30 days interval after a past due notice
has been sent. In the event that the trade receivables remain uncollectible, a letter of demand will be
sent to the errant customer before our Group commences any legal action.
Generally, credit limits are approved as a multiple of three times the average preceding monthly sales
after the temporary credit period.
We generally receive payments between 99 to 102 days for domestic customers and 19 to 38 days for
export customers after delivery of products to our customers. For FY2001, FY2002, FY2003 and
FP2004, over 90% of our sales to domestic customers were on credit compared to our export sales
where credit sales accounted for less than 10% of the export sales.
Based on our assessment of the credit risk, there are no significant concentrations of credit risk. The
maximum exposure to credit risk for our Group is represented by RM0.5 million being the single largest
credit limit to a customer.
Our trade receivables collection days, bad trade receivables and allowance for doubtful trade
receivables written off for FY2001, FY2002, FY2003 and FP2004 are as follows:
<
12 months
>
8 months
FY2001
FY2002
FY2003
FP2004
83
90
91
76
Bad trade receivables written off (RM000)
900
529
As % of revenue
1.3
0.7
Allowance for doubtful trade receivables (RM000)
48
241
569
294
As % of revenue
0.1
0.3
0.7
0.4
Trade receivables turnover (in days)(1)
Note:
(1)
Trade receivables turnover (in days) can be calculated based on trade receivables/revenue multiplied by 365 days (or 243
days for FP2004).
72

We adopt a specific allowance policy for doubtful trade receivables on the basis that trade receivables
that have remained outstanding for 120 days after the credit period and if no payments were received
within the preceding 90 days:
(i)
50% allowance when no legal notice of demand issued; or
(ii)
100% allowance when legal notice of demand has been issued (that is, after the end of third
reminder letter).
However, the management will assess the collectibility of the outstanding trade receivables on a
case-by-case basis to determine the quantum of allowance or if any allowance is required. The
management may not make any allowance if they are of the view that the trade receivables outstanding
is immaterial (lower than RM2,000) or if the sales personnel provide constructive feedback on the
collectibility of the outstanding trade receivables from the customer.
Our trade receivables turnover period has increased from FY2001 to FY2002 mainly as a result of the
increase in the proportion of credit sales compared to cash sales over this period. There were no
material movements in our trade receivables turnover period from FY2002 to FY2003. In FP2004, our
cash sales have increased from 13.4% in FY2003 to 30.8% in FP2004 in view of higher export sales.
This resulted in a corresponding decrease in our proportion of credit sales and has led to a decrease
in our trade receivables turnover period from 91 days in FY2003 to 76 days in FP2004.
INVENTORY POLICY
Our inventory comprises of finished goods, work-in-progress and raw materials. Our inventory level is
determined principally by our customer orders, sale forecasts and production requirements. We will
generally maintain adequate inventory levels to satisfy production needs and where appropriate, enter
into long-term (of up to six months) contracts to purchase raw materials. Our decision as to when we
will enter into these long-term purchase contracts will be dependent on the movement in prices of these
raw materials (namely milk powder and palm oil) in the market and our view of its trend. We source our
raw materials from more than one supplier. Apart from raw materials, we generally hold one months
supply of inventory to satisfy our anticipated monthly sales. We review our monthly inventory level in
tandem with our monthly sales forecasts. In addition, we conduct monthly inventory counts to
determine our monthly physical inventory levels as well as to identify missing items, expired or
damaged inventories to be written off.
Our inventory turnover days and inventories written off for FY2001, FY2002, FY2003 and FP2004 are
as follows:
<
FY2001
12 months
FY2002
FY2003
8 months
FP2004
41
31
52
60
Inventories written off (RM000)
765
89
47
51
% of revenue
1.1
0.1
0.1
0.1
Inventory turnover (in days)(1)
>
Note:
(1)
Inventory turnover (in days) can be calculated based on inventory/cost of sales multiplied by 365 days (or 243 days for
FP2004)
73

PROFIT ESTIMATE
Barring any unforeseen circumstances, and based on the bases and assumptions set out below, our
Directors estimate our Group to achieve revenue, profit before income tax and profit after income tax
of RM116.4 million, RM8.6 million and RM7.3 million respectively for FY2004 (based on unaudited
management accounts). This represents increases of 51.2%, 56.0% and 81.9% respectively as
compared with FY2003.
Our Groups revenue is estimated to increase by approximately RM39.4 million or 51.2% from
approximately RM77.0 million in FY2003 to approximately RM116.4 million in FY2004 due mainly to
higher demand in both domestic and export sales.
We enjoyed higher profit margins due to better economies of scale as a result of increased capacity and
better utilisation of capacity, production planning and cost control. These contributed to an increase in
our profit before tax margin from 7.2% in FY2003 to 7.4% in FY2004.
For FP2004, we achieved Proforma Group revenue, profit before income tax and profit after income tax
of RM68.2 million, RM5.3 million and RM4.7 million respectively. This represents 58.6%, 62.1% and
64.0% respectively of our estimated revenue, profit before income tax and profit after income tax for
FY2004.
Bases and Assumptions Underlying the Profit Estimate
The profit estimate for FY2004, for which our Directors are solely responsible, has been prepared on
bases consistent with the accounting policies normally adopted by our Group in the preparation of our
financial statements.
The general principal bases and assumptions used as at the time of preparation of the profit estimate
are set out below:
(a)
there will be no adverse changes in the national or international monetary, financial, fiscal,
political, economic, legal, social and regulatory conditions that are likely to materially prejudice the
operations of our Group (including but not limited to changes caused directly or indirectly by
escalation of hostilities in the Middle East or elsewhere, outbreak of wars and outbreak of
infectious diseases such as SARS);
(b)
there will be no material property, plant and equipment write-off or impairment of property, plant
and equipment;
(c)
there will be no material changes to the terms and conditions in any of the existing agreements,
contracts and business arrangements with our business partners, suppliers and customers (for
example, with respect to credit terms); and
(d)
there will be no major quality or operational mishap in our production processes that might lead
to our disqualification as vendor to our customers or a collapse or significant reduction in the
demand for our services or products.
SIGNIFICANT CHANGES IN ACCOUNTING POLICY

There were no changes in our Proforma Groups accounting policies for the relevant financial
years/period that affected the operating results of our Proforma Group. Our Proforma Groups operating
results were not affected by the adoption of revised or new accounting standards as our Proforma
Group has been following the recognition and measurement principles of the relevant accounting
standards.
74
HISTORY AND BUSINESS

HISTORY AND DEVELOPMENT OF OUR GROUP
Our Group can trace its origins back to January 1997, when our founding members namely, the Tan
Brothers, Messrs Mah Weng Choong, Khor Sin Kok and Chung Chee Fook, entered into a joint venture
through their investment holding companies, Motif Etika Sdn Bhd (Motif Etika) and Jasnida Sdn Bhd
(Jasnida), to engage in the manufacturing and distribution of milk products in Malaysia. Motif Etika
was wholly owned by the Tan Brothers and Jasnida was collectively owned by Messrs Mah Weng
Choong, Khor Sin Kok and Chung Chee Fook. Mr Kwong Yuen Seng became a shareholder of Jasnida
on 28 February 2003.
Clarity Valley Sdn Bhd (Clarity Valley) which was initially incorporated on 22 March 1996, was used
as the joint venture vehicle to engage in what is now our principal business. In October 1996, Clarity
Valley acquired a parcel of land of approximately 348,916 sq ft, at the newly developed industrial park
at Klang, Selangor Darul Ehsan, Malaysia to build EDSBs first condensed milk production factory.
On 25 January 1997, we changed our name from Clarity Valley to Etika Dairies Sdn. Bhd., to associate
the Company with the group identity of Motif Etika and to reflect the Companys principal business of
manufacturing and distributing milk products which mainly comprise sweetened condensed milk,
evaporated milk and complementary products such as the repacking and distribution of full cream and
instant high calcium non-fat milk powder, instant coffee powder and tea dust.
The factory was completed in December 1998 and the installation of a modern and fully automated
sweetened condensed milk production line was commissioned in February 1999.
Our Founding Members were desirous to create and develop a premium brand that would be easily
identifiable within the domestic market and compete effectively with the existing brands of multinational
companies on a regional and international level. With this in mind, we unveiled DAIRY CHAMP as our
trademark brand on 1 March 1999. DAIRY CHAMP is now a household brand name which is readily
identifiable by our distinctive logo of a champions trophy.
To position ourselves as a manufacturer and distributor of sweetened condensed milk and with a
modest budget to begin with, our Founding Members focused on producing a quality product that would
be well received by customers at an affordable price. We identified a proliferation of Mamak
Stalls/Restaurants, coffee shops and Teh Tarik stalls throughout the country and recognised that it was
simply the result of the growing lifestyle trend of Malaysians. As a result, apart from dealers,
wholesalers, restaurants and on-premise outlets, we decided to reach out to the end users of
condensed milk and started marketing and distributing our products directly to these stall vendors
throughout the country. Our products distributed under the DAIRY CHAMP brand, namely sweetened
condensed filled milk and sweetened creamer, were commercially launched on 1 March 1999
throughout Malaysia.
The milestone achievements of our Group were as follows:
Year
Developments
2000
Launched the DAIRY CHAMP Full Cream Milk Powder, packed in 450g and 900g
aluminium foil pouch packs.
Launched the DAIRY CHAMP High Calcium Instant SMP in similar sized packs. These
products are specially formulated and produced in Australia and are well received in the
market place due to its creamy, aromatic flavour and attractive packaging design.
Installed a repacking facility to complement our manufacturing business. This facility was
installed to handle the process of repacking SMP, coffee powder and tea dust.
Entered into an OEM arrangement to co-pack sweetened condensed milk with Carrefour
under their in-house 1 brand.
75

Year
Developments
2001
Introduced TEH TARIK CHAMP, which is 100% pure tea dust, packed in pack sizes of
1kg bag, 2kg tub, 5kg pail and 10kg pail.
Exported products to Cambodia, Philippines, Angola (West Africa) and Taiwan.
Launched KOPI CHAMP Instant Coffee Powder. Distributed in 180g foil pack size, this
product was an instant hit with coffee shop owners owing to its premium quality and
reasonable pricing.
In line with our sales strategy to become a leading brand name, we began exporting our
products to Iran, Singapore, New Zealand, Indonesia, Myanmar, Malawi, and some other
countries in West Africa.
Entered into an arrangement to retail our DAIRY CHAMP products with the Makro chain
of hypermarkets.
Exported to countries in West Africa, namely Gambia, Benin, Burkina Faso, Gabon, Cape
Verde, Ghana, the Ivory Coast as well as to the Middle Eastern country of Iran.
Entered into an OEM arrangement to co-pack sweetened condensed milk with Giant under
their in-house Giant brand.
Exported to the West African countries of Guinea, Senegal, Mali and Liberia and to
countries such as Suriname, Iraq, United Arab Emirates, Pakistan, Cuba, Panama, Togo
and Trinidad.
2002
2003
2004
Most of our products exported to these countries are manufactured on an OEM basis and are exported
under various third-party brand names such as Happy Way, Madora, Marimar, Me & My, Royale, Fiesta,
Nicola Lait, Mamies, Lorado, Rosa, Russo and several others. We also export our products under
DAIRY CHAMP brand to Indonesia, Brunei, Myanmar, New Zealand, Middle East, Central America,
and East and West Africa.
As at 30 September 2004, our export sales accounted for approximately 32.0% of our annual turnover.
In view of the increasing demand for our products in Malaysia and overseas, we installed a second
production line in 2003 to accommodate the production of sweetened condensed milk in 1kg sized
packs and we commenced production at this line in April 2003. In March 2004, we added a third
production line specifically for the production of evaporated milk.
As at the Latest Practicable Date, we are a growing organisation with 282 employees in sales and
marketing, production, product research and development, engineering, human resources, finance and
administration departments. Other than the factory and main office located at Klang, we have sales
offices and warehousing facilities in Alor Setar, Sungei Petani, Butterworth, Ipoh, Seremban, Malacca,
Batu Pahat, Johor Bahru, Kuantan, Mentakab and Kota Kinabalu.
As part of the Restructuring Exercise (described in the section entitled Restructuring Exercise of this
Prospectus) undertaken in connection with the Invitation which resulted in the formation of our Group,
Etika Corporation Private Limited was incorporated in 23 December 2003 to serve as the holding
company of our Group. On 6 July 2004, we changed our name from Etika Corporation Private Limited
to Etika International Holdings Private Limited. Effective 10 November 2004, we were converted into a
public limited company and changed our name to Etika International Holdings Limited.
76

BUSINESS
Overview
non-fat milk powder, instant coffee powder and tea dust. We operate out of a production and
warehousing facility located at Lot. LS-1, Persiaran Satu, Meru Industrial Park, Persiaran Hamzah
Alang, 42200 Klang, Selangor Darul Ehsan, Malaysia and the facility occupies an industrial freehold
land of approximately 348,916 sq ft, with a built-up area of approximately 84,000 sq ft.
Currently, we have sales offices and warehousing facilities throughout Malaysia to facilitate the
distribution of our products. We have expanded our distribution business by exporting our products
within ASEAN and to East and West Africa, Central and South America, Middle East and other
Asia-Pacific countries. Please refer to the section entitled History and Business Marketing &
Distribution of this prospectus for more information. Our export segment accounts for approximately
21.7% in FY2001, 7.9% in FY2002, 12.7% in FY2003 and 30.8% in FP2004 of our total revenue.
Apart from products exported under our own brand DAIRY CHAMP, we also export to several
countries under at least 12 third-party brands which are manufactured by us under OEM arrangements.
As of 4 November 2000 and 18 October 2003, we have entered into contractual arrangements with
hypermarkets, namely, Carrefour and Giant respectively, to co-pack our sweetened condensed milk
under their household brand names. Our sweetened condensed milk is co-packed for Carrefour under
their in-house 1 brand and for Giant under their in-house Giant brand, to be sold through their retail
market outlets in Malaysia.
In addition, as of 12 April 2002, we had also entered into an arrangement with the Makro chain of
hypermarkets, to retail products under our DAIRY CHAMP brand throughout Malaysia.
Our business is divided into three geographical segments, namely domestic sales in Malaysia, export
sales to ASEAN and export sales to other countries.
Domestic Sales
In general, sweetened condensed milk products are subdivided into three main types, namely
sweetened condensed full cream milk, sweetened condensed filled milk and sweetened creamer.
Our sweetened condensed filled milk is manufactured using vegetable fat extracted from palm oil in
place of the ingredients of milk fat or butter fat normally used to produce sweetened condensed milk.
This change in method of production was first adopted in the Malaysian market in 1972 and has since
been followed by several milk product manufacturers.
The method currently used to produce sweetened condensed filled milk, are also used to produce
sweetened creamer. However, we have improved on this formula to the extent that we can now produce
sweetened creamers at a reduced cost, without compromising its quality and taste. As a testament to
its quality and taste, sales of our sweetened creamer constitute the bulk of our total sales.
We commenced our commercial production of evaporated milk in March 2004 and currently, sales of
evaporated milk do not represent a material percentage of our total domestic sales. Based on our past
success with sweetened condensed milk, we intend to grow our market share for this product in the
future.
Domestic sales are influenced by seasonal factors such as the fasting month for the Muslims and also
during the Chinese new year festival where business operators will stock up lower quantities in view of
the long holiday period, especially so if the festival falls in the shorter month of February. It is during
these seasonal factors that plant shutdowns are scheduled for maintenance work and overhaul.
77

Export Sales
We currently export to various countries in ASEAN (including Singapore, Indonesia, Thailand, Brunei,
Myanmar, Cambodia and Philippines) and other regions, which include East and West Africa, the
Middle East, Central and South America, and other Asia-Pacific countries. We distribute our products
through trading companies and buying agents, some of which are based in Europe, in particular, United
Kingdom, France and Germany. While we have a fairly diversified export market, we enjoy strong
demand from Africa and EDSB has specifically dedicated one production line to accommodate the
supply of sweetened condensed milk to this market. Since FY2003, we have witnessed an increasing
demand for sweetened condensed milk from Indonesia and African markets. The African market which
had traditionally obtained its supply from European sweetened condensed milk manufacturers has
switched to sourcing its supplies of condensed milk from Asian producers due to generally competitive
pricing and the quality of the products.
Our Products
Sweetened condensed milk is processed from the combination of fat, milk constituents and sugar.
Vitamins are also added to the finished product. Sweetened condensed milk can be divided into three
variants, namely sweetened condensed full cream milk, sweetened condensed filled milk and
sweetened creamer. The sweetened condensed full cream milk variant is produced from milk fat while
the sweetened condensed filled milk and sweetened creamer variants are produced from vegetable fat
in place of milk fat. The sweetened creamer variant contains a higher proportion of vegetable fat than
sweetened condensed filled milk.
Evaporated milk is processed from the combination of fat and milk constituents. Vitamins are also
added to the finished goods. Evaporated milk is also divided into three variants, namely evaporated full
cream milk, evaporated filled milk and evaporated creamer. The evaporated full cream milk variant is
produced from milk fat while the evaporated filled milk and evaporated creamer variants are produced
from vegetable fat in place of milk fat. The evaporated creamer variant contains a lower proportion of
vegetable fat than evaporated filled milk.
78

A description of all of the products that we manufacture is set out below:
Brand
Description
Pack size(s)
DAIRY CHAMP
Sweetened Condensed Milk
390g 48 tins
1kg 24 tins
DAIRY CHAMP
Sweetened Condensed Filled Milk
397g 48 tins
510g 48 tins
750g 30 tins
1kg 24 tins
DAIRY CHAMP
Sweetened Creamer
388g 48 tins
505g 48 tins
738g 30 tins
1kg 24 tins
DAIRY CHAMP
Evaporated Filled Milk
400g 48 tins
DAIRY CHAMP
Evaporated Creamer
400g 48 tins
DAIRY CHAMP
Full Cream Milk Powder
450g 24 aluminium pouches

900g 12 Aluminium pouches
DAIRY CHAMP
Instant High Calcium Non-Fat Milk Powder

TEH TARIK
CHAMP
Tea Dust
1kg 16 Aluminium pouches

2kg 1 plastic tub
KOPI CHAMP(1)
Instant Coffee Powder
Note:
(1)
The trademark registration of KOPI CHAMP was not approved by PHIM. We intend to develop new brands to replace
KOPI CHAMP. In line with this intention, as at the Latest Practicable Date, the Group had made applications in Malaysia
for CHUM CAFE, PLUS KAFE and PLUS CAFE to be registered as trademarks. For more information on the Groups
trademarks, please refer to the section entitled History and BusinessIntellectual Property of this Prospectus.
79

Our Manufacturing Process
(A)
Manufacturing Process of Sweetened Creamer and Sweetened Condensed Filled Milk
RAW MATERIALS
MIXING
FILTERING
HOMOGENISATION
PASTEURISATION
EVAPORATION
The raw materials are prepared according to set formulation. For each batch of
production, the requisite bags of milk powders and sugar are stacked on pallets
in preparation for use. The amount of vitamins required are measured and
pre-packed in preparation for use. Filtered water and palm oil are also pumped
into two separate measurement tanks to be readied for use in the manufacturing
process.
The pre-measured filtered water is transferred from the measurement tank into
the mixing tank and is heated using a plate heat exchanger. The stirrer is turned
on and the required milk powders are added into the mixing tank to be dissolved.
After 30 minutes, the required amount of sugar is added into the mixture and
stirred for 30 minutes. The pre-measured palm oil and vitamins are then
incorporated as final ingredients. After stirring for another 15 minutes, the mixing
is complete and ready for filtering.
The completed mixture is transferred from the mixing tank by pump through a
series of pipes and into a holding tank. Filtration of the mixture will remove any
undissolved solid particles. When the mixture is completely transferred into the
holding tank, it is again drawn by a second pump from the holding tank, through
another set of filters and passed into the homogeniser.
The filtered mixture is passed through the homogeniser for emulsification to
obtain a desired level of consistency and texture.
After the milk is homogenised, it is passed through a plate heat exchanger where
the milk product is heated up to a pre-set temperature to destroy any presence of
harmful bacteria. The pasteurised milk is then introduced into a second holding
tank to undergo a process of evaporation.
From the holding tank, the milk is transferred into a vacuum cooler for
evaporation. At this stage, water in the product is transformed into vapour, in order
for the product to achieve a state of greater consistency and density. When the
milk has been condensed and cooled down to about 25C, vacuuming is stopped
and the milk is transferred by a pump into the storage tank.
STORAGE TANK
CAN FILLING
CAN SEAMING
LABELLING
BOXING
PALLETISING
The milk is drawn from the storage tank and passed through a set of filters into the
filling machine. The filling machine fills the open-top cans with milk. The cans
have been previously washed with steam and hot water and subsequently flame
sterilised to prevent contamination.
The filled cans then go through a seamer where sterilised lids are coded, capped
and seamed around the open end of the cans.
The seamed cans are conveyed through a labelling machine where our
Companys product labels bearing relevant brand are labelled.
The labelled cans are then conveyed to a boxing machine where they are packed
into cartons. The packed cartons are conveyed through the carton-gluing machine
for sealing and subsequently inkjet-printed with a product code and an expiry
date.
The cartons are conveyed to the palletiser where they are stacked onto pallets at
the palletiser. Palletised cartons are subsequently transferred to the warehouse to
await distribution.
80

(B)
Manufacturing Process of Evaporated Filled Milk and Evaporated Creamer
RAW MATERIALS
MIXING
FILTERING
The raw materials are prepared according to set formulation. For each batch of
production, the requisite bags of milk powders are stacked on pallets in
preparation for use. The amount of vitamins required are measured and prepacked in preparation for use. Filtered water and palm oil are also pumped into
two separate measurement tanks to be readied for use in the manufacturing
process.
The pre-measured filtered water is transferred from the measurement tank into
the mixing tank and is heated using a plate heat exchanger. The stirrer is turned
on and the required milk powders are added into the mixing tank to be dissolved.
After 30 minutes, the pre-measured palm oil and vitamins are then incorporated
as final ingredients. After stirring for another 15 minutes, the mixing is complete
and ready for filtering.
The completed mixture is transferred from the mixing tank by pump through a
series of pipes and into a holding tank. Filtration of the mixture will remove any
undissolved solid particles. When the mixture is completely transferred into the
holding tank, it is again drawn by a second pump from the holding tank, through
another set of filters and into the homogeniser.
DE-AERATION
The mixture passes through the de-aerator to remove the air bubbles that were
incorporated during the mixing process.
HOMOGENISATION
From the de-aerator, the de-aerated mixture is passed through the homogeniser
for emulsification to obtain a desired level of consistency and texture.
COOLING
After the milk is homogenised, it is passed through a plate heat exchanger where
the milk product is cooled down before transfer to the storage tank.
STORAGE TANK
STANDARDISATION
The milk in the storage tank is stirred for 30 minutes. A sample is then collected
from the storage tank and analysed in the laboratory. Based on the results of the
laboratory analysis, the milk in the storage tank may be standardised to the
required percentage of fat and total solids.
CAN FILLIN G
The milk is drawn from the storage tank and passed through a set of filters into the
filling machine. The filling machine fills the open-top cans with milk. The cans
have been previously washed with steam and hot water.
CAN SEAMING
STERILISATION
LABELLING
The filled cans then go through a seamer where lids are coded, capped and
seamed around the open end of the cans.
The seamed cans are then loaded into the steriliser for sterilisation. After
sterilisation, the cans are cooled and dried by blowing air through them.
The seamed cans are conveyed through a labelling machine where our
Companys product labels bearing the relevant brand are labelled.
BOXING
The labelled cans are then conveyed to a boxing machine where they are packed
into cartons. The packed cartons are conveyed through the carton-gluing machine
for sealing and subsequently inkjet-printed with a product code and an expiry
date.
PALLETISING
The cartons are conveyed to the palletiser where they are stacked onto pallets at
the palletiser. Palletised cartons are subsequently transferred to the warehouse to
await distribution.
81

(C)
Process for the Re-packing of Milk Powders, Instant Coffee and Tea Dust
RAW MATERIALS
FILLING/REPACKING
WEIGHING
The required material (milk powders/instant coffee/tea dust) is conveyed into a

clean and air-conditioned packing room.
Inside the packing room, the material is transferred from its packing into the
hopper. From the hopper, the material is filled into aluminium pouches that have
been coded with the expiry date.
The filled pouches are weighed to ensure that the required minimum net weight
is achieved.
The pouches are then heat-sealed and conveyed out of the packing room.
HEAT-SEALING
BOXING
PALLETISING
Outside the packing room, the pouches are packed into the cartons that were
previously printed with a product code and an expiry date.
The carton will then be sealed and palletised. Palletised cartons are then
transferred to the warehouse for subsequent distribution.
QUALITY AND RELIABILITY ASSURANCE

Quality Control and Product Reliability
We believe that our milk products are of consistently high quality. We have put in place a set of stringent
quality control measures to monitor and control the quality of our milk products. In a highly competitive
industry, we recognise that customer satisfaction is critical to our business success. As such, we are
fully committed to achieving and maintaining a high level of customer satisfaction, by ensuring that our
milk products are manufactured to an assured level of quality, that our services are rendered efficiently
and each of our employees take an active role in ensuring that our standards are maintained.
Quality control at our plant is conducted at various stages of the manufacturing process and is fully
compliant with the Quality Assurance Program (QAP), the Hazard Analysis Critical Control Points
(HACCP) and all veterinary inspection requirements, regulated by the Department of Veterinary
Services, Ministry of Agriculture in Malaysia. Under the QAP, there are principally three stages of quality
control. The first is the incoming quality control on the raw materials used for our production, the second
is the in-process quality control during the production stage and the last is the outgoing quality control
which is carried out on the final product. We also carefully monitor and control the dual processes of
mixing and canning, in order to ensure that the food is safe for consumption, satisfies high hygiene
standards and is free from harmful contaminants.
Our three stages of quality control are described as follows:
Stage 1 Receiving Inspection and Testing
At this stage, all incoming materials are screened by our receiving storage department and tested
at our in-house laboratory for their quality and safety before they are used in the manufacturing
process.
82

Stage 2 In-process Inspection and Testing
At this stage, the products being processed are subject to in-process quality control inspections
and are closely monitored and recorded at all control points.
Stage 3 Final Inspection and Testing
At this stage, the finished product undergoes final inspection where they are analysed by our
quality control staff to ensure that they conform to our requirements, for instance, the general
constitution and condition of our tin cans, the quality of the labelling and sealing process and
general cleanliness, among others. This process ensures that all our in-process inspection and
testing procedures are conducted and completed satisfactorily and that the products have been
approved for distribution.
In addition, we adhere strictly to an in-house procedural manual that sets out the steps to be taken in
identifying and detecting non-conforming products so as to ensure that such products are properly
segregated, documented and disposed of in accordance with our Groups quality assurance policy.
Hazard Analysis Critical Control Point (HACCP)
The HACCP program was incorporated in our manufacturing process as a safety management tool and
as part of our overall quality assurance program. This program, which is monitored by the Department
of Veterinary Services, Ministry of Agriculture in Malaysia for the purpose of its Veterinary Health Mark
certification scheme, centers on a system of identification of potential hazards and process control. It
analyses and monitors the extent and severity of a companys deviation from acceptable manufacturing
or processing parameters and assesses the risk of potential hazards that may arise as a result. It is a
systematic approach to assuring the safety of food products and maintaining the standard of food
quality since deviation from acceptable processing standards can affect the safety and quality of food
products.
Benefits of HACCP
The HACCP is a voluntary program formulated on scientific principles. It is essentially an exercise in
evidence gathering and an assessment of risks associated with human health. Control systems are
established to focus on hazard prevention and to discourage an over reliance on end-product testing
methods. Under the HACCP framework, the manufacturing process is monitored right from the
beginning. As such, poor quality or defective products and raw materials are detected very early in the
production process and are withheld from further processing. By minimising wastage of resources and
incidences of having to dispose of defective end-products, our Group enjoys significant cost savings,
increased productivity and higher profits.
As the HACCP is applied daily throughout the manufacturing process as a standard operational
procedure, our daily record-keeping exercise enables regulatory officials during site inspection visits to
immediately recognise EDSBs daily efforts in complying with food safety laws in Malaysia, as
compliance only upon notice of site visits, is not an accurate indicator of good process management
and product safety assurance.
As compliance with the HACCP is recognised by customers as a mark of quality products and safety
assurance, we enjoy high customer confidence which we believe has resulted in a steady increase in
our market share. Apart from our increased competitiveness in the domestic market, we also compete
more effectively in the overseas market as the HACCP is recognised internationally.
83

Good Manufacturing Practice
In addition to the HACCP program, our Group also adheres to a Good Manufacturing Practice (GMP)
program, which provides customers with an additional level of assurance of the quality of our products.
The GMP ensures the following:
Suitability of factory premises and environment for manufacturing;
Use of proper equipment and utensils for manufacturing;
Quality of raw materials supplied are acceptable;
Our personnel are well trained, are competent in our operations and practise good hygiene habits.
Effectiveness of sanitary facilities and control of operations;
Effectiveness of EDSBs pest control program to prevent contamination of our products;
Proper storage and distribution of materials and finished products; and
Effectiveness of the product recall program in relation to the control of non-conforming products.
As part of our quality assurance efforts, our Group consistently monitors the quality of our milk products
and general standard of our service through customer surveys and feedback. Feedback enables us to
ascertain if our products have reached desired quality standards and whether the customers
requirements and expectations are met at all times. Accordingly, our employees are regularly trained
and inducted into the principles and methods of quality improvement. To keep our employees
motivated, we constantly monitor their performance and ensure that their achievements and efforts are
recognised by the management.
As a large portion of products are produced for and consumed mainly by the domestic market, we also
ensure that these products are formulated and manufactured in accordance with Halal requirements
under Islamic Law. As such, all our products fully comply with the regulations laid down by the Islamic
Development Department of Malaysia.
AWARDS AND CERTIFICATION
Quality Certification
In recognition of our quality control and assurance efforts, EDSB was on 12 July 1999, awarded a
certificate of authentication from the Islamic Development Department of Malaysia, which states that all
our products have complied with the Halal requirements in accordance with Islamic Law. Since this
initial award, the Islamic Development Department of Malaysia has consistently renewed this
certificate. The last certificate awarded is valid till 14 July 2006.
On 9 July 2001, EDSB was also certified by the Department of Veterinary Services, Ministry of
Agriculture in Malaysia to have complied with all the veterinary inspection regulations and the
requirements of the QAP and HACCP and is thereby awarded the Veterinary Health Mark. This
certificate is valid till 31 December 2004.
Currently, our Group is working towards the achievement of an ISO 9001:2000 certification.
Awards
On 30 June 2003, our brand DAIRY CHAMP in relation to our sweetened condensed milk product was
awarded the Brand Equity Magazine Award 2002 (Bronze) by Brand Equity Magazine, which is a
magazine publication based in Malaysia.
In the same year, a report by a worlds leading market information company ranked DAIRY CHAMP
amongst the top 25 family brands in Malaysia for the year 2002. Our Directors are of the opinion that
DAIRY CHAMP is one of the top brands in Malaysia.
84

More recently, our DAIRY CHAMP brand was awarded the status of Superbrand, which is a token
of recognition by the Malaysian Superbrands Council to feature the top 80 best-known brands in
Malaysia for the year 2003/2004 in the Malaysian edition of the Superbrands book. The criteria used
by the Malaysian Superbrands Council in their evaluation of a superbrand were the brands market
dominance, longevity, goodwill, customer loyalty and overall market acceptance.
A summary of our awards and certification are as follows:
Date first
awarded
Date for renewal
Authentication,
12/07/1999
14/07/2006
Department of Veterinary Services,

Ministry of Agriculture, Malaysia
Certificate of Authentication,
Veterinary Health Mark
09/07/2001
31/12/2004
Brand Equity Magazine, Perception

Media Sdn Bhd
Brand Equity Magazine Award

2002 (Bronze)
30/06/2003
Malaysian Superbrands Council
Superbrands Award 2003/2004
05/05/2004
Organisation/Authority
Award
Islamic Development Department

of Malaysia
Certificate
HALAL
of
CUSTOMERS AND MARKETS

For FY2003, we derived approximately 87.3%, 8.3% and 4.4% of our revenue from customers in
Malaysia, ASEAN (excluding Malaysia) and other countries respectively. Our products are mainly sold
to countries within ASEAN (Indonesia, Singapore, Philippines, Thailand, Brunei, Myanmar and
Cambodia) and other parts of the world namely East and West Africa, Middle East (Iran, Iraq and United
Arab Emirates), Central and South America (Cuba, Suriname, Trinidad and Jamaica), the Asia-Pacific
region (New Zealand, Fiji and Tonga) and Taiwan.
The following are our customers whose purchases constituted 5% or more of our revenue in FY2001,
FY2002, FY2003 and FP2004:
Percentage of total revenue (%)(1)
12 months
>
8 months
Customers
<
FY2001
FY2002
FY2003
FP2004
Ang International Ltd
9.4
Toshoku Singapore Pte Ltd
8.0
Tionale Enterprises Pte Ltd
6.1
Persona
7.3
5.7
Flexible Packaging Pte Ltd
5.4
Node-Langlois Matieres Premier
5.0
Note:
(1)
The above figures are percentages of actual revenue. A decrease in one FY compared to the previous may not necessarily
represent a decrease in the absolute amount of sales to that particular customer.
None of our Directors or Substantial Shareholders has any interest, direct or indirect, in any of our
major customers listed above.
85

MARKETING & DISTRIBUTION
Our marketing activities are currently centred on promoting the sale of our milk products to potential
customers and building good business relationships with existing clients in Malaysia and overseas. As
at the Latest Practicable Date, our sales and marketing team comprised 57 staff. The domestic and
export market is headed by Mr Kwong Yuen Seng who is our director for sales and marketing and is
assisted by Mr Khor Sin Kok, who is our director for operations, both of whom have extensive
experience in the milk product industry. On average, our sales and marketing staff each has over 10
years of experience in this industry.
We sell and market our products directly to dealers, wholesalers, retailers and to on-premise customers
(such as Mamak Stalls/Restaurants, coffee shops, Teh Tarik stalls and other food and beverage
outlets).
Typically, our sales distribution channels are divided as follows:
Domestic Sales
Our domestic sales and distribution channels are divided into five regions. Our distribution arm typically
operates from office cum warehouses in these five regions as follows:
Geographical
Territory
Location of office cum warehouses
Peninsula Malaysia (West

Coast)
Northern region
Central region
Southern region
Alor Setar, Sungei Petani, Butterworth, Ipoh,

Klang and Seremban
Malacca, Batu Pahat and Johor Bahru
Peninsula Malaysia (East

Coast)
Kuantan and Mentakab
East Malaysia
Kota Kinabalu
Our network of office cum warehouses throughout Malaysia enables our sales force to provide
comprehensive after-sales support service and obtain regular feedback from our customers. In
addition, the network enables our sales force to ensure that our customers have adequate levels of
inventory for usage or sale through regular deliveries.
Domestic sales are predominantly made under our DAIRY CHAMP brand contributed by a small
percentage from our co-packing arrangement with Carrefour and Giant.
Growth in domestic sales will be largely driven by the general economic and population growth as well
as our strategy to continue increasing our domestic market share in line with our DAIRY CHAMP
brands increasing acceptance and brand recognition.
86

Export Sales
Our export markets are organised as follows:
Geographical
Brands
Countries
ASEAN
Own and OEM
Brunei, Indonesia, Myanmar, Singapore, Philippines,

Thailand and Cambodia
OTHERS
Africa
Own and OEM
Mainly western African countries and several

countries in east Africa
Central and South

America
Own and OEM
Cuba, Suriname, Jamaica and Trinidad
Middle East
Own and OEM
Iran, Iraq and United Arab Emirates
Asia-Pacific and other

countries
Own and OEM
New Zealand, Fiji, Tonga, Taiwan, and Pakistan
Sales and distribution in our export markets are made via trading companies or buying agents in food
related business, some of whom are based in Singapore and Europe, in particular, United Kingdom,
France and Germany. We adopt an open competition approach where pricing factors will be influential
and our customers are not restricted from purchasing from competitors.
Apart from looking into growing the existing export markets, in particular, Indonesia and African
countries, our Group is constantly looking into exploring new markets, especially PRC and Hong Kong.
Our Groups export sales as a percentage of our total annual revenue have been increasing steadily
from approximately 7.9% in FY2002 to approximately 12.7% in FY2003 and more recently to
approximately 30.8% in FP2004. We expect that our Group will be able to maintain an export ratio of
approximately one-third of total revenue going forward.
Indonesia, PRC and Hong Kong are markets identified by EDSB that will provide tremendous
opportunity for our Group. We expect to enhance our presence in Indonesia in due time after all our
planned expansion comes into fruition.
EDSB generally handles export enquiries via e-mail directly or through its websites,
http://www.dairychamp.com, http://www.etikadairies.com.my as well as http://ecplaza.net (under
search for space, type in sweetened condensed milk), which is a business-to-business portal
providing listings of manufactured products. Advertising materials are used to support our customers.
It is worth noting that EDSB has managed to grow its export market to its current size without high
operating or marketing cost and without having any local presence in these markets. However, in time
to come, our presence will be required and this is part of our future plan to further consolidate our
market share. We will also move towards promoting and growing our own brands.
Internet and Media Publicity
We do not conduct general advertising campaigns. However, as a cost effective and efficient means
to reach out to prospective customers, our websites http://www.etikadairies.com.my and
http://www.dairychamp.com were recently set up as a means of increasing awareness of our business
and our products. From time to time, interest from the media has also generated publicity for our
products. For instance, we launched a project together with the Indian Muslim Restaurant Owners
Association to construct Malaysias largest Teh Tarik Cup. The Cup was listed in the Malaysia Book of
Records on 8 April 2000, providing excellent publicity coverage for our DAIRY CHAMP brand. In
addition, we have become the official supplier of Teh Tarik at Malaysian open house functions
organised by the Ministry of Culture and Tourism in 2002 and 2003. We have also sponsored an
exhibition booth at Kuala Lumpur International Airport by which our products are displayed and utilised
to prepare Teh Tarik beverages, for sale to local and foreign travellers.
87

Through such publicity, we believe that we have been able to increase our profile and publicity for our
products.
SUPPLIERS AND RAW MATERIALS
The raw materials that we use are sourced locally and overseas. Our overseas suppliers are mainly
from United States, Europe, Australia and New Zealand. Our main raw materials are milk powder
(comprising skimmed milk and whey powder), sugar, palm oil, vitamins and packaging material (such
as tin cans, labels and cartons). To ensure competitive pricing and reliability of supply, we source our
raw materials from a pool of suppliers with established business relationships with our Group. Our
principal suppliers have been supplying raw materials to us for at least five years. To minimise
dependence on any one particular supplier, efforts are made to ensure that each type of raw material
is sourced from several suppliers. This also decreases our dependence on third-party suppliers to a
certain extent.
The following are our suppliers whose sales constituted 5% or more of our purchases in FY2001,
FY2002, FY2003 and FP2004:
Suppliers
Products
supplied
FY2001
Malaysian Sugar
Manufacturing Co Ltd
Percentage of total sales (%)

FY2002
FY2003
FP2004
Sugar
24.8
29.7
29.2
24.4
Tin cans
21.3
26.9
25.4
23.5
Bonlac Foods Limited
Milk powder
16.1
Murray Goulburn Co-operative

Co. Limited
Milk powder
8.0
James Farrell and Co
Milk powder
5.8
7.3
5.4
NZMP (SEA) Pte Ltd
Milk powder
4.5
8.4
Palm oil
3.6
6.4
5.7
10.9
7.0
Unican Industries Sdn Bhd
Palmpro Industries (M) Sdn

Bhd
Maypol Foods Sp.zo.o
Milk powder
Hoogwegt Int BV
Milk powder
None of our Directors or Substantial Shareholders has any interest, direct or indirect, in any of our
major suppliers listed above.
88

INTELLECTUAL PROPERTY
Trademarks
As at the Latest Practicable Date, our Group owns the following registered trademarks and service
marks:
Trademark
Country of
Application
Application No./
(Registration Date)
Myanmar
Class
Date of Expiry
6556/2003 /
(24/11/2003)
29
23/11/2006
Malaysia
00013787 /
(03/10/2000)
29
10 years from
Registration Date
Malaysia
00013786 /
(03/10/2000)
29
10 years from
Registration Date
Malaysia
00013785 /
(03/10/2000)
29
10 years from
Registration Date
Malaysia
99012030 /
(26/11/1999)
35
10 years from
Registration Date
Class 29
Applicable for product types such as sweetened condensed milk, sweetened

condensed filled milk, sweetened beverage creamer, evaporated milk, milk powder,
UHT milk, sterilised milk, pasteurised milk, yoghurt drinks, evaporated filled milk and
unsweetened beverage creamer.
Class 35
Applicable for trademarks relating to advertising, business management, business

administration and office functions.
89

As at the Latest Practicable Date we have made applications in Malaysia for the following trademarks,
which are still pending registration:
Trademark(1)
Application No.
Class
Application Date
0301913
30
19/02/2003
9912031
29
19/11/1999
97002988(1)
29
08/07/2000
97002989(1)
29
08/07/2000
9806961
29
08/06/1998
97005816(1)
29
08/07/2000
97005123(1)
29
08/07/2000
0301914
30
19/02/2003
0301912
30
19/02/2003
97005122(1)
29
08/07/2000
01007106(1)
30
29/05/2003
Note:
(1)
PHIM has given directions for these trademarks to be advertised in PHIMs Gazette.
Class 29

Class 30
Applicable for product types such as coffee, tea, cocoa, sugar, rice, tapioca, sago,
artificial coffee, flour and preparations made from cereals, bread, pastry and
confectionary, ices, honey, treacle, yeast, baking-powder, salt, mustard, vinegar,
sauces (condiments) and spices.
90

We have also made applications overseas for the following trademarks, which are still pending
registration as at the Latest Practicable Date:
Trademark
Country of Application
Application No.
Class
Application
Date
Indonesia
D002003-22314-22503
29
22/08/2003
Philippines
4-2003-0009283
29
07/10/2003
Thailand
527816
29
22/08/2003
0068063
29
28/06/2004
Hong Kong
300271557
29
20/08/2004
Hong Kong
300303759
29
19/10/2004
Cameroon (O.A.P.I.)
(1)
Note:
(1)
O.A.P.I. is defined as the African Intellectual Property Organisation which covers Cameroon, Chad, Benin, Burkina Faso,
Central African Republic, Congo, Cote dIvoine (Ivory Coast), Gabon, Guinea, Guinea-Bissau, Mali, Mauritania, Nigeria,
Senegal and Togo.
Class 29

Where appropriate, we will continue to apply for trademarks, use patent and other relevant intellectual
property laws to protect our intellectual property rights. Where we are aware of intellectual property
rights of others that may pertain to or affect our business, we will attempt to either avoid processes
protected by such rights, cross-licence or otherwise obtain the rights to use such intellectual property.
91

RESEARCH AND DEVELOPMENT
We place substantial emphasis on the area of research and development and we attribute our success
and competitiveness in the market to our commitment to improving and developing our milk products
as we believe that our continued success depends to a significant extent on maintaining or even
improving our technological capabilities.
Our research and development team is led by our Director, Mr Mah Weng Choong, our Executive
Officers Messrs Kwong Yuen Seng and Chung Chee Fook and staffed by qualified research personnel
with food technology and food science backgrounds. Our research and development team is also
assisted by members from our quality control and production department to ensure that quality
standards remain our primary focus in all our research and development efforts. In addition, our sales
and marketing personnel work closely with our research and development team to ensure that our
products and services are developed and formulated in line with our customers needs, tastes and
expectations.
We set out below, some examples of the research and development undertaken by the team:
Promoting wider acceptance of our products and to enhance their overall performance in the
domestic market. To achieve this, we are currently working to increase and hold the formation of
froth created by our milk products when used to prepare Teh Tarik. We are also working on
increasing the viscosity of our condensed milk product and maintaining the level of viscosity within
an acceptable range over the span of the products shelf life.
Improving the cost effectiveness of materials used without compromising the standards of product
quality, taste and consistency of texture that we have achieved over the years. We are currently
researching into the viability of using new ingredients to produce sweetened condensed milk.
We are looking to produce a soy-based or a mixture of soy and milk-based sweetened condensed
milk, mixed with vegetable fat. Our objective is to target consumers who are lactose intolerant,
health conscious and/or are vegetarians, thereby increasing our customer base by reaching out
to a different group of consumers.
Enhancing the value of our existing milk products by the addition of, inter alia, vitamins, calcium
and flavouring.
For FY2001, FY2002, FY2003 and FP2004, our research and development expenditures were as
follows:
<
FY2001
12 months
FY2002
FY2003
8 months
FP2004
Expenditure(1)
535
189
283
576
Percentage of revenue (%)
0.75
0.27
0.37
0.84
RM000
>
Note:
(1)
The above expenditure includes the cost of raw material used for trial production, personnel expenses, laboratory cost and
supplies and finance costs.
INSURANCE
We maintain a number of insurance policies for our assets and employees in Malaysia. These policies
typically cover our buildings and their contents, factory and office equipment, raw materials and
personal accident for our Directors and selected employees. As part of good business practice, we also
maintain public liability insurance to insure against accidental bodily injury, death or damage to property
arising in connection with our business. In addition, we are insured against burglary, damage and
destruction. We also maintain product liability insurance to cover accidental bodily injury arising out of
the use or consumption of our milk products across Malaysia and worldwide except US and Canada.
92

Our insurance premiums form an insignificant percentage of our total costs and expenses incurred for
FY2001, FY2002, FY2003 and FP2004. To date, no claims were made under any of the above
insurance policies taken up by our Group. To the best of their knowledge, our Directors believe that the
above insurance policies are adequate for our business and operations.
TRAINING POLICY
Our training policy is to ensure that our employees are equipped with the appropriate skills to meet the
requirements of the job. Technical activities within our Groups operations are undertaken only by
qualified technical personnel and who are experienced and trained within their discipline. Apart from
orienting our employees on our policies and procedures when new employees join us, our training
program also includes on-the-job-training and formal training which are specialised programs tailored
to meet our employees specific development needs. Additional training needs are identified and
training programs are implemented based on the QAP in place.
The requirement for additional training is normally identified at our factory/plant meetings and
management review meetings which are conducted fortnightly. Training needs are identified based on
the following circumstances:
Change in job description;
Introduction of new personnel;
Introduction of a new product line or of a new technology;
Changes in corporate strategic planning; and/or
Quality audit findings.
Training is conducted in either one of the following two forms:

(1)
On-the-job training
This form of training is conducted by an employee who is deemed by the management to be
competent in the subject field and is also considered by our Production Manager as being
sufficiently capable to impart the relevant skills and knowledge to a fellow employee. In cases
where the management feels that additional specialised training is required, we may send our
technical employees to our suppliers for training. For example, we regularly send our technical
employees to our tin can suppliers/manufacturers to enhance their skills and knowledge on the
operation of a can seamer.
(2)
Formal training
This form of training is conducted where the management considers on-the-job training to be
inadequate or inappropriate. Formal training is conducted through in-house seminars organised
either by our human resources department or a suitably qualified employee identified by our
management or external trainers who are accredited by the Malaysian Ministry of Agriculture.
When necessary, our employees are instructed on the different products which we market,
updated on any new products which we may intend to launch and trained on various aspects of
customer service at an in-house seminar.
All our employees are trained in the processes and philosophies of EDSBs quality management
system at induction sessions organised for new employees. This is to ensure that they are familiar with
the requirements of our quality policy manual, quality system procedures and our general in-house
policies.
93

COMPETITION
We believe that we face competition mainly from several large foreign companies (some of which have
manufacturing plants in Asia) and some small and medium sized local companies involved in the milk
product industry. Some of these manufacturers have fundamentally similar capabilities and compete
with us on key attributes which include manufacturing competency, reliability and quality of products
and services, pricing, time-to-market and available production capacity.
We believe the following to be our main competitors for our products:
Sweetened Condensed Milk and Evaporated Milk
Countries
Competitors
Product Brand
Malaysia
F & N Dairies (Malaysia) Sdn Bhd
F&N
Gold Coin
Nestle Products Sdn Bhd
Tea Pot
Milkmaid
Carnation
Dutch Lady Milk Industries Bhd
Completa
Frisian Flag/
Omela
Yeo Hiap Seng Bhd
Goodtase
Malaysia Milk Sdn Bhd
Marigold
Generally, the Malaysian market has been highly competitive, and in the past five years from 1999 to
2003, we have experienced substantial competition for market share in the milk product industry.
We believe that the main elements of competition in our industry will include factors such as technology,
quality, pricing, responsiveness, logistical issues influencing the quality and timing of service as well as
proximity to our customers business or operating centres.
The operation of the AFTA to which Malaysia is a party is not expected to have any impact on our sales
in Malaysia as milk products no longer attract any import duty in Malaysia. Even without duty, there is
no evidence of high importation or new labels/brand being brought into the country over the years. We
believe this is due to the highly competitive state of local players operating in a matured industry without
any form of protection. For this reason, it is highly unlikely that we will see new entrants into the milk
product industry in Malaysia.
However, AFTA may be beneficial to our export sales due to the implementation of reduced tariffs
between countries in ASEAN. Nonetheless, export markets are very diverse and each market presents
its own challenges. For instance, the African market displays a preference for the 1kg sized packaging
which is not the case for other countries of export.
94

COMPETITIVE STRENGTHS
We believe that we possess the following strengths that will benefit our customers and differentiate us
from our competitors.
Experienced and committed management team
We have an experienced and committed team which is familiar with the milk product industry. The team
comprises the Tan Brothers, Messrs Mah Weng Choong, Khor Sin Kok, Kwong Yuen Seng and Chung
Chee Fook, who are currently either Directors of our Company or members of our senior management
team. Together our management team has a collective experience of more than 100 years in the milk
product industry and possess a wide range of expertise including strategic planning, business
development, in-depth operational and production expertise specific to the milk product industry. Our
experienced management team was instrumental in charting the growth of our Group.
Brand Recognition
Our Group has consistently focused on brand building and product differentiation. We believe that we
have distinguished ourselves from our competitors and established our reputation as a reliable
manufacturer of quality milk products which are competitively priced. We believe that our DAIRY
CHAMP brand is one of the more recognisable brands in Malaysia.
To increase DAIRY CHAMP brands awareness, we participate in various promotional campaigns
which include, inter alia, sponsorship activities such as the Teh Tarik competitions, sampling of our
products at high traffic outlets, sporting events, social and charitable events organized by nongovernmental organisations and political parties, Malaysian open-house functions organized by the
Ministry of Culture and Tourism (in 2002 and 2003) and joint marketing and promotional activities with
certain key customers, for example advertising via supermarket mailers.
As a homegrown Malaysian brand, DAIRY CHAMP products enjoy greater visibility as a Made in
Malaysia product associated with the grassroots, the traditional culture of Malaysia and the support of
Government initiatives to promote home grown brands.
The HALAL certification and the adoption of the HACCP in our manufacturing process has enhanced
consumer confidence and provided further endorsement to the quality of DAIRY CHAMP products.
Despite being a relatively new player in the domestic milk product industry dominated by a few
multinational companies, we have been awarded the following recognition:
Award & Ratings
Organisation Sponsoring Award
Year
Superbrand Status
Superbrands Malaysia
2003/2004
Bronze Award
Brand Equity Magazine
2002
Extensive sales and marketing network and well diversified customer base
Our Group adopts a direct marketing and distribution strategy for the sales of our products directly to
end consumers which include Mamak Stalls/Restaurants, coffee shops and Teh Tarik stalls throughout
Malaysia. This approach has generated good market acceptance of our DAIRY CHAMP products
among our dealers, wholesalers and retailers in most urban and rural areas in Malaysia. Our sales
offices and warehouses are strategically located with close proximity to customers in the major towns
including Alor Setar, Sungei Petani, Butterworth, Ipoh, Seremban, Klang, Batu Pahat, Malacca, Johor
Bahru, Kuantan, Mentakab, and Kota Kinabalu.
As at the Latest Practicable Date, our sales and marketing team comprises 57 staff, most of whom are
former employees of multinational companies and have established strong rapport with their
customers. Our Group has been able to leverage on these established customer relationships and
network to increase the penetration of our products throughout Malaysia.
95

To achieve maximum market reach and visibility of our products, our sales and marketing team will
focus on procuring new customers by identifying and marketing directly to the Mamak Stalls/
Restaurants, coffee shops and Teh Tarik stalls who are not currently selling our products. Once we
have achieved a reasonable visibility for the usage of our products, we will pass these new customers
to our network of dealers, wholesalers and retailers to manage and service these customer accounts
on a regular basis. This mutually beneficial approach allows our sales and marketing team to focus on
the objective of increasing our Groups market share through the procurement of new customers and
subsequently passing them on to our dealers, wholesalers and retailers. Our current marketing and
distribution approach has been effective in increasing our revenue, as the top 20% of our customer
accounts which comprise dealers, wholesalers and retailers have historically contributed over 80% of
our annual revenue.
As a result of our marketing and distribution approach, we have, at the Latest Practicable Date, a well
diversified customer base of over 3,000 domestic and overseas dealers, wholesalers, retailers and
on-premise customers. In addition, we have entered into contractual arrangements with hypermarkets,
namely, Carrefour and Giant respectively, to co-pack our sweetened condensed milk under their
in-house brands, as well as an arrangement with Makro chain of hypermarkets to retail our DAIRY
CHAMP brand products throughout Malaysia. We also export our products to various countries under
our DAIRY CHAMP brand as well as under at least 12 third-party brands which are manufactured by
us under OEM arrangements.
For more details, please refer to the section entitled History and Business Marketing and
Distribution of this Prospectus.
Quality Products
Our Group places significant emphasis and priority in quality control as an integral part of the entire
production process. This is evidenced by our Groups commitment to consistently deliver quality milk
products to our customers to earn the customers confidence in and acceptance of our products.
EDSB implements the HACCP and quality assurance programs which are monitored by the Veterinary
Services Department of the Ministry of Agriculture. The stringent quality control procedures help to
maintain the distinctive taste and assure the consistency and quality of our products. With the
implementation of the HACCP, our Group is well positioned in the domestic and export markets.
Furthermore, as HACCP is an internationally recognised quality standard, the certification serves to
minimise international trade barriers and create more export sales opportunities for the Company.
The quality of DAIRY CHAMP products is further affirmed by the fact that several large hypermarket
chains like Carrefour, Giant and certain other overseas customers have approached our Group to
manufacture our products under OEM arrangements.
Cost Efficient Operations
Domestic sales of sweetened condensed full cream milk and sweetened condensed filled milk are
subject to price ceilings imposed by the Ministry of Domestic Trade in Malaysia. Notwithstanding the
price ceiling, our pricing strategy was to preserve and/or grow our gross profit margin.
In order to price our products competitively and to preserve our gross profit margins, we adopted a cost
focused approach to consistently strive to achieve and maintain cost efficiency in our operations. Our
proximity to Port Klang allows us to save on haulage charges for the import and export of our raw
materials and products. In addition, the implementation of the HACCP in our production process has
enabled us to achieve greater productivity and profitability through, inter alia, wastage reduction.
To penetrate the mass market, we position our products in the value segment as against the premium
segment. This is made possible by offering value for money quality products at competitive prices.
We believe that this strategy works for us as we are able to generate higher sales volume over the
96

years and at the same time, our ability to manage our operations cost efficiently has resulted in the
increasing trend of our gross profit margin in FY2001, FY2002, FY2003 and FP2004 of 10.1%, 16.4%,
21.2% and 18.2%.
Established Customer Relationships
We distinguish ourselves for our dedication to our products and our drive to foster strong relationships
with our customers. As at the Latest Practicable Date, our extensive sales and marketing network was
established by our team of 57 sales and marketing personnel. Most of our sales and marketing
personnel are former employees of multinational companies. With an average of more than 10 years
of experience each, they are equipped with in-depth industry knowledge and have fostered strong
rapport with their customers.
We have over the years developed and maintained good long-term business relationships with many
of our customers. We believe that we have been able to earn and sustain their trust and confidence
mainly due to our reliability and efficiency in providing quality products at competitive prices on a timely
basis. In particular, we have earned our customers trust with good understanding of our customers
needs and requirements and our commitment towards customer satisfaction e.g. our stock return policy
allows our customers to return expired or damaged products in exchange for new ones and we also
provide after-sales support services such as addressing any negative customer feedback on our
products.
The strength of our customer relationship is also evidenced by the spread of our customers ranging
from dealers and wholesalers to our ultimate consumers. The top 20% of our customers contribute to
over 80% of our domestic sales for FY2001, FY2002, FY2003 and FP2004 respectively. The majority
of these customers are our dealers and wholesalers who have been with us since our Company started
operation. For more information on our major customers, please refer to the section entitled History
and Business Customers and Markets of this Prospectus.
GOVERNMENT REGULATIONS
We have obtained the necessary business licenses and permits issued by various governmental
authorities or departments in Malaysia for our day-to-day operations. Save as disclosed under the
section entitled Risk Factors of this Prospectus and below, we are not subject to any special
legislation or regulatory controls in the countries in which we operate, other than those generally
applicable to companies and businesses in such countries, which will have a material effect on our
business operations.
Malaysia
Environmental requirements in Malaysia
The Environment Quality Act, 1974 of Malaysia (EQA) and the regulations and orders made
thereunder are legislation related to the prevention, abatement, control of pollution and enhancement
of the environment in Malaysia. The EQA specifies that certain wastes, defined as scheduled wastes,
are not permitted to be discharged into the environment in contravention of acceptable conditions. The
Director General of Environmental Quality has been appointed to administer the EQA and any
regulations and orders made thereunder through the Department of Environment.
97

Control of Supply Act 1961
The Control of Supply Act 1961 legislates the control and rationing of certain types of article, food and
commodity in Malaysia. Under the Act, the Minister is empowered to declare any article or food as a
controlled article. No person shall deal with any controlled item unless it is licensed. Sugar is classified
as a controlled article under the Act and we have a license to purchase sugar in the quantity necessary
for our manufacturing purpose.
Price Control Act 1946
The Price Control Act 1946 provides for the control of pricing of various commodities including
condensed milk and evaporated milk. Under this Act, retailers cannot sell these products above the
maximum price fixed by the Minister for these products.
Food Act 1983
The Food Act 1983 is enacted to protect the public against health hazards and fraud in the preparation,
sale and use of food and for matters relating thereto. Under the Act, food manufacturers are required
to adhere to various regulatory standards in respect of food production, the state of hygiene of the
production plant, the content, quality and labelling of the food products.
Factories and Machinery Act 1967
The Factories and Machinery Act 1967 relates to the control of factories with respect to matters
regarding safety, health and welfare of persons therein, registration and machinery currently under
operation. The Company is required to obtain Certificates of Fitness in respect of its steam boiler,
unified pressure vessels and hoisting machines for so long as the machines are in service. Such
Certificates of Fitness are generally issued for a period of 15 months if it passes inspection by the Chief
Inspector. A body corporate is liable upon conviction to a fine not exceeding RM5,000 for operating
such machines without a Certificate of Fitness. Further, the Chief Inspector is empowered to seal any
part of the plant or machinery which he deems not to be in compliance with the requirements under the
Act upon inspection.
Securities requirements in Malaysia
As at the Latest Practicable Date, pursuant to the Guidelines for the Acquisition of Assets, Mergers and
Take-overs of Companies and Businesses issued by the FIC (the FIC Guidelines), the prior approval
of the FIC is required, inter alia, for any proposed acquisition of 15% or more of the voting power of a
Malaysian company or business by any one foreign interest or associated group or non-associated
group of foreign interests. A foreign interest includes companies or institutions incorporated outside
Malaysia.
Although the FIC Guidelines do not have the force of law (as they are not legislation passed by
Parliament or regulations under any existing laws) and do not impose any penalty for non-compliance,
there are indirect sanctions that the FIC can impose. For example, the FIC could persuade local
authorities (such as the immigration department or the local town council) not to grant to companies
who are not in compliance with the FIC Guidelines, licences or permits that may be required under
Malaysian law related to the operations of the company.
However, the FIC Guidelines do not apply to manufacturing companies licensed by the Ministry of
International Trade and Industry (MITI). Pursuant to the Industrial Co-ordination Act 1975 (ICA) of
Malaysia, persons involved in any manufacturing activity in Malaysia must obtain a licence from the
MITI in respect of such manufacturing activity if the manufacturing companys shareholders funds
exceed RM2.5 million and it employs 75 or more full time employee.
Although the FIC Guidelines do not apply to manufacturing companies licensed by MITI, the FIC
Guidelines will apply to the Group in the event that the Group engages in non-manufacturing
businesses in the future.
98

MITI Licences
The MITI may, in their discretion, impose certain conditions including equity conditions for the issue of
the manufacturing licence and non-compliance with such terms may result in the manufacturing licence
being revoked.
PROPERTIES AND FIXED ASSETS
Properties
We own the following properties:
Title/Location
Use of Property
Tenure
Total land
area (sq ft)
Lot. LS-1, Persiaran Satu, Meru

Industrial Park, Persiaran Hamzah
Alang, 42200 Klang,
Selangor Darul Ehsan,
Malaysia
Office, factory and

warehouse
Freehold
348,916
Gross
built-up area
(sq ft)
84,000
Note:
(1)
The above property is assigned in favour of Maybank Malaysia as security for our banking facilities.
Our Group plans to extend our factory by 40,000 sq ft from its existing built-up area of approximately
84,000 sq ft within its current available freehold land space of approximately 348,916 sq ft.
This extension is necessary in order to increase the existing warehouse and storage area in the factory,
thereby removing the need to rent additional warehouse space. The extension will also free up space
on the production floor that is currently also used for storage as well. The space freed up will then be
used to accommodate the additional sterilising equipment (steriliser) for the production of evaporated
milk as well as an additional production line for sweetened condensed milk.
We have entered into a sale and purchase agreement to purchase the following property from Fabina
Properties Sdn. Bhd. on 8 July 2004. This property is adjacent to the existing property to Lot. LS-1
described above.
Gross
built-up area
(sq ft)
Title/Location
Use of Property
Tenure
Total land
area (sq ft)
Lot. LS-2, Persiaran Satu, Meru

Industrial Park, Persiaran Hamzah
Alang, 42200 Klang,
Selangor Darul Ehsan,
Malaysia
Currently vacant land
Freehold
174,240
We currently also lease the following properties:

Use of
Property
Annual
Rental
Area (land)/
(built-up)
Tenure
Lessor
Chamber E, Lian Seng

Courts, 275, Jalan Haruan
1, Oakland Industrial Park,
Seremban, 70200
Negeri Sembilan
Office and
warehouse
RM19,800
1,400 sq ft (land)/
1,736 sq ft (built-up)
2 years from
16/04/2004
Tan Kang Hai

Transport Co.
Sdn Bhd
No. 32, Hala Rapat Baru,

Kawasan Perindustrian
Kinta Jaya, 31350
Perak
Office and
Warehouse
RM15,600
2,400 sq ft (land)/
2 years from
01/07/2003 with
option to renew
for 2 years
Mr Yee Ah Juan
Title/Location
99

Use of
Property
Annual
Rental
Area (land)/
(built-up)
No. 397, Jalan Joo Cheang

Pekan Lama, 08000
Sungei Petani
Kedah
Office, and
warehouse
RM8,400
No. 7 & 9, Jalan Kota Murni

2, Perindustrian Kota Murni,
Batu Pahat, 83000
Johor
Office and
warehouse
No. 24 Jalan Mutiara Emas

7/10, Taman Mount Austin
81100
Johor Bahru
Title/Location
Tenure
Lessor
1,500 sq ft (land)/
3 years from
01/05/2004 with
option to renew
for 2 years
Mr Ong Chee
Keong
RM9,600
1,176 sq ft (land)/
3 years from
01/01/2004 with
option to renew
for 2 years
Mr Neo Kim
Siew
Office and
Warehouse
RM18,000
3,900 sq ft (land)/
3 years from
01/05/2004 with
option to renew
for 2 years
Mr Peter Foo
Sung Loy
No. 1140, MK10, Bukit

Kechil,
Bukit Mertajam 14000
Penang
Office and
warehouse
RM6,000
1,400 sq ft (land)/
3 years from
01/12/2003 with
option to renew
for 2 years
Mr Yap Chin
Teik
Suite 1, No. 1, Jalan IM

14/2, Bandar Indera
Mahkota 25200
Kuantan
Pahang
Office
RM2,400
110 sq ft (land) /
110 sq ft (built-up)
3 years from
01/08/2004 with
option to renew
for 2 years
Kean Tat Hup

Kee (M) Sdn
Bhd
No. 50 B, Stor Keretepi

Jalan Tanjung Bendahara
Alor Setar 05300
Kedah
Office and
warehouse
RM2,400
430 sq ft (land) /
430 sq ft (built-up)
3 years from
01/07/2004 with
option to renew
for 2 years
Mr Tan Chun
Heng
No. 14 Jalan PM6, Taman

Perindustrian Merdeka,
Batu Berendam 75350
Malacca
Office and
warehouse
RM18,000
3,200 sq ft (land)/
3 years from
15/07/2004
Mr Kwong Yuen
Seng
We also enjoy the complimentary use of offices at Mentakab and Kota Kinabalu at the following
addresses:
Title/Location
Use of Property
Lessor
No. 40 Jalan Industrial

3/1, Temerloh Industrial Park
Mentakab 28400
Pahang
Office
P.S. Raya Sdn Bhd
Lot. 2, Ground Floor

Kompleks Mutiara
Inanam, Kota Kinabalu
Sabah
Office
Mass-Way Sdn Bhd
Production Facilities
Our production and warehousing facility is located at Lot. LS-1, Persiaran Satu, Meru Industrial Park,
Persiaran Hamzah Alang, 42200 Klang, Selangor Darul Ehsan, Malaysia. The facility occupies an
industrial freehold land of approximately 348,916 sq ft, with a built-up area of approximately 84,000 sq
ft. Please see the section entitled History and Business Properties and Fixed Assets of this
Prospectus for further details on our production facilities.
As at 31 May 2004, the factory (land/building) and its related production equipment/machineries
(including waste water treatment conforming to the Environmental Quality Act, 1974 of Malaysia) had
a cost of RM35.1 million.
The machinery and equipment that are installed in our factory encompasses commonly utilised
technology (which is also employed by other milk production facilities nationwide, eg. machinery for
mixing) and state of the art equipment (eg. homogeniser). Our plant is specially designed for batch
production. Batch production is a manufacturing process of producing our finished products by batches.
100

We believe that the quality of the batches could be better monitored under this process and the
parameters of the production process can be better controlled.
Our factory utilises superior canning equipment as compared to that commonly available in the market.
Our canning equipment fills the tin cans more accurately, thereby reducing wastage, produces less air
bubbles that can contribute to chances of contamination and minimises the incidences of smearing
which in turn reduces the need for cleaning. By using superior machinery and equipment, our
production costs are significantly reduced.
Production Capacity and Output
Our products are solely produced at our factory located at Lot. LS-1, Persiaran Satu, Meru Industrial
Park, Persiaran Hamzah Alang, 42200 Klang, Selangor Darul Ehsan, Malaysia, which was completed
in December 1998. The factory occupies a total land area of approximately 348,916 sq ft, with a built-up
area of approximately 84,000 sq ft and is a freehold property.
Our current production comprises three production lines which produces pack sizes varying from 388g
to 1kg.
Our first production line was commissioned in February 1999 and started commercial production of
DAIRY CHAMP products in March 1999 with an initial run of one shift cycle of eight hours. From March
2001 to October 2001, we progressively increased our production cycle from a one shift (eight hours)
to a three shift (24 hours) cycle to increase our production capacity in line with the increase in demand
for our products.
An additional production line commenced production in April 2003 mainly for the production of 1kg pack
sizes and a further line commenced operation in March 2004 specifically for the production of
evaporated milk.
As at 30 September 2004, our annualised maximum production capacity is approximately 2.2 million
cartons. This capacity was achieved via our capacity expansion plan in FY2003 and FY2004 which
resulted in a year on year increase in our production capacity by 20.8% and 24.1% respectively. There
was no increase in our production capacity from FY2001 to FY2002.
Our utilisation rates for FY2001, FY2002, FY2003 and FP2004 are 66.6%, 73.0%, 66.4% and 74.0%
respectively.
101
PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS

PROSPECTS
Industry Outlook
Barring any unforeseen circumstances, the Directors are optimistic about the future prospects of our
Group and have identified the following trends and factors that are expected to drive our Groups growth
in the foreseeable future:
Domestic Market
Sweetened condensed milk and evaporated milk are the preferred choices of diary products used in
tea, coffee, other beverages and local desserts in Malaysia. The demand for sweetened condensed
milk and evaporated milk will be positively driven by the healthy economic and population growth
expected in Malaysia through consumption of our products in households and restaurants due to the
proliferation of Mamak Stalls/Restaurants.
Our Groups DAIRY CHAMP sweetened condensed milk and evaporated milk products have been
well received in Malaysia for what we believe to be our products distinctive flavour. In the competitive
domestic milk product market, whilst certain of our competitors offer a diverse range of products, we
have differentiated ourselves as a focused producer of quality and price competitive sweetened
condensed milk and evaporated milk products. These factors have contributed to the growing level of
market acceptance and acknowledgement of DAIRY CHAMP products which was evidenced by the
growth of our domestic sales of RM55.9 million, RM65.5 million, RM67.2 million and RM47.2 million in
FY2001, FY2002, FY2003 and FP2004 respectively. The year on year growth in our domestic sales and
positive market feedback has affirmed our Groups market position and bodes well for the anticipated
growth in domestic demand for our products.
The domestic milk market structure in which our Group operates is dominated by a few players with
entry barriers such as high capital outlay, licensing requirements for exclusive franchise rights, the need
to establish a brand and market share, technical expertise and in-depth industry knowledge.
Consequently, there are hardly any new competitors in the industry. As a relatively new market player,
we are able to quickly establish our brand presence among the existing domestic industry players. The
Directors view the recent announcement regarding the shut down of the Malaysian sweetened
condensed milk production facility of one of our Groups main competitors as a favourable business
opportunity. Encouraged by the positive market feedback of our DAIRY CHAMP products, we will
capitalise on this opportunity to increase our Groups current market share. Further, we will continue to
work towards expanding our domestic market share by leveraging on our brandname and reinforcing
our established market presence as a manufacturer and distributor of sweetened condensed milk and
evaporated milk to Mamak Stalls/Restaurants, coffee shops and Teh Tarik stalls throughout Malaysia.
Our Group has also identified high traffic outlets such as supermarkets or mega markets as another
potential market segment which is envisaged to be an additional channel for our Group to boost
domestic sales going forward.
Export Market
Various countries like Singapore and Indonesia in the ASEAN region share similarities in culture and
food as Malaysia. Our Directors expect that growth for the consumption of sweetened condensed milk
and evaporated milk will remain high in the developing countries and will grow in tandem with the
population and economic growth in these countries. Apart from growing the existing export markets, we
are constantly exploring new markets such as PRC and Hong Kong.
102

Our export sales to the other markets including East and West Africa, Central and South America,
Middle East, and other Asia-Pacific countries, is expected to continue to grow positively as evidenced
by our Groups growth in export sales from 7.9%, 12.7% and 30.8% in FY2002, FY2003 and FP2004.
It is our intention to achieve an export sales contribution ratio of one third of our total revenue. Based
on the feedback from our overseas customers, trading companies and buying agents, our products
have been well received in the export markets for its quality as well as our ability to deliver our products
within a short lead-time.
Our Directors are of the view that competition from existing and new players in the overseas markets
will continue to exert pressure on the selling price of our products. Nevertheless, our Directors believe
that our pricing, cost focused strategies and the quality of our products will position our Group
favourably vis-a`-vis its competitors and mitigate such price pressures.
Our export sales have grown faster than our domestic sales, and we expect our domestic/export ratio
to remain consistent at 2:1 for the next two years. Domestic market is expected to remain strong for
ESDB until the market finds its equilibrium among the major players in Malaysia.
We plan to increase our export market sales (in particular, to Indonesia) and new markets like PRC and
Hong Kong. This plan includes the expansion of our export sales team, the setting up of sales and
distribution offices, and the identification and appointment of a local distributor, with an ultimate
intention of setting up a manufacturing plant.
OEM brands will not be our concentration as we will focus on our own brands.
Trend Information
Since the third quarter of 2003, the price of milk powder has been increasing and is now at the higher
end of the price range. Based on our discussions with our suppliers, we expect the price of milk powder
to remain steady at this level, in the near term.
From October 2003 to the middle of 2004, the price of palm oil witnessed an upward trend, where palm
oil prices increased to approximately RM1,300 per metric tonne and reached a high of RM2,000 per
metric tonne in April 2004 before reversing its trend downwards. Since the middle of 2004, we have
experienced a decline in the price of palm oil and based on our discussions with our suppliers, we
expect the price of palm oil to fluctuate within a relatively narrow band in the foreseeable future.
Sugar, which is a primary raw material in our production process, is a price-controlled commodity in
Malaysia, and accordingly, the price of sugar is expected to remain stable for a relatively long period
of time.
In order to obtain sufficient quantities of good quality raw materials at acceptable prices, we typically
enter into forward supply contracts of between three to six months with our suppliers, whenever
possible.
Material changes in the cost of these raw materials will have an impact on our profit margins if we have
not managed the purchase of these raw materials adequately. Nonetheless, we are able to transfer a
significant proportion of such raw materials cost increases by adjusting trade discounts and trade offers
usually given on our products, without necessarily increasing our invoice price as our competitors
would experience similar increases in raw materials cost.
103

BUSINESS STRATEGIES AND FUTURE PLANS
Based on the factors set out above, our Directors are optimistic about the prospects of our Group. To
capture the business opportunities, we intend to adopt the strategies and future plans as set out below:
Increase our production capacity
Our existing manufacturing facilities in Meru, Klang, in Malaysia, which have an aggregate land area
of approximately 348,916 sq ft, is operating at an average capacity utilisation rate of 74.0% in FP2004.
To meet the anticipated increase in market demand, we intend to increase the production capacity of
sweetened condensed milk and evaporated milk as follows:
Production Line
Purpose
Target Acquisition Date
One rotomat steriliser for evaporated

milk
Double evaporated milk

production capacity
Order placed in July 2004

Commercial run by April 2005
One new production line for sweetened

condensed milk
Increase sweetened
condensed milk production
capacity by an additional 70%
approximately
Order targeted December

2004; Commercial run by
October 2005
Factory extension for additional

warehousing space
Additional 40,000 sq ft of
warehousing space
Completion targeted by
August 2005
We intend to utilise approximately RM14.1 million of our net proceeds to fund the installation of a
steriliser for evaporated milk, the new production line for the production of sweetened condensed milk
and the construction of additional warehousing space.
As part of our Groups capital expenditure budgeting process, we would usually plan for additions to our
production capacity when our monthly utilisation rate exceeds 70% on a consistent basis, after taking
into consideration, factors such as our Groups sales estimates, financial condition and lead-time of
between 9 to 12 months from the point of ordering the new capital equipment to the start of commercial
production.
We have also entered into a sales and purchase agreement on 8 July 2004 to acquire an additional
piece of land measuring 174,240 sq ft adjacent to our existing factory as a strategic acquisition to cater
to our future expansion plans. This acquisition will be funded by our internal sources as well as bank
borrowings.
The additional land area, warehouse and production lines would allow us to expand our existing
production capacity which is in line with our objective to serve both the domestic market and the
anticipated growth in demand from our export markets.
Expand the breadth and depth of the Malaysian market
We believe that the Malaysian market continues to present attractive growth opportunities in the
sweetened condensed milk and evaporated milk market. To capture the growth potential of the
Malaysian market, we intend to extend our market reach by capturing market share from our
competitors and further leveraging on the Malaysian Governments support for our home grown brand
and our subsidiary.
To capture more market share, we intend to expand our product range (in terms of pack size) and to
increase the number of our sales and marketing personnel in our existing sales offices. With a larger
sales and marketing team, we will be able to procure more new customers from our existing sales and
marketing network as well as to extend our coverage to reach more areas in Malaysia. With a larger
sales and marketing team, we are able to intensify our marketing and distribution efforts in Malaysia.
104

The quality of DAIRY CHAMP products is further affirmed by the fact that several large hypermarket
chains like Carrefour, Giant and certain other overseas customers have approached our Group to
manufacture our products under OEM arrangements.
We intend to move from the sale of our products through our current OEM arrangements under
third-party brands towards the sale of our products under our DAIRY CHAMP brand on the shelves
of high traffic outlets such as Giant, Carrefour and other supermarkets or megamarkets.
Expand our overseas markets
We believe that export sales are expected to grow at a higher rate than our domestic sales and in line
with the population and economic growth of the countries we export to. Apart from products exported
under our own DAIRY CHAMP brand, we also export to various countries under at least 12 third-party
brands which are manufactured by us under OEM arrangements. We intend to move from the sale of
our products through our current OEM arrangements under third-party brands towards the sale of our
products under DAIRY CHAMP brand. We will encourage our trading companies or buying agents to
advertise more of our DAIRY CHAMP products or to switch to the sale of DAIRY CHAMP products
instead of products under third-party brands. Once we are able to establish good visibility for our
products in the overseas markets, we intend to expand the overseas markets through the setting up of
subsidiaries or co-packing arrangements.
Acquisitions, joint venture and strategic alliances
We intend to grow our Group by identifying new opportunities that will bring economies of scale to our
existing operations and that will enhance shareholders return and value. This process will involve
identifying new investments for acquisition to expand and/or diversify our product base and/or
identifying potential strategic alliances and/or joint ventures in existing or new markets we are
interested in to further expand our business.
105
DIRECTORS, MANAGEMENT AND STAFF

MANAGEMENT REPORTING STRUCTURE
The following chart shows our management reporting structure as at the date of this Prospectus:
ETIKA INTERNATIONAL HOLDINGS
LIMITED
Board of Directors
EXECUTIVE DIRECTOR
Kamal Y P Tan
CHIEF FINANCIAL
OFFICER
Thong Cooi Seong
ETIKA DAIRIES SDN. BHD.

MANAGING DIRECTOR
Mah Weng Choong
Operations
Khor Sin Kok
Sales & Marketing

Kwong Yuen Seng
Regional Sales
Central
Regional Sales
North/East Malaysia
Technical and Production

Chung Chee Fook
Accounts and Finance
Production
Logistics
Engineering Services
Human Resources
Quality Control
Regional Sales
South/East Coast
Credit Control
Export Sales
DIRECTORS
Our Board is entrusted with the responsibility for the overall management of our Group. Our Directors
particulars are as follows:
Name
Age
Address
Current Occupation
Dato Jaya J B Tan
56
52, Jalan 5/4 (Jalan Tanjong)

46000 Petaling Jaya,
Selangor Darul Ehsan, Malaysia
Businessman
Kamal Y P Tan
52
21, Lengkok Setia Budi

Damansara Heights
50490 Kuala Lumpur, Malaysia
Executive Director
106

Name
Age
Address
Current Occupation
Tajuddin Joe Hok Tan
49
12, Lorong Kemaris 3

Bukit Bandaraya
Businessman
Mah Weng Choong
66
9 Lorong Kemaris 6,
Bukit Bandaraya
Managing Director, EDSB
Khor Sin Kok
48
69 Jalan SS22/27A, 47400, Petaling

Jaya, Selangor, Malaysia
Executive Director, Operations

EDSB
(Alternate Director to Mah
Weng Choong)
Teo Chee Seng
50
24E Brighton Avenue

Singapore 559264
Lawyer
John Lyn Hian Woon
46
28 Wilby Road #03-41

Singapore 276309
Chief Executive Officer,

Colonial Investment Pte. Ltd.
Information on the areas of responsibility and working experiences of our Directors is set out below:
Dato Jaya J B Tan
Non-Executive Chairman of the Company
Dato Jaya J B Tan graduated from the University of Arizona and is a Mechanical Engineer by training
and has extensive experience in forestry, property development, food retail operations, trading and
financial services. He has served as Chairman of several companies quoted on the stock exchanges
of Malaysia, the UK, Singapore, Australia and India. He has extensive involvement in gaming and
leisure businesses in Australia, Papua New Guinea and Ghana. Dato Jaya J B Tan is currently the
Non-Executive Chairman of a company listed on the SGX-ST called Lasseters International Holdings
Limited. He was appointed as a Director of the Company on 23 December 2003.
Kamal Y P Tan
Executive Director of the Company
Mr Kamal Y P Tan is an Economics graduate from the London School of Economics and has held board
positions with companies listed on stock exchanges in Malaysia, Singapore, Australia, the UK and
India. He currently manages various manufacturing and distribution businesses in Malaysia and is
actively involved in private gaming and leisure business operations in Australia, Papua New Guinea
and Ghana. Mr Kamal Y P Tan is currently a Non-Executive Director of a company listed on SGX-ST
called Lasseters International Holdings Limited. He was appointed as a Director of the Company on 23
December 2003.
Non-Executive Director of the Company
Mr Tajuddin Joe Hok Tan holds a Master of Business Administration degree from the Oklahoma City
University and is a member and Diploma holder of the Chartered Institute of Marketing, London. He has
experience in stockbroking, asset management, options and futures trading and has sat on the boards
of various companies listed on the stock exchanges in Malaysia, Singapore, the UK, Australia and
India. He is also actively involved in private gaming and leisure business operations in Australia, Papua
New Guinea and Ghana. Mr Tajuddin Joe Hok Tan is currently the Executive Director of a company
listed on SGX-ST called Lasseters International Holdings Limited. He was appointed as a Director of
the Company on 23 December 2003.
107

Mah Weng Choong
Non-Executive Director of the Company
Mr Mah Weng Choong is a graduate in Science from the University in Malaya. Having spent 34 years
in the Malaysian dairy division of a group listed on the SGX-ST, he has gained extensive experience
in the manufacture of sweetened condensed milk and evaporated milk. He has worked in milk plants
in Malaysia and Singapore that produces sweetened condensed milk, evaporated milk, ice-cream, UHT
beverages, milk powder packing and other dairy-related products. Notably, he contributed to the
development of sweetened condensed filled milk using refined palm oil instead of butterfat which has
been in great demand since its launch. He has assisted in the setting up of sweetened condensed milk,
evaporated milk and can-making plants as well as implementing the installation and production of
ice-cream, UHT beverages, sterilised milk, pasteurised milk and milk powder packing plants. He was
appointed as the Managing Director of EDSB in 1996 and has successfully set up our current factory
located in Meru, Klang, in Malaysia. His primary responsibilities include the formulation and
implementation of our Groups business strategies and Group policies and charting the growth of our
Group. He was appointed as a Director of the Company on 3 August 2004.
Khor Sin Kok
Alternate Director to Mah Weng Choong
Mr Khor Sin Kok has a degree in Mechanical Engineering from the University of Leeds, UK and a
Master degree in Business Administration majoring in Finance from Michigan State University, USA. He
worked for a short period as a Teaching Assistant in Michigan State University. Upon his return to
Malaysia, he joined a property development company in Penang as Assistant Project Manager.
Following that, he joined the Malaysian dairy division of a group listed on the SGX-ST in 1985 as
Assistant Project Development Manager. During his 12 years tenure with the Malaysian dairy division,
he was involved in market research activities, project feasibility studies and implementation, and
manufacturing operations. His last position was as Production Manager and was responsible for the
manufacturing operations of various product lines like sweetened condensed milk, evaporated milk,
milk powder packing, ice-cream, UHT beverages, sterilized and pasteurized products in plastic bottle
and gable-top paper carton, and the can making plant. He joined EDSB in 1996 as Executive Director,
Operations and has worked closely with the other fellow Directors to successfully set up our current
factory in Meru, Klang, in Malaysia. He oversees the day-to-day management and operations of our
Group in addition to his main responsibilities which include business development and strategic
planning of our Group. He was appointed as Alternate Director to Mr Mah Weng Choong in the
Company on 3 August 2004.
Teo Chee Seng
Independent Director of the Company
Mr Teo Chee Seng was appointed as Independent Director of the Company on 3 August 2004. He is
a lawyer in private practice in Singapore for more than 22 years. He is also a Commissioner for Oaths
and a Notary Public. He is the legal consultant to Tzu Chi Foundation, Taiwans biggest charity
organisation with 5 million members worldwide. He also sits on the current Advisory Board of Raffles
Town Club. He is currently an Independent Director of a company listed on SGX-ST called Lasseters
International Holdings Limited. He holds a Bachelor of Laws (Hons) degree from the University of
Singapore.
John Lyn Hian Woon
Independent Director of the Company
Mr John Lyn Hian Woon was appointed as Independent Director of the Company on 3 August 2004. He
is presently the Chief Executive Officer of Colonial Investment Pte. Ltd., where he is responsible for
management, strategic planning, investment and corporate restructuring. Prior to that, he was an
investment banker with various financial institutions such as Chase Manhattan Bank, Citibank,
Schroders Securities and HSBC James Capel with a total of 15 years experience.
108

Experience and Expertise of the Board of Directors
The Directors of the Company have appropriate expertise to act as directors of the Company, as
evidenced by their business and working experience set out above. Messrs Dato Jaya J B Tan, Kamal
Y P Tan, Tajuddin Joe Hok Tan and Teo Chee Seng are also directors of other public listed companies
in Singapore and therefore have the appropriate experience to act as directors of the Company and are
familiar with the roles and responsibilities of a director of a public listed company in Singapore. The
Company will be making arrangements for Messrs Mah Weng Choong, Khor Sin Kok and John Lyn
Hian Woon to receive the relevant training to familiarise themselves with the roles and responsibilities
of a director of a listed company subsequent to the listing of the Company.
SENIOR MANAGEMENT
Our day-to-day operations are largely handled by our experienced and qualified Executive Officers.
Their particulars are as follows:
Name
Age
Address
Designation
Thong Cooi Seong
39
208-11-2 Robson Heights

Condo Persiaran Endah
Robson Heights
Chief Financial Officer
Kwong Yuen Seng
65
2379 Jalan Pokok Mangga

75200 Malacca, Malaysia
Executive Director,
Sales and Marketing
Chung Chee Fook
64
302 Jalan Selesa 1, Taman Gembira,

Off Jalan Kuchai Lama,
Executive Director,
Technical and Production
Information on the areas of responsibility and working experience of our Executive Officers is set out
below:
Thong Cooi Seong
Chief Financial Officer
Mr Thong Cooi Seong is a holder of a MICPA (Malaysian Institute of Certified Public Accountant)
qualification and has more than 19 years of experience in group accounts and reporting, joint venture
start-up businesses, company mergers and acquisitions, cost and budgetary control processes, and
strategic business planning. He started his career in 1985 where he spent an initial seven years in
public accounting firms including Ernst & Young. He subsequently served in several private,
public-listed and multinational corporations holding senior positions in finance and accounting
functions. These companies included Sungei Besi Mines Malaysia Berhad, Niro Ceramic (M) Sdn. Bhd,
PT Sandimas Reksakeramika Granito, Dragages Malaysia Berhad and Europlastic Malaysia Sdn. Bhd.
He joined our Group in June 2004.
Kwong Yuen Seng
Executive Director, Sales and Marketing
Mr Kwong Yuen Seng has overall responsibility for EDSBs sales and marketing activities. Prior to
joining EDSB, he had more than 34 years experience in the Malaysian dairy division of a group listed
on the SGX-ST. He began his career at the age of 23 and as a sales representative in a dairy company
based in Malacca. During this time, he was part of a team of pioneers who advanced the sale of
sweetened condensed milk in Malaysia and had over the years, gained considerable experience in the
domestic milk product industry, having worked in both East and West Malaysia. He was appointed as
Executive Director, Sales and Marketing of EDSB in 1999 and is primarily responsible for developing
marketing strategies and expanding our market share in Malaysia and overseas.
109

Chung Chee Fook
Director, Technical and Production
Mr Chung Chee Fook has overall responsibility of EDSBs technical and production departments. Prior
to joining EDSB, Mr Chung was actively involved in the fields of research and development, product
development, and quality assurance in the dairy product industry. Mr Chung has worked in the dairy
product industry since 1966, holds a Technical Diploma in Milk Processing and Control from London
and a Certificate on Low Acid Can Food from the Food and Drug Administration, U.S.A. He is also a
qualified Lead Assessor for ISO 9000 Certification. During the mid-80s, he assisted the New Zealand
Dairy Board in their research concerning the inter-laboratory testing of heat stability of milk powders.
He was also the Quality Assurance Manager of a dairy company and was in charge of product
development and quality assurance, in particular, monitoring the quality standards of products such as
sweetened condensed milk, evaporated milk, milk powder packing, ice-cream, dairy beverages and
fruit juices. He was appointed Executive Director, Technical and Production of EDSB in 1997 and is
primarily responsible for production and quality assurance.
COMPENSATION
The compensation(1) paid to our Directors and our Executive Officers for services rendered to our
Group on an individual basis in remuneration bands during FY2002, FY2003 and FP2004 are as
follows:
<
Names
Directors
Dato Jaya J B Tan
Kamal Y P Tan
Mah Weng Choong
Khor Sin Kok
Teo Chee Seng
John Lyn Hian Woon
Executive Officers
Thong Cooi Seong
Kwong Yuen Seng
Chung Chee Fook
12 months
>
FY2002(2)
FY2003(2)
8 months
FP2004(2)
A
A
(3)
(3)
A
A
(3)
(3)
A
A
(3)
(3)
(3)
A
A
(3)
A
A
(3)
A
A
Notes:
(1)
Remuneration includes salary, bonus, EPF, directors fee and benefits-in-kind.
(2)
Band A = up to S$250,000.
(3)
Not under our appointment as at the relevant period.
Pension or retirement benefits

We have not and will not set aside or accrue any pension or retirement benefits for any of our
employees.
STAFF
As at the Latest Practicable Date, we had 282 full-time employees of whom approximately 3.9% were
management/professional/executive personnel, 7.8% were technical and supervisory personnel, 5.7%
were clerical personnel, 62.4% were operations and 20.2% were sales and marketing. We believe that
our management enjoys a cordial and harmonious working relationship with our employees and we
have not encountered any strikes or disruptions with our employees. We do not employ a significant
number of temporary staff. However, from time to time, we may employ contract workers to help us in
handling increased workload.
110

The table below shows the breakdown of our full-time employees by activity as at the end of each of
the period under review.
<
FY2001
12 months
FY2002
FY2003
8 months
FP2004
8
20
16
85
51
9
18
14
85
50
9
19
16
107
52
10
22
15
161
56
180
176
203
264
Activity
Management/Professional/Executive(1)
Technical and Supervisory(2)
Clerical(3)
Operations(4)
Sales & Marketing(5)
Total
>
Notes:
(1)
(2)
Includes personnel of supervisory levels and above.

Assistant supervisors and technicians.
(3)
Clerks and administrative staff.
(4)
Operators, cleaners, delivery/transport personnel.
(5)
Sales promoters and marketing assistants.
All our employees above are currently based in Malaysia. Our employees are not part of any collective
bargaining arrangement or union. We believe that our management enjoys a cordial and harmonious
working relationship with our employees and this is expected to continue. There has not been any
incidence of work stoppages or labour disputes which affected our operations.
CORPORATE GOVERNANCE
Our Directors recognise the importance of good corporate governance and in offering high standards
of accountability to our Shareholders. We have therefore set up the following committees:
Remuneration Committee
Our Remuneration Committee comprises Messrs Teo Chee Seng, John Lyn Hian Woon and Dato Jaya
J B Tan with Mr Teo Chee Seng as the chairman. Our Remuneration Committee will be responsible for
recommending to our Board a remuneration framework for our Directors and Executive Officers, and
determine specific remuneration packages for each Executive Director and Executive Officer. The
recommendations of our Remuneration Committee will be submitted for endorsement by the Board. All
aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses,
options and benefits-in-kind will be considered by our Remuneration Committee. The Remuneration
Committee will also administer the ESOS. Each member of the Remuneration Committee shall abstain
from voting on any resolutions in respect of his own remuneration package.
Nominating Committee
Our Nominating Committee comprises Messrs Teo Chee Seng, Dato Jaya J B Tan and John Lyn Hian
Woon, with Mr Teo Chee Seng as the chairman. Our Nominating Committee will be responsible for (i)
the re-nomination of our Directors having regard to the Directors 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. Our Nominating
Committee will, subject to the approval of our Board, decide how our Boards performance is to be
evaluated and propose objective performance criteria which address how our Board has enhanced
long-term shareholder value. The performance evaluation will also include consideration of our
Companys share price performance over a 5-year period vis-a`-vis the Singapore Straits Times Index
and a benchmark index of our industry peers. Our Board will also implement a process to be carried
out by our Nominating Committee for assessing the effectiveness of our Board as a whole and for
assessing the contribution by each individual Director to the effectiveness of our Board. Each member
of our Nominating Committee shall abstain from voting on any resolutions in respect of the assessment
of his performance or re-nomination as a director.
111

Audit Committee
Our Audit Committee comprises Messrs John Lyn Hian Woon, Tajuddin Joe Hok Tan and Teo Chee
Seng with Mr John Lyn Hian Woon as the chairman.
Our Audit Committee will assist our Board in discharging their responsibility to safeguard our assets,
maintain adequate accounting records, and develop and maintain effective systems of internal control,
with the overall objective of ensuring that our management creates and maintains an effective control
environment in our Group.
Our Audit Committee will provide a channel of communication between our Board, our management
and our external auditors on matters relating to audit.
In particular, our Audit Committee will:
(a)
review with the external auditor the audit plan, their evaluation of the system of internal accounting
controls, their letter to management and the managements response;
(b)
review the financial statements of our Company and our Group before submission to our Board
for approval, focusing in particular on changes in accounting policies and practices, major risk
areas, significant adjustments resulting from the audit, compliance with accounting standards and
compliance with the Listing Manual and any other relevant statutory or regulatory requirements;
(c)
review the internal control procedures and ensure co-ordination between external auditors and
our management and review the assistance given by our 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 absence of our management, where necessary);
(d)
review and discuss with the external auditors any suspected fraud or irregularity, or suspected
infringement of any relevant laws, rules of regulations, which has or is likely to have a material
impact on our Groups operating results or financial position, and our managements response;
(e)
consider the appointment or re-appointment of the external auditors and matters relating to
resignation or dismissal of the auditors;
(f)
review the interested person transaction (if any) falling within the scope of Chapter 9 of the Listing
Manual;
(g)
review potential conflicts of interest, if any;
(h)
undertake such other reviews and projects as may be requested by our Board, and will report to
our Board its findings from time to time on matters arising and requiring the attention of our Audit
Committee; and
(i)
generally undertake such other function and duties as may be required by statute or the Listing
Manual, or by such amendment as may be made thereto from time to time.
Apart from the above functions, our Audit Committee will also commission and review the findings of
internal investigations into matters where there is any suspected fraud or irregularity, or failure of
internal controls, or infringement of any law, rule or regulation which has or is likely to have a material
impact on our Groups operating results or financial position. Each member of our Audit Committee will
abstain from voting in respect of matters in which he is interested.
112

Board Practices
Our Board of Directors will consist of not less than two Directors. Our Directors do not currently have
a fixed term of office. At each annual general meeting, one-third of the 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. A retiring Director shall be eligible for re-election. The Directors to retire in every
year shall be those who have been longest in office since their last re-election or appointment. All
Directors shall retire from office at least once every three years.
SERVICE AGREEMENTS
There are no existing or proposed service agreements between us or our subsidiary and any of our
Directors which provide for benefits upon termination of employment.
Directors
On 8 November 2004, we entered into a service agreement (the Service Agreement) with our
Executive Director, Kamal Y P Tan (the Appointee). The Service Agreement is valid for a term of three
years commencing from the date of admission to our Company to the Official List of the SGX-SESDAQ
and thereafter shall automatically continue from year to year unless terminated in accordance with the
Service Agreement. The Service Agreement can be terminated by the Company or the Appointee by
written notice of six months given by either party to the other provided that the Company shall have the
option to pay six months salary in lieu of any required period of notice. Except for such payment in lieu
of notice as provided for under the Service Agreement, no compensation or damages is payable by our
Company to the Appointee in respect of his termination in accordance with the terms of the Service
Agreement. The Service Agreement may also be terminated by our Company at any time without notice
or payment upon the occurrence of events such as the default or misconduct of the Appointee in
connection with or affecting our business, wilful neglect by the Appointee in the discharge of his duties,
commission or a serious breach of his Service Agreement or disqualification of the Appointee from
acting as a Director for any reason.
The Service Agreement covers the terms of employment, specifically salary. Directors fees do not form
part of the terms of the Service Agreement as these require the approval of Shareholders during our
Companys Annual General Meeting.
Under the Service Agreement, the Appointee is paid an annual salary of S$100,000 p.a. Among others,
the Appointee is also entitled to be reimbursed all travelling, hotel and other expenses wholly,
exclusively and necessarily incurred by him in or about the performance of his duties under the Service
Agreement. The Service Agreement also provides that the Company shall bear full dental and medical
expenses of the Appointee and his immediate family members, pay monthly subscriptions and related
expenses of a golf club membership used by the Appointee and bear all expenses including service and
repair, maintenance, insurance, road tax and fuel expenses of the Appointees car.
There are non-competition restrictions under the Service Agreement which are effective during the term
of the Service Agreement and for a period of one year after the termination of the Appointees
employment pursuant to the terms of the Service Agreement. There are also confidentiality clauses
under the Service Agreement.
Save as disclosed above, there are no other existing or proposed service agreements between our
Company or subsidiary and any of our Directors which provide for benefits upon termination of
employment.
113

Had the Service Agreement been in place for FY2003, the aggregate remuneration payable to the
Appointee would have been RM0.2 million and the profit before income tax of our Proforma Group for
FY2003 would have been RM5.3 million instead of RM5.5 million. The Appointees remuneration of
RM0.2 million represents approximately 4.2% of the profit before income tax of our Proforma Group
(taking into account the aforesaid remuneration) in FY2003 had the Service Agreement been in effect
for FY2003.
Had the Service Agreement been in place for FP2004, the aggregate remuneration payable to the
Appointee would have been RM0.1 million and the profit before income tax of our Proforma Group for
FP2004 would have been RM5.2 million instead of RM5.3 million. The Appointees remuneration of
RM0.1 million represents approximately 2.9% of the profit before income tax of our Proforma Group
(taking into account the aforesaid remuneration) in FP2004 had the Service Agreement been in effect
for FP2004.
Executive Officers
Each of our Executive Officers is a party to a letter of appointment which sets forth compensation and
related terms of that persons employment, such as annual leave and grounds of termination, etc. All
of those persons are employed until an appropriate termination notice is given, or payment in lieu of
notice is given, by either party. In addition to their monthly salaries and variable annual bonuses,
Executive Officers appointed to General Manager positions and above are also entitled to the use of
a company car.
Our Executive Directors and Executive Officers are entitled to such other benefits in accordance with
our human resource policy, as may be determined from time to time.
ETIKA EMPLOYEE SHARE OPTION SCHEME
In conjunction with our listing on the SGX-SESDAQ, we have on 8 November 2004, adopted an
employee share option scheme known as the Etika Employee Share Option Scheme or the ESOS.
The ESOS will provide an opportunity for our employees and Directors to participate in the equity of our
Company. The rules of the ESOS are set out in Appendix E of this Prospectus. The ESOS conforms
to the requirements set out in Part VIII of Chapter 8 of the Listing Manual and options will be granted
only after the listing of our Shares on the SGX-SESDAQ.
Purpose and Administration of the ESOS
We recognise the importance of acknowledging contributions made by our employees and Directors to
our success and development. The ESOS will serve to motivate employees and Directors to optimise
their performance standards, dedication and efficiency. The ESOS is also a strong incentive to attract
and recruit new employees with abilities and expertise that are crucial to our long-term growth and
profitability.
The ESOS will be administered by our Remuneration Committee which will determine the terms and
conditions of the grant of options, including the price at which the options may be exercised. Under the
ESOS, the Remuneration Committee has the ability to grant options to present and future full-time
employees and Directors (whether Executive or Non-Executive).
Size of the ESOS
The total number of Shares to be issued under the ESOS will not exceed 15% (or such other
percentage allowed under the rules of the SGX-ST) of the total issued share capital of our Company
from time to time. With a significant portion of our issued share capital set aside for the ESOS, we
believe that eligible employees and Directors will recognise that we are making a significant effort to
reward them for their efforts and contributions by providing greater opportunities to enable them to
participate in the equity of our Company. Through implementing the performance-based incentive
114

scheme, we hope to provide an opportunity to as many employees of our Company as possible to own
our Shares. With an increased participation in the equity interest of our Company, we believe that our
employees and Directors sense of involvement in the Company will be enhanced. Implementing the
ESOS with the maximum amount of Shares currently allowed under the rules of the Listing Manual will
enable us to maintain flexibility.
The 15% scheme size is intended to accommodate the potential pool of participants arising from a
broad base of eligible participants, and to support the use of share options in our overall long-term
compensation strategy. We are of the view that the ESOS size of 15% of our issued share capital is
reasonable, after taking into account the contributions by our Directors and employees, and the number
of our employees. We anticipate that the pool of participants under the ESOS is likely to increase further
pursuant to our future expansion plans. In order for the ESOS to achieve its objective, it must be of a
sufficient size to allow an adequate number of options to be issued to existing and new employees and
sufficiently attractive in comparison with schemes offered by other companies in the industry.
Eligibility
Executive and Non-Executive Directors of our Company are eligible to participate in the ESOS. Save
for Mr Kamal Y P Tan, all controlling shareholders and their associates (both as defined in the Listing
Manual) are not eligible to participate in the ESOS. Our Company has decided to allow Mr Kamal Y P
Tan to participate in the ESOS as Mr Kamal Y P Tan has relevant experience in businesses which we
consider as valuable to our business. Further, we also intend to compensate and reward him for his
effort and contribution as he will be involved in the day-to-day running of our business.
We have extended eligibility to Non-Executive Directors who, although not employed by us, work
closely with us and who, by reason of their relationship with us, are in a position to give input and
contribute their experience, knowledge and expertise to our development and prosperity. By
implementing the ESOS, we will be able to provide persons who are closely associated with our
business operations an opportunity to participate in the equity of our Company. In doing so, we will
enhance our working relationships with the Non-Executive Directors by instilling in them a greater
sense of involvement. The extension of the ESOS to Non-Executive Directors enables us to continue
to attract capable individuals to sit on our Board as Non-Executive Directors.
Although our Non-Executive Directors may receive remuneration in the form of directors fees, the
ESOS will provide us with the means to acknowledge special assistance or extra efforts of a
Non-Executive Director (for instance, in introducing or facilitating business opportunities for our Group
or where additional time has been expended in significant corporate exercises or projects that are
undertaken by us), in addition to, or in lieu of increasing, the cash quantum of directors fees. Although
it is impossible to quantitatively measure the performances or contributions of our Non-Executive
Directors, we would consider rewarding Non-Executive Directors who perform services or contribute to
our business in ways that go beyond the ordinary scope of their duties as Non-Executive Directors of
our Company.
Nevertheless, in order to minimise any possible conflicts of interest, and so as not to compromise the
objectivity of independent members of our Board who may, in the future, be selected to participate in
the ESOS, our Non-Executive Directors would largely continue to be remunerated for their services by
way of directors fees. As such, while the ESOS does not specify any limitation as to the amount of
Shares to be comprised in options that may be granted to any participant in a financial year or to any
category of participants for the duration of the ESOS, it is envisaged that options that may be granted
to Non-Executive Directors will be of token amounts and will not comprise (whether on an individual or
collective basis) a significant portion of the Shares available under the ESOS. Rather, it is intended that
the bulk of options that are granted pursuant to the ESOS will be to our employees and Executive
Directors, as they will comprise the core group of participants of the ESOS.
115

Subscription Price
Under the ESOS, the subscription price of options granted will be determined by the Remuneration
Committee, in its absolute discretion. The Remuneration Committee may grant options to participants
at up to twenty per cent. (20%) discount to the market price of the Shares for the five consecutive
trading days immediately preceding the relevant date of grant of the option. Where the options are
granted at the then prevailing market price of the Shares, the options may only be exercised after the
first anniversary of the date on which the relevant option was granted. However, for options granted at
a discount to the then prevailing market price, such options may only be exercised after the second
anniversary of the date on which the relevant option was granted. The options granted under the ESOS
shall be exercised before the tenth anniversary of the relevant date of the grant of the options or, in the
case of options granted to Non-Executive Directors, before the fifth anniversary of the relevant date of
the grant of the options.
The ability to offer options at a discount to the prevailing market price of the Shares may be utilised as
a means to reward participants for their outstanding performance as well as to motivate them to
continue to excel, and will be an additional method available to us for compensating employees other
than through salary, salary increments and cash bonuses. This will enable us to introduce an effective
method of motivating participants to maximise their performance, which we believe will in turn create
better value for our shareholders. As share options granted with a discount are subject to a longer
vesting period than those granted at the prevailing market price, holders of such options are
encouraged to have a longer term view of the Company, thereby promoting staff and employee
retention and reinforcing their ties to us.
We anticipate that options would be offered at a discount under circumstances including but not limited
to the following:
where it is more meaningful for our Company to acknowledge a participants achievements

through offering options at a discount to the market price rather than paying him a cash bonus or
a larger cash bonus. These options operate as a form of cashless reward from our Company, with
a greater potential for capital appreciation than market price options; and
where more compelling motivation is required in order to attract new talents into our Group and/or
retain talented individuals. As options become more significant components of employee
remuneration packages and the grant of options with a discount element becomes more common
place, a discretion to grant options at a discount to the market price of the Shares will provide us
with a means to maintain the competitiveness of our compensation strategy.
The determination of whether a discount will be given and the quantum of the discount, will be decided
upon on a case-by-case basis in accordance with internal guidelines established by our Company,
taking into account individual merit, the objective that is desired to be achieved by our Company
through the grant of that option and such other factors described immediately above. Such internal
guidelines will include (where available) market comparatives and practices of other industry players,
and the value of the options as a component of the participants compensation package.
It should be further noted that while a maximum discount of 20% is proposed, it does not imply that all
options granted will have or include a discount. The giving of a discount (and the quantum of the
discount that may be given) will depend on certain factors and the circumstances of each case, as
explained above.
116

Potential Cost to Our Company of Granting Options under the ESOS
The cost to us of granting options, with or without a discounted subscription price under the ESOS,
includes the following:
the exercise of an option at a discount to the market price would translate into a reduction of the
proceeds from the exercise of such option, as compared to the proceeds that we would have
received from such exercise had the exercise been made at the prevailing market price of the
Shares. Such reduction of the exercise proceeds would represent the monetary cost to us of
granting options at a discount;
as the monetary cost of granting options at a discount is borne by us, our earnings would
effectively be reduced by an amount corresponding to the reduced interest earnings that we would
have received from the difference in proceeds from a subscription price with no discount versus
the discounted subscription price. Such reduction would, accordingly, result in the dilution of our
earnings per Share; and
the effect of the issue of new Shares upon the exercise of Options is that our Groups NTA per
Share will increase if the exercise price is above the NTA per Share and decrease, if the exercise
price is below the NTA per Share. The costs as discussed above would only materialise upon the
exercise of the relevant options.
In July 2004, the Council of Corporate Disclosure and Governance announced the adoption of Financial
Reporting Standard 102 on Share-based Payment (FRS 102), effective for financial statements
covering periods beginning on or after 1 January 2005 for listed companies. Upon legislation of FRS
102, the fair value of employee services received in exchange for the grant of the options would be
recognised as an expense. For equity-settled share-based payment transactions, the total amount to
be expensed in the income statement over the vesting period is determined by reference to the fair
value of each option granted at the grant date and the number of options vested by vesting date, with
a corresponding increase in equity.
Before the end of the vesting period, at each balance sheet date, the entity revises its estimates of the
number of options that are expected to vest by the vesting date and recognises the impact of its revision
in the income statement with a corresponding adjustment to equity. After the vesting date, no
adjustment to the income statement would be made. The proceeds received net of any directly
attributable transaction costs are credited to share capital (nominal value) and share premium account
when the options are exercised.
During the vesting period, the consolidated earnings per share would be reduced by both the expense
recognised and the potential ordinary shares to be issued under the share option scheme. When the
options are exercised, the consolidated net tangible assets will be increased by the amount of cash
received in subscription for the new Shares. On a per Share basis, the effect is accretive if the
subscription price is above the net tangible assets per Share but dilutive otherwise.
Details of the number of options granted pursuant to the ESOS, the number of options exercised and
the exercise price (as well as any applicable discount) will be disclosed in our annual report.
We have made an application to the SGX-ST for permission to deal in and for quotation of the Shares
which may be issued upon the exercise of the options to be granted under the ESOS. The approval of
the SGX-ST is not to be taken as an indication of the merits of our Group, our Shares, the New Shares
or the ESOS Shares.
117
PRINCIPAL SHAREHOLDERS
OWNERSHIP STRUCTURE
The shareholders of our Company and their respective shareholdings immediately before and after the
Invitation are set out below:
Before the Invitation
Direct Interest
Number of
Shares
Dato Jaya J B Tan(1)

Kamal Y P Tan(1)
Tajuddin Joe Hok Tan(1)
After the Invitation
Deemed Interest
Number of
Shares
29,618,789
23.03
29,618,789
23.03
29,618,788
Mah Weng Choong

Khor Sin Kok
Direct Interest
Number of
Shares
88,856,366
69.09
88,856,366
69.09
23.03
88,856,366
4,536,846
3.53
Deemed Interest
Number of
Shares
29,618,789
17.26
88,856,366
51.78
29,618,789
17.26
88,856,366
51.78
69.09
29,618,788
17.26
88,856,366
51.78
4,536,846
2.64
Directors
4,536,846
3.53
4,536,846
2.64
Teo Chee Seng(2)
John Lyn Hian Woon(2)
23,695,017
18.42
23,695,017
13.81
Chung Chee Fook(4)
2,468,231
1.92
2,468,231
1.44
Kwong Yuen Seng(4)
4,536,846
3.53
4,536,846
2.64
43,000,000
25.05
128,630,152 100.00(5)
171,630,152
100.00
Shareholders of 5% or
more other than
Directors
GYA Nominees Sdn Bhd(3)
Other Shareholders
Public (including
Reserved Shares)
Total
Notes:
(1)
Messrs Dato Jaya J B Tan, Kamal Y P Tan and Tajuddin Joe Hok Tan, who are also our Directors, are siblings.
(2)
Our Independent Directors, Messrs Teo Chee Seng and John Lyn Hian Woon, will be offered 50,000 and 200,000 Reserved
Shares respectively, at the Issue Price pursuant to the Invitation, in recognition of their future contributions to our Group. In
the event that they accept any or all of the Reserved Shares offered to them, they may dispose of or transfer any/or all of
their Reserved Shares after the admission of our Company to the Official List of the SGX-SESDAQ.
(3)
GYA Nominees Sdn Bhd is a custodian services company incorporated in Malaysia on 11 September 2003. Abd Hamid bin
Mohamed is not a director of this company and has no beneficial interest in GYA Nominees Sdn Bhd. GYA Nominees Sdn
Bhd is holding the Shares in trust for Abd Hamid bin Mohamed.
(4)
Chung Chee Fook and Kwong Yuen Seng are Executive Officers.
(5)
Does not add up due to rounding differences.
Except as described under the section entitled Restructuring Exercise of this Prospectus, there were
no significant changes in the percentage of ownership of our Directors and Substantial Shareholders
in our Company from its incorporation until the Latest Practicable Date.
MORATORIUM
To demonstrate their commitment to our Group, our Companys shareholders, namely Messrs Dato
Jaya J B Tan, Kamal Y P Tan, Tajuddin Joe Hok Tan, Mah Weng Choong, Kwong Yuen Seng, Khor Sin
Kok, Chung Chee Fook and Abd Hamid bin Mohamed, who will in aggregate hold 128,630,152 ordinary
shares in our Company, representing approximately 74.9% of our Companys enlarged issued and
paid-up capital after the Invitation, have each undertaken (not to sell, transfer or otherwise dispose of
any part of their respective interests in our Company for a period of six months commencing from the
date of the Companys admission to the Official List of the SGX-SESDAQ ( the First Moratorium
Period). Each of them has also undertaken to maintain at least 50% of their respective original
aggregate shareholdings (adjusted for any share consolidation or subdivision) in our Company for a
period of six months upon the expiration of the First Moratorium Period.
118
INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS

Transactions between our Group and any interested persons (namely, our Directors, our Managing
Director or any of our controlling shareholders, or the associates of such persons) are generally known
as interested person transactions. Save as disclosed below and under the sections entitled
Restructuring Exercise and Directors, Management and Staff Service Agreements of this
Prospectus, none of our Directors, Executive Officers or controlling shareholders and associates of any
such Director, Executive Officer or controlling shareholder was or is interested, directly or indirectly, in
any material transaction undertaken by our Group within the past three financial years ended 30
September 2001 to 2003, the eight months financial period ended 31 May 2004 and up to the Latest
Practicable Date.
PAST INTERESTED PERSON TRANSACTIONS
Purchase of motor vehicle from TCBY (Malaysia) Sdn Bhd (TCBY)
EDSB purchased one motor vehicle (a Toyota Camry) from TCBY in June 2003 for RM70,000. TCBY
is an associate of the Tan Brothers by virtue of the Tan Brothers being Substantial Shareholders and
directors of Motif Etika, which is the holding company of TCBY.
Rental of office cum warehouse from our Executive Officer
EDSB has since its commencement of operations in 1999, been renting an office cum warehouse
located in Malacca at a monthly rental of RM1,500. Mr. Kwong Yuen Seng is deemed interested in this
transaction by virtue of him being the landlord of the property.
Loans from Motif Etika
Prior to 11 February 2004, Motif Etika held 87.5% of the total issue and paid up capital of EDSB. Motif
Etika is wholly owned by the Tan Brothers. The total net amount due (to)/from Motif Etika as at the end
of each of FY2001, FY2002, FY2003 and FP2004 are as follows:
<
RM000
Amount due (to)/from Motif Etika
FY2001
12 months
FY2002
FY2003
>
8 months
FP2004
(31)
(25)
(10)
18
During the last three financial years, FP2004 and up to the Latest Practicable Date, the largest
outstanding advance owing to Motif Etika was approximately RM5.8 million of which RM5.5 million was
capitalised in FY2001.
As at the Latest Practicable Date, there are no amounts due to or from Motif Etika.
Payment of insurance premiums to Perinsu (Broker Insurans) Sdn Bhd (PBI)
PBI is principally engaged in the business of insurance brokerage. Our Substantial Shareholders and
Directors, namely, the Tan Brothers, are major shareholders and directors of Panglima Etika Sdn Bhd,
which in turn owns 51% of the share capital of PBI.
From time to time, we obtain insurance coverage in relation to our operations for instance we
maintain keyman life insurance for our key executives as well as fire, theft and other general insurance
for our production facilities. We obtain such insurance through PBI who provides insurance brokerage
services such as advising, recommending, reviewing and appointing insurance companies to assume
insurance coverage for EDSB, in consideration for which PBI receives a brokerage commission from
the insurance company. In Malaysia, the relevant regulatory authority (that is, Bank Negara Malaysia)
fixes the commission rates, payable by insurance companies to the brokers. As such, the premiums we
pay to PBI are at commercial rates and such transactions are at arms length. Please refer to the
section entitled Interested Persons Transactions and Conflicts of Interest Existing and Future
Interested Person Transactions of this Prospectus for further information.
119

EXISTING AND FUTURE INTERESTED PERSON TRANSACTIONS
Payment of insurance premiums to PBI
The insurance brokerage services with PBI continues as an existing and future interested person
transaction. The amount of premiums incurred by EDSB for FY2001, FY2002, FY2003 and FP2004 are
set out in the table below.
<
RM000
FY2001
12 months
FY2002
FY2003
8 months
FP2004
227
191
217
238
13
Insurance premiums incurred

Amount due to PBI
(1)
>
Note:
(1)
The amount relates to the insurance premiums payable to the insurance companies, which are collected by PBI and
subsequently paid to the insurance companies.
From 1 June 2004 to the Latest Practicable Date, our insurance premium incurred amounted to
approximately RM96,000 and as at the Latest Practicable Date, our amount due to PBI was
approximately RM1,000.
We believe that obtaining our insurance coverage through PBI allows us to obtain more competitive
rates through bulk discounts and we intend to continue doing so.
Rental of office cum warehouse from our Executive Officer
EDSB has since its commencement of operations in 1999, been renting an office cum warehouse
located in Malacca at a monthly rental of RM1,500. Mr Kwong Yuen Seng is deemed interested in this
transaction by virtue of him being the landlord of the property.
This tenancy will expire on 14 July 2007 and will be reviewed by the Audit Committee as part of the
review procedures described under the section entitled Interested Person Transactions and Conflicts
of Interests Review Procedures for Future Interested Persons Transactions of this Prospectus.
Future Transaction with Life Medicals Sdn Bhd (LMSB)
LMSB is a Malaysian incorporated company which is engaged in the business of manufacturing
medical plastic products, packaging materials and disposable plastic products. Our Executive Director,
Mr Kamal Y P Tan, and our Non-Executive Director, Dato Jaya J B Tan collectively own a majority
interest in the share capital of LMSB. Mr Kamal Y P Tan is also a non-executive director of LMSB.
EDSB is considering purchasing plastic lids from LMSB. These plastic lids are required by EDSB for the
production of its milk products, in particular, the manufacture of milk products with pack sizes weighing
1kg. Should such transactions materialise, they will be conducted on normal commercial terms and on
an arms length basis. Such transactions will be reviewed by the Audit Committee as part of the review
procedures described under the section entitled Interested Person Transactions and Conflicts of
Interests Review Procedures for Future Interested Persons Transactions of this Prospectus.
120

Guarantees(1) provided by our Directors and/or Substantial Shareholders
Largest amount of
loan outstanding
from FY2001 to the
Latest Practicable
Date (based on
amount outstanding
as at the end of
each calendar
Party to whom
month)
guarantee is
RM000
given
Maybank
Malaysia
Maybank
Malaysia
6,706(2)
11,398
Amount of
loan
outstanding
as at Latest
Practicable
Date
RM000
Effective
interest
rate
charged
p.a
Nature of
facilities
Guarantees
provided by
3,715
7.75%
Overdraft
Tan Brothers,
Messrs Mah
Weng Choong
and Khor Sin
Kok
11,353
2.64% to
2.93%
Bankers
acceptances
Tan Brothers,
Messrs Mah
Weng Choong
and Khor Sin
Kok
3,246
7.75%
Term Loan 3
Tan Brothers,
Messrs Mah
Weng Choong
and Khor Sin
Kok
Maybank
Malaysia
3,246(3)
Maybank
Malaysia
7.75%
Term Loan 4
Tan Brothers,
Messrs Mah
Weng Choong
and Khor Sin
Kok
Maybank
Malaysia
7,093
2,276
7.75%
Term Loans 1
and 2
Tan Brothers
Aseam Credit
Sdn Bhd
3,353
148
6.40% to
9.10%
Hire Purchase
Tan Brothers
740
378
5.75%
(flat rate)
Hire Purchase
Tan Brothers
58
27
4.8%
(flat rate)
Hire Purchase
Mr Khor Sin Kok
235
155
3.75%
(flat rate)
Hire Purchase
Mr Mah Weng
Choong
92
89
3.10%
(flat rate)
Hire Purchase
Mr Kamal Y P
Tan
Aseamlease
Berhad
Sime Credit (M)
Sdn. Bhd.
EON Finance
Berhad
Mayban
Finance
Berhad
Note:
(1)
The amount of facilities guaranteed by our Directors and/or Substantial Shareholders exclude foreign exchange facilities.
(2)
The largest amount of loan outstanding exceeded the amount of facility granted due to unpresented cheques.
(3)
The largest amount of loan outstanding exceeded the amount of facility granted due to interest expense accrued at month
end which was settled in the following month.
121
INTERESTED PERSON TRANSACTION AND CONFLICTS OF INTERESTS

After the Invitation, we intend to write to the relevant financial institutions to discharge the guarantees
provided by the Directors and/or Substantial Shareholders. If we are unable to obtain a discharge of the
guarantees, the Directors and/or Substantial Shareholders will continue to provide the guarantees. Our
Directors are of the view that revisions to the terms and conditions of our banking facilities, if any, are
unlikely to be material and would not adversely affect our operations and financial performance.
REVIEW PROCEDURES FOR FUTURE INTERESTED PERSON TRANSACTIONS
Our Audit Committee will review and approve all interested person transactions as defined by the
Listing Manual (Interested Person Transactions) to ensure that they are on normal commercial terms
and on an arms length basis, that is, the transactions are transacted on terms and prices not more
favourable to the interested persons than if they were transacted with a third-party and are not
prejudicial to the interests of our Shareholders in any way.
During its periodic review or such other review deemed necessary by it, our Audit Committee will carry
out a review of records of all Interested Person Transactions to ensure that they are carried out in
accordance with the following internal control procedures:
(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. Interested Person
Transactions below S$100,000 do not require such approval. Any sale or purchase contracts to
be made with an Interested Person shall not be approved unless the pricing is:
(a)
determined in accordance with our usual business practices and policies;
(b)
consistent with the usual margin given or price received by us for the same or substantially
similar type of transactions between us and unrelated parties; and
(c)
the terms are no more favourable to the Interested Person than those extended to or
received from unrelated parties.
For the purposes above, contracts for the same or substantially similar type of transactions
entered into between us and unrelated third parties, if any, 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 Interested Person Transactions entered into by us and categorise
these transactions as follows:
(a)
a Category 1 Interested Person Transaction is one where the value thereof is in excess of
3% of the NTA of our Group; and
(b)
a Category 2 Interested Person Transaction is one where the value thereof is below or equal
to 3% of the NTA of our Group.
All Category 1 Interested Person Transactions must be approved by our Audit Committee prior to
entry whereas Category 2 Interested Person Transactions need not be approved by our Audit
Committee prior to entry but shall be reviewed on a quarterly basis by our 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.
122

Our Audit Committee will also review all Interested Person Transactions to ensure that the prevailing
rules and regulations of the SGX-ST (in particular, Chapter 9 of the Listing Manual) are complied with.
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 or the Act, we will seek our
Shareholders approval (where necessary) for such transactions. We will also endeavour to comply with
the principles of and best practices set out in the Best Practices Guide of the Listing Manual.
All the Independent Directors and Non-Executive Directors, who are members of our Audit Committee,
are of the view that the review procedures and systematic monitoring mechanism of all Interested
Person Transactions as mentioned above, are adequate in ensuring that such transactions will be on
normal commercial terms and will not be prejudicial to the interests of our Shareholders in any way.
Chapter 9 of the Listing Manual
Under Chapter 9 of the SGX-ST Listing Manual, where a listed company or any of its subsidiaries or
associated companies over which the listed company has control (other than a subsidiary or associated
company that is listed on a foreign stock exchange) proposes to enter into a transaction with the listed
companys interested persons, shareholders approval and/or an immediate announcement is required
in respect of the transaction if the value of the transaction is equal to or exceeds certain financial
thresholds. In particular, shareholders approval is required where the value of such transaction is not
below S$100,000 and is:
(i)
equal to or more than five per cent. of the latest audited NTA of the listed company; or
(ii)
equal to or more than five per cent. of the latest audited NTA, when aggregated with other
transactions entered into with the same interested person during the same financial year.
Definitions under the Listing Manual

Under the Listing Manual:
(i)
the term interested person is defined to mean a director, chief executive officer, or controlling
shareholder, of the listed company or an associate of any such director, chief executive officer or
controlling shareholder; and
(ii)
the term associate is defined to mean:

(a)
in relation to any director, chief executive officer, substantial shareholder or controlling

shareholder (being an individual) means:
(aa) his immediate family;
(bb) the trustees of any trust of which he or his immediate family is a beneficiary or, in the
case of a discretionary trust, is a discretionary object; and
(cc) any company in which he and his immediate family together (directly or indirectly) have
an interest of 30% or more.
(b)
(iii)
in relation to a substantial shareholder or a controlling shareholder (being a company)

means any other company which is its subsidiary or holding company or is a subsidiary of
any such holding company or one in the equity of which it and/or such other company or
companies taken together (directly or indirectly) have an interest of 30% or more.
the term approved exchange is defined as a stock exchange that has rules which safeguarded
the interests of the shareholders against interested person transactions according to similar
principles to Chapter 9 of the Listing Manual.
123

POTENTIAL CONFLICTS OF INTERESTS
Save as disclosed in the section entitled Interested Person Transactions and Conflicts of Interest of
this Prospectus,
(a)
no Director, Executive Officer or controlling shareholder of our Company or their respective

Associates has any interest direct or indirect, in any material transactions to which our Company
was or is to be a party;
(b)
no Director, Executive Officer or controlling shareholder of our Company and their respective
Associates has any interest, direct or indirect, in any business which competes with the existing
business of our Group; and
(c)
no Director, Executive Officer or controlling shareholder of our Company or their respective

Associates has any interest, direct or indirect, in any enterprise or company that is our Groups
customer or supplier of goods and services.
124
DESCRIPTION OF ORDINARY SHARES

The following statements are brief summaries of our capital structure and the more important rights and
privileges of our shareholders as conferred by the laws of Singapore and our Articles of Association
(Articles). These statements summarise the material provisions of our Articles but are qualified in
entirety by reference to our Articles, a copy of which will be available for inspection at our offices during
normal business hours for a period of six months from the date of registration of this Prospectus.
Shares
Our authorised capital is S$48,000,000 consisting of 800,000,000 ordinary shares of par value S$0.06
each (Shares). We have only one class of shares, namely, our Shares, which have identical rights in
all respects and rank equally with one another. Our Articles provide that we may issue shares of a
different class with preferential, deferred, qualified or special rights, privileges or conditions as our
Directors may think fit and may issue preference shares which are, or at our option are, redeemable,
subject to certain limitations. Our Directors may issue shares at a premium. If shares are issued at a
premium, a sum equal to the aggregate amount or value of the premium will, subject to certain
exceptions, be transferred to a share premium account.
As at the date of this Prospectus, 128,630,152 Shares have been issued and fully paid. All of our
Shares are in registered form. We may, subject to the provisions of the Companies Act and the listing
rules of the SGX-ST, purchase our own Shares. However, we may not, except in circumstances
permitted by the Companies Act, grant any financial assistance for the acquisition or proposed
acquisition of our Shares.
New Shares
New Shares may only be issued with the prior approval of our shareholders in a general meeting. 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 the then existing
shareholders of our Company shall 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 unless
otherwise revoked or varied by shareholders in a general meeting. Subject to the foregoing, the
provisions of the Companies Act and any special rights attached to any class of shares currently issued,
all new Shares are under the control of our Directors who may allot and issue the same with such rights
and restrictions as they may think fit.
Shareholders
Only persons who are registered on our register of shareholders and, in cases in which the person so
registered is CDP, the persons named as the depositors in the depository register maintained by CDP
for our Shares, are recognised as our shareholders. We will not, except as required by law, recognise
any equitable, contingent, future or partial interest in any Share or other rights for any Share other than
the absolute right thereto of the registered holder of that Share or of the person whose name is entered
in the depository register for that Share. We may close our register of shareholders for any time or times
if we provide the Accounting and Corporate Regulatory Authority in Singapore with at least 14 days
notice and 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
our shareholders entitlement to receive dividends and other distributions.
125

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 SGX-ST. Our Directors may decline to register any transfer of Shares
which are not fully paid or Shares on which we have a lien. Shares may be transferred by a duly signed
instrument of transfer in a form approved by SGX-ST. Our 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 the applicant pays
a fee which will not exceed S$2 and furnishes any evidence and indemnity that our Directors may
require.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Directors may convene an
extraordinary general meeting whenever it thinks fit and must do so if our shareholders representing not
less than 10% of the total voting rights of all our shareholders request in writing that such a meeting be
held. In addition, two or more of our shareholders holding not less than 10% of our issued share capital
may call a meeting. Unless otherwise required by law or by our Articles, voting at general meetings is
by ordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at that
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 our
Memorandum of Association and our Articles, a change of our corporate name and a reduction in our
share capital, share premium account or capital redemption reserve fund. We must give at least 21
days notice in writing for every general meeting convened for the purpose of passing a special
resolution. Ordinary resolutions generally require at least 14 days notice in writing. The notice must be
given to each of our shareholders who have supplied us with an address in Singapore for the giving of
notices and must set forth the place, the day and the hour of the meeting and, in the case of special
business, the general nature of that business.
Voting Rights
A holder of our ordinary shares is entitled to attend, speak and vote at any general meeting, in person
or by proxy. A proxy does not need to be a shareholder. A person who holds ordinary shares through
the SGX-ST book-entry settlement system will only be entitled to vote at a general meeting as a
shareholder if his name appears on the depository register maintained by CDP 48 hours before the
general meeting. Except as otherwise provided in our Articles, two or more shareholders must be
present in person or by proxy to constitute a quorum of any general meeting. Under our Articles, on a
show of hands, every shareholder present in person and by proxy shall have one vote (provided that
in the case of a shareholder who is represented by two proxies, only one of the two proxies as
determined by that shareholder or, failing such determination, by the Chairman of the meeting in his
sole discretion shall be entitled to vote on a show of hands), and on a poll, every shareholder present
in person or by proxy shall have one vote for 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 by any two shareholders present in
person or by proxy and entitled to vote. In the case of a tie vote, whether on a show of hands or a poll,
the Chairman of the meeting shall be entitled to a casting vote.
126

Dividends
We may, by ordinary resolution of our shareholders, declare dividends at a general meeting, but we
may not pay dividends in excess of the amount recommended by our Board. 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 the section entitled,
Bonus and Rights Issue below. All dividends are paid pro-rata amongst our shareholders in proportion
to the amount paid-up on each shareholders Shares, unless the rights attaching to an issue of any
Share provide otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent
through the post to each shareholder at his registered address. Notwithstanding the foregoing, the
payment by us to CDP of any dividend payable to a shareholder whose name is entered in the
depository register shall, to the extent of payment made to CDP, discharge us from any liability to that
shareholder in respect of that payment.
Bonus and Rights Issue
Our Board may, with the approval of our shareholders at a general meeting, capitalise any reserves or
profits (including profits or monies 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. Our Board may also issue rights to take up additional Shares to other
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.
Takeovers
Under the Singapore Code on Take-overs and Mergers (the Take-over Code) issued by the Authority
pursuant to Section 321 of the Securities and Futures Act, any person acquiring an interest, either on
his own or together with persons acting in concert with him, in 30% or more of our voting shares must
extend a takeover offer for the remaining voting shares in accordance with the provisions of the
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 or presumed to be 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 six-month period.
Liquidation or Other Return of Capital
If we are liquidated or in the event of any other return of capital, holders of our Shares will be entitled
to participate in any surplus assets in proportion to their shareholdings, subject to any special rights
attaching to any other class of shares.
Indemnity
As permitted by Singapore law, our Articles provide that, subject to the Companies Act, our Board and
officers shall be entitled to be indemnified by us against any liability incurred in defending any
proceedings, whether civil or criminal, which relate to anything done or omitted to have been done as
an 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 our Directors and officers against any
liability which by law would otherwise attach to them in respect of any negligence, default, breach of
duty or breach of trust of which they may be guilty in relation to us.
Limitations on Rights to Hold or Vote Shares
Except as described in Voting Rights and Takeovers above, there are no limitations imposed by
Singapore law or by our Articles on the rights of non-resident shareholders to hold or vote ordinary
shares.
127

Minority Rights
The rights of minority shareholders of Singapore-incorporated companies are protected under Section
216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon
application by any of our shareholders, as they think fit to remedy any of the following situations where:
(a)
our affairs are being conducted or the powers of our Directors are being exercised in a manner
oppressive to, or in disregard of the interests of, one or more of the shareholders; or
(b)
we take an action, or threaten to take an action, or our shareholders pass a resolution, or propose
to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or
more of our shareholders, including the applicant.
Singapore courts have a wide discretion as to the reliefs they may grant and those reliefs are in no way
limited to those listed in the Companies Act itself. Without prejudice to the foregoing, the Singapore
courts may:
(a)
direct or prohibit any act or cancel or vary any transaction or resolution;
(b)
regulate the conduct of our affairs in the future;
(c)
authorise civil proceedings to be brought in our name, 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 shareholders shares by our other shareholders or by us
and, in the case of a purchase of shares by us, a corresponding reduction of our share capital;
(e)
in the case of a purchase of shares by the company, provide for a reduction accordingly of the
companys capital; or
(f)
provide that we be wound up.
128
EXCHANGE CONTROLS
EXCHANGE CONTROLS IN MALAYSIA
The following is a description of the exchange controls existing in the jurisdictions in which our Group
operates which may affect the repatriation of capital and the remittance of profits by or to our Company.
Malaysia
The Malaysian government on 1 September 1998 imposed new capital restrictions and pegged the RM
against the USD at RM3.80 to USD1.00. We currently have one subsidiary in Malaysia. RM amounts
cannot be paid by our subsidiary to us in Singapore without the prior approval of the Controller of
Foreign Exchange in Malaysia. Based on the exchange control regulations issued by Bank Negara
Malaysia in September 1999, as subsequently modified in February 2001 and July 2001, foreign funds
and profits made therefrom are subject to the following rules:
(a)
the principal amount of foreign funds brought into Malaysia when repatriated will not attract any
levy; and
(b)
with effect from 2 May 2001, the 10% levy imposed on profits from portfolio investments that are
repatriated within 12 months from the month the profits are realised, is abolished.
Pursuant to the clarification on the New Exchange Control of Malaysia Notices Part 21 issued by
Bank Negara Malaysia on 19 July 2001, remitting banks are no longer required to sight any
documentary evidence upon effecting conversion and/or repatriation of funds in the external accounts.
Banking institutions remitting payments exceeding RM50,000 or its equivalent in foreign currency to a
non-resident will require the resident payer to provide certain information together with supporting
documents in respect of such payments.
129
TAXATION
The following is a discussion of certain tax matters arising under the current tax laws in Singapore and
is not intended to be and does not constitute legal or tax advice. While this discussion is considered to
be a correct interpretation of existing laws in force as at the date of this Prospectus, no assurance can
be given that courts or fiscal authorities responsible for the administration of such laws will agree with
this interpretation or that changes in such laws will not occur. The discussion is limited to a general
description of certain tax consequences in Singapore with respect to ownership of our Shares by
Singapore investors, and does not purport to be a comprehensive nor exhaustive description of all of
the tax considerations that may be relevant to a decision to purchase our Shares. Prospective investors
should consult their tax advisers regarding Singapore tax and other tax consequences of owning and
disposing our Shares. 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 and the
relevant tax authorities or courts could later disagree with the explanations or conclusions set out
below. It is emphasised that neither our Company, our Directors, the Manager, the Underwriter,
the Placement Agent, the Sub-Placement Agent nor any other persons involved in the Invitation
accepts responsibility for any tax effects or liabilities resulting from the subscription for,
purchase, holding or disposal of our Shares.
Singapore 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 or deemed received in Singapore (apart from certain categories of
foreign income received in Singapore on or after 1 June 2003, subject to certain conditions).
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 companys 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-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 or deemed received in Singapore (apart from certain categories of
foreign income received in Singapore on or after 1 June 2003, subject to certain conditions).
The corporate tax rate in Singapore is 22% with effect from the Year of Assessment 2004. In addition,
three-quarters of up to the first S$10,000 of a companys chargeable income and one-half of up to the
next S$90,000 will be exempt from corporate tax. This partial tax exemption is a permanent feature to
the new corporate tax regime which takes effect from the Year of Assessment 2002 onwards. For the
Year of Assessment 2004, the remaining chargeable income after the partial exemption will be taxed
at 22%.
The Finance Minister has announced on 27 February 2004 that the corporate tax rate will be reduced
to 20% for the Year of Assessment 2005.
For a Singapore tax resident individual, the rate of tax will vary according to the individuals
circumstances but is subject to a maximum rate of 22.0% for the Year of Assessment 2004, that is,
calendar year 2003. The Finance Minister has, in the 2004 Budget Statement, reaffirmed the
Governments goal to reduce the top individual marginal tax rate to 20%.
130
TAXATION
Non-resident individuals, subject to certain exceptions, are subject to Singapore income tax only on
income accruing in or derived from Singapore.
The Finance Minister has also announced on 27 February 2004 that all foreign sourced income
received or deemed received in Singapore by a resident individual (apart from those received through
a partnership in Singapore) will be fully exempt from tax with effect from the Year of Assessment 2005.
Dividend Distribution
Singapore moved from the imputation system of taxation to a one-tier corporate system from 1
January 2003. Under this new 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.
Previously under the imputation system, the tax paid by a company at the normal corporate tax rate is
deemed paid by its shareholders. Thus, shareholders receive dividends net of the tax paid by the
Company. Dividends received by either a resident or non-resident of Singapore are not subject to
withholding tax. Shareholders are taxed in Singapore on the gross amount of dividends, which is the
cash amount of the dividend plus an amount normally equivalent to the corporate income tax rate paid
by us on the dividend. The tax paid by us effectively becomes available to shareholders as a tax credit
to offset the Singapore income tax liability.
Franked dividends on our ordinary shares received by a Singapore tax resident individual will be liable
to tax in Singapore.
Franked dividends on our ordinary shares received by a Singapore tax resident company will be liable
to tax in Singapore at the corporate income tax rate. In the absence of any expenses which may be
deductible against the dividends, the Singapore resident company will not receive any tax refund from
the Inland Revenue Authority of Singapore, and vice versa.
A non-tax resident shareholder is effectively taxed on franked dividends at the corporate income tax
rate. Thus, no further Singapore income tax will be imposed on the net dividend received by a
non-resident holder of ordinary shares. Further, the non-resident shareholder will normally not receive
any tax refund from the Inland Revenue Authority of Singapore.
Companies can opt to stay with the imputation of taxation to enable them to make full use of the
unutilised dividend franking credits as at 31 December 2002. Such companies are given a 5 year
transition period from 1 January 2003 to 31 December 2007 to pay franked dividends out of its
unutilised dividend franking credits. During this period, shareholders will continue to receive these
dividends with credits attached and be taxed as mentioned above under the imputation tax system.
Gains on Disposal of the Shares
Singapore does not impose tax on capital gains. However, gains may be construed to be of an income
nature and subject to tax especially if they arise from activities which the Inland Revenue Authority of
Singapore regards as the carrying on of a trade in Singapore.
Any profits from the disposal of our 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 Duty
There is no stamp duty payable on the subscription of our Shares. Stamp duty is payable on the
instrument of transfer of our Shares at the rate of S$2.00 for every S$1,000 market value of our Shares
registered in Singapore.
131
TAXATION
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 transfers of the Shares through the CDP.
Estate Duty
Singapore estate duty is imposed on the value of most immovable property situated in Singapore and
on most movable property wherever situated, owned by individuals who are domiciled in Singapore,
subject to specific exemption limits. However, for individuals who are non-domiciled in Singapore, they
will only be subject to Singapore estate duty on immovable assets situated in Singapore. Our ordinary
shares are considered to be movable property situated in Singapore as we are a company incorporated
in Singapore.
Our ordinary shares held by an individual domiciled in Singapore are subject to Singapore estate duty
upon the individuals death. Singapore estate duty is payable to the extent that the value of our ordinary
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 5.0% on the first S$12,000,000 of the
individuals Singapore chargeable assets and thereafter at 10.0%. Individuals should consult their own
tax advisers regarding the Singapore estate duty consequences of their ownership of our ordinary
shares.
Goods and Services Tax (GST)
The sale of the shares by a GST-registered investor belonging in Singapore to another person
belonging in Singapore is an exempt sale not subject to GST. Any GST (for example, GST on
brokerage) or indirectly incurred by the investor in respect of these shares sold by him will become an
additional cost to the investor.
Where the shares are sold by a GST registered investor in the course of or furtherance of a business
carried on by him to a person belonging outside Singapore, the sale is a taxable sale subject to GST
at 0%. Consequently, any GST directly (for example GST on brokerage) or indirectly incurred by him
in respect of the shares sold by him is available as a credit against the GST chargeable by him on the
sale of any goods or supply of services made by him in the course of or furtherance of his business,
with the result that any excess credit is claimable as a refund from the Inland Revenue Authority of
Singapore.
Services such as brokerage, handling and clearing services rendered by a GST registered person to
an investor belonging in Singapore in connection with the investors purchase or sale of the shares will
be subject to GST at the current rate of 5.0%. Similar services rendered to an investor belonging
outside Singapore will be zero-rated.
132
CLEARANCE AND SETTLEMENT

Upon listing and quotation on SGX-SESDAQ, our Shares will be traded under the book-entry
settlement system of the CDP, and all dealings in and transactions of the Shares through SGXSESDAQ will be effected in accordance with the terms and conditions for the operation of securities
accounts with the CDP, as amended form time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf
of persons who maintain, either directly or through depository agents, securities accounts with CDP.
Persons named as direct securities account holders and depository agents in the depository register
maintained by the CDP, rather than CDP itself, will be treated, under our Articles of Association and the
Companies Act, as members of the Company in respect of the number of Shares credited to their
respective securities accounts.
Persons holding the Shares in securities account with CDP may withdraw the number of Shares they
own from the book-entry settlement system in the form of physical share certificates. Such share
certificates will, however, not be valid for delivery pursuant to trades transacted on SGX-SESDAQ,
although they will be prima facie evidence of title and may be transferred in accordance with our Articles
of Association. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for
each withdrawal of more than 1,000 Shares is payable upon withdrawing the Shares from the
book-entry settlement system and obtaining physical share certificates. In addition, a fee of S$2.00 or
such other amount as our Directors may decide, is payable to the share registrar for each share
certificate issued and a stamp duty of S$10.00 is also payable where our Shares are withdrawn in the
name of the person withdrawing our Shares or S$0.20 per S$100.00 or part thereof of the
last-transacted price where it is withdrawn in the name of a third-party. Persons holding physical share
certificates who wish to trade on SGX-SESDAQ must deposit with CDP their share certificates together
with the duly executed and stamped instruments of transfer in favour of CDP, and have their respective
securities accounts credited with the number of Shares deposited before they can effect the desired
trades. A deposit fee of S$10.00 and another S$10.00 for stamp duty are payable upon the deposit of
each instrument of transfer with CDP. The above fees may be subject to such changes as may be in
accordance with CDPs prevailing policies or the current tax policies that may be in force in Singapore
from time to time.
Transactions in the Shares under the book-entry settlement system will be reflected by the sellers
securities account being debited with the number of Shares sold and the buyers securities account
being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for
the Shares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on the SGX-SESDAQ is payable at the rate of 0.05
per cent. of the transaction value subject to a maximum of S$200 per transaction. The clearing fee,
instrument of transfer deposit fee and share withdrawal fee may be subject to Singapore Goods and
Services Tax of five per cent.
Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on
CDP on a scripless basis. Settlement of trades on a normal ready basis on the SGX-ST generally
takes place on the third Market Day following the transaction date, and payment for the securities is
generally settled on the following business day. CDP holds securities on behalf of investors in securities
accounts. An investor may open a direct account with CDP or a sub-account with a CDP agent. The
CDP agent may be a member company of the SGX-ST, bank, merchant bank or trust company.
133
INDEPENDENT COMPILATION REPORT IN RELATION

TO THE PROFORMA FINANCIAL INFORMATION
13 December 2004
The Board of Directors
(previously known as Etika Corporation Private Limited)
Ocean Building
Singapore 049315
Dear Sirs
INDEPENDENT COMPILATION REPORT IN RELATION TO THE PROFORMA FINANCIAL
INFORMATION
We report on the proforma financial information of the Proforma Group, comprising Etika International
Holdings Limited (previously known as Etika Corporation Private Limited) (Company) and its
subsidiary, Etika Dairies Sdn. Bhd., set out on pages 136 to 161 of the Prospectus dated 13 December
2004, which has been prepared for illustrative purposes only and based on certain assumptions to
show what:
(a)
the financial positions of the Proforma Group as at the date of the balance sheets as at 30
September 2003 and 31 May 2004 would have been if the group structure as at the date of
lodgment of the Prospectus had been in place on those dates;
(b)
the financial results of the Proforma Group for the financial years ended 30 September 2001, 30
September 2002 and 30 September 2003 (FY2001, FY2002 and FY2003) and eight months
financial period ended 31 May 2004 (FP2004) would have been if the group structure as at the
date of the lodgment of the Prospectus had been in place since 1 October 2000; and
(c)
the changes in equity and the cash flows of the Proforma Group for FY2003 and FP2004 would
have been if the group structure as at the date of the lodgment of the Prospectus had been in
place since 1 October 2002.
The proforma financial information of the Proforma Group for FY2001 to FY2003 and FP2004, because
of their nature, may not give a true picture of the Proforma Groups actual financial positions, financial
results, changes in equity and cash flows.
The proforma financial information of the Proforma Group for FY2001 to FY2003 and FP2004 are the
responsibility of the Directors of the Company. Our responsibility is to express an opinion on the
proforma financial information based on our work.
We have carried out our procedures in accordance with Singapore Statement of Auditing Practice 24:
Auditors and Public Offering Documents. Our work, which involved no independent examination of the
underlying financial statements, consisted primarily of comparing the proforma financial information to
the financial statements (or where information is not available, to the accounting records) of the
companies in the Proforma Group and discussing the proforma financial information for FY2001 to
FY2003 and FP2004 with the Directors of the Company.
134
INDEPENDENT COMPILATION REPORT IN RELATION

TO THE PROFORMA FINANCIAL INFORMATION
In our opinion,
(a)
the proforma financial information of the Proforma Group for FY2001 to FY2003 and FP2004,
have been properly prepared in a manner consistent with the format of the audited financial
statements of the subsidiary, Etika Dairies Sdn. Bhd. and the accounting policies of the Proforma
Group, which are in accordance with International Financial Reporting Standards (IFRS); and
(b)
the proforma financial information of the Proforma Group for FY2001 to FY2003 and FP2004 have
been properly compiled on the basis stated in Note 2 to the proforma financial information; and
(c)
the proforma financial information of the Proforma Group for FY2001 to FY2003 and FP2004 have
been properly prepared from the audited financial statements of the subsidiary, Etika Dairies Sdn.
Bhd., which were prepared in accordance with IFRS.
This compilation report has been prepared for inclusion in the Prospectus dated 13 December 2004 in
connection with the Invitation to subscribe for 43,000,000 ordinary shares of S$0.06 each in the capital
of the Company (New Shares) comprising:
(a)
2,000,000 Offer Shares at S$0.21 for each Offer Share by way of public offer; and
(b)
41,000,000 Placement Shares by way of placement, comprising:

(i)
37,500,000 Placement Shares at S$0.21 for each Placement Share; and
(ii)
3,500,000 Reserved Shares at S$0.21 for each Reserved Share,
Yours faithfully
BDO International
Singapore
Lee Joo Hai

Partner
135
ETIKA INTERNATIONAL HOLDINGS LIMITED

PROFORMA FINANCIAL INFORMATION
PROFORMA GROUP BALANCE SHEETS
Notes
Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
23,982
30,020
Deferred tax assets
460
24,442
30,020
Non-current assets
Current assets
Inventories at cost
8,674
13,847
Trade receivables
18,236
20,181
928
1,260
33
34
27,871
35,322
17,937
22,729
Less: Current liabilities

Trade payables
10
2,896
3,387
11
552
537
12
15,150
16,389
36,535
43,042
(8,664)
(7,720)

Less: Non-current liabilities
11
750
902
12
2,414
3,910
Deferred tax liabilities
212
3,164
5,024
Net assets
12,614
17,276
12,614
17,276
136

PROFORMA GROUP PROFIT AND LOSS ACCOUNTS
Notes
Revenue
13
Cost of goods sold

Gross profit
Other operating income
(Based on
unaudited
management
financial
statements
presented for
comparative
purpose only) Eight
months financial
period ended
Financial years ended 30 September
Eight months
financial
period ended
2001
2002
2003
31 May 2004
31 May 2003
RM000
RM000
RM000
RM000
RM000
71,434
71,121
76,993
68,231
47,911
(64,243)
(59,467)
(60,649)
(55,789)
(37,797)
7,191
11,654
16,344
12,442
10,114
98
35
10
16
Administrative expenses
(2,020)
(2,003)
(2,606)
(1,916)
(1,770)
Marketing and distribution expenses
(4,715)
(4,688)
(5,559)
(3,694)
(3,594)
Other operating expenses
(1,595)
(1,360)
(1,198)
(759)
(760)
14
(1,041)
3,638
6,991
Finance costs
15
(1,674)
(1,587)
(1,483)
(2,715)
2,051
5,508

Income tax
Earnings per Share (sen)(1)
16
2,723
(762)
(1,501)
6,089
(755)
5,334
(672)
3,996
(1,008)
2,988
(814)
1,289
4,007
4,662
2,174
0.01
1.00
3.12
3.62
1.69
Note:
(1)
Earnings per Share for the financial years and period under review have been computed based on the pre-Invitation share
capital of 128,630,152 ordinary shares of S$0.06 each.
137

PROFORMA GROUP STATEMENT OF CHANGES IN PROFORMA SHAREHOLDERS EQUITY
Proforma
share capital
RM000
Proforma
accumulated
(losses)/
profits
RM000
Total
RM000
Balance as at 1 October 2002
16,286
(7,679)
8,607
Net profit for the financial year
4,007
4,007
Balance as at 30 September 2003
16,286
(3,672)
12,614
16,286
(3,672)
12,614
4,662
4,662
16,286
990
17,276
Net profit for the financial period

Balance as at 31 May 2004
138

PROFORMA GROUP CASH FLOW STATEMENTS
Financial year
ended
30 September 2003
RM000
Eight months
financial
period ended
31 May 2004
RM000
5,508
5,334
Allowance made for doubtful trade receivables
569
294
Depreciation of property, plant and equipment
1,541
1,150
Interest expenses
1,280
589
57
42
8,955
7,409
Inventories
(3,602)
(5,173)
Trade receivables
(1,527)
(2,239)
(303)
(332)
Cash flows from operating activities

Profit before income tax
Adjustments for:
Plant and equipment written off

Operating profit before working capital changes
Working capital changes:

Trade payables
367
4,792
414
491
4,304
4,948
Cash from operations

Interest paid
(496)
Net cash from operating activities
(231)
3,808
4,717
Purchase of property, plant and equipment (Note A)
(1,878)
(6,650)
Net cash used in investing activity
(1,878)
(6,650)
Cash flows from investing activity
Cash flows from financing activities

Drawdown of bank borrowings net
562
Repayments of hire purchase obligations
(1,246)
Repayments to a related party
(14)
Interest paid
(784)
Net cash (used in)/from financing activities
(1,482)
Increase/(Decrease) in cash and cash equivalents
448
2,060
(443)
(358)
1,259
(674)
Cash and cash equivalents at beginning of financial year/

period
(2,945)
(2,497)
Cash and cash equivalents at end of financial year/period

(Note B)
(2,497)
(3,171)
139

PROFORMA GROUP CASH FLOW STATEMENTS (Continued)
A.
Purchase of property, plant and equipment

For the financial year ended 30 September 2003 and eight months financial period ended 31 May
2004, the Proforma Group acquired property, plant and equipment as follows:
Financial year
ended
30 September 2003
RM000
Eight months
financial
period ended
31 May 2004
RM000
Additions of property, plant and equipment
2,932
7,230
Acquired under hire purchase agreements
(1,054)
Cash payments to purchase property, plant and equipment
B.
1,878
(580)
6,650
Cash and cash equivalents

Cash and cash equivalents included in the Proforma Group cash flow statements comprise the
following balance sheet amounts:
Balance as at
30 September 2003
RM000
33
Balance as at
31 May 2004
RM000
34
Bank overdrafts secured
(2,530)
(3,205)
Cash and cash equivalents at end of financial year/period
(2,497)
(3,171)
140

NOTES TO THE PROFORMA FINANCIAL INFORMATION
These notes form an integral part of and should be read in conjunction with the proforma financial
information.
1.
General corporate information

Etika International Holdings Private Limited (previously known as Etika Corporation Private
Limited) (Company) was incorporated in Singapore on 23 December 2003 under the Singapore
Companies Act, Chapter 50 (Act) as a private limited company under the name Etika
Corporation Private Limited. The Company subsequently changed its name to Etika International
Holdings Private Limited on 6 July 2004. In connection with its conversion into a public limited
company, the Company changed its name to Etika International Holdings Limited on 10
November 2004. As at the date of incorporation, the authorised share capital of the Company was
S$100,000 comprising 100,000 ordinary shares of S$1.00 each and its issued and paid-up share
capital was S$3.00 comprising 3 ordinary shares of S$1.00 each.
The address of the Companys registered office is 10 Collyer Quay, #19-08 Ocean Building,
Singapore 049315. The Company does not have a place of business in Singapore as at the date
of the Prospectus as its principal activity is that of an investment holding company.
The principal activity of the Company is that of investment holding.
The principal activities of the subsidiary are set out in Note 3 to the proforma financial information.
The number of employees in the Proforma Group as at 30 September 2003 and 31 May 2004 was
203 and 264 respectively (30 September 2002: 176 and 30 September 2001: 180).
2.
Basis of preparation of proforma financial information

Restructuring exercise
The proforma financial information was compiled based on the Restructuring Exercise to
rationalise and streamline the corporate structure of the Proforma Group, resulting in the
Company becoming the holding company of the Proforma Group.
Pursuant to a Sale and Purchase Agreement dated 5 November 2004 (which was rescinded on
5 November 2004 and superseded by Share Transfer Agreements dated 5 November 2004 and
8 November 2004 respectively) between the Company and Dato Jaya J B Tan, Kamal Y P Tan
and Tajuddin Joe Hok Tan, Abd Hamid bin Mohamed, Mah Weng Choong, Kwong Yuen Seng,
Khor Sin Kok and Chung Chee Fook (Sellers), the Company acquired the entire issued and
paid-up share capital of Etika Dairies Sdn. Bhd. (EDSB) from the Sellers for a consideration of
S$7,717,806, based on the audited net book value of EDSB as at 31 May 2004. The consideration
was satisfied by the issue and allotment of an aggregate of 128,630,102 fully-paid new ordinary
shares of S$0.06 each in the capital of the Company to the Sellers.
The Share Transfer Agreement dated 5 November 2004 was for the sale of 1,256 shares in the
issued and paid-up capital of EDSB to the Company for a total consideration of S$596 satisfied
by the issue and allotment of 9,930 fully-paid ordinary shares of S$0.06 each in the capital of the
Company to the Sellers.
The Share Transfer Agreement dated 8 November 2004 was for the sale of 16,284,459 shares in
the issued and paid-up capital of EDSB to the Company for a total consideration of S$7,717,210
satisfied by the issue and allotment of 128,620,172 fully-paid ordinary shares of S$0.06 each in
the capital of the Company to the Sellers.
Basis of preparation
The objective of the proforma financial information of the Proforma Group is to show what the
historical information might have been had the Proforma Group as described in Note 3 to the
proforma financial information been in place throughout the financial years/period under review
141

NOTES TO THE PROFORMA FINANCIAL INFORMATION (Continued)
2.
Basis of preparation of proforma financial information (Continued)

The proforma financial information of the Proforma Group is expressed in Ringgit Malaysia (RM)
which is the measurement currency of the Proforma Group. The proforma financial information
has been prepared in accordance with the historical cost convention.
The proforma financial information has been prepared for illustrative purposes only. These are
prepared in accordance with the accounting policies of the Proforma Group as set out in Note 4
to the proforma financial information. The proforma financial information are prepared based on
certain assumptions to show what:
(a)
the financial positions of the Proforma Group as at the date of the balance sheets as at 30
September 2003 and 31 May 2004 would have been if the group structure as at the date of
lodgment of the Prospectus had been in place on those dates;
(b)
the financial results of the Proforma Group for the financial years ended 30 September 2001,
30 September 2002, 30 September 2003 and eight months financial period ended 31 May
2004 would have been if the group structure as at the date of the lodgment of the Prospectus
had been in place since 1 October 2000; and
(c)
the changes in equity and the cash flows of the Proforma Group for the financial year ended
30 September 2003 and eight months financial period ended 31 May 2004 would have been
if the group structure as at the date of the lodgment of the Prospectus had been in place
However, the proforma financial information of the Proforma Group because of their nature may
not give a true picture of the actual financial positions, financial results, changes in equity and
cash flows of the Proforma Group, and is not necessarily, indicative of the results of the
operations, changes in equity and cash flows or the related effects on the financial positions that
would have been attained had the Proforma Group actually existed earlier.
The unaudited proforma financial information is compiled based on the unaudited management
financial statements of the Company for the period from 23 December 2003 (date of
incorporation) to 31 May 2004, which have been prepared in accordance with International
Financial Reporting Standards (IFRS) and audited financial statements of EDSB for the financial
years ended 30 September 2001, 30 September 2002, 30 September 2003 and eight months
financial period ended 31 May 2004, which have been prepared in accordance with IFRS.
The unaudited proforma financial information for the eight months ended 31 May 2003 is compiled
based on the unaudited management financial statements of EDSB.
All material intra-group transactions and balances have been eliminated in the preparation of the
proforma financial information.
In arriving at the unaudited proforma financial information, no material adjustment was required
to be made to the information used in the preparation of the proforma financial information.
Auditors of Proforma Group
BDO International, Certified Public Accountants, Singapore, has been appointed the auditors of
the Company subsequent to the eight months financial period ended 31 May 2004.
142

2.
Basis of preparation of proforma financial information (Continued)

Auditors of Proforma Group (Continued)
The audited financial statements of the Company for the financial period from 23 December 2003
(date of incorporation) to 30 September 2004 was not subject to any qualifications except an
emphasis of matter stating that the financial statements of the Company have been prepared on
a going concern basis assuming financial support from the shareholders who are also Directors
of the Company and their abilities to provide such financial support.
BDO Binder, Chartered Accountants, Kuala Lumpur, Malaysia, a member of Malaysian Institute of
Accountant, has audited the statutory financial statements of EDSB, drawn up in accordance with
applicable approved accounting standards in Malaysia and the provisions of the Malaysia
Companies Act, 1965, in accordance with approved standards on auditing in Malaysia for the
financial years ended 30 September 2001, 30 September 2002 and 30 September 2003. The
auditors reports in these financial statements were unqualified.
For purpose of this compilation report, BDO Binder, Chartered Accountants, Kuala Lumpur,
Malaysia, a member of Malaysian Institute of Accountant, has performed an independent audit on
the financial statements of EDSB for the financial years ended 30 September 2001, 30 September
2002, 30 September 2003 and eight months financial period ended 31 May 2004. The auditors
reports in these financial statements were unqualified.
Notwithstanding the unqualified audit reports being issued, we draw attention to:
3.
(a)
Note 20(a) to the proforma financial information concerning the credit risk of trade
receivables which have been outstanding for more than 90 days; and
(b)
as mentioned on pages 69 and 70 of the Prospectus under Working Capital Management

and Bank Borrowings and Gearing on the management of working capital and debt levels,
the Proforma Group has a negative working capital position as at 30 September 2003 and
31 May 2004 of RM 8.7 million and RM 7.7 million respectively. In the opinion of the
Directors, they are confident that the Proforma Group would be able to meet working capital
needs and service debt obligations as and when they fall due without foregoing any
necessary future capital expenditure based on positive cash flows from operations and
existing bank facilities.
Details of Proforma Group

The particulars of the subsidiary included in the preparation of the proforma financial information
of the Proforma Group are as follows:
Name of subsidiary
Date and place

of incorporation
and operations Principal activities
22 March 1996,
Malaysia
Engaged in the manufacturing and

distribution of milk products and the
repacking and distribution of
complementary products
143
Issued and
paid-up share
capital as at
31 May 2004
Effective
equity
interests held
by the
Proforma
Group
RM16,285,715
100%

4.
Significant accounting policies

(a)
Basis of proforma consolidation

The unaudited proforma financial information for the financial years ended 30 September
2001, 30 September 2002, 30 September 2003 and eight months financial period ended 31
May 2004 are prepared for illustrative purposes only and are prepared on the basis detailed
in Note 2 to the proforma financial information above.
The proforma financial information includes the financial statements of the Company and its
subsidiary made up to the end of each financial year/period. The financial statements of the
subsidiary are included in the proforma financial information on the basis that the Proforma
Group had been in existence since 1 October 2000. All material intra-group balances and
transactions are eliminated on consolidation and the proforma financial information reflects
external transactions only.
(b)
Subsidiary
A subsidiary is a company in which the Proforma Group, directly or indirectly, holds more
than half of the issued share capital, or controls more than half of the voting power or
controls the composition of the board of directors.
(c)

Property, plant and equipment are stated at cost less accumulated depreciation and
impairment loss, if any.
The cost of property, plant and equipment comprises its purchase price and any direct
attributable costs of bringing the property, plant and equipment to working condition for its
intended use. Expenditure for additions, improvements and renewals are capitalised and
expenditure for maintenance and repairs are charged to the proforma group profit and loss
accounts. Upon disposal, the difference between the disposal proceeds and the carrying
amount is charged or credited to the proforma group profit and loss accounts.
Depreciation is calculated on the straight-line method so as to write off the cost of the
property, plant and equipment over their estimated useful lives as follows:
Years
Factory building
40
Motor vehicles
6.25
5 to 15
Furniture and fittings
10
Renovation
10
No depreciation is provided on freehold land.

Fully depreciated assets are retained in the proforma financial information until such time
when they are no longer in use.
144

4.
Significant accounting policies (Continued)

(d)
Impairment of assets
The carrying amounts of the Proforma Groups non-current assets are reviewed at each
balance sheet date to determine whether there is any indication of impairment. If any such
indication exists, the assets recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of the asset or its
cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in
the proforma group profit and loss accounts.
The recoverable amount is the higher of an assets net selling price and value in use. The
net selling price is the amount obtainable from the sale of an asset in an arms length
transaction. Value in use is the present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal at the end of its useful life.
Recoverable amounts are estimated for individual assets or, if it is not possible, for the
cash-generating unit.
An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amounts. An impairment loss is reversed only to the extent that
the assets carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss has been recognised.
Reversals of impairment losses are recognised in the proforma group profit and loss
accounts.
(e)
Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined on a first-in, first-out basis and comprises all costs of purchase and
other related charges incurred in bringing the inventories to their present location and
condition. In the case of finished goods, cost includes cost of raw materials, direct labour and
an appropriate portion of manufacturing overheads.
Net realisable value is the estimated selling price at which the inventories can be realised in
the normal course of business after allowing for the costs of realisation. Allowance is made
for obsolete, slow-moving and defective inventories.
(f)
Trade and other receivables

Trade and other receivables are recognised and carried at original invoiced amount less
allowance for doubtful receivables.
Known bad receivables are written off and specific allowance for doubtful receivables is
made when collection for the full amount is no longer probable.
(g)
Trade and other payables

Trade and other payables are carried at cost which are the fair value of the consideration to
be paid in the future for goods and services received, whether or not billed to the Proforma
Group.
145

4.

(h)
Related parties
For the purpose of this proforma financial information, parties are considered to be related
to the Proforma Group if the Proforma 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 Proforma Group and the party are subject to common
control or common significant influence.
Related parties may be individuals or other entities.
(i)
Cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances net of bank overdrafts.
(j)
Hire purchase
Hire purchase agreement in which the Proforma Group assumes substantially all the risks
and rewards incidental to ownership of the financed item are classified as hire purchase.
Assets acquired by way of hire purchases are capitalised at an amount equal to the lower
of its fair value and the present value of the minimum hire purchase payments at the
inception of the hire purchase term, less accumulated depreciation and impairment losses,
if any. Hire purchase payments are apportioned between the finance charges and reduction
of the hire purchase liability so as to achieve a constant rate of interest on the remaining
balance of liability. Finance charges are charged to the proforma group profit and loss
accounts.
Capitalised assets are depreciated over the shorter of the estimated economic useful life of
the assets or the lease term.
(k)
Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised at cost.
(l)
Income tax
Income tax for the financial year/period comprises current and deferred tax. Income tax is
recognised in the proforma group profit and loss accounts except to the extent that it relates
to items recognised directly in equity, in which case such income tax is recognised in
proforma group shareholders equity.
Current tax is the expected tax payable on the taxable income for the financial year, using
tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to
income tax payable in respect of previous financial years.
Deferred tax is provided using the liability method, providing for temporary differences at the
balance sheet date between the carrying amounts and tax bases of assets and liabilities in
the financial statements. The amount of deferred tax provided is based on the 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.
146

4.

(l)
Income tax (Continued)

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.
(m) Share capital

Ordinary share capital is recognised at the fair value of the consideration received by the
Company.
(n)
Financial instruments
Financial assets and liabilities carried on the balance sheets include cash and cash
equivalents, trade and other receivables, trade and other payables, related party balances,
hire purchase payables and bank borrowings. The accounting policies on recognition and
measurement of these items are disclosed in the respective accounting policies associated
with each item.
(o)
Revenue recognition
Revenue from sale of products is recognised upon passage of title to customers, which
generally coincides with their delivery and acceptance.
(p)
Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into RM at rates of
exchange approximate to those ruling at the balance sheet date. Transactions in foreign
currencies during the financial years/period are translated at rates of exchange approximate
to those ruling on the transaction dates. Exchange differences arising from the above are
recognised in the proforma group profit and loss accounts.
In the preparation of the proforma financial information, the assets and liabilities of the
Company are translated into RM at rates of exchange approximate to those ruling at the
balance sheet date except for share capital and reserves which are translated at historical
rates for the respective financial years. The results of the Company are translated into RM
at the average exchange rate for the financial years/period. Exchange differences arising
due to such translations are taken directly to the foreign currency translation reserve.
(q)
Operating leases
Leases where lessor effectively retains substantially all risks and benefits of ownership of
the leased assets are classified as operating leases.
Operating lease payments are charged to the proforma group profit and loss accounts on a
straight-line basis over the term of the lease.
When an operating lease is terminated before the lease term has expired, any payment
required to be made to the lessor by way of penalty is recognised as an expense in the
financial year/period in which the termination take place.
147

4.

(r)
Employee benefits
Defined contribution plan
Contributions to defined contribution plans are recognised as an expense in the proforma
group profit and loss accounts in the same financial year as the employment that gives rise
to the contributions.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. An
accrual is made for the estimated liability for annual leave as a result of services rendered
by employees up to the balance sheet date.
(s)
Finance costs
Interest expenses and similar charges are expensed in the proforma group profit and loss
accounts in the financial year/period in which they are incurred.
(t)
Segment reporting
A segment is a distinguishable component of the Proforma Groups business that is engaged
either in providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which is subject
to risks and rewards that are different from those of other segments.
Segment information is presented in respect of the Proforma Groups geographical
segment. The geographical segment is based on the Proforma Groups geographical
locations of customers, assets and liabilities.
Inter-segment pricing is determined on an arms length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated items mainly comprise
indivisible infrastructure, support and software costs necessary to provide the service in any
geographical segment and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the financial year/period to
acquire segment assets that can be expected to be used for more than one financial year.
(u)
Preliminary expenses
Preliminary expenses are fully written off in the financial year/period in which they are
incurred.
148

5.
Freehold
land
RM000
Factory
building
RM000
Motor
vehicles
RM000
Office and
factory
equipment
RM000
Furniture
and fittings
RM000
Renovation
RM000
Total
RM000
6,830
5,615
2,234
12,999
293
376
28,347
Additions
414
2,437
28
44
2,932
Written off
6,830
5,624
2,648
15,371
321
420
31,214
508
1,235
3,774
76
106
5,699
Depreciation charged for the financial year
141
361
970
30
39
1,541
Written off
649
1,596
4,736
106
145
7,232
6,830
4,975
1,052
10,635
215
275
23,982
Cost
149
(65)
(65)
(8)
(8)
Net book value

As at 30 September 2003

5.
Property, plant and equipment (Continued)
Freehold
land
RM000
Factory
building
RM000
Motor
vehicles
RM000
Office and
factory
equipment
RM000
Furniture
and fittings
RM000
Renovation
RM000
Total
RM000
6,830
5,624
2,648
15,371
321
420
31,214
Additions
1,418
51
683
5,035
24
19
7,230
8,248
5,675
3,331
20,364
345
439
38,402
649
1,596
4,736
106
145
7,232
Depreciation charged for the financial year
94
277
729
22
28
1,150
743
1,873
5,465
128
173
8,382
8,248
4,932
1,458
14,899
217
266
30,020
Cost
150
Written off
(42)
(42)
Net book value

As at 31 May 2004

5.
Property, plant and equipment (Continued)

As at the balance sheet date, the land title has not been issued by the relevant authorities.
As at 30 September 2003, the Proforma Group had motor vehicles, and office and factory
equipment purchased under hire purchase agreements with net book values of RM592,219 and
RM2,325,869 respectively. As at 31 May 2004, the Proforma Group had motor vehicles, and office
and factory equipment purchased under hire purchase agreements with net book values of
RM1,157,942 and RM1,313,254 respectively.
As at 30 September 2003 and 31 May 2004, certain of the property, plant and equipment with net
book values of RM21,131,737 and RM27,548,777 respectively have been charged to a licenced
bank in Malaysia for banking facilities granted to the Proforma Group as set out in Note 12 to the
proforma financial information.
Certain motor vehicles of the Proforma Group, with net book values as at 30 September 2003 and
31 May 2004 of RM38,519 and RM746,953 respectively are registered under the names of certain
Directors of the subsidiary who are holding the motor vehicles in trust for the Proforma Group.
6.
Deferred tax assets/(liabilities)

Recognised deferred tax assets/(liabilities) are attributable to the following:
Balance as at
30 September 2003
RM000
Balance at beginning of financial year/period
Recognised in proforma group profit and loss account
Balance at end of financial year/period
Balance as at
31 May 2004
RM000
1,961
460
(1,501)
(672)
460
(212)
Deferred tax assets/(liabilities) arise as a result of:

(1,499)
Unabsorbed capital allowances

Unutilised tax losses
Other deductible temporary differences
(1,854)
201
1,646
1,561
112
81
460
(212)
As at 30 September 2003 and 31 May 2004, the Proforma Group had unutilised tax losses of
approximately RM5,878,000 and RM5,169,000 respectively and unabsorbed capital allowances
of approximately RM605,000 and RM Nil respectively which are available for set-off against any
future taxable profits, subject to the agreement by the relevant tax authority and with provisions
of the tax legislation of the respective countries in which the Proforma Group operates.
151

7.
Inventories at cost
Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
Finished goods
3,925
4,638
Raw materials
4,379
8,703
370
506
8,674
13,847
Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
19,093
21,332
Packaging materials
8.
Trade receivables
Trade receivables
Allowance for doubtful trade receivables
9.
(857)
(1,151)
18,236
20,181
Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
Other receivables
Deposits
Prepayments
Advances to suppliers
Amounts due from related parties - non trade
25
33
189
146
87
350
627
713
18
928
1,260
The amounts due from related parties are unsecured, interest-free and have no fixed terms of
repayment.
152

10. Other payables and accruals

Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
Other payables
1,773
2,478
Accrued operating expenses
1,109
896
14
13
2,896
3,387
Amounts due to related parties - non trade
The amounts due to related parties are unsecured, interest-free and have no fixed terms of
repayment.
11.

Minimium
lease
payments
RM000
Future
finance
charges
RM000
Present
value of
payments
RM000

Within one financial year
552
158
710
After one financial year but within five financial years
750
175
925
1,302
333
1,635
Within one financial year
537
125
662
After one financial year but within five financial years
902
177
1,079
1,439
302
1,741
For the financial year ended 30 September 2003 and eight months financial period ended 31 May
2004, the effective interest rates range from 6.98% per annum to 12.37% per annum and from
6.09% per annum to 11.52% per annum respectively.
153

12. Bank borrowings secured

Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
2,530
3,205
11,192
11,398
1,428
1,786
15,150
16,389
2,414
3,910
17,564
20,299
2,856
2,398
933
475
53
2,823
3,842
5,696
Financial year
ended
30 September 2003
%
Eight months
financial
period ended
31 May 2004
%
Repayable within one financial year

Bank overdrafts
Bankers acceptance
Term loans
Repayable after one financial year

Term loans
Term loans
Term loan 1
repayable by 120 monthly instalments of RM73,999 each
commencing 1 July 2000
Term loan 2
commencing 1 April 2000
Term loan 3
upon full drawdown of the loan of RM3,200,000
Effective interest rates

Bank overdraft
7.758.15
7.75
Bankers acceptance
2.662.70
2.642.93
Term loans
7.758.15
7.75
As at 30 September 2003 and 31 May 2004, the Proforma Group has banking facilities amounting
to RM24,588,741 and RM23,673,159 respectively and RM17,563,559 and RM20,298,694
respectively of the Proforma Groups banking facilities had been utilised.
154

12. Bank borrowings secured (Continued)

Bank borrowings of the Proforma Group are secured by:
(a)
supplemental loan agreement cum assignment over land and factory building currently
being developed into an industrial park held under a Master Title No. Geran 24082, Lot.
7215, Mukim of Kapar, Daerah of Kelang, Selangor Darul Ehsan;
(b)
first to eighth, debenture on the subsidiary companys past, present, fixed and floating
assets (excluding machineries and vehicles financed by hire purchase agreements); and
(c)
joint and several guarantees by certain Directors of the Company and its subsidiary.
13. Revenue
Revenue of the Proforma Group represents invoiced value of goods sold less goods return
inwards and discount allowed net of goods and services tax. Proforma Group turnover is in
respect of external transactions only.
14. (Loss)/Profit from operations
The above is arrived at:
2001
2002
2003
RM000
RM000
RM000
Eight months
financial
period ended
31 May 2004
RM000
After charging:
Allowance made for doubtful trade receivables
48
241
569
294
Bad trade receivables written off
900
529
Costs of defined contributon plans included in

personnel expenses
438
449
538
406
Depreciation of property, plant and equipment
1,397
1,446
1,541
1,150
699
566
866
588
20
20
16
37
Inventories written off
765
89
47
51
Personnel expenses*
4,559
4,444
5,472
4,359
Plant and equipment written off
61
57
42
Rental of premises
86
84
80
64
Rental of storage
31
42
54
15
Directors remuneration included in personnel

expenses
Directors of subsidiary
Directors benefits in kind
Directors of subsidiary
and crediting:
Foreign exchange gain
* These include the amounts shown as Directors remuneration.
155

15. Finance costs

2001
2002
2003
RM000
RM000
RM000
Bank charges
Eight months
financial
period ended
31 May 2004
RM000
171
183
190
145
13
21
hire purchase obligations
373
401
418
125
bank overdraft
272
266
213
42
bankers acceptance
278
251
283
188
term loans
580
477
366
234
1,674
1,587
1,483
755
Commitment fees
Interest expense
16. Income tax

2001
2002
2003
RM000
RM000
RM000
Eight months
financial
period ended
31 May 2004
RM000
Deferred tax
current financial year/period
prior financial years
(624)
762
1,501
672
(2,099)
(2,723)
762
1,501
672
Reconciliation of effective tax rate

2001
2002
2003
RM000
RM000
RM000
Eight months
financial
period ended
31 May 2004
RM000
(2,715)
2,051
5,508
5,334
(760)
574
1,542
1,494
Expenses not deductible for tax

purposes
160
205
Tax incentives
(24)
(17)
(41)
(17)
(805)
(2,099)
(2,723)
762
1,501
672
Income tax calculated at Malaysias

statutory tax rate of 28%
Utilisation of reinvestment allowance

Underprovision in prior financial years
156

17. Dividends
The subsidiary has no tax credit under Section 108 of the Malaysia Income Tax Act, 1967 to frank
the payment of net dividends out of its accumulated profits as at 31 May 2004.
Under the Malaysia full imputation system, the subsidiary may distribute its accumulated profits
without incurring additional tax liability, if and only if, an equal amount of income tax, past or
present, has been paid.
18. Commitments
(a)
Forward foreign exchange contracts

As at 30 September 2003 and 31 May 2004, the proforma group has outstanding forward
foreign exchange contracts to sell United States dollars (USD) and buy approximately
RM1,598,000 and RM5,847,000 respectively at exchange rates ranging from 3.7995 to
3.8080. These contracts mature within one to four months from their respective
commencement dates.
(b)
Capital commitments
Capital commitments in respect of property, plant and

equipment contracted but not provided for
Balance as at
30 September 2003
RM000
Balance as at
31 May 2004
RM000
2,313
1,395
19. Segment reporting

Business segments
The Proforma Groups only principal business segment is manufacture and distribution of milk
products and repack and distribution of complementary products and therefore, no business
segment information is presented.
Geographical segments
The Proforma Groups business segment operates in three main geographical areas. Sales
revenue is based on the country in which the customer is located. Segment assets consist
primarily of property, plant and equipment, inventories, receivables and cash and bank balances.
Capital expenditure comprises additions to property, plant and equipment. Segment assets and
capital expenditure are shown by the geographical area in which the assets are located.
Malaysia
RM000
ASEAN
RM000
Others
RM000
Total
RM000
55,928
7,697
7,809
71,434
Financial year ended 30 September 2001

Revenue
157

19. Segment reporting (Continued)

Geographical segments (Continued)
Malaysia
ASEAN
Others
Total
RM000
RM000
RM000
RM000
65,545
4,317
1,259
71,121
67,245
6,352
3,396
76,993
2,932
2,932
47,212
4,531
16,488
68,231
7,230
7,230
50,918
240
695
51,853
63,551
214
1,577
65,342

Revenue
Revenue
Capital expenditure
Eight months financial period ended 31 May
2004
Revenue
Capital expenditure
Segment assets
Segment assets
20. Financial risk management

The Proforma Group is exposed to financial risks arising from the normal course of business. The
Proforma Group does not hold or issue derivative financial instruments for trading purposes or to
hedge against fluctuation, if any, in interest rates.
(a)
Credit risk
The Proforma Group has a credit policy in place and the exposure to credit risk is monitored
on an ongoing basis. The credit risk is controlled by the application of credit approvals, limits
and monitoring procedures.
As at 30 September 2003 and 31 May 2004, the Proforma Group has trade receivables of
RM2,995,149 and RM2,302,288 respectively, which have been outstanding for more than 90
days. Other than as mentioned, the Proforma Group has no significant concentration of
credit risk.
The Directors represented that while improvement and enhancement to credit control
procedures are ongoing and continuous, it is acceptable industry norm for some customers
to pay after their credit terms. As such the amounts outstanding do not necessarily represent
unrecoverable debts. In the opinion of the Directors, all bad and doubtful receivables
requiring allowance have been adequately provided for in the proforma financial information
as at 31 May 2004.
158

20. Financial risk management (Continued)

(a)
Credit risk (Continued)

The maximum exposure to credit risk is represented by the carrying amount of each financial
asset in the balance sheets.
(b)
Interest rate risk

The Proforma Group finances its operations through a mixture of accumulated profits and
bank borrowings. The Proforma Group borrows in local currencies at both fixed and floating
rates of interest to manage the Proforma Groups exposure to interest rate fluctuations. The
objectives for the mix between fixed and floating rate borrowings are set to reduce the
impact of an upward change in interest rates while enabling benefits to be enjoyed if interest
rates fall.
The Proforma Groups exposure to market risk for changes in interest rates relates primarily
to bank borrowings and hire purchase arrangements.
(c)
Foreign currency risk

The Proforma Group has minimum transactional exposures from its external trading
activities where the currency denomination is in USD as USD is pegged at USD1.00 to
RM3.80.
Exposures may arise from purchases of materials where the currency denomination is not
in USD or RM. The Proforma Groups policy is to enter into forward currency contracts
whenever is necessary.
The Proforma Group incurs foreign currency risk on transactions and balances that are
denominated in currencies other than RM. The currencies giving rise to this risk are primarily
United States dollars and Singapore dollars.
(d)
Fair values
The carrying amounts of the financial assets and liabilities in the financial statements
approximate their fair values.
(e)
Liquidity risk
The Proforma Group seeks to achieve a balance between certainty of funding, a flexible,
cost-effective borrowing structure and continuity of funding. This is to ensure that all
projected net borrowing needs are covered by committed facilities. Also, the objective for
debt maturity is to ensure that the amount of debt maturity in any financial year is not beyond
the Proforma Groups means to repay and refinance.
Short-term flexibility is achieved by overdraft facilities.
159

21. Significant related parties transactions

In addition to related parties information disclosed elsewhere in the proforma financial
information, the following were significant related parties transactions between the Proforma
Group and its related parties during the financial years/period at rates and terms agreed between
the parties:

2001
2002
2003
RM000
RM000
RM000
Insurance premium expenses paid to a related
party
Eight months
financial
period ended
31 May 2004
RM000
227
191
217
238
70
Acquisition of a motor vehicle from a related

party at net book value
22. Subsequent events

Subsequent to 31 May 2004, the following events have taken place:
(a)
on 8 July 2004, its subsidiary, EDSB entered into a sales and purchase agreement with a
third party to acquire a piece of industrial lot located at Meru Industrial Park at a
consideration of RM2,962,080;
(b)
at an annual general meeting (AGM) held on 22 October 2004, the Shareholders

approved, inter alia, the following:
(c)
(i)
an increase in the authorised share capital of the Company from S$100,000

comprising 100,000 ordinary shares of S$1.00 each to S$48,000,000 comprising
48,000,000 ordinary shares of S$1.00 each; and
(ii)
the consolidation of three ordinary shares of par value S$1.00 each in the authorised
and issued share capital of the Company into one ordinary share of par value S$3.00
each (Share Consolidation) and the subsequent division thereof into fifty ordinary
shares of par value S$0.06 each (Sub-division);
at an extraordinary general meeting (EGM) on 8 November 2004, the Shareholders

approved, inter alia, the following:
(i)
the conversion of the Company into a public company limited by shares and the
change of the name in connection therewith to Etika International Holdings Limited;
(ii)
the adoption of a new set of Articles of Association;
(iii)
the issue of up to 43,000,000 New Shares pursuant to the Invitation which when fully
paid, allotted and issued, will rank pari passu in all respect with the existing issued
Shares;
160

22. Subsequent events (Continued)

(iv) the establishment of the ESOS, the rules of which are set out in Appendix E of this
Prospectus; and
(v)
(d)
that the Directors be authorised, pursuant to Section 161 of the Companies Act and the
Articles of Association of the Company, to allot and issue new Shares in the Company
(whether by way of rights, bonus or otherwise) or convertible securities at any time and
upon such terms and conditions whether for cash or otherwise with such rights and
restrictions and for such purposes and to such persons as the Directors shall in their
absolute discretion deem fit, provided that the aggregate number of Shares and
convertible securities to be issued pursuant to such authority shall not exceed 50 per
cent of the issued share capital of the Company, of which the aggregate number of
Shares and convertible securities issued other than on a pro-rata basis to the existing
Shareholders of the Company shall not exceed 20 per cent of the issued share capital
of the Company (the percentage of issued share capital being based on the
post-Invitation issued share capital of the Company after adjusting for new Shares
arising from the conversion or exercise of any convertible securities or employee share
options on issue at the time such authority is given, and for any consolidation or sub
division of shares), unless revoked or varied by the Company in general meeting, such
authority shall continue to be in force until the conclusion of the next AGM or the date
by which the next AGM is required by law to be held, whichever is earlier.
as at 9 November 2004, the authorised share capital of the Company was S$48,000,000
comprising 800,000,000 Shares and the issued and paid-up capital of the Company was
S$7,717,809 comprising 128,630,152 Shares of S$0.06 each pursuant to the Restructuring
Exercise as described in Note 2 to the proforma financial information.
23. Approval of proforma financial information

The proforma financial information is approved by the Board of Directors on 13 December 2004.
161
GENERAL AND STATUTORY INFORMATION

INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
1.
The present and past directorships (held in the five years preceding the date of this Prospectus)
of each of our Directors, other than those held in our Company, and in other companies are set
out below:
Name
Present Directorships
Past Directorships
Dato Jaya J B Tan
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Artex Investment Limited

Australian Hotels & Leisure
Corporation Pty Ltd
Ausvegas Pty Ltd
Evian Management (Aust) Pty Ltd
Evian Management (Aust) No.2
Pty Ltd
Evian Management (Aust) No. 3
Pty Ltd
Evian Properties (Aust) Pty Ltd
Evian Properties (Aust) No. 2 Pty
Ltd
Ltd
Fanlin Limited
Ford Dynasty Pty Ltd
Grand Imperial Saigon Hotel Ltd
Grand Imperial Saigon Water
Company Ltd
Kadin Raya Sdn Bhd
Lasseters Casino Pty Ltd
Lasseters Corporation Limited
Lasseters ePayments Limited
Lasseters Holdings Pty Ltd
Lasseters Hotels (SA) Pty Ltd
Lasseters Interactive Gaming Pte
Ltd
Lasseters International Holdings
Limited
Lasseters International Pte Ltd
Lasseters Investments Pte Ltd
Montezuma Holdings Sdn Bhd
Montezuma Trading Sdn Bhd
Motif Etika Sdn Bhd
Nurring Group Limited
Palmgold Limited
Panglima Etika Sdn Bhd
Enrich Gain Limited

Merrington Holdings Sdn Bhd
Quilter Assets Limited
Sierra Jubilee Sdn Bhd
TCBY Pty Ltd
162

Name
Past Directorships
Paragon Holdings Limited

Perinsu (Broker Insurans) Sdn
Bhd
Quilter Assets Holdings Pty Ltd
Radiant Investments Limited
Rahsna Bena Sdn Bhd
Rentak Kemuncak Sdn Bhd
Rising Sino Limited
River Patisserie Pty Ltd
Salujati Sdn Bhd
Sutera Mesra Sdn Bhd
Tajan Management Pty Ltd
Tajan Properties Pty Ltd
United Pacific Corporation Limited
UPC Leisure Holdings Sdn Bhd
Vintage Options Sdn Bhd
Worldrich Pty Ltd
Kamal Y P Tan
Group Companies
Group Companies
Nil
Other Companies
Other Companies

Corporation Pty Ltd
Ausvegas Pty Ltd
Evian Management (Aust) No.2
Pty Ltd
Evian Management (Aust) No. 3
Pty Ltd
Ltd
Ltd
Fanlin Limited
Company Ltd
Kadin Raya Sdn Bhd
Lajusta Sdn Bhd
Enrich Gain Limited

SKT (No. 2) Pty Ltd
SKT (No. 3) Pty Ltd
SKT Pty Ltd
TCBY Pty Ltd
163

Name
Past Directorships

Ltd
Limited
Life Medicals Sdn Bhd
Motif Etika Sdn Bhd
Palmgold Limited
Bhd
Rahsna Bena Sdn Bhd
Rising Sino Limited
Salujati Sdn Bhd
Tajan Properties Pty Ltd
Worldrich Pty Ltd
Tajuddin Joe Hok
Tan
Group Companies
Group Companies
Nil
Other Companies
Other Companies

Corporation Pty Ltd
Ausvegas Pty Ltd
Evian Management No.2
(Australia) No.2 Pty Ltd
Evian Management (Aust) Pty No.
3 Ltd
Ltd
Ltd
Fanlin Limited
Enrich Gain Limited

TCBY Pty Ltd
164

Name
Past Directorships

Company Ltd
Kadin Raya Sdn Bhd
Ltd
Limited
Motif Etika Sdn Bhd
Palmgold Limited
Bhd
Rising Sino Limited
Salujati Sdn Bhd
Tajan Properties Pte Ltd
Worldrich Pty Ltd
Mah Weng Choong
Khor Sin Kok
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Jasnida Sdn Bhd
Nil
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Jasnida Sdn Bhd

Syarikat Guan Leong Sdn Bhd
Nil
165

Name
Past Directorships
Teo Chee Seng
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Cathay Connection Sdn Bhd

Hock Properties Pte Ltd
Limited
Profound Far East Sdn Bhd
Justus Management Pte Ltd
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Silverlake Solutions Sdn Bhd

Zinglabs Pte Ltd
Axis Systems Sdn Bhd

Jaks Resources Bhd
Kencana Investments Pte Ltd
John Lyn Hian

Woon
2.
The present and past directorships (held in the 5 years preceding the date of this Prospectus) of
each of our Executive Officers, other than those held in our Company, and in other companies are
set out below:
Name
Past Directorships
Thong Cooi Seong
Group Companies
Group Companies
Nil
Nil
Other Companies
Other Companies
Nil
Nil
Group Companies
Group Companies
Nil
Other Companies
Other Companies
Jasnida Sdn Bhd
Nil
Group Companies
Group Companies
Etika Dairies Sdn.Bhd.
Nil
Other Companies
Other Companies
Jasnida Sdn Bhd
Nil
Kwong Yuen Seng
Chung Chee Fook
166

3.
Except as disclosed below, none of our Directors or Executive Officers or controlling

shareholders:
(a)
has at any time during the last 10 years, had a petition under any bankruptcy laws of any
jurisdiction filed against him or against a partnership of which he was a partner;
(b)
has at any time during the last 10 years, had a petition under any law of any jurisdiction filed
against a corporation of which he was a director or key executive for the winding up of that
corporation on the ground of insolvency;
(c)
has any unsatisfied judgement against him;
(d)
has ever been convicted 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;
(e)
has been convicted of any offence, in Singapore or elsewhere, involving a breach of any law
or regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere, or has been the subject of any criminal proceedings (including pending criminal
proceedings which he is aware of) for such breach;
(f)
has at any time during the last 10 years, had judgement entered against him in any civil
proceedings in Singapore or elsewhere involving the 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 on his part, or has 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;
(g)
has been convicted in Singapore or elsewhere of any offence in connection with the
formation or management of any corporation;
(h)
has been disqualified from acting as a director of any corporation, or from taking part in any
way directly or indirectly in the management of any corporation;
(i)
has been 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; or
(j)
has ever, to his knowledge, been concerned with the management or conduct, in Singapore
or elsewhere, of affairs of:
(i)
any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere; or
(ii)
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;
in connection with any matter occurring or arising during the period when he was so
concerned with the corporation or partnership.
SHARE CAPITAL
4.
As at the Latest Practicable Date, to the best of the knowledge of our Directors, our Directors are
not aware of any arrangements, the operation of which may at a subsequent date result in the
change of control of our Company. Save for the new Shares to be allotted and issued under the
ESOS, there are no founder, management, deferred or unissued shares reserved for any
purpose. Our Substantial Shareholders are not entitled to any different voting rights from other
Shareholders.
167

MEMORANDUM AND ARTICLES OF ASSOCIATION
5.
Memorandum of Association and Registration Number

Our Companys constitution is its Memorandum and Articles of Association. The registration
number with which our Company was incorporated with is 200313131Z. The Memorandum of
Association of the Company states, among other things, that the liability of members of the
Company is limited. The objects of the 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.
6.
Articles of Association
The following provisions in the Articles of Association relate to, inter alia, the transfer of shares,
voting rights of shareholders and Directors shareholding qualification, remuneration, borrowing
powers and voting rights on proposals, arrangements or contracts in which they are interested:
(1)
The following provisions in the Articles of Association relate to the remuneration,

restrictions on voting rights and borrowing powers of the Directors
(a)
Directors Remuneration
Article 79
The ordinary fees of the Directors shall from time to time be determined by an ordinary
resolution of the Company and 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 the 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 fees is payable shall be entitled only to rank in
such division for a proportion of fees related to the period during which he has held
office.
Article 80
(A)
Any Director who holds any executive office, or who serves on any committee of
the Directors, or who otherwise performs services which in the opinion of the
Directors are outside the scope of ordinary duties of a Director, may be paid such
extra remuneration by way of salary, commission or otherwise as the Directors
may determine.
(B)
The fees (including any remuneration under Article 80(A) above) in the case of a
Director other than an Executive Director shall be payable by a fixed sum and
shall not at any time be by commission on or a percentage of the profits or
turnover, and no Director whether an Executive Director or otherwise shall be
remunerated by a commission on or a percentage of turnover.
Article 82
Subject to the provisions of the Statutes, the Directors shall have the 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 83
A Director may be party to or in any way interested in any contract or arrangement or
transaction to which the Company is a party or in which the Company is in any way
interested and he may hold and be remunerated in respect of any office or place of
168

profit other than the office of Auditor of the Company or any subsidiary thereof) under
the Company or any other company in which the Company is in any way interested and
he (or any firm of which he is a member) may act in a professional capacity for the
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 88
The remuneration of a Managing Director, Chief Executive Officer or President (or
person holding an equivalent position) shall from time to time be fixed by the Directors
and may, subject to these presents, be by way of salary, commission or participation
in profits or by any or all of these modes but he shall not under any circumstances be
remunerated by a commission on or a percentage of turnover.
Article 98(D)
An alternate Director shall be entitled to contract and be interested in and benefit from
contracts, arrangements or transactions and to be repaid expenses and indemnified to
the same extent mutatis mutandis as if he were a Director but he shall not be entitled
to receive from the Company in respect of his appointment as alternate Director any
fees except only such part (if any) of the fees otherwise payable to his principal as such
principal may by notice in writing to the Company from time to time direct; Provided that
such fees paid by the Company to the alternate Director be deducted from his
principals remuneration.
(b)
Restrictions on Voting Rights of Directors

Article 83
A Director may be party to or in any way interested in any contract or arrangement or
transaction to which the Company is a party or in which the 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 the Company or any subsidiary thereof) under
the Company or any other company in which the Company is in any way interested and
he (or any firm of which he is a member) may act in a professional capacity for the
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 102
A Director shall not vote in respect of any contract or proposed contract or arrangement
or any other proposal whatsoever in which he has any personal material interest,
directly or indirectly. A Director shall be counted in the quorum at a meeting in relation
to any resolution on which he is debarred from voting.
(c)
Borrowing Powers of Directors

Article 109
Subject as hereinafter provided and to the provisions of the Statutes, the Directors may
exercise all the powers of the 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 the Company or of any third-party.
169

(2)
The following provisions of the Articles of Association relate to the variation of

members rights, the transfer of shares and voting rights of members
(a)
Variation of Members Rights

Article 6(A)
Whenever the share capital of the Company is divided into different classes of shares,
the special rights attached to any class may, subject to the provisions of the Statutes,
be varied or abrogated 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 the shares of the
class (but not otherwise) and may be so varied or abrogated either whilst the 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 the Company and to the proceedings thereat shall mutatis mutandis apply,
except that the necessary quorum shall be two persons and that any holder of shares
of the class present in person or by proxy or by attorney or in the case of a corporation
which is a member, by a representative may demand a poll and that every such holder
shall on a poll have one vote for every share of the class held by him; Provided Always
that where the necessary majority for such a special resolution is not obtained at such
general meeting, consent in writing if obtained from the holders of three-quarters in
nominal value of the issued shares of the class concerned within two months of such
general meeting shall be as valid and effectual as a special resolution carried at such
general meeting. The foregoing provisions of this Article shall apply to the variation or
abrogation of the special rights attached to some only of the shares of any class as if
each group of shares of the class differently treated formed a separate class the
special rights whereof are to be varied.
Article 6(B)
The repayment of preference capital other than redeemable preference capital, or any
alteration of preference shareholders rights, may only be made pursuant to a special
resolution of the preference shareholders concerned; Provided Always that where the
necessary majority for such a special resolution is not obtained at the general meeting,
consent in writing if obtained from the holders of three-fourths of the preference shares
concerned within two months of the general meeting, shall be as valid and effectual as
a special resolution carried at the general meeting.
Article 6(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 the Company in some or all respects pari passu therewith but in no
respect in priority thereto.
170

(b)
Transfer of Shares
Article 36
All transfers of the legal title in shares may be effected by the registered holders thereof
by transfer in writing in the form for the time being prescribed by any rules of or
bye-laws governing the Stock Exchange. The instrument of transfer of any share shall
be signed by or on behalf of the transferor and be witnessed; Provided that an
instrument of transfer in respect of which the transferee is the Depository shall be
effective although not signed or witnessed by or on behalf of the Depository. The
transferor shall remain the holder of the shares concerned until the transfer is
registered and the name of the transferee is entered in the Register of Members in
respect thereof.
Article 37
The Register of Members may be closed at such times and for such period as the
Directors may from time to time determine; Provided Always that such Register shall
not be closed for more than thirty days in any year. Provided Always that the Company
shall give prior notice of such closure as may be required to the Stock Exchange,
stating the period and purpose or purposes for which the closure is made.
Article 38(A)
There shall be no restriction on the transfer of fully paid up shares (except where
required by law, the listing rules of the Stock Exchange or the rules and/or bye-laws
governing the Stock Exchange) but the Directors may in their discretion decline to
register any transfer of shares upon which the 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.
Article 38(B)
The Directors may in their sole discretion refuse to register any instrument of transfer
of shares unless:
(i)
all or any part of the stamp duty (if any) payable on each share certificate and
such fee not exceeding S$2 as the Directors may from time to time require
pursuant to Article 41, is paid to the Company in respect thereof;
(ii)
the instrument of transfer is deposited at the Office or at such other place (if any)
as the Directors may appoint accompanied by the certificates of the shares to
which it relates, and such other evidence as the Directors may reasonably require
to show the right 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;
(iii)
the instrument of transfer is in respect of only one class of shares; and
(iv) the amount of the proper duty with which each share certificate to be issued in
consequence of the registration of such transfer is chargeable under any law for
the time being in force relating to stamps is tendered.
Article 39
If the Directors refuse to register a transfer of any shares, they shall within one month
after the date on which the transfer was lodged with the Company send to the
transferor and the transferee notice in writing of the refusal as required by the Statutes.
171

Article 40
All instruments of transfer which are registered may be retained by the Company but
any instrument of transfer which the Directors may refuse to register shall (except in
the case of fraud) be returned to the party presenting the same.
Article 41
There shall be paid to the Company in respect of the registration of any instrument of
transfer or probate or letters of administration or certificate of marriage or death or stop
notice or power of attorney or other document relating to or affecting the title to any
shares or otherwise for making any entry in the Register of Members affecting the title
to any shares such fee not exceeding S$2 as the Directors may from time to time
require.
Article 42
The Company shall be entitled to destroy all instruments of transfer which have been
registered at any time after the expiration of six years from the date of registration
thereof and all dividend mandates and notifications of change of address at any time
after the expiration of six years from the date of recording thereof and all share
certificates which have been cancelled at any time after the expiration of six years from
the date of the cancellation thereof. It shall conclusively be presumed in favour of the
Company that every entry in the Register of Members purporting to have been made
on the basis of an instrument of transfer or other document so destroyed was duly and
properly made, every instrument of transfer so destroyed was a valid and effective
instrument duly and properly registered and every share certificate duly and properly
cancelled and every other document hereinbefore mentioned so destroyed was a valid
and effective document in accordance with the recorded particulars thereof in the
books or records of the Company; Provided Always that:
(c)
(i)
the provisions aforesaid shall apply only to the destruction of a document in good
faith and without notice of any claim (regardless of the parties thereto) to which
the document might be relevant;
(ii)
nothing herein contained shall be construed as imposing upon the Company any
liability in respect of the destruction of any such document earlier than as
aforesaid or in any other circumstances which would not attach to the Company
in the absence of this Article; and
(iii)
references herein to the destruction of any document include references to the

disposal thereof in any manner.
Alteration of Capital
Article 7
The Company may from time to time by ordinary resolution increase its capital by such
sum to be divided into shares of such amounts as the resolution shall prescribe.
Article 8(A)
Subject to any direction to the contrary that may be given by the Company in general
meeting and except as permitted under the listing rules of the Stock Exchange, all new
shares shall, before issue, be offered to such persons who as at the date of the offer
are entitled to receive notices from the Company of general meetings in proportion, as
far 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
172

to whom the offer is made that he declines to accept the shares offered, the Directors
may dispose of those shares in such manner as they think most beneficial to the
Company. The 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 the Directors, be conveniently offered under this
Article 8(A). Notwithstanding the foregoing, where the new shares to be offered are
ordinary shares, no shares held by a member other than ordinary shares shall be taken
into account for the purpose of determining the proportions in which such ordinary
shares are to be offered to such member as aforesaid.
Article 8(B)
Notwithstanding Article 8(A), the Company may by ordinary resolution in general
meeting give to the Directors general authority, either unconditionally or subject to such
conditions as may be specified in the ordinary resolution, to:
(a)
(b)
(i)
issue shares in the capital of the Company whether by way of rights, bonus
or otherwise; and/or
(ii)
make or grant offers, agreements or options (collectively, Instruments) that

might or would require shares to be issued, including but not limited to the
creation and issue of (as well as adjustments to) warrants, debentures or
other instruments convertible into shares; and
(notwithstanding that the authority conferred by the ordinary resolution may have
ceased to be in force) issue shares in pursuance of any Instrument made or
granted by the Directors while the ordinary resolution was in force;
Provided that:
(1)
the aggregate number of shares to be issued pursuant to the ordinary resolution

(including shares to be issued in pursuance of Instruments made or granted
pursuant to the ordinary resolution but excluding shares which may be issued
pursuant to any adjustments effected under any relevant Instrument), does not
exceed 50 per cent. (or such other limit as may be prescribed by any rules of the
Stock Exchange) of the issued share capital of the Company (as calculated in
accordance with sub-paragraph (2) below), of which the aggregate number of
shares to be issued other than on a pro-rata basis to shareholders of the
Company (including shares to be issued in pursuance of Instruments made or
granted pursuant to any adjustments effected under any relevant Instrument)
does not exceed 20 per cent. (or such other limit as may be prescribed by any
rules of the Stock Exchange) of the issued share capital of the Company (as
calculated in accordance with sub-paragraph (2) below);
(2)
(subject to such manner of calculation as may be prescribed by any rules of the

Stock Exchange from time to time) for the purpose of determining the aggregate
number of shares that may be issued under sub-paragraph (1) above, the
percentage of issued share capital shall be calculated based on the issued share
capital of the Company at the time of the passing of the ordinary resolution, after
adjusting for:
(i)
new shares arising from the conversion, exercise or vesting, as the case
may be, of convertible securities, share options or share awards
outstanding or subsisting at the time of the passing of the ordinary
resolution; Provided that such options or awards were granted pursuant to
a share option scheme effected and administered in compliance with the
rules of the Stock Exchange; and
(ii)
any subsequent consolidation or subdivision of shares;
173

(3)
in exercising the authority conferred by the ordinary resolution, the Company

shall comply with the provisions of the listing rules of the Stock Exchange for the
time being in force (unless such compliance is waived by the Stock Exchange)
and these presents; and
(4)
(unless revoked or varied by the Company in general meeting) the authority

conferred by the ordinary resolution shall not continue in force beyond the
conclusion of the Annual General Meeting of the Company next following the
passing of the ordinary resolution, or the date by which such Annual General
Meeting of the Company is required by law to be held, or the expiration of such
other period as may be prescribed by the Act (whichever is the earliest).
Article 9
The Company may by ordinary resolution:
(i)
consolidate and divide all or any of its share capital into shares of larger amount
than its existing shares;
(ii)
cancel any shares which, at the date of the passing of the resolution, have not
been taken or agreed to be taken, by any person and diminish the amount of its
capital by the amount of the shares so cancelled;
(iii)
sub-divide its shares, or any of them, into shares of smaller amount than is fixed
by the Memorandum of Association (subject, nevertheless, to the provisions of
the Statutes), and so that the resolution whereby any share is sub-divided may
determine that, as between the holders of the shares resulting from such
sub-division, one or more of the shares may, as compared with the others, have
any such preferred, deferred or other special rights, or be subject to any such
restrictions, as the Company has power to attach to unissued or new shares; or
(iv) subject to the provisions of the Statutes, convert any class of shares into any
other class of shares.
Article 10(A)
The Company may by special resolution reduce its share capital or any capital
redemption reserve fund, share premium account or other undistributable reserve in
any manner and with and subject to any incident authorised and consent required by
law.
Article 10(B)
Subject to and in accordance with the provisions of the Act, the Company in general
meeting may authorise the Directors to purchase or otherwise acquire all shares,
including ordinary shares and preference shares issued by it on such terms as the
Company may think fit and in the manner prescribed by the Act. If required by the Act,
all shares purchased by the Company shall be cancelled. On cancellation of the shares
as aforesaid, the rights and privileges attached to those shares shall expire. The
amount of the Companys issued share capital which is diminished on cancellation of
the shares purchased shall be transferred to the Companys capital redemption
reserve. In any other instance, the Company may deal with any such share which is so
purchased or acquired by it in such manner as may be permitted by, and in accordance
with, the Act.
174

(d)
Voting Rights of Members

Article 5(A)
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 notices, reports and balance sheets and attending
general meetings of the Company, and preference shareholders shall also have the
right to vote at any meeting convened for the purpose of reducing the capital or
winding-up or sanctioning a sale of the undertaking of the Company or where the
proposition to be submitted to the meeting directly affects their rights and privileges or
when the dividend on the preference shares is in arrears for more than six months.
Article 65
Subject and without prejudice to any special privileges or restrictions as to voting for
the time being attached to any special class of shares for the time being forming part
of the capital of the Company, each member entitled to vote may vote in person or by
proxy or by attorney or in the case of a corporation which is a member, by a
representative. On a show of hands, every member who is present in person or by
proxy or by attorney or in the case of a corporation which is a member, by a
representative shall have one vote and on a poll, every member who is present in
person or by proxy or by attorney or in the case of a corporation which is a member,
by a representative shall have one vote for every share which he holds or represents.
For the purpose of determining the number of votes which a member, being a
Depositor, or his proxy or his attorney or in the case of a corporation which is a
member, its representative may cast at any general meeting on a poll, the reference to
shares held or represented shall, in relation to shares of that Depositor, be the number
of shares entered against his name in the Depository Register as at forty-eight hours
before the time appointed for holding the relevant general meeting as certified by the
Depository to the Company.
Article 66
In the case of joint holders of a share, any one of such persons may vote, but if more
than one of such persons is present at a meeting, the vote of the senior who tenders
a vote, whether in person or by proxy or by attorney or in the case of a corporation
which is a member, by a representative, 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
Depository Register in respect of the share.
Article 68
No member shall, unless the Directors otherwise determine, be entitled in respect of
shares held by him to vote at a general meeting either personally or by proxy or by
attorney or in the case of a corporation which is a member, by a representative or to
exercise any other right conferred by membership in relation to meetings of the
Company if any call or other sum presently payable by him to the Company in respect
of such shares remains unpaid.
Article 69(A)
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.
175

Article 69(B)
If any votes shall be counted which ought not to have been counted, or might have
been rejected, the error shall not vitiate the result of the voting unless it be pointed out
at the same meeting, or at any adjournment thereof, and unless in the opinion of the
Chairman at the meeting or at any adjournment thereof as the case may be, it shall be
of sufficient importance to vitiate the result of the voting.
Article 70
On a poll, votes may be given personally or by proxy or by attorney or in the case of
a corporation which is a member, by a representative 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 71(A)
A member may appoint not more than two proxies to attend and vote at the same
general meeting; Provided that if the member is a Depositor, the Company shall be
entitled and bound:
(i)
to reject any instrument of proxy lodged if the Depositor is not shown to have any
shares entered against his name in the Depository Register as at forty-eight
hours before the time appointed for holding the relevant general meeting as
certified by the Depository to the Company; and
(ii)
to accept as the maximum number of votes which in aggregate the proxy or

proxies appointed by the Depositor is or are able to cast on a poll a number which
is the number of shares entered against the name of that Depositor in the
Depository Register as at forty-eight hours before the time appointed for holding
the relevant general meeting as certified by the Depository to the Company,
whether that number is greater or smaller than the number specified in any
instrument of proxy executed by or on behalf of that Depositor.
Article 71(B)
The Company shall be entitled and bound, in determining rights to vote and other
matters in respect of a completed instrument of proxy submitted to it, to have regard
to the instructions (if any) given by and the notes (if any) set out in the instrument of
proxy.
Article 71(C)
Where a member appoints more than one proxy to attend and vote at the same general
meeting, he shall specify on each instrument of proxy the proportion of his holdings in
respect of which the appointment is made, failing which, the second named proxy shall
be deemed to have been appointed as an alternate to the first named proxy.
Article 71(D)
A proxy need not be a member of the Company.
Article 72(A)
An instrument appointing a proxy shall be in writing in any usual or common form or in
any other form which the Directors may approve and:
(i)
in the case of an individual, shall be signed by the appointor or his attorney; and
(ii)
in the case of a corporation, shall be either given under its common seal or signed
on its behalf by an attorney or a duly authorised officer of the corporation.
176

Article 73
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 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 purpose of any meeting shall not be required again to be delivered for the
purpose of any subsequent meeting to which it relates.
Article 74
An instrument appointing a proxy shall be deemed to include the right to demand or join
in demanding a poll, to move any resolution or amendment thereto and to speak at the
meeting.
Article 76
Any corporation which is a member of the Company may by resolution of its directors
or other governing body authorises such person as it thinks fit to act as its
representative at any meeting of the Company or of any class of members of the
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 the Company and such corporation shall for the purpose of these presents
be deemed to be present in person at any such meeting if a person so authorised is
present thereat.
(3)
The following provisions of the Articles of Association relate to the Dividend Rights
Article 121
The Company may by ordinary resolution declare dividends but no such dividends
shall exceed the amount recommended by the Directors.
Article 122
If and so far as in the opinion of the Directors the profits of the Company justify such
payments, the 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 123
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 the 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.
177

Article 124
Notice of declaration of any dividend, whether interim or otherwise, may be given by
advertisement.
Article 125
No dividend shall be paid otherwise than out of profits available for distribution under
the provisions of the Statutes. The declaration of the Directors as to the net profits of
the Company shall be conclusive.
Article 126
No dividend or other moneys payable on or in respect of a share shall bear interest as
against the Company.
Article 127(A)
The Directors may retain any dividend or other moneys payable on or in respect of a
share on which the Company has a lien and may apply the same in or towards
satisfaction of the debts, liabilities or engagements in respect of which the lien exists.
Article 127(C)
The payment by the Directors of any unclaimed dividends or other moneys payable on
or in respect of a share into a separate account shall not constitute the Company a
trustee in respect thereof. All dividends unclaimed after being declared may be
invested or otherwise made use of by the Directors for the benefit of the Company and
any dividend unclaimed after a period of six years from the date of declaration of such
dividend may be forfeited and if so shall revert to the Company but the Directors may
at any time thereafter at their absolute discretion annul any such forfeiture and pay the
dividend so forfeited to the person entitled thereto prior to the forfeiture.
Article 131
Any dividend or other moneys payable in cash on or in respect of a share may be paid
by cheque or warrant sent through the post to the registered address appearing in the
Register of Members or (as the case may be) the Depository Register of a member or
person entitled thereto (or, if two or more persons are registered in the Register of
Members or (as the case may be) entered in the Depository Register as joint holders
of the share or are entitled thereto in consequence of the death or bankruptcy of the
holder, to any one of such persons) or to such person at such address as such member
or person or persons may by writing direct. Every such cheque or warrant shall be
made payable to the order of the person to whom it is sent or to such person as the
holder or joint holders or person or persons entitled to the share in consequence of the
death or bankruptcy of the holder may direct and payment of the cheque or warrant by
the banker upon whom it is drawn shall be a good discharge to the Company. Every
such cheque or warrant shall be sent at the risk of the person entitled to the money
represented thereby. Notwithstanding the foregoing provisions of this Article and the
provisions of Article 133, the payment by the Company to the Depository of any
dividend payable to a Depositor shall, to the extent of the payment made to the
Depository, discharge the Company from any liability to the Depositor in respect of that
payment.
178

Article 132
If two 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 the
Company in general meeting or a resolution of the 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.
(4)
The following provisions of the Articles of Association relate to the appointment,

retirement and removal of Directors
(a)
Appointment, Retirement and Removal of Directors

Article 77
Subject as hereinafter provided, the Directors, all of whom shall be natural persons,
shall not be less than two in number. The Company may by ordinary resolution from
time to time vary the minimum and/or maximum number of Directors.
Article 78
A Director shall not be required to hold any shares of the Company by way of
qualification. A Director who is not a member of the Company shall nevertheless be
entitled to attend and speak at general meetings.
Article 84(A)
The Directors may from time to time appoint one or more of their body to be the holder
of any executive office (including, where considered appropriate, the office of
Chairman or Deputy Chairman) on such terms and for such period as they may
(subject to the provisions of the Statutes) determine and, without prejudice to the terms
of any contract entered into in any particular case, may at any time revoke any such
appointment.
Article 84(B)
The appointment of any Director to the office of Chairman or Deputy Chairman or
Managing or Joint Managing or Deputy or Assistant Managing Director shall
automatically determine if he ceases to be a Director but without prejudice to any claim
for damages for breach of any contract of service between him and the Company.
Article 84(C)
The appointment of any Director to any other executive office shall not automatically
determine if he ceases from any cause to be a Director, unless the contract or
resolution under which he holds office shall expressly state otherwise, in which event
such determination shall be without prejudice to any claim for damages for breach of
any contract of service between him and the Company.
179

Article 90
The office of a Director shall be vacated in any of the following events, namely:
(i)
if he becomes prohibited by law from acting as a Director; or
(ii)
if (not being a Director holding any executive office for a fixed term) he resigns by
writing under his hand left at the Office or if he in writing offers to resign and the
Directors resolve to accept such offer; or
(iii)
if he becomes a bankrupt or enters into any composition with his creditors

generally; or
(iv) if he becomes of unsound mind or if in Singapore or elsewhere, an order is 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, receiver or other person (by whatever name called) to exercise powers
with respect to his property or affairs; or
(v)
if he is removed by the Company in a general meeting pursuant to these

presents.
Article 91
At each Annual General Meeting, one-third of the 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 with
a minimum of one) shall retire from office by rotation. All Directors shall retire from
office at least once every three years.
Article 92
The Directors to retire in every year shall be those 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 lot.
A retiring Director shall be eligible for re-election.
Article 96
The 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
the 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 the Director in whose place he is
appointed was last elected a Director. In default of such appointment, the vacancy
arising upon the removal of a Director from office may be filled as a casual vacancy.
Article 97
The Company may by ordinary resolution appoint any person to be a Director either to
fill a casual vacancy or as an additional Director. Without prejudice thereto, the
Directors shall have the power at any time to appoint any person to be a Director either
to fill a casual vacancy or as an additional Director. Provided that the total number of
Directors shall not thereby exceed the maximum number (if any) fixed by or in
accordance with these presents. Any person appointed by the Directors pursuant to
this Article 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.
180

Article 98(A)
Any Director may at any time by writing under his hand and deposited at the Office, or
delivered at a meeting of the Directors, appoint any person (other than a Director)
approved by a majority of his co-Directors to be his alternate Director and may in like
manner at any time terminate such appointment. Such appointment, unless previously
approved by the majority of the Directors, shall have effect only upon and subject to
being so approved. A person shall not act as alternate Director to more than one
Director at the same time.
Article 98(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. The alternate
Director may also be removed from office by a resolution of the Directors, but he shall
be entitled to vote on such resolution and he shall, ipso facto, cease to be an alternate
Director if the Director concerned (below called his principal) ceases to be a Director.
Article 98(C)
An alternate Director shall (except when absent from Singapore) be entitled to receive
notices of meetings of the 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 the Directors shall be as effective as the
signature of his principal. To such extent as the Directors may from time to time
determine in relation to any committees of the 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 the power to act as a Director nor shall he be deemed to be a Director for the
purposes of these presents.
(b)
Nomination of Directors
Article 95
No person other than a Director retiring at the meeting shall, unless recommended by
the Directors for election, be eligible for appointment as a Director at any general
meeting unless not less than eleven 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 a 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 the Directors for election, not less than nine clear days notice
of the Directors intention to propose such person and of such persons willingness to
be elected shall be necessary. Notice of each and every such person shall be served
on the members at least seven days prior to the meeting at which the election is to take
place.
Article 97
The Company may by ordinary resolution appoint any person to be a Director either to
fill a casual vacancy or as an additional Director. Without prejudice thereto, the
Directors shall have the power at any time to appoint any person to be a Director either
181

to fill a casual vacancy or as an additional Director. Provided that the total number of
Directors shall not thereby exceed the maximum number (if any) fixed by or in
accordance with these presents. Any person appointed by the Directors pursuant to
this Article 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 103
The continuing Directors may act notwithstanding any vacancies, but if and so long as
the number of Directors is reduced below the minimum number fixed by or in
accordance with these presents or the Statutes, the continuing Directors or Director
may, except in an emergency, act only for the purpose of increasing the number of
directors to such minimum number, or to summon general meetings, but not for any
other purpose. If there be no Director or Directors able or willing to act, then any two
members may summon a general meeting for the purpose of appointing Directors.
(5)
Limitation on Rights to Hold or Vote Ordinary Shares

There are no limitations imposed by Singapore law or by our Articles of Association on the
rights of non-resident Shareholders to hold or vote on our ordinary shares.
(6)
Delaying, deferring or preventing change in control of the Company

There is no provision in our Articles of Association which could have an effect of delaying,
deferring or preventing a change in control of the Company and which could operate only
with respect to a merger, acquisition or corporate restructuring involving the Company.
MATERIAL CONTRACTS
7.
The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by our Company and our subsidiaries within the two years preceding the date
of lodgement of this Prospectus and are or may be material:
(a)
the Sale and Purchase Agreement dated 5 November 2004 (which was rescinded on 5
November 2004 and superseded by two Share Transfer Agreements dated 5 November
2004 and 8 November 2004 respectively) made between Messrs Dato Jaya J B Tan, Kamal
Y P Tan, Tajuddin Joe Hok Tan, Mah Weng Choong, Khor Sin Kok, Chung Chee Fook,
Kwong Yuen Seng, Abd Hamid bin Mohamed and the Company whereby, inter alia, the
Company acquired the entire issued and paid-up share capital of EDSB for a consideration
of S$7,717,806 in exchange for the issuance of 128,630,102 ordinary shares of S$0.06 each
in the capital of the Company to Messrs Dato Jaya J B Tan, Kamal Y P Tan, Tajuddin Joe
Hok Tan, Mah Weng Choong, Khor Sin Kok, Chung Chee Fook, Kwong Yuen Seng and GYA
Nominees Sdn Bhd (held in trust for Abd Hamid bin Mohamed). Further details are set out
under the section entitled Restructuring Exercise of this Prospectus;
(b)
the Sale and Purchase Agreement dated 8 July 2004 to purchase Lot. LS-2, Persiaran Satu,
Meru Industrial Park, Persiaran Hamzah Alang, 42200 Klang, Selangor Darul Ehsan,
Malaysia;
(c)
the Management Agreement dated 13 December 2004 made between our Company and
PPCF as the Manager for the Invitation referred to in paragraph 9 below;
(d)
the Underwriting Agreement dated 13 December 2004 entered into between our Company
and DMG as the Underwriter for the underwriting of the Offer Shares referred to in paragraph
10 below;
182

(e)
the Placement Agreement dated 13 December 2004 made between our Company and DMG
as the Placement Agent referred to in paragraph 11 below; and
(f)
the Depository Agreement dated 13 December 2004 made between our Company and CDP
pursuant to which CDP agreed to act as central depository for the Companys securities for
trades in the securities of the Company through the SGX-ST.
LITIGATION
8.
Except as disclosed below, to the best of our knowledge and belief, having made all reasonable
enquiries, neither our Company nor our subsidiary is engaged in any legal or arbitration
proceedings as plaintiff or defendant, including those which are pending or known to be
contemplated, which may have or have had in the last 12 months before the date of lodgement
of this Prospectus a material effect on the financial position or the profitability of our Company:
(a)
The Company has in the course of construction of our factory at Meru, Klang, in Malaysia,
engaged a main contractor to construct the factory. The main contractor has engaged
various subcontractors to undertake the job. Although we have settled the claim with the
main contractor, he failed to settle the claims of his subcontractors. We have no contractual
relationship with these subcontractors and are of the view that they have no legal basis to
make any claims against us. One of such subcontractors, namely, Lin Hup Electric Co. Sdn.
Bhd. (Lin Hup), had instituted proceedings in the Sessions Court In Malaysia in 26 July
1999 against EDSB for the sum of RM111,393.99 allegedly for subcontract work done in
respect of the factory. Lin Hup obtained a summary judgement in its favour on 2 May 2001.
The summary judgement was however overturned on appeal on 18 June 2003. When Lin
Hup obtained the summary judgement, it proceeded to file a separate petition to wind up
EDSB based on the arguments put forth to obtain the summary judgement. EDSB then
lodged an application to restrain the winding up petition pending the result of its appeal
against the summary judgement. EDSBs application to restrain the winding up petition was
granted with costs of RM10,000 on 26 July 2001. As the summary judgement had been
overturned on appeal on 18 June 2003, accordingly, the petition to wind up EDSB has been
withdrawn. Lin Hup subsequently filed an application to appeal in the Malaysian Court of
Appeal against the order for costs of RM10,000 and this appeal is currently pending. The
main proceedings in respect of Lin Hups claim of RM111,393.99 is yet to be fixed for
hearing.
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS

9.
Pursuant to the Management Agreement dated 13 December 2004 (the Management

Agreement), our Company appointed PPCF to manage the Invitation. PPCF will receive a
management fee from our Company for its services rendered in connection with the Invitation.
10. Pursuant to the Underwriting Agreement dated 13 December 2004 (the Underwriting
Agreement), our Company appointed DMG to underwrite the Offer Shares. The Underwriter,
DMG, agreed to underwrite the Offer Shares for a commission of 2.25% of the Issue Price for
each Offer Share, payable by our Company for subscribing or procuring subscribers for any Offer
Shares not subscribed for pursuant to the Invitation and will pay or procure payment to our
Company for such Offer Share. DMG may, at its absolute discretion, appoint one or more
sub-underwriters for the Offer Shares.
11.
Pursuant to the Placement Agreement dated 13 December 2004 (the Placement Agreement),
the Placement Agent, DMG, agreed to subscribe and or procure subscription for the Placement
Shares at the Issue Price for a placement commission of 1.5% of the Issue Price for each
Placement Share, payable by our Company. DMG may, at its absolute discretion, appoint one or
more sub-placement agents for the Placement Shares, including PPCF.
183

12. Brokerage will be paid by our Company on the Offer Shares at the rate of 0.25% of the Issue Price
for each Offer Share and 1.0% of the Issue Price for each Placement Share. For the Offer Shares,
the 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 the Participating Banks in respect of successful applications
made through Electronic Applications at their respective ATMs or IB websites. For the Placement
Shares, the brokerage will be paid to the Placement Agent in accordance with the Placement
Agreement.
13. Subscribers of Placement Shares (excluding the Reserved Shares) may be required to pay a
brokerage of up to 1.0% of the Issue Price to the Placement Agent or the Sub-Placement Agent,
as the case may be (subject to Singapore Goods and Services Tax of 5.0%, if applicable).
14. Save as aforesaid and as disclosed under the section entitled Plan of Distribution of this
Prospectus, no commission, discount or brokerage, has been paid or other special terms granted
within the two years preceding the date of this Prospectus or is payable to any Director, promoter,
expert, proposed Director or any other person for subscribing or agreeing to subscribe or
procuring or agreeing to procure subscriptions for any Shares in or debentures of our Company
or our subsidiary.
15. The Management Agreement, the Underwriting Agreement or the Placement Agreement may be
terminated by the Manager, the Underwriter or the Placement Agent respectively at any time on
or before the close of the Application List on the occurrence of certain events including, inter alia:
(a)
any imminent threat or occurence of any local, national or international outbreak or

escalation of hostilities, insurrection, terrorist attacks or armed conflict (whether or not
involving financial markets) and any adverse change or crisis or any development likely to
lead to an adverse change or crisis in national, regional or international political, financial,
industrial, legal, monetary, taxation, exchange controls or economic conditions (including but
without limitation to 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 development or crisis, or deterioration thereof and any
such conditions or other occurence of any nature whatsoever which in the opinion of the
Manager, the Underwriter or the Placement Agent (exercised in good faith) would:
(i)
result or be likely to result in a material adverse fluctuation or adverse conditions in the

stock market in Singapore or elsewhere; or
(ii)
be likely to prejudice the success or the subscription or offer of the New Shares
(whether in the primary market or in respect of dealings in the secondary market); or
(iii)
make it impracticable, inadvisable, inexpedient or uncommercial to proceed with any of

the transactions contemplated in the Management Agreement, the Underwriting
Agreement or the Placement Agreement; or
(iv) be likely to have an adverse effect on the business, trading position, operations or
prospects of our Group as a whole; or
(v)
be such that no reasonable manager, underwriter or the placement agent would have
entered into the Management Agreement, the Underwriting Agreement or the
Placement Agreement respectively; or
(vi) make it uncommercial or otherwise contrary to or outside the usual commercial

practices of managers, underwriters or placement agents in Singapore for the
Manager, the Underwriter or the Placement Agent to observe or perform or be obliged
to observe or perform respectively, the terms of the Management Agreement, the
Underwriting Agreement or the Placement Agreement; or
184

(b)
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 court or government body in Singapore or elsewhere, the Securities Industry Council
of Singapore, the SGX-ST or the Authority or other regulatory authority, whether or not
having the force of law, which, in the opinion of the Manager, the Underwriter or the
Placement Agent:
(i)
adversely affects or is likely to adversely affect the listing of and quotation for the
Shares on SGX-SESDAQ, or the business, operations, financial condition,
performance or prospects of our Group; or
(ii)
results or is likely to result in the success of the Invitation being prejudiced; or
(iii)
make it impracticable, inadvisable, inexpedient or uncommercial to proceed with any of

the transactions contemplated in the Management Agreement, the Underwriting
Agreement or the Placement Agreement; or
(iv) make it uncommercial or otherwise contrary to or outside the usual commercial

practices of managers, underwriters or placement agents in Singapore for the
Manager, the Underwriter or the Placement Agent to observe or perform or be obliged
to observe or perform respectively, the terms of the Management Agreement, the
Underwriting Agreement or the Placement Agreement,
(c)
the issue of a stop order by the Authority in accordance with Section 242 of the Securities
and Futures Act (notwithstanding that a supplementary or replacement prospectus is
subsequently registered with the Authority pursuant to Section 241 of the Securities and
Futures Act); or
(d)
there shall come to the knowledge of the Manager, the Underwriter or the Placement Agent,
any breaches of the warranties or undertakings in the Management Agreement, the
Underwriting Agreement or the Placement Agreement or that any of the warranties in the
Management Agreement, or the Underwriting Agreement or the Placement Agreement is
untrue or incorrect; or
(e)
that any specified event as defined in the Management Agreement, the Underwriting
Agreement or the Placement Agreement comes to the knowledge of the Manager, the
Underwriter or the Placement Agent respectively; or
(f)
any statement contained in this Prospectus or application forms relating hereto has become
untrue, incorrect or misleading in any material aspect or matters have arisen or have been
discovered, which would, if this Prospectus was to be issued at that time, constitute a
material omission of such information, and our Company fails to lodge a supplementary or
replacement prospectus within a reasonable time after being notified of such a material
misrepresentation or omission or fails to take such steps as the Manager may reasonably
require to inform investors of the lodgement of such supplementary or replacement
prospectus.
16. The Placement Agreement is conditional upon the Management Agreement or the Underwriting
Agreement not having been terminated or rescinded pursuant to the provisions of the
Management Agreement or the Underwriting Agreement.
17. In the event that the Management Agreement, the Underwriting Agreement or the Placement
Agreement is terminated, our Company reserves the right, at the absolute discretion of our
Directors, to cancel the Invitation.
18. Other than the Management Agreement, Underwriting Agreement and the Placement Agreement
where PPCF was appointed as the Manager for the Invitation, DMG as the Underwriter and the
Placement Agent and PPCF was appointed by DMG as a Sub-Placement Agent, we do not have
any material relationship with any of the Manager, the Underwriter, the Placement Agent and/or
the Sub-Placement Agent.
185

MISCELLANEOUS
19. 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.
20. The expenses in connection with the Invitation of approximately S$1.3 million, including
underwriting commission, placement commission, brokerage, management fees, auditors fee,
solicitors fee, and all other incidental expenses can be broken down as follows:
S$000
Listing Fee
20
Professional Fees
760
Underwriting and placement commission and brokerage fees
226
Miscellaneous expenses
244
Total estimated expenses
1,250
All such expenses will be borne by our Company.

21. There have been no public takeover offers by third-parties in respect of our Shares or by us in
respect of other companies shares which have occurred during the last and current financial year.
22. Save as disclosed in the section entitled General and Statutory Information Management,
Underwriting and Placement Arrangements, no commission, discount or brokerage has been
paid or other special terms granted within the two years preceding the date of this Prospectus or
is payable to any Director, promoter, expert, proposed director or any other person for subscribing
or agreeing to subscribe or procuring or agreeing to procure subscriptions for any Shares in, or
debentures of, our Company or our subsidiary.
23. No expert is interested, directly or indirectly, in the promotion of, or in any property or assets which
have, within the two years preceding the date of this Prospectus, been acquired or disposed of by
or leased to our Company or our subsidiary or are proposed to be acquired or disposed of by or
leased to our Company or our subsidiary.
24. Application monies received by our Company in respect of successful applications (including
successful applications which are subsequently rejected) will be placed in a separate non-interest
bearing account with Maybank Singapore (the Receiving Bank). In the ordinary course of
business, the Receiving Bank will deploy these monies in the interbank money market. All profits
derived from the deployment of such monies will accrue to the Receiving Bank. 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 revenues or any other benefit arising therefrom.
25. Save as disclosed in this Prospectus, our Directors are not aware of any relevant 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 subsidiary.
26. Save as disclosed under the sections entitled Risk Factors, Capitalisation and Indebtedness,
Managements Discussion and Analysis of Results of Operations and Financial Position and
Prospects, Business Strategies and Future Plans of this Prospectus, the financial condition and
operations of our Group are not likely to be affected by any of the following:
(a)
known trends or demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in our Groups liquidity increasing or decreasing in any material
way;
186

(b)
material commitments for capital expenditure;
(c)
unusual or infrequent events or transactions or any significant economic changes that

materially affected the amount of reported income from operations; and
(d)
known trends or uncertainties that have had or that we reasonably expect will have a
material favourable or unfavourable impact on revenues or operating income.
27. We currently have no intention of changing our auditors after the listing of our Company on the
SGX-ST.
28. Save as disclosed in this Prospectus under the sections entitled Use of Proceeds and General
Statutory Information Material Contracts, no property has been purchased or acquired or
proposed to be purchased or acquired by our Company or our subsidiary which is to be paid for
wholly or partly out of the proceeds of the Invitation or the purchase or acquisition of which has
not been completed at the date of the issue of this Prospectus other than property in respect of
which the contract for the purchase or acquisition whereof was entered into in our ordinary course
of business or in the ordinary course of business of our subsidiary, such contract not being made
in contemplation of the Invitation nor the Invitation in consequence of the contract.
29. Save as disclosed under the section entitled Independent Compilation Report In Relation to the
Proforma Financial Information Subsequent Events of this Prospectus, our Directors are not
aware of any event which has occurred since 31 May 2004 which may have a material effect on
the information provided in section entitled Independent Compilation Report in Relation to the
Proforma Financial Information and the profit estimate of our Group in the section entitled
Management Discussion and Analysis of Results of Operations and Financial Position Profit
Estimate of this Prospectus.
30. No expert is engaged on a contingent basis by our Company or any of our subsidiary, or has a
material interest, whether direct or indirect, in our Shares, our subsidiary or has a material
economic interest whether direct or indirect, in our Company, including an interest in the success
of the Invitation.
31. There are no limitation on the right to own our Shares, including limitations on the right of a
non-resident or foreign shareholder to hold or exercise voting rights on our Shares imposed by the
Articles of Association of the Company.
CONSENTS
32. The Auditors of the Company and Reporting Accountants have given and have not withdrawn their
written consent to the issue of this Prospectus with the inclusion herein of the sections entitled
Independent Compilation Report in Relation to the Proforma Financial Information and The
Letter from the Reporting Accountants in Relation to the Examination of Profit Estimate For The
Financial Year Ended 30 September 2004 as set out in Appendix D, their name and all references
to their name in the form and context in which they are included in this Prospectus and to act in
such capacity in relation to this Prospectus. The auditors of EDSB have given and have not
withdrawn their written consent to the issue of this Prospectus with the inclusion herein of the
audited financial statements of EDSB for FY2001, FY2002, FY2003 and FP2004, and their name
and all references to their name, in the form and context in which they are respectively included
in this Prospectus to act in such capacities in relation to this Prospectus.
187

33. Each of the Manager, the Underwriter, the Placement Agent, the Sub-Placement Agent, the
Receiving Banker, the Solicitors to the Invitation, the Legal Advisers to the Company on Malaysian
Law, the Share Registrar and Share Transfer Office and the Principal Bankers 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.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS
34. This Prospectus has been seen and approved by our Directors and they individually and
collectively 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
stated and the opinions expressed herein are fair and accurate in all material respects as of the
date hereof and there are no material facts the omission of which would make any statements in
this Prospectus misleading, and that this Prospectus constitutes full and true disclosure of all
material facts about the Invitation and our Group. Our Directors confirm that the profit estimate of
our Group for FY2004 as set out in the section entitled Managements Discussion and Analysis
of Results of Operations and Financial Position Profit Estimate of this Prospectus has been
stated by our Directors after due and careful enquiry.
CONFIRMATION BY THE MANAGER
35. With reference to the profit estimate of the Group for FY2004 as set out in the section entitled
Managements Discussion and Analysis of Results of Operations and Financial Position Profit
Estimate of this Prospectus, the Manager confirms that it is satisfied that the profit estimate has
been made by the Directors after due and careful enquiry.
DOCUMENTS AVAILABLE FOR INSPECTION
36. The following documents or copies thereof may be inspected at our registered office at 10 Collyer
Quay, #19-08, Ocean Building, Singapore 049315 during normal business hours for a period of six
months from the date of registration of this Prospectus:
(a)
the Memorandum and Articles of Association of our Company;
(b)
the letters of consent referred to in paragraphs 32 and 33 on page 187 of this Prospectus;
(c)
the material contracts referred to in paragraph 7 on pages 182 and 183 of this Prospectus
under General and Statutory Information;
(d)
the Independent Compilation Report in Relation to the Proforma Financial Information as set
out on pages 134 to 161 of this Prospectus;
(e)
the audited financial statements of EDSB for FY2001, FY2002, FY2003 and FP2004 as set
out in Appendices B and C of this Prospectus;
(f)
the Letter from the Reporting Accountants in relation to the examination of the Profit
Estimate for the financial year ended 30 September 2004 as set out in Appendix D of this
Prospectus; and
(g)
the Service Agreement referred to on pages 113 and 114 of this Prospectus.
188
APPENDIX A: TERMS, CONDITIONS AND PROCEDURES

FOR APPLICATION AND ACCEPTANCE
You are invited to apply and subscribe for the New Share at the Issue Price, subject to the following
terms and conditions:
1.
YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 NEW SHARES OR INTEGRAL

MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF NEW 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 Banking (IB) websites of the relevant
Participating Banks (Internet Electronic Applications which, together with ATM applications shall
be referred to as Electronic Application).
Your application for Placement Shares (other than the Reserved Shares) may only be made by
way of the printed Placement Shares Application Forms.
Your application for Reserved Shares may only be made by way of printed Reserved Shares
Application Forms.
YOU MAY NOT USE YOUR CPF FUNDS TO APPLY FOR THE NEW SHARES.
3.
You are allowed to submit only one application in your own name for either the Offer
Shares or the Placement Shares (other than the Reserved Shares). If you submit an
application for the Offer Shares by way of printed Offer Shares Application Form, you MAY
NOT submit another application for the Offer Shares by way of an Electronic Application
and vice versa. Such separate applications shall be deemed to be multiple applications
and shall be rejected.
If you (being other than an approved nominee company) have submitted an application for the
Offer Shares in your own name, you should not submit any other applications for the Offer Shares,
whether by way of a printed Offer Shares Application Form or by way of an Electronic Application,
for any other person. Such separate applications will be deemed to be multiple applications and
shall be rejected.
If you have been procured by a Placement Agent to subscribe for Placement Shares (other than
Reserved Shares) you shall not make any application for Offer Shares either by way of an Offer
Shares Application Form or by way of an Electronic Application and vice versa. Such separate
applications will be deemed to be multiple applications and shall be rejected.
If you have made an application for the Reserved Shares, you may submit one separate
application for the Offer Shares in your own name, either by way of a printed Offer Shares
Application Form or by way of an Electronic Application; or submit one separate application for the
Placement Shares (other than the Reserved Shares) in your own name by way of a printed
Placement Shares Application Form, provided you adhere to the terms and conditions of this
Prospectus. Such separate application will not be treated as multiple applications.
JOINT OR MULTIPLE APPLICATIONS WILL BE REJECTED. If you submit or procure
submissions of multiple share applications for Offer Shares, Placement Shares or both Offer
Shares and Placement Shares, you may be deemed to have committed an offence under the
Penal Code (Chapter 224) of Singapore and the Securities and Futures Act (Chapter 289) of
Singapore (Securities and Futures Act) and your applications may be referred to the relevant
authorities for investigation. Multiple applications or those appearing to be or suspected of being
multiple applications will be liable to be rejected at our discretion.
A-1

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 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) bear post office box numbers.
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, 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 persons acting as 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
printed 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, 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 at the time of your Electronic Application, as the case
may be, differ from those particulars in your Securities Account as maintained with CDP. If you
have more than one individual direct Securities Account with CDP, your application shall be
rejected.
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 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.
We reserve the right to reject any application which does not conform strictly to the instructions
set out in the Application Forms and in this Prospectus or 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 further
reserves 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.
A-2

10. We 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. 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 will
give due consideration to the desirability of allotting the New Shares to a reasonable number of
applicants with a view to establishing an adequate market for the Shares.
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 New Shares allotted to you. This will be the only acknowledgement of
application monies received and is not an acknowledgement by us. 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 New 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 that our Company lodges a supplementary or replacement prospectus (relevant
document) pursuant to the Securities and Futures Act or any applicable legislation in force from
time to time prior to the close of the Invitation, and the New Shares have not been issued, we will
(as required by law) at our Companys sole and absolute discretion either:
(i)
within seven days of the lodgement of the relevant document give you a copy of the relevant
document and provide you with an option to withdraw your application; or
(ii)
treat your application as withdrawn and cancelled, in which case the applications shall be
deemed to have been withdrawn and cancelled and we shall refund your application monies
(without interest or any share of revenue or other benefit arising therefrom) to you within
seven days from the lodgement of the relevant document.
In the event that at the time of the lodgement of the relevant document, the New Shares have
already been issued but trading has not commenced, we will (as required by law) either:
(i)
within seven days of the lodgement of the relevant document give you a copy of the relevant
document and provide you with an option to return the Shares; or
(ii)
treat the issue of the New Shares as void, in which case the issue shall be deemed to be void
and we shall refund your application monies (without interest or any share of revenue or
other benefit arising therefrom) to you within seven days from the lodgement of the relevant
document.
Additional terms and instructions applicable upon the lodgement of the supplementary or
replacement prospectus, including instructions on how you can exercise the option to withdraw,
may be found in such supplementary or replacement prospectus.
Where an applicant has notified us within 14 days from the date of lodgment of the supplementary
or replacement prospectus of his wish to exercise his option under the Securities and Futures Act
to withdraw his application or return the New Shares allotted and/or allocated to him, we shall pay
to him all monies paid by him on account of his application for the New Shares without interest or
any share of revenue of other benefit arising therefrom and at his own risk, within seven days from
the receipt of such notification.
13. In the event of an under-subscription for Offer Shares as at the close of the Application List, we
will make available that number of Offer Shares under-subscribed to satisfy excess applications
for Placement Shares (other than the Reserved Shares) to the extent there is an over-subscription
for Placement Shares (other than the Reserved Shares) as at the close of the Application List.
A-3

In the event of an under-subscription for the Placement Shares (other than the Reserved Shares)
as at the close of the Application List, we will make available that number of Placement Shares
(other than the Reserved Shares) under-subscribed to satisfy excess applications for Offer
Shares to the extent that there is an over-subscription for Offer Shares as at the close of the
Application List.
Any of the Reserved Shares not taken up shall be made available first to satisfy applications for
the Placement Shares to the extent that there is an over-subscription for the Placement Shares
and then to satisfy applications for Offer Shares to the extent that there is an over-subscription for
Offer Shares as at the close of the Application List.
In the event of an over-subscription for Offer Shares as at the close of the Application List and
Placement Shares are fully subscribed or over-subscribed as at the close of the Application List,
the successful applications for Offer Shares will be determined by ballot or otherwise as
determined by our Directors and approved by the SGX-ST.
In the above instances, the basis of allotment of the Offer Shares as may be decided upon by our
Directors in ensuring a reasonable spread of shareholders of our Company, shall be made public,
as soon as practicable, via an announcement through the SGX-ST and by advertisement in a
generally circulating daily press.
14. You irrevocably authorise CDP to disclose the outcome of your application, including the number
of New Shares allotted to you pursuant to your application, to authorised operators.
15. Any reference to you or the Applicant in this section shall include an individual, a corporation,
an approved nominee company and trustee applying for Offer Shares by way of an Offer Share
Application Form or a person applying for the Reserved Shares by way of a Reserved Shares
Application Form.
16. By completing and delivering an Application Form or by making and completing an Electronic
Application by (in the case of an ATM Electronic Application) by pressing the Enter or OK or
Confirm or Yes or any other relevant key on the ATM (as the case may be) or by (in the case
of an Internet Electronic Application), clicking Submit or Continue or Yes or Confirm or any
other relevant button on the IB website screen (as the case may be) in accordance with the
provisions of this Prospectus, you:
(a)
irrevocably offer to subscribe for the number of New Shares specified in your application (or
such smaller number for which the application is accepted) at the Issue Price and agree that
you will accept such New Shares as may be alloted and/or 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, or the IB websites or ATMs of the Participating Banks, the terms
and conditions set out in this Prospectus shall prevail;
(c)
agree that the aggregate Issue Price for the New Shares applied for is due and payable to
us forthwith;
(d)
warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such information,
representations and declarations will be relied on by our Company in determining whether
to accept your application and/or whether to allot any New Shares to you; and
(e)
agree and warrant that if the laws of any jurisdictions outside Singapore are applicable to
your application, you have complied with all such laws and none of our Company, the
Manager, the Underwriter and/or the Placement Agent and/or the Sub-Placement Agent will
infringe any such laws as a result of the acceptance of your application.
A-4

17. Our acceptance of applications will be conditional upon, inter alia, we being satisfied that:
(a)
permission has been granted by the SGX-ST to deal in, and for quotation of, all our existing
Shares and the New Shares on the Official List of the SGX-SESDAQ;
(b)
the Management and Underwriting Agreement, and the Placement Agreement referred to in
the section entitled General and Statutory Information Management, Underwriting and
Placement Arrangements of this Prospectus have become unconditional and have not been
terminated; and
(c)
the Authority has not served a stop order which directs that no further Shares to which this
Prospectus relates be allotted or allocated.
18. In the event that a stop order in respect of the New Shares is served by the MAS or other
competent authority, and:
(a)
the New Shares have not been issued, we will (as required by law) deem all applications
withdrawn and cancelled and our Company shall refund the application monies (without
interest or any share of revenue or other benefit arising therefrom) to you within 14 days of
the date of the stop order; and
(b)
if the New Shares have already been issued but trading has not commenced, the issue will
(as required by law) be deemed void, and
(i)
if documents purporting to evidence title had been issued to you, our Company shall
inform you to return such documents to our Company within 14 days from that date;
and
(ii)
our Company will refund the application monies (without interest or any share of
revenue or other benefit arising therefrom) to you within seven days from the date of
the receipt of those documents (if applicable) or the date of the stop order, whichever
is later.
This shall not apply where only an interim stop order has been served.
In the event that an interim stop order in respect of the New Shares is served by the MAS or other
competent authority, no New Shares shall be issued to you during the time when the interim stop
order is in force.
19. The MAS is not able to serve a stop order in respect of the New Shares if the New Shares have
been issued and listed on a securities exchange and trading in them has commenced.
20. We will not hold any application in reserve.
21. We will not allot or allocate Shares on the basis of this Prospectus later than six months after the
date of registration of this Prospectus.
22. Additional terms and conditions for applications by way of Application Forms are set out in
Appendix A: Terms, Conditions and Procedures for Application and Acceptance Additional
Terms and Conditions for Application Using Printed Application Forms of this Prospectus.
23. Additional terms and conditions for applications by way of Electronic Applications are set out in
Appendix A: Terms, Conditions and Procedures for Application and Acceptance Additional
Terms and Conditions for Electronics Applications of this Prospectus.
A-5

ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION
FORMS
You shall make an application by way of Application Forms 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 appendix titled TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND
ACCEPTANCE of this Prospectus, as well as the Memorandum and Articles of Association of our
Company.
1.
Your application must be made using the WHITE Application Forms for Offer Shares and the
BLUE Application Forms for Placement Shares (other than the Reserved Shares) or the PINK
Application Forms for Reserved Shares 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. We
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.
All spaces in the Application Forms except those under the heading FOR OFFICIAL USE ONLY
must be completed and the words NOT APPLICABLE or N.A. should be written in any space
that is not applicable.
4.
Individuals, corporations, approved nominee companies and trustees must give their names in
full. You must make your application using, in the case of individuals, your full name appearing in
your identity card (if you have such an identification document) or in your passport and, in the case
of corporations, your full names as registered with a competent authority. If you are a nonindividual completing the Application Form under the hand of an official, you must state the name
and capacity in which that official signs. 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. 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 the Share Registrar and Share Transfer
Office. We 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.
6.
You (whether you are an individual and 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% 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 New Shares is a citizen or permanent resident of Singapore or a
corporation, whether incorporated or unincorporated and wherever incorporated or constituted, in
A-6

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%
of the issued share capital of or interests in such corporation.
7.
Your application must be accompanied by a remittance in Singapore currency for the full amount
payable, in respect of the number of New Shares applied for, in the form of a BANKERS DRAFT,
CASHIERS ORDER drawn on a bank in Singapore, made out in favour of ETIKA SHARE ISSUE
ACCOUNT crossed A/C PAYEE ONLY with your name and address written clearly on the
reverse side. We will not accept applications accompanied by ANY OTHER FORM OF
PAYMENT. We will reject remittances bearing NOT TRANSFERABLE or NON
TRANSFERABLE crossings. No acknowledgement of receipt will be issued by the
Company, or the Manager for applications or application monies received.
8.
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 after of the balloting or,
if no balloting is necessary, after the close of the Application List at your own risk. Where your
application is rejected or accepted in part only, the full amount or the balance of the application
monies 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 days after the close of the Application
List.
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 in accordance with the provisions of this
Prospectus, you agree that:
(a)
in consideration of us having distributed the Application Form to you and agreeing to close
the Application List at 12:00 noon on 21 December 2004 or such other time or date as
we may, in consultation with the Manager, decide and by completing and delivering this
Application Form, you agree that:
(i)
your application is irrevocable; and
(ii)
your remittance will be honoured on first presentation and that any monies 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;
(c)
in respect of the New Shares for which your application has been received and not rejected,
acceptance of your application shall be constituted by written notification and not otherwise,
notwithstanding any remittance being presented for payment by or on behalf;
(d)
you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application; and
(e)
in making your application, reliance is placed solely on information contained in this

Prospectus and that none of our Company, the Manager, the Underwriter, the Placement
Agent and the Sub-Placement Agent or any other person involved in the Invitation shall have
any liability for any information not so contained.
A-7

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. ONLY ONE APPLICATION should be enclosed
in each envelope
2.
You must:
3.
(a)
enclose the WHITE Offer Shares Application Form, duly completed and signed, together
with your correct remittance 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; and
(iii)
affix adequate Singapore postage,
(c)
seal WHITE envelope A;
(d)
write, in the special box provided on the larger WHITE official envelope B addressed to LIM
ASSOCIATES (PTE) LTD, 10 COLLYER QUAY, #19-08, OCEAN BUILDING, SINGAPORE
049315, the number of Offer Shares you have applied for; and
(e)
insert WHITE official envelope A into WHITE envelope B, seal WHITE envelope B, and
thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk to
LIM ASSOCIATES (PTE) LTD, 10 COLLYER QUAY #19-08, OCEAN BUILDING,
SINGAPORE 049315, so as to arrive by 12:00 noon on 21 December 2004 or such other
time as we 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.
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.
Applications for Placement Shares (other than Reserved Shares)

1.
Your application for Placement Shares (other than Reserved Shares) MUST be made using the
BLUE Placement Shares Application Forms. ONLY ONE APPLICATION should be enclosed in
each envelope.
2.
The completed and signed 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, CDP Securities Account number
and address written clearly on the reverse side, must be enclosed and sealed in an envelope to
be provided by you. 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 DMG & PARTNERS SECURITIES PTE.
LTD., 20 RAFFLES PLACE, #22-01, OCEAN TOWERS, SINGAPORE 048620, to arrive by 12:00
noon on 21 December 2004 or such other time or date as we 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.
A-8

Applications for Reserved Shares
1.
Your application for Reserved Shares MUST be made using the PINK Reserved Shares
Application Form. ONLY ONE APPLICATION should be enclosed in each envelope.
2.
The completed and signed PINK Reserved Shares Application Form and your 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, 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 DELIVER BY HAND at
your own risk to our Companys registered office presently at DMG & PARTNERS SECURITIES
PTE. LTD., 20 RAFFLES PLACE, #22-01, OCEAN TOWERS, SINGAPORE 048620, so as to
arrive by 12.00 noon on 21 December 2004 or such later time or date as we 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.
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 the IB website screens (in the case of Internet Electronics Applications) of
the relevant Participating Banks.
Currently, DBS Bank and UOB Group are the only Participating Banks through which a Internet
Electronic Applications can be made on the respective IB websites of DBS Bank and the UOB Group
For illustration purposes, the procedures for Electronic Applications through ATMs and the IB website
of DBS Bank are set out in the Steps for ATM Electronic Applications for Offer Shares through ATMs
of DBS Bank (including POSB ATMs) and the Steps for Internet Electronic Applications for Offer
Shares through the IB website of DBS Bank (the Steps) appearing respectively on pages A-14 to
A-16 of this Prospectus.
The Steps set out the actions that you must take at ATMs or the IB website of DBS Bank to complete
an Electronic Application. Please read carefully the terms of this Prospectus, the Steps and the terms
and conditions for Electronic Applications set out below before making and Electronic Application.
Any reference to you 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 lB website of a relevant
Participating Bank.
To make an ATM Electronic Application:
(a)
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 of the relevant Participating
Banks. An ATM card issued by one Participating Bank cannot be used to apply for the Offer
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.
(b)
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 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.
A-9

To make an Internet Electronic Application, you must have a bank account with and/or a User
Identification (User ID) and a Personal Identification Number (PIN) given by the relevant
participating Banks. Upon completion of your Internet Electronic Application, 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.
Further, you must ensure, when making an Internet Electronic Application, that the mailing address for
IB with the relevant Participating Bank is in Singapore and the application is being made in Singapore
and you will be asked to declare the above accordingly. Otherwise your application is liable to be
rejected.
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
appendix entitled APPENDIX A: TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION
AND ACCEPTANCE of this Prospectus, as well as the Memorandum and Articles of Association of our
Company.
1.
In connection with your Electronic Application for the Offer Shares 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 and have read, understood and
agreed to all the terms and conditions of application for the Offer 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, CPF
investment account number (if applicable) and share application amount (the
Relevant Particulars) from your account with the Participating Bank to the Share
Registrar, SGX-ST, CDP, SCCS, CPF, our Company, Manager, the Underwriter and the
Placement Agent (the Relevant Parties); and
(c)
that this is your only application 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 of any other relevant key
in the ATM or click Confirm or OK on the IB website 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 key ,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 of your Relevant Particulars to the Relevant Parties.
2.
BY MAKING AN ELECTRONIC APPLICATION YOU CONFIRM THAT YOU ARE NOT

APPLYING FOR OFFER SHARES AS 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 FOR OFFER SHARES AND
SHALL NOT MAKE ANY OTHER APPLICATION FOR OFFER SHARES, WHETHER AT THE
ATM OR THE IB WEBSITES OF ANY PARTICIPATING BANK OR ON THE APPLICATION
FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARES OR PLACEMENT
SHARES (OTHER THAN RESERVED SHARES) ON AN APPLICATION FORM, YOU SHALL
NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND VICE VERSA.
A-10

3.
You must have sufficient funds in your bank account with your Participating Bank at the time you
make your Electronic Application, failing which such Electronic Application will not be completed.
Any Electronic Application which does not conform strictly to the instructions set out on
the screens of the ATM or IB website through which your Electronic Application is being
made shall be rejected.
4.
You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares
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 we 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 any other relevant button on the IB website 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 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 monies will be refunded (without interest or any share of revenue
or other benefit arising therefrom) in Singapore currency to you by being automatically credited to
your account with your Participating Bank within 24 hours after balloting. 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 monies, 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 within 14 Market Days after the close of the Application List.
Responsibility for timely refund of application monies from unsuccessful or partially successful
Electronic Applications lies solely with the respective Participating Banks. Therefore, you are
strongly advised to consult your Participating Bank or the status of your Electronic Application
and/or the refund of any monies 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. None of the SGX-SESDAQ, the CDP, the SCCS, the Participating Banks, our
Company, the Manager, the Underwriter, the Placement Agent or the Sub-Placement Agent
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.
6.
If your Electronic Application made through the ATMs of one of the Participating Banks and is
unsuccessful, no notification will be sent by such Participating Bank.
If your Internet Electronic Application made through the IB website of DBS Bank or UOB Group
is unsuccessful, no notification will be sent by such Participating Bank.
A-11

If you make Electronic Applications through the ATMs of the following banks, you may check the
provisional results of their ATM Electronic Applications as follows:
Service
expected from
Bank
Telephone
Other Channels
Operating Hours
DBS
Bank
1800-339 6666
(for POSB account
holders)
Internet Banking
24 hours a day
Evening of the
balloting day
http://www.dbs.com(1)
1800-111 1111
(for DBS account
holders)
OCBC
1800-363 3333
ATM
ATM/Phone Banking
24 hours a day
Evening of the
balloting day
UOB
Group
1800-222 2121
ATM (Other Transactions

IPO Enquiry)
Phone Banking/ATM:
24 hours a day
Evening of the
balloting day
http://www.uobgroup.com(1),(2)
Internet Banking:
24 hours a day
Notes:
(1)
If you have made your Internet Electronic Applications through the IB websites of DBS Bank or UOB Group, you may
check the results of your application 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)
If you have made your Electronic Application through the ATM or the IB website of the UOB Group, you may check
the results of your application through UOB Personal Internet Banking, UOB ATMs or UOB PhoneBanking services.
7.
Electronic Applications shall close at 12:00 noon on 21 December 2004 or such other time
and date as we may, in consultation with the Manager decide. Subject to paragraph 9 below,
an Internet Electronic Application is deemed to be received when it enters the designated
information system of the relevant Participating Bank.
8.
You are deemed to have irrevocably requested and authorised us to:
9.
(a)
register the Offer Shares or Placement Shares 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 monies, should your Electronic Application be unsuccessful, by
automatically crediting your bank account with your Participating Bank with the relevant
amount 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 monies, should your Electronic Application be accepted in part
only, by automatically crediting your bank account with your Participating Bank with the
relevant amount within 14 Market Days after the close of the Application List.
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, and if, in any such event our Company,
the Manager, and/or the relevant Participating Bank do not receive your Electronic Application, or
data relating to your Electronic Application is lost, corrupted or not otherwise accessible, whether
wholly or partially for whatever reason, you shall be deemed not to have made an Electronic
A-12

Application and you shall have no claim whatsoever against our Company, the Manager and/or
the relevant Participating Bank for Offer Shares 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. We will reject any application by any person
acting as nominee except those made by approved nominee companies only.
11.
All your particulars in the records of your Participating Bank at the time you make your Electronic
Application shall be deemed to be true and correct and your Participating Bank, 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.
12. You should ensure that your personal particulars as recorded by both CDP and the
relevant Participating Bank 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 us making available the Electronic Application facility, through the

Participating Banks acting as our agents, at the ATMs and the IB websites (if any):
(i)
your Electronic Application is irrevocable; and
(ii)
your Electronic Application, our acceptance 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 Manager, the Participating Banks or 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 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 not otherwise, notwithstanding
any payment received by or on behalf;
(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 Manager, the Underwriter, the Placement Agent and the Sub-Placement
Agent nor any other person involved in the Invitation shall have any liability for any
information not so contained.
The instructions for Electronic Applications will appear on the ATM screens and the IB website
screens.
A-13

Steps for ATM Electronic Applications for Offer Shares through ATMs of DBS Bank (including
POSB ATMs)
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, SGX and No. refer to Account, amount, application, and, NRIC,
SGX-ST 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 Bank or POSB ATM Card
2.
Enter your Personal Identification Number
3.
Select CASHCARD MORE SERVICES
4.
Select ESA-IPO SHARE/INVESTMENTS
5.
Select ELECTRONIC SECURITY APPLICATION (IPOS/BOND/ST-NOTES) to ETIKA
6.
Read and understand the following statements which will appear on the screen:
7.
THE OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR

ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR PROFILE
STATEMENT (AND IF APPLICABLE, A COPY OF THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT) WHICH
CAN BE OBTAINED FROM ANY DBS BANK/POSB BRANCH IN SINGAPORE AND,
WHERE APPLICABLE, THE VARIOUS PARTICIPATING BANKS DURING BANKING
HOURS, SUBJECT TO AVAILABILITY.
ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES)

SHOULD READ THE PROSPECTUS/DOCUMENT OR PROFILE STATEMENT (AS
SUPPLEMENTED OR REPLACED, IF APPLICABLE) BEFORE SUBMITTING HIS
APPLICATION WHICH WILL NEED TO BE MADE IN THE MANNER SET OUT IN THE
PROSPECTUS/DOCUMENT OR PROFILE STATEMENT (AS SUPPLEMENTED OR
REPLACED, IF APPLICABLE). A COPY OF THE PROSPECTUS/DOCUMENT OR
PROFILE STATEMENT, AND IF APPLICABLE, A COPY OF THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT HAS BEEN
LODGED WITH AND REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE
WHO ASSUMES NO RESPONSIBILITY FOR ITS OR THEIR CONTENTS.
Press the ENTER key to confirm that you have read and understood.
Press the ENTER key to acknowledge:
YOU HAVE READ, UNDERSTOOD AND AGREED TO ALL TERMS OF THE APPLICATION
AND PROSPECTUS/DOCUMENT OR PROFILE STATEMENT, AND IF APPLICABLE, THE
REPLACEMENT OR SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE
STATEMENT.
YOU CONSENT TO DISCLOSE YOUR NAME, NRIC/PASSPORT NO., ADDRESS,

NATIONALITY, CDP SECURITIES A/C NO., CPF INVESTMENT A/C NO. AND SECURITY
APPLICATION AMOUNT FROM YOUR BANK A/C(S) TO SHARE AND SHARE APPLN
AMOUNT FROM YOUR BANK A/C(S) TO SHARE REGISTRARS, SGX, SCCS, CDP, CPF
AND THE ISSUER.
A-14

FOR FIXED AND MAX PRICE SECURITY APPLICATION, THIS IS YOUR ONLY
APPLICATION AND IT IS MADE IN YOUR OWN NAME AND AT YOUR OWN RISK.
THE MAXIMUM PRICE FOR EACH SHARE IS PAYABLE IN FULL ON APPLICATION AND
SUBJECT TO REFUND IF THE FINAL PRICE IS LOWER.
FOR TENDER SECURITIES APPLICATIONS, THIS IS YOUR ONLY APPLICATION AT THE

SELECTED TENDER PRICE 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

OR PROFILE STATEMENT AND IF APPLICABLE, THE REPLACEMENT OR
SUPPLEMENTARY PROSPECTUS/DOCUMENT OR PROFILE STATEMENT.
8.
Select your nationality.
9.
Select the DBS Bank account (AutoSave/Current/Savings/Savings Plus) or the POSB account
(current/savings) from which to debit your application monies.
10. Enter the number of securities you wish to apply for using cash.
11.
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 DBS Banks
records.)
12. Check the details of your share application, your NRIC/passport number and CDP Securities
Account number and number of securities on the screen and press the ENTER key to confirm
application
13. Remove the Transaction Record for your reference and retention only.
A-15

Steps for Internet Electronic Application for Offer Shares through the IB website of DBS Bank
For illustrative purposes, the steps for making an Internet Electronic Application through the DBS Bank
IB website is shown below. Certain words appearing on the screen are in abbreviated form (A/c, amt,
&, I/C, SGX and No. refer to Account, amount, and, NRIC, SGX-ST and Number
respectively)
Step
1.
Click on to DBS Bank website (www.dbs.com).
2.
Login to Internet banking.
3.
Enter your User ID and PIN.
4.
Select Electronic Security Application (ESA).
5.
Click Yes to proceed and to warrant that you have observed and complied with all applicable
laws and regulations.
6.
Select your country of residence.
7.
Click on Etika and click the Submit button
8.
Click Confirm to confirm:
9.
(a)
You have read, understood and agreed to all terms of application and the Prospectus/
Document or Profile Statement and if applicable, the Supplementary or Replacement
Prospectus/Document or Profile Statement.
(b)
You consent to disclose your name, I/C or Passport number, address, nationality, CDP
Securities Account number., CPF Investment account number (if applicable) and securities
application amount from your DBS Bank/POSB Account(s) to registrars of securities, SGX,
SCCS, CDP, CPF Board and issuer/vendor(s)
(c)
You are not a US Person (as such term is defined in Regulation S under the United States
Securities Act of 1933, as amended)
(d)
This application is made in your own name and at your own risk
(e)
For FIXED/MAX price securities application, this is your only application. For TENDER price
securities application, this is your only application at the selected tender price
Fill in details for share application and click Submit
10. Check the details of your share application, your NRIC/passport Number and click OK to confirm
your application
11.
Print Confirmation Screen (optional) for your reference & retention only.
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APPENDIX C: AUDITED FINANCIAL STATEMENTS OF ETIKA DAIRIES

SDN. BHD. FOR THE EIGHT MONTHS FINANCIAL PERIOD ENDED 31 MAY 2004
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APPENDIX D: THE LETTER FROM THE REPORTING ACCOUNTANTS IN

RELATION TO THE EXAMINATION OF PROFIT ESTIMATE FOR THE
FINANCIAL YEAR ENDED 30 SEPTEMBER 2004
13 December 2004
The Board of Directors
(previously known as Etika Corporation Private Limited)
Ocean Building
Singapore 049315
Dear Sirs
This letter has been prepared for inclusion in the Prospectus dated 13 December 2004 in connection
with the Invitation in respect of 43,000,000 ordinary shares (New Shares) of S$0.06 each in the capital
of Etika International Holdings Limited (previously known as Etika Corporation Private Limited)
(Company) payable in full, comprising:
(a)
2,000,000 Offer Shares at S$0.21 for each Offer Share by way of public offer; and
(b)
41,000,000 Placement Shares by way of placement, comprising:

(i)
37,500,000 Placement Shares at S$0.21 for each Placement Share; and
(ii)
3,500,000 Reserved Shares at S$0.21 for each Reserved Share,

We have examined the estimate in accordance with Singapore Standards on Auditing applicable to the
examination of prospective financial information. The Directors are responsible for the projection
including the assumptions set out under Managements Discussion and Analysis of Results of
Operations and Financial Position Profit Estimate on page 74 of the Prospectus on which the
estimate is based. The estimate includes results shown by the proforma financial information for the
eight months financial period ended 31 May 2004.
Based on our examination of the evidence supporting the assumptions, nothing has come to our
attention which causes us to believe that these assumptions do not provide a reasonable basis for the
estimate. Further, in our opinion, the estimate is properly prepared on the basis of the assumptions, is
consistent with the accounting policies normally adopted by the Proforma Group, which are in
accordance with International Financial Reporting Standards.
Actual results are likely to be different from the estimate since anticipated events frequently do not
occur as expected and the variation may be material.
Yours faithfully
BDO International
Singapore
Lee Joo Hai
Partner
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APPENDIX E: RULES OF ETIKA EMPLOYEE SHARE OPTION SCHEME

1.
DEFINITIONS
In this ESOS, unless the context otherwise requires, the following words and expressions shall
have the following meanings:
Act
The Companies Act (Chapter 50) of Singapore, as amended,

supplemented or modified from time to time
Auditors
The auditors of the Company for the time being
Board
The Board of Directors of the Company
CDP
The Central Depository (Pte) Limited
Committee
A committee of Directors duly authorised and appointed by the

Board pursuant to Rule 16 to administer ESOS
Company or Etika
control
The capacity to dominate decision making, directly or indirectly, in

relation to the financial and operating policies of that company
being controlled
Controlling Shareholder
A Shareholder who has control over the Company and unless

rebutted, a person who controls directly or indirectly a
shareholding of fifteen per cent. (15%) or more of the Companys
issued share capital shall be presumed to be a Controlling
Shareholder of the Company
CPF
Central Provident Fund
Director
A person holding office as a director for the time being of the

Company or any of the corporations within our Group
Employee
Any full-time confirmed employee of our Group
ESOS
The Etika Employee Share Option Scheme, as modified,

supplemented or amended from time to time
Executive Director
A Director who performs an executive function
Exercise Price
The price at which a Participant shall subscribe for each Share

upon the exercise of an Option, as determined in accordance with
Rule 9, or such adjusted price as may be applicable pursuant to
Rule 10
Financial Year
Each period, at the end of which the accounts of the Company

are prepared and audited, for the purpose of laying the same
before an annual general meeting of the Company
Grantee
The person to whom an offer of an Option is made
Group
The Company and its Subsidiary
Group Company
Any of the corporations within our Group
Market Day
A day on which the SGX-ST is open for trading of securities
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Market Price
The price as defined in Rule 9.1(ii)(a)
Non-Executive Director
A Director who is not an Executive Director
Offer Date
The date on which an offer to grant an Option is made
Option
The right to subscribe for Shares granted or to be granted

pursuant to the ESOS and for the time being subsisting
Option Period
The period for the exercise of an Option as set out in Rule 11
Participant
A holder of an Option
SGM
Special General Meeting of the Company
SGX-ST
The Singapore Exchange Securities Trading Limited
Shareholders
The registered holders for the time being of Shares (other than
CDP) or in the case of Depositors, Depositors who have Shares
entered against their names in the Depositary Register
Shares
Ordinary shares of S$0.06 each in the capital of the Company
Subsidiary
A corporation which is for the time being a subsidiary of the

Company as defined by the Act
S$
Singapore dollars
The terms Depositor, Depository Register and Depository Agent shall have the meanings
ascribed to them respectively by Section 130A of the Act.
The term associate shall have the meaning ascribed to it by the SGX-ST Listing Manual or any
other publication prescribing rules or regulations for corporations admitted to the Official List of the
SGX-ST (as modified, supplemented or amended from time to time).
Words denoting the singular shall, where applicable, include the plural and vice versa and words
denoting the masculine gender shall, where applicable, include the feminine and neuter gender.
References to persons shall include corporations.
Any reference in the ESOS 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 the ESOS shall, where applicable, have the same meaning assigned to it under the Act.
Any reference in the ESOS to a time of day shall be a reference to Singapore time unless
otherwise stated.
2.
NAME OF THE SCHEME

The ESOS shall be called the Etika Employee Share Option Scheme.
3.
OBJECTIVES OF ESOS
The ESOS will provide an opportunity for Employees who have contributed significantly to the
growth and performance of our Group, as well as Directors who satisfy the eligibility criteria as set
out in Rule 4 of the ESOS, to participate in the equity of the Company.
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The ESOS is primarily a share incentive scheme. It recognises the fact that the services of
Employees and Directors are important to the success and continued well being of our Group.
Implementation of the ESOS will enable the Company to give recognition to the contributions
made by such Employees and Directors. At the same time, it will give such Employees and
Directors an opportunity to have a direct interest in the Company and will also help to achieve the
following positive objectives:
(i)
to motivate such Employees and Directors to maintain a high level of performance and
contribution;
(ii)
to attract and maintain a group of key Employees whose contributions are important to the
long-term growth and profitability of our Group;
(iii)
to instil loyalty to, and a stronger identification by Employees with the long-term prosperity
of, our Group; and
(iv) to attract potential Employees with relevant skills to contribute to our Group and to create
value for Shareholders.
4.
ELIGIBILITY
4.1 An Employees eligibility to participate in the ESOS shall be at the absolute discretion of the
Committee and in addition, an Employee must:
(i)
be confirmed in his employment with our Group and not be on probation;
(ii)
have attained the age of twenty-one (21) years on or before the Offer Date; and
(iii)
not be an undischarged bankrupt and must not have entered into a composition with his
creditors.
4.2 All Directors of the Company (whether Executive or Non-Executive) are, subject to the absolute
discretion of the Committee, eligible to participate in the ESOS, provided that the Director must:
(i)
have attained the age of twenty-one (21) years on or before the Offer Date; and
(ii)
not be an undischarged bankrupt and must not have entered into a composition with his
creditors.
4.3 Save for the participation of Mr Kamal Y P Tan, all Controlling Shareholders and their associates
shall not be eligible to participate in the ESOS. Provided always that each grant of Options to Mr
Kamal Y P Tan (including the terms of and the number of Shares comprised in such Options) may
only be effected with the specific prior approval of Shareholders at a general meeting.
4.4 There shall be no restriction on the eligibility of any Grantee or Participant to participate in any
other share option or share incentive scheme, whether or not implemented by any of the other
corporations within our Group or any other corporation.
4.5 Subject to the Act and any requirement of the SGX-ST or any other stock exchange on which the
Shares may be listed or quoted, the terms of eligibility for participation in the ESOS may be
amended from time to time at the absolute discretion of the Committee.
5.
SIZE OF ESOS
The aggregate nominal amount of Shares over which the Committee may grant Options on any
date, when added to the nominal amount of Shares issued and issuable in respect of all Options
granted under the ESOS, shall not exceed fifteen per cent. (15%) of the issued share capital of
the Company on the day preceding that date.
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6.
MAXIMUM ENTITLEMENT
Subject to Rule 4, Rule 5 and Rule 10, the aggregate number of Shares in respect of which
Options may be offered to a Grantee for subscription in accordance with the ESOS shall be
determined at the discretion of the Committee which shall take into account (where applicable)
criteria such as the position and responsibilities within our Group, performance, years of service
and potential for future development of the Grantee.
7.
OFFER DATE
7.1 The Committee may, save as provided in Rule 4, Rule 5 and Rule 6, offer to grant Options to such
Grantees as it may select in its absolute discretion at any time during the period when the ESOS
is in force. Except that, for so long as the Shares are listed and quoted on the SGX-ST, no Options
shall be granted during the period of thirty (30) days immediately preceding the date of
announcement of the Companys interim and/or final results (whichever the case may be) and in
addition, in the event that an announcement on any matter of an exceptional nature involving
unpublished price sensitive information is made, offers to grant Options may only be made on or
after the third Market Day on which such announcement is released.
7.2 An offer to grant an Option to a Grantee shall be made by way of a letter (the Letter of Offer) in
the form or substantially in the form set out in Appendix I, subject to such modifications as the
Committee may determine from time to time.
8.
ACCEPTANCE OF OFFER
8.1 An Option offered to a Grantee pursuant to Rule 7 may only be accepted by the Grantee within
thirty (30) days after the relevant Offer Date and not later than 5.00 p.m. on the thirtieth (30th) day
from such Offer Date by completing, signing and returning to the Company the Acceptance Form
in or substantially in the form set out in Appendix II, subject to such modification as the Committee
may from time to time determine and together with the Acceptance Form:
(i)
paying S$1.00 or such other amount as the Committee may require as consideration (the
Consideration); and
(ii)
providing such other documentation as the Committee may require;
if, at the date on which the Company receives from the Grantee the Acceptance Form in respect
of the Option as aforesaid, he remains eligible to participate in the ESOS in accordance with these
Rules.
8.2 If a grant of an Option is not accepted strictly in the manner as provided in this Rule 8, such offer
shall, upon the expiry of the thirty (30) day period referred to in Rule 8.1, automatically lapse and
shall forthwith be deemed to be null and void and be of no effect.
8.3 The Company shall be entitled to reject any purported acceptance of a grant of an Option made
pursuant to this Rule 8 or Exercise Notice (as defined in Rule 12.1) given pursuant to Rule 12
which does not comply strictly with the terms of the ESOS.
8.4 Options are personal to the Grantees to whom they are granted and shall not be sold, mortgaged,
transferred, charged, assigned, pledged or otherwise disposed of or encumbered in whole or in
part or in any way whatsoever without the Committees prior written approval, but may be
exercised by the Grantees duly appointed personal representative as provided in Rule 11.7 in the
event of the death of such Grantee.
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8.5 The Grantee may accept or refuse the whole or part of the offer. If only part of the offer is
accepted, the Grantee shall accept the offer in multiples of 1,000 Shares. The Committee shall
within fifteen (15) Market Days of receipt of the Acceptance Form and the Consideration
acknowledge receipt of the same.
8.6 In the event that a grant of an Option results in a contravention of any applicable law or subsidiary
legislation, such grant shall be null and void and of no effect and the relevant Participant shall
have no claim whatsoever against the Company.
8.7 Unless the Committee determines otherwise, an Option shall automatically lapse and become
null, void and of no effect and shall not be capable of acceptance if:
(i)
it is not accepted in the manner as provided in Rule 8.1 within the thirty (30) day period
referred to therein; or
(ii)
the Participant dies prior to his acceptance of the Option; or
(iii)
the Participant is adjudicated a bankrupt or enters into composition with his creditors prior
to his acceptance of the Option; or
(iv) the Participant ceases to be in the employment of our Group or ceases to be a Director, in
each case, for any reason whatsoever prior to his acceptance of the Option; or
(v)
9.
the Company is liquidated or wound-up prior to the Participants acceptance of the Option.
EXERCISE PRICE
9.1 Subject to any adjustment pursuant to Rule 10, the Exercise Price for each Share in respect of
which an Option is exercisable shall be fixed by the Committee at:
(i)
where the Options are offered to a Grantee prior to the date of the listing and quotation of
the Shares on any stock exchange, a price equal to the price per Share offered to the public
at the initial public offering of the Shares;
(ii)
where the Options are offered to a Grantee after the date of the listing and quotation of the
Shares on any stock exchange:
(a)
a price (the Market Price) equal to the average of the last dealt prices for a Share, as
determined by reference to the daily official list or other publication published by the
SGX-ST for the three consecutive Market Days immediately preceding the Offer Date
of that Option, rounded up to the nearest whole cent in the event of fractional prices;
or
(b)
a price (as shall be determined by the Committee in its absolute discretion) which is set
at a discount to the Market Price, provided that:
(1)
the maximum discount shall not exceed twenty per cent. (20%) of the Market
Price (or such other percentage or amount as may be determined by the
Committee and permitted by the SGX-ST); and
(2)
the Shareholders in general meeting shall have authorised the making of offers
and grants of Options under the ESOS at a discount not exceeding the maximum
discount as aforesaid in a separate resolution.
9.2 Where the Exercise Price as determined above is less than the par value of the Share, the
Exercise Price shall be the par value.
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10. ALTERATION OF CAPITAL
10.1 If a variation in the issued share capital of the Company, whether by way of a capitalisation of
profits or reserves or rights issue or reduction (including any reduction arising by reason of the
Company purchasing or acquiring its issued Shares), subdivision, consolidation or distribution, or
issues for cash or for shares or otherwise than for cash or otherwise howsoever, should take
place, then:
(i)
the Exercise Price in respect of the Shares comprised in any Options to the extent
unexercised; and/or
(ii)
the nominal value, class and/or number of Shares comprised in any Options to the extent
unexercised and the rights attached thereto; and/or
(iii)
the maximum entitlement in any one Financial Year; and/or
(iv) the nominal value, class and/or number of Shares in respect of which additional Options may
be granted to Participants,
may, at the option of the Committee, be adjusted in such manner as the Committee may
determine to be appropriate including retrospective adjustments where such variation occurs after
the date of the exercise of an Option but the Record Date relating to such variation precedes such
date of exercise and, 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. However, the cancellation of issued Shares purchased or acquired by the
Company during the period when a share purchase mandate granted by the Shareholders
(including any renewal of such mandate) is in force by way of a market purchase of such Shares
undertaken by the Company on the SGX-ST shall not normally be regarded as a circumstance
requiring adjustment, unless the Committee shall consider an adjustment to be appropriate, or
unless the Committee determines that an adjustment should be made, having regard to market
purchases of Shares undertaken by the Company from time to time during the period the share
purchase mandate (or any renewal thereof) is in force.
For the purposes of these Rules, Record Date means the date as at the close of business on
which Shareholders must be registered in order to participate in any dividend, right, allotment or
other distribution (as the case may be).
10.2 Notwithstanding the provisions of Rule 10.1 above, no such adjustment shall be made:
(i)
which would result in the Shares to be issued upon the exercise of an Option being issued
at a discount to the nominal value of a Share and if such an adjustment would but for this
sub-Rule have so resulted, the Exercise Price payable shall be the nominal value of a Share;
(ii)
if as a result, the number of Shares which a Participant shall be entitled to subscribe for
pursuant to the exercise of Options granted to him shall be reduced (except in the event of
consolidation of Shares); and
(iii)
unless the Committee after considering all relevant circumstances considers it equitable to
do so.
10.3 The issue of securities as consideration for an acquisition of any assets by the Company will not
be regarded as a circumstance requiring adjustment under the provisions of this Rule 10.
10.4 The restriction on the number of Shares to be offered to any Grantee under Rule 5 above, shall
not apply to the number of additional Shares or Options over additional Shares issued by virtue
of any adjustment to the number of Shares and/or Options pursuant to this Rule 10.
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10.5 Upon any adjustment required to be made, the Company shall notify each Participant (or his duly
appointed personal representative(s)) in writing and deliver to him (or, where applicable, his duly
appointed personal representative(s)) a statement setting forth the new Exercise Price thereafter
in effect and the nominal value, class and/or number of Shares thereafter comprised in the Option
so far as unexercised and the maximum entitlement in any one Financial Year.
11.
OPTION PERIOD
11.1 Options granted with the Exercise Price set at the Market Price or set by the Committee in
accordance with Rule 9.1(i) shall only be exercisable, in whole or in part (provided that an Option
may be exercisable in part only in respect of 1,000 Shares or any multiple thereof) at any time,
by a Participant after the first anniversary of the Offer Date of that Option, provided always that
Options shall be exercised before the tenth anniversary of the relevant Offer Date (or, in the case
of Options granted to Non-Executive Directors, before the fifth anniversary of the relevant Offer
Date), or such earlier date as may be determined by the Committee, failing which all unexercised
Options shall immediately lapse and become null and void and a Participant shall have no claim
against the Company.
11.2 Options granted with the Exercise Price set at a discount to the 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) at any time, by a Participant after the second anniversary
of the Offer Date of that Option, provided always that Options shall be exercised before the tenth
anniversary of the relevant Offer Date (or, in the case of Options granted to Non-Executive
Directors, before the fifth anniversary of the relevant Offer Date), or such earlier date as may be
determined by the Committee, failing which all unexercisable Options shall immediately lapse and
become null and void and a Participant shall have no claim against the Company.
11.3 An Option shall, to the extent unexercised, immediately lapse and become null and void and a
Participant shall have no claim against the Company:
(i)
upon the bankruptcy of the Participant or the happening of any other event which result in
his being deprived of the legal or beneficial ownership of such Option; or
(ii)
in the event of misconduct on the part of the Participant, as determined by the Committee
in its absolute discretion.
11.4 Subject to Rule 11.4, 11.5 and 11.6, if a Participant ceases to be an Employee or a Director for
any reason whatsoever, the Participant shall not be entitled to exercise any unexercised Options
and any unexercised Option shall immediately lapse and become null and void. For the purpose
of this Rule, the Participant shall be deemed to have ceased being an Employee or a Director as
of the date of the notice of termination or resignation, as the case may be, unless such notice shall
be withdrawn prior to its effective date.
11.5 Where a Participant who is an Executive Director ceases to be an Executive Director due to a
change in control of the Board of Directors, he shall, notwithstanding Rule 11 and Rule 12, be
entitled to exercise in full all unexercised Options from the date he ceased to be an Executive
Director until the end of the relevant Option Period.
11.6 If a Participant ceases to be an Employee by reason of:
(i)
his ill health, injury or disability, in each case, as certified by a medical practitioner approved
by the Committee;
(ii)
his redundancy;
(iii)
his retirement at or after a normal retirement age;
(iv) his retirement before that age with the consent of the Committee; or
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(v)
the Subsidiary, by which he is principally employed ceasing to be a corporation within our

Group or the undertaking or part of the undertaking of such Subsidiary, being transferred
otherwise than to another corporation within our Group, or for any other reason approved in
writing by the Committee, he may, at the absolute discretion of the Committee, exercise any
unexercised Option within the relevant Option Period, and upon the expiry of such period,
the Option shall immediately lapse and become null and void.
11.7 If a Participant dies and at the date of his death holds any unexercised Option, such Option may,
at the absolute discretion of the Committee, be fully exercisable by the duly appointed legal
personal representatives of the Participant from the date of his death to the end of the relevant
Option Period and upon the expiry of such period, the Option shall immediately lapse and become
null and void.
11.8 The Committee may, by notification, provide for further restrictions on the period during which
Options may be exercised (whether granted with the Exercise Price set at a discount to Market
Price or not) whether by providing a schedule for the vesting of Shares comprised in the relevant
Options or otherwise.
12. EXERCISE OF OPTIONS, ALLOTMENT AND LISTING OF SHARES
12.1 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), by a Participant giving notice in writing
to the Company in or substantially in the form set out in Appendix III (the Exercise Notice),
subject to such modifications as the Committee may from time to time determine. Every Exercise
Notice must be accompanied by a remittance for the full amount of the aggregate Exercise Price
in respect of the Shares which have been exercised under the Option, the relevant CDP charges
(if any) and any other documentation the Committee may require. All payment shall be made by
cheque, cashiers order, bank draft or postal order made out in favour of the Company. An Option
shall be deemed to be exercised upon the receipt by the Company of the said notice duly
completed and the receipt by the Company of the full amount of the aggregate Exercise Price in
respect of the Shares which have been exercised under the Option.
12.2 Subject to:
(i)
such consents or other actions required by any competent authority under any regulations
or enactments for the time being in force as may be necessary (including any approvals
required from the SGX-ST); and
(ii)
compliance with the Rules of ESOS and the memorandum of association and bye-laws of
the Company,
the Company shall, as soon as practicable after the exercise of an Option by a Participant but in
any event within ten (10) Market Days after the date of the exercise of the said Option in
accordance with Rule 12.1, allot the Shares in respect of which such Option has been exercised
by the Participant and within five (5) Market Days from the date of such allotment, despatch the
relevant share certificates to the Participant or, if the Shares are listed and quoted on the SGX-ST,
to CDP for the credit of the securities account or securities sub-account of that Participant by
ordinary post or such other mode of delivery as the Committee may deem fit.
12.3 The Company shall, if necessary, as soon as practicable after the exercise of an Option, apply to
the SGX-ST or any other stock exchange on which the Shares are quoted or listed for permission
to deal in and for quotation of the Shares which may be issued upon exercise of the Option and
the Shares (if any) which may be issued to the Participant pursuant to any adjustments made in
accordance with Rule 10.
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12.4 Shares which are all allotted on the exercise of an Option by a Participant shall be issued, as the
Participant may elect, in his name or, if the Shares are listed and quoted on the SGX-ST, in the
name of CDP to the credit of the securities account of the Participant maintained with CDP or the
Participants securities sub-account with a CDP Depository Agent or the CPF investment account
maintained with a CPF agent bank.
12.5 Shares allotted and issued upon the exercise of an Option shall be subject to all provisions of the
memorandum of association and bye-laws of the Company and shall rank pari passu in all
respects with the then existing issued Shares in the capital of the Company except for any
dividend, right, allotment or other distribution, the Record Date of which is prior to the date such
Option is exercised.
12.6 Except as set out in Rule 12.2 and subject to Rule 10, an Option does not confer on a Participant
any right to participate in any new issue of Shares.
12.7 The Company shall keep available sufficient unissued Shares to satisfy the full exercise of all
Options for the time being remaining capable of being exercised.
13. ALTERATIONS AND MODIFICATIONS TO THE ESOS
13.1 Any or all of the provisions of the ESOS may be modified and/or altered at any time and from time
to time by resolution of the Committee except that:
(i)
any modification or alteration which shall alter adversely the rights attaching to any Option
granted prior to such modification or alteration and which in the opinion of the Committee,
materially alters the rights attaching to any Option granted prior to such modification or
alteration may only be made 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 Shares which would fall to be issued and
allotted upon exercise in full of all outstanding Options;
(ii)
the definitions of Director, Executive Director, Employee and Group and the provisions
of Rules 4, 5, 6, 8.1, 9, 11.1, 12.5, 16 and this Rule shall not be altered or modified to the
advantage of Participants under the ESOS except with the prior approval of Shareholders at
a general meeting; and
(iii)
(if required) no modification or alteration shall be made without the prior approval of the
SGX-ST or any other stock exchange on which the Shares are quoted or listed, and such
other regulatory authorities as may be necessary.
For the purposes of Rule 13.1(i), the opinion of the Committee as to whether any modification or
alteration would alter adversely the rights attaching to any Option shall be final and conclusive.
13.2 Notwithstanding anything to the contrary contained in Rule 13.1, the Committee may at any time
by resolution (and without any other formality save for the prior approval of the SGX-ST if
necessary) amend or alter the ESOS in any way to the extent necessary to cause the ESOS to
comply with any statutory provision or the provisions or the regulations of any regulatory or other
relevant authority or body (including the SGX-ST).
13.3 Written notice of any modification or alteration made in accordance with this Rule shall be given
to all Participants.
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14. DURATION OF ESOS
14.1 The ESOS 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 on which the ESOS is adopted by Shareholders.
Subject to compliance with any applicable laws and regulations in Singapore, the ESOS may be
continued beyond the above stipulated period with the approval of the Shareholders by ordinary
resolution at a general meeting and of any relevant authorities which may then be required.
14.2 The ESOS may be terminated at any time by the Committee or by resolution of the Shareholders
at a general meeting subject to all other relevant approvals which may be required and if ESOS
is so terminated, no further Options shall be offered by the Company hereunder.
14.3 The termination, discontinuance or expiry of the ESOS shall be without prejudice to the rights
accrued to Options which have been granted and accepted as provided in Rule 8, whether such
Options have been exercised (whether fully or partially) or not.
15. TAKE-OVER AND WINDING-UP OF THE COMPANY
15.1 In the event of a take-over being made for the Company, Participants (including Participants
holding Options which are then not exercisable pursuant to the provisions of Rule 11.1) holding
Options as yet unexercised shall, notwithstanding Rule 11 but subject to Rule 15.5, be entitled to
exercise such Options in full or in part during the period commencing on the date on which such
offer is made or, if such offer is conditional, the date on which the offer becomes or is declared
unconditional, as the case may be, and ending on the earlier of:
(i)
the expiry of six (6) months thereafter, unless prior to the expiry of such six (6) month period,
at the recommendation of the offeror and with the approvals of the Committee and (if so
required) the SGX-ST, such expiry date is extended to a later date (being a date falling not
later than the date of expiry of the Option Period relating thereto); or
(ii)
the date of the expiry of the Option Period relating thereto,
whereupon any Option then remaining unexercised shall immediately lapse and become null and
void.
Provided always that if during such period the offeror becomes entitled or bound to exercise the
rights of compulsory acquisition of the Shares under the provisions of the Act and, being entitled
to do so, gives notice to the Participants that it intends to exercise such rights on a specified date,
all Options shall remain exercisable by the Participants until such specified date or the expiry of
the respective Option Periods relating thereto, whichever is earlier. Any Option not so exercised
by the said specified date shall lapse and become null and void provided that the rights of
acquisition or obligation to acquire stated in the notice shall have been exercised or performed,
as the case may be. If such rights of acquisition or obligations have not been exercised or
performed, all Options shall, subject to Rule 11, remain exercisable until the expiry of the Option
Period.
15.2 If under any applicable laws, 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 corporation or corporations, Participants (including Participants
holding Options which are then not exercisable pursuant to the provisions of Rule 11.1) shall
notwithstanding Rule 11 but subject to Rule 15.5, be entitled to exercise any Option then held by
them 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 the compromise or arrangement becomes effective, whichever is later (but not after
the expiry of the Option Period relating thereto), whereupon any unexercised Option shall lapse
and become null and void, provided always that the date of exercise of any Option shall be before
the expiry of the relevant Option Period.
E-10

15.3 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 lapse and become null and void.
15.4 In the event a notice is given by the Company to its members to convene a general meeting for
the purposes of considering, and if thought fit, approving a resolution to voluntarily wind-up the
Company, the Company shall on the same date as or soon after it despatches such notice to each
member of the Company give notice thereof to all Participants (together with a notice of the
existence of the provisions of this Clause) and thereupon, each Participant (or his legal personal
representative(s)) shall be entitled to exercise all or any of his Options at any time not later than
two business days prior to the proposed general meeting of the Company by giving notice in
writing to the Company, accompanied by a remittance for the full amount of the aggregate
Exercise Price for the Shares in respect of which the notice is given whereupon the Company
shall as soon as possible and, in any event, no later than the business day immediately prior to
the date of the proposed general meeting referred to above, allot the relevant Shares to the
Participant credited as fully paid.
15.5 If in connection with the making of a general offer referred to in Rule 15.1 above or the ESOS
referred to in Rule 15.2 above or the winding up referred to in Rule 15.4 above, 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 exercisable, may not, at the discretion of the Committee, be
permitted to exercise that Option as provided for in this Rule 15.
15.6 If the events stipulated in this Rule 15 should occur, to the extent that an Option is not exercised
within the respective periods referred to herein in this Rule 15, it shall lapse and become null and
void.
16. ADMINISTRATION OF THE ESOS AND SHAREHOLDERS APPROVAL
16.1 The ESOS 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.
16.2 The Committee shall have the power, from time to time, to make or vary such regulations (not
being inconsistent with the ESOS) for the implementation and administration of ESOS as it thinks
fit.
16.3 Any decision of the Committee, made pursuant to any provision of the ESOS (other than a matter
to be certified by the Auditors), shall be final and binding (including any decisions pertaining to
disputes as to the interpretation of ESOS or any rule, regulation, or procedure thereunder or as
to any rights under the ESOS).
16.4 A Participant who is a member of the Committee shall not be involved in its deliberation in respect
of Options (if any) to be granted to him.
16.5 Where approval or authorisation of Shareholders is required to be sought under the ESOS, the
Company shall explain to the Shareholders the basis for the following:
(i)
participation by the Non-Executive Directors;
(ii)
discount quantum; and
(iii)
size of the ESOS.
E-11

16.6 The Company shall, where applicable, briefly describe in the circular to the Shareholders the
potential cost to it arising from the grant of Options.
16.7 The Company shall disclose the terms of the ESOS or a summary of the principal terms of the
ESOS in the circular to the Shareholders. The summary shall contain all the information required
under rules 844 to 849, and rules 853 to 854 in Part VIII of the SGX-ST Listing Manual and/or such
other applicable statutory provisions or regulations of any regulatory authority or body (including
the SGX-ST) from time to time in force. If only a summary is disclosed, the Company shall make
the terms of the ESOS available for inspection at its registered office for at least 14 days before
the date of the general meeting of the Shareholders.
16.8 Where any director of the Company is trustee of the ESOS or has an interest direct or indirect in
the ESOS, the circular must disclose that interest.
16.9 Shareholders who are eligible to participate in the ESOS must abstain from voting on any
resolution relating to the ESOS.
17. NOTICES
17.1 Any notice given by a Participant to the Company shall be sent by post or delivered to the principal
office of the Company or such other address as may be notified by the Company to the Participant
in writing.
17.2 Any notice or documents given by the Company to a Participant shall be sent to the Participant
by hand or sent to him at his home address stated in the records of the Company or the last known
address of the Participant, and if sent by post shall be deemed to have been given on the day
immediately following the date of posting.
18. TERMS OF EMPLOYMENT UNAFFECTED
18.1 The ESOS or any Option shall not form part of any contract of employment between the Company,
or any Group Company and any Participant and the rights and obligations of any individual under
the terms of the office or employment with such corporation within our Group shall not be affected
by his participation in the ESOS or any right which he may have to participate in it or any Option
which he may hold and the ESOS or any Option shall afford such an individual no additional rights
to compensate or damages in consequence of the termination of such office or employment for
any reason whatsoever.
18.2 The ESOS shall not confer on any person any legal or equitable rights (other than those
constituting the Options themselves) against the Company or our Group directly or indirectly or
give rise to any cause of action at law or in equity against the Company and/or our Group.
19. TAXES
All taxes (including income tax) arising from the exercise of any Option granted to any Participant
under the ESOS shall be borne by the Participant.
E-12

20. COSTS AND EXPENSES OF THE ESOS
20.1 Each Participant shall be responsible for all fees of CDP (if any) relating to or in connection with
the issue and allotment of any Shares pursuant to the exercise of any Option in CDPs name, the
deposit of share certificate(s) with CDP, the Participants securities account with CDP or the
Participants securities sub-account with his Depository Agent or CPF investment account with a
CPF agent bank (collectively, the CDP charges) and all taxes referred to in Rule 19 which shall
be payable by the relevant Participant.
20.2 Save for such costs and expenses expressly provided in the ESOS to be payable by the
Participants, all fees, costs, and expenses incurred by the Company in relation to the ESOS
including but not limited to the fees, costs and expenses relating to the issue and allotment of the
Shares pursuant to the exercise of any Option shall be borne by the Company.
21. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained and subject to the Act, the Board, 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 respect of any matter under or in
connection with the ESOS including but not limited to the Companys delay or failure in issuing
and allotting the Shares or in applying for or procuring the listing of and quotation for the Shares
allotted pursuant to the exercise of any Option on the SGX-ST or any other stock exchanges on
which the Shares are quoted or listed.
22. DISPUTES
Any disputes or differences of any nature in connection with the ESOS shall be referred to the
Committee and its decision shall be final and binding in all respects.
23. 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
Singapore or any other relevant country.
24. DISCLOSURES IN ANNUAL REPORTS
The Company shall, for so long as the Shares are listed and quoted on the SGX-ST, make the
following disclosure in its annual report:
(i)
the names of the members of the Committee;
(ii)
the information required in the table below for the following Participants:
(a)
Directors of the Company;
(b)
Participants who are Controlling Shareholders and their associates; and
(c)
Participants, other than those in (i) and (ii) above, who receive five percent. (5%) or
more of the total number of Options available under the ESOS.
E-13
Name of
Participant
(iii)
Options
granted during
Financial Year
under review
(including
terms)
Aggregate
options granted
since
commencement
of the ESOS to
end of
Financial Year
under review
Aggregate
options
exercised since
commencement
of the ESOS to
end of
Financial Year
under review
Aggregate
options
outstanding as
at end of
Financial Year
under review
The number and proportion of Options granted at the following discounts to average market
value of the Shares in the financial year under review:
(a)
options granted at up to ten per cent. (10%) discount; and
(b)
options granted at between ten per cent. (10%), but not more than twenty per cent.
(20%) discount.
25. GOVERNING LAW

The ESOS shall be governed by and construed in accordance with the laws of the Republic of
Singapore. The Company and the Participants, by accepting the offer of the grant of Options in
accordance with the ESOS, submit to the exclusive jurisdiction of the courts of the Republic of
Singapore.
E-14

APPENDIX I

LETTER OF OFFER
Serial No:
PRIVATE AND CONFIDENTIAL
Date:
To:
Name
Designation
Address
PRIVATE AND CONFIDENTIAL
Dear Sir/Madam
We are pleased to inform you that you have been nominated by the Committee of the Board of Directors
of Etika International Holdings Limited (the Company) to participate in the Etika Employee Share
Option Scheme (the ESOS). Terms as defined in the ESOS shall have the same meaning when used
in this letter.
Accordingly, an offer is hereby made to grant you an Option, in consideration of the payment of a sum
of S$1.00, to subscribe for and be allotted
ordinary shares of S$0.06 each in the capital
of the Company at the price of S$
per ordinary share. The Option shall be subject to
the terms of this Letter of Offer and the ESOS (as the same may be amended from time to time
pursuant to the terms and conditions of the ESOS), a copy of which is enclosed herewith.
The Option is personal to you and may not be sold, mortgaged, transferred, charged, assigned,
pledged or otherwise disposed of or encumbered in whole or in part or in any way whatsoever.
If you wish to accept the offer, please sign and return the enclosed Acceptance Form with a sum of
S$1.00 not later than
a.m./p.m. on the
day of
failing which this
offer will forthwith lapse.
Yours faithfully
For and on behalf of
Name:
Designation:
E-15

APPENDIX II

ACCEPTANCE FORM
Serial No:
To:
The Committee
Etika Employee Share Option Scheme
c/o The Company Secretary
Ocean Building
Singapore 049315
Closing Time and Date for Acceptance of Option
No. of Shares in respect of which Option is offered
Exercise Price per Share
S$
Total Amount Payable on acceptance of Option
S$
(exclusive of the relevant CDP charges)
I have read your Letter of Offer dated

(the Offer Date) and agree to be bound by the
terms thereof and of the Etika Employee Share Option Scheme (the ESOS). I confirm that my
acceptance of the Option will not result in the contravention of any applicable law or regulation in
relation to the ownership of shares in the Company or options to subscribe for such shares.
I hereby accept the Option to subscribe for
ordinary shares of S$0.06 each in the
capital of Etika International Holdings Limited (the Shares) at S$
per Share and
enclose *cash/bankers draft/cashiers order/postal order no.
for S$1.00 being
payment for the purchase of the Option.
I understand that I am not obliged to exercise the Option.
I also understand that I shall be responsible for all the fees of CDP (if applicable) relating to or in
connection with the issue and allotment of any Shares in CDPs name, the deposit of share certificates
with CDP, my securities account with CDP or my securities sub-account with a CDP Depository Agent
or CPF investment account with a CPF agent bank (as the case may be) (collectively, the CDP
charges).
I confirm that as at the date hereof:
(a)
I am not less than 21 years old nor an undischarged bankrupt nor have I entered into a
composition with any of my creditors;
(b)
I satisfy the eligibility requirements to participate in the ESOS as defined in Rule 4 of the ESOS;
and
(c)
I satisfy other requirements to participate in the ESOS as set out in the Rules of the ESOS.
E-16

I hereby acknowledge that you have not made any representation or warranty or given me any
expectation of employment or continued employment to induce me to accept the offer and that the
terms of the Letter of Offer and this Acceptance Form constitute the entire agreement between us
relating to the offer.
I agree to keep all information pertaining to the grant of the Option to me confidential.
PLEASE PRINT IN BLOCK LETTERS
Name in full
Designation
Address
Nationality
*NRIC/Passport No.
Signature
Date
Delete as appropriate.
Notes:
(i)
Option must be accepted in full or in multiples of 1,000 Shares.
(ii)
The Acceptance Form must be forwarded to the Company Secretary in an envelope marked Private and Confidential.
(iii) The Participant shall be informed by the Company of the relevant CDP charges payable at the time of the exercise of an
Option.
E-17

APPENDIX III

EXERCISE NOTICE
Serial No:
To:
The Committee
Etika Employee Share Option Scheme
c/o The Company Secretary
Ocean Building
Singapore 049315
Total Number of Shares of S$0.06 each (the Shares)

at S$
per Share under an Option granted
on
(the Offer Date)
Number of Shares previously allotted and issued

thereunder
Outstanding balance of Shares which may be allotted

and issued thereunder
Number of Shares now to be subscribed (in multiples of

1,000)
1.
Pursuant to your Letter of Offer dated

thereof, I hereby exercise the Option to subscribe for
Holdings Limited (the Company) at S$
(the Offer Date) and my acceptance

Shares in Etika International
per Share.
2.
I hereby request the Company to allot and issue to me the number of Shares specified in
paragraph 1 in *my name/name of The Central Depository (Pte) Limited (CDP) to the credit of
my *Securities Account with a CDP/*Securities Sub-Account with a CDP Depository Agent /*CPF
investment account with a CPF agent bank specified below and to deliver the share certificates
relating thereto to me/CDP at my own risk. I further agree to bear such fees or other charges as
may be imposed by CDP/CPF (the CDP charges) and any stamp duties in respect thereof:
*(a) Direct Securities Account Number:
*(b) Securities Sub-Account Number:
Name of CDP Depository Agent:
* (c) CPF Investment Account Number:
Name of CPF agent bank:
3.
I enclose a *cheque/cashiers order/bank draft/postal order no.

S$
by way of subscription for the total number of the said Shares.
4.
I agree to subscribe for the Shares subject to the terms of the Letter of Offer, the Etika Employee
Share Option Scheme (as the same may be amended pursuant to the terms thereof from time to
time) and the memorandum and articles of Association of the Company.
E-18
for

5.
I declare that I am subscribing for the Shares for myself and not as a nominee for any other
person.
PLEASE PRINT IN BLOCK LETTERS

Name in full
Designation
Address
Nationality
NRIC/Passport No.
Signature
Date
Delete as appropriate
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 form entitled Exercise Notice must be forwarded to the Company Secretary in an envelope marked Private and
Confidential.
E-19
10 Collyer Quay
Ocean Building #19-08
Singapore 049315
Tel: (65) 6230 9508 Fax: (65) 6536 1360
www.etikadairies.com.my
SNP SPrint Pte Ltd 6418858

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PROSPECTUS DATED 13 DECEMBER 2004

(Registered by the Monetary Authority

INVESTING IN OUR SHARES INVOLVES

Etika International Holdings Limited

PrimePartners Corporate Finance Pte. Ltd.

Underwriter and Placement Agent

DMG & Partners Securities Pte. Ltd.

PrimePartners Corporate Finance Pte. Ltd.

Our Brands & Products

EAST & WEST

For Dairy Champ

Extensive distribution network and well-diversified

- Exporting products under our Dairy Champ brand and at least

Cost Efficient Operations

Established customer relationships

Expand overseas market

Expand breadth & depth of Malaysian market

* Based on unaudited management accounts for FY2004

GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . .

DETAILS OF THE INVITATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Listing on the SGX-SESDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Overview of Our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Summary Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Risks Related to Our Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Risks Related to Political and Economic Considerations . . . . . . . . . . . . . . . . . . . . . . . .

Risks Related to Our Securities and Our Trading Market . . . . . . . . . . . . . . . . . . . . . . .

CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . .

MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND

Review of Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Capital Expenditure and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Foreign Exchange Exposure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Significant Changes in Accounting Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

HISTORY AND BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

History and Development of Our Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Quality and Reliability Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Awards and Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Customers and Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Marketing and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Suppliers and Raw Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS . . . . . . . . . . . . . . . . . . . . .

Business Strategies and Future Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DIRECTORS, MANAGEMENT AND STAFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management Reporting Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Etika Employee Share Option Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTERESTED PERSON TRANSACTIONS AND CONFLICTS OF INTERESTS . . . . . . . . . .

Past Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Existing and Future Interested Person Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . .

Review Procedures for Future Interested Person Transactions . . . . . . . . . . . . . . . . . . .

Potential Conflict of Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DESCRIPTION OF ORDINARY SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exchange Controls in Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CLEARANCE AND SETTLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INDEPENDENT COMPILATION REPORT IN RELATION TO THE PROFORMA FINANCIAL

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

: TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND