(Incorporated in the Republic of Singapore on 31 March 2000

)

PROSPECTUS DATED 8 JANUARY 2001
Application has been made to the Singapore Exchange Securities Trading Limited (the “SGXST”) for permission to deal in, and for quotation of, all of our ordinary shares of $0.05 each (the “Shares”) comprising existing issued and fully paid-up shares and the new Shares (the “New Shares”) which are the subject of this Invitation (as defined herein). Such permission will be granted when the Company has been admitted to the Official List of the SGX Sesdaq. Acceptance of applications will be conditional upon permission being granted to deal in, and for quotation of, all the issued Shares and the New Shares. Moneys paid in respect of any application accepted will be returned, without interest or any share of revenue or other benefit arising therefrom and at the applicant’s own risk, if the said permission is not granted. The SGX-ST assumes no responsibility for the correctness of any of the statements made, opinions expressed or reports contained in this Prospectus. Admission to the Official List of the SGX Sesdaq is not to be taken as an indication of the merits of the Invitation, the Company, its subsidiaries, the Shares or the New Shares. A copy of this Prospectus, together with copies of the Application Forms, has been lodged with and registered by the Registrar of Companies and Businesses in Singapore who takes no responsibility for its contents.

Invitation in respect of 39,470,000 Ordinary Shares of $0.05 each comprising 25,000,000 New Shares and 14,470,000 Vendor Shares as follows:(1) 6,000,000 Offer Shares at $0.32 for each Offer Share by way of public offer, and 33,470,000 Placement Shares by way of placement, comprising:(i) 32,430,000 Placement Shares at $0.32 for each Placement Share; and

(2)

(ii) 1,040,000 Reserved Shares at $0.32 for each Reserved Share reserved for our Directors, management, employees and others who have contributed to the success of our Group, payable in full on application.

Manager, Underwriter and Placement Agent

“A SPECIALIST IN INTEGRATED TREATMENT SYSTEMS FOR ADVANCED WATER TREATMENT AND MEMBRANE FILTRATION”

Core

business
A one-stop shop service for the design, fabrication, installation, commissioning and maintenance of water treatment systems, specialising in advanced membrane filtration technologies that have found diverse applications across industries and markets.
Our Shanghai Office

Our headquarters in Singapore

We build specialised systems for:

• • • • •

Water Purification of raw water for public consumption and industrial applications Wastewater Treatment for industries Water Recycling of wastewater for reuse Advanced Membrane Filtration to recover or purify products, such as antibiotics, Vitamin C, dyes and urea in manufacturing process High-purity piping systems and equipment hook-up to convey pure products, such as compressed air, specialty gases, ultra-pure water and chemicals to manufacturing plants

Water Treatment System in an electronic factory EDI System in a semiconductor facility

Membrane Filtration Plant for water recycling Recycling of brine solution in a sugar factory

Financial

highlights
(’S$ mil)

For financial year ended December 31

20.140 20

Financial Performance Financial Performance
18 15.775 16

14

12

10

8.720

8 6.391
Profit before tax

6.929 5.954

6 3.870

4
Turnover

2 0.137 0

1.058 0.430

Our competitive

1997

1998

1999

10 mths ended 31 Oct ‘00

2000(Estimate)

strengths
Provide integrated services • Designing • Engineering • Installation • Commissioning • Maintenance Ability to meet the diverse needs of various industries by utilising membrane filtration • Serve industries such as electronics, pharmaceutical and biotechnology • Not reliant on a single industry or customer Experienced management team Led by founder and Managing Director, Ms Olivia Lum, for the past 10 years • Assisted by a dedicated management team

Ability to meet international standards • Produce water which meets USP standards • Manufacture equipment which meets ASME standards Customised systems • Provide solutions to suit the various needs of customers • Customise membrane filtration plants for diverse applications required by different industries Established relationship with customers and suppliers • Approximately 70% of our business is obtained through referrals and recommendations by our existing customers, engineering consultants and companies • Supply agreement with E-Cell Corporation of Canada for a patented electrochemical liquid purification apparatus widely used in industries requiring ultra-pure water

Brisk pace of PRC‘s industrial development further compounds the Incorporatedshortage of potable water Singapore on 31 March 2000 in the Republic of Growth in membrane industry • Demand for membrane materials in the US is projected to grow by 7.Projected growth of 10% to 15% per annum over the next three years.8 billion in 2004 Our business strategies Provide fully integrated services • Continue to provide a wide range of water treatment services • Plan to provide emergency recovery units to provide uninterrupted water treatment while servicing or upgrading customers’ water treatment systems Lower direct costs • Aim to manufacture in-house up to 30% to 50% of the materials used in our systems Incorporate information technology into systems • Enhance operational capabilities of our systems Strengthen and cultivate relationships with engineering consultants and companies • Keep abreast of new projects Tender for projects of larger value Increase research & development and improve quality standards • Develop proprietary membranes • Improve existing membranes • Find new uses and applications • Drive quality system to ISO standards .less than 1% of world’s fresh water is readily accessible for human use Growing market for conservation and recycling of water . and by 20% to 25% per annum in the longer term in Singapore Increasing water consumption .2 billion in 1999 to US$1.8% per annum from US$1.Water consumption in PRC estimated to grow at 5% per annum .Industry prospects Rising demand for water treatment systems • • • Shortage of fresh water supply .

......................................................................................................................................................................................................................................................................................................................................................... DEFINITIONS ............................................................... Credit Policy on Sales and Purchases .............. SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION ................................................................................................................................................................ Results of Application and Distribution ............................................................................................................. Review of Financial Position ....................... BUSINESS — — — — — Principal Activities ............................... Foreign Exchange Exposure ................................................................................... DETAILS OF THE INVITATION — — — — Listing on SGX Sesdaq ................................................................... REVIEW OF RESULTS — — — — — — — — — Overview ................ Major Projects Completed ................................................................................................................................ HISTORY ........................................................................................................................ 11 12 14 15 16 20 21 26 28 4 5 9 PROSPECTUS SUMMARY ..................................... GLOSSARY OF TECHNICAL TERMS ..................................... Capitalisation and Indebtedness ......................................................................................................................................................................................................................................................................................................................................................................... ISSUE STATISTICS ............................................................................................................................................................................................................................................................................................................................. Our Work Process .................................... Results of Operations ..............................................................................................TABLE OF CONTENTS Page CORPORATE INFORMATION ................. Dividends .................................................................... 1 49 52 55 56 57 ............................................................................................... Our Business Strategy ....................... RISK FACTORS ............................................................................. THE INVITATION ...................................................................................................... Dilution ............................................................................................................................... Marketing ................................................................................................................................................................................................................ 30 34 37 38 41 42 42 43 43 45 47 SHARE CAPITAL ..................................................................................... Indicative Timetable for Listing .. Structure of Our Invitation ............. Profit Estimate .................................................................................................................

..................................................................................... Remuneration of Employees related to Directors and Substantial Shareholders ... Future Plans .................................................................................... Service Agreements ............................................................................................................. DIRECTORS................................................ PLANTS AND EQUIPMENT ......................................... Staff ................... PROSPECTS AND FUTURE PLANS — — Prospects ............................................................................................................................................. 69 72 73 76 76 76 76 GENERAL INFORMATION ON THE GROUP — — — — Shareholders .................... Trademark ....................................................... APPENDIX A — DIRECTORS’ REPORT ........................................................................................................................................................................................................................................................................................................................ MAJOR CUSTOMERS .......................................................... GENERAL AND STATUTORY INFORMATION ............. MANAGEMENT AND STAFF — — — — — — — Directors ....................................................................................................................................................................................................................................................................................... PROPERTY.......................... Disputes ................................... 61 63 64 65 MAJOR SUPPLIERS .................. 66 67 68 CORPORATE GOVERNANCE .................................................................................. Research and Development ................................................................................ 58 59 59 60 60 COMPETITION — Competitive Strengths ............................................................................................................................................................................................................................................ Directors’ Remuneration ............................................................... Management Structure ..... Group Structure .............................................................................................................................................. Staff Training ......................................................................... GOVERNMENT REGULATIONS ........................................................................................................................................ Moratorium ..................................................................................................................... 78 79 79 83 85 87 89 107 INTERESTED PERSON TRANSACTIONS ..........................................................................................................................................................................................................................Page — — — — — Production ................... Management ........................................................................................................................................... 2 ..................................................................................................................................... Restructuring Exercise ............................................................................

............................... APPENDIX F — TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION ....Page APPENDIX B — LETTER FROM THE AUDITORS AND REPORTING ACCOUNTANTS IN RELATION TO THE CONSOLIDATED PROFORMA PROFIT ESTIMATE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2000 ................................................................................................ APPENDIX D — DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES . APPENDIX C — ACCOUNTANTS’ REPORT ............................ APPENDIX E — DESCRIPTION OF SINGAPORE LAW AND REGULATIONS RELATING TO TAXATION ............................................. 108 109 129 133 136 3 ........................................................................................................

CORPORATE INFORMATION BOARD OF DIRECTORS : Ms Lum Ooi Lin Olivia (Managing Director) Dr Deirdre Murugasu (Executive Director) Mr Foo Hee Kiang (Executive Director) Mr Teo Kiang Kok (Independent Director) Mr Lee Joo Hai (Independent Director) Ms Sherry Quark Siew Mui. UNDERWRITER AND PLACEMENT AGENT : AUDITORS AND REPORTING ACCOUNTANTS : SOLICITORS TO THE INVITATION : PRINCIPAL BANKER : 4 . CPA 40 Changi South Street 1 Singapore 486764 Tel: (65) 214 0777 Fax: (65) 214 1211 Lim Associates (Pte) Ltd 10 Collyer Quay #19-08 Ocean Building Singapore 049315 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 Arthur Andersen Certified Public Accountants 10 Hoe Chiang Road #18-00 Keppel Towers Singapore 089315 Shook Lin & Bok 1 Robinson Road #18-00 AIA Tower Singapore 048542 The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 COMPANY SECRETARY REGISTERED OFFICE : : SHARE REGISTRAR AND SHARE TRANSFER OFFICE : MANAGER.

been used:- Companies Group Companies “HSPL” “HEPL” “HES” “HMTS” “HFPL” “Hyflux” or the “Company” “Hyflux Group” or the “Group” “Proforma Group” : : : : : : : : Hydrochem (S) Pte Ltd Hydrochem Engineering (S) Pte Ltd Hydrochem Engineering (Shanghai) Co. the following definitions have. for the purpose of this Prospectus. Singapore 068809 Dandong Synthetic Fiber Co. “Manager”.. “Placement Agent”.. as if it had been in existence since 1 January 1995 on the basis described in the Accountants’ Report Other Corporations and Agencies “Amway” “ASME” “CDP” “CPF” “DBS Bank”. Ltd American Society of Mechanical Engineers The Central Depository (Pte) Limited Central Provident Fund The Development Bank of Singapore Ltd : DBS Capital Investments Ltd having its registered address at 6 Shenton Way. “Underwriter” or “Receiving Bank” “DBS Capital” : : : : : Amway (China) Co. Ltd Hydrochem Membrane Technology (Shanghai) Co. Ltd EPCOS Pte Ltd (formerly known as Siemens Matsushita Components Pte Ltd) Flextronics (Malaysia) Sdn Bhd Gimmill Industrial (Pte) Ltd having its registered address at 43 Tampines Street 92. Singapore 528887 Hewlett Packard Singapore (Pte) Ltd 5 “Dandong” “EPCOS” : : “Flextronics” “Gimmill” : : “HP” : . treated. where appropriate.DEFINITIONS For the purpose of this Prospectus and the accompanying Application Forms. Ltd Hyflux Engineering Pte Ltd Hyflux Ltd The Company and its subsidiaries The Company and its subsidiaries following completion of the Restructuring Exercise. DBS Building Tower One.

Chapter 50 of Singapore The official application forms to be used for the purpose of the Invitation and which form part of this Prospectus List of applications for subscription and/or purchase of the Invitation Shares The articles of association of the Company Automated teller machine The audit committee of the Company The board of Directors of the Company The directors of the Company as at the date of this Prospectus. unless otherwise stated Refers to commercial transactions based on the electronic submission of data over communication networks Earnings per Share Applications for the Invitation Shares through an ATM or Internet Banking website.“Jacobs-Lend Lease” “JTC” “MPW” “Ramatex” “Ramatex Suzhou” “SCCS” “Siegle and Epple” “SGX-ST” or “Exchange” “VTS Batteries” “Wyeth” General : : : : : : : : : : Jacobs-Lend Lease Pte Ltd Jurong Town Corporation Membrane Products Kiryat Weizman Ltd Ramatex Textiles Industrial Sdn Bhd Ramatex Industrial (Suzhou) Ltd Securities Clearing & Computer Services (Pte) Ltd Siegle and Epple Asia Pte Ltd Singapore Exchange Securities Trading Limited VTS Batteries Pte Ltd Wyeth Pharmaceuticals (Singapore) Pte Ltd “Act” “Application Forms” : : The Companies Act. of one of the Participating Banks in accordance with the terms and conditions of this Prospectus The executive officers of the Company as at the date of this Prospectus. in the individual case. unless otherwise stated Financial year ended or ending 31 December A non-executive Director whose relationship would not. where applicable. be likely to affect the Director’s exercise of independent judgement 6 “Application List” : “Articles of Association” or “Article” “ATM” “Audit Committee” “Board” “Directors” : : : : : “e-commerce” : “EPS” “Electronic Applications” : : “Executive Officers” : “FY” Independent Director : : .

430. subject to the terms and conditions of this Prospectus The 32. subject to and on the terms and conditions of this Prospectus The 6. federation of national standards bodies $0.“Invitation” : The invitation to the public in respect of the Invitation Shares.000 New Shares for which the Company invites applications to subscribe. subject to and on the terms of this Prospectus The offer by the Company and the Vendors to the public for subscription and/or purchase of the Offer Shares and the Vendor Shares respectively at the Issue Price. subject to and on the terms of this Prospectus The New Shares and Vendor Shares International Standards Organisation. Far Eastern Bank Limited and Industrial & Commercial Bank Limited) The placement of the Placement Shares by the Placement Agent on behalf of the Company and the Vendors for subscription and/or purchase at the Issue Price.000.32 for each Invitation Share A day on which the SGX-ST is open for trading in securities Multi-National Corporation Not applicable Net tangible asset The 25. management. Oversea-Chinese Banking Corporation Limited (“OCBC”) Group (comprising OCBC and Bank of Singapore Limited). as described in pages 79 to 82 of this Prospectus a world-wide “Invitation Shares” “ISO” : : “Issue Price” “Market Day” : : “MNC” “NA” “NTA” “New Shares” : : : : “Offer” : “Offer Shares” : “Participating Banks” : “Placement” : “Placement Shares” : “PRC” “R&D” “Reserved Shares” : : : “Restructuring Exercise” : 7 .000. Keppel TatLee Bank Limited (“KTB”).000 Placement Shares reserved for the Directors.000 Invitation Shares which are the subject of the Placement (including the Reserved Shares) The People’s Republic of China Research and development 1. Overseas Union Bank Limited (“OUB”) and United Overseas Bank Limited (“UOB”) Group (comprising UOB. employees and others who have contributed to the success of the Group The restructuring exercise of the Group undertaken in connection with the Invitation.000 Invitation Shares which are the subject of the Offer DBS Bank (including its POSBank Services division).040.

Any reference in this Prospectus and the Application Forms to shares being allotted to an applicant includes allotment to CDP for the account of that applicant. unless otherwise stated United States dollar and cents. 8 . “US$” and “US cents” “%” or “per cent.05 each in the capital of the Company Shareholders of the Company DBS Capital and Gimmill United States of America DBS Capital. Any reference in this Prospectus and the Application Forms to any enactment is a reference to that enactment as for the time being amended or re-enacted.” “RMB” “sq ft” “sq m” “PBT” : : : : : : Words importing the singular shall.470.“Securities Account” “Shares” : : Securities account maintained by a depositor with CDP Ordinary shares of $0. where applicable. A reference to a time of day in this Prospectus and the Application Forms shall be a reference to Singapore time unless otherwise stated. respectively Per centum or percentage Chinese Renminbi Square feet Square metre Profit before tax “US Dollar”. where applicable. Units and Others “m3” “S$” or “$” and “cents” : : Cubic metres Singapore dollars and cents respectively. include the plural and vice versa and words importing the masculine gender shall. include the feminine and neuter genders and vice versa. Gimmill and Ms Lum Ooi Lin Olivia 14.000 Shares for which the Vendors invite applications to purchase subject to and on the terms of this Prospectus “Shareholders” “Strategic Investors” “USA” or “US” “Vendors” “Vendor Shares” : : : : : Currencies. References to persons shall include corporations. Any word defined under the Act or any statutory modification thereof and used in this Prospectus and the Application Forms shall have the meaning assigned to it under the said Act or statutory modification as the case may be.

a type of material used for high purity water tubing An expression of the acidity of a solution. and the vapour is subsequently cooled and condensed to the liquid state and collected The agglomeration of finely divided suspended solids into larger. the following technical terms and abbreviations have. pH 7 is neutral.GLOSSARY OF TECHNICAL TERMS For the purpose of this Prospectus. A pH of 1 is very acidic. usually gelatinous. been used:- “activated carbon filtration” : The removal of chlorine by passing liquid through a bed of highly adsorptive carbon material The use of bacteria to consume unwanted organics Potable grade water in Organisation’s standards accordance with World Health “biological treatment” “city water” : : “Cleaning-in-place” or “CIP” : A built-in cleaning system within a production line that facilitates periodic cleaning A process of agglomeration of minute charged particles into larger particles which can be removed by settling and/or filtration The portion of the feed stream that is rejected from the membrane surface The removal of liquid from a suspension or solution The process of removing dissolved gases in water The removal of all ionised minerals and salts from a solution The injection of micro air bubbles into a stream to cause the lighter particles to float thereby causing a separation The process in which a liquid is converted into its vapour state by heating. where appropriate. particles The separation of materials from a homogeneous mixture or from the common parental source Filtration using granular materials such as sand and coal A process in which certain ions of a given charge may be absorbed from solution and replaced in the solution by different ions of a similar charge from the resin Media through which a liquid is passed and refers to the functional filter material The portion of the feed stream that passes through the membrane Perfluoroalkoxy. pH 14 is very alkaline 9 “coagulation” : “concentrate” : “concentration” “degasification” “deionisation” or “DI” “dissolved air flotation” : : : : “distillation” : “flocculation” : “fractionation” : “granular media filtration” “ion exchange” : : “membrane” : “permeate” : “PFA” : “pH” : .

and reducing scale buildup “potable water” “PVDF” : : “recovery” : “refractory organic” : “reverse osmosis” or “RO” : “sand filtration” : “screening” : “sedimentation” “sludge dewatering” “suspension” “UF” “USP” : : : : : “water softening” : 10 . the applications include improving the lathering of soap. a guide with lists and directions for the use of drugs The process of removing the hardness of water.“pH adjustment” : The introduction of acids or alkalines into a solution to achieve the desired pH range Water that is suitable for human consumption Polyvinylidene Floride. a type of material used for high purity water piping Expressed in %. The amount of useful material gained from the feed stream An organic compound that cannot be oxidised by normal biological treatments The process by which a solution under pressure is forced through a semi-permeable membrane from a more concentrated to a less concentrated solution Filtration through a packed bed of sand that can remove particles down to less than 25 microns The use of a mesh or screen to stop large particles from passing through Settling of suspended solids in a fluid by gravity The process of reducing or eliminating moisture content Undissolved particles in a liquid Ultra-filtration US Pharmacopoeia.

if the said permission is not granted. the Company may make an announcement of the same to the SGX-ST.m. or invitation or solicitation to subscribe for. members of the SGX-ST and merchant banks in Singapore. This Prospectus has been prepared solely for the purpose of the Invitation and may not be relied upon by any persons other than the applicants in connection with their application for the Invitation Shares or for any other purpose. All applicants should take note of any such announcement and. such information or representation must not be relied upon as having been authorised by the Company. subject to availability. opinions expressed or reports contained in this Prospectus. without interest or any share of revenue or benefit arising therefrom and at the applicant’s own risk.DETAILS OF THE INVITATION LISTING ON SGX SESDAQ Application has been made to the SGX-ST for permission to deal in. 11 . The SGX-ST assumes no responsibility for the correctness of any of the statements made. the Vendors or the Manager. if given or made. invitation or solicitation. Moneys paid in respect of any application accepted will be returned. members of the Association of Banks in Singapore. nothing herein is. all the Shares already issued as well as the New Shares on the SGX Sesdaq. No person is authorised to give any information or to make any representation not contained in this Prospectus in connection with the Invitation and. Neither the delivery of this Prospectus and the Application Forms nor the Invitation shall. subject to any limitation under all applicable laws. upon release of such an announcement. Copies of this Prospectus and the Application Forms and envelopes may be obtained on request. The Directors and the Vendors individually and collectively accept full responsibility for the accuracy of the information given in this Prospectus and confirm. the Company. having made all reasonable enquiries. from:The Development Bank of Singapore Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 and from DBS Bank branches (including its POSBank Services division). under any circumstances. constitute a continuing representation or create any suggestion or implication that there has been no change in the affairs of the Company or of its subsidiaries or in any statements of fact or information contained in this Prospectus since the date of this Prospectus. a promise or representation as to the future performance or policies of the Company or its subsidiaries. This Prospectus does not constitute an offer of. shall be deemed to have notice of such changes. Admission to the Official List of the SGX Sesdaq is not to be taken as an indication of the merits of the Invitation. that to the best of their knowledge and belief. the Invitation Shares in any jurisdiction in which such offer or invitation is unauthorised or unlawful nor does it constitute an offer.00 a. there are no other material facts the omission of which would make any statement in this Prospectus misleading and that this Prospectus constitutes full and true disclosure of all material facts about the Invitation and the Company and its subsidiaries. on 15 January 2001 and will remain open until 12. or may be relied upon as.00 noon on the same day or for such further period or periods as the Directors and Vendors may in their absolute discretion decide. its subsidiaries or the Shares. Where such changes occur. Acceptance of applications will be conditional upon permission being granted to deal in and for quotation for all the issued Shares as well as the New Shares. The Application List will open at 10. Save as expressly stated in this Prospectus. Such permission will be granted when the Company has been admitted to the Official List of the SGX Sesdaq. and for quotation of. invitation or solicitation to any person to whom it is unlawful to make such offer.

20% of the total number of Invitation Shares initially available under the Invitation and 3.000 Reserved Shares (2.000 Offer Shares INVITATION 39. the Vendors and DBS Bank based on the estimated market valuation of our Company and the market demand for our Shares.470. Our Invitation The Invitation comprises the following tranches:- PUBLIC OFFER TRANCHE 6. shall be referred to as “Electronic Applications”). is $0.STRUCTURE OF OUR INVITATION Issue Price The Issue Price.54% of our post-IPO issued and paid-up share capital. 12 . (i) Public Offer Tranche The Public Offer is open to members of the public in Singapore as well as to institutional and professional investors.470.000 Invitation Shares at the Issue Price represents 15. A person submitting an application for the Invitation Shares in the Public Offer Tranche by way of ATM may not submit another application of Invitation Shares by way of an Internet Electronic Application and vice versa. determined by us. The Issue Price is the same for all Invitation Shares offered in the various tranches of our Invitation and is payable in full on application.32 for each Invitation Share offered in our Invitation.000 Placement Shares (82.000 Placement Shares (84.000 Invitation Shares. A person submitting an application for Invitation Shares in the Public Offer Tranche by way of a printed Offer Shares Application Form may not submit another application of Invitation Shares by way of an Electronic Application and vice versa.430. Such separate applications shall be deemed to be multiple applications and shall be rejected. Investors may apply for Invitation Shares under the Public Offer Tranche by way of printed Offer Shares Application Forms or by way of electronic applications through the ATMs belonging to the Participating Banks (“ATM Electronic Applications”) or through Internet Banking (“IB”) websites of the relevant Participating Banks (“Internet Electronic Applications”.16 % of Invitation) Investors may subscribe for any number of Invitation Shares in integral multiples of 1. The terms and conditions and the procedures for application of Invitation Shares under the Public Offer Tranche are set out on pages 136 to 149 in Appendix F of this Prospectus.20% of Invitation) 1. The Public Offer Tranche of initially 6.000. which together with ATM Electronic Applications. Only one application may be made for the benefit of a person for Invitation Shares under the Public Offer Tranche.000 Ordinary Shares (15.040.64 % of Invitation) PLACEMENT TRANCHE 33.80 % of Invitation) 32.000.

040. The Placement Tranche (other than Reserved Shares) of 32. The terms and conditions and the procedures for application of Placement Shares are set out on pages 136 to 149 in Appendix F of this Prospectus. Such separate applications will not be treated as multiple applications. An investor who has agreed to subscribe for Placement Shares (other than Reserved Shares) or who otherwise subscribes for Placement Shares shall not make or procure to be made any separate application for Offer Shares.61% of our post-IPO issued and paid-up capital. there will be balloting and applicants who are not successful in the ballot will not receive any Invitation Shares under the Public Offer Tranche while successful applicants in the ballot may receive less than the number of Invitation Shares they applied for under the Public Offer Tranche. The Reserved Tranche of 1. 13 .(a) the Directors.000 Invitation Shares under our Invitation are subject to priority allocation to persons in the following categories who have contributed to our success:.000 Invitation Shares at the Issue Price represents 2.430. In the event that the Public Offer Tranche and the Invitation on the whole are substantially over-subscribed.040.16% of the total number of Invitation Shares initially available under the Invitation and 19. Professional investors generally include brokers. (iii) Placement Tranche The Placement will involve selective marketing of Invitation Shares to institutional and professional investors and other investors expected to have a sizeable demand for the Invitation Shares. (b) the executive officers and employees of our Group and (c) others who have contributed to our success.64% of the total number of Invitation Shares available under the Invitation and 0. The Placement Tranche comprises Reserved Shares and Placement Shares. The terms and conditions and the procedures for application of Reserved Shares are set out on pages 136 to 149 in Appendix F of this Prospectus.Allocation of Invitation Shares under the Public Offer Tranche will be based on the level of valid applications received.11% of our post-IPO issued and paid-up share capital. Application for the Reserved Shares may only be made by way of printed Reserved Shares Application Forms. provided he adheres to the terms and conditions of this Prospectus. Such separate application will be deemed to be multiple applications and shall be rejected. dealers. Application for Placement Shares may only be made by way of printed Placement Shares Application Forms. companies (including fund managers) whose ordinary business involves dealing in shares and other securities and corporate entities which regularly invest in shares and other securities. An applicant making an application for the Reserved Shares using the Reserved Shares Application Form may submit one separate application for Invitation Shares under the Public Offer Tranche in his own name either by way of an Offer Shares Application Form or through an Electronic Application or submit one separate application for Placement Shares (other than Reserved Shares) by way of a Placement Shares Application Form.000 Invitation Shares at the Issue Price represents 82. (ii) Reserved Tranche 1.

RESULTS OF APPLICATION AND DISTRIBUTION We will publicly announce the level of subscription for Invitation Shares and the basis of allocation of the Invitation Shares, as soon as it is practicable after the closing date for applications:(i) (ii) through a MASNET announcement to be posted on the Internet at the SGX-ST website http://www.singaporeexchange.com; and in the local English and Chinese newspapers.

Applicants who make ATM Electronic Applications through the ATMs of the following banks may check the provisional results of their Electronic Applications as follows:Bank DBS Bank Telephone 1800-222 2222 327 4767 222 8228 Available at ATM/Internet Internet Banking or Internet Kiosk www.dbs.com* ATM Operating Hours 24 hours a day Service Expected From 7.00 p.m. on the balloting day ATM - Evening of the balloting day Phone Banking 8.00 a.m. on the day after the balloting day Evening of the balloting day

KTB

ATM - 24 hours a day Phone Banking Mon-Fri: 0800-2200 Sat: 0800-1500

OCBC

1800-363 3333

ATM

ATM - 24 hours a day Phone Banking 24 hours a day Phone Banking/ Internet Banking 24 hours a day OUB Mobile Buzz** 24 hours a day Phone Banking***/ ATM - 24 hours a day

OUB

1800-224 2000

OUB Personal Internet Banking www.oub2000.com.sg* OUB Mobile Buzz

Evening of the balloting day

UOB

1800-533-5533 1800-222-2121

ATM (Other Transactions – “IPO Enquiry”) www.uobcyberbank.com.sg***

6.00 p.m. on the balloting day

*

Applicants who have made Internet Electronic Applications through the Internet Banking websites of DBS Bank or OUB may also check the results of their application through the same channels listed in the table above in relation to ATM Electronic Applications made at the ATMs of DBS Bank or OUB. Applicants who have made Electronic Applications through the ATMs or the Internet Banking website of OUB and who have activated their OUB Mobile Buzz service will be notified of the results of their Electronic Applications, via their mobile phones. Applicants who have made Electronic Applications through the ATMs or the Internet Banking website of UOB, may check the results of their application through UOB CyberBank, UOB Group’s ATMs or UOB Phone Banking services.

**

***

If the Applicant’s Electronic Application is made through the ATMs of the UOB Group and is unsuccessful, it is expected that a computer-generated notice will be sent to the Applicant by the relevant Participating Bank (at the address of the Applicant as stated in the records of the relevant Participating Bank at the date of his ATM Electronic Application) by ordinary post at the Applicant’s own risk within three Market Days after the close of the Application List. If the Applicant’s ATM Electronic Application is made through the ATMs of KTB, the OCBC Group, OUB or DBS Bank (including its POSBank Services division) and is unsuccessful, no notification will be sent by the relevant Participating Bank. If the Applicant’s Internet Electronic Application made through the IB websites of UOB, OUB or DBS Bank is unsuccessful, no notification will be sent by such Participating Banks.

14

INDICATIVE TIMETABLE FOR LISTING In accordance with the SGX-ST’s News Release of 28 May 1993 on the trading of initial public offering shares on a “when issued” basis, an indicative timetable is set out below for the reference of applicants:Indicative date/time 15 January 2001, 12 noon 16 January 2001 Event Closing of Application List Balloting of applications, if necessary (in the event of an oversubscription for the Offer Shares (other than the Reserved Shares)) Commence trading on a “when issued” basis Last day of trading on a “when issued” basis Commence trading on a “ready” basis Settlement date for all trades done on a “when issued” basis and for all trades done on a “ready” basis on 29 January 2001

17 January 2001, 9.00 a.m. 26 January 2001 29 January 2001, 9.00 a.m. 1 February 2001

The above timetable is only indicative as it assumes that the closing date of the Application List is 15 January 2001, the date of admission of the Company to the Official List of SGX Sesdaq will be 17 January 2001, the SGX-ST’s shareholding spread requirement will be complied with and the Invitation Shares will be issued and fully paid up prior to 17 January 2001. The actual date on which the Shares will commence trading on a “when issued” basis will be announced when it is confirmed by the SGX-ST. The above timetable and procedure may be subject to such modifications as the SGX-ST may in its discretion decide, including the decision to permit trading on a “when issued” basis, and the commencement date of such trading. The commencement of trading on a “when issued” basis will be entirely at the discretion of the SGX-ST. All persons trading in the Shares on a “when issued” basis, if implemented, do so at their own risk. In particular, persons trading in the Shares before their Securities Accounts with CDP are credited with the relevant number of Shares do so at the risk of selling Shares which neither they nor their nominees, if applicable, have been allotted with or are otherwise beneficially entitled to. Such persons are also exposed to the risk of having to cover their net sell positions earlier if “when issued” trading ends sooner than the indicative date mentioned above. Persons who have a net sell position traded on a “when issued” basis should close their position on or before the first day of “ready” basis trading. Investors should consult the SGX-ST announcement on the “ready” listing date on the Internet (at the SGX-ST website http:// www.singaporeexchange.com), INTV or the newspapers, or check with their brokers on the date on which trading on a “ready” basis will commence.

15

PROSPECTUS SUMMARY
The information contained in this summary is derived from and should be read in conjunction with the full text of this Prospectus. Company Our Company was incorporated in Singapore on 31 March 2000 under the Act as an exempt private limited company in the Republic of Singapore, under the name of Hyflux Pte Ltd. Our Company was subsequently converted to a public limited company on 20 December 2000 and changed its name to Hyflux Ltd. To prepare for a listing on the SGX Sesdaq pursuant to the Invitation, the Restructuring Exercise was undertaken to rationalise the shareholding structure and to consolidate the principal entities of our Group as directly or indirectly wholly owned subsidiaries under the listing vehicle of Hyflux Ltd. We operate from our Singapore registered office at 40 Changi South Street 1 Singapore 486764 and our branch office in Shanghai. Our sales personnel are also stationed in Guangzhou and Beijing for close proximity to our customers. Business We are a specialist company that provides integrated treatment systems for advanced water treatment and membrane filtration. We provide one-stop shop service for the design, fabrication, installation, commissioning and maintenance of treatment systems for water purification, wastewater treatment and water recycling. In the specialised field of membrane processing, we utilise membrane filtration technologies that have found diverse applications across industries such as electronics, pharmaceuticals and biotechnology.

Water Purification
This involves the purification of raw water from various sources (such as river water, seawater, well water and rainwater, etc) for public consumption and industrial applications including the production of deionised water and ultra-pure water for use in industries such as electronics, pharmaceutical and biotechnology.

Wastewater Treatment
We manufacture treatment plants that treat wastewater of industries so that such water may be discharged in accordance with the standards of the relevant regulatory authorities in the respective countries in which our clients operate. Besides treatment, we also review the water streams in our clients’ manufacturing processes and recommend ways to minimise waste effluent and the number of subsequent treatments.

Water Recycling
Water recycling is the recovery of water for reuse. For companies that use substantial volumes of water, our water treatment systems assist them to recycle their wastewater. Depending on the characteristics of the wastewater, we can recover between 50% to 90% of the wastewater for reuse using mainly membrane filtration technology.

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pharmaceutical and biotechnology industries. Servicing and maintenance Servicing and maintenance are part of our after-sale services that are essential to ensure smooth operation of our customers’ plant. etc. Our Customers We service customers in several industries. Diverse Industries Through our research and development (“R&D”) efforts.Advanced Membrane Filtration We utilise advanced membrane filtration technology to recover or purify certain products (such as antibiotics. installation. This provides us with a competitive edge over some of our competitors who utilise other technologies and hence focus on specific industries. nanofiltration and reverse osmosis while the latter generally refers to the use of reverse osmosis only. Our Competitive Strengths Integrated Services We offer a one-stop shop service to our customers and provide integrated services of designing. water recycling and liquid separation as opposed to conventional methods. for example. High-purity piping systems and equipment hook-up High-purity piping systems are required to convey pure products such as compressed air. pharmaceutical. Proper hooking-up of the distribution piping to the equipment is vital to prevent contamination. ultra-pure water and chemicals to manufacturing plants. commissioning and maintenance of systems that treat liquids utilising mainly membrane filtration technology. food and beverage. in that the former includes a range of technologies such as ultrafiltration. we have managed to utilise membrane filtration for water purification. This has allowed us to meet the diverse needs of various industries such as electronics. Vitamin C. biotechnology. specialty gases. Advanced membrane filtration involves four physical separation processes: purification. In FY1999. including the electronics. 17 . We use membranes designed and manufactured in-house as well as third party membranes. We offer applications of the four separation processes individually or together across many industries including electronics. wastewater treatment. urea. chemical. biotechnology and textile industries. Our sales to the electronics and pharmaceutical industries each constitutes about 33% of our revenue in FY1999 with the remainder from the other industries. concentration and fractionation. Advanced membrane filtration is distinguished from simple membrane filtration. the electronics and pharmaceutical industries. engineering. approximately 35% of our revenue was generated through sales in Singapore while 60% came from our operations in the People’s Republic of China (“PRC”). dyes. The balance 5% was generated through sales in other countries such as Malaysia and Taiwan. recovery. pharmaceutical. pharmaceutical and biotechnology by applying the four separation processes of advanced membrane filtration individually or together (please refer to “Advanced Membrane Filtration” as set out above for more details). Though our current focus is on the electronics. chemical and food. We have always adopted an approach of serving at least three to four industries that are not closely linked.) in our clients’ manufacturing process. we do not rely on a single industry or customer.

This is possible as we are able to manufacture the membranes and water treatment systems in-house. This has enabled us to secure new projects without having to increase our marketing activities and thus. for the past ten (10) years. Ms Lum Ooi Lin Olivia. We have been led by our Managing Director. we will continue to lower our direct costs by moving towards manufacturing more materials in-house. Established relationships with customers and suppliers We estimate that 70% of our business is obtained through referrals and recommendations by our existing customers and engineering consultants and companies. We are on the approved vendor list of several of our customers. we utilise advanced membrane filtration technology to customise the water treatment plants to meet the specific needs of various industries. Lower direct costs In order to remain competitive. This allows us to tender for jobs from these customers without having to undergo a pre-selection process.Experienced Management We have an experienced management team who is familiar with the business and is well positioned to lead our Group forward to continued growth and profitability. We currently aim to manufacture up to 30% to 50% of the materials used in our systems. We have built up such a relationship with our suppliers and this allows us to offer a range of products and services. Our suppliers have to be assured that we. 18 . Customised Systems A key feature of our water treatment systems is the identification and adoption of modern technologies to provide solutions to the various needs of our customers. We are able to provide such a service due to our experience in building water treatment systems. our marketing expenses. For details of our competitive strengths. as the solution provider. are able to successfully install their products for the benefit of the end users. This enhances our position as an integrated water treatment provider. For example. we plan to provide emergency recovery units. Ability to Meet International Standards Our products and services are able to meet international standards for different industries. please see pages 61 to 62 of this Prospectus. Our Strategy Provide fully integrated services We will continue to focus on being an integrated service provider that treats liquids utilising mainly membrane filtration technology. In order to provide uninterrupted water treatment while servicing or upgrading is carried out on our customers’ water treatment systems. which are specially designed truck-trailers containing water treatment systems. which typically involves the evaluation of track record and capital base. The equipment which we source from our suppliers to incorporate into our customers’ water treatment and advanced membrane filtration systems require a high degree of expertise in installation and commissioning. we are able to produce water which meets US Pharmacopoeia (“USP”) standards and our equipment can be manufactured to meet American Society of Mechanical Engineers (“ASME”) standards. For example. once we have ascertained that there is sufficient demand from our customers.

000 each. We are currently reviewing the documentation of our work procedures in preparation of meeting the ISO standards. we will continue to commit our resources in research and development both internally and also in collaboration with universities and environmental institutes to develop proprietary membranes. we shall also seek to drive our quality system to International Standards Organisation (“ISO”) standards by 2001. we intend to develop the next phase of our business by tendering and obtaining projects of values of above $5. we recognise the need to build ties and cultivate relationships with international engineering consultants and companies such as Siegle and Epple Asia Pte Ltd (“Siegle and Epple”). Strengthen and cultivate relationships with engineering consultants and companies We estimate approximately 30% of our business is obtained through referrals and recommendations by engineering consultants and companies. electronics manufacturing plants. As such. These companies specialise in the designing and building of pharmaceutical plants. chemical processing plants and other industrial plants.000. For details of our strategy. To meet the rising demand of our customers for products and services of the highest quality. 19 . Increase research and development (“R&D”) and improve quality standards To remain competitive and be at the fore-front of the water treatment business. please see pages 56 to 57 of this Prospectus. We will apply for the ISO certification upon the completion of the review. we will be developing and incorporating more of such tools to enhance the operational capability of our systems.000. an engineering joint venture company between a US and an Australian company.000 each in value in 1999 and 2000. improve existing ones and to seek new uses for membrane filtration technology in the food and pharmaceutical industries. a German engineering consulting firm and Jacobs-Lend Lease Pte Ltd (“Jacobs-Lend Lease”).Incorporate information technology into our systems With the advent of information technology. Increase the value of the projects After having secured projects of up to $5.

Reserved Shares : 1.470.040. the proceeds from the New Shares may be placed on deposits with banks or financial institutions or invested in short term money market instruments or used to repay short-term bank borrowings or used as working capital. employees and others who have contributed to the success of our Group an opportunity to participate in the equity of our Company. $0. Pending the deployment of the net proceeds for purposes mentioned above. to satisfy applications made by members of the public for the Offer Shares.5 million for setting up sales and service centres in PRC. Our Company proposes to use the net proceeds of the Invitation as follows:1.32 for each Invitation Share.000 of the 33. or in the event of an under-subscription for the Placement Shares. Our Directors consider that the listing of our Company and the quotation of the Shares on the Offical List of the SGX Sesdaq will enhance our Company’s public image. comprising 25.5 million for the expansion of our manufacturing and research facilities in Singapore and Shanghai. and 4. It will also provide members of the public. management.000.470.000 New Shares and 14. The Shares will be quoted on the SGX Sesdaq. 2. employees and others who have contributed to the success of our Group.0 million for acquisition of new technologies.000 Placement Shares will be reserved for our Group’s Directors. approximately $3. approximately $2. In the event that any of the Reserved Shares are not taken up. Issue Price Purpose of the Invitation : : Use of proceeds : Listing Status : 20 . as our Directors may in their absolute discretion deem fit. the balance of approximately $0. approximately $0. they will be made available to satisfy applications for the Placement Shares.8 million for working capital.8 million. Please see page 67 on “Future Plans” for more details. rank pari passu in all respects with the then existing issued Shares.THE INVITATION Size : 39.470. 3. The Vendor Shares and the New Shares will. management.000 Vendor Shares. The net proceeds from the Invitation (after deducting estimated expenses in relation to the Invitation) is estimated to be $6.000 Invitation Shares. our Directors. upon registration in the name of CDP or its nominee. subject to admission of our Company to the Official List of the SGX Sesdaq and permission for dealing in and quotation of our Shares being granted by the SGX-ST.

We have not encountered such a situation in the past but there can be no assurance that there will not be any delays in existing and future projects which we undertake resulting in payment of liquidated damages which could have a material impact on our financial performance and financial condition. we may be liable for liquidated damages should there be a delay in the completion of our projects. 41. FY1999 and the ten months ended 31 October 2000 respectively. FY1998. 32. including the risks faced by us described below and elsewhere in this Prospectus. This will increase our costs and adversely affect our financial position. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors. it is important that we manage our projects in terms of time. 33. Should there be any downturn in both the electronics and pharmaceutical industries and if we are not able to seek new customers in other industries on a timely basis. FY1999 and the ten months ended 31 October 2000 respectively. Our profit will depend on our ability to secure new projects As mentioned earlier. financial conditions or results of operations could be materially and adversely affected. 2. In addition. Mismanagement of projects could have an adverse effect on our profitability As our business is project-based. We are dependent on the electronics and pharmaceutical industries We design. Mismanagement will result in rectification costs and delays in the completion of the projects and hence adversely affect our profitability. FY1998.9%.RISK FACTORS You should carefully evaluate each of the following considerations and all of the other information set forth in this Prospectus before deciding to invest in the Company’s Shares.8%. and you may lose all or part of your investment. If our initial cost estimates are incorrect or delays occur during the contract progress resulting in cost overruns. procurement of materials and allocation of resources. In such case. Sales to the electronics industry accounted for 49.3%. If we are unable to do so. our profitability under that contract will be adversely affected. 21 . Our financial performance will depend on our ability to secure new projects that are profitable. our financial performance would be adversely affected. install and commission water treatment plants mainly for the electronics and pharmaceutical industries. If any of the following considerations and uncertainties develop into actual events. Sales to the pharmaceutical industry accounted for 36. our business.9% and 38. The following considerations relate principally to the industry in which the Group operates and its business in general. This Prospectus also contains forward-looking statements that involve risks and uncertainties. our profitability will be adversely affected.8% of our turnover for FY1997. Our profit for fixed price contracts may be adversely affected if our cost estimates are incorrect or if there are delays in completion of the projects Almost all of our revenue is derived from contracts with fixed prices.5%. our business is project-based. the trading price of our Shares could decline due to any of these considerations.0% of our turnover for FY1997.2% and 51.

7% FY1997 Net foreign exchange gain (loss) ($’000) Percentage of turnover Percentage of profit before tax (“PBT”) 27 0. Though we are not directly regulated by these environmental laws and regulations. Any changes in legislative. our performance will be adversely affected. In addition. In FY1999. and should our water treatment plants not be able to meet these standards. Any significant fluctuation in foreign exchange rates during the course of our projects will have an impact on our Group’s profits. profits derived from our projects denominated in US$ would be lower in S$ should there be any depreciation in the exchange rate of US$ against S$. changes in industrial standards such as US Pharmacopoeia (“USP”) and regulatory requirements. Our ability to anticipate changes in technology and regulatory standards and to develop and introduce new and enhanced products successfully on a timely basis will be a significant factor in our ability to grow and to remain competitive. we are subject to the risks generally associated with new product introductions and applications. each of which influences the demand for our products and services. Acceptance of new products may also be affected by the adoption of new government regulations requiring stricter standards. delays in development or failure of products to operate properly. 22 .We are subject to risks associated with technological and regulatory changes In 1999.3% 0. We are exposed to foreign currency risks Our projects are carried over a span of a few months to two (2) years. Please refer to “Foreign Exchange Exposure” on pages 43 to 44 for more details. our Group does not have a foreign currency hedging policy as our foreign exchange gains and losses over the past three financial years had been relatively low. regulatory or industrial requirements may render certain of our purification and filtration products and processes obsolete. For example.5% respectively while the proportion of purchases and expenses in S$ and US$ was 67.1% respectively.9%) FY1999 (9) (0. the proportion of our revenue in S$ and US$ was 28. Our customers are subject to environmental laws and regulations of the countries in which they operate and they may seek recourse from us should there be any violation The environmental laws and regulations of the countries in which we support our clients require our clients to meet certain standards and impose liability if these are not met (please refer to page 65 on “Government Regulations” for more details).3% and 53. We will continue to monitor our foreign exchange exposure in the future and will consider hedging any material foreign exchange exposure should the need arise.7% FY1998 (9) (0. There can be no assurance that we will be able to achieve the technological advances that may be necessary for us to remain competitive or that certain of our products will not become obsolete. we will be exposed to changes in technology such as the development of water treatment processes and filtration membranes. Our foreign exchange gains/losses for the past three financial years and for the ten months ended 31 October 2000 are as follows: Ten months ended 31 October 2000 42 0.7% 19.6% and 24. We provide quotations to our customers mainly in S$ and US$ and make purchases mainly in S$ and US$. if a new government regulation requires industries’ water discharge to be of a higher standard. there is no assurance that our customers or the relevant authorities will not seek recourse from us in the event of non-compliance with such laws and regulations. even if our plants were commissioned and tested to be satisfactory at the point of hand over to our customers.1%) (2. we commenced the manufacture of filtration membranes.1%) (0. including the lack of market acceptance. For example. As a result.1%) Currently.

there is a limited supply for adequately skilled engineers. we will continue to be reliant on foreign workers. In the event that the applications are replicated. locally or from overseas. third parties may subsequently assert claims to certain applications. We are dependent on foreign labour Foreign workers account for approximately 40% of our workforce in Singapore. Due to the tight labour supply. In addition. or that our trade secrets and proprietary know-how will not otherwise become known or be independently discovered by others. We do not have patents to protect our products and proprietary technology against claims by other parties We have developed designs and applications of the advanced membrane filtration system in various industries such as electronics. We have been dependent on the continued efforts of our senior management. We are dependent on the availability of adequately skilled engineers and our key personnel Owing to the specialised nature of our work. to the extent that we are unable to recruit the required number of skilled engineers. Furthermore. our profitability will be affected by higher production costs. However. issued or pending patents or claims of third parties. Any changes in governmental policies which restrict the employment of foreign workers in Singapore would affect our profitability as such restrictions may allow us to employ only Singaporean workers who are relatively more costly to employ. which we seek to protect. Should there be any significant increase in such levies. employees and consultants. that we will have adequate remedies for any breach. and Sales Director Mr Foo Hee Kiang. or to contest the validity of. our Executive Director Dr Deirdre Murugasu. In such an event. or that we would prevail in any such contest. by confidentiality agreements with our prospective working partners and collaborators. The cost of labour has been steadily increasing due to staff remuneration and training costs. our turnover and profitability will be negatively affected. we could incur substantial costs in defending ourselves in suits brought against us for alleged infringement of another party’s patents. who oversees sales and marketing. there can be no assurance that these agreements will not be breached.In addition. There can be no assurance that any license acquired under such patents would be made available to us on acceptable terms. we may need to acquire licenses to. in particular our Managing Director Ms Lum Ooi Lin Olivia. To the best of our knowledge. We rely on trade secrets. We will apply for patents when further research shows more conclusive results and we assess that it is feasible to do so. 23 . pharmaceutical and food and beverage. the liabilities and risks imposed on our customers by environmental laws may adversely impact demand for some of our products or services or impose greater liabilities and risks on us. we will not have any legal recourse for these designs and applications which are not patented in the event that such solutions are successfully replicated by third parties. the Singapore government imposes levies on the employment of foreign workers. We have not applied for any patents in respect of the designs and applications as the technology is evolving and our R&D efforts are still on-going. The loss of services of these senior management could have an adverse effect on our ability to achieve our objectives. proprietary know-how and technology. In addition. to meet the expected increase in both production and R&D. in part. there were no breaches of such agreements in the past. who steers the R&D and business development activities. if at all. Such applications arose from our R&D efforts. Furthermore. our turnover and profitability on these applications may be adversely affected. which could also have an adverse effect on our competitive and financial position. Meanwhile.

our customers may be found to be non-compliant with the regulatory standards. the Administrative Body of the State Council has developed a system of water standards which comprises five levels of quality standards. which included credit tightening policies and adjustment to interest rates. For instance. will be adversely affected by unnecessary delays in obtaining approvals from the governmental bodies in PRC.Risks of conducting business in People’s Republic of China (“PRC”) As we derived a substantial portion of our revenue from PRC. As mentioned on page 22. An application for approval to conduct certain activities in PRC may be unduly protracted with the involvement of several government agencies or the enforcement of laws and regulations and the outcome of a dispute resolution may not be as predictable as in more developed jurisdictions. administrative directives and internal guidelines. PRC has experienced significant economic growth and social progress since its adoption of the “open door” reform policy in 1978 and the “socialist market economy” policy in 1993. the administration of PRC laws and regulations by PRC government agencies may be subject to considerable discretion. we face risks of conducting business in PRC. regulations. The fabrication and commissioning of our plants is based on our understanding of the standards required. our business and operations and hence. Experience in the implementation. For example. even though such growth has been uneven across geographic and economic sectors. The PRC legal system is a codified system with written laws. and the Chinese government had to introduce anti-inflationary measures from time to time. characterised by state ownership of productive assets. may affect the demand of our products and services in PRC. the PRC government has continued to adopt an economic expansion policy. Any significant change in PRC laws and regulations and legal system may affect us Our business and operations in PRC are governed by the legal system of PRC. changes to existing laws or interpretations thereof. undertakings and commitments entered into are also limited. circulars. We cannot assure you that such growth will not decrease or that any slowdown will not have a negative effect on our business. the Administrative Body of State Council in charge of Environmental Protection regulates under the PRC Environmental Protection Law of 1989. These conditions could have the effect of limiting our growth potential in PRC. It is recognised that PRC lacks an adequate infrastructure and a well-established financial system to keep pace with its rapidly growing economy. Even in the wake of the recent Asian economic crisis. General risks associated with doing business in PRC The PRC economy has primarily been a planned and centralised economy. However. These measures. Under this law. 24 . Consequently. Our role is to assist our customers to achieve these standards pertaining to the discharge of water treated by our plants. interpretation and enforcement of such laws and regulations and of commercial contracts. the introduction of new laws. As a result. there is no assurance that our customers or the relevant authorities will not seek recourse from us in the event of non-compliance with such regulatory laws and regulations. Should the interpretation of these standards be subject to discretion. even if our plants were commissioned and tested to be satisfactory at the point of hand-over to our customers. and pre-emption of provincial or local laws by national laws. PRC has experienced various periods of severe inflationary pressures as a result of an over-heated economy. Prior decisions by PRC courts may be cited as authority but they do not have any effect as binding precedents. our financial performance.

Thus. or the perception that such sales may occur. Currently. The sale of a significant amount of Shares in the public market after the Invitation. there can be no assurance that we will continue to be able to obtain sufficient foreign exchange to pay dividends or to satisfy our foreign exchange requirements. the State Administration for Foreign Exchange (“SAFE”) regulates the conversion of Renminbi into foreign currencies. As such. there can be no assurance that the current foreign exchange rulings will not be changed to our detriment. Except as otherwise described in “Moratorium” (see page 79 of this Prospectus).11 cents (adjusted for the net proceeds from the Invitation) as at 31 October 2000. differences between our those expected by investors and analysts.PRC foreign exchange control may limit our ability to utilise our revenue effectively Our PRC subsidiary is subject to PRC rules and regulations on currency conversion. etc. Our Share price may be volatile. 25 . will be sustained. including the liquidity actual financial or operating results and analysts’ recommendations or projections. changes in changes in general market conditions and broad market In addition.) can be effected without requiring the approval of the SAFE. Investors in our Shares would face immediate and substantial dilution in the book value per Share and may experience future dilution Our Issue Price of $0. Although the Directors do not presently anticipate any difficulty in meeting our foreign exchange needs. FIEs are allowed to open foreign currency accounts including the “basic account” and “capital account”. We have applied to the SGX-ST for the listing and quotation of our Shares on the Official List of the SGX Sesdaq. Risks relating to an investment in shares Future sale of Shares could adversely affect our Share price Any future sale or availability of Shares can have a downward pressure on our Share price. for capital items like direct investments. there has been no public market for our Shares. there is an immediate and substantial dilution in the book value per Share (please refer to page 42 on “Dilution”). remittance of foreign currencies for payment of dividends. loans. etc. could materially and adversely affect the market price of our Shares. However. Currency translation within the scope of the “basic account” (for example. In PRC. subject to significant fluctuations in response to various of the market for our Shares. which could result in substantial losses for investors purchasing our Shares in this Invitation The market price of our Shares could be factors and events.) still requires the approval of the SAFE. no assurance can be given that an active trading market for the Shares will develop or. if developed. However. our Share price will be under downward pressure if certain of our Directors or management staff or employees sold their respective Shares immediately after the Invitation or Moratorium. No prior market for our Shares Prior to this Invitation. The Issue Price may not be indicative of the market price for our Shares after the completion of this Invitation. securities. conversion of currency in the “capital account” (for example. With such registration certifications (which need to be renewed annually).32 is substantially higher than our Group’s net tangible assets per share of 10. there will be no restriction on the ability of the substantial shareholders to sell their Shares either on the SGX-ST or otherwise. foreign investment enterprises (“FIEs”) are required to apply to the SAFE for “Foreign Exchange Registration Certificates for FIEs”. These factors also affect our ability to sell additional equity securities. fluctuations.

994 Shares after adjusting for the proceeds from the issue of new shares to our Strategic Investors (please refer to pages 81 to 82 of this Prospectus).05 cents (0.687.687.994 Shares PRICE EARNINGS RATIO Historical price earnings ratio based on the historical net EPS of our Group for the financial year ended 31 December 1999 based on the pre-flotation share capital of 144. and the estimated net proceeds from the issue of the New Shares based on the post-flotation share capital of 169.994 Shares 498% (b) 217% EARNINGS Historical net EPS of our Group for the financial year ended 31 December 1999 based on the pre-flotation share capital of 144.32 5.35 cents (b) 10.687.994 Shares S$0.00 times NA 7.687.27 times .687. after taking into account the Restructuring Exercise referred to on pages 79 to 82 of this Prospectus and the Stock Split:(a) before adjusting for the estimated net proceeds from the issue of the New Shares based on the pre-flotation share capital of 144.01) cents(1) 4.687.994 Shares Estimate price earnings ratio based on the estimate net EPS of our Group for the financial year ended 31 December 2000 based on the pre-flotation share capital of 144.994 Shares Estimate net EPS of our Group for the financial year ended 31 December 2000 based on the pre-flotation share capital of 144.687. Executive Officers and employees who are related to substantial shareholders and based on the pre-flotation share capital of 144.11 cents Premium of Issue Price per Share over the NTA per Share as at 31 October 2000:(a) before adjusting for the estimated net proceeds from the issue of the New Shares based on the pre-flotation share capital of 144.687.40 cents 640.687.ISSUE STATISTICS Issue Price for each Invitation Share NET TANGIBLE ASSETS NTA per Share based on the consolidated balance sheet of our Group as at 31 October 2000.994 Shares 26 0. and the estimated net proceeds from the issue of the New Shares based on the post-flotation share capital of 169.994 Shares Historical net EPS of our Group had the Service Agreements (as defined on pages 76 to 77 of this Prospectus) been in effect for the financial year ended 31 December 1999 based on the pre-flotation share capital of 144.994 Shares. assuming the Service Agreements (as defined on pages 76 to 77 of this Prospectus) had been in effect for the financial year ended 31 December 1999 and taking into account the remuneration payable to Executive Directors.994 Shares Historical price earnings ratio based on the historical net EPS of our Group for the financial year ended 31 December 1999 based on the pre-flotation share capital of 144.687.994 Shares after adjusting for the proceeds from the issue of new shares to our Strategic Investors (please refer to pages 81 to 82 of this Prospectus).687.

687. the proforma consolidated profit before tax and profit after taxation would have been approximately $295.000 respectively.994 Shares Estimate net operating cash flow per Share for the financial year ended 31 December 2000 based on the pre-flotation share capital of 144.33 times 6.994 Shares Notes:(1) Had the Service Agreements (as defined on pages 76 to 77 of this Prospectus) been in effect for the financial year ended 31 December 1999.687.58 cents 213.687.NET OPERATING CASH FLOW(2) Historical net operating cash flow per Share for the financial year ended 31 December 1999 based on the pre-flotation share capital of 144.994 Shares Estimate price to net operating cash flow based on the estimate net operating cash flow per Share for the financial year ended 31 December 2000 based on the pre-flotation share capital of 144.000) instead of $430. 0. Net operating cash flow is defined as net profit after tax with provision for depreciation added back.15 cents 4.994 Shares PRICE TO NET OPERATING CASH FLOW RATIO Historical price to net operating cash flow based on the historical net operating cash flow per Share for the financial year ended 31 December 1999 based on the pre-flotation share capital of 144.000 and $(21.687.99 times (2) 27 .000 and $79.

For comparative purposes. The adjusted price earnings ratio would have been 10.184 — 1.09 681 0.04 4.775 235 — 235 (74) (24) 137 (12) 1.01 The financial results of the Proforma Group for the periods under review have been prepared on the basis that the Proforma Group had been in existence throughout the periods under review.02 million) and (0.391 1999 6.30 million.596) 125 0. the profit before taxation. interest & taxation Other Income Profit before depreciation. the profit after taxation and EPS for FY1999 would have been $0.47 79 0.293 15. Had the Service Agreements as described on pages 76 to 77 of this Prospectus been in effect for the financial year ended 31 December 1999.85 times based on the Issue Price of S$0.95 cents respectively.358 3. $4.194 (220) (20) 5. (3) 28 .184 (106) (20) 1.013 181 6.870 1998 6. $(0. Operating Results of the Proforma Group(1) Financial Year Ended 31 December Unaudited 10 months ended 31 October 1999 Audited 10 months ended 31 October 2000 (S$’000) Turnover Operating profit before depreciation.929 4. the EPS is calculated using profit after taxation and divided by the pre-flotation share capital of 144. The profit before tax.SUMMARY OF PROFORMA GROUP FINANCIAL INFORMATION The following selected financial information should be read in conjunction with the full text of this Prospectus.01) cents respectively. interest & taxation Depreciation Interest expense Profit before taxation Taxation Profit after taxation attributable to shareholders of the Company(2) EPS (cents) Notes:(1) (2) (3) 1997 3. including the Accountants’ Report set out on pages 109 to 128 of this Prospectus.687.05 52 0.954 (1.83 million.058 (377) 408 186 594 (143) (21) 430 (351) 293 113 406 (110) (11) 285 (233) 6.27 million and 2.994 Shares. the profit after taxation and EPS for period ended 31 October 2000 would have been $5.32.

587 3.075 0. 3.978) 3.307 982 575 209 894 427 80 5 — (4. Our Group incurred negative working capital of $0.719 1. the NTA per Share is calculated based on the pre-flotation share capital of 144.700 1.140 433 743 297 — — — — — — (1.024 — 160 24 61 — 2. 2.719 1.473) 332 27 450 1.469 4.994 Shares.467 1.239 614 1.35 (S$’000) Fixed assets Preliminary expenses Current assets Stocks Trade debtors Work-in-progress Other debtors.644 (284) 1. 29 .739 — 506 15 60 — 1. deposits and prepayments Amount due from Directors Fixed deposits Short term notes Cash and bank balances Current liabilities Trade creditors Other creditors and accruals Bank overdraft & bills payable Amount due to Directors Proposed dividend Provision for taxation Hire purchase creditors Finance lease creditors Term loan due within a year As at 31 December 1997 1998 1999 362 46 553 516 — 621 68 57 — 325 2.21 Net current assets/(liabilities) Non-current liabilities 667 — 1.726 20 452 3.01 million for FY1999 mainly due to an increase in proposed dividend of $0.86 million.948 216 4 295 (6.349 561 — 1.687.032 545 242 37 120 — 5 — (2.075 Shareholders’ equity NTA per Share (cents)(3) Notes:1.17 795 9 648 1.550 4.Financial Position of the Proforma Group(1) Audited as at 31 October 2000 4.968 980 — 659 500 298 10.765 7.595) 1.71 The financial positions of the Proforma Group for the periods under review have been prepared on the basis that the Proforma Group had been in existence throughout the periods under review.765 5.479) (12)(2) (482) 310 310 0. 1.444 905 1.466 (447) 7. For comparative purposes.

824 91. This discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes.293 91. Service and maintenance This source of revenue arises after hand-over of a completed system.1 567 6.3 100 15.929 93. However. our revenue will fluctuate with the number and size of the projects secured and completed. contains forward-looking statements. we are subject to the corporate disclosure policy of the SGX-ST Listing Manual. installing and commissioning of water treatment systems and advanced membrane filtration plants The majority of our revenue is project-based and these contracts are secured through our marketing efforts and referrals from our customers as well as engineering consultants and companies. except for the historical information.212 563 15.870 89.935 358 4. For example.9 100 6. which consist mainly of material costs and labour costs. 2. 30 .7 8. which are included elsewhere in this Prospectus. Our contract price is determined after having budgeted for all cost components.4 100 3.6 6.391 8. OVERVIEW Revenue Our main sources of revenue are as follows:Unaudited 10 months ended 31 October 1999 $’000 % FY1997 $’000 % Designing. servicing of instruments and checking of system performance.9 100 5. such servicing may also involve the changing of consumables. We do not assume any obligation to publicly release the results of any revision or updates to these forwardlooking statements to reflect future events or unanticipated occurrences. Customers will either sign a yearly service contract with us or engage us on an on-call basis. installing and commissioning Service and maintenance TOTAL REVENUE FY1998 $’000 % FY1999 $’000 % 10 months ended 31 October 2000 $’000 % 3. Hence. Yearly service contracts account for approximately 10% of this source of revenue while the balance is from on-call service. some customers may appoint us to provide a full range of services from design to construction and maintenance while others may contract us just to build and install the plant.6 100 Designing. wearable parts and water treatment chemicals. Our contract revenue is recognised using the percentage-ofcompletion method. we derive a majority of our revenue from projects.775 96. The main factors affecting our revenue are as follows:1. In addition. The typical nature of work in a yearly service contract comprises mainly analysis of water quality. These statements are subject to risks and uncertainties. the value of each project is dependent on the range of services required by our customers. You should not place undue reliance on these forward-looking statements as our actual results could differ materially.447 423 3.489 440 6.4 3. measured by reference to the value of work performed to total estimated contract value. which constitute about 2-3% of our total revenue.REVIEW OF RESULTS The information in this section.1 10.

This will in turn affect our revenue. the size of our capital base will affect our success in securing projects as this is often one of the considerations of our potential customers. Such costs had increased from $0. The increase was due to an increase in manpower.3. 2. Factors that will affect our direct labour costs include:1. FY1998 and FY1999 respectively. As such. we have to incur high training costs for the new employees. according to activity.26 million in FY1997 to $0. being able to deliver a project as scheduled will allow us to commence or plan for another project quickly. it is less meaningful for our results to be classified by activity.74 million in FY1997 to $2. corresponding to a higher turnover as we took on more projects in FY1998 and FY1999. technicians and contract workers who are working on the projects or providing maintenance services. and 31 . material costs accounted for 34. 46. The proportion of components manufactured in-house versus components purchased from third parties will thus affect our material costs. installing and commissioning of plants.49 million after the exclusion of one project with Dandong Synthetic Fiber Co. This was due to our efforts to manufacture most of our components in-house. Labour costs Direct labour costs consist of salaries. This is due to the fact that in FY2000. we will need to train our engineers and technicians for an average of 6 and 12 months respectively before they can be put on a project. materials. component parts for water treatment and other membrane process systems.0% for FY1997. Material costs Material costs consist mainly of equipment. bonuses and other staff-related costs of engineers.41 million in FY1998 and FY1999 respectively. As we focus on membrane filtration. As more than 90% of our revenue is derived from designing. and any delays in the completion of a project may delay the recognition of the revenue associated with the project. Material costs have increased from $1. we manufactured most of the components instead of subcontracting the manufacturing process. Direct Costs Our direct costs comprise mainly material costs and direct labour costs such as salaries and bonuses.0%.12 million for FY1999. we do not classify our direct costs and expenses. If we are unable to retain such trained staff.7% and 45. especially when we have employed contract workers for the project.38 million and $0. inability to retain our trained engineers and technicians for membrane filtration. For the ten months ended 31 October 2000.0% of that for the whole of FY1999. Material costs as a percentage of turnover was 45.57 million for FY1998 and increased to $3. a specialised technology of water treatment. any delay in the completion of a project will incur additional manpower costs. For the ten months ended 31 October 2000. In addition. 4.0% in FY1999. our direct labour costs have reached 172.39 million to $5. Ltd as further explained on page 35 of the Prospectus. and thus profit. Please refer to page 21 on “Risk Factors” for more details.9% of total revenue as compared to 45. The turnover in FY1998 had been adjusted from $6. thus allowing us to control and lower our material costs.

677 220 20 3.069 13. Expenses Operating expenses For the past three financial periods and the ten months ended 31 October 2000.5 13.2 7.6 12.4 50.5 100 Pilot plants and marketing expenses These expenses include direct material and manpower costs for building pilot plants. our actual profit margin will be affected. seminars and marketing material expenses.0 699 29.3 4.5 0. As we employ foreign workers for our operation in Singapore. related transportation and freight costs. Please refer to pages 30 to 32 for factors affecting our revenue and direct costs. There may be instances where the pilot plant results were not satisfactory to the potential customers.3 1.5 29.015 42. However.9 44.5 100 Year Ended 31 December 1997 1998 1999 $’000 % $’000 % $’000 % Pilot plants and marketing R&D Manpower General and administration (“G&A”) Depreciation Interest Total 124 131 508 868 74 24 1.3. 32 . Prior to entering into such contracts.247 1. any changes in governmental policies that restrict the employment of foreign workers in Singapore would also affect our labour costs if we have to employ more locals in Singapore. If our estimates deviate widely from the actual time and resources required for a project. our operating expenses were as follows:Unaudited 10 months ended 31 October 1999 $’000 % 280 285 480 903 110 11 2.8 100 461 387 679 1.8 23. not all pilot plants built will result in secured contracts.7 5. and other ancillary expenses such as exhibitions. or where the customers decide to abort the planned investment regardless of the pilot test outcome.149 14.9 191 8. normally representing approximately 2% to 5% of the actual industrial size and are built to test certain new processes or to demonstrate to customers the capabilities and the effectiveness of the systems before concluding contracts.386 4.458 143 21 3.794 2. Factors that increase our revenue and/or lower our direct costs will increase our gross profit margin accordingly. who are relatively more costly compared to workers from low cost countries such as India.5 0.2 32. Pilot plants are small-scale plants.8 0. any changes in the levies imposed by the Singapore government on the employment of foreign workers in Singapore which would affect our labour costs.5 106 20 2.4 14. we have to estimate the number of man-hours and materials required.2 43. We will bear the cost of building pilot plants and any subsequent manpower costs incurred to demonstrate the performance of pilot plants.729 7.7 100 10 months ended 31 October 2000 $’000 % 91 539 1.2 5. Gross Profit Margin Contracts with fixed prices constitute a significant portion of our revenue.4 100 355 14.2 4. Such a marketing approach was essential during our initial entrance to the market as we intended to serve customers such as VTS Batteries Pte Ltd (“VTS Batteries”) and Hitachi Chemical Asia Pacific Pte Ltd.3 1.6 46.3 21.3 0.

36 million in FY1998. Our R&D expenses have increased from $0. The increase in general and administrative expenses in FY1999 was mainly due to the general provision and write-off of doubtful debts amounting to $0. such costs are major cost components.51 million in FY1997 to $0. travelling expenses and provision for doubtful debts.70 million in FY1998 and remained relatively constant at $0. we have already incurred indirect manpower costs amounting to 183. we need not build every pilot plant from scratch. Of this amount.3% of our R&D expenses for FY1999. representing 115.09 million. As we implement our strategy to develop our R&D capability.12 million in FY1997 to $0. we embarked on the research of producing specialised application membranes.46 million in FY1999. to have wider applications of membrane used in different processes and to strive for market share in the membrane filtration industry.7% of that for the whole of FY1999. For the ten months ended 31 October 2000. especially in membrane technology. 33 . For the ten months ended 31 October 2000. $0.87 million in FY1997 to $1. 14. we no longer need to use pilot plants to market our systems to every customer.19 million in FY1998 and further increased to $0.78 million. financial and administrative personnel.7% of our indirect manpower costs for the whole of FY1999. Manpower costs Manpower costs consist mainly of salaries.39 million in FY1999. logistics.18 million was due to the write-off of non-trade bad debts and the balance was for general provision.9% and 14.13 million in FY1997 to $0. for the ten months ended 31 October 2000 we have already incurred R&D expenses amounting to 139. Manpower costs have increased from $0. Going forward. These expenses have increased from $0. These expenses represented 7.26 million. R&D expenses R&D expenses consist primarily of salaries of R&D personnel. As a result. its construction costs are expensed when incurred. R&D expenses in FY1997 and FY1998 were primarily incurred for membrane applications on different types of processes.68 million. and have further increased to $0. an increase of 127. As we are in a specialised industry.Whether or not a pilot plant results in a sales contract. Despite this decrease. We believe that our R&D work is crucial in ensuring our competitiveness.02 million in FY1998 and to $1. our turnover for the same period had reached $15. In addition. professional fees.0% of our general and administrative expenses for FY1999. we have built up a database of pilot plants and we are usually able to modify an existing pilot plant for demonstration to a new customer. we will need to increase the number of research staff (please refer to page 67 on “Future Plans” for more details). equipment and related material costs.68 million for FY1999. The increase in FY1998 and FY1999 was a result of our emphasis on more pilot testing in these two years to increase market awareness of our services and capabilities.7% over the whole of FY1999. representing 19. The increase in our general and administrative expenses was largely due to an increase in travelling and entertainment expenses.6% of our total operating expenses for FY1997. our pilot plants and marketing expenses declined to $0. In FY1999.2%. FY1998 and FY1999 respectively. These expenses have increased from $0. General and administrative expenses Our general and administrative expenses consist mainly of office rental. we had incurred general and administrative expenses amounting to $1. bonuses and staff-related costs of general management. in addition to continuing development of membrane applications. This will increase our R&D expenses accordingly. This was because we have established our presence in this industry and hence.46 million in FY1999. For the ten months ended 31 October 2000. we expect to spend up to 80% of our R&D expenses on developing a greater variety of specialised application membranes that are suitable for diverse applications in the pharmaceutical and biotechnology industries. Over the years.

9 6.2 33.3 6.219 495 4.3 37.929 32. food and beverage.14 million due to our Group’s acquisition of additional plant and machinery to meet the increase in demand of our products and services.1 9.870 49.460 536 5.908 1. PRC and others. Depreciation of fixed assets of our Group had increased from $0.4 6.1 5.0 54.2 100 109 142 34 285 38. paper and pulp and battery manufacturing. namely electronics.6 32.3 100 64 11 6.775 38.9 27.7 1.1 6.671 41. depreciation of fixed assets increased to $0. Depreciation expenses increased as we acquired more plant and machinery for the manufacture of our components instead of subcontracting the manufacturing process.0 51.996 8.8 11.8% of the depreciation expenses for the whole of FY1999. Others include biotechnology. RESULTS OF OPERATIONS Our segmental results can be classified by customers’ industry. accounting for 153. Review of Past Performance by Customers’ Industry Unaudited 10 months ended 31 October 1999 $’000 % 1.9 100 1.0 140 143 147 430 32.301 2.5 2.1 1.954 32.958 3. Depreciation expenses for the ten months ended 31 October 2000 amounted to $0. motor vehicles and plant and machinery.3 49.9 1.293 36.8 159 2.561 55.4 6.5 100 10 months ended 31 October 2000 $’000 % 5. For FY1999.22 million.6 33.2 34.5 3. we do not classify our direct costs and expenses.169 1.9 6.7 42.9 58. The increase was also due to the acquisition of motor vehicles during that period. according to activity. and can be classified into Singapore.2 100 Year Ended 31 December 1997 1998 1999 $’000 % $’000 % $’000 % Turnover Electronics Pharmaceutical Others Total PBT Electronics Pharmaceutical Others Total PBT Margin (%) Electronics Pharmaceutical Others Total Note:(1) (1) (1) 1. As more than 90% of our revenue is derived from designing.7 15.427 535 3.9 13.2 6. As such.9 33.0 100 983 92.6 6. chemical processing. pharmaceutical and others.7 11. 34 .7 6. and thus profit. Our segmental results by geographical region are based on the location of our customers.8 51.277 2.351 6.3 36.9 100 41 75 21 137 30. it is less meaningful for our results to be classified by activity.Depreciation of fixed assets Our Group’s fixed assets consist primarily of leasehold property.9 3.058 100 2.4 33. installing and commissioning of plants.07 million in FY1997 to $0.391 100 2.6 16.610 15.3 3.8 10.2 6.11 million in FY1998 due to the purchase of office equipment and furniture when we moved to larger office premises at Kaki Bukit Industrial Terrace.579 2.8 100 2. textile. sugar and edible oil refinery.

1% over FY1997 to $6.8 6.410 152 4.6 5. such as Ramatex Textiles Industrial Sdn Bhd (“Ramatex”) with a contract value of approximately $1.5 5.7 6.731 2.20 million project in FY1997 with Jiangsu Jiangan Pharmaceutical Co.90 million (the “Dandong Project”).6 6.2 6.0 100 Year Ended 31 December 1997 1998 1999 $’000 % $’000 % $’000 % Turnover Singapore PRC Others Total PBT Singapore PRC Others Total PBT Margin Singapore PRC Others Total Note:1. Ltd (“Dandong”) of about $0.3 2.391 100 2. due to uncertainty in realisation of revenue in the year of project completion.16 million in FY1998 as we had completed a nonrecurring $1.3 23. Our work for EPCOS also contributed to the increase in sales activities in Singapore from $1. Ltd. our resources were committed to meet the growth in new projects that we have secured from the electronics and other industries.954 54.1 3. 35 . which was completed in FY1997 and project revenue was recognised only in FY1998.870 45. In FY1998.5 6.39 million. (1) (1) (1) 1. The increase in turnover was partially offset by the decline in turnover from the pharmaceutical industry from $1.67 million in FY1998.7 6.7 FY1997 to FY1998 For FY1998.47 million to $1.9 1. we had not actively sought new projects from the pharmaceutical industry and the contribution of the pharmaceutical industry to our turnover declined. Thus.43 million in FY1997 to $0.8 4. turnover from other industries increased from $0.6 3.2 39.480 220 5.678 41.6 100 37 55 1.8 100 38 79 20 137 27.33 million in FY1998.7 14.3 37.147 332 6. Dandong had experienced difficulties in paying us the contract sum.8 4.1 4.7 100 113 159 13 285 39.Review of Past Performance by Geographical Region Unaudited 10 months ended 31 October 1999 $’000 % 1. instead of in the year of completion.8 4.0 6. In FY1998.6 100 10 months ended 31 October 2000 $’000 % 8.647 467 3. we reached an agreement with Dandong to honour the contract sum (please refer to page 43 on “Credit Policy on Sales and Purchases” for more details).2 16. This was due to an increase in turnover from the electronics industry by 40.5 36.76 million for FY1997 to $2.325 20.56 million in FY1998 as we secured and commenced a few major projects in FY1998. This accounted for the increase in our sales to other regions from $0.6 8.519 6.293 40.6 63.10 million. turnover increased by 65.5 1.6 55.6 38. Hewlett Packard Singapore (Pte) Ltd (“HP”) and Hyundai Electronics (Shanghai) Co.91 million in FY1997 to $2.7 3.39 million for FY1998.65 million in FY1997 to $2.756 1.1 100 2.0% from $1.6 4.254 2.775 54.058 3.68 million in FY1998.4 42.2 100 140 274 16 430 32. Another reason for the increase in turnover from other industries was due to the project with Dandong Synthetic Fiber Co.6 100 3.54 million in FY1997 to $3.3 3. In addition. The recognition of revenue was made only in FY1998.4 2. we had secured and completed projects for EPCOS Pte Ltd (“EPCOS”).7 100 966 91. This also resulted in an increase of our sales to PRC from $1.7 57. Others include Malaysia and Taiwan.0 40.929 35. Ltd.388 37.450 4.5 12..4 59.2 4.310 946 15.3 56. In addition.7 41.

by a decline in turnover from the electronics and other industries. There was an increase in turnover from the pharmaceutical industry from $0.90 million was recognised in FY1998 due to uncertainty in revenue realisation in the year the project was completed.76 million from $2. If the revenue from the Dandong Project were excluded. The increase in turnover was offset. FY1998 was an exceptional year due to the recognition of revenue for the Dandong Project. Although the project was completed in FY1997. Turnover from the electronics industry decreased marginally from $2. Had the turnover for the Dandong Project been excluded for FY1998. the revenue generated of $0. the PBT for FY1998 would have been about $0.44 million in general and administrative costs. The turnover from other industries decreased by $1. Operating expenses increased by $0.5% for FY1998.43 million in FY1999.56 million in FY1998 to $2.39 million in FY1998 to $3. due to a new contract that we secured from Amway (China) Co.68 million in FY1998 to $4. our turnover from PRC also increased from $2. our PBT decreased from $1. This was mainly due to the increase of $0.98 million in FY1998 to $0. 36 .16 million in FY1998 to $2.4% to $6.23 million and manpower costs of $0. the full amount of $0.Our PBT increased from $0.14 million in FY1997 to $1.00 million in FY1999.35 million in FY1999.06 million in FY1998 as a result of the Dandong Project.30 million in FY1999. to some extent.67 million in FY1998 to $2. PBT margin declined from 16.10 million in FY1998.90 million contributed to the profit for FY1998. $0.28 million in FY1999. of which we had recognised progressive billing of about $2.16 million and we would have recorded an increase in our PBT of $0. the decline in turnover from other industries would have been $0.39 million in FY1998.21 million from $3. our PBT margin would have shown an increase from 2. Ltd (“Amway”). the PBT was exceptionally high due to the recognition of revenue and profits associated with the Dandong Project. from $2. Our sales in Singapore remained stable from FY1998 to FY1999. As mentioned on page 33.5% in FY1997 to 16.66 million in FY1998 to $2. As such.6% in FY1998 to 6.15 million in FY1999. The increase in operating expenses is mainly due to an increase in pilot plants and marketing expenses of $0. which was completed in FY1997. This was mainly due to the decline in PBT from other industries from $0.26 million.06 million in FY1998 to $0. The increase was mainly due to the Dandong Project. corresponding to the increase in turnover in FY1998. Our operating expenses increased from $1.31 million instead. largely due to the general provision and write off of doubtful debts of $0. For FY1998.9% due to the completion of the Ramatex project of $1. Had the Dandong Project been excluded for the purpose of analysis.18 million arose from the write-off of non-trade doubtful debts. Had such a non-recurring transaction been excluded from the FY1998 results. Therefore. Our PBT margin increased from 3.73 million in FY1997 to $2.2% in FY1999.19 million. The costs associated with this project had been charged in earlier years. FY1998 to FY1999 Turnover for FY1999 increased by 8. However. Despite the increase in turnover.27 million in FY1999 instead.93 million.15 million in FY1999.5% in FY1998 to 6. The contract value amounted to approximately $4.2% in FY1999.00 million.6% in FY1998. Sales in other countries decreased by 74. the PBT margin would have been 2.35 million in FY1999.15 million in FY1999.

which was substantially completed as at 31 October 2000.2% and 68. $5.50 million and Flextronics (Malaysia) Sdn Bhd (“Flextronics”) with a contract value of about $0. compared to $2. profit before tax and profit after tax of $15. This also resulted in an increase in sales from the PRC market. our turnover of $15. (2) undertake more fabrication of our treatment plant in-house leading to cost savings of up to 40%. In addition.37 million respectively. Our PBT margin was 37. Based on the audited results for the ten months ended 31 October 2000. on a turnover of $20.14 million for FY2000.4% of the respective estimates. the turnover from the electronics industry also grew from $1.5% over the ten months ended 31 October 1999.50 million for the ten months ended 31 October 1999 to $1. we also secured a project for Gultech (Suzhou) Electronics Co Ltd (“Gultech”) in PRC with a contract value of $1.28 million for the corresponding period in FY1999.Ten months ended 31 October 2000 versus unaudited ten months ended 31 October 1999 For the 10 months ended 31 October 2000.95 million as compared to $0.95 million and $4.31 million for the ten months ended 31 October 2000. The improvement in our PBT margin was because we (1) began to manufacture filtration membranes and components used in our plant instead of buying them from external suppliers. an increase of 31. Our expenses on building pilot plants for the first 10 months ended 31 October 2000 amounted to $0. This was mainly attributable to new projects such as EPCOS (phase 5) and WUS Printed Circuit (S) Pte Ltd in Singapore. turnover from Singapore increased to $8. 37 . The realisation of the balance of the contract value for Amway’s project that amounted to $2.72 million and $6. Turnover from other industries also increased from $0.5 million. 68. compared to $1.73 million for the corresponding period in FY1999.7% for the period ended 31 October 2000.00 million for the ten months ended 31 October 2000. compared to $0.09 million. In addition. representing 78.1% over the corresponding period in FY1999.4%. Our Directors believe that our Group will be able to achieve the profit estimate as most of our revenue is secured by existing contracts with our customers.36 million respectively.60 million total contract value secured in March 2000 from JacobsLend Lease.15 million for the 10 months ended 31 October 1999. such as Malayan Sugar Manufacturing Sdn Bhd with a contract value of about $0. thus leading to cost savings of up to 50%. The total cost savings resulting from the manufacture of more components in-house amounted to approximately $1. This also partially accounted for the increase in turnover from PRC to $6. PROFIT ESTIMATE Barring any unforeseen circumstances.30 million for the ten months ended 31 October 2000. The increase in turnover was mainly due to an increase in turnover from the pharmaceutical industry from $2. the increase in our G&A expenses were proportionally less than the increase in turnover. resulting in higher margins.00 million also contributed to the increase in turnover for the pharmaceutical industry for the period ended 31 October 2000.20 million.17 million for the ten months ended 31 October 2000. our Group had already achieved a turnover. Sales to other countries for the 10 months ended 31 October 2000 were $0. our Directors estimate that our Group will achieve a profit before tax and profit after tax of $8.61 million for the 10 months ended 31 October 2000. and by $11.22 million for the ten months ended 31 October 1999 to $8. As a result. This was mainly attributable to the $4.48 million or an increase of 267. This was mainly due to the increase in the number of projects secured in Malaysia.78 million.46 million for the whole of FY1999 and $0.78 million surpassed the sales for the whole of FY1999 by $8.7%.41 million for the corresponding period in FY1999.52 million for the ten months ended 31 October 2000. In addition.58 million for the ten months ended 31 October 1999 to $6.85 million or an increase of 127.

we recorded a preliminary expense for the incorporation of our Company. In addition.80 million in FY1999 was mainly due to the purchase of motor vehicles and plant and machinery for the expansion of our Group’s business. Together with other capital additions. plant and machinery. we have no significant capital expenditure and disposal. Hydrochem Engineering (Shanghai) Co. In FY2000. Consequently. The increase in net book value from $0.37 million. short term notes and cash and bank balances. we have achieved profit after tax of $4. 38 . Ltd (“HES”). We achieved savings in material costs through the manufacture of components in-house instead of subcontracting.47 million in FY1998 was mainly due to cash generated from operating profits.33 million in FY1997 to $1.24 million in FY1998 mainly due to the increase in cash and bank balances. For the ten months ended 31 October 2000. we acquired a leasehold property located at 40 Changi South Street 1 for a cash consideration of $2.01 million based on the projects secured and completed. we expect to recognise additional profit of $2.3 months in FY1998. motor vehicles. fixed deposits. Current Assets Current assets comprise mainly stocks. production and research purposes. Trade debtors increased from $0. the increase in operating expenses is less than the increase in turnover. For FY1997 to FY1998. REVIEW OF FINANCIAL POSITION The following discussion is to be read in conjunction with “Financial Position of the Proforma Group” on page 29 of this Prospectus. Profit after tax is estimated to increase correspondingly by $6. other debtors. which were amortised over three years.6% from $6.Our turnover is estimated to increase by 190. There has also been an increase in the number of contracts with value of more than $1. A significant part of such increase was derived from existing customers requiring additional water treatment systems. Preliminary expenses Preliminary expenses for FY1997 to FY1999 relate to expenses incurred by our subsidiary. which was consistent with the increase in number of day sales in trade debtors from 1. These savings were offset by more favourable terms granted to our existing customers for new projects secured in the second half of FY2000 for the purpose of maintaining goodwill. We have maintained the level of referrals and recommendations from our existing clients and engineering consultants and companies. trade debtors.6 months in FY1997 to 3. in line with the increase in turnover.33 million in FY1998 to $0. The increase in cash and bank balances by $1.10 million from $2. For the ten months ended 31 October 2000.36 million. Our efforts in conducting pilot plant trials and marketing also yielded additional revenue. our Group’s fixed asset net book value has accordingly increased by $3..14 million in FY2000 due to higher demand for water treatment systems from our customers (please see “Prospects” on page 66 of this Prospectus).93 million in FY1999 to $20. Pre-tax profit is expected to increase by $8. the gross profit and the gross profit margin for FY2000 are estimated to be in line with that of FY1999.29 million to $6.14 million from $0.73 million as at 31 October 2000. The purchase was financed by our own cash resources and a term loan (please see page 39 for more details). deposits and prepayments.14 million in FY1997 to $4. For the remaining two months of FY2000.80 million as at 31 December 1999 to $4. Fixed Assets Our Group’s fixed assets consist primarily of leasehold property.29 million. work-in-progress.00 million in FY2000.74 million in FY1998.52 million to $1.80 million. The property is acquired for the expansion of our business and is used for office. Our current assets increased by $2.93 million from $0. and trade debtors.

60 million in FY1998. The higher trade debtors was also due to an increase in number of day sales in trade debtors from 1.30 million in FY1997 to $0.24 million in FY1998 to $4. This was due mainly to an increase in provision of dividend by $0.12 million was due to higher net profits for FY1998. In FY1999. Bank overdraft and bills payable also increased by $0. and provision for taxation.98 million from $4.6 months for the ten months ended 31 October 2000.88 million to $4. This was in line with the lower purchase of stocks and decrease in number of days purchases in trade creditors from 5. The increase in trade creditors and bills payable was in line with the increase in the stock balances as at the end of FY1999 to support the Group’s sales.0 months in FY1999 because proportionately more purchases were made in last quarter of FY1999. Current Liabilities Current liabilities comprise mainly trade creditors. current liabilities increased by $1.70 million increase in trade creditors. Increase in provision for taxation by $0.98 million.5% equity interest in Hydrochem Engineering (S) Pte Ltd (“HEPL”). This was due primarily to an increase in other creditors and accruals from $0. current assets increased by $5.97 million and trade debtors by $2. During this period. evidenced by the decrease in the number of day sales in trade debtors from 3.47 million in FY1998 to $2. we utilised our cash to invest in short term notes of $0.47 million in FY1999.80 million (please see pages 79 to 82 on “Restructuring Exercise” for more details of the Shareholders’ Agreement).50 million and placed $0.74 million in FY1997 to $1.30 million. proposed dividend. In addition.66 million in fixed deposits.40 million to $0.01 million. Our Group also declared a net dividend of $0. Bank overdraft and bills payable increased from $0.03 million in FY1998 as a result of higher accrued operating expenses.50 million to $6. in relation to the purchase of a leasehold property at 40 Changi South Street 1.9 months in FY1998 to 5. we have an outstanding term loan of $0. We also utilised cash of about $2.3 months for the ten months ended 31 October 2000.47 million in FY1999 to $10.61 million in FY1998.56 million.74 million in FY1998 to $1. The overall increase in bills payable and trade creditors was in line with the increased purchase of stocks and the expansion of operations.43 million in FY1997 to $0. Creditor’s payment period increased despite an increase in cash and bank balances as cash was used by Hydrochem (S) Pte Ltd (“HSPL”) for the purchase of the 50.58 million.20 million in relation to the repayment of term loan for purchase of the leasehold property at 40 Changi South Street 1. Current liabilities increased by $1. Current liabilities increased during the ten months ended 31 October 2000 by $2. as indicated by the increase in work-inprogress by $3.48 million. despite the increase in turnover in FY1999.0 months in FY1999 to 1. other creditors and accruals.3 months in FY1998 to 1.55 million in FY1998 and trade creditors increased from $0.55 million in FY1999 mainly due to an improvement in debt collection.Current assets increased from $4.52 million due to higher profits for the ten months ended 31 October 2000.81 million and an increase in provision for taxation by $1. Cash and bank balances increased from $1.13 million from $1.8 months in FY1999 to 2. which was due within a year as at 31 October 2000. we issued new shares to DBS Capital Investments Ltd (“DBS Capital”) and Gimmill Industrial (Pte) Ltd (“Gimmill”) for cash amounting to $4. The increases were partially offset by the decrease in trade creditors by $0. This was attributable mainly to a $0.47 million in FY1997 to $2. after accounting for a decrease in trade debtors. This was attributed mainly to an increase in cash and bank balances. This was also due to an increase in the number of days purchases in trade creditors from 2.02 million in FY1999. The cash was utilised to finance our business expansion.89 million for FY1999. In addition.91 million and decrease in bank overdraft and bills payable by $0. bank overdraft and bills payable.03 million to $0. This has also contributed to the decrease in trade debtors from $1. 39 . As at 31 October 2000.44 million.8 months in FY1999.

There were no non-current liabilities in FY1997. had incurred net losses in FY1999 while our Singapore subsidiaries recorded profits and were liable to pay taxes. In FY1999. As the tax losses for HES could not be used to offset the tax liabilities of the profitable subsidiaries. shareholders’ equity decreased by $1.43 million in FY1999.89 million. Our principal uses of cash have been for meeting expenses such as purchase of materials. we have obtained additional banking facilities of $2. non-current liabilities decreased marginally from $0. we have funded our operations through operating cash flow. there was no provision for taxation as we had tax losses carried forward from earlier years. Shareholders’ equity Shareholders’ equity increased from $1. in line with the higher PBT of $5. Shareholders’ equity increased from $0.12 million in FY1998 to $0. we experienced a net current liabilities position largely due to the declaration of dividends amounting to $0.77 million during the period ended 31 October 2000 pursuant to the issue of shares by our Company for cash amounting to $4.72 million in FY1998.66 million (after declaring an interim dividend of $1. Ms Lum Ooi Lin Olivia and Dr Deirdre Murugasu. However. non-current liabilities increased by $0. borrowings from financial institutions and admission of new shareholders finance our capital expenditure and working capital requirement. there were non-current liabilities of $0. This was in line with the retention of our Group’s profit after taxation for the year.20 million. HES. Our subsidiary in Shanghai. considering our existing banking facilities. Cash generated from operations.04 million was declared in FY1998. 40 . Taxation In FY1997.31 million in FY1999 to $7.48 million.43 million in FY1999.80 million and retained profits for the period amounting to $2. we are of the opinion that we have sufficient working capital for our present operational requirements. In FY1999. This was mainly a result of declaration of net dividend amounting to $0.Non-current liabilities Non-current liabilities comprise leasing and hire purchase creditors and deferred taxation. The cash generated from our operations are mainly from progress billing of contracts.20 million to $0.70 million for the first six months ended 30 June 2000). Liquidity and Capital Resources Since our inception. In FY1999. For the ten months ended 31 October 2000.95 million recorded for that period.06 million in FY1998 to $0.08 million in FY1997 to $1. staff-related expenses and selling and administrative costs. A net dividend of $0. our provision for taxation increased despite the decrease in our PBT from $1.45 million as at 31 October 2000. Provision for taxation increased from $0.89 million.48 million for FY1999 to $0.28 million due to deferred tax liabilities.95 million. which are secured by our leasehold property at 40 Changi South Street 1 and joint and several personal guarantees from our Directors.41 million to $0. In addition. existing and new shareholders and supplemented by banking facilities. provision for taxation increased to $1.31 million. For the period ended 31 October 2000. In FY1998.

As at 31 October 2000, our working capital stood at $3.47 million compared to $(0.01) million at the end of FY1999. This was attributable to a cash injection of $4.80 million from the issuance of new shares to DBS Capital and Gimmill. These cash balances were subsequently used to finance business growth, invest in short term notes of $0.50 million and fixed deposits of $0.66 million. We have also utilised cash of about $2.00 million to partially repay the banking facilities which are secured by our leasehold property. The cash injection by the two Strategic Investors is subject to certain conditions (please see pages 81 to 82 for details). Specifically, the agreement stipulates that should the Issue Price of our Shares at the Invitation be below an amount of approximately $0.20 per Share, we will have to pay back an amount to the Strategic Investors, based on an agreed formula. On the other hand, if the Issue Price is above an amount of approximately $0.20 per Share, we will receive a top-up payment from the two Strategic Investors, based on an agreed formula. Based on the actual Issue Price of $0.32 per Share, we will receive a total amount of approximately $2.60 million from the two Strategic Investors (please refer to pages 81 to 82 for details). Subsequent to the Invitation, DBS Bank is agreeable to releasing the personal guarantees from our Directors, Ms Lum Ooi Lin Olivia and Dr Deirdre Murugasu, to secure our Group’s banking facilities. These will be substituted by the corporate guarantee of our Company. We do not foresee that our existing facilities will be affected. Our Directors are confident that with our Company’s listing status and its strengthened financial position from the expected net proceeds from the issue of the New Shares, our credit rating should improve and we should be able to secure further or alternative sources of credit facilities at the then prevailing interest rates should the above mentioned facilities be terminated. CAPITALISATION AND INDEBTEDNESS The following table shows our cash and cash equivalents and capitalisation as at 31 October 2000:1. 2. on an actual basis; and as adjusted for the issue of Shares to our two Strategic Investors and from the Invitation.

You should read this table in conjunction with our financial statements and the related notes included in this Prospectus. As at 31 October 2000 Actual Adjusted $’000 $’000 Cash and cash equivalents Hire purchase creditors(1) Finance lease creditors Term loan
(2) (1)

957 (369) (13) (295) 3,042 4,192 1,254 (2) 8,486 9,163

10,365 (369) (13) (295) 8,484 8,158 1,254 (2) 17,894 18,571

Shareholders’ equity: Issued and paid up capital Share premium Revenue reserve Translation reserve Total Shareholders’ Equity Total Capitalisation
Notes: (1) (2) Please refer to pages 124 to 125 of the Accountants’ Report for more details. Term loan was for the purchase of leasehold property 40 Changi South Street 1. Please refer to page 125 of the Accountants’ Report for more details.

41

DIVIDENDS Our Directors have declared an interim dividend of $1.70 million for the first six months ended 30 June 2000 to our existing shareholders. The declaration and payment of dividends will be determined at the sole discretion of the Board subject to shareholders’ approval, and will depend upon our Group’s operating results, financial conditions, other cash requirements including capital expenditures, the terms of its borrowing arrangements (if any), and other factors deemed relevant by our Directors. We currently do not have any dividend policy. Therefore, there can be no assurance that dividends will be paid in the future. We intend to distribute another interim dividend of up to 12% of profit after tax (of which profit after tax is net of the first interim dividend of $1.70 million) to our existing shareholders, as well as new shareholders after the Invitation. DILUTION Dilution is the amount by which the Issue Price paid by the purchasers of our Shares in this Invitation exceeds our NTA per Share after the Invitation. The audited NTA per Share of our Group as at 31 October 2000 before adjusting for the net proceeds from the Invitation and based on preInvitation issued and paid-up share capital of 144,687,994 Shares was 5.35 cents. On 3 June 2000, our Strategic Investors, DBS Capital and Gimmill, paid $0.7889096 per share for 3,042,174 ordinary shares of $0.10 each. Subsequently, on 21 June 2000, an agreement was entered into by our Company and the Strategic Investors, which provides for the cost of investment to each of these Strategic Investor in our Company to be at a 20% discount to the Issue Price (please refer to pages 79 to 82 on “Restructuring Exercise” for more details). Pursuant to the Invitation in respect of 25,000,000 New Shares at the Issue Price of $0.32 per Share, our Group’s NTA per Share after adjusting for the top-up payment from our two Strategic Investors and the estimated net proceeds from the Invitation and based on the post-Invitation issued and paid-up share capital of 169,687,994 Shares would have been 10.11 cents. This represents an immediate increase in NTA per Share of 4.76 cents per Share to our existing shareholders and an immediate dilution in NTA per Share of 21.89 cents per Share to our new investors. The following table illustrates this per Share dilution:As at 31 October 2000 Issue price NTA per Share based on the pre-Invitation issued Share capital of 144,687,994 Shares NTA per Share after the top-up by our two Strategic Investors and the Invitation Increase in NTA per Share attributable to existing shareholders Dilution in NTA per Share to new investors Cents 32.00 5.35 10.11 4.76 21.89

The following table summarises as at the date of this Prospectus, the total number of Shares Issued by us, the total consideration paid to us and the average price paid per Share by our existing shareholders and by our new public investors in the Invitation.
Average price per Share (cents) 5.00 32.00

No. of Shares Existing shareholders New public investors Total 144,687,994 25,000,000 169,687,994

% 85.3 14.7 100.0

Consideration ($’000) 7,234 8,000 15,234

% 47.5 52.5 100.0

42

CREDIT POLICY ON SALES AND PURCHASES For our project contracts, depending on the contractual terms, there could be an initial down payment of 20% to 30%, with another 30% to 50% payment upon delivery of equipment and before installation, and the balance to be settled upon installation and commissioning. The average number of day sales in trade debtors for the past three financial years from FY1997 to FY1999 is 2.2 months. In November 2000, we introduced a new “build, own, operate and transfer” arrangement with one customer, under which we will build the plant at the premises of the customer. We own the plant and upon its commissioning, we will operate the plant and our customer will purchase the treated water from us. The contract is for a five-year period. At the end of each year, the customer has the option to purchase the plant from us at a pre-specified price. At the end of the five years, the customer has to purchase the plant from us. Under this arrangement, we do not collect any down payment from our customer. We will, however, earn income from the sale of treated water. There is a specified minimum amount that the customer has to pay us on a monthly basis, regardless of the actual amount of water purchased from us during the month. Full payment is due to us only upon the sale of the plant to our customer. However, we require our customer to issue a banker’s guarantee in our favour to cover our estimated costs for the project. We intend to introduce this arrangement to more customers, in accordance with their needs. Normally, we offer a guarantee of one year and we provide 2% of the contract sum as warranty expense. For the PRC projects, we request a letter of credit to secure the contract sum except for multi-national corporations (“MNCs”). For the past three financial years, we have been able to maintain our doubtful debts at less than 5% of our turnover. In FY1997, our collections for a project that we had completed for one of our customers, Dandong, were delayed as Dandong faced cash flow problems. Subsequently, in FY1998, Dandong managed to pay the full amount of the outstanding sum to us. It is our practice to monitor and follow up on the payment status of our customers. We may consider legal action if a debtor fails to respond to our payment request followed by a letter of demand. For the last three financial years, there were no such legal actions. We have typically 30 to 90 days payment terms from our suppliers. FOREIGN EXCHANGE EXPOSURE Please refer to “Risk Factors” on page 22 for the discussion on our exposure to foreign exchange fluctuations. The proportion of our turnover and purchases and expenses in the respective foreign currency are as follows:Turnover 10 months ended 31 October 2000 % 52.4 41.8 5.8 100.0

FY1997 % Singapore Dollar US Dollar RMB Total 58.3 37.8 3.9 100.0

FY1998 % 57.4 37.7 4.9 100.0

FY1999 % 28.3 53.5 18.2 100.0

43

3% respectively.1 8.6 13.6 24.3% and 53. In FY1999.0 100.5 29. the proportion of our turnover in S$ and US$ was 52. For example.6 0.1 3.4% and 41.0 64.7% (9) (0.1%) 42 0.Purchases and expenses 10 months ended 31 October 2000 % 60.1%) (0.5% and 29.6% and 24.5% respectively while the proportion of purchases and expenses in S$ and US$ was 67.3% 0. We have not used any financial hedging instruments to manage our foreign exchange risk as our foreign exchange gain/losses over the past three financial years had been relatively low.6 0.1% respectively.0 Our net foreign exchange gain or loss as a proportion of turnover and PBT for the last three financial years and for the ten months ended 31 October 2000 are as follows:10 months ended 31 October FY1997 FY1998 FY1999 2000 Net foreign exchange gain (loss) ($’000) Percentage of turnover Percentage of PBT 27 0.8% respectively while the proportion of purchases and expenses in S$ and US$ was 60. Deutschemark and Italian lira.1 31.7% We provide quotations to our customers mainly in S$ and US$ and make purchases also mainly in S$ and US$.0 1.0 FY1999 % 67. FY1998 % 79.3 0.0 100.9%) (9) (0. We will continue to monitor our foreign exchange exposure in the future and will consider hedging any material foreign exchange exposure should the need arise. 44 .7% 19.0 FY1997 % Singapore US Dollar RMB Others(1) Total Note: (1) Others include Malaysian ringgit.3 9. For the ten months ended 31 October 2000. profits derived from our projects denominated in US$ would be lower in S$ should there be any depreciation in the exchange rate of US$ against S$. Any significant fluctuation in foreign exchange rates during the course of our projects will have an impact on our Group’s profits.6 100. the proportion of our turnover in S$ and US$ was 28.1%) (2.8 100.8 6.

843. whichever is the earlier. our shareholders approved.225.000.10 each as at 31 March 2000 Issue of Shares pursuant to Restructuring Exercise and to Strategic Investors 20 30.000.10 each into two shares of $0. bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as our Directors may in their absolute discretion deem fit provided that the aggregate number of Shares issued pursuant to such authority shall not exceed 50% of the issued share capital of our Company immediately prior to the proposed issue and provided that the aggregate number of such Shares to be issued other than on a pro rata basis to the existing shareholders shall not exceed 20% of the issued share capital of our Company immediately prior to the proposed issue.042.70 1.844.225 from share premium by way of a bonus issue of 83.421.994 25.60 3.399. will rank pari passu in all respects with our existing Shares. unless revoked or varied by our Company in general meeting. (ii) (iii) (iv) (v) (vi) Capitalisation Save as fully described under the section titled “General and Statutory Information .172. to issue Shares in our Company (whether by way of rights.SHARE CAPITAL At an Extraordinary General Meeting held on 18 December 2000. the following:(i) the sub-division of each ordinary share of $0. details of the changes in the issued and paid-up capital of the Company since 31 March 2000 are summarised as follows:Number of Shares Issued and fully paid-up ordinary shares of $0.421.250. the capitalisation of $4.042. and.994 $ 2.687. inter alia.05 each New ordinary shares of $0.000 169.Share Capital”. the issue of 25.10 in our authorised as well as our issued and paid-up share capital into two ordinary shares of $0.844. pursuant to Section 161 of the Act.687.000.60 3.492 83.726 30.05 each (the “Stock Split”). when issued and fully paid.00 3.60 4.746 Subdivision of one ordinary share of $0. such authority shall continue in force until the conclusion of the next Annual General Meeting of our Company or the date by which the next Annual General Meeting of our Company is required by law to be held.000 New Shares pursuant to the Invitation.500 Shares credited as fully paid to our existing shareholders (the “Bonus Issue”). and the authorisation of our Directors.042.174.234. our conversion into a public limited company and the change of our name to “Hyflux Ltd”.10 7. the adoption of a new set of Articles of Association.00 0.500 2 144.192.399. The New Shares.00 8.484.05 each pursuant to the Bonus Issue Issue of Shares pursuant to Shareholders’ Agreement Total issued and paid-up share capital prior to Invitation Issue of New Shares pursuant to Invitation Issued and paid-up capital after the Invitation 60.174.70 45 .192.

399 (1) 7.042.084.10 each Ordinary shares of $0.590.05 each Shareholders’ Funds Share capital Share premium Notes:(1) After Invitation ($) 50.225 7.842.042.423 8.024(2) 16.000 3.000.642.192.608.10 each at a premium of $3.348 ordinary shares to DBS Capital and Gimmill (3.000.000 — 50.5% equity interest in HEPL and the issue of 6.399 8. Net issue proceeds of approximately $6. after the Restructuring Exercise and the issue of New Shares are set out below. After Restructuring Exercise.80 million less par value of the New Shares and taking into account Note (1) above and the bonus issue via capitalisation of share premium amounting to $4.024 9.000 — — 50.174 ordinary shares each) at a premium of $0.689 per share.000. net of expenses of $550 and an issue of bonus shares via capitalisation of share premium amounting to $1.234.192. (2) 46 .840 fully paid ordinary shares of $0.423 This share premium arose from the issue of 435.399 2.156.65 per share for our Company’s acquisition of 49.The authorised share capital and the shareholders’ funds of our Company as at 31 October 2000.158.174 4.484. These statements should be read in conjunction with the Accountant’s Report set out in pages 109 to 128 of this Prospectus.234. issue to Strategic Investors and Bonus Issue ($) As at 31 October 2000 ($) Authorised Share Capital Ordinary shares of $0.225.

We also installed for Siemens the distribution piping from our plants to the point-of-use including equipment hook-up. we provided our first integrated water treatment system for the then Siemens Matsushita Components Pte Ltd (“Siemens”. water system for dicing machines. In 1992. a subsidiary of General Electric International to purchase E-Cell manufactured equipment. chemical supply and collection system and wastewater treatment system. We believe that we are the first to introduce the process for this particular use in PRC. as we expanded our operations. This enables us to offer a more comprehensive range of systems to our customers.000 m3 per day river water treatment plant for Ramatex in Malaysia. Pursuant to the signing of this agreement. In 1995 and 1996.000 sq ft. In 1998. chemical treatment and softening of raw water for potable water and boiler/cooling tower water usage. we concentrated on building brand awareness for our services by building industrial-sized pilot plants to demonstrate the capability and effectiveness of membrane filtration technology which we believe was not practised in the industry then. In the same year. we built our first hot water recycling plant for VTS Batteries using the membrane filtration technology acquired from MPW in 1992. Ms Olivia Lum and a few other minority shareholders. we acquired from MPW the knowledge to install the membranes and membrane filtration plants. Our presence in Shanghai allowed us to service our existing customers in Singapore such as MMI Holdings Ltd and Goldtron Limited who were setting up manufacturing facilities in PRC.HISTORY We started operations with the incorporation of Hydrochem (S) Pte Ltd (“HSPL”) on 30 June 1989. food and electronics industries. We conducted more than 100 pilot plant trials of membrane applications and water treatment technologies for the pharmaceutical. In November 1998. we saw our efforts in building pilot plants pay off as we secured larger projects such as the 6. As our business expanded. In this year. the principal activity of HSPL then was to provide general water treatment. This capability to provide hook-up services enhanced our range of services and enabled us to position ourselves as an integrated water treatment provider. 47 . we also signed an agreement with E-Cell Corporation (“E-Cell”). we also moved from Tampines Industrial Park to a larger premise at Citimac Industrial Complex at Macpherson which had a built-in area of 3. now known as EPCOS) manufacturing facility in Kallang. We started business at Block 9012. we were able to use the membrane filtration technology for other processes such as removing protein from fermentation broths in pharmaceutical plants. Through these distribution rights. In 1997. which we subsequently used in our water treatment processes. In 1994. we obtained the distribution rights from Membrane Products Kiryat Weizman Ltd (“MPW”). HEPL and HES were incorporated to penetrate the PRC market. Tampines Industrial Park with a 1. In November of that year. we received a grant from the National Science and Technology Board (“NSTB”) under the Research and Development Assistance Scheme (“RDAS”) to carry out research on (1) the purification of industrial water as an alternative source to city water for industrial uses and (2) the ozonation method for the treatment of dye effluent and refractory organics. We installed the deionisation (“DI”) water system. we shifted to a larger factory space at 34 Kaki Bukit Industrial Terrace in December 1997 and eventually extended to another unit at 43 Kaki Bukit Industrial Terrace one and a half years later.200 sq ft office. to distribute their membranes and membrane filtration plants to industrial customers. using traditional water treatment technologies such as media filtration. E-Cell transferred to us the know-how to build an Electro-Deionisation (“EDI”) system for chemicals-free deionisation of water using an E-cell component called an E-cell stack. Through our own R&D. Founded by our Managing Director.

we received another grant from the Economic Development Board under the Innovative Development Scheme (“IDS) for the development of membranes. This scheme spans over a period of three (3) years and its aim is to encourage development work by subsidising some of the costs such as salaries of our R&D staff. we introduced a new arrangement with one customer.000 sq ft as our operations continued to grow and we needed more factory and office space. In March 2000. we also commenced R&D to develop our own filtration membranes. a pharmaceutical company in PRC. With effect from October 2000. we will operate the plant for a period of five years. 48 . As part of our marketing efforts. At the end of the five years. In the same year. during which our customer will purchase the treated water from us. which is the key component in our systems. our customer will have to purchase the plant from us (please refer to page 43 on “Credit Policy on Sales and Purchases” for more details). In November 2000. to construct a pure water treatment system and a high purity piping system in their Guangzhou manufacturing plant. Hyflux Ltd was incorporated on 31 March 2000 to assume the role of an investment holding company for our Group. we incorporated a new subsidiary. After commissioning. Our in-house manufactured membranes saw their first industrial application in March 2000 in the Jurong Bird Park sewage water recycling project and the wastewater treatment of textile dyeing water in Suzhou for Ramatex Industrial (Suzhou) Ltd (“Ramatex Suzhou”). we commenced operations from our new premises at 40 Changi South Street 1 with a built-in area of 17. HFPL is formed to handle such projects. This allows us to customise the water treatment systems to the needs of our customers and also to control the quality and costs of filtration membranes. Hyflux Engineering Pte Ltd (“HFPL”). under which we will build our plant in the premises of the customer. we secured a contract from Amway.In 1999.

ground. and designing. sea. Below is a diagrammatic illustration of our water treatment processes:Raw Water (From river. well water and rainwater) is purified from its various sources for consumption and industrial applications. 49 . pharmaceuticals and biotechnology. sea. wastewater treatment. installing. seawater.BUSINESS PRINCIPAL ACTIVITIES Our principal activities are project-based and comprise:(a) water treatment which involves water purification. sand filtration. water recycling and advanced membrane filtration. wastewater treatment and water recycling utilising mainly membrane filtration technology. The water treatment services we provide could be any one of these processes or a combination of some or all of the processes. we carry out water purification. advanced membrane filtration for process streams. lake. etc) City Water Raw Water Treatment DI/ Ultra-Pure Water ("UPW") Treatment High Purity Piping Production (Equipment Hook-up) Water Recycling Process Recovery (Membrane filtration) Waste Water Treatment Drainage Piping Discharge of Treated Waste Water (To sewer. engineering. commissioning and maintenance of high purity piping systems and equipment hook-up. etc) Water Purification Raw water (such as river water. The technologies that are adopted by us for water purification include:(a) (b) membrane filtration technology. river. (b) (c) Water Treatment For water treatment processes. Additional tertiary treatment using membrane filtration technology and ion exchanges will produce deionised water or even ultra-pure water for use in industries such as electronics.

Using our water treatment systems. degasification.000 m3 since year 2000 (brochure by the ENV entitled “Welcome to Jurong Industrial Water Works”). This water. biological treatment. sedimentation. although excellent in quality. dissolved air flotation. oil and grease removal. For companies that use substantial volumes of water. Wastewater Treatment Treatment plants are built to process the wastewater of industries so that such water may be discharged in accordance with the standards of the relevant regulatory authorities in the respective countries in which our clients operate. ozone or chlorine. the Ministry of Environment (“ENV”) has set up a supplementary source of water in the Jurong Industrial Estate by setting up the Jurong Industrial Water Works (the “Works”). is limited and costs S$2. To ease the demand for city grade water by the industries. Currently. This water is cheap.40 per m3. flocculation. some industries such as the food and beverage and pharmaceutical industries are unable to use this water for their manufacturing processes. disinfection by ultraviolet light. We use the following technologies for wastewater treatment:(a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) pH adjustment. our customers are able to purify such industrial water to city grade quality for as low as 55% of the cost of city grade water charged by PUB (including the cost of industrial water). at S$0.(c) (d) (e) (f) (g) (h) (i) (j) multi-stage filtration. the main source of city grade water for industries in Singapore is from the Public Utilities Board (“PUB”). granular media filtration. and can be used for washing and other general purposes.000 m3 per day which was increased to 125. Water Recycling Water recycling is the recovery of water for reuse. and disinfection. advanced chemical oxidation. Besides treatment. because of its lower quality. The Works treats the final effluent from the Ulu Pandan Sewage Treatment Works and has an original designed capacity of 45. Depending on the characteristics of the wastewater. 50 . membrane filtration. our water treatment systems assist them to recycle their wastewater. we can recover between 50% to 90% of the wastewater for reuse using mainly membrane filtration technology.12 per m3 as at 1 July 2000 (The Sunday Times 25 June 2000). Our water recycling processes are mainly utilised in our Singapore projects. and sedimentation. screening. activated carbon filtration. we also review our customers’ water streams and recommend ways to minimise waste effluent and the number of subsequent treatments. coagulation. sludge dewatering. However. ion exchanges.

We used a combination of our in-house manufactured membranes with other membranes to remove suspended solids such as fibres. recovery. Fractionation This is the separation of materials from the homogenous mixture or from the common parental source. The volume of solid sludge generated is minimised and the treated water is suitable for recycling. is that the solution need not undergo any phase changes. Currently. × 100% Concentration This is the removal of liquid from the suspension or solution by membrane filtration process. Recovery Recovery is the percentage of useful material gained from the feed stream expressed as follows:Recovery = Amount in the permeate or the concentrate Amount in the feed The useful material may be the permeate or the concentrate. We would select the appropriate type of membranes depending on the needs of our customers. In membrane separation. This is extremely useful in the bio-pharmaceutical industries as the concentration of organics are susceptible to heat and will be destroyed in distillation. Membrane filtration involves four physical separation processes: purification. we utilise advanced membrane technology to recover or purify products such as antibiotics. as opposed to distillation. Membranes are extensively used for this application in the bio-pharmaceutical and food industries. The advantage of using membranes in concentration. dissolved dyes.Advanced Membrane Filtration In advanced membrane filtration. concentration and fractionation. 51 . we are able to manufacture some of the membranes used in our advanced membrane filtration plants. the purification is carried out by the filtration process. The extent of purity and therefore the type of membranes used depend on the requirements of our customers. insoluble additives. As an example of decolourisation of textile waste streams. Vitamin C. Purification This is the removal of unwanted elements from the useful material. The advantages of advanced membrane filtration are that customers are able to improve yield as a result of less wastage and save cost on energy and space as the plant is smaller in size compared to other conventional methods used. recovery and purification of acids and alkalines in Cleaning-in-place (“CIP”) streams in the food and pharmaceutical industries and the decolourisation of textile waste streams. thus ensuring no change in the physical and chemical nature of the concentrated products. we have built a wastewater treatment plant for Ramatex Suzhou. Examples of applications of advanced membrane filtration are the removal of proteins from fermentation streams for the pharmaceutical industry. dyes and urea in process streams. divalent salts and organics.

electro-polished stainless steel and polypropylene together with compatible fittings and valves are used so as to prevent contamination and leaching of the contact surface. Our work in this area includes the following:- High-purity piping systems We design. especially in the case of ultra-pure water. Our installation is documented and may be used by the relevant authorities for verification when necessary. 52 . Proper hooking-up between the distribution piping and the equipment are crucial to guarantee optimised functions. build. Trained and skilled installation teams operating appropriate welding equipment are deployed to carry out the construction to ensure a defect-free installation. cooling water. The water must also be delivered in a controlled manner to ensure the desired pressure and flow. install.High Purity Piping Systems And Equipment Hook-up As an integrated service provider. commission and maintain water treatment systems. we not only treat water but also design. specialty gases. Our engineering department of about 75 consists of seven (7) sections as follows:- Engineering Department Process Section Service Section Project Section Electrical Section Production Section Design Section QA/QC Section The following is our work process which is carried out for each of our projects under regular quality control and checks to ensure that all materials. gases and chemicals required to the production area. After the water treatment process. Equipment hook-up Most advanced production equipment and machinery employed in the microelectronics and pharmaceutical manufacturing processes require the supply of several types of services such as compressed air. engineer and install high-purity piping systems to convey the extremely pure products such as water. ultra-pure water and vacuum for their operations. Special materials such as Polyvinylidene Floride (“PVDF”). it is important that such treated water is delivered through water systems to the point-of-use in an appropriate medium to prevent contamination. OUR WORK PROCESS All our water treatment systems are handled by our engineering department in our premises under strict quality controls. Customised controls and instrumentation are used to properly monitor and operate them. We have a team of 20 specially trained technicians and engineers to provide this service. procedures and work are executed in accordance with the customer’s internal good manufacturing practices and quality requirements. Perfluoroalkoxy (“PFA”).

The Production Superintendent will study in detail the relevant drawings. the Process Section together with the Electrical Section will produce the General Arrangement Layout. All these will be carried out in accordance with the overall project schedule and timetable derived at the start of the project. The installation team will install all the equipment. Procurement Based on the materials prepared at the design stage.Design After understanding and clarifying with our customers on their requirements and specifications. The delivered goods are either put into our store or issued directly to the Production or Project Section. our Production Section takes over after the procurement. quality and after-sales support. the piping and electrical drawings and bill of materials plus data sheets. He will also prepare the method statement and sequence of construction and provide input or feedback to the Design Engineer. Our Design Section will also produce the construction drawings of individual equipment to be fabricated and assembled. All quotations received will be assessed and evaluated together with the Project Manager from our Project Section. Pre-delivery Inspection will be jointly conducted with the Project Manager. A method statement and the construction sequence are prepared before any physical work is carried out. piping. the installation team will be despatched to site to prepare for the delivery of the equipment. electrical and pneumatic connections in accordance with the site requirements and technical specifications. Fabrication and Assembly For systems which are fabricated in-house. At the appropriate time. Final negotiations will be conducted with the eventual selected vendor and the purchasing officer will issue the purchase order with agreed terms and conditions. both of which are used to check the integrity of the weldings. Regular inspection by our Quality Assurance and Control Section (“QA/QC Department”) will be executed to ensure zero defects due to workmanship. our purchasing officers of our Purchasing Department will send out enquiries and technical specifications of all relevant components and equipment to at least three vendors. The main criteria for evaluation will be the appropriateness of the product. delivery. Inspection is executed visually or by non-destructive testing. bill of materials and timetable prepared by the Design Section before executing the manpower and resource planning. All materials and components received are also inspected at this stage before the commencement of the fabrication and assembly works. our process and design engineers from our Process Section will produce a detailed Process and Instrumentation Diagram together with Functional Design Specifications of the proposed treatment system. Regular coordination and progress meetings will also be carried out with the customer. their engineering consultants and other sub-contractors. A pre-commissioning inspection will be conducted with our Commissioning Engineer and any defects will be rectified. 53 . Installation The Project Manager of each project will carry out a site survey and study all relevant drawings and documentation before producing his own installation schedule and manpower and resource planning. These will be checked and approved internally by our manager of the Process Section before submission to our customer or their consultants for confirmation. such as X-rays and dye penetrant tests. The purchasing officer will then track the delivery schedule of goods ordered and carry out visual inspection of the delivered goods with the assistance of the Project Manager or Engineer. its cost-competitiveness. Once these diagrams and specifications are approved. the Designer and the QA officer before the assembled equipment are delivered to site.

Upon the successful testing and commissioning of the whole plant. Very often. the Commissioning Engineer will then compile the Owner’s Manual comprising the Operation and Maintenance Instructions. electrical. Both classroom and hands-on plant training will be conducted before the final hand-over of the whole plant. the performance of the plant located at the customer’s premises. We have contracts ranging from the provision of full service (whereby we operate and maintain the plant) to an on-call basis. After the one year warranty period. Our service and maintenance team from our Service Section will follow-up with the operational and servicing aspects of the plant during this period. we are also able to fit our water treatment systems with the Supervisory Control and Data Acquisition (“SCADA”) system. we can conduct remote troubleshooting from our office instead of having to travel to the customer’s premises. real-time tracking of the plant operation.Testing and Commissioning An initial visual inspection will first be carried out before the commencement of testing of individual equipment. This system allows us to monitor. This will enable a shorter turnaround time to the customer. We are thus able to maintain on-line. we will also chart the performance of our system based on critical parameters such as temperature. unless specifically required by our customers. Currently. we provide various levels of maintenance and servicing work depending on the needs of our customers. Our plants are also subject to performance verification by our customers. from our office. Verification by external parties is not required. If the water treatment systems manufactured by us are of a value of more than S$1 million. Should there be any problems detected. they will make regular visits to the plant to ensure that the operators are familiar with the running of the plant as well as to guide them on regular servicing and maintenance. we have engaged SETSCO Services Pte Ltd to provide inspection and testing services on the process pipelines that we have installed. instrumentation and process performances of each equipment is first tested and verified by the Commissioning Engineer of the Process Section before the performance of the whole plant is tested. Service and Maintenance We provide a one year warranty on all our water treatment systems. pH of liquid and operating pressure and despatch our technicians to attend to any problems after detailed diagnosis from our office. For example. they also assist the Commissioning Engineer during the training phase and after hand-over. The mechanical. This will be handed to the customer and at the same time the operation and maintenance training will be conducted by our Process Section for the operators and facilities staff of the customer. 54 .

000m3 per day Textile Malaysia 1998 (Hyundai Electronics (Shanghai) Co Ltd) DI Water Production 20m3 per hour Electronics PRC 2000 (Amway (China) Co Limited) DI Water (USP grade) Production 200 gallons per minute Pharmaceutical PRC 2000 Hewlett Packard Singapore Pte Ltd Further upgrading of DI Water System 160 gallons per minute Electronics Singapore 2000 FCI Singapore Pte Ltd DI Water Production and Wastewater Treatment System 180 m3 per day Electronics Singapore 2000 Jurong BirdPark Recycling of sewage water using UF and Reverse Osmosis (“RO”) membranes 480 m3 per day Theme park Singapore 2000 Shanghai Liquid Crystal Co. Wastewater Treatment. recycling and chemical delivery system 120 m3 per day Electronics Singapore 1998 Ramatex Textiles Industrial Sdn Bhd River Water Treatment System using Nano-filtration membrane 6. This is evidenced by the following major projects (in terms of contract value of more than $1 million or new innovations through our R&D efforts) successfully completed or currently undertaken by us:Completed Projects Year 1994 End-User/Project (Sector) Industry Electronics Country Singapore VTS Batteries Pte Ltd Recycling of hot water 100 m3 per day of recycled water 1996 (Shanghai Sunve Pharmaceutical Ltd) Removal of protein from fermentation broth using UF membrane technology Processed 100 tonnes of fermentation broth per day Pharmaceutical PRC 1997 Siemens Matsushita Components Pte Ltd DI Water Production.MAJOR PROJECTS COMPLETED Through the years we have managed to enlarge our customer base especially among the MNCs. Ltd DI Water Production 20m3 per hour Electronics PRC 2000 Flextronics (M) Sdn Bhd DI Water Production 180m3 per day Electronics Malaysia 2000 EPCOS Pte Ltd DI Water Production – 2 systems 120 m3 per day each system Electronics Singapore 55 .

We will also seek to further automate our manufacturing process.Year 2000 End-User/Project (Sector) Industry Electronics Country PRC Gultech (Suzhou) Electronics Co Ltd of China Pure water production and Wastewater Treatment System 5. OUR BUSINESS STRATEGY Provide fully integrated services Our Group’s mission is to be one of the market leaders in treating liquids utilising mainly membrane filtration technology. Lower direct costs In order to remain competitive. which are specially designed truck-trailers containing water treatment systems to provide uninterrupted water treatment while servicing or upgrading is carried out on our customers’ water treatment systems. piping and distribution to equipment hook-up. As at 31 December 2000.000 m3 per day 2000 China BBCA Biochemical Group Corp of China Membrane separation of fermentation products Pharmaceutical PRC Projects currently undertaken by us and expected to be completed by year 2001 End-User/Project (Sector) Industry Pharmaceutical Country Singapore Wyeth Pharmaceuticals (Singapore) Pte Ltd (“Wyeth”) Installation of high-purity and utility piping system including equipment setup Dovechem Terminals Sdn Bhd Wastewater Treatment Plant 10 m3 per hour Port Malaysia Compass Technology Singapore Pte Ltd Production of filtered and DI Water Wastewater treatment 136 m3 per hour Electronics Singapore WUS Printed Circuit (S) Pte Ltd Jurong Industrial Water Treatment Plant.9 million. 56 . RO-DI Water Treatment Plant and Wastewater Treatment Plant 113m3 per hour. the total value of the projects for which work was on-going and expected to be completed in FY2001 amounted to approximately $4. the total value of the projects for which we have commenced work and were expected to be completed in FY2000 was approximately $3. We currently aim to manufacture up to 30% to 50% of the materials used in our systems. We also plan to provide emergency recovery units. 45m3 per hour and 68m3 per hour. we will continue to lower our direct costs by moving towards the manufacturing of more materials in-house. To achieve this. water-recycling. we strive to continue to provide a wide range of water treatment services from water purification. wastewater treatment. respectively Electronics Singapore Hewlett Packard Singapore (Pte) Ltd Supply and installation of Ultra-pure water distribution system Electronics Singapore As at 31 December 1999.0 million.

at least on a quarterly basis.000. However. In 1999 and 2000. about 30% of our work is obtained through such engineering companies. Strengthen and cultivate relationships with engineering consultants and companies Our fourth strategy is to strengthen and cultivate relationships with major international engineering consultants and companies such as Siegle and Epple and Jacobs-Lend Lease. We also participate in selected exhibitions held in PRC and Singapore. Our R&D efforts have received support from the government shown through the grants from EDB and NSTB. Based on what we have achieved so far. we shall seek to drive our quality system to ISO standards by 2001.000 to $5.000 each in value. electronics manufacturing plants. We raise our public profile and awareness of our services by engaging in advertising through direct mailers to potential customers. Increase the value of the projects Since we commenced our business. the average value of each project undertaken by us has increased from $10. quality and operational issues are expeditiously resolved. To meet the rising demand of our customers for quality products and services. MARKETING We position ourselves as a fully integrated water treatment and advanced membrane filtration company and all our three (3) executive Directors are actively involved in marketing with the assistance of 6 sales personnel. In the future. With such grants. pH of liquid and operating pressure. we have commenced the process of ensuring that our products and services meet the requirements of ISO.000. we intend to allow our customers to purchase components from us online. Currently.000 in our first two years to $1. We believe in cultivating long-term relationships with engineering consultants and companies such as Siegle and Epple and Jacobs-Lend Lease and the ultimate users of our systems.000 in value in the last two years. 57 . chemical processing plants and other industrial plants so as to keep abreast of new projects. and various industrial directories. interfacing our computer monitoring systems with that of our customers’ central control system via the SCADA system (please refer to page 54 for more details) and providing online analysis and charting the performance of our plant on critical parameters such as temperature. At the moment. We consult our customers. we will continue to commit our resources in R&D both internally and also in collaboration with the universities and environmental institutes. we intend to develop new and better products for application in our water treatment and advanced membrane filtration systems.000. we are capable of monitoring our customers’ plants through the Internet. we secured 3 projects of between $3. Since the beginning of 2000.000 to $2. on the development of new products and projects in the industry so as to be able to respond appropriately and in a pro-active manner.000.Incorporate information technology into our system We also intend to develop and incorporate information technology to further enhance the operational capability of our systems. we are not reliant on any particular engineering company. Our R&D department will continue to develop proprietary membranes and improve existing membranes to enhance their performance in various applications. both specialists in the design and building of pharmaceutical plants. Increase R&D and improve quality standards To remain competitive and be at the fore-front of the water treatment and advanced membrane filtration businesses. We dedicate ourselves to ensure that all supply.000 to $20. These potential customers are obtained from lists maintained by the EDB and other investment agencies.000 and above. we intend to develop the next phase of our business by tendering and obtaining projects each of value of $5.000. The value of our services lies in providing a one-stop shop with innovative products and applications which ultimately results in cost savings and quality improvement.

In our Changi South facility. We continually look to improving our workflow. We are able to carry out the fabrication and assembly of water treatment and advanced membrane filtration systems. Work is documented to keep proper records which allow future verifications.499 sq m. All materials. biotechnology. We have invested in advanced equipment to ensure quality fabrication and assembly of our water treatment and advanced membrane filtration systems. (ii) on-time delivery and (iii) customer satisfaction. food and beverage. For the purpose of testing membranes. 58 . Both the membrane testing unit and pilot plants are portable and can be easily deployed to various sites to carry out the same functions. anticipate quality problems and measure compliance with established procedures. This is to ensure that each customer’s demands which are unique to itself and its industry are addressed by all our various departments from design. we do not over-rely on any particular customer or industry. we have to move to a larger premise at Changi South in order to handle more projects.To avoid the cyclical trend of business. Thus. our quality engineers will review all requirements of our customers and come up with a checklist specific to the project in addition to the usual checks listed in our quality manual. PRODUCTION Production Facilities and Capacity We have two manufacturing facilities. conduct pilot trials and fabricate special components and parts at both our facilities. Periodic internal audits are conducted to measure progress. Our water treatment and advanced membrane filtration systems are applicable in many industries and we have built relationships in the electronics. Quality Assurance and Control We are committed to product quality. These factors will form the basis by which our quality engineers check each process of work. pharmaceutical. one located in Changi South with a land area of 2. commencing in August 1999.436 sq m and another in Shanghai with an area of 1. installation. Work procedures are clearly spelt out and checks and controls are implemented at every step. We also carry out the manufacture of membranes in Singapore. fabrication. procedures and methodology for each stage of our work process to attain (i) zero defects. At the onset of a project. FY1998 483 FY1999 967(1) 483 We have operated at close to full capacity for the past three years. Only approved items are accepted into the store. we have a membrane testing plant that will allow us to test individual membranes. if necessary. components and equipment purchased will be scrutinised and inspected by our storekeeper and jointly with the project engineer. The size of our production facilities in Singapore for the last three years are shown below:FY1997 Production facilities (sq m) Note: (1) Excludes factory in Shanghai which we leased for six years. commissioning to maintenance. textile and chemical industries. We also have a laboratory to carry out analysis of water samples and to conduct trials for our customers. we have a 214 sq m cleanroom (Class 100K) for the manufacture of systems to be installed in high-purity facilities. Any defective item will be rejected and kept aside or returned.

our products and services as well as the quality requirements. Our staff in Shanghai are occasionally posted to Singapore to learn from our senior engineers and enhance their working experience. all works will be measured against the Inspection Testing Plan (ITP) as prepared by our quality engineers. All these are recorded in the commissioning log which will form part of the owner’s manual. adjustments. DISPUTES To date. We also send our engineers to PRC for job exposure and to help train their counterparts there. Our liquid wastes include organic solvents and additives which are classified as non-toxic in small quantities. a series of pre-commissioning checks and commissioning tests will be carried out. STAFF TRAINING We have 135 full-time employees in Singapore and PRC as at 15 December 2000. Work Safety and Environmental Issues Besides quality of product. This is followed by a carefully matched mentoring scheme to impart technical knowledge on the job.In all the stages of our work process. During the installation stage of our systems. Our commissioning and service teams will follow-up on the plant’s operation for at least two (2) weeks after handing over to allow for a smooth transition to our customer. we have not encountered any major industrial disputes with our customers and suppliers. Prior to the handing over of the plant to the client. In the course of our work process. We have also designated a supervisor to oversee safety in the production area and the workshop. We place great emphasis on staff training as we rely on the skills and extensive experience of our staff. plastic pipes and other plastic materials. we have a system of self-assessment by which the person executing the task will check his work against the checklist before it is passed to the next party. Insurance Coverage We are covered by insurance policies for risks such as damage to property. These are disposed in accordance with regulations. our work procedures also strive to maintain a safe working environment for our workers. third party liability and workmen’s compensation. In-house seminars are conducted regularly by the various heads of department to keep everyone updated with their area of work. We also adopt a multi-disciplinary approach by rotating our staff to different departments to enable them to acquire skills in at least two (2) different disciplines. All operators of our machines are trained and certified to ensure that they can perform minor settingup. 59 . We do not have any incident of fatalities over the past five years. Guidelines on remedial action and retest are also listed. Our workers are briefed on safety procedures and the supervisors are responsible for ensuring compliance with these safety procedures. All new staff undergo a one-day orientation programme where they are familiarised with our general working environment. trouble-shooting and simple maintenance on the machines they operate. In addition. we generate industrial wastes which consist of non-toxic solids such as scrap metal. we effect all-risk insurance coverage for each project carried out at our customers’ premises.

our R&D team develops proprietary membranes and also works on improving existing membranes to improve their performance in various applications. In March 2000. we received a grant from NSTB under RDAS which we used to carry out research on (1) the purification of industrial water as an alternative source to city water for industrial user and (2) the ozonation method for the treatment of dye effluent and refractory organics. we have developed in-house membranes manufacturing capabilities and we are able to customise both our plants and treatment to suit the needs of our customers. Headed by a scientist with a PhD in Chemistry and assisted by one (1) engineer. water purification. RESEARCH AND DEVELOPMENT A team of six (6) full-time R&D staff runs this department. ENV and Environment Technology Institute (ETI). We allocate about $60.000 to $80. will expire in May 2001. which is now administered by EDB. Since the second quarter of 2000. are as follows:10 months ended 31 October 2000 $357. one (1) chemist and four (4) technicians. The areas of application include wastewater treatments. This grant. As at the date of this Prospectus. To improve the operations of our water treatment and advanced membrane filtration systems. Our workers attend skill courses conducted by the Building Construction Authority (BCA) and other training institutes to upgrade their skills.000 TRADEMARK FY1998 $191. This scheme spans over a period of 3 years. our R&D team also researches on ways of optimising instrumentation and controls.In order to enable our technicians and engineers to keep abreast of new developments and technologies in the field of water treatment and advanced membrane filtration. We continually seek new uses for membrane filtration technology in industries such as electronics. 60 . we sponsor our senior engineers and technicians for external courses conducted by local institutions such as the Environmental Engineering Research Centre (EERC).000 a year for external staff training or about $444 to $593 per employee. water recycling and separation of liquids. this application is still pending. We have also sent our senior engineers overseas to attend international conferences and seminars to enable them to exchange information with other experts. HSPL has also applied for the registration of the name “HYDROCHEM” as trademark under Class 11 in Singapore on 11 May 2000. we received another grant from the EDB under IDS for our work in the development of hollow-fibre membranes. Our R&D expenses for the last three years and for the ten months ended 31 October 2000.000 HSPL is the registered owner of the trademark “HYFLUX” with effect from 19 August 1999 under Class 11 in Singapore for a period of 10 years. food and pharmaceutical.000 FY1997 $131. We have received two (2) grants from NSTB and EDB respectively to be used for R&D purposes. which were partially financed by the grants. In November 1998.000 FY1999 $387.

33% from the pharmaceutical industry and 34% from other industries such as biotechnology and food and beverage. Ms Lum Ooi Lin Olivia. For FY1999. we are now able to design and install completed plants within a shorter time frame of between two (2) months to a year. Believing that a strong management team is a key factor in ensuring the continued success of our Group. our main competitors in water treatment business are US Filter (Asia) Pte Ltd. We are led by our Managing Director. 61 . COMPETITIVE STRENGTHS Our Directors consider the following to be our competitive strengths:- Integrated Services We offer a one-stop shop service to our customers and provide integrated services of designing. engineering. commissioning and maintenance of systems that treat liquid streams utilising mainly membrane filtration technology. Ms Lum has been instrumental in propelling the Group’s growth over the years. and Cuno Incorporated. Koch Membranes Systems Inc. Starting from the design of the water treatment plants. fabrication and assembly. Chemitreat Pte Ltd. all of which are US-based. Though our current focus is on the electronics. Experienced Management We have an experienced management team who is familiar with the business and whom we believe would be able to lead our Group forward to continued growth and profitability. water recycling and liquid separation as opposed to conventional methods. installing. we do not rely on a single industry or customer.. depending on the complexity of the project. all based in Singapore.COMPETITION To the best of our Directors’ knowledge. who has more than ten (10) years of hands-on experience in all aspects of our business. 33% of our sales were derived from the electronics industry. Phillip Muller Hager + Elsasser GmbH of Germany and Organo Corporation of Japan. Ms Lum has also groomed a dedicated and dynamic management team to assist her in the daily management of the business operations of our Group. Diverse Industries Through our R&D efforts. United Professional Services (S) Pte Ltd and Scottscentre Pte Ltd. pharmaceutical and biotechnology. such as electronics and pharmaceutical. Kurita (S) Pte Ltd. Ionics Asia-Pacific Pte Ltd. This provides us with a competitive edge over some of our competitors who utilise other technology and hence focus on specific industries. installation and commissioning of the completed plants. wastewater treatment. Therefore. As we employ about 75 technicians and engineers with relevant expertise in each stage of our work process. we provide the full range of services in the procurement of components. pharmaceutical and biotechnology industries. Our main competitors in the advanced membrane filtration business are Osmonics Inc. we have managed to utilise membrane filtration for water purification. We have always adopted an approach of serving at least 3 to 4 industries that are not closely linked. This has allowed us to meet the diverse needs of various industries such as electronics. we have not been affected by a downturn in any specific industry for the past three (3) years.

This is to minimise the disruption in supply from any one supplier.Ability to Meet International Standards Our products and services are able to meet international standards for different industries. we are able to produce water. Wyeth and FCI. We are now able to manufacture the membranes used in membrane filtration and this allows us to customise the membrane filtration plants to the diverse needs required by different industries. If required by our customers. As a testimony and acceptance of our quality products and services. 62 . Customised Systems A key feature of our water treatment systems is the identification and adoption of the latest technologies to provide solutions to the various needs faced by our customers. we have serviced EPCOS for each of its phases of business expansion. Amway. Some of these benefits are the saving of space and energy as the size of our treatment plants using membrane technology are smaller. which meets USP standards and our equipment can be manufactured to meet the ASME standards. From the procurement of materials and components to the manufacturing and assembly of the complete water treatment and advanced membrane filtration system. For example. With a track record established with our customers. a subsidiary of General Electric International. Established relationship with customers and suppliers We estimate that 70% of our business is obtained through referrals and recommendations by our existing customers and engineering consultants and companies whom we have worked with. We are an approved vendor of several of our customers. we have supplied and installed our systems for big MNCs such as EPCOS. Membrane filtration technology is also adopted for the recovery of precious minerals in certain process streams. Most of the suppliers of such high technology equipment sell them selectively to solution providers as they must be confident that the solution provider can successfully install their products for the benefit of the end-users. This has enabled us to secure new projects without having to increase our marketing activities and thus. our marketing expenses. to purchase electrochemical liquid purification apparatus known as “Stacks” which is patented worldwide and used in industries requiring ultra-pure water. The addition of this apparatus widens our range of products and services and enhances our position as an integrated water treatment provider. Our application of membrane technology for wastewater treatment also provided benefits over conventional treatments such as coagulation. which typically involves the evaluation of track record and capital base. reduction of solid waste generated and overall increased effectiveness. We have been dealing with most of our suppliers since the commencement of our business and have strived to have a minimum of two (2) local and/or international suppliers for each of the products we purchase. We have also instituted a system of monitoring and assessing the service of our staff both internally as well as by our customers to further improve our services. we have controls and assurances to check and ensure quality of our products. our compliance with these standards is certified by independent third parties and these certifications are provided to our customers. We have entered into a supply agreement with E-Cell Corporation of Canada. we are able to build systems for our customers for each progressive stage of their expansion. The equipment which we source from our suppliers to incorporate into our customers’ water treatment and advanced membrane filtration systems require a high degree of expertise in installation and commissioning. There is also little or no addition of chemicals. For example. HP. This allows us to tender for jobs from these customers without having to undergo a pre-selection process.

which accounted for the increase in purchases from this supplier in 1998 and 1999. direct or indirect.3 — 0. We also purchase other components such as pumps from Osmonics Inc. Since 1998. We purchased reverse osmosis membranes from Nitto Denko (S) Pte Ltd but also sourced these membranes from other suppliers.9 0. None of the Directors or substantial shareholders has any interests.MAJOR SUPPLIERS The suppliers who accounted for 5% or more of our Proforma Group’s purchases for the past three financial years ended 31 December 1997 to 1999 are as follows:Year ended 31 December 1997 1998 1999 % % % Membrane Products Kiryat Weizmann Ltd (“MPW”) Nitto Denko (S) Pte Ltd Osmonics Inc. in the suppliers mentioned above. we were able to purchase substitutes from Osmonics Inc.4 9. This increase was also due to our buying directly from Osmonics Inc. 5.7 We purchase mainly Selro membranes from MPW until 1998 when the company ceased operations..4 4.9 — 3.6 6. instead of going through their agents. 63 .

0 — — 0.7 10. Gimmill also owns 29. our major customers vary from year to year depending on the project obtained. 1 Gimmill is a Singapore-incorporated investment holding company.6 5.5 16.000 shares of $1 each of which 9.9 9.3 8.2 0. Year ended 31 December 1997 1998 1999 % % % Jiangsu Jiangan Pharmaceutical Corp. 64 .5 — — — — — 0. Save as disclosed above and in page 85.5 5.6 5.008 shares have been issued and paid-up.1 8.2 14. These shareholders are not related to the Directors and/or other substantial shareholders of our Company.9 5. The shareholders of Gimmill are Ma Wong Ching (Malaysian) who owns 70% of Gimmill. Ramatex and Ramatex Suzhou (Please refer to page 85 on “Interested Person Transactions” for more details).3 17.3 As our business is project based.000. Ltd SGS Thomson Microelectronics Pte Ltd Everlight Chemical Industrial Corporation Hitachi Chemical Asia-Pacific Pte Ltd Sanyo Air-Conditioners Manufacturing (S) Pte Ltd Ramatex Textiles Industrial Sdn Bhd Dandong Chemical Fiber Co. Gimmill1 holds a 10% equity stake in Hyflux.7 0. in the customers mentioned above. Ltd Takasago Thermal Engineering Co.2 0.600.01 1.2 — 0. Ltd Tee Yih Jia Food Manufacturing Pte Ltd Matsushita Refrigeration Industries (S) Pte Ltd Siegle + Epple Asia Pte Ltd Amway (China) Co.000 comprising 10.15% of Ramatex Berhad which in turn owns 100% of our customers.2 7.MAJOR CUSTOMERS The customers which accounted for 5% or more of our Group’s turnover for the past three financial years ended 31 December 1997 to 1999 are listed below. As at 31 October 2000.5 — 2.7 — — — — — — — — — — — 0. It has an authorised share capital of $10.000.3 28. Wong Lang Piow (Malaysian) who owns 10% and Ma On May (Singaporean) who owns the balance 20%.4 3. Customers who are related to one another have been grouped together and treated as a single customer. Ltd Ramatex Industrial (Suzhou) Ltd ACP Construction Pte Ltd FCI Singapore Pte Ltd 30. direct or indirect.1 17. none of the Directors or substantial shareholders has any interests.

Environmental Pollution Control (Trade Effluent) Regulations 1999. pH value and mineral contents. In Malaysia the Kementrian Sains Dan Teknologies (the Ministry of Science & Technology) regulates under the Environmental Quality Act 1974 and the Environmental Quality (Sewerage and Industrial Effluents) Regulations 1979. However. the Ministry of Environment regulates under the Environmental Pollution Act 1999. 65 .GOVERNMENT REGULATIONS We are not directly regulated by any government regulations. The latter was issued under the Environmental Quality Act. including water pollution control. To the best of our knowledge. Under this law. 1974 and set the standards of effluent on parameters such as its temperature. we have not encountered any violation of regulations by our customers in relation to our water treatment plants over the last three years. In Singapore. Sewerage and Drainage Act 1999 and the Sewerage and Drainage (Trade Effluent) Regulations 1999. our customers’ businesses are regulated by various environmental regulations and our role is to assist our customers to meet those standards pertaining to the discharge of water treated by our plant. In PRC. We assist our customers in PRC to meet these standards according to the level of quality desired. the Administrative Body of the State Council in charge of Environmental Protection regulates under the PRC Environmental Protection Law of 1989. These legislations set out the laws and regulations on the license and use of certain premises and the pollution control. the Administrative Body of the State Council in charge of Environmental Protection has developed a system of water standards which comprises five levels of quality standards.

With about 20% of the world’s population. Consumption will be driven by expanding use in food processing.300. Volume 16. air pollution control and radioactive wastewater testing and treatment.3% a year. we expect a continual rise in demand for all our water treatment systems. There is a growing trend towards using alternative cost-effective water sources including desalinated water and recycled industrial and sewage waste streams (source: quoted by Asian Water.2 billion in 1999 and is projected to grow by 7. Publication Date: 1/11/98.5% of fresh water.gov “Water Treatment in China”. Advanced membrane technology According to a study entitled “Membrane Separation Technologies to 2004” published in August 2000 by the Freedonia Group. Of the remaining 2. USA. global climate changes and degradation of natural purification capacities.8 billion in 2004. less than 1% of the world’s fresh water is readily accessible for human use (source: http://strategis. The brisk pace of PRC’s industrial development has further compounded the shortage of potable water. the market size of this industry is estimated at US$330 million. with the balance of the world demand divided approximately evenly between Europe and Asia (inclusive of Oceania). the Singapore government is implementing various measures including conservation and recycling of water.6% over the past decade with the manufacturing sector growing at a faster rate of 7. the US Department of Commerce International Trade Administration Trade Development). 97. the US department of commerce). urbanisation.gc. According to World Bank’s figures.ita.8% per annum to US$1. PRC is taking several measures to tackle her water problem such as stricter enforcement of environmental regulations and expanding infrastructure projects like water treatment facilities (source: http://infoserv2. In Singapore. The market for conservation and recycling of water is expected to expand by 10% to 15% annually over the next three (3) years and by 20% to 25% a year in the longer term. which is a key component in our treatment plants. “Water Conservation and Recycling Systems”. In view of the increasing water demand globally. 66 .ca. The US currently constitutes about 60% of the global market. 70% is frozen in the polar icecaps and 30% is mostly present as soil moisture or lies in underground acquifers.PROSPECTS AND FUTURE PLANS PROSPECTS Water treatment business Of all water on earth. Asia’s demand is now largely met by the US producers and our proximity to this market provides opportunities for us to increase our market share in Asia. PRC has only 8% of the global fresh water resources. Singapore’s water consumption has been growing at an annual rate of 4.5% is salt water. To boost Singapore’s water supply.000m3 daily of which 52% is imported from Malaysia. Our Directors are of the view that our competitive position has been enhanced since we started manufacturing our own customised membranes as we are now able to better control cost and quality of the membranes. an industrial market research firm based in Ohio.doc. Aggravating the shortage of fresh water supply are higher population growth.ic. According to a report “Water Conservation and Recycling Systems” published in November 1998 by the US Department of Commerce. water consumption is about 1. medical applications and on-going development of new uses in hazardous waste remediation. the number of people living in water-stressed countries will rise from 500 million to 3 billion by 2025. Water consumption is estimated to be growing at an annual rate of 5%. especially in Singapore and PRC where our business is mainly carried out. 6 June 2000). demand for membrane materials in the US totalled US$1. It is estimated that the investment required to meet the increase will amount to some US$270 billion by the year 2015 in Asia Pacific alone. As a result.

purchase components and parts and obtain updates and status on their projects through our website.5 million. we have not entered into any agreements.5 million. we are in constant contact. As at the date of this Prospectus. we will acquire more sophisticated equipment such as computerised orbital welding machines. we continually seek to acquire new technologies to complement and improve our current products and services. We will also be increasing our manufacturing facilities in Shanghai in 2001. we will intensify our R&D efforts to further develop and manufacture different types of membranes using various materials for use in new applications such as in fermentation processes. The costs of these expansion plans are estimated to be between $2. with renowned universities that conduct R&D on membranes or companies that have such technologies.0 million to $2. we are also in the position to further increase our production capacity in the future. In particular. With the increased floor space at our Changi South facility. In order to provide quicker response to our existing customers. Our customers would be able to obtain quotations. we intend to adopt the following strategies and future plans using the Invitation proceeds:Increase overseas sales and service centres Currently. In this respect. we intend to set up sales and service centres in Guangzhou and Beijing within one to two years by employing and deploying more sales and service staff to support the current personnel. We estimate the setup costs to be $0. In the area of membrane filtration technology. We are currently negotiating with an e-business consultant to design our website. we intend to set up our own website to enable business-to-business (“B2B”) e-commerce by our customers by the end of 2001. 67 . Expansion of manufacturing and research facilities To increase the production and productivity of the installation of our water treatment and advanced membrane filtration systems. through regular visits. We have purchased new equipment such as mixing vessels and testing equipment and are in the process of increasing our production facilities in the clean room to assist us in this area. we intend to acquire the technology to manufacture membranes for use in the biotechnology industry.FUTURE PLANS To remain competitive and to take advantage of the growing trend towards using alternative costeffective water sources and the growth in the membrane industry. The research is in a preliminary stage. infrared welding machines and plasma cutting machine for our Singapore facilities. we have sales personnel stationed in Guangzhou and Beijing. To increase our sales channel and to increase the ease of the availability of our services. Acquisition of new filtration technologies As we are in a specialised industry.

review the half-year and annual financial statements and balance sheet and profit and loss accounts before submission to the Board for approval. review the internal control and procedures and ensure co-ordination between the external auditors and the management. and discuss problems and concerns. their evaluation of the system of internal controls. and by such amendments made thereto from time to time. their management letter and the management’s response. and any matters which the auditors may wish to discuss (in the absence of the management where necessary). The Audit Committee comprises Messrs Teo Kiang Kok. Olivia is an Executive Director of the Company while Messrs Teo Kiang Kok and Lee Joo Hai are Independent Directors of the Company. Olivia. if any arising from the interim and final audits. The Audit Committee will meet periodically to discuss and review the following:(a) (b) review with the external auditors the audit plan. Lee Joo Hai and Ms Lum Ooi Lin. maintain adequate accounting records. Ms Lum Ooi Lin. Olivia. the Directors and Executive Officers will continue to manage the business and operations of the Group. focusing in particular. consider the appointment or re-appointment of the external auditors and matters relating to resignation or dismissal of the auditors. and that the management demonstrates and stimulates the necessary aspects of the Group’s internal control structure among all parties. significant adjustments resulting from the audit. undertake such other reviews and projects as may be requested by the Board and will report to the Board its findings from time to time on matters arising and requiring the attention of the Audit Committee. on changes in accounting policies and practices. reviewing the assistance given by the management to the auditors. the going concern statement. review transactions falling within the scope of Chapter 9A and Clause 1006 of the SGX-ST Listing Manual. or suspected infringement of any relevant laws. compliance with accounting standards as well as compliance with any stock exchange and statutory/ regulatory requirements. rules or regulations.CORPORATE GOVERNANCE The business and operations of the Group are presently under the management and close supervision of the executive directors. major risk areas. and develop and maintain effective systems of internal control. review and discuss with the external auditors any suspected fraud or irregularity. The Audit Committee will be chaired by Mr Lee Joo Hai. their audit report. which has or is likely to have a material impact on the Group’s operating results or financial position. The overall management of the Group is overseen by Ms Lum Ooi Lin. The Audit Committee shall have the overall objective to ensure that the management has created and maintained an effective control environment in the Company. (c) (d) (e) (f) (g) (h) 68 . and generally undertake such other functions and duties as may be required by statute or the Listing Manual. The Audit Committee will assist the Board with regard to discharging its responsibility to safeguard the Company’s assets. After listing. and the management’s response.

an Executive Director of our Group.DIRECTORS. Mr Foo Hee Kiang. is also currently our Sales Director. addresses and principal occupations of the Directors are listed below:Name Age Address Country of Principal Residence Singapore Position held Lum Ooi Lin Olivia 39 17 Whitley Road Singapore 297803 25 Sunset Heights Singapore 597411 58 Burghley Drive Singapore 559029 481 Pasir Panjang Road #02-06 Singapore 117621 95 Paya Lebar Crescent Singapore 536179 Managing Director Deirdre Murugasu 39 Singapore Executive Director Foo Hee Kiang 38 Singapore Executive Director Teo Kiang Kok 44 Singapore Independent Director Lee Joo Hai 44 Singapore Independent Director The business and working experience of our Directors are as follows:Ms Lum Ooi Lin Olivia is the Managing Director and the founder of our Group. Prior to incorporating HSPL. Mr Foo was a Sales Manager with Multico System Engineers Pte Ltd from 1990 to 1998. He is primarily responsible for the marketing and sales of the products and services of our Group. 69 . an Executive Director of our Group. She is the main driving force behind the growth and business expansion of our Group and is overall responsible for our Group’s strategic planning. Dr Deirdre Murugasu holds a Masters of Medicine (Family Medicine) from the National University of Singapore. where she supervised a team of laboratory supervisors and technicians. Dr Deirdre Murugasu was a Registrar with the Ministry of Health where she worked for nine years. Ms Lum holds a Bachelor of Science (Hons) degree from the National University of Singapore. a company that deals in construction equipment and building materials. Mr Foo holds a Bachelor of Engineering degree from the National University of Singapore. Prior to joining our Group in 1998. MANAGEMENT AND STAFF Directors The Board of Directors is responsible for the overall management of the Company. His main areas of practice are corporate finance. He has more than 16 years of experience in legal practice and is currently the head of the corporate finance and China practice groups of Shook Lin & Bok. Mr Teo Kiang Kok was appointed an Independent Director of our Group on 19 December 2000. Prior to joining our Group in 1996. Ms Deirdre Murugasu. application and marketing of new products and services of our Group to relevant market sectors. The names. He is a senior partner of Shook Lin & Bok. where he was in charge of the building materials and light construction equipment divisions. Ms Lum was a chemist with Glaxo Pharmaceuticals Pte Ltd for about three years. policies and corporate directions. is primarily responsible for the development. a firm of advocates and solicitors. Ms Lum has acquired experience in the water treatment and advanced membrane filtration industry from her management of our Group for more than 10 years. international finance and securities. Her last appointment there was as a senior doctor specialising in family medicine. ages. Mr Foo has more than 14 years of marketing and sales experience.

He has more than 20 years of experience in accounting.. is set out below:Name Lum Ooi Lin Olivia Present Directorships Group Companies Hydrochem (S) Pte Ltd Hydrochem Engineering (S) Pte Ltd Hydrochem Engineering (Shanghai) Co. including and not limited to the Invitation. He is a certified Public Accountant of Singapore and is a member of the Institute of Chartered Accountants in England and Wales. Ltd Hyflux Engineering Pte Ltd Other Companies Kimic Technologies (S) Pte Ltd Past Directorships Group Companies Nil Other Companies Expertech Resources Pte Ltd Expertech Resources (M) Sdn Bhd Kimic Technologies (M) Sdn Bhd Kimic Chemitech (S) Pte Ltd Selro Technology Sdn Bhd Finest Flavors Pte Ltd Group Companies Nil Deirdre Murugasu Group Companies Hydrochem (S) Pte Ltd Hydrochem Engineering (S) Pte Ltd Hydrochem Engineering (Shanghai) Co. which will be receiving a fee paid by us and the Vendors for legal services rendered in connection with the Invitation. The list of present and past directorships of each Director for the last five years. It is envisaged that we may continue to engage the services of Shook Lin & Bok as and when the need arises. Mr Lee is currently a partner in a public accounting firm in Singapore. taxation and company secretarial work. as at the date of this Prospectus. Our Directors are of the view that the provision by Shook Lin & Bok of such services will not interfere with Mr Teo Kiang Kok’s independent judgement in his role as a member of the Audit Committee as matters involving the Group will be handled by other partners and associates of the firm. Ltd Hyflux Engineering Pte Ltd Other Companies Kimic Technologies (S) Pte Ltd People’s Surgery Pte Ltd Other Companies Kimic Chemitech (S) Pte Ltd Foo Hee Kiang Group Companies Hydrochem (S) Pte Ltd Hydrochem Engineering (S) Pte Ltd Hydrochem Engineering (Shanghai) Co. In the event that Mr Teo Kiang Kok is interested in any matter handled by Shook Lin & Bok involving our Group.Mr Lee Joo Hai was appointed as an Independent Director of our Group on 19 December 2000.. Ltd Other Companies Nil Group Companies Nil Other Companies Nil 70 .. other than that held in the Company. he will adhere to the guidelines for interested person transactions as listed on pages 85 and 86 of this Prospectus and abstain from reviewing and voting on that particular transaction. Mr Teo Kiang Kok is a senior partner of Shook Lin & Bok. auditing.

71 . The Audit Committee comprises Messrs Teo Kiang Kok.Name Teo Kiang Kok(1) Present Directorships Group Companies Nil Other Companies Asean Emerging Companies Growth Fund Ltd Circuits Plus Holdings Ltd Giant Wireless Technology Ltd Kingboard Copper Foil Holdings Ltd Mayfran International Ltd Miyoshi Precision Ltd New Wave Technologies Ltd Praxair Surface Technologies Pte Ltd SLAB Services Pte Ltd SM Summit Holdings Ltd Teamsphere Ltd The Vittoria Fund Ltd The Vittoria One Ltd Unisteel Technology Ltd Past Directorships Group Companies Nil Other Companies GRP Ltd IPC Corporation Ltd Malaysian Emerging Companies Growth Fund Ltd Solid Resources Investment Ltd Lee Joo Hai(1) Group Companies Nil Group Companies Nil Other Companies Other Companies FDS Networks Group Ltd Solid Resources Investment Ltd IPC Corporation Ltd Kian Ho Bearings Ltd Kingboard Copper Foil Holdings Limited Lung Kee Metal Holdings Limited Miyoshi Precision Limited PSL Holdings Limited Teamsphere Limited Unisteel Technology Limited Note:(1) Companies in which Mr Teo Kiang Kok and Mr Lee Joo Hai were appointed as Directors for the purpose of incorporation or as nominee director only and in the course of their professional practice have not been included. Mr Lee Joo Hai is the Chairman of the Audit Committee. Lee Joo Hai and Ms Lum Ooi Lin Olivia. Independent Directors/Audit Committee The Independent Directors are Messrs Teo Kiang Kok and Lee Joo Hai.

Avenue 123. No.MANAGEMENT The day-to-day operations of the Group are entrusted to the Executive Directors and an experienced and qualified team of Executive Officers responsible for the different functions of our Group. The particulars of the Executive Officers are set out below:Name Lim Kim Seng Chin Tain Min Age 49 50 Address 65 Taman Bedok Singapore 487105 Blk 862A Tampines Street 83 #09-414 Singapore 521862 82H Lorong J Telok Kurau Singapore 425901 16 Amber Gardens #10-03 Amber Park Singapore 439961 Blk 429 Tampines Street 41 #06-507 Singapore 520429 Position Held General Manager Finance Manager Jennifer Hoalim Simon Niels Matterson 41 36 Office Manager Senior Engineering Manager Ricky Chew Ann Meng 30 Construction Manager Govindharaju Venkidachalam 36 Blk 367 Bukit Batok Street 31 R&D Manager #10-227 Singapore 650367 Blk 453 Pasir Ris Drive 6 #08-224 Singapore 510453 Blk 634 Hougang Avenue 8 #12-41 Singapore 530634 Blk 437 Yishun Ave 6 #08-2072 Singapore 760437 Room 301. 3. Shanghai Chief Designer Yap Kiam Wu 28 Bruce Sim Lian Huat 30 Electrical Manager Tan Yu Ming 27 Senior Engineer Ge Wen Yue 32 Head of Sales and Marketing (Shanghai) 72 . Zhijiangxi Road.

Sales & Marketing (Shanghai) Ge Wen Yue Construction Manager Ricky Chew Ann Meng Senior Engineering Manager Simon Niels Matterson R&D Manager Govindharaju Venkidachalam Finance Manager Chin Tain Min Office Manager Jennifer Hoalim Chief Designer Yap Kiam Wu Electrical Manager Bruce Sim Lian Huat Senior Engineer Tan Yu Ming .MANAGEMENT STRUCTURE Managing Director Lum Ooi Lin Olivia General Manager Lim Kim Seng Executive Director Deirdre Murugasu Executive Director Foo Hee Kiang 73 Head .

trouble-shooting of membrane separation systems and the commissioning of water and wastewater treatment systems. From 1997 to 1998. construction and marketing aspects of the wastewater treatment business. Mr Chin graduated from the Nanyang University with a Bachelor of Commerce (Accountancy) degree. Mr Lim was a Vice President with DBS Bank’s Private Equity Department for close to two years. From 1994 to 1997. fabrication and installation. Ms Hoalim is a Certified Hospitality Housekeeping Executive of the Educational Institute of the American Hotels and Motels Association. Ms Hoalim joined our Group in June 1994. in Malaysia for the last five (5) years. Prior to that. human resource. He is a non-practicing member of the Institute of Certified Public Accountants of Singapore. Dr Venkidachalam was Senior Executive of Ion Exchange (India) Ltd. Mr Matterson has acquired knowledge in design. Alcoholic Beverage and Accommodation Services. He joined our Group in April 2000. and also for organising manpower for projects. where he was responsible for developing and managing a portfolio of private equity investments on behalf of the bank or its subsidiaries. These services range from design. Dr Venkidachalam joined our Group in April 1999. Mr Lim has over 25 years of experience in the banking sector and relevant industries. he was Senior Membrane Scientist of Membrane Research Technology Singapore Ltd. besides being the Company Secretary. training of staff and the execution of projects. Prior to joining our Group on 1 October 2000. after having managed his own design consultancy business. Mr Lim has a degree in accountancy from the University of Singapore and a Master of Business Administration from the National University of Singapore. Mr Chin joined our Group in November 1999. Mr Chin is a public accountant with the Malaysian Institute of Accountants and is also a Certified Public Accountant of CPA Australia. Africa. Dr Govindharaju Venkidachalam (PhD) is our Group’s R&D Manager responsible for the development of hollow fiber membranes. Mr Chin has 20 years of experience in various positions such as public accountant. From 1990 to 1994. His past experience includes mechanical design. electrical. Mr Chin Tain Min is our Group’s Finance Manager responsible for the financial management. Ms Hoalim has worked at Cockpit Hotel as Executive Housekeeper and Front Office Manager. organisation and successful completion of membrane development and its application projects. After his graduation in 1995. She is a member of City and Guilds of London in the areas of General Catering. He has also gained exposure to the wastewater treatment industry in Europe. The last position he held was as director of his own consultant firm in 1999. the Middle East and Far East. She holds a Certificate in Hygiene of Food Retailing and Catering from the Royal Society of Health (London) and a General Diploma from the Business Education Council of Britain. pilot studies for water treatment systems. Mr Chew worked as a Project Engineer with ETAS Pte Ltd and acquired project management and technical knowledge in regional wastewater treatment projects. Ms Jennifer Hoalim is our Group’s Office Manager responsible for the administration and human resource management of the Group. Mr Simon Niels Matterson is our Group’s Senior Engineering Manager responsible for the engineering services of projects. Mr Matterson is a Professional Chemical Engineer and he has more than 13 years’ experience in the water and wastewater industry. supervision of plant installation and the commissioning of plants. consultant and financial controller in Malaysia and Singapore. and was responsible for managing the research and development activity relating to 74 . he was with the Phillips Petroleum group of companies in Singapore for 17 years. mechanical. feasibility studies. purchasing and logistics management of our Group. of which water treatment system is one aspect. he joined Lindeteves Jacoberg Ltd as Project Engineer. Mr Matterson holds a Bachelor of Science in Engineering Product Design from the Polytechnic of the South Bank in London. co-ordination of projects. where he was responsible for the design. information technology. Mr Chew joined our Group in July 1999. having worked as Project Engineer for companies such as Biwater International in UK and Southern Water McDowells in UK and Malaysia.Mr Lim Kim Seng is our Group’s General Manager responsible for finance. England. Leaving ETAS Pte Ltd in 1998 as Senior Project Engineer. Mr Chew holds a Diploma in Mechanical Engineering from Ngee Ann Polytechnic. holding senior managerial positions in financial management and human resource administration. internal control and accounting system of the Group. Mr Ricky Chew Ann Meng is our Group’s Construction Manager responsible for project management.

In 1993. when Takara Engineering (S) Pte Ltd was acquired by Hongguan Technologies (S) Pte Ltd. 5 in 1990 and advanced in ranks to Sales Department personnel. then to Technological Development Department personnel and finally to the position of Technical Deputy. Mr Tan joined our Group in September 1999. Mr Sim holds a Diploma in Electrical Engineering from the Singapore Polytechnic. Mr Yap Kiam Wu is our Group’s Chief Designer responsible for the design and development of new equipment as well as serving as an in-house co-ordinator. Mr Sim started working as Assistant Engineer in Flexible Automation Pte Ltd and was promoted to Electrical Engineer one year later. India and a Bachelor of Science from the University of Madras. Mr Tan Yu Ming is our Group’s Senior Engineer responsible for the implementation of projects for ultra pure water treatment and wastewater treatment. Mr Sim joined our Group in November 1999. In April 1997. Mr Tan holds a Bachelor of Science (Hons) degree from the University Technology of Malaysia. In 1998. Mr Ge joined our Group in September 1994. Mr Bruce Sim Lian Huat is our Group’s Electrical Manager responsible for project management. Mr Ge Wen Yue is the Head of Sales and Marketing of HES responsible for overseeing the research. His responsibilities in Flexible Automation Pte Ltd include panel design and software development for integrated circuit encapsulation machines. Mr Yap started his career with AU Precision Pte Ltd from 1992 as a Machinist and rose to the position of Shift Leader in 1994.the development of hollow fiber membranes for various applications. Mr Sim joined Takara Engineering (S) Pte Ltd as Electrical Engineer and was involved in the improvement and development of existing integrated circuit moulding systems. India. He holds a Diploma in Mechanical Engineering from the Singapore Polytechnic. He then joined Tempco Manufacturing (S) Pte Ltd in 1994 as a CNC machinist and was subsequently promoted to Engineering Assistant. development and sales of the advanced membrane filtration technology in PRC. He holds a Doctor of Philosophy degree from the Indian Institute of Technology (IIT) in Bombay. Mr Ge holds a Bachelor of Chemistry from the Shanghai University. a Master of Science from the University of Hyderabad. he was further assigned to various automation projects. electrical control systems for water treatment plants and also for leading a group of electricians for project execution of electrical installations. Mr Yap subsequently joined Nortrans Engineering Group Pte Ltd (now known as Nortrans Offshore (S) Pte Ltd) as a draughtsman for two years before joining our Group in October 1999. Save as disclosed below. 75 . In 1997. none of the Executive Officers currently hold directorships or held any past directorships for the last five (5) years:Name Present Directorships Other companies Chin Tain Min Fidelity Capital Consultants Pte Ltd Remajaya Sdn Bhd Optimum Bonus Sdn Bhd None of our Directors and Executive Officers have any family relationships with one another or with any substantial Shareholder of our Company. Mr Ge has worked as a Technician in Shanghai Dazhonghua Rubber Factory No. Mr Tan started working as an Environmental Engineer with Envilab Sdn Bhd where he worked for two and a half years and was responsible for the implementation of projects for wastewater treatment. India.

9 are electrical engineers. The Service Agreements cover the terms of employment.940 Total — — 434. 9 are chemical engineers.940 725.STAFF We have 135 full-time employees in Singapore and PRC as at 15 December 2000. 4 are chemists and the remaining are technicians and other general workers.000 and above $250. Of these employees.200 434. Directors’ fees do not form part of the terms of the Service Agreements as these require the approval of shareholders in the Company’s annual general meeting. We have not experienced any significant seasonal fluctuations in the number of full-time employees. The Service Agreements will continue for a term of three (3) years unless otherwise terminated by either party giving not less than six (6) months’ notice in writing to the other.800 REMUNERATION SHAREHOLDERS OF EMPLOYEES RELATED TO DIRECTORS AND SUBSTANTIAL None of our employees are related to our Directors and substantial shareholders. The total remuneration paid to our Directors. We have not experienced any industrial disputes in the past three years.800 434. Deirdre Murugasu and Foo Hee Kiang (the “Executive Directors”). SERVICE AGREEMENTS On 29 December 2000.000 to $499.940 FY1999 $ 427. Please refer to page 59 on “Staff Training” for details on our training policy for staff.999 Total — — 4 4 NonExecutive Directors — — — FY1999 NonExecutive Executive Directors Directors — — 2 2 — — 1 1 725. The employees are not unionised. 76 . The relationship between management and staff has been good. the total remuneration of such employees who are related to the Directors and substantial shareholders shall be subject to the annual review and majority approval of the Audit Committee. substantial shareholders and employees who are related to our Directors and substantial shareholders will be disclosed in the annual report of our Company.999 $0 to $249.940 — 725. In the event that any of our employees are related to our Directors and substantial shareholders in the future.800 Total — — 725. the Company entered into separate service agreements (“Service Agreements”) with Messrs Lum Ooi Lin Olivia. 17 are mechanical engineers. DIRECTORS’ REMUNERATION The remuneration of our Directors on an aggregate basis and in remuneration bands for FY1998 and FY1999 are as follows:Aggregate Directors’ Remuneration FY1998 $ Executive Directors Non-Executive Directors Total Number of Directors in Each Remuneration Bands FY1998 Executive Directors $500.600 7. specifically salaries and bonuses. 20 are administration staff.

000.000 and $5. there are no other existing or proposed service agreements between the Company or its subsidiaries and any Director of the Company. Dr Deirdre Murugasu and Mr Foo Hee Kiang will be $20.000. Had the Service Agreements been in place for FY1999.000 for Ms Lum Ooi Lin Olivia and $150. year-end bonus.000.0% of PAT Incentive bonus Ms Lum Ooi Lin Olivia.0% of PAT 3. $15. the value of which shall be not more than $300. the aggregate remuneration payable to the Executive Directors (including CPF.000 instead of $427.Under the Service Agreements. Save as disclosed above. the monthly salary payable to Ms Lum Ooi Lin Olivia. 20% and 20% of the PSS Amount respectively.000.000 1. the combined profit after tax of our Group calculated based on the consolidated audited accounts in respect of such financial year) Where PAT is between $3.000 but less than or equal to $7. footnote (2)).000 instead of $430. They will each be entitled to annual increments as decided by our Board.000 respectively. entertainment expenses and other out-of-pocket expenses reasonably incurred by the Executive Directors in the process of discharging their duties on behalf of our Group will be borne by our Company. The Service Agreements also state that the Executive Directors will be entitled to a car. In addition.000.000 Where PAT is more than $5.000 (please refer to page 28. the Executive Directors will each be entitled to participate in a profit sharing scheme (“PSS”). Dr Deirdre Murugasu and Mr Foo Hee Kiang are entitled to 60%. The amount to be set aside by our Company for the PSS (the “PSS Amount”) shall be in accordance with the following scale:Profit After Tax (“PAT”) (in relation to any financial year of our Group. All travelling and travel-related expenses.000 and $10. profit sharing and benefits in kind) would have been $562.000 Where PAT is above $7.600 and the PBT of our Group for FY1999 would have been $295.000 represents approximately 66% of the PBT of the Group (with the aforesaid remuneration added back) in FY1999 had the Service Agreements been in effect for FY1999. The Executive Directors’ aggregate remuneration of $562. 77 .000.000 for each of Dr Deirdre Murugasu and Mr Foo Hee Kiang.0% of PAT 5.

and Ge Wen Yue. Chin Siong Wee. Ng Koon Hwi.95 4.399. employees and others who have contributed to the success of our Group will be allotted to these two Executive Directors. Please refer to page 64 for more details on Gimmill. dispose of or transfer all or part of their respective shareholdings in our Company after the Shares are listed on the SGX Sesdaq.326 — — 69. after taking into account the Restructuring Exercise. each holding less than 5% of the Company’s share capital (Please see page 80.76 1.572. Tan Jin Bee.797 14.000 Reserved Shares to be offered to our Directors (please see note 3 above).16 4.78 — — 98.GENERAL INFORMATION ON THE GROUP SHAREHOLDERS The shareholders of the Company and their respective direct shareholdings immediately before and after the Invitation.966 110. Dr Deirdre Murugasu and Mr Foo Hee Kiang.016 2.20 100. Bonus Issue and Stock Split. Gan Leong Ming.82 4.687.00 5. These parties are not related to the Directors and other substantial shareholders of our Company. are set out below:Before Invitation Number of Shares % Directors Lum Ooi Lin Olivia Deirdre Murugasu Foo Hee Kiang Teo Kiang Kok Lee Joo Hai Substantial Shareholders (5% or more) DBS Capital Gimmill (1) After Invitation Number of Shares % 101.326 — — 58. These shareholders are not related to the Directors and substantial shareholders of our Company. Reserved Shares of 55.886. Koh Lip Lin.268.572.797 10. Excluding the 110. Wong Lang Piow (10%) and Ma On May (20%).994 3.000 169.52 — — 14.95 Other Shareholders Minority Shareholders(2) Reserved Shares to be offered to non-public(3) Public(4) Total Notes:(1) Gimmill Industrial (Pte) Ltd is owned by Ma Wong Ching (70%). The minority shareholders comprise Wong Ming Keong.092 6.576 6.023.06 23.016 2.399. they may hold. Chen Yue Feng.64 — — 100.886.687.468.05 1.360. paragraph (2) under “Restructuring Exercise” of this Prospectus).966 — — 144. This represents 0.268.00 8.555 8.00 10. Should these two Executive Directors accept the Reserved Shares. Any excess Reserved Shares not subscribed for by other management.994 3.000 39. 5.555 4. We intend to offer two of our Executive Directors.691.06% of our post-float share capital.468.11 0.000 each in view of their past contributions to our Group.00 (2) (3) (4) 78 .

069.242 2.0 % 92.000 187. Hyflux became the holding company of our Group after the Restructuring Exercise.069.980 ordinary shares of $0.555 8.797 101. of Vendor Shares 6.0 5.252 45.490.10 each in Hyflux:Name Number of HSPL Shares Sold 736.001 18. of Shares held before the Invitation 14.999.980 % 92.686 No.555 98.510 450.362.092 129.0 5.000 Number of Hyflux Shares Issued 7.16% of our Company’s issued share capital after the Invitation.Vendors The names of the Vendors and the number of Vendor Shares which they will offer pursuant to the Invitation are set out below:Name No. which involved the following transactions:(1) On 1 June 2000 and 31 August 2000 respectively.6 2.000 DBS Capital Gimmill Lum Ooi Lin Olivia Total MORATORIUM To demonstrate her commitment to our Group.331.576 115.470.470 7. RESTRUCTURING EXERCISE The following Restructuring Exercise was effected in preparation for the Invitation and the listing of the Company on SGX Sesdaq.516 14. of shares held after the Invitation 8.960. consideration of which was satisfied by the issue of 7. who will own 58.0 Lum Ooi Lin Olivia Deirdre Murugasu Foo Hee Kiang 79 .242 6. Ms Lum Ooi Lin Olivia.023.686 No.999.399.468.691.4 100.797 14.399. has undertaken not to dispose of or transfer any part of her interests in our Company for a period of twelve (12) months commencing from the date of admission of our Company to the Official List of SGX Sesdaq and in the twelve (12) months thereafter shall not reduce her shareholding to below 50% of her original interest in our Company. Hyflux entered into a sale and purchase agreement (the “HSPL Sale and Purchase Agreement”) and a supplemental agreement thereto with the following persons to acquire the entire issued and paid-up capital of HSPL to become the holding company of HSPL with effect from 31 March 2000.468.747 800.6 2.4 100.

000 88.901.8 11.7889096 per said share.558 ordinary shares of $0.10 each in the capital of our Company at a consideration of $0.8 100.000 each.2 12.4 17.174 ordinary shares of $0.0 % 14.(2) On 1 June 2000 and 31 August 2000 respectively. Pursuant to a subscription agreement dated 3 June 2000.840 ordinary shares of $0.8 18. DBS Capital and Gimmill each subscribed for 3. the sum of $1.8 16.4 17.00 each constituting 49.10 each in Hyflux:Name (the “HEPL Shareholders”) Wong Ming Keong Chen Yue Feng Ng Koon Hwi Gan Leong Ming Koh Lip Lin Chin Siong Wee Deirdre Murugasu Tan Jin Bee Ge Wen Yue Number of HEPL Shares Sold 80.000 64.80 was capitalised from the share premium account of our Company for a bonus issue of 15.7 1.2 12.042.800.000 97.8 11.8 16.000 10.800 Number of Hyflux Shares Issued 64.000 or $2.7 1. Hyflux entered into a Sale and Purchase Agreement (the “HEPL Sale and Purchase Agreement”) and a supplemental agreement thereto with the following persons to acquire 544.800 ordinary shares of $1.155.6 1.8 18.000 51.800 25.000 77. consideration of which was satisfied by the issue of 435.9 4.8 100.840 20.000 70.400 56.10 each fully paid to the shareholders as at 1 June 2000.000 8.590.600 70.400.5% of the issued and paid-up capital of HEPL with effect from 31 March 2000.000 10. (4) 80 .000 80.000 100.000 544.000 435.9 4.000 8.6 1.0 (3) On 1 June 2000.840 % 14. totalling an aggregate of $4.

the Strategic Investor’s earlier cash investment of $2. putting us in a better position to tender for projects of larger values. 81 . We have provided services to the subsidiaries of Ramatex Berhad. In addition. In consideration for this top-up. the HEPL Shareholders. B represents the value of the Strategic Investor’s shareholdings in our Company. This price was determined on a willing buyer. In such a scenario. implied by a 20% discount to the IPO Price.8 x IPO Price) . As the IPO Price was not determinable then.400. inter alia. We have sought the investment of these two investors to finance the purchase of a new factory at Changi South and working capital. based on the IPO Price. the capital injection will increase our capital base.000 A where B C N represents the number of ordinary Shares held by such Strategic Investor prior to its subscribing for the one Share under this Clause. that in the event our Company achieves an initial public offering (“IPO”) at any time on or before 30 November 2001 at an offer price (“IPO Price”) that results in a First Top-up Price (as defined below) greater than zero. which aid our efforts to achieve a public listing.$2. the Shareholders’ Agreement was drawn up to align the capital investment of the Strategic Investors to the intended fair value of our Company’s Shares. Where A is greater than zero. The Shareholders’ Agreement provides. the fair value of one ordinary share of our Company was intended to be based on the IPO Price. from FY1998 (please see page 85 on “Interested Person Transactions” for details). We have thus offered the Strategic Investors a discount of 20% to the fair value in view of the potential benefits that would arise from their capital investments. and C represents the cost of investment of each Strategic Investor (please refer to paragraph 4 above). The Shareholders’ Agreement is intended to provide for the Strategic Investors’ cost of investment in our Company to be at a 20% discount to the fair value of their shareholdings. DBS Capital. We will benefit from the professional advice provided by DBS Capital in areas such as business strategy and restructuring. We believe that the inclusion of Gimmill as our shareholder will strengthen our business relationship with the Ramatex Group. based on a 20% discount to the IPO Price. Ramatex Berhad. willing seller basis.000 is less than the agreed value. Gimmill and Hyflux entered into a shareholders’ agreement (the “Shareholders’ Agreement”) to effect their intentions and to regulate their relationship inter se and in the conduct of the business and affairs of the Company. in consideration. the Strategic Investor will have to top-up the difference determined as A above. within five (5) Business Days of fixing the IPO Price subscribe and pay for. our Company shall issue and allot to DBS Capital and Gimmill. At the point of cash injection by the Strategic Investors. Gimmill is a business associate of our Group through its associate company. Ramatex and Ramatex (Suzhou). one ordinary share each at a price (“First Top-up Price”) computed as follows:First Top-up Price = $(N x 0. our Company will issue one share to each of the Strategic Investors. and the two Strategic Investors shall.(5) On 21 June 2000.400.

our Company will buy back one (1) share each from the Strategic Investors.8 x IPO Price) A where B C N represents the number of ordinary Shares held by such Strategic Investor prior to its subscribing for the one Share under this Clause.30 million Thus.234. Where A is less than zero.120. Our cash will increase by the amount of top-up by the Strategic Investors and our share premium account will also increase by the same amount. and C represents the value of the Strategic Investor’s shareholdings in our Company.30 million from each of the Strategic Investors or a total of about $2. the first top-up price will be positive and will be determined as follows:A=$(14. the Strategic Investor’s earlier cash investment of $2.399 shares each. B represents the cost of investment of each Strategic Investor (please refer to paragraph 4 above).In the event that the Company achieves an IPO at any time on or before the 30 November 2001 at an IPO Price that results in the First Top-up Price being negative.994.60 million.5% of the issued and paid-up capital of HEPL at a consideration of $646. Hyflux entered into a sale and purchase agreement with HSPL for the acquisition by Hyflux of 555.32) . our Company will have to pay the difference determined as A above to each of the Strategic Investors. a capital reduction or such other form of arrangement as may be permitted by the Act or any other law in existence at the relevant time and upon such terms and conditions reasonably satisfactory to each of the Strategic Investors.687. Other than as disclosed above. (6) On 7 September 2000.468.10 each constituting 50. In consideration of this top-up. we have not entered into any other agreements with our Strategic Investors. our Company shall as soon as possible buy back one Share each from DBS Capital and Gimmill. In such a scenario. via a share buyback. we will then issue one (1) new ordinary share to each of the Strategic Investors. there will be no restriction on the ability of the Strategic Investors to sell their remaining interest in the Company (please refer to “Risk Factors” on page 25 for details). representing HSPL’s cost of investment in HEPL. Our issued share capital prior to the Invitation will increase correspondingly by two (2) shares to 144. In consideration for this payment.400.700 ordinary shares of $0. 82 . After the IPO.796 x 0.8 x 0.000 .000 = approximately $1. The price of such Share to be bought back by our Company (“First Buy-back Price”) shall be computed on the following basis:First Buy-back Price = $2. based on a 20% discount to the IPO Price. Each of the Strategic Investors shall be entitled to sell as vendor shares up to one-half of its shareholding in the Company at IPO or 7.400.$(N x 0.400.32. we will receive approximately $1. implied by a 20% discount to the IPO Price. Based on the actual IPO Price of $0.000 is more than the agreed value.$2.

provision of installation and commissioning of relevant projects and provision of technical services and consultation Hydrochem (S) Pte Ltd Hydrochem Engineering (S) Pte Ltd 9 Mar 1994 Republic of Singapore $1.100.000 Effective interest owned by the Group 100% Principal business owned by the Group Manufacturing.500 100% Hydrochem Engineering (Shanghai) Co. manufacture of equipment and parts primarily for membrane filtration technology. processing and dealing in water treatment equipment and turnkey engineering installation of industrial equipment and machines and other related activities Consulting in the installation of equipment for chemical processing. Ltd 24 Nov 1994 PRC US$420.. Ltd (ÒHESÓ) Subsidiaries The details of our Company’s subsidiaries are as follows:Name of company Date and place of incorporation 30 Jun 1989 Republic of Singapore Issued and paid-up capital $800..000 100% 83 .GROUP STRUCTURE Our Group structure after the Restructuring and prior to listing is as shown below:- Hyflux Ltd 100% Hydrochem (S) Pte Ltd (ÒHSPLÓ) 100% Hyflux Engineering Pte Ltd (ÒHFPLÓ) 100% Hydrochem Engineering (S) Pte Ltd (ÒHEPLÓ) 100% Hydrochem Engineering (Shanghai) Co. application of chemicals and chemical preparation for commercial or industrial use and wholesale of chemical and fabricated products Development. sale of manufactured equipment and ancillary parts.

Note:(1) Application to wind up Hydrochem Membrane Technology (Shanghai) Co..Name of company Date and place of incorporation 18 November 2000 Republic of Singapore Issued and paid-up capital $2.00 Effective interest owned by the Group 100% Principal business owned by the Group Operating of water and liquid treatment plants and sale of treated water Hyflux Engineering Pte Ltd None of our subsidiaries are listed on any stock exchange. Ltd (“HMTS”) has been made in PRC as HMTS has been dormant since incorporation. 84 .

We will prepare relevant information to assist our Audit Committee in its review.160. Two of our major customers. a listed company in Malaysia. as landlord and Hydrochem (S) Pte Ltd (“HSPL”). owns 29. The lease was extended on the same terms until 31 October 2000 when we moved into our new premises at 40 Changi South Street 1. The Property is owned jointly by Dr Deirdre Murugasu and our Managing Director and substantial Shareholder. which has a 10. substantial shareholders or Executive Officers were or are interested in any material transactions undertaken by our Group within the last three financial years.437 FY1999 $71. If further services are provided by our Company to the Ramatex Group. 85 . Interested Person Transactions (a) Gimmill. A summary of our sales to the Ramatex Group is as follows:Ten months ended 31 October 2000 $182.15% of Ramatex Berhad.000 $1. There were no maintenance and service contracts with Ramatex and Ramatex Suzhou.437 — $1. 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 we have not been disadvantaged in any other way. The lease was not renewed upon its expiry on 31 October 2000. HSPL leased the whole of the premises at 34 Kaki Bukit Industrial Terrace (the “Property”) from Dr Murugasu for a term of one (1) year commencing 1 November 1997 to 31 October 1998 at a monthly rental of $9.000 $1. Ramatex and Ramatex (Suzhou) are wholly-owned subsidiaries of Ramatex Berhad.160. Ms Lum Ooi Lin Olivia with each holding equal stakes. Guidelines for Future Interested Person Transactions Our Audit Committee.520 $450.000. and (iv) sale of membranes.000 Gimmill was not a shareholder of our Company when these projects with the Ramatex Group were secured. Dr Deirdre Murugasu. we would ensure that such transactions continue to be on arms’ length basis.000 $632.169. We have provided the following services to the Ramatex Group:(i) treatment of river water using nano-filtration membranes in Malaysia. will review and approve all interested person transactions as defined by the SGX-ST Listing Manual (“Interested Person Transactions”) to ensure that they are on arms’ length basis. (ii) wastewater treatment of textile dyeing water in Suzhou. (iii) installation of a wastewater treatment plant in Suzhou. when formed.INTERESTED PERSON TRANSACTIONS Save as disclosed below.520 Sales Ramatex Ramatex Suzhou FY1997 — — — FY1998 $1. signed the lease agreement.95% equity stake in our Company prior to and after the Invitation respectively.240. none of our Directors. (b) Pursuant to a lease agreement dated 1 November 1997 between our Executive Director. representing the owners. Dr Deirdre Murugasu.00% and 4. our wholly-owned subsidiary. as tenant. that is. chemicals and filters.

direct or indirect. direct or indirect. he will abstain from reviewing and voting on that particular transaction. in any company carrying on the same business or carrying on a similar trade as our Group. direct or indirect.Before any agreement or arrangement that is not in the ordinary course of business of our Group is transacted. No Director. in any material transactions to which our Group was or is to be a party. In the event that a member of the Audit Committee is interested in any of the Interested Person Transactions. prior approval must be obtained from the Audit Committee. in any enterprise or company that is our Company’s customer or supplier of goods or services. (c) 86 . save as disclosed in the section on “Interested Person Transactions” and “Directors”:(a) (b) No Director. We will also comply with the provisions in Chapter 9A of the SGX-ST Listing Manual in respect of all future Interested Person Transactions. Potential conflicts of interest As at the date of this Prospectus. substantial shareholder or Executive Officer of our Group has any interest. substantial shareholder or Executive Officer of our Group has any interest. and No Director. Any decision to proceed with such an agreement or arrangement would be recorded for review by the Audit Committee. and if required under the SGX-ST Listing Manual or the Act. we will seek our Shareholders’ approval for such transaction. substantial shareholder or Executive Officer of the Group has any interest.

627 per annum. Nonetheless.PROPERTY. PLANTS AND EQUIPMENT Our Group currently owns the following property:Cost as at 31 October 2000 ($) Accumulated Net book Depreciation as at value as at 31 October 2000 31 October 2000 ($) ($) Description/Location. Unexpired term and Annual rental if leasehold Date of Purchase Description A 2-storey factory at 40 Changi South Street 1 Singapore 486764 Land area/Built-in area 2. Tenure.884.000 87 .580 sq m Tenure 30 years commencing 1 December 1996 Annual Rental $69. 22 June 2000 2.000 Nil 2. an annual land rent is payable under JTC’s terms and conditions of lease. payable to JTC(1) Note: (1) A 30-year lease constitutes a legal interest. Area.436 sq m/1.884.

344 per annum for the first two (2) years and an adjusted rental to be agreed by the parties for the remaining four (4) years subject to an upward or downward adjustment of not more than ten per cent (10%) of the rental for the first two (2) years Rental is payable to Shanghai Jin Niu Property Development Co Ltd(1) Notes: (1) Date of Purchase NA NA NA NA Shanghai Jin Niu Property Development Co Ltd. the landlord of the factory at No 77 E-Shan Road. motor vehicles and furniture. Jin Niu Building. fittings and office equipment. is a third party unrelated to our Group.58 sq m Tenure 6 years commencing 1 August 1999 to 31 July 2005 Annual Rental RMB481. Shanghai. Unexpired term and Annual rental if leasehold Description Ground floor factory at No 77 E-Shan Road. Pudong New District. Pudong New District. Tenure. Shanghai Land area/Built-in area 1. our Group currently leases the following property:Cost as at 31 October 2000 ($) Accumulated Depreciation as at 31 October 2000 ($) Net book value as at 31 October 2000 ($) Description/Location.498.14 million as at 31 October 2000. Area. Jin Niu Building. Our plant and machinery. had a net book value of approximately $1. 88 .In addition.

judgement or ruling of any court of competent jurisdiction. in Singapore or elsewhere. in Singapore or elsewhere. ages. including the Service Agreements referred to on pages 76 to 77 of this Prospectus.000. rules or regulations. Information on the business and working experience of the Executive Officers of the Group is set out on pages 74 to 75 of this Prospectus:The list of present and past directorships of each Executive Officer for the last five years is set out on page 75 of this Prospectus. (d) a conviction of any offence. or from taking part in any way directly or indirectly in the management of any company. involving a breach of any securities or financial market laws. 89 . The aggregate emoluments (including CPF contributions thereon) paid to the then existing Directors for services rendered in all capacities to the Company and its subsidiaries in FY1999 amounted to approximately $434. (g) disqualification from acting as a director of any company. addresses and current occupations of the Directors of the Company and Executive Officers of the Group are set out on pages 69 to 72 of this Prospectus.800. other than the Company. or charged for violation of any securities laws or any such pending criminal proceeding against him. 3. (h) the subject of any order. is set out on pages 70 to 71 of this Prospectus. Information on the business and working experience of the Directors is set out on pages 69 to 70 of this Prospectus. and (i) the management or conduct of affairs of any company or partnership which has been investigated by an inspector appointed under the provisions of the Companies Act. tribunal or governmental body permanently or temporarily enjoining him from engaging in any type of business practice or activity. (f) a conviction in Singapore or elsewhere of any offence in connection with the formation or management of any corporation. 7. (e) the subject of judgement in any civil proceeding in Singapore or elsewhere in the last 10 years involving fraud. The names. The list of present and past directorships of each Director for the last five years. None of the Directors or Executive Officers is or was involved in any of the following events:(a) a petition under any bankruptcy laws filed in any jurisdiction against him or any partnership in which he was a partner or any corporation of which he was a director or an executive officer in the last 10 years. 5. 2. The aggregate emoluments payable to the present Directors in FY2000 under the arrangements in force at the date of this Prospectus.GENERAL AND STATUTORY INFORMATION INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS 1. (b) unsatisfied judgements outstanding against him. is approximately $862. involving fraud or dishonesty punishable with imprisonment for three months or more. misrepresentation or dishonesty or any such pending civil proceeding against him. or other securities enactment or by any other regulatory body in connection with any matter involving the company or partnership occurring or arising during the period when he was so concerned with the company or partnership. (c) a conviction of any offence. 6. 4.

the Company or its subsidiaries has been granted to.886.468.8. 15. 16.00% 10. which are the subject of this Invitation (please refer to “Shareholders” on page 78 for more details). No Director has any interest in any existing contract or arrangement that is significant in relation to the business of the Group taken as a whole. or leased to. or is entitled to be. 10. Save as disclosed on pages 76 to 77 of this Prospectus. No option to subscribe for shares in.00% — — — — 101.797 14. the Company or its subsidiaries within two years preceding the date of this Prospectus. in any business carrying on a similar trade as the Company or its subsidiaries.76% 1.326 — — 69. There is no shareholding qualification for Directors in the Articles of Association of the Company.016 2. 14. directly or indirectly. 90 . given an option to subscribe for any shares in or debentures of the Company or its subsidiaries. no person has been.572. 11. or was exercised by. % % Save as disclosed above.468. no sum has been paid or has been agreed to be paid to any Director or to any firm in which a Director is a partner in cash or in shares or otherwise by any person to induce him to become a Director in connection with the promotion or formation of the Company. any Director or Executive Officer within the last financial year. no Director has any interest in the Shares. or in any assets acquired or disposed of by. 12. including the New Shares. Save as disclosed below. there are no existing or proposed service contracts between the Directors and the Company or its subsidiaries. no Director or expert is interested.78% — — — — — — — — — — — — Number of Shares in which the Directors and substantial shareholders are deemed to have an interest 9. Save as disclosed on page 85 of this Prospectus. 17.82% 4. in the promotion of.023. substantial shareholder or Executive Officer has any interest. or debentures of. direct or indirect. or in any proposal for such acquisition or disposal or lease as aforesaid.092 6. The Directors and Executive Officers are unrelated by blood or marriage to one another nor are they so related to any substantial shareholder of the Company. 13. The interests of the Directors and substantial shareholders in the Company at the date of this Prospectus and as recorded in the Register of Directors’ Shareholdings and the Register of Substantial Shareholders maintained under the provisions of the Companies Act (Chapter 50) are as follows:Number of Shares registered in the names of Directors and substantial shareholder Directors Lum Ooi Lin Olivia Deirdre Murugasu Foo Hee Kiang Teo Kiang Kok Lee Joo Hai Holders of 5% or more DBS Capital Gimmill 14. Save as disclosed on pages 81 to 82 of this Prospectus.797 10. No Director.

999.901.174.10 $0.789 $0. there were no changes in the issued and paid-up share capital of the Company or its subsidiaries within the three years preceding the date of this Prospectus:Number of shares issued Issue price per Share Purpose of issue/ consideration Resultant issued share capital 19.00 $800.084.000 Hydrochem Engineering (S) Pte Ltd 10 August 1999 10.000 ordinary shares of $1.00 each 50.30 million Incorporation Pursuant to Restructuring Exercise Pursuant to Restructuring Exercise Capitalisation of share premium account Working capital Capitalisation of share premium account Pursuant to the Shareholders’ Agreement $2.05 $1.10 each 7.739.10 $3. there is only one class of shares in the capital of the Company.584 $2.00 91 . management or deferred shares.80 $3. It is envisaged that we may continue to engage the services of Shook Lin & Bok as and when the need arises. SHARE CAPITAL 18.100.00 Capitalisation of revenue reserve account Capitalisation of Director’s loan $750.844.399.10 $0.75 $0. All of the shares are in registered form.00 $800.60 $7.500 ordinary shares of $0.234.000 $843.10 each 15. Date of issue Hyflux Ltd 31 March 2000 1 June 2000 1 June 2000 1 June 2000 3 June 2000 18 December 2000 8 January 2001 20 ordinary shares of $0.000 10 May 1999 $1.00 each $1.10 each 83.60 $7.500 Hyflux Engineering Pte Ltd 18 November 2000 2 ordinary shares of $1.10 each 435.000 ordinary shares of $1. There are no limitations imposed by Singapore law or the Articles of Association of the Company on the rights of non-resident shareholders to hold or vote on the ordinary shares of the Company.Mr Teo Kiang Kok is a senior partner of Shook Lin & Bok which will be receiving a fee paid by us and the Vendors for legal services rendered in connection with the Invitation. Our Directors are of the view that the provision by Shook Lin & Bok of such services will not interfere with Mr Teo Kiang Kok’s independent judgement in his role as a member of the Audit Committee.00 each $1. The rights and privileges attached to the Shares are stated in the Articles of Association of the Company.399.05 each $0.00 each $1.042. As at the date of this Prospectus.10 each 6.433.05 each 2 ordinary shares of $0.00 Working capital $1.558 ordinary shares of $0.00 Incorporation $2.840 ordinary shares of $0.980 ordinary shares of $0.000 ordinary shares of $1.70 Hydrochem (S) Pte Ltd 10 May 1999 400. There are no founder.234. Save as disclosed herein and on page 45 of this Prospectus.348 ordinary shares of $0.

Articles of Association Provisions relating to Directors The provisions in the Articles of Association with respect to: (a) a Director’s power to vote on a proposal. arrangement or contract in which the Director is materially interested. in the absence of an independent quorum. that the liability of members of the Company is limited. (d) retirement or non-retirement of Directors under an age limit requirement. equally. 92 . The ordinary remuneration of an executive Director may not include a commission on or a percentage of turnover and the ordinary remuneration of a non-executive Director shall be a fixed sum. A Director who is not a member of the Company shall nevertheless be entitled to receive notice of and to attend and speak at General Meetings. and (e) number of shares. 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. and that the objects for which the Company is established include those of a holding and investment company. no shares or debentures were issued or were agreed to be issued by the Company or its subsidiaries for cash or for a consideration other than cash during the last three years preceding the date of this Prospectus. Article 77 The ordinary remuneration of the Directors.20. (c) borrowing powers exercisable by the Directors and how such borrowing powers can be varied. to vote compensation to themselves or any members of their body. required for Directors’ qualification. (b) the Directors’ power. if any. Objects and Purposes The Memorandum of Association of the Company states. among others. 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”. and not by a commission on or a percentage of profits or turnover. The complete listing of our objects and purposes can be found at page 1 to 5 of our Company’s Memorandum of Association. or failing agreement. are as follows:- Article 76 A Director shall not be required to hold any shares of the Company by way of qualification. except that any Director who shall hold office for part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for a proportion of remuneration related to the period during which he has held office. Save as disclosed above. which shall from time to time be determined by an Ordinary Resolution of the Company. MEMORANDUM AND ARTICLES OF ASSOCIATION Memorandum of Association 21.

other than by a commission on or percentage of commission or turnover. may be paid such extra remuneration by way of salary. Article 90 The Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to offer himself for re-election. A Director shall not be counted in the quorum at a meeting in relation to any resolution on which he is debarred from voting. or (B) where such Director has given notice in writing to the Company that he is unwilling to be re-elected. A retiring Director shall be eligible for re-election. the Directors may exercise all the powers of the Company to borrow money.Article 78 Any Director who holds any executive office. Provided that such extra remuneration in case of an executive Director shall not by way of commission on or a percentage of turnover and in the case of a non-executive Director shall be by a fixed sum. to mortgage or charge its undertaking. those to retire shall (unless they otherwise agree among themselves) be determined by ballot. Article 108 Subject as hereinafter provided and to the provisions of the Statutes. Article 91 The Company at the meeting at which a Director retires under any provision of these presents may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director or some other person eligible for appointment. or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director. the retiring Director shall be deemed to have been re-elected except in any of the following cases:(A) where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost. property and uncalled capital and to issue debentures and other securities. or who serves on any committee of the Directors. or (D) where such Director has attained any retiring age applicable to him as Director. commission or otherwise as the Directors may determine. whether outright or as collateral security for any debt. Article 100 A Director shall not vote in respect of any contract or arrangement or any other proposal whatsoever in which he has any interest. In default. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last reelected Directors on the same day. directly or indirectly. and not by a commission on or a percentage of profits or turnover. liability or obligation of the Company or of any third party. 93 . The retirement shall not have effect until the conclusion of the meeting except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break. or (C) where the default is due to the moving of a resolution in contravention of the next following Article.

but subject thereto and the terms of such approval. and any shares may. and to Article 5. (f) sinking fund provisions. qualified or special rights. Article 19 Each member shall (subject to receiving at least fourteen days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified the amount called on his shares.Provisions relating to rights. by way of premium) but subject always to the terms of issue of such shares. (d) rights to share in any surplus in the event of liquidation. no shares may be issued by the Directors without the prior approval of the Company in General Meeting pursuant to Section 161 of the Act. Provided Always that:(A) no shares shall be issued to transfer a controlling interest in the Company without the specific prior approval of the Company in General Meeting. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. whether as regards dividend. deferred. and to any special rights attached to any shares for the time being issued. A call may be revoked or postponed as the Directors may determine. be issued with such preferential. 94 . conditions or restrictions. the terms and manner of redemption being determined by the Directors in accordance with the Act. and preference shares may be issued which are or at the option of the Company are liable to be redeemed. conversion or otherwise. as the Directors may think fit. return of capital. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments. subject to compliance with Sections 70 and 75 of the Act. including the time limit after which dividend entitlement lapses and an indication of the party in whose favour this entitlement operates. (c) rights to share in the company’s profits. including: (a) dividend rights. including whether Directors stand for re-election at staggered intervals and the impact of that arrangement where cumulative voting is permitted or required. (e) redemption provisions. when permitted. (g) liability to further capital calls by the Company. the Directors may allot (with or without conferring a right of renunciation) or grant options over or otherwise dispose of the same to such persons on such terms and conditions and for such consideration and at such time and whether or not subject to the payment of any part of the amount thereof in cash or otherwise as the Directors may think fit. participation in surplus. preferences and restrictions attaching to each class of the shares. privileges. voting. and (B) no shares shall be issued at a discount or options granted over unissued shares except in accordance with the Act. preferences and restrictions attaching to Shares The provisions in the Articles of Association relating to the rights. are as follows:- Article 4(A) Subject to these presents. Article 18 The Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or. (b) voting rights. and (h) any provision discriminating against any existing or prospective holder of such securities as a result of such shareholder owning a substantial number of shares.

or attend. whilst bearing interest. Article 89 At each Annual General Meeting. the chairman of the meeting to determine which proxy shall be entitled to vote where a member is represented by two proxies. forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified. be entitled to exercise his rights as a member. while his bankruptcy continues. if their number is not a multiple of three. In the case of non-payment. Any further Directors so to retire shall be those of the other Directors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last reelected Directors on the same day. one-third of the Directors for the time being (or. confer a right to participate in profits. on a show of hands every member who is present in person or by proxy shall have one vote. Article 90 The Directors to retire by rotation shall include (so far as necessary to obtain the number required) any Director who is due to retire at the meeting by reason of age or who wishes to retire and not to offer himself for re-election.Article 21 Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of issue of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these presents be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable. Provided that no Director holding office as Managing Director shall be subject to retirement by rotation or be taken into account in determining the number of Directors to retire. per annum) as the member paying such sum and the Directors may agree. 95 . Article 23 The Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the moneys so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate (not exceeding eight per cent. each Director (other than a Director holding office as Managing Director) shall retire at least once every three years. A retiring Director shall be eligible for re-election. Capital paid on shares in advance of calls shall not. Article 63 Subject to any special rights or restrictions as to voting attached by or in accordance with these presents to any class of shares. the number nearest to but not less than one-third) shall retire from office by rotation. A Director shall be subject to such age limit as may be prescribed under the Act for purposes of retirement or re-election. vote or act at any meeting of the Company. and on a poll every member who is present in person or by proxy shall have one vote for every share of which he is the holder. those to retire shall (unless they otherwise agree among themselves) be determined by ballot. all the relevant provisions of these presents as to payment of interest and expenses. For the avoidance of doubt. A member who is bankrupt shall not.

at the discretion of the Directors. pursuant to Section 69 of the Act and in the form of stock dividends. capitalise any sum standing to the credit of any of the Company’s reserve accounts as representing profits available for distribution under the provisions of the Statutes or. Article 124 If and so far as in the opinion of the Directors. 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 126 No dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes or. pursuant to Sections 69 or 70 of the Act. carry forward any profits. no amount paid on a share in advance of calls shall be treated as paid on the share. The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned. out of the share premium account. the Company’s share premium account or capital redemption reserve. with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation. by appropriating such sum to the persons registered as the holders of shares in the Register of Members or (as the case may be) the Depository Register at the close of business on the date of the resolution (or such other date as may be specified therein or determined as therein provided) in proportion to their then holdings of shares and applying such sum on their behalf in paying up in full unissued shares or (subject to any special rights previously conferred on any shares or class of shares for the time being issued) unissued shares of any other class not being redeemable shares. for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. 96 . In carrying sums to reserve and in applying the same. the Directors shall comply with the provisions of the Statutes. For the purposes of this Article. Article 125 Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide. shall be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may also. The Directors may divide the reserve into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. 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. without placing the same to reserve.Article 122 The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which. with the sanction of an Ordinary Resolution of the Company. Article 134 The Directors may. Any dividend unclaimed after six (6) years from the date of declaration shall be made forfeit and revert to the Company. the profits of the Company justify such payments.

be made either with the consent in writing of the holders of threequarters in nominal value of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of the holders of the shares of the class (but not otherwise) and may be so made either whilst the Company is a going concern or during or in contemplation of a winding-up. 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. (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. and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the members of different classes of members. vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit. (B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference capital (other than redeemable preference capital) and any variation or abrogation of the rights attached to preference shares or any class thereof. divide among the members in specie or in kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds. Provisions relating to variation of rights of Shareholders The provisions in the Articles of Association relating to the actions necessary to change the rights of holders of the stock. under supervision. except that the necessary quorum shall be two or more persons holding at least one-third in nominal value of the issued shares of the class present in person or by proxy or attorney and that any holder of shares of the class present in person or by proxy or attorney may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him where the class is a class of equity shares within the meaning of Section 64(1) of the Act or at least one vote for every share of the class where the class is a class of preference shares within the meaning of Section 180(2) of the Act. and the liquidation of the Company may be closed and the Company dissolved. the variation or abrogation of the special rights attached to any class may. with the authority of a Special Resolution.Article 146 If the Company shall be wound up (whether the liquidation is voluntary. are as follows:- Article 9 (A) Whenever the share capital of the Company is divided into different classes of shares. shall be as valid and effectual as a Special Resolution carried at such General Meeting. 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. 97 . subject to the provisions of the Act. or by the court) the Liquidator may. the consent in writing. The Liquidator may. but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability. with the like authority. Provided Always that where the necessary majority for such a Special Resolution is not obtained at such General Meeting.

All other General Meetings shall be called Extraordinary General Meetings. are as follows:- Article 42 A reference to a member shall be a reference to a registered holder of shares in the Company. or where the balance standing to a Depositor’s Securities Account has been apportioned between two proxies the aggregate of the proportions of the Depositor’s shareholding they are specified to represent. if the instrument is dealt with in such manner as is provided above. Article 47 An Annual General Meeting shall be held once in every year. or where such registered holder is CDP. 98 . at such time (within a period of not more than fifteen months after the holding of the last preceding Annual General Meeting) and place as may be determined by the Directors. according to the records of CDP as supplied by CDP to the Company. the Company being entitled to deem each such Depositor. proceed with proper expedition to convene an Extraordinary General Meeting. and shall on requisition in accordance with the Statutes. the Depositors on behalf of whom CDP holds the shares. and the true balance standing to the Securities Account of a Depositor as at the time of the General Meeting. transmissions or certification of shares shall not apply to the transfer of book-entry securities (as defined in the Statutes). to represent such number of shares as is actually credited to the Securities Account of the Depositor as at such time. (C) the delivery by the Company to CDP of provisional allotments or share certificates in respect of the aggregate entitlements of Depositors to new shares offered by way of rights issue or other preferential offering or bonus issue shall to the extent of the delivery discharge the Company from any further liability to each such Depositor in respect of his individual entitlement. and accordingly no instrument appointing a proxy of a Depositor shall be rendered invalid merely by reason of any discrepancy between the proportion of Depositor’s shareholding specified in the instrument of proxy. including the conditions of admission. and where a Depositor has apportioned the balance standing to his Securities Account between two proxies. Provided that:(A) a Depositor shall only be entitled to attend any General Meeting and to speak and vote thereat if his name appears on the Depository Register maintained by CDP forty-eight (48) hours before the General Meeting as a Depositor on whose behalf CDP holds shares in the Company. (B) the payment by the Company to CDP of any dividend payable to a Depositor shall to the extent of the payment discharge the Company from any further liability in respect of the payment. Article 48 The Directors may whenever they think fit.Provisions relating to Annual General Meeting and Extraordinary General Meetings The provisions in the Articles of Association relating to the manner in which annual general meetings and extraordinary general meetings of shareholders are convoked. to apportion the said number of shares between the two proxies in the same proportion as previously specified by the Depositor in appointing the proxies. and (D) the provisions in these presents relating to the transfers. or each proxy of a Depositor who is to represent the entire balance standing to the Securities Account of the Depositor.

including the rights of non-resident or foreign shareholders to hold or exercise voting rights on their Shares. and (B) in the case of an Extraordinary General Meeting by a majority in number of the members having a right to attend and vote thereat. the notice shall contain a statement to that effect. The period of notice shall in each case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held and shall be given in manner hereinafter mentioned to all members other than such as are not under the provisions of these presents entitled to receive such notices from the Company. if not accepted. and if any resolution is to be proposed as a Special Resolution. The offer shall be made by notice specifying the number of shares offered. be conveniently offered under this Article 5(A). Article 50 (A) Every notice calling a General Meeting shall specify the place and the day and hour of the meeting. Provided also that the accidental omission to give notice to or the non-receipt of notice by any person entitled thereto shall not invalidate the proceedings at any General Meeting. to the amount of the existing shares to which they are entitled. Provided Always that in the case of any Extraordinary General Meeting at which it is proposed to pass a Special Resolution. Provided that a General Meeting notwithstanding that it has been called by a shorter notice than that specified above shall be deemed to have been duly called if it is so agreed:(A) in the case of an Annual General Meeting by all the members entitled to attend and vote thereat. and. Provisions relating to rights of non-resident or foreign Shareholders The provisions in the Articles of Association relating to the rights to own Shares. in the opinion of the Directors. the notice shall also specify the meeting as such. being a majority together holding not less than 95 per cent. are as follows:- Article 5 (A) Subject to any direction to the contrary that may be given by the Company in General Meeting and as permitted by the rules of the Designated Stock Exchange. 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. (C) In the case of any General Meeting at which business other than routine business (“special business”) is to be transacted.Article 49 Any Extraordinary General Meeting at which it is proposed to pass a Special Resolution or (save as provided by the Statutes) a resolution of which special notice has been given to the Company. after the expiration of that time. shall be called by twenty-one days’ notice in writing at the least and an Annual General Meeting or any other Extraordinary General Meeting. the notice shall specify the general nature of such business. will be deemed to be declined. in nominal value of the shares giving that right. 99 . the Directors may dispose of those shares in such manner as they think most beneficial to the Company. at least twenty-one days’ notice in writing of such Extraordinary General Meeting shall be given to any stock exchange upon which the Shares may be listed. and limiting a time within which the offer. At least fourteen days’ notice of any General Meeting shall be given by advertisement in the daily press and in writing to any stock exchange upon which the shares in the Company may be listed. and there shall appear with reasonable prominence in every such notice a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of him and that a proxy need not be a member of the Company. by fourteen days’ notice in writing at the least. as nearly as the circumstances admit. (B) In the case of an Annual General Meeting. or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered. all new shares shall before issue be offered to such persons who as at the date (as determined by the Directors) of the offer are entitled to receive notices from the Company of General Meetings in proportion.

authorise the Directors not to offer new shares to members to whom by reason of foreign securities laws. Provisions relating to delay. and (iii) the instrument of transfer is in respect of only one class of shares. duly stamped in accordance with any law for the time being in force relating to stamp duty. notwithstanding Article 5(A) above. and the Company shall not be bound by or compelled in any way to recognise (even when having notice thereof) any equitable. acquisition or corporate restructuring involving our Company is as follows:- 100 . but to sell the entitlements to the new shares on behalf of such members on such terms and conditions as the Company may direct. serve a notice in writing to the applicant stating the facts which are considered to justify the refusal as required by the Statutes. (B) The Directors may decline to register any instrument of transfer unless:(i) such fee not exceeding S$2. or (except only as by these presents or by the Statutes or law otherwise provided) any other right in respect of any share. contingent. and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and. deferment or prevention of a change in control our Company The provision of our Articles of Association that would have an effect of delaying. Provided Always that in the event of the Directors refusing to register a transfer of shares. such offers may not be made without registration of the shares or a prospectus or other document. future or partial interest in any share. no person shall be recognised by the Company as holding any share upon any trust.00 as the Directors may from time to time require is paid to the Company in respect thereof. bye-laws or listing rules of any stock exchange on which the shares in the Company may be listed) but the Directors may in their discretion decline to register any transfer of shares upon which the Company has a lien. if the instrument of transfer is executed by some other person on his behalf. Article 35 (A) There shall be no restriction on the transfer of fully paid up shares (except where required by law or by the rules. (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. the Company shall within ten market days after the date on which the application for a transfer of shares was made. Article 43 Except as required by the Statutes or law. deferring or preventing a change in control of the company and that would operate only with respect to a merger.(B) The Company may. may refuse to register a transfer to a transferee of whom they do not approve. the authority of the person so to do. or any interest in any fractional part of a share. restrict or qualify the above. except an absolute right to the entirety thereof in the registered holder and nothing in these presents contained relating to CDP or to Depositors or in any depository agreement made by the Company with any common depository for shares shall in any circumstances be deemed to limit. and in the case of shares not fully paid up.

participation in surplus. return of capital. subject to compliance with Sections 70 and 75 of the Act. BANK BORROWINGS AND WORKING CAPITAL 22. (b) estimated preliminary and issue expenses (including underwriting and placement commission) for the Invitation payable by the Company. and to Article 5. In the opinion of the Directors. the Company and its subsidiaries had as at 31 October 2000. no shares may be issued by the Directors without the prior approval of the Company in General Meeting pursuant to Section 161 of the Act. after taking into account the present banking facilities. voting. Save as disclosed on page 41 of this Prospectus and in the Accountants’ Report. and (d) working capital. and to any special rights attached to any shares for the time being issued. mortgages. as the Directors may think fit. the terms and manner of redemption being determined by the Directors in accordance with the Act. qualified or special rights.Article 4(A) Subject to these presents. and any shares may. 24. (c) the repayment of any money borrowed by the Company in respect of any of the foregoing matters. conditions or restrictions. and preference shares may be issued which are or at the option of the Company are liable to be redeemed. privileges. charges. guarantees or other contingent liabilities. hire purchase commitments. deferred. No amount is required to be provided in respect of the matters aforesaid otherwise than out of the proceeds of the Invitation. Provided Always that:(i) no shares shall be issued to transfer a controlling interest in the Company without the specific prior approval of the Company in General Meeting. and (ii) no shares shall be issued at a discount or options granted over unissued shares except in accordance with the Act. whether as regards dividend. there are no minimum amounts which must be raised by the Invitation in order to provide for the following items: (a) the purchase price of any property purchased or to be purchased which is to be defrayed in whole or in part out of the proceeds of the Invitation. conversion or otherwise. 23. the Directors may allot (with or without conferring a right of renunciation) or grant options over or otherwise dispose of the same to such persons on such terms and conditions and for such consideration and at such time and whether or not subject to the payment of any part of the amount thereof in cash or otherwise as the Directors may think fit. no other borrowings or indebtedness in the nature of borrowings including bank overdrafts and liabilities under acceptances (other than normal trading bills) or acceptance credits. The Directors are of the opinion that. be issued with such preferential. 101 . the Group has adequate working capital for its present requirements. but subject thereto and the terms of such approval.

E-Shan Road.000 80. (d) The HSPL Sale and Purchase Agreement dated 1 June 2000 between the Company and the following persons (the “HSPL Shareholders”) to acquire the entire issued and paid-up ordinary shares in HSPL.112 for the first two (2) years.840 Wong Ming Keong Chen Yue Feng Ng Koon Hwi Gan Leong Ming Koh Lip Lin Chin Siong Wee Deirdre Murugasu Tan Jin Bee Ge Wen Yue .000 88.00 per sq m is payable per month.510 450.000 77. of HEPL shares sold 80. (b) Tenancy agreement dated 5 April 1999 between Lim Bok Yong Investment Pte Ltd as landlord and HSPL as tenant for the lease the premises known as 43 Kaki Bukit Industrial Terrace Singapore 416099 having a built-in area of 5.212 sq ft for a term of two (2) years commencing 15 April 1999 to 14 April 2001 at a rental of $5.470 7.000 70. Pudong New District. consideration of which was satisfied by the issue of 7.000 8.252 45.980 Shares in the capital of the Company (the “HSPL Acquisition”):Name No.000 187.600 70.000 97.000 64.58 sq m for a term of six (6) years commencing 1 August 1999 at a monthly rental of RMB40.112 for the next four (4) years.MATERIAL CONTRACTS 25.840 20.999. of Hyflux Shares issued 7. (c) A 5-week option to purchase dated 14 March 2000 for the purchase of the whole of the premises known as 40 Changi South Street 1.000 51.840 Shares in the capital of the Company (the “HEPL Acquisition”):Name No.5% of the issued and paid-up ordinary shares in HEPL. A maintenance fee of RMB2.400 (inclusive of Goods and Services Tax). Shanghai having a built-in area of 1.000 No.000 per month.999.980 Lum Ooi Lin Olivia Deirdre Murugasu Foo Hee Kiang (e) The HEPL Sale and Purchase Agreement dated 1 June 2000 between the Company and the HEPL Shareholders to acquire 544. subject to an upward or downward revision up to a maximum of ten per cent (10%) of RMB40. Singapore 486764 (the “Property”) by Applied Industries (S) Pte Ltd (“Applied Industries”) to HSPL of an option exercise price of $260.800 25.800 ordinary shares of $1. of Hyflux shares Issued 64.001 18.000 544.800 102 No.000 10.000 100. of HSPL shares sold 736.400 56.747 800.000 8.00 each constituting 49.362. The following contracts not being contracts entered into in the ordinary course of business of the Company and its subsidiaries (as the case may be) have been entered into by the Company and its subsidiaries (as the case may be) within the two years preceding the date of this Prospectus and are or may be material:(a) A lease agreement effective 1 August 1999 between Shanghai Jin Niu Property Development Co Ltd as landlord and HES as tenant for the lease of No 77 Jin Niu Building. consideration of which was satisfied by the issue of 435.000 10.000 435.498.

LITIGATION 26.042.700 ordinary shares of $0. (m) An agreement dated 8 January 2001 made between the Company and CDP pursuant to which CDP agreed to act as central depository for the Company’s securities for trades in the securities of the Company through the SGX-ST.5% of the issued and paid-up capital of HEPL at a consideration of $646. Koh Lip Lin.120. Chen Yue Feng. the Vendors and DBS Bank referred to in paragraph 27 on page 104 below.174 Shares in the capital of the Company at a consideration of $0.10 each constituting 50. (i) (j) A deed of assignment dated 22 June 2000 between HSPL as mortgagor and DBS Bank as mortgagee for the mortgage of the Property. the Strategic Investors and the Company to give effect to their intentions and to regulate their relationship inter se and in the conduct of the business and affairs of the Company pursuant to the Subscription. (o) The Placement Agreement dated 8 January 2001 made between the Company. We are currently seeking legal advice and will decide on the appropriate course of action once we have considered the feasibility of the options. (g) Shareholders’ agreement dated 21 June 2000 between the Existing Shareholders. Ng Koon Hwi. (l) A sale and purchase agreement dated 7 September 2000 between the Company and HSPL for the acquisition by the Company of 555. 103 . have been frozen by the Shanghai Pudong New district People’s Court on 27 December 1999.7889096 per Share. (k) A Supplemental Agreement dated 31 August 2000 between the Company and HEPL Shareholders confirming the effective date of the HEPL Acquisition as 31 March 2000 and the consideration of the same as $1. including the Apartment. totalling an aggregate of $4. No.000. for the subscription by each of the Strategic Investors of 3.634. (n) The Management and Underwriting Agreement dated 8 January 2001 made between the Company. DBS Capital and Gimmill and the Company.(f) Subscription agreement dated 3 June 2000 between Wong Ming Keong. Lum Ooi Lin Olivia (the “Existing Shareholders”). Ge Wen Yue. neither the Company nor any of its subsidiaries is engaged in any litigation or arbitration either as plaintiff or defendant in respect of any claims or amounts which may have or have had during the previous 12 months a significant effect on the Group’s financial position and the Directors have no knowledge or are aware of any proceeding. A Supplemental Agreement dated 31 August 2000 between the Company and HSPL Shareholders confirming the effective date of the HSPL Acquisition as 31 March 2000 and the consideration of the same as $799.418 which has been paid in full by HEPL. the Vendors and DBS Bank referred to in paragraph 27 on page 104 below.400. (h) A deed of assignment dated 22 June 2000 between Applied Industries as assignor and HPSL as assignee for the assignment of the lease of the Property with JTC dated 26 November 1999 at a consideration of $2. Chin Siong Wee.998. HEPL entered into a pre-sale agreement dated 12 October 1999 (the “Pre-Sale Agreement’) with Shanghai Jinma Real Estate Co. Save as disclosed above. litigation or claim of material importance which are pending or threatened against the Company or any of its subsidiaries or of any facts likely to give rise to any such litigation. Tan Jin Bee. As such. arbitration or claim. its assets. HEPL may take action to procure the legal title of the Apartment or to recover the consideration paid for the Apartment.2 Jinqiao Hotel Residence (the “Apartment”) in Shanghai for a consideration of US$75. Ltd (“Shanghai Jinma”) to purchase a residential apartment at Block A. 9th Floor. Deirdre Murugasu.800. Foo Hee Kiang.800. A search was conducted by us at Shanghai Real Estate Registry in August 2000 which stated that pursuant to the bankruptcy of Shanghai Jinma. Gan Leong Ming.000 (the “Subscription”)..

The nature of the business of the Company is stated on pages 49 to 52 of this Prospectus. the Company and the Vendors appointed DBS Bank to manage the Invitation and to underwrite the Invitation Shares. 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 the Company.5% of the Issue Price for each Invitation Share. MISCELLANEOUS 28. payable by the Company and the Vendors in the proportion in which the number of Invitation Shares offered by each of them pursuant to the Invitation bears to the total number of Invitation Shares. promoter. the Placement Agent agreed to subscribe or procure subscriptions for the Placement Shares for a placement commission of 1. financial or economic conditions in Singapore or abroad which result. (e) Save as aforesaid. (c) Pursuant to the placement agreement (“Placement Agreement”) dated 8 January 2001. no commission. (b) Pursuant to the Management and Underwriting Agreement. discount or brokerage. (d) Brokerage will be paid by the Company and the Vendors. at the rate of 1. has been paid or other special terms granted within the two years preceding the date of this Prospectus or is payable to any Director. expert. (f) The Management and Underwriting Agreement may be terminated by the Underwriter at any time on or before the closing of the Application List on the occurrence of certain events including. to members of the Exchange. in the Singapore stock market being materially and adversely affected.. (g) The Placement Agreement is conditional upon the Management and Underwriting Agreement not having been terminated or rescinded pursuant to the provisions of the Management and Underwriting Agreement. in the proportion in which the number of Invitation Shares offered by each of them pursuant to the Invitation bears to the total number of Invitation Shares. 104 .0% of the Offer Price for each Offer Share. The time of opening of the Application List is set out on page 11 of this Prospectus. payable by the Company and the Vendors in the proportion in which the number of Invitation Shares offered by each of them pursuant to the Invitation bears to the total number of Invitation Shares. changes in political. (a) Pursuant to the management and underwriting agreement (“Management and Underwriting Agreement”) dated 8 January 2001. inter alia. DBS Bank will receive a management fee from the Company and the Vendors in the proportion in which the number of Invitation Shares offered by each of them pursuant to the Invitation bears to the total number of Invitation Shares. the Underwriter agreed to underwrite the Invitation Shares for a commission of 1. all the corporations listed below are. At the date of this Prospectus.MANAGEMENT AND UNDERWRITING ARRANGEMENTS 27. for its services rendered in connection with the Invitation. inter alia. Ltd Hyflux Engineering Pte Ltd 29.5% of the Issue Price for each Placement Share. or to Participating Banks in respect of successful applications made through Electronic Applications at the ATMs of the relevant Participating Banks. by virtue of Section 6 of the Companies Act (Chapter 50). merchant banks and members of the Association of Banks in Singapore in respect of accepted applications made on Application Forms bearing their respective stamps. deemed to be related to the Company:Subsidiaries of the Company Hydrochem (S) Pte Ltd Hydrochem Engineering (S) Pte Ltd Hydrochem Engineering (Shanghai) Co.

32 for each Offer Share and $0. Pursuant to an agreement contained in a letter dated 4 January 2001. the Vendors and the Receiving Bank have agreed that the Company and the Vendors will receive for its own account an aggregate of a 50% share of any net revenue in excess of $50. Save as disclosed in this Prospectus. management fee and all other incidental expenses in relation to this Invitation is approximately $1. the Directors are not aware of any relevant material information including trading factors or risks not mentioned elsewhere in the Prospectus which is unlikely to be known or anticipated by the general public and which could materially affect the profits of the Company and its subsidiaries.000 earned by the Receiving Bank from the deployment of such monies in the interbank money market to be shared between the Company and the Vendors in the proportion borne by the number of Invitation Shares each has offered to the total number of Invitation Shares offered pursuant to the Invitation. the contract not being made in contemplation of the Invitation nor the Invitation in consequence of the contract. Application moneys received by the Company and the Vendors in respect of successful applications (including successful balloted applications which are subsequently rejected) will be placed in a separate non-interest bearing account with DBS Bank (the “Receiving Bank”). The amount payable on application is $0. In the ordinary course of business.2 million. 105 . events or uncertainties that will result in or are reasonably likely to result in the Group’s liquidity increasing or decreasing in any material way. Save as disclosed in this Prospectus. 32. No amount of cash or securities or benefit has been paid or given to any promoter within the two years preceding the date of this Prospectus or is proposed or intended to be paid or given to any promoter at any time. and (d) known trends or uncertainties that have had or that the Group reasonably expects to have a material favourable or unfavourable impact on revenues or operating income. brokerage. 31. which will be borne by the Company and the Vendors in the proportion borne by the number of Invitation Shares each has offered to the total number of Invitation Shares offered pursuant to the Invitation. No property has been purchased or acquired or proposed to be purchased or acquired by the Company or its subsidiaries 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 the contract for the purchase or acquisition whereof was entered into in the ordinary course of business of the Company or its subsidiaries. (b) material commitments for capital expenditures. (c) unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from operations. the Receiving Bank will deploy these moneys in the interbank money market. 36. Any refund of all or part of the application monies to unsuccessful or partially successful applicants will be made without any interest or any share of such revenue or any other benefits. The estimated amount of the expenses of this issue and of the application for listing. 33. including underwriting and placement commission. the Company. The listing fee and other fees payable to the SGX-ST for the listing are payable by the Company. commitments. 34. 35. the financial condition and operations of the Group are not likely to be affected by any of the following:(a) known trends or known demands.32 for each Placement Share.30. There has been no previous issue of Shares by the Company or offer for sale of its Shares to the public within the two years preceding the date of this Prospectus.

based on information furnished to it by the Group. It is also satisfied that the profit estimate of the Group for the financial year ended 31 December 2000 has been stated by the Directors after due and careful enquiry. the Solicitors. that to the best of their knowledge and belief. and that this Prospectus constitutes full and true disclosure of all material facts about the Invitation and the Company and its subsidiaries. STATEMENT BY DIRECTORS OF THE COMPANY AND THE VENDORS 40. (e) the material contracts referred to on pages 102 to 103 of this Prospectus. 106 . Copies of the following documents may be inspected at the registered office of the Company at. STATEMENT BY DBS BANK 41. Our Directors also confirm that the profit estimate for the financial year ended 31 December 2000 has been stated after due and careful enquiry. 38. (f) the letters of consent referred to on page 106 of this Prospectus. DBS Bank acknowledges that. This Prospectus has been seen and approved by our Directors and the Vendors and they collectively and individually accept full responsibility for the accuracy of the information given in this Prospectus and confirm. to the best of its knowledge and belief. and (g) the audited accounts of the Company and its subsidiaries for the last two financial years ended 31 December 1998 and 31 December 1999 and the ten months ended 31 October 2000. (b) the Directors’ Report. (c) the letter from the Auditors and Reporting Accountants in relation to the consolidated proforma profit estimate for the financial year ended 31 December 2000. (d) the Accountants’ Report (including statement of adjustments). in the form and context in which they appear in this Prospectus and references to their names in the form and context in which they appear in this Prospectus and to act in such capacity in relation to this Prospectus. there are no other facts the omission of which would make any statements herein misleading. DOCUMENTS AVAILABLE FOR INSPECTION 39. the Principal Banker and the Share Registrar have given and have not withdrawn their consent to the issue of this Prospectus with the inclusion herein of their names in the form and context in which they appear in this Prospectus and to act in those capacities in relation to this Prospectus. Underwriter and Placement Agent(s).CONSENTS 37. this Prospectus constitutes a full and true disclosure of all the material facts about the Invitation and the Company and its subsidiaries and it is not aware of any other facts the omission of which would make any statements herein misleading. 40 Changi South Street 1 Singapore 486764 during normal business hours for a period of six months from the date of this Prospectus:(a) the Memorandum and Articles of Association of the Company. having made all reasonable enquiries. The Auditors and Reporting Accountants have given and have not withdrawn their written consent to the issue of this Prospectus with the inclusion herein of the Accountants’ Report and the letter relating to the profit estimate for the year ended 31 December 2000. The Manager.

05 each in the capital of the Company (the “Shares”) comprising 25.APPENDIX A DIRECTORS’ REPORT 8 January 2001 The Shareholders Hyflux Ltd 40 Changi South Street 1 Singapore 486764 Dear Sirs This report has been prepared for inclusion in the Prospectus of Hyflux Ltd (the “Company”) to be dated 8 January 2001 in connection with the Invitation in respect of 39. I report that. and the date hereof:(a) (b) the business of the Company and its subsidiaries has.000 New Shares and 14. in the opinion of the Directors.000 Vendor Shares. and save as disclosed on page 116 of this Prospectus. arisen since the last Annual General Meeting of the Company which would adversely affect the trading or the value of the assets of the Company or its subsidiaries. (c) (d) (e) Yours faithfully for and on behalf of the Board of Directors Lum Ooi Lin Olivia Managing Director Hyflux Ltd 107 . there have been no changes in the published reserves or any unusual factors affecting the profit of the Company and its subsidiaries since the last audited accounts. having made due inquiry in relation to the interval between 31 October 2000. the date to which the last audited accounts of the Company were made up. been satisfactorily maintained. in the opinion of the Directors. no circumstances have. On behalf of the Directors of the Company.000. save as disclosed on page 126 of this Prospectus.470. the current assets of the Company and its subsidiaries appear in the books at values which are believed to be realisable in the ordinary course of business. no contingent liabilities have arisen by reason of any guarantees given by the Company or its subsidiaries.000 ordinary shares of $0.470.

000 New Shares and 14.470.000 ordinary shares of $0. Further. The profit estimate of the Proforma Group includes results of the audited financial statements for the ten months ended 31 October 2000.32 per Share comprising 25. and is presented in accordance with Statements of Accounting Standard in Singapore. The Directors are solely responsible for the profit estimate of the Proforma Group including the bases and assumptions on which the estimate is based. Based on our examination of the evidence supporting the assumptions.000 Vendor Shares.05 each in the capital of the Company (the “Shares”) at $0.000. We have reviewed the profit estimate of the Proforma Group for the financial year ended 31 December 2000 set out on pages 37 to 38 of the Prospectus in accordance with the Singapore Standard on Auditing applicable to the examination of prospective financial information. in our opinion. the profit estimate of the Proforma Group. nothing has come to our attention which cause us to believe that these assumptions do not provide a reasonable basis for the profit estimate of the Proforma Group. Yours faithfully Arthur Andersen Certified Public Accountants Singapore Max Loh Khum Whai Partner-in-charge 108 .470. payable in full on application. is consistent with the accounting policies normally adopted by the Proforma Group. is properly prepared on the bases and assumptions. so far as the accounting policies and calculations are concerned.APPENDIX B LETTER FROM THE AUDITORS AND REPORTING ACCOUNTANTS IN RELATION TO THE CONSOLIDATED PROFORMA PROFIT ESTIMATE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2000 8 January 2001 The Board of Directors Hyflux Ltd 40 Changi South Street 1 Singapore 486764 Dear Sirs This letter has been prepared for inclusion in the Prospectus of Hyflux Ltd (the “Company”) to be dated 8 January 2001 in connection with the Invitation in respect of 39.

management.5% of the entire issued and paid-up ordinary shares of Hydrochem Engineering (S) Pte Ltd for a consideration of S$1. and 33.10 each in the capital of the Company at a consideration of S$0. (iv) On 3 June 2000.75 per share in the Company. comprising 20 initial subscriber shares of S$0.000.590.10 each at par in the Company. comprising 25. (iii) On 1 June 2000. the sum of S$1.800 ordinary shares of S$1 each in Hydrochem Engineering (S) Pte Ltd constituting 49. The Company was incorporated with an authorised share capital of S$50. two investors (the “Investors”) each subscribed for 3.800. (ii) On 31 March 2000.840 ordinary shares of S$0.400.10 each and an issued and paid-up share capital of S$2. INTRODUCTION This report has been prepared for inclusion in the Prospectus to be dated 8 January 2001 in connection with the Invitation by Hyflux Ltd (the “Company”) in respect of 39.634.590. THE COMPANY The Company was incorporated in Singapore on 31 March 2000 as a limited private company under the name of Hyflux Pte Ltd. On 20 December 2000.042.32 for each Placement Share.470.000 ordinary shares of S$0.155. 2.816. the Company acquired the entire issued and paid-up share capital of Hydrochem (S) Pte Ltd for a consideration of $799. the Company acquired 544.998 which was satisfied by the issue of 7.999. The following was carried out by the Company: (i) On 31 March 2000.10 each at S$3. comprising 500.789 per share.10 each. employees and others who have contributed to the success of the Group.558 ordinary shares of S$0.000.000 for the Company. 109 .000. which was satisfied by the issue of 435. comprising: (i) 32. and (ii) 1.470.80 was capitalised from the share premium account of the Company for a bonus issue of 15.470.05 each.901. The principal activity of the Company is that of investment holding.430.980 ordinary shares of S$0.040. raising an amount of S$4.000 ordinary shares of S$0.APPENDIX C ACCOUNTANTS’ REPORT 8 January 2001 The Board of Directors Hyflux Ltd 40 Changi South Street 1 Singapore 486764 Dear Sirs A.000.000 New Shares and 14. giving rise to a share premium of $1.000 Placement Shares at S$0.000.32 for each Offer Share by way of public offer.174 ordinary shares of S$0. 6. B.10 each credited as fully paid to the existing shareholders.000 Placement Shares by way of placement.000 Reserved Shares at S$0.32 for each Reserved Share reserved for the Directors.000 Offer Shares at S$0. the Company was converted into a public limited company and changed its name to Hyflux Ltd.000 Vendor Shares payable in full on application as follows: 1.

(v) the issue of 25. when fully paid.024 for the Company.000 New Shares which is part of the subject of this Invitation and which.B.500 ordinary shares of S$0.225 from the share premium account of the Company by way of a bonus issue of 83.844.120.10 each in the authorised and issued and paid-up share capital into 2 ordinary shares of S$0. (iii) the conversion of the Company into a public limited company and the change of its name to Hyflux Ltd. the Company acquired the remaining 50. unless revoked or varied by the shareholders in a general meeting. the following: (i) the sub-division of each of the ordinary shares of S$0. inter alia. and (vi) that pursuant to Section 161 of the Companies Act.5% equity interest in Hydrochem Engineering (S) Pte Ltd for a cash consideration of $646. the Directors be authorised to issue shares in the Company (whether by way of rights. allotted and issued.192. THE COMPANY (Continued) (v) On 7 September 2000. bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit.000. the shareholders of the Company approved. such authority shall continue in force until the conclusion of the Annual General Meeting or the date by which the next Annual General Meeting is required by law to be held. 110 . provided that the aggregate number of shares to be issued pursuant to this resolution shall not exceed 50% of the issued share capital of the Company immediately prior to the proposed issue and provided that the aggregate number of such shares to be issued other than on a pro-rata basis to the then existing shareholders shall not exceed 20% of the issued share capital of the Company immediately prior to the proposed issue. raising an amount of S$2. At an Extraordinary General Meeting held on 18 December 2000.05 each (the “Stock Split”).608. and (vi) On 8 January 2001. pursuant to a shareholders’ agreement dated 21 June 2000. (iv) the adoption of the new Articles of Association of the Company. will rank pari passu in all respects with the existing ordinary shares of the Company. representing Hydrochem (S) Pte Ltd’s cost of investment in Hydrochem Engineering (S) Pte Ltd. the two Investors each subscribed for 1 ordinary share of S$0. whichever is the earlier.304.05 each in the capital of the Company at a consideration of S$1.012 per share. (ii) the capitalisation of S$4.05 each credited as fully paid to the existing shareholders.

THE PROFORMA GROUP The Company and its subsidiaries are collectively referred to as the “Proforma Group”. The auditors’ reports on the financial statements of the Company and its subsidiaries incorporated in Singapore for all the periods under review were not qualified..500 100 Hyflux Engineering Pte Ltd Singapore 18 November 2000 S$2 100 Held by a subsidiary Hydrochem Engineering (Shanghai) Co. as well as the financial years ended 31 December 1997 to 1998 have been audited by Casey Lim & Company. for PRC statutory reporting purposes. Casey Lim & Company. We have reviewed these financial statements and made adjustments as appropriate. a firm of certified public accountants in the PRC.000 100 Development. 9 March 1994 to 30 June 1995 and that for 1 July 1995 to 31 December 1996. 1 October 1994 to 31 December 1995 and the financial years ended 31 December 1996 to 1999 were prepared in accordance with applicable accounting regulations in the People’s Republic of China (PRC) and were audited by Guang Hua Certified Public Accountants.. The subsidiaries at the date of this report are as follows: Place and date of incorporation Singapore 30 June 1989 Issued and paid-up capital S$800. applications of chemicals and chemical preparations for commercial or industrial use and wholesale of chemical and fabricated products Operating of water and liquid treatment plants and sale of treated water Hydrochem Engineering (S) Pte Ltd Singapore 9 March 1994 S$1. processing and dealing in water treatment equipment and turnkey engineering installation of industrial equipment and machines and other related activities Consulting in the installation of equipment for chemical processing. The financial statements of Hydrochem Engineering (Shanghai) Co.100. We have acted as auditors of Hydrochem (S) Pte Ltd and Hydrochem Engineering (S) Pte Ltd with effect from the financial year ended 31 December 1999. for the purpose of inclusion in the Proforma Group financial statements. Ltd for the period from the date of incorporation. sale of manufactured equipment and ancillary parts. The financial statements of Hydrochem (S) Pte Ltd for the financial years ended 31 December 1995 to 1998 have been audited by another firm of public accountants. Ltd People’s Republic of China 24 November 1994 US$420. manufacture of equipment and parts primarily for membrane filtration technology. provision of installation and commissioning of relevant projects and provision of technical services and consultation We were appointed as auditors of the Company from the date of its incorporation.C. 111 . The financial statements of Hydrochem Engineering (S) Pte Ltd for the financial periods from the date of incorporation.000 % equity held by the Group 100 Name of subsidiary Hydrochem (S) Pte Ltd Principal activities Manufacturing.

BASIS OF PRESENTATION OF FINANCIAL STATEMENTS The financial statements set out in this report have been prepared on the basis that the Proforma Group structure had been in place throughout the periods covered by this report.10 each at par and 435.870 137 (12) 125 6. The net tangible assets acquired was S$1.D. In preparing the Proforma Group financial statements. we have assumed that there is no goodwill arising on consolidation from the acquisition of these subsidiaries on a proforma basis. including notional adjustments to reflect the investments and share capital of the Company.75 per share.840 ordinary shares of S$0. as if the Proforma Group had existed from 1 January 1995. Accordingly.4 million was effected via the issue of 7. This resulted in the creation of share premium and goodwill on consolidation in the consolidated financial statements. we have assumed that this restructuring took place as at 1 January 1995.775 5. we have made such adjustments as we considered necessary in order to present the financial statements on a consistent and comparable basis.058 (377) 681 Turnover (Loss) profit before taxation Taxation Net (loss) profit for the year/period 1 2 3 112 .358 Note 1995 S$’000 1. The acquisition of Hydrochem (S) Pte Ltd and Hydrochem Engineering (S) Pte Ltd for a total consideration of S$2.073 (258) (14) (272) 3.929 430 (351) 79 15. E.391 1.6 million.999.954 (1.10 each at S$3. It has been prepared in accordance with the accounting policies of the Proforma Group set out in Section K of this report and is based on the audited financial statements of the companies in the Proforma Group for the financial years ended 31 December 1995 to 31 December 1999 and the financial period for the ten months ended 31 October 2000.437 (225) (10) (235) Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 3. STATEMENTS OF PROFORMA GROUP RESULTS The results of the Proforma Group after making adjustments as we considered appropriate are set out below: Ten months ended 31 October 1999 2000 S$’000 S$’000 6.980 ordinary shares of S$0. In arriving at the Proforma Group financial statements. The Proforma Group has been accounted for as if the restructuring was done on a net asset basis.596) 4.

(Loss) profit before taxation has been determined after charging (crediting) the following: Ten months ended 31 October 1999 2000 S$’000 S$’000 18 — 184 143 107 328 9 (108) — (34) 8 1 2 10 — 73 387 9 71 — 220 83 307 (42) (129) — (61) 2 2 2 9 5 178 539 1995 S$’000 Amortisation of preliminary expenses Bad trade debts written off Bad non-trade debts written off Depreciation of fixed assets Directors’ fees Directors’ remuneration Foreign exchange (gain) loss.F. NOTES TO THE STATEMENTS OF PROFORMA GROUP RESULTS Turnover represents contract revenue recognised using the percentage-of-completion method. Intra-group transactions have been excluded from Proforma Group turnover. 1. The Proforma Group has significant transactions with related parties on terms agreed between the parties as follows: Ten months ended 31 October 1999 2000 S$’000 S$’000 108 90 1995 S$’000 Rental expenses paid to directors — Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 — 18 108 2. net Grants received Loss on disposal of fixed assets Interest income on bank deposits Interest expense — bank overdrafts — hire purchase — finance lease — bills payable — loan Provision for doubtful trade debts Research and development costs 14 5 — — — — — 6 — — 57 9 213 (8) — — — Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 — — — 90 60 181 (8) — — — 18 4 — — — — — 20 — — 74 — 287 (27) — 2 — 21 3 — — — — 131 19 — — 106 355 371 9 — — (8) 10 — — 10 — — 191 113 . Provision is made for any foreseeable losses as soon as they are known. measured by reference to the value of work performed to total estimated contract value.

108 (194) 144 430 — — 5.073 3.775 (225) — — (258) — — 137 — — 1.437 — — Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 3. NOTES TO THE STATEMENTS OF PROFORMA GROUP RESULTS (Continued) Taxation comprises: Ten months ended 31 October 1999 2000 S$’000 S$’000 1995 S$’000 Current tax — current year — underprovision in respect of prior year Deferred tax — current year — underprovision in respect of prior year — — 10 10 — Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 14 — — — 14 12 — — — 12 108 — 269 — 377 335 — (2) 18 351 1.276 (4.870 6.929 15.990 (120) — 6.078 (2. 3.954 — — (225) (258) 137 1.954 114 .437 3.F.391 6.149) — 20.596 The taxation charge for the Proforma Group differs from the amount obtained by applying the applicable income tax rate to the profit before taxation of the Proforma Group mainly due to the utilisation of tax losses brought forward from prior year and no right of offset of taxable profits of one subsidiary with tax losses of another.664 (232) (41) 9.058 430 5.592 4 — — 1.205 (132) — 3.501) — 1. G. STATEMENTS OF ADJUSTMENTS The following adjustments have been made to the audited financial statements of the companies in the Proforma Group for the respective financial years/period covered by this report: Ten months ended 31 October 1999 2000 S$’000 S$’000 1995 S$’000 Turnover Turnover from summation of audited financial statements Elimination of turnover within Proforma Group Adjustment for overstatement of turnover Adjusted turnover as stated in the Statements of Proforma Group Results (Loss) profit before taxation (Loss) profit before taxation from summation of audited financial statements Overstatement of trade debtors Restatement of stocks Adjusted (loss) profit before taxation as stated in the Statements of Proforma Group Results 1.

596 — 10 14 12 377 351 1.444 (6.726 20 10.239 (2.719 234 — 1.372 (606) 766 927 As at 31 December 1996 1997 1998 S$’000 S$’000 S$’000 940 1.082) 706 362 46 2.719 186 11 285 310 153 9 285 7.467 (4.473) 667 332 27 4.596 H.765 115 .595) 1. STATEMENTS OF ADJUSTMENTS (Continued) Ten months ended 31 October 1999 2000 S$’000 S$’000 1995 S$’000 Taxation Taxation from summation of audited financial statements Understatement of deferred tax liability Adjusted taxation as stated in the Statements of Proforma Group Results 10 — Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 14 — 12 — 108 269 351 — 1.075 — 15 269 1.G.466 — — — 940 — — — 1.978) 3.140 (1.075 1.788 (1.479) (12) 4.644 795 9 4. SUMMARISED PROFORMA GROUP BALANCE SHEETS The summarised balance sheets of the Proforma Group as at 31 December 1995 to 1999 and as at 31 October 2000 as set out below have been prepared based on the audited financial statements after making adjustments as we considered appropriate and on the basis that the Proforma Group had been in place since 1 January 1995.765 1995 S$’000 Proforma shareholders’ equity Represented by: Fixed assets Preliminary expenses Current assets Current liabilities Net current assets (liabilities) Less: Non-current liabilities Hire-purchase creditors (non-current portion) Finance lease creditors (non-current portion) Deferred taxation — — 927 21 182 — 1. As at 31 October 1999 2000 S$’000 S$’000 310 7.

719 (647) 310 — 7.5% equity interest in Hydrochem Engineering (S) Pte Ltd by Hydrochem (S) Pte Ltd for cash Balance carried forward — Year ended 31 December 1996 1997 1998 S$’000 S$’000 S$’000 927 940 1.I.075 — 1.075 1.719 310 1995 S$’000 Balance brought forward Add (less): Notional investment in subsidiaries via the issue of shares by the Company Net (loss) profit attributable to the Proforma Group Dividends.162 (235) — — — 285 (272) — — — 10 125 — — — — 681 (37) — — 60 79 (894) (7) — — 4.358 (1.800 — 927 — 940 — 1.700) (3) 4. net Currency alignment Issue of shares by the Company for cash Purchase of 50. MOVEMENTS IN PROFORMA SHAREHOLDERS’ EQUITY The movements in the shareholders’ equity of the Proforma Group for each of the five years ended 31 December 1995 to 1999 and the ten months ended 31 October 2000 are as follows: Ten months ended 31 October 1999 2000 S$’000 S$’000 1.765 116 .

948 216 4 295 561 6.466 — — 1. Proforma Group S$’000 7. secured (current portion) Bank overdraft.765 — — — 5.765 Proforma Company S$’000 5.J.009 3. secured 12 13 14 14 11 905 1.796 3.444 150 870 20 — — — 161 3.700 500 — 97 5.969 117 .968 980 — — 500 659 298 10. set out in Section L.307 1.009 Note Proforma shareholders’ equity Represented by: Fixed assets Investment in subsidiaries Preliminary expenses Current assets Stocks Trade debtors Work-in-progress Other debtors.765 Less: Current liabilities Trade creditors Other creditors and accruals Proposed dividend Provision for taxation Hire purchase creditors (current portion) Finance lease creditors (current portion) Term loan. deposits and prepayments Due from subsidiaries (non-trade) Dividend receivable Short term notes Fixed deposits Cash and bank balances 9 10 4 5 6 7 8 1 2 3 4.978 Net current assets Less: Non-current liabilities Hire purchase creditors (non-current portion) Finance lease creditors (non-current portion) Deferred taxation 12 13 153 9 285 7. STATEMENTS OF NET ASSETS The statements of net assets of the Proforma Group and of the Company as at 31 October 2000 are set out below with the notes thereon.587 3.349 1.700 — 96 — — — 1.726 — 20 452 3.700 1.

direct labour and direct and indirect overheads incurred in connection with the contracts. measured by reference to the value of work performed to total estimated contract value. Income recognition Income from contracts is recognised using the percentage-of-completion method. This is amortised on a straight-line basis over 5 years through the profit and loss account. the difference between the fair value of net assets of subsidiaries acquired at the date of acquisition over the cost of acquisition represents goodwill or reserve on consolidation. When subsidiaries are acquired. the financial statements of foreign subsidiaries are translated at the rates of exchange ruling at the balance sheet date except for share capital and reserves which are translated at historical rates of exchange and profit and loss items which are translated at average exchange rates for the year. Work-in-progress Work-in-progress is stated at cost plus attributable profit net of progress billings and provision for foreseeable losses. are prepared in accordance with the historical cost convention and Statements of Accounting Standard in Singapore to reflect the results and financial positions of the Company and the Proforma Group. In the preparation of the Proforma Group financial statements. Costs include cost of materials. The results of subsidiaries acquired or disposed of during the year are included in or excluded from the Proforma Group financial statements as if the Proforma Group existed with effect from 1 January 1995. Investment in subsidiaries Investment in subsidiaries is stated in the financial statements of the Company at cost. These expenses are written off to the statement of profit and loss over 3 years. Preliminary expenses Preliminary expenses are stated at cost less amounts amortised. Grants These relate to grants received from the National Science and Technology Board (“NSTB”) and the Economic Development Board (“EDB”) for certain projects undertaken by the Company.K. Foreign currency translation differences are taken to translation reserve. expressed in Singapore dollars. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies which have been consistently applied in the preparation of the financial statements of the Company and the Proforma Group are as follows: Basis of accounting The financial information. 118 . Significant intercompany balances and transactions have been eliminated on consolidation. Such grants received are recognised as income through the profit and loss account and matched against related costs incurred during the year which they are intended to compensate. Provision is made for any foreseeable losses as soon as they are known. Provision is made where there is a decline in value that is other than temporary. Basis of consolidation The Proforma Group financial statements include the financial statements of the Company and its subsidiaries made up to the end of the financial year.

The estimated useful lives have been taken as follows Years Plant and machinery Motor vehicles Computers Office equipment Leasehold property Furniture and fittings Renovations 4 . a subsidiary. labour and an attributable portion of overhead costs. In the case of finished goods and work-in-progress. Stocks Stocks are stated at the lower of cost and net realisable value.5 over the lease period 4 .5 4 . Taxation Income tax expense is determined on the basis of tax effect accounting. SIGNIFICANT ACCOUNTING POLICIES (Continued) Fixed assets and depreciation Fixed assets are stated at cost less accumulated depreciation.5 Fully depreciated assets are retained in the financial statements until they are no longer in use. During the financial year ended 31 December 1996.5 1 . The excess of the hire purchase or finance lease payments over the recorded hire purchase or finance lease obligations is treated as finance charges which are allocated over each hire purchase and finance lease term to give a constant rate of interest on the outstanding balance at the end of each period.10 4 . 119 .000. using the liability method and is applied to all significant timing differences.K. the assets are capitalised as if they had been purchased outright at the values equivalent to the present value of the total rental payable during the periods of the hire purchase or finance lease and the corresponding hire purchase commitments or finance lease are included under liabilities. Provision is made for deteriorated. Fixed assets are depreciated using the straight-line method to write-off the cost over their estimated useful lives. damaged. Hire purchase and finance lease Where assets are financed by hire purchase contracts or finance leases that give rights approximating to ownership. Deferred tax benefits are not recognised unless there is reasonable expectation of their realisation. Cost is determined on a firstin. The effect of the change in accounting estimate is to increase the Group’s loss before taxation for the financial year ended 31 December 1996 by approximately S$14. The Directors are of the opinion that the change is to more accurately reflect the economic useful life of the computers for depreciation purposes. cost includes raw materials. obsolete and slow-moving stocks. Hydrochem (S) Pte Ltd changed the estimated useful life of computers for depreciation purposes from 5 years to 1 year.4 4 . first-out basis.

K.

SIGNIFICANT ACCOUNTING POLICIES (Continued) Foreign currency transactions and balances The accounting records of the companies in the Proforma Group are maintained in their respective reporting currencies. Transactions in foreign currencies during the year are recorded in the respective reporting currencies using exchange rates approximating those ruling at transaction dates. Foreign currency monetary assets and liabilities at the balance sheet date are translated into the respective reporting currencies at exchange rates approximating those ruling at that date. All resultant exchange differences are dealt with through the profit and loss account. Pension scheme Hydrochem Engineering (Shanghai) Co., Ltd is required to provide certain staff pension benefits to their employees under existing People’s Republic of China legislation. Pension contributions are provided at 30% of total basic salary of contracted Chinese employees and are contributed to a pension fund managed by government agencies, which are responsible for paying pensions to the company’s Chinese retired employees. These benefits are accounted for on an accrual basis and charged to the profit and loss account. Value-added tax (“VAT”) In accordance with the relevant People’s Republic of China tax laws, the subsidiary is subject to Value-added Tax (“VAT”), which is charged on top of the selling price at a general rate of 17%. An input credit is available whereby VAT previously paid on purchases of semi-finished products or raw materials etc. can be offset against the VAT on sales to determine the net VAT payable. Research and development costs Expenditure on research and development is charged to the profit and loss account in the year in which it is incurred except where a major project is undertaken and it is reasonably anticipated that the development costs will be recovered through future commercial activity. Such development costs are written off over the life of the project from the date of commencement of commercial operation.

120

L. 1.

NOTES TO THE STATEMENT OF NET ASSETS FIXED ASSETS
Furniture and fittings S$’000 Office equipment S$’000 Motor vehicles S$’000 Plant and machinery S$’000 Leasehold property S$’000

Group

Renovations S$’000

Computers S$’000

Total S$’000

Cost As at 1.1.00 Additions Currency alignment As at 31.10.00 Accumulated depreciation As at 1.1.00 Charge for the period Currency alignment As at 31.10.00 Net book value As at 31.10.00 43 Motor vehicle S$’000 84 563 56 541 467 2,972 4,726 25 4 — 29 97 24 1 122 87 51 — 138 55 7 — 62 235 68 2 305 33 62 — 95 5 4 — 9 537 220 3 760 45 27 — 72 152 52 2 206 133 568 — 701 66 52 — 118 565 278 3 846 273 287 2 562 97 2,884 — 2,981 1,331 4,148 7 5,486

Company

Cost As at 1.1.00 Additions As at 31.10.00 Accumulated depreciation As at 1.1.00 Charge for the period As at 31.10.00 Net book value As at 31.10.00 150 — — — — 150 150

As at 31 October 2000, the Group and Company had fixed assets under hire purchase and finance lease with a net book value of approximately $582,000 and $150,000 respectively. As at 31 October 2000, the Group’s leasehold residential property in the People’s Republic of China with a net book value of approximately S$87,000 was frozen by the Pudong New District People’s Court arising from a dispute between the developers of the property with People’s Republic of China authorities (please refer to page 103 on “Litigation” for details).

121

L. 2.

NOTES TO THE STATEMENT OF NET ASSETS (Continued) INVESTMENT IN SUBSIDIARIES
Country of incorporation and place of business Principal Activities Equity interest held by the Proforma Group % 100 Proforma cost of investment by the Company S$’000 453

Name of Subsidiary

Hydrochem (S) Pte Ltd

Singapore

Manufacturing, processing and dealing in water treatment equipment and turnkey engineering installation of industrial equipment and machines and other related activities Consulting in the installation of equipment for chemical processing, applications of chemicals and chemical preparations for commercial or industrial use and wholesale of chemical and fabricated products

Hydrochem Engineering (S) Pte Ltd

Singapore

100

417

Held by a subsidiary Hydrochem Engineering (Shanghai) Co., Ltd People’s Republic of China Development, manufacture of 100 equipment and parts primarily for membrane filtration technology, sale of manufactured equipment and ancillary parts, provision of installation and commissioning of relevant projects and provision of technical services and consultation —

870

122

3. NOTES TO THE STATEMENT OF NET ASSETS (Continued) PRELIMINARY EXPENSES Group S$’000 Preliminary expenses incurred Less accumulated amortisation Balance at end of the period 86 (66) 20 Company S$’000 20 — 20 Movements in accumulated amortisation during the financial period are as follows: At beginning of the period Amortisation for the period At end of the period 57 9 66 — — — 4.118 (6.L.150) 3.587 Movements in provision for doubtful trade debts during the period are as follows: At beginning of the period Provision for the period At end of the period — 178 178 — — — Company S$’000 — — — 6. TRADE DEBTORS Group S$’000 Trade debtors Less provision for doubtful trade debts 3.765 (178) 3. STOCKS Group S$’000 Raw materials 452 Company S$’000 — 5.968 Company S$’000 — — — 123 . WORK-IN-PROGRESS Group S$’000 Project cost and attributable profits Less progress billings 10.

349 Company S$’000 — — — — 12. 9. BANKING FACILITIES Banking facilities from a bank. 11.L. 10. interest-free and have no fixed terms of repayment.9% per annum with maturities within one year. OTHER CREDITORS AND ACCRUALS Group S$’000 Other creditors Accrued operating expenses Advance payments from customers 414 602 333 1. consisting of letters of credit and letters of guarantee. 7.000 placed with the bank and personal guarantees from two Directors. DUE FROM SUBSIDIARIES (NON-TRADE) These balances are unsecured. HIRE PURCHASE CREDITORS Group S$’000 Minimum payable under hire purchase agreements: — within one year — between two to five years 236 172 408 Less finance charges allocated to future years (39) 369 Classified as follows: — current portion — non-current portion 216 153 369 96 — 96 105 — 105 (9) 96 Company S$’000 124 . DEPOSITS AND PREPAYMENTS Group S$’000 Other debtors Deposits Prepayments 252 41 687 980 Company S$’000 — — 161 161 8. SHORT TERM NOTES These short term notes bear variable interest rates from 2. are secured against fixed deposits of approximately $61.825% to 2. NOTES TO THE STATEMENT OF NET ASSETS (Continued) OTHER DEBTORS.

(ii) A joint and several personal guarantee from the Directors. The term loan is repayable within one year and interest is payable at approximately 6% per annum.L. The term loan is repayable within one year and interest is payable at 1. The term loan of Hydrochem Engineering (Shanghai) Co.9 million. and (iii) Deed of Assignment of the lease agreement between the Company and Jurong Town Corporation. NOTES TO THE STATEMENT OF NET ASSETS (Continued) FINANCE LEASE CREDITORS Group S$’000 Minimum payable under finance lease agreements: — within one year — between two to five years 5 11 16 Less finance charges allocated to future years (3) 13 Classified as follows: — current portion — non-current portion 4 9 13 — — — — — — — — Company S$’000 14. Ltd is secured by letter of credit granted by Hydrochem Engineering (S) Pte Ltd.. TERM LOAN AND BANK OVERDRAFT (SECURED) The term loan and bank overdraft of Hydrochem (S) Pte Ltd are secured by the following:(i) A legal mortgage on the leasehold property at 40 Changi South Street 1 with a net book value as at 31 October 2000 of approximately S$2. 13.25 % per annum above the prevailing prime rate. 125 .

844. when fully paid. the Group had contingent liabilities secured against fixed deposits and personal guarantees from the Directors.000 New Shares which is part of the subject of this Invitation and which. the Company incorporated Hyflux Engineering Pte Ltd as a wholly-owned subsidiary in Singapore with an issued and paid-up capital of S$2.000.476 2. and (vi) that pursuant to Section 161 of the Companies Act. (v) the issue of 25. secured As at 31 October 2000. (ii) the capitalisation of S$4. bonus or otherwise) at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit.225 from the share premium account of the Company by way of a bonus issue of 83.05 each (the “Stock Split”).000.275 Company S$’000 — — — — (b) Contingent liabilities. unless revoked or varied by the shareholders in a general meeting.L.10 each in the authorised and issued and paid-up share capital into 2 ordinary shares of S$0. NOTES TO THE STATEMENT OF NET ASSETS (Continued) COMMITMENTS AND CONTINGENCIES (a) Lease commitments As at 31 October 2000. 15. the Group has aggregate minimum lease commitments in respect of rental of land amounting to approximately S$2. SUBSEQUENT EVENTS At an Extraordinary General Meeting held on 18 December 2000. such authority shall continue in force until the conclusion of the Annual General Meeting or the date by which the next Annual General Meeting is required by law to be held.05 each credited as fully paid to the existing shareholders. will rank pari passu in all respects with the existing ordinary shares of the Company.192. (iii) the conversion of the Company into a public limited company and the change of its name to Hyflux Ltd. allotted and issued. the Directors be authorised to issue shares in the Company (whether by way of rights. the following: (i) the sub-division of each of the ordinary shares of S$0. Group S$’000 Letter of credit Letter of guarantee 598 457 1.275.055 16. payable as follows: Group S$’000 Within one year Between two to five years Later than five years 171 628 1. whichever is the earlier.500 ordinary shares of S$0. Subsequent to the financial period. 126 . the shareholders of the Company approved. provided that the aggregate number of shares to be issued pursuant to this resolution shall not exceed 50% of the issued share capital of the Company immediately prior to the proposed issue and provided that the aggregate number of such shares to be issued other than on a pro-rata basis to the then existing shareholders shall not exceed 20% of the issued share capital of the Company immediately prior to the proposed issue. inter alia. (iv) the adoption of the new Articles of Association of the Company.

075 1.700 * Payable to Hyflux Pte Ltd 127 . and the proceeds and estimated expenses in connection therewith.844.000 New Shares at S$0.000 New Shares of S$0.05 share 60.32 per share. NET TANGIBLE ASSET BACKING OF THE PROFORMA GROUP The net tangible asset backing of the Proforma Group for each ordinary share of S$0.11 cents N.012 per share and the issue of 25.05 each Bonus issue of 83. which forms part of the subject of the Invitation.000 (1.000. S$’000 Net tangible assets Net tangible assets as at 31 October 2000 Proceeds from the issue of 2 ordinary shares of S$0.304. which forms part of the subject of this Invitation Less estimated expenses of the Invitation payable by the Company 7.05 each at S$1.745 2.844 25.85 596 1.422 Sub-division of ordinary shares of S$0.05 each Issue of 25.500 ordinary shares of S$0.012 per share Proceeds from the issue of 25.05 each is based on the statement of net assets of the Proforma Group as at 31 October 2000 and after taking into consideration the issue of 2 ordinary shares at S$1.000 New Shares of S$0.10 each into 2 ordinary shares of S$0.000. DIVIDENDS Dividends declared by the companies in the Proforma Group during the periods under review were as follows: Year/period ended Gross dividend per share Net dividend (S$’000) Ordinary dividend Hyflux Pte Ltd 30 June 2000 Hydrochem (S) Pte Ltd 31 December 1999 30 June 2000* Hydrochem Engineering (S) Pte Ltd 31 December 1999 31 December 1998 $0.000 169.688 10.05 each at S$0.M.000.0459 298 37 $1.844 83.05 each in connection with the Invitation Post-Invitation issued share capital Net tangible asset backing per S$0.00 $2.200) 17.153 Number of shares ’000 Issued share capital Issued and paid-up share capital as at 31 October 2000 30.32 per share.3635 $0.700 $0.608 8.304.

Arthur Andersen Certified Public Accountants Singapore Max Loh Khum Whai Partner-in-charge 128 .O. Yours faithfully. AUDITED FINANCIAL STATEMENTS No audited financial statements have been prepared for the Company or its subsidiaries for any period subsequent to 31 October 2000.

except as required by law. the provisions of the Act and any special rights attached to any class of shares currently issued. The Company typically closes the register to determine shareholders’ entitlement to receive dividends and other distributions. The Company may. The approval.APPENDIX D DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES The following statements are brief summaries of the rights and privileges of shareholders conferred by the laws of Singapore and the Articles of Association (the “Articles”) of the Company. of which the aggregate number of shares to be issued other than on a pro-rata basis to its shareholders may not exceed 20% (or such other limit as may be prescribed by the SGX-ST) of its issued share capital for the time being. all new ordinary shares are under the control of the Board of Directors who may allot and issue the same with such rights and restrictions as it may think fit. New Ordinary Shares New ordinary shares may only be issued with the prior approval in a general meeting of the shareholders of the Company. The aggregate number of shares to be issued pursuant to such approval may not exceed 50% (or such other limit as may be prescribed by the SGX-ST) of its issued share capital for the time being. recognise any equitable. the register may not be closed for more than 30 days in aggregate in any calendar year. if granted. are recognised as shareholders of the Company. in cases in which the person so registered is CDP. However. The Company will not. it may not. future or partial interest in any ordinary share or other rights for any ordinary share other than the absolute right thereto of the registered holder of that ordinary share. contingent. the persons named as the depositors in the depository register maintained by CDP for the ordinary shares. Subject to the foregoing. 129 . Shareholders Only persons who are registered in the register of shareholders of the Company and. subject to the provisions of the Act and the rules of the SGX-ST purchase its own ordinary shares. The Company may close the register of shareholders for any time or times if it provides the SGX-ST at least 10 clear market days’ notice. grant any financial assistance for the acquisition or proposed acquisition of its own ordinary shares. These statements summarise the material provisions of the Articles but are qualified in entirety by reference to the Articles. Ordinary Shares All of the ordinary shares are in registered form. except in circumstances permitted by the Act. will lapse at the conclusion of the annual general meeting following the date on which the approval was granted. However.

Under the Articles. for example. two or more shareholders holding not less than 10% of the issued share capital of the Company may call a meeting. 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. whether on a show of hands or a poll. The notice must be giving of notices and must set forth the place. every shareholder present in person or by proxy shall have one vote for each ordinary share which he holds or represents. including voluntary winding up. 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. requiring an affirmative vote of a simple majority of the votes cast at the meeting. and on a poll. requiring the affirmative vote of at least 75% of the votes cast at the meeting. The Company must give at least 14 days’ notice in writing. The Board of Directors may also decline to register any instrument of transfer unless. failing such determination. The Board of Directors may decline to register any transfer of ordinary shares which are not fully paid shares or ordinary shares on which the Company has a lien. the chairman of the meeting shall be entitled to a casting vote. is necessary for certain matters under Singapore law. Ordinary shares may be transferred by a duly signed instrument of transfer in a form approved by any stock exchange on which the Company is listed. the day and the hour of the meeting and. In the case of a tie vote. in person or by proxy. in the case of special business. Unless otherwise required by law or by the Articles. voting at general meetings is by ordinary resolution. for the appointment of directors. Proxies need not be a shareholder. A special resolution. Except as otherwise provided in the Articles. An ordinary resolution suffices. a change of the corporate name and a reduction in the share capital. 130 . speak and vote at any general meeting. 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. General Meetings of Shareholders The Company is required to hold an annual general meeting every year. The Board of Directors may convene an Extraordinary General Meeting whenever it thinks fit and must do so if shareholders representing not less than 10% of the total voting rights of all shareholders request in writing that such a meeting be held. amendments to the Memorandum of Association and the Articles. only one of the two proxies as determined by that shareholder or. Voting Rights A shareholder is entitled to attend. the general nature of that business.Transfer of Ordinary Shares There is no restriction on the transfer of fully paid ordinary shares except where required by law or the listing rules or the rules or bye-laws of any stock exchange on which the Company is listed. among other things. In addition. The Company will replace lost or destroyed certificates for ordinary shares if it is properly notified and if the applicant pays a fee which will not exceed S$2 and furnishes any evidence and indemnity that the Board of Directors may require. A poll may be demanded in certain circumstances. on a show of hands. by the Chairman of the meeting in his sole discretion shall be entitled to vote on a show of hands). two or more shareholders must be present in person or by proxy to constitute a quorum at any general meeting. share premium account or capital redemption reserve fund. A person who holds ordinary shares through the SGX-ST bookentry 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.

but it may not pay dividends in excess of the amount recommended by the Board of Directors. between 25% and 50% of the voting shares acquires additional voting shares representing more than 3% of the voting shares in any 12 month period. however. and a financial advisor and its client in respect of shares held by the financial advisor and shares in the client held by funds managed by the financial advisor on a discretionary basis. parties acting in concert with him and their associates are not allowed to vote on the partial offer. Approval of the Securities Industry Council (the “Council)” must be obtained in advance for partial offers (which must not be mandatory takeover offers) for less than 100% of the equity share capital of the Company not already owned by the Offeror and his concert parties. to the extent of payment made to CDP. in 25% or more of the voting shares in the Company must extend a mandatory takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Code on Takeovers and Mergers (the “Takeover code”). consent will not be granted. The Company must pay all dividends out of its profits. Takeovers The Act and the Singapore Code on Takeovers and Mergers regulate the acquisition of ordinary shares of public companies and contain certain provisions that may delay. Bonus and Rights Issues The Board of Directors may. In the case of a partial offer which could result in the Offeror and his concert parties holding shares carrying more than 50% but less than 100% of the voting rights of a company. Such rights are subject to any conditions attached to such issue and the regulations of any stock exchange on which the Company is listed. a person and any investment company. The Offeror. “Parties acting in concert” include a company and its related and associated companies. deter or prevent a future takeover or change in control of the Company. See “Bonus and Rights Issue”. An offer for consideration other than cash must be accompanied by a cash alternative at not less than the highest price paid by the offeror or parties acting in concert with the offeror within the preceding 12 months. A mandatory takeover offer is also required to be made if the Offeror holding. with approval of the shareholders at a general meeting. the Company may capitalise its share premium account and apply it to pay dividends. a company and its directors (including their relatives). The Offeror and his concert parties may not deal in shares of 131 . by ordinary resolution of its shareholders. In the case of a partial offer which could result in the Offeror and his concert parties holding shares carrying not less than 25% but not more than 50% of the voting rights of the Company.Dividends The Company may. All dividends are paid pro rata among the shareholders in proportion to the amount paid up on each shareholder’s ordinary shares. a company and its pension funds. declare dividends at a general meeting. The Board of Directors may also declare an interim dividend without the approval of its shareholders. capitalise any reserves or profits (including profit or moneys carried and standing to any reserve or to the share premium account) and distribute the same as bonus shares credited as paid-up to the shareholders in proportion to their shareholdings. unit trust or other fund whose investment such person manages on a discretionary basis. either on his own or together with parties acting in concert with him. Any person (the “Offeror”) acquiring an interest. not only on the specified number or percentage of acceptances being received but also on approval by the Company’s shareholders. In the case of a partial offer which could not result in the Offeror and parties acting in concert with him holding shares carrying 25% or more of the voting rights of the Company. dividends are paid by cheque or warrant sent through the post to each shareholder at his registered address. consent will normally be granted. the payment by the Company to CDP of any dividend payable to a shareholder whose name is entered in the depository register shall. unless the rights attaching to an issue of any ordinary share provides otherwise. Any partial offer which could result in the Offeror and his concert parties holding 50% or more of the voting rights of the Company must be conditional. Notwithstanding the foregoing. if such dividends are satisfied by the issue of shares to shareholders of the Company. either on his own or together with parties acting in concert with him. Unless otherwise directed. discharge the Company from any liability to that shareholder in respect of that payment. consent will not normally be granted unless conditions as set out in the Takeover Code are complied with. The Board of Directors may also issue rights to take up additional ordinary shares to shareholders in proportion to their shareholdings.

the Board of Directors and officers shall be entitled to be indemnified by the Company against any liability incurred in defending any proceedings. including the applicant. 132 (a) . Limitations on Rights to Hold or Vote Shares Except as described in “Voting Rights” and “Takeovers” above. may the Offeror or his concert parties. holders of ordinary shares will be entitled to participate in any surplus assets in proportion to their shareholdings. subject to the Act. the Company by a person or persons and on such terms as the court may direct. (c) authorise civil proceedings to be brought in the name of. there are no limitations imposed by Singapore law or by the Articles on the rights of non-resident shareholders to hold or vote ordinary shares. which unfairly discriminates against. purchase such shares during a period of 12 months after the end of the offer period. one or more of the shareholders. Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no way limited to those listed in the Act itself. subject to any special rights attaching to any other class of shares. The Council will not normally give consent to partial offers for the Company within 12 months from the date of the close of a previous partial offer (whether successful or not) unless the subsequent partial offer is. a corresponding reduction of its share capital. or (b) the Company takes an action.the Company during the offer period nor. in the case of a purchase of shares by the Company. (b) regulate the conduct of the affairs of the Company in the future. Without prejudice to the foregoing. (d) provide for the purchase of a minority shareholder’s shares by the other shareholders or by the Company and. except with the consent of the Council. upon application by any shareholder of the Company. Liquidation or Other Return of Capital If the Company liquidates or in the event of any other return of capital. Minority Rights The rights of minority shareholders of Singapore-incorporated companies are protected under Section 216 of the Act. and the offer is proposed to be made by a person not acting in concert with the previous offeror. Singapore courts may:(a) direct or prohibit any act or cancel or vary any transaction or resolution. The Council’s consent will normally be granted if such purchases are proposed to be made more than 6 months after the close of the partial offer. 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. one or more of the shareholders. or in disregard of the interests of. recommended by the board of the Company. default. or propose to pass a resolution. (e) provide that the Memorandum of Association or the Articles be amended. as would normally be required. which relate to anything done or omitted to have been done as an officer. whether civil or criminal. the Articles provide that. The Company may not indemnify Directors and officers against any liability which by law would otherwise attach to them in respect of any negligence. or on behalf of. or is otherwise prejudicial to. or threatens to take an action. which gives the Singapore courts a general power to make any order. breach of duty or breach of trust of which they may be guilty in relation to the Company. as they think fit to remedy any of the following situations:the affairs of the Company are being conducted or the powers of the Board of Directors are being exercised in a manner oppressive to. or (f) provide that the Company be wound up. Indemnity As permitted by Singapore law. or the shareholders pass a resolution. in the case of a successful partial offer.

133 . Singapore Taxation The following discussion describes the material Singapore income tax. Income Tax General Singapore resident taxpayers. The rate shall be reduced to 25. An individual will be regarded as being resident in Singapore in a year of assessment if. subject to certain exceptions. non-Singapore resident taxpayers who derive certain types of income from Singapore are subject to a withholding tax currently at 25. Subject to the provisions of any applicable tax treaty. stamp duty and estate duty consequences of the purchase. may change at any time. This description is based on laws.5% or generally 15% in the case of interest. Prospective purchasers of our Ordinary Shares should consult their tax advisors concerning the tax consequences of their particular situations. Non-Singapore resident individuals. royalty and rental of movable equipment income. capital gains tax. and any change could be retroactive to the date of issuance of our ordinary shares. he was physically present in Singapore or exercised employment in Singapore (other than as a director of a company) for 183 days or more. in the preceding year. however. or if he resides in Singapore. subject to certain exceptions. regulations and interpretations.APPENDIX E DESCRIPTION OF SINGAPORE LAW AND REGULATIONS RELATING TO TAXATION The discussion below is not intended to constitute a complete analysis of all tax consequences relating to ownership of our Ordinary Shares. These laws and regulations are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. and foreign income received in Singapore. and foreign income received in Singapore. are subject to Singapore income tax only on income accruing in or derived from Singapore. are subject to Singapore income tax on:(a) (b) income that is accrued in or derived from Singapore. regulations and interpretations now in effect and available as of the date of this Prospectus. The corporate tax rate in Singapore is currently 26%. if the company’s board of directors meets and conducts the business of the company in Singapore). 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) (b) income accruing in or derived from Singapore. A company will be regarded as being resident in Singapore if the control and management of its business is exercised in Singapore (for example. The laws. Non-Singapore resident corporate taxpayers. ownership and disposal of our ordinary shares.5% with effect from the year of assessment 2001 (financial year ended in 2000).

00 for every S$1. 134 . Singapore taxpayers are taxed on dividends received from the Company at the income tax rates applicable to each taxpayer. the Company may pay tax exempt dividends out of the foreign income received in Singapore. the disposal profits would be taxable. as the case may be. However. Any subsequent dividends paid by the Company out of this account to its shareholders (other than on any shares of a preferential nature) will be tax exempt subject to certain conditions. as the case may be. Shareholders receive dividends net of such tax. or they are short-term gains from the sale of real property and shares in unlisted companies with substantial real property or real property related assets in Singapore. However. stamp duty may be payable if the instrument of transfer which is executed outside Singapore is received in Singapore. have to pay further tax to) the IRAS. Stamp duty is payable on the instrument of transfer of ordinary shares of the Company at the rate of S$2. Singapore does not impose withholding tax on dividends paid to Singapore citizen or non-Singapore resident shareholders. Conversely. unless otherwise agreed. The tax paid by the Company effectively becomes available to its shareholders as a tax credit to offset their Singapore income tax liability on the gross amount of dividends paid by the Company. such non-resident shareholders who do not have deductible expenses which are accepted by the Inland Revenue Authority of Singapore (“IRAS’’) as attributable to such dividend income will normally not receive any refund from the IRAS.Dividend Distributions Under Singapore’s taxation system. The purchaser is liable for stamp duty. As the tax paid by the Company at the prevailing corporate tax rate is deemed to be paid by its shareholders. on the amount of net dividends plus an amount equal to the amount of gross dividends multiplied by the prevailing corporate tax rate). the tax paid by the Company at the prevailing corporate tax rate is in effect imputed to. no further Singapore income tax liability is imposed on dividends received by such non-resident shareholders. The Company will credit such amounts to a special account (known as the “Section 13E account”). Gains on disposal of the ordinary shares Singapore does not impose tax on capital gains. higher) than the tax deducted at source from such dividends at the prevailing corporate rate. No stamp duty is payable if no instrument of transfer is executed or if the instrument of transfer is executed outside Singapore. Any profits from the disposal of ordinary shares are not taxable in Singapore unless the seller is regarded as having derived gains of an income nature. Shareholders are taxed on the gross amount of dividends (that is. The above stamp duty is not applicable to scripless transfers of the ordinary shares through CDP system. and deemed to be paid on behalf of its shareholders.000 market value of such ordinary shares. Where the Company receives foreign income that has not been subject to full Singapore income tax due to the availability of foreign tax credits. such resident shareholders may receive a refund from (or. in which case. Where their income tax liabilities on the dividends are lower (or. The amount of tax exempt dividend is equal to (i) the foreign tax credit allowed divided by the prevailing corporate tax rate less (ii) the foreign tax paid. Stamp Duties No stamp duty is payable on the issue of new ordinary shares of the Company. gains may be construed to be of an income nature and subject to tax if:(a) (b) they arise from activities which the IRAS regards as the carrying on of a trade in Singapore.

whether or not such individual is domiciled in Singapore. wherever it may be.000. for example. Unless other exemptions apply to the other assets. Stamp duty on contract notes has been suspended for the sale or purchase of any stocks or shares made between June 30. 2000. owned by individuals who are domiciled in Singapore. The Company’s ordinary shares are considered to be movable property situated in Singapore as the Company is a company incorporated in Singapore and the share register is maintained in Singapore. subject to specific exemption limits. subject to specific exemption limits. Accordingly.000 of the individual’s Singapore chargeable assets and thereafter at 10%. Singapore estate duty is payable to the extent that the value of the ordinary shares aggregated with any other assets subject to Singapore estate duty exceeds S$600.000 will be taxed at 5% on the first S$12. Individuals should consult their own tax advisors regarding the Singapore estate duty consequences of their ownership of the Company’s ordinary shares. stamp duty is payable at a rate of S$0. Estate Duties Singapore estate duty is imposed on the value of most movable and immovable property situated in Singapore owned by individuals who are not domiciled in Singapore. 1998 to June 29.Further. the separate exemption limit for residential properties. Singapore estate duty is imposed on the value of most immovable property situated in Singapore and on most movable property. the Company’s ordinary shares held by an individual are subject to Singapore estate duty upon such individual’s death.000. 135 .000 or any part thereof of the transaction value on the contract note for the sale or purchase of ordinary shares in Singapore unless certain conditions are met. any excess beyond S$600.50 for every S$1.

Conversely. for any other person. who is submitting an application in his own name should not submit any other applications. and such applications may be referred to the relevant authorities for investigation. A person submitting an application for the Offer Shares by way of an ATM Electronic Application may not submit another application for Offer Shares by way of an Internet Electronic Application and vice versa. which together with ATM Electronic Applications. 136 . Applications for the Offer Shares (other than Reserved Shares) may be made by way of the Offer Shares Application Forms or by way of electronic applications through the 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”. shall be referred to as “Electronic Applications”). Applications appearing to be or suspected of being multiple applications will be liable to be rejected at the discretion of the Company. 2. Only one application may be made for the benefit of one person for either the Offer Shares (other than the Reserved Shares) or the Placement Shares in his own name. Placement Shares or both Offer Shares and Placement Shares) may be deemed to have committed an offence under the Penal Code (Chapter 224) of Singapore and the Securities Industry Act (Chapter 289) of Singapore. other than an approved nominee company. Such separate applications will be deemed to be multiple applications and shall be rejected. Such separate applications will be deemed to be multiple applications and shall be rejected. A person submitting an application for the Offer Shares (other than Reserved Shares) by way of a printed application form may not submit another application for Offer Shares by way of Electronic Application and vice versa. A person. whether on a printed application form or through an Electronic Application. An applicant who has agreed with the Placement Agents to subscribe for Placement Shares or who otherwise subscribes for Placement Shares shall not make or procure any separate application for Offer Shares either by way of an Offer Shares Application Form or through an Electronic Application. Joint or multiple applications will be rejected. Such separate applications will be deemed to be multiple applications and shall be rejected. and applications for Reserved Shares may only be made by way of the Reserved Shares Application Forms. an applicant who has made an application for Offer Shares (other than for Reserved Shares) either by way of the Offer Shares Application Form or through an Electronic Application shall not make any separate application for Placement Shares. Persons submitting or procuring submission of multiple share applications (whether for Offer Shares. subject to the following terms and conditions:1. Such separate applications will be deemed to be multiple applications and shall be rejected.APPENDIX F TERMS AND CONDITIONS AND PROCEDURES FOR APPLICATION Applications are invited for the subscription of the Invitation Shares at the Issue Price. Applicants may not use their CPF Funds to apply for the Invitation Shares. Applications for Placement Shares may only be made by way of the Placement Shares Application Forms.

or to scale down or ballot. as the case may be. Approved nominee companies are defined as banks. as the case may be) bear post office box numbers. his application will be rejected. 4. Such separate applications will not be treated as multiple applications. An applicant without an existing Securities Account with CDP in his own name at the time of application will have his application rejected (in the case of an application by way of an Application Form) or will not be able to complete his Electronic Application (in the case of an Electronic Application). If the address of an applicant stated on the Application Form or. partnerships. 6. If the applicant possesses more than one individual direct Securities Account with CDP. This right applies to applications made by way of printed Application Forms and by way of Electronic Applications. undischarged bankrupts. 137 . chops or non-corporate bodies. due consideration will be given to the desirability of allotting the Invitation Shares to a reasonable number of applicants with a view to establishing an adequate market for the Shares. in the case of an Electronic Application. provided he adheres to the terms and conditions of this Prospectus. For non-nominee applications. contained in the records of the relevant Participating Banks. in the case of an Electronic Application. and no enquiry and/or correspondence on the decision of the Company will be entertained. as the case may be. failing which the notification letter on successful allotment and other correspondence from CDP will be sent to his address last registered with CDP. joint Securities Account holders of CDP and applicants whose addresses (furnished in their printed Application Forms or. insurance companies. Applications made by persons acting as nominees other than approved nominee companies will be rejected. differ from those particulars in his Securities Account as maintained with CDP. 8. The Company reserves the right to reject or accept. each applicant must maintain a Securities Account with CDP in his own name at the time of application. in the case of Electronic Applications.An applicant making an application for the Reserved Shares using the Reserved Shares Application Form may submit one separate application for Offer Shares (other than Reserved Shares) in his own name either by way of an Offer Shares Application Form or through an Electronic Application or submit one separate application for Placement Shares by way of a Placement Share Application Form. finance companies. Any application by any person must therefore be made in his/her/their own name(s) and without qualification or. as the case may be. merchant banks. 5. any application without assigning any reason therefore. where the application is made by way of a printed Application Form by a nominee. Subject to paragraph 7 below. is different from the address registered with CDP. Applications will not be accepted from any person under the age of 21. the applicant must inform CDP of his updated address promptly. Nominee applications may be made by approved nominee companies only. The existence of a trust will not be recognised. in the name(s) of approved nominee company or companies after complying with paragraph 5 below. contained in the records of the relevant Participating Bank. An applicant with an existing Securities Account with CDP who fails to provide his Securities Account number or who provides an incorrect Securities Account number in section B of the Application Form or in his Electronic Application. is liable to have his application rejected. 3. an application may be rejected if the applicant’s particulars such as his name. nationality and permanent residence status provided in his Application Form or. NRIC or passport number. contained in the records of the relevant Participating Bank at the time of his Electronic Application. 7. In deciding the basis of allotment which shall be at the discretion of the Company. sole proprietorships. in whole or in part. licensed securities dealers in Singapore and nominee companies controlled by them.

and subject to the conditions set out in. in the case of an Internet Electronic Application. The Company reserves the right to reject any application which does not conform strictly to the instructions set out in the Application Forms and this Prospectus or which does not comply with the instructions for Electronic Applications or with the terms and conditions of this Prospectus or. It is expected that CDP will send to each successful applicant at his own risk. 14. Applications for any other number of Invitation Shares will be rejected. in the case of applications by way of printed Application Form. and (b) warrants the truth and accuracy of the information in his application.000 Invitation Shares. by clicking “Submit” or “Continue” or “Yes” or “Confirm” or any other relevant button on the IB website screen in accordance with the provisions herein. in each case on the terms of. which is illegible.000 Invitation Shares or higher integral multiples of 1. This will be the only acknowledgement of application moneys received and is not an acknowledgement by the Company. By completing and delivering an Application Form and. within 15 Market Days after the close of the Application List. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. In the event of an under-subscription for the Offer Shares as at the close of the Application List. 13. that number of Placement Shares under-subscribed shall be made available to satisfy applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. the instructions set out in the Application Forms and this Prospectus or the instructions for Electronic Applications 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. 10. incomplete. a statement showing that his Securities Account has been credited with the number of Invitation Shares allotted to him. such remittances or the processing thereof. the successful applications for the Offer Shares shall be determined by ballot. 138 . In the event of an over-subscription for the Offer Shares as at the close of the Application List and/or the number of Placement Shares are fully subscribed or over-subscribed as at the close of the Application List. Any of the Reserved Shares not taken up will 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. No Shares will be allotted on the basis of this Prospectus later than six months after the date of this Prospectus. The Company further reserves the right to treat as valid any applications not completed or submitted or effected in all respects in accordance with the terms and conditions of this Prospectus. 11. In the event of an under-subscription for the Placement Shares as at the close of the Application List. 12. in the case of an ATM Electronic Application. Each applicant irrevocably authorises CDP to complete and sign on his behalf as transferee or renouncee any instrument of transfer and/or other documents required for the issue or transfer of the Invitation Shares allotted to the applicant. that number of Offer Shares under-subscribed shall be made available to satisfy 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. this Prospectus and the Memorandum and Articles of Association of the Company.9. incorrectly completed or which is accompanied by an improperly drawn up or improper form of remittance. or deriving from. Applications must be made in lots of 1. by pressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key on the ATM or. each applicant:– (a) irrevocably offers to subscribe for the number of Invitation Shares specified in his application (or such smaller number for which the application is accepted) at the Issue Price for each Invitation Share and agrees that he will accept such Shares as may be allotted to him. This authorisation applies to applications made both by way of printed Application Forms and by way of Electronic Applications. or otherwise as determined by the Directors and approved by SGX-ST. 15.

Applications for the Offer Shares (other than for the Reserved Shares) must be made using the WHITE Application Forms and official envelopes “A” and “B”. ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING PRINTED APPLICATION FORMS Applications by way of printed Application Forms shall be made on. 21. and applications for the Placement Shares must be made using the BLUE Application Forms. and for quotation for.” should be written in any space that is not applicable. and (b) the Management and Underwriting Agreement and Placement Agreement referred to on page 104 of this Prospectus have become unconditional and have not been terminated. incorrectly completed or which are accompanied by improperly drawn up or improper form of remittances may be rejected. as well as the Memorandum and Articles of Association of the Company. a person applying for the Placement Shares through the Placement Agent and a person applying for the Reserved Shares by way of a Reserved Shares Application Form. 139 . 2. 1. 22. The Application Forms must be completed in English. 19. Additional terms and conditions for applications by way of printed Application Forms are set out on pages 139 to 142 of this Prospectus. except those under the heading “FOR OFFICIAL USE ONLY”. Care must be taken to follow the instructions set out in the respective Application Forms and this Prospectus for the completion of the respective Application Forms. and subject to. all the existing Shares and the New Shares on a “when issued” basis on SGX Sesdaq. including the number of Invitation Shares allotted to the applicant pursuant to his application. accompanying and forming part of this Prospectus. the terms and conditions of this Prospectus. The Issue Price for each New Share is $0. 18.32. must be completed and the words “NOT APPLICABLE” or “N. Additional terms and conditions for Electronic Applications are set out on pages 143 to 147 of this Prospectus. and applications for the Reserved Shares must be made using the PINK Application Forms.A. to authorised operators. 20. Any reference to the “applicant” in this section shall include a person applying for the Offer Shares by way of an Electronic Application or by way of an Offer Shares Application Form. Applications which do not conform strictly to these instructions or to the terms and conditions of this Prospectus or which are illegible. incomplete. All spaces in an Application Form. No application will be held in reserve.16. 17. Please type or write clearly in ink using BLOCK LETTERS. Each applicant irrevocably authorises CDP to disclose the outcome of his application. including but not limited to the terms and conditions appearing below and those set out under the section on “Terms and Conditions and Procedures for Application” found on pages 136 to 139 of this Prospectus. Acceptance of applications will be conditional upon the Company being satisfied that:– (a) permission has been granted by SGX-ST to deal in.

Applicants. Approved nominee companies are required to declare whether the beneficial owner of the Invitation Shares is a citizen or permanent resident of Singapore or a corporation. a copy of its Memorandum and Articles of Association or its equivalent constitutive documents must be lodged with the Company’s Share Registrar. in respect of the number of Invitation Shares applied for. will be required to declare whether they are corporations in which citizens or permanent residents of Singapore or any body corporate 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 corporations. 4. must state the name and capacity in which that official signs. in which citizens or permanent residents of Singapore or any body corporate incorporated or constituted under any statute of Singapore have an interest in the aggregate of more than 50% of the issued share capital of or interests in such corporation. Remittances bearing “Not Transferable” or “Non Transferable” crossings will be rejected. (a) All applicants must complete Sections A and B and sign page 1 of the Application Form. will be refunded to the applicant by ordinary post at his own risk (without interest or any share of revenue or other benefit arising therefrom) within 14 days after the close of the Application List provided that the remittance accompanying such application which has been presented for payment or other processes has been honoured and the application moneys received in the designated share issue account. 5. Applications not accompanied by any payment or accompanied by any other form of payment will not be accepted. Where paragraph 7(a) is deleted. in the form of a Banker’s Draft. at the risk of the applicants. within three Market Days after the close of the Application List. 7. corporations and approved nominee companies must give their names in full. Individual applicants will be required to declare whether they are citizens or permanent residents of Singapore. Unsuccessful applications and those not successfully balloted or accepted are expected to be returned to the applicants by ordinary post. Cashier’s Order or POSB Cashier’s Order drawn on a bank in Singapore and made out in favour of “HYFLUX SHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”. (b) All applicants are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form. 140 . Corporate applicants. in the case of corporations. A corporation completing an Application Form is required to affix its Common Seal (if any) in accordance with its Memorandum and Articles of Association or the equivalent constitutive documents of the corporation. Applications for the Invitation Shares must be accompanied by payment in cash in the form set out below only. No acknowledgement of receipt will be issued by the Company or the Manager or the Placement Agent for applications and application moneys received. the full amount or the balance of the application moneys. without interest or any share of revenue or other benefit arising therefrom. in their full names as registered with a competent authority. Individuals. other than individuals. the applicant must also complete Section C of the Application Form with particulars of the beneficial owner(s). in the case of individuals. (c) Applicants who 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 are liable to have their applications rejected. If an application by a corporate applicant is successful. completing the Application Form under the hand of an official. Where an application is rejected or accepted in part only. whether incorporated or unincorporated and wherever incorporated or constituted. whether incorporated or unincorporated and wherever incorporated or constituted. Applications must be made.3. 6. The Company reserves the right to require any applicant to produce documentary proof of identification for verification purposes. as the case may be. or in the form of a DBS Autobank Cashier’s Order Equivalent. Unsuccessful applicants using DBS Autobank Cashier’s Order Equivalent will have the full amount of their application moneys (without interest or any share of revenue or other benefit arising therefrom) automatically credited to their accounts maintained with DBS Bank. Each application must be accompanied by a cash remittance in Singapore currency for the full amount payable. in their full names as appearing in their identity cards (if applicants have such identification documents) or passports and. and with the name and address of the applicant written clearly on the reverse side.

in the appropriate box provided. (2) state the number of Offer Shares (other than Reserved Shares) applied for. and (4) affix adequate Singapore postage. (e) all applications. reliance is placed solely on the information contained in this Prospectus and that none of the Company. SINGAPORE 068809. (c) in respect of the Invitation Shares for which his application has been received and not rejected. in their absolute discretion. duly completed and executed. acceptances and contracts resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and that he irrevocably submits to the non-exclusive jurisdiction of the Singapore courts. Applications for Offer Shares (other than Reserved Shares) (a) Applications for Offer Shares (other than Reserved Shares) must be made using the WHITE Application Forms and WHITE official envelopes “A” and “B”. each applicant agrees that:– (a) his application is irrevocable. and (f) in making his application. notwithstanding any remittance being presented for payment by or on behalf of the Company. 6 SHENTON WAY #28-00. the Underwriter. the number of Offer Shares (other than Reserved Shares) for which the application is made. and 141 . In consideration of the Company having distributed the Application Form to the applicant and agreeing to close the Application List at 12. on the larger official WHITE envelope “B” addressed to DBS BANK. the Manager.8. together with the correct remittance in accordance with the terms and conditions of this Prospectus in the WHITE official envelope “A” which is provided. (iv) write. (iii) SEAL THE OFFICIAL WHITE ENVELOPE “A”. acceptance of his application shall be constituted by written notification by or on behalf of the Company and not otherwise.00 noon on 15 January 2001 or such later time or date as the Directors may. DBS BUILDING TOWER ONE. (d) he will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of his application. the Placement Agent or any other person involved in the Invitation shall have any liability for any information not so contained. 9. (b) The applicant must:– (i) enclose the WHITE Offer Shares Application Form. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the meanings assigned to them in this Prospectus. (3) tick the relevant box to indicate the form of payment. 10. (ii) in the appropriate spaces on the WHITE official envelope “A”:– (1) write his name and address. (b) his remittance will be honoured on first presentation and that any moneys returnable may be held pending clearance of his payment and he will not be entitled to any interest or any share of revenue or other benefit arising therefrom. decide and by completing and delivering the Application Form.

in favour of “HYFLUX SHARE ISSUE ACCOUNT” for the number of Placement Shares applied for by 12. Current Account No. (d) Alternatively. 001-045686-5. (c) ONLY ONE APPLICATION should be enclosed in each envelope. DBS Building Tower One. in their absolute discretion. for the attention of Capital Markets. in their absolute discretion. SINGAPORE 068809. No acknowledgement of receipt will be issued for any application or remittance received. decide. DBS Building Tower One. affix adequate Singapore postage on “B” (if despatching by ordinary post) and thereafter DELIVER BY HAND OR DESPATCH BY ORDINARY POST at his own risk to DBS BANK. Applications for Reserved Shares (a) Applications for Reserved Shares must be made using the PINK Application Forms. Singapore 068809. 6 Shenton Way #28-00. Singapore 068809. so as to arrive by 12. the applicant may remit his application moneys by electronic transfer to the account of DBS Bank. decide. Local Urgent Mail or Registered Post must NOT be used.00 noon on 15 January 2001 or such other time or date as the Directors and the Vendors may.00 noon on 15 January 2001. Applications for Placement Shares (a) Applications for Placement Shares must be made using the BLUE Application Forms. to arrive by 12. in their absolute discretion. DBS BUILDING TOWER ONE. Shenton Way Branch. (c) ONLY ONE APPLICATION should be enclosed in each envelope. Local Urgent Mail or Registered Post must NOT be used. 142 . 6 Shenton Way #28-00. so as to arrive by 12. incomplete or incorrectly completed or accompanied by an improperly drawn up or improper form of remittance are liable to be rejected. (c) ONLY ONE APPLICATION should be enclosed in each envelope. decide. 6 Shenton Way #28-00. Local Urgent Mail or Registered Post must NOT be used. The applicant must affix adequate Singapore postage (if despatching by ordinary post) and thereafter the sealed envelope must be delivered by hand or despatched by ordinary post at the applicant’s own risk to DBS Bank. decide. for the attention of Capital Markets. Applications that are illegible.00 noon on 15 January 2001 or such other time or date as the Directors and the Vendors may. No acknowledgement of receipt will be issued for any application or remittance received. 11. (b) The completed BLUE Placement Shares Application Form and the applicant’s remittance in accordance with the terms and conditions of this Prospectus for the full amount payable in respect of the number of Placement Shares applied for must be delivered by hand or despatched by ordinary post enclosed and sealed in any envelope to be provided by the applicant. 12. Applicants who remit their application moneys via electronic transfer should send a copy of the telegraphic transfer advice slip to DBS Bank. Singapore 068809. No acknowledgement or receipt will be issued for any application or remittance received. 6 SHENTON WAY #28-00.(v) insert WHITE official envelope “A” into WHITE official envelope “B”.00 noon on 15 January 2001 or such other time or date as the Directors and the Vendors may. in their absolute discretion.00 noon on 15 January 2001 or such other time or date as the Directors and the Vendors may. seal WHITE official envelope “B”. to arrive by 12. (b) The completed PINK Reserved Shares Application Form and the applicant’s remittance in accordance with the terms and conditions of this Prospectus for the full amount payable in respect of the number of Reserved Shares applied for must be enclosed and sealed in an envelope to be provided by the applicant. The applicant must affix adequate Singapore postage (if despatching by ordinary post) and thereafter the sealed envelope must be delivered by hand or despatched by ordinary post at the applicant’s own risk to DBS Bank. DBS Building Tower One.

and subject to. an Applicant must have an existing bank account with. the Steps and the terms and conditions for Electronic Applications set out below carefully before making an Electronic Application. that the mailing address of his account selected for the application is in Singapore and the application is being made in Singapore. the Applicant must have an existing bank account with and a User Identification (“User ID”) and a Personal Identification Number/Password (“PIN”) given by the relevant Participating Banks.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 Electronic Applications) of the relevant Participating Banks (the “Steps”). one of the Participating Banks before he can make an ATM Electronic Application at the ATMs of that Participating Bank. An Applicant who fails to use his own ATM card or who does not key in his own Securities Account Number will have his application rejected. must use an ATM card issued to him in his own name and must enter his own Securities Account number. Upon the completion of his ATM Electronic Application transaction. there will be an on-screen confirmation (“Confirmation Screen”) of the application which can be printed out by the Applicant for his record. Upon completion of his Internet Electronic Application through the IB website of DBS Bank. For an Internet Electronic Application. the procedures for Electronic Applications through ATMs and the IB website of DBS Bank are set out in the “Steps for ATM Electronic Applications through ATMs of DBS Bank (including its POSBank Services division)” and the “Steps for Internet Electronic Application through the IB website of DBS Bank” (the “DBS Steps”) appearing on pages 148 and 149 of this Prospectus respectively. as well as the Memorandum and Articles of Association of the Company. For an ATM Electronic Application. The DBS Steps set out the actions that the Applicant must take at ATMs or the IB website of DBS Bank to complete an Electronic Application. In connection with his Electronic Application for the Offer Shares. and be an ATM cardholder of. An Applicant must ensure. including one who has a joint bank account with a Participating Bank. An Applicant. The printed record of the Confirmation Screen is for the Applicant’s retention and should not be submitted with any printed Application Form. An Electronic Application shall be made in accordance with. the terms and conditions of this Prospectus including but not limited to the terms and conditions appearing below as well as those set out under the section on “Terms and Conditions and Procedures for Application” found on pages 136 to 139 of this Prospectus. For illustrative purposes. the Applicant will receive an ATM transaction slip (“Transaction Record”). The actions that the Applicant must take at the ATMs or the IB websites of the other Participating Banks are set out on the ATM screens or the IB websites of the relevant Participating Banks. Please read the terms of this Prospectus. Otherwise. Using his own Securities Account Number with an ATM card not issued to him in his own name will render his ATM Electronic Application liable to be rejected. OUB and UOB are the only Participating Banks through which Internet Electronic Applications may be made. In this connection. DBS Bank. Any reference to the “Applicant” in these Terms and Conditions for Electronic Applications and the Steps shall mean the applicant who applies for the Offer Shares (other than the Reserved Shares) through an ATM of a Participating Banks or the IB website of a relevant Participating Bank. the Applicant will be asked to declare that he is in Singapore at the time when he makes his application. his application is liable to be rejected. The Transaction Record is for the Applicant’s retention and should not be submitted with any printed Application Form. the Applicant is required to confirm statements to the following effect in the course of activating the Electronic Application:– 143 . when making an Internet Electronic Application. Currently. 1. An ATM card issued by one Participating Bank cannot be used to apply for Offer Shares at an ATM belonging to other Participating Banks. confirming the details of his ATM Electronic Application. An Applicant must ensure that he enters his own Securities Account Number when using the ATM card issued to him in his own name.

the Applicant shall be treated as signifying his confirmation of each of the above statements. his confirmation shall signify. In the event that the Company decides to allot any lesser number of such Offer Shares or not to allot any Offer Shares to the Applicant. his written permission given in accordance with the relevant laws of Singapore. An Applicant may make an ATM Electronic Application at an ATM of any Participating Bank or an Internet Electronic Application at the IB website of any relevant Participating Bank for the Offer Shares (other than Reserved Shares) in the form of cash only by authorising such Participating Bank to deduct the full amount payable from his account with such Participating Bank. CPF. (b) send the relevant Share certificate(s) to CDP. 2. including Section 47(4) of the Banking Act (Chapter 19) of Singapore. SCCS. If the Applicant’s Electronic Application is successful. to the disclosure by that Participating Bank of the Relevant Particulars of his account(s) with that Participating Bank to the Relevant Parties. (c) return or refund (without interest or any share of revenue or other benefit arising therefrom) the application moneys in Singapore currency should his Electronic Application not be accepted. In respect of statement 1(b) above. by automatically crediting the Applicant’s bank account with his Participating Bank with the relevant amount within three Market Days after the close of the Application List. address. The Applicant irrevocably agrees and undertakes to subscribe for and to accept the number of Offer Shares (other than Reserved Shares) applied for as stated on the Transaction Record or on the Confirmation Screen or any lesser number of Offer Shares (other than Reserved Shares) that may be allotted to him in respect of his Electronic Application. 144 . (b) that he consents to the disclosure of his name. and shall be treated as. His application will not be successfully completed and cannot be recorded as a completed transaction unless he presses the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key in the ATM or clicks “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button on the IB website screen. the Applicant agrees to accept such decision as final. and (c) that that application is his only application for the Offer Shares (other than Reserved Shares) and it is made in his name and at his own risk.(a) that he has received a copy of this Prospectus and has read. the Company and the Manager (the “Relevant Parties”). 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 agrees to be bound by the same. NRIC or passport number. and 3. By doing so. 4. CDP Securities Account number. CPF Investment Account number (if applicable) and share application amount (the “Relevant Particulars”) from his account with that Participating Bank to the Share Registrar. his confirmation (by his action of pressing the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key on the ATM or clicking “Confirm” or “OK” or “Submit” or “Continue” or “Yes” or any other relevant button on the IB website screen) of the number of Offer Shares (other than Reserved Shares) applied for shall signify and shall be treated as his acceptance of the number of Offer Shares (other than Reserved Shares) that may be allotted to him and his agreement to be bound by the Memorandum and Articles of Association of the Company. nationality and permanent resident status. CDP. The Applicant irrevocably requests and authorises the Company to:– (a) register the Offer Shares allotted to the Applicant in the name of CDP for deposit into his Securities Account.

8. 10. is expected to commence after such refund has been made. the full amount or the balance of the application moneys will be refunded in Singapore currency (without interest or any share of revenue or other benefit arising therefrom) to the Applicant by being automatically credited to the Applicant’s bank account with his Participating Bank within 14 days after the close of the Application List. when there is an on-screen confirmation of the application. WHETHER AT THE ATMs OF ANY PARTICIPATING BANK OR THE IB WEBSITES OF THE RELEVANT PARTICIPATING BANKS OR ON THE PRESCRIBED PRINTED APPLICATION FORMS. THE APPLICANT CONFIRMS THAT HE IS NOT APPLYING FOR THE OFFER SHARES AS NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC APPLICATION THAT HE MAKES IS THE ONLY APPLICATION MADE BY HIM AS BENEFICIAL OWNER. by automatically crediting the Applicant’s bank account with his Participating Bank with the relevant amount within 14 days after the close of the Application List. Electronic Applications shall close at 12. 5. the Participating Banks and/or the Company and/or the Manager do not record or receive the Applicant’s Electronic Application. the Applicant shall promptly notify his Participating Bank. an Internet Electronic Application is deemed to be received only upon its completion. WHERE A PERSON HAS MADE AN APPLICATION FOR INVITATION SHARES (OTHER THAN RESERVED SHARES) ON AN APPLICATION FORM. BY MAKING AN ELECTRONIC APPLICATION. Where an Electronic Application is rejected or accepted in part only. Where an Electronic Application is not accepted. Trading on a “when issued” basis. or data relating to the Applicant’s Electronic Application or the tape or any other devices containing such data is lost.(d) return or refund (without interest or any share of revenue or other benefit arising therefrom) the balance of the application moneys in Singapore currency should his Electronic Application be accepted in part only. loss or damage. failing which his Electronic Application will not be completed or accepted. electronic. destroyed or not otherwise accessible. that is. fires. THE APPLICANT SHALL MAKE ONLY ONE ELECTRONIC APPLICATION AND SHALL NOT MAKE ANY OTHER APPLICATION FOR THE INVITATION SHARES (OTHER THAN FOR THE RESERVED SHARES). decide. it is expected that the full amount of the application moneys will be refunded in Singapore currency (without interest or any share of revenue or other benefit arising therefrom) to the Applicant by being automatically credited to the Applicant’s bank account with the relevant Participating Bank within three Market Days after the close of the Application List. . 9. corrupted. Subject to the paragraph above. whether wholly or partially for whatever reason. All particulars of the Applicant in the records of his Participating Bank at the time he makes his Electronic Application shall be deemed to be true and correct and the relevant Participating Bank and the Relevant Parties shall be entitled to rely on the accuracy thereof. The Applicant irrevocably agrees and acknowledges that his Electronic Application is subject to risks of electrical. Any Electronic Application which does not strictly conform to the instructions set out in this Prospectus or on the screens of the ATM or the IB website through which that Electronic Application was made will be rejected. in any such event. If there has been any change in the particulars of the Applicant after the time of the making of his Electronic Application. if applicable. 145 7. the Applicant shall be deemed not to have made an Electronic Application and the Applicant shall have no claim whatsoever against the Participating Banks. technical and computer-related faults and breakdowns. HE SHALL NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND VICE VERSA. the Company or the Manager for the Offer Shares applied for or for any compensation. acts of God and other events beyond the control of the Participating Banks. 6. No application will be kept in reserve. The Applicant must have sufficient funds in his bank account(s) with his Participating Bank at the time he makes his Electronic Application. the Company and the Manager and if.00 noon on 15 January 2001 or such other time as the Directors and Vendors may in their absolute discretion.

The responsibility for timely refund of application moneys arising from unsuccessful or partially successful Electronic Application lies solely with the respective Participating Banks. Therefore, Applicants are strongly advised to consult their respective Participating Banks regarding the status of their Electronic Applications and/or refund of application moneys to them arising from their unsuccessful or partially successful Electronic Applications, to determine the exact number of Shares, if any, which have been allotted to them. Neither the SGX-ST, CDP, SCCS, the Participating Banks, the Company nor the Manager assumes any responsibility for any loss which may be incurred as a result of Applicants having to cover any net sell positions or from buy-in procedures activated by the SGX-ST. If the Applicant’s Electronic Application is made through the ATMs of UOB Group and is unsuccessful, it is expected that a computer-generated notice will be sent to the Applicant by the relevant Participating Bank (at the address of the Applicant as stated in the records of the relevant Participating Bank at the date of his ATM Electronic Application) by ordinary post at the Applicant’s own risk within three Market Days after the close of the Application List. If the Applicant’s ATM Electronic Application is made through the ATMs of OCBC Group, KTB, OUB or DBS Bank (including its POSBank Services division) and is unsuccessful, no notification will be sent by the relevant Participating Bank. If the Applicant’s Internet Electronic Application made through the IB website of UOB, OUB or DBS Bank is unsuccessful, no notification will be sent by such Participating Bank. Applicants who make Electronic Applications through the ATMs of the following banks may check the provisional results of their ATM Electronic Applications as follows:–
Bank DBS Bank Telephone 1800-222 2222 327 4767 222 8228 Available at ATM/ Internet Internet Banking or Internet Kiosk www.dbs.com* ATM Operating Hours 24 hours a day Service expected from 7.00 p.m. on the balloting day ATM - Evening of the balloting day Phone Banking 8.00 a.m. on the day after the balloting day Evening of the balloting day Evening of the balloting day

KTB

ATM-24 hours a day Phone Banking Mon-Fri 0800-2200 Sat 0800-1500

OCBC

1800-363 3333

ATM

ATM-24 hours a day Phone Banking 24 hours a day Phone Banking/ Internet Banking 24 hours a day OUB Mobile Buzz** 24 hours a day Phone Banking***/ ATM 24 hours

OUB

1800-224 2000

OUB Personal Internet Banking www.oub2000.com. sg* OUB Mobile Buzz ATM(Other Transactions – “IPO Enquiry”) www.uobcyberbank. com.sg***

UOB

1800-533 5533 1800-222 2121

6.00 p.m. on the balloting day

*

Applicants who make Internet Electronic Applications through the IB websites of OUB or DBS Bank may also check the results of their application through the same channels listed in the table above in relation to ATM Electronic Applications made at ATMs of DBS Bank or OUB. Applicants who make Electronic Applications through the ATMs or IB website of OUB and who have activated their OUB Mobile Buzz service will be notified of the results of their Electronic Application via their mobile phones. Applicants who make Electronic Applications through the ATMs of UOB Group or the IB website of UOB may check the results of their application through UOB CyberBank, UOB Group ATMs or UOB Phone Banking Services.

**

***

146

11.

In consideration of the Company making available the Electronic Application facility, through the ATMs and IB websites (if any) of the Participating Banks and agreeing to close the Application List at 12:00 noon on 15 January 2001 or such later time or date as the Directors and Vendors may in their absolute discretion decide, and by making and completing an Electronic Application, the Applicant agrees that:– (a) his Electronic Application is irrevocable; and (b) his Electronic Application, the acceptance of his Electronic Application by the Company and the contract resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and he irrevocably submits to the non-exclusive jurisdiction of the Singapore courts. (c) none of the Company, the Manager or the Participating Banks shall be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to his Electronic Application to the Company or CDP due to a breakdown or failure of transmission, delivery or communication facilities or any risks referred to in paragraph 6 on page 145 of this Prospectus or to any cause beyond their respective controls; (d) he will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of his application; (e) in respect of the Offer Shares for which his Electronic Application has been successfully completed and not rejected, acceptance of the Applicant’s Electronic Application shall be constituted by written notification by or on behalf of the Company and not otherwise, notwithstanding any payment received by or on behalf of the Company; and (f) in making his application, reliance is placed solely on the information contained in this Prospectus and that none of the Company, the Manager, the Underwriter, the Placement Agent or any other person involved in the Invitation shall have any liability for any information not so contained.

12.

The Applicant should ensure that his personal particulars as recorded by both CDP and the relevant Participating Banks are correct and identical. Otherwise his Electronic Application may be rejected. The Applicant should promptly inform CDP of any change in his address, failing which the notification letter on successful allotment will be sent to his address last registered with CDP. The existence of a trust will not be recognised. Any Electronic Application by a person must be made in his/their own name(s) and without qualification. The Company will reject any application by any person acting as nominee.

13.

147

INSTRUCTIONS FOR ELECTRONIC APPLICATIONS THROUGH ATMS OF DBS BANK (INCLUDING ITS POSBANK SERVICES DIVISION) AND IB WEBSITE OF DBS BANK Instructions for an Applicant using Electronic Application will appear on the ATM screens and the IB website screens of the relevant Participating Banks. Steps for ATM Electronic Application through ATMs of DBS Bank (including its POSBank Services division) For illustrative purposes, the steps for making an ATM Electronic Application through a DBS Bank or POSBank ATM and through the IB website of DBS Bank are shown below. Certain words appearing on the screen are in abbreviated form (“A/c”, “amt”, “appln”, “ &”, “I/C” and “No.” refer to “Account”, “amount”, “application”, “and”, “NRIC” and “Number” respectively). Instructions for ATM Electronic Applications on the ATM screens of Participating Banks (other than DBS Bank(including its POSBank Services division)) may differ slightly from those represented below. Step 1: 2: 3: 4: 5: 6: Insert your personal DBS or POSBank ATM Card. Enter your Personal Identification Number Select “CASHCARD & MORE SERVICES” Select “ESA-IPO SHARE/BOND/RIGHTS” Select “ELECTRONIC SECURITY APPLN (IPO-SHARE/BOND)” to “HYFLUX” Press the “ENTER” key to acknowledge:— — You have read, understood & agreed to all terms of the appln & the Prospectus/Document You consent to disclose your name, I/C No., address, nationality, CDP Securities A/c No., CPF Investment A/c No. & security appln amount from your bank account(s) to share registrars, SCCS, CDP, CPF, issuer/vendor(s) For FIXED price security appln, this is your only appln and it is made in your own name and at your own risk For TENDER security appln, this is your only appln 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 where applicable

— — — 7: 8:

Select your nationality Select the DBS Bank account (Autosave/Current/Savings/Savings Plus) or the POSBank account (Current/Savings) from which to debit your application moneys Enter the number of shares/securities you wish to apply for using cash Enter your own 12-digit CDP Securities Account number or press “Enter” to confirm if your CDP Securities Account number is correct. (If your CDP Securities Account number has already been stored in the DBS Bank’s or POSBank’s records) Check the details of your securities application, your CDP Securities Account number on the screen and press the “ENTER” key to confirm application Remove the Transaction Record for your reference and retention only

9: 10:

11:

12:

148

” refer to “Account”.dbs. “NRIC” and “Number” respectively).. Step 1: 2: 3: 4: 5: Click on to DBS bank website (www. SCCS. “I/C” and “No. “amt”. understood Prospectus/Document & agreed to all terms of application and 6: 7: (b) You consent to disclose your name. CDP Securities A/c No. address. this is your only application at the selected tender price (e) You are not a US Person as referred to in the Prospectus/Document. “amount”. your IC/passport No. For TENDER securities application. & security application amount from your DBS/POSBank account(s) to share registrars. “and”. and no. CDP. “&”. nationality.. this is your only application. ‘appln”. I/C No. the steps for making an Internet Electronic Application through the DBS Bank IB website is shown below. “application”. Certain words appearing on the screen are in abbreviated form (“A/c”.com) Login to Internet banking Enter your User ID and PIN Select “Electronic Security Application” Click “Yes” to proceed and to warrant that you have observed and complied with all applicable laws and regulations Click on “Hyflux” Click “Confirm” to acknowledge: (a) You have read. 8: 9: Fill in details for share application and click “Submit” Check the details of your securities application. where applicable. CPF Investment A/c No. of shares on the screen and click “OK” to confirm your application Print Confirmation Screen (optional) for your reference & retention only 10: 149 .Steps for Internet Electronic Application through the IB website of DBS Bank For illustrative purposes. CPF Board and issuer(s) (c) This application is made in your own name and at your own risk (d) For FIXED price securities application.

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SNP SPrint Pte Ltd 612004 .

HYFLUX LTD 40 Changi South Street 1 Singapore 486764 .

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