Great Group Holdings 2009 IPO Prospectus

PROSPECTUS DATED 16 SEPTEMBER 2009
(Registered by the Monetary Authority of Singapore on 16 September 2009)

This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser. We have made an application to the Singapore Exchange Securities Trading Limited (the SGX-ST) for permission to deal in and for quotation of all the ordinary shares (the Shares) in the capital of Great Group Holdings Limited (the Company) already issued (including the Vendor Shares as defined herein), the new Shares (the New Shares) which form part of this Invitation (as defined herein) and the new Shares which may be issued upon the vesting of the awards to be granted under the Great Group Performance Share Scheme (the Performance Shares). Such permission will be granted when our Company has been admitted to the Official List of the SGX-ST. Acceptance of applications of the Invitation Shares (as defined herein) will be conditional upon, inter alia, permission being granted by the SGX-ST to deal in and for quotation of all of the existing issued Shares (including the Vendor Shares), the New Shares and the Performance Shares. If the said permission is not granted for any reason, monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom, and you will not have any claim against our Company, the Vendors, the Manager, the Underwriter and Placement Agent (as defined herein). The dealing in and quotation of our Shares will be in Singapore dollars. The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, the existing issued Shares (including the Vendor Shares), the New Shares and the Performance Shares. A copy of this Prospectus has been lodged with and registered by the Monetary Authority of Singapore (the Authority). The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus with the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, have been complied with. The Authority has not, in any way, considered the merits of the existing issued Shares (including the Vendor Shares), the New Shares and the Performance Shares, as the case may be, being offered or in respect of which an invitation is made, for investment. We have not lodged or registered this Prospectus in any other jurisdiction. INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION ENTITLED RISK FACTORS OF THIS PROSPECTUS. No Shares shall be allotted and/or allocated on the basis of this Prospectus later than six (6) months after the date of registration of this Prospectus by the Authority.
GREAT GROUP HOLDINGS LIMITED (Incorporated in Singapore on 29 February 2008) (Company Registration Number 200804077W)
Invitation in respect of 80,000,000 Invitation Shares comprising 65,000,000 New Shares and 15,000,000 Vendor Shares as follows: (a) 2,000,000 Offer Shares at S$0.295 each by way of public offer; and (b) 78,000,000 Placement Shares at S$0.295 each by way of placement, payable in full on application. Manager, Underwriter and Placement Agent
Daiwa Securities SMBC Singapore Limited

Applications should be received by 12.00 noon on 23 September 2009 or such other date and time as our Company and the Vendors may, in consultation with the Manager, Underwriter and Placement Agent, decide, subject to any limitations under all applicable laws.
OUR BUSINESS
An Established Undergarment Manufacturer in the PRC
CONTRACT MANUFACTURING Design, manufacture and sale of mens and womens undergarments generally carried out on an ODM basis Manufacture and sale of childrens and infants apparel generally manufactured on an OEM basis Customers who are the owners of international brands or major retail chains include: - Zeeman Group (the Netherlands) - Pelican (Russia) - Next (UK) - Hema BV (the Netherlands) - Oviesse SPA (Italy) - Wibra Supermarket BV (the Netherlands) - KIK Textilien und Non-Food GmbH (Germany) Products sold directly to customers or through their purchasing agents or through trading companies mainly based in the PRC PROPRIETARY GRAT.UNIC () BRAND Design, manufacture and sale of mens undergarments, and to a lesser extent, womens undergarments Launch of GREAT () brand of products in February 2006 which was subsequently re-branded to GRAT.UNIC () brand in March 2007 Targeted at the middle to upper class consumer segments in the PRC LICENSED TRADEMARKS FROM WARNER BROS. Licensed to manufacture and sell products bearing Superman and Supergirl trademarks in the PRC (including Hong Kong and Macau) for three years commencing from 1 June 2007 Launched the first series of mens undergarments bearing the Superman trademark in March 2008 POINTS OF SALES Comprising specialty stores or dedicated shelf spaces located strategically in shopping malls, departmental stores and commercial areas of major cities in the PRC 102 points of sales across 16 provinces / municipalities / autonomous regions throughout the PRC as at the Latest Practicable Date Intend to increase to 200 points of sales within next three years
FINANCIAL HIGHLIGHTS
REVENUE RMBmil
500 400 300 200 100 0 FY2006 FY2007 FY2008
146.4 2.4 144.0 400.8 262.3 19.9 1.0 48.7
GROSS PROFIT MARGIN CAGR 65.5% %

40% 30% 20%
351.1 242.4
29.5 21.3 27.1 26.0
NET PROFIT RMBmil 80 70 60 50 40 30 22.2 20 10 0

FY2006
CAGR 78.4%
70.8 56.5
10% 0%
21.1
26.6
32.6
34.3 32.9 24.9
FY2006
FY2007
FY2008
FY2007
FY2008
Contract Manufacturing
GRAT.UNIC ()
Superman
Overall Group
DISTRIBUTION NETWORK
Area Anhui Chongqing Fujian Gansu Guangxi Hainan Hebei Hubei Heilongjiang Jiangsu Liaoning Shaanxi Shandong Shanghai Tianjin Zhejiang Total As at the end of FY2008 2 11 26 9 2 4 1 7 6 6 6 2 4 3 3 10 102
COMPETITIVE STRENGTHS
Stringent quality inspection and quality control system Various quality control and assurance certifications including the Oeko-Tex Standard 100 ecological textile certification and ISO 9001 quality management system certification Industry recognition for GRAT.UNIC () brand targeted at the middle to upper class consumers Awarded Best Brand Award () at the 89th China Knitwear Cotton Trade Fair (89) Extensive sales and distribution network in the PRC GRAT.UNIC () and Superman products retailed across 16 provinces / municipalities / autonomous regions throughout the PRC at 102 points of sales as at the Latest Practicable Date Strong relationships with customers Diversified customer base across a wide geographical region covering the Asia-Pacific region and Europe Including major retail chains and owners of international brands, such as Zeeman Group (the Netherlands), Pelican (Russia), Hema BV (the Netherlands) and NEXT (UK) Experienced and professional management team Led by Executive Chairman and CEO, Weng Wenwei, who has over 16 years of experience in business management, particularly in the mens undergarment industry Strategically located production facilities Located in Licheng District, Quanzhou City, Fujian Province, the PRC, with convenient access to most of the suppliers of raw materials and fabrics Continuous product design and development Launch of undergarments that utilise fabrics with anti-microbial qualities in March 2008 following the collaboration agreement with Quanzhou Huiyu Developed several new designs of mens undergarments
PROSPECTS
Strong growth potential in the PRC market for high quality and branded undergarments
The above image is an artist impression of Great Group Holdings new headquarters and new production facilities to be completed. For illustration purpose only.
FUTURE PLANS
Expand production capacity and facilities
Consolidate business and production operations in one location Expand production capacity by 100% by acquiring 18 additional production lines
Promote GRAT.UNIC () brand within the PRC and increase marketing efforts for contract manufacturing services and products
Increase advertising activities Expand distribution network and increase the number of points of sales from 102 to 200 within the next three years Increase overseas marketing efforts to attract more potential overseas customers for contract manufacturing services and products
Enhance R&D capabilities Expand the range of products and establish new brand names Enhance logistics system Consider acquiring potential business in apparel and garments industry
TABLE OF CONTENTS
Page
1 2 3 4 5 6
CORPORATE INFORMATION ................................................................................................. DEFINITIONS ........................................................................................................................... GLOSSARY OF TECHNICAL TERMS ..................................................................................... CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS ........................................... SELLING RESTRICTIONS ....................................................................................................... DETAILS OF THE INVITATION LISTING ON THE SGX-ST ....................................................................................................... INDICATIVE TIMETABLE FOR LISTING ..................................................................................
4 6 13 15 17
19 23 24 25 27 29 32 35
7 8 9 10 11 12 13
THE INVITATION ...................................................................................................................... PLAN OF DISTRIBUTION ........................................................................................................ USE OF PROCEEDS AND LISTING EXPENSES ................................................................... MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS .......................... PROSPECTUS SUMMARY ...................................................................................................... INVITATION STATISTICS ......................................................................................................... RISK FACTORS RISKS RELATING TO OUR BUSINESS ................................................................................... RISKS RELATING TO THE PRC .............................................................................................. RISKS RELATING TO AN INVESTMENT IN OUR SHARES ...................................................
37 45 49 51 52 53 54 55 56
14 15 16 17 18 19 20
EXCHANGE RATES ................................................................................................................. EXCHANGE CONTROLS ......................................................................................................... DIVIDEND POLICY ................................................................................................................... CAPITALISATION AND INDEBTEDNESS ............................................................................... DILUTION ................................................................................................................................. SELECTED COMBINED FINANCIAL INFORMATION ............................................................ MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW ............................................................................................................................... REVIEW OF PAST PERFORMANCE ....................................................................................... REVIEW OF RESULTS OF OPERATIONS .............................................................................. REVIEW OF FINANCIAL POSITION ........................................................................................ LIQUIDITY AND CAPITAL RESOURCES ................................................................................
60 64 67 71 72
TABLE OF CONTENTS
CAPITAL EXPENDITURES, DIVESTMENTS AND COMMITMENTS ...................................... FOREIGN EXCHANGE MANAGEMENT .................................................................................. INFLATION ................................................................................................................................ 21 GENERAL INFORMATION ON OUR GROUP SHARE CAPITAL ...................................................................................................................... RESTRUCTURING EXERCISE ................................................................................................ GROUP STRUCTURE .............................................................................................................. SHAREHOLDING AND OWNERSHIP STRUCTURE .............................................................. VENDORS ................................................................................................................................ MORATORIUM .......................................................................................................................... 22 HISTORY AND BUSINESS HISTORY ................................................................................................................................... BUSINESS OVERVIEW ............................................................................................................ PRODUCTION PROCESS ........................................................................................................ PRODUCTION FACILITIES AND CAPACITY ........................................................................... QUALITY ASSURANCE ............................................................................................................ SALES AND MARKETING ....................................................................................................... OUR MAJOR CUSTOMERS ..................................................................................................... OUR MAJOR SUPPLIERS ....................................................................................................... CREDIT MANAGEMENT .......................................................................................................... RESEARCH AND DEVELOPMENT ......................................................................................... INTELLECTUAL PROPERTY ................................................................................................... LICENCES, PERMITS AND APPROVALS ............................................................................... AWARDS AND ACHIEVEMENTS ............................................................................................. INVENTORY MANAGEMENT ................................................................................................... PROPERTIES AND FIXED ASSETS ........................................................................................ STAFF TRAINING ..................................................................................................................... INSURANCE ............................................................................................................................. COMPETITION ......................................................................................................................... COMPETITIVE STRENGTHS ................................................................................................... 23 PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS PROSPECTS ............................................................................................................................ ORDER BOOK .......................................................................................................................... SEASONALITY ......................................................................................................................... TREND INFORMATION ............................................................................................................ BUSINESS STRATEGIES AND FUTURE PLANS ................................................................... 129 131 131 132 132 85 87 91 93 96 100 105 109 111 114 115 121 121 121 122 124 125 126 127 77 79 80 82 83 84 74 76 76
TABLE OF CONTENTS
24 DIRECTORS, EXECUTIVE OFFICERS AND EMPLOYEES MANAGEMENT REPORTING STRUCTURE ........................................................................... DIRECTORS ............................................................................................................................. EXECUTIVE OFFICERS ........................................................................................................... SERVICE AGREEMENT ........................................................................................................... DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION ............................................. EMPLOYEES ............................................................................................................................ CORPORATE GOVERNANCE ................................................................................................. 25 26 GREAT GROUP PERFORMANCE SHARE SCHEME ............................................................ INTERESTED PERSON TRANSACTIONS INTERESTED PERSONS ......................................................................................................... PAST INTERESTED PERSON TRANSACTIONS .................................................................... ON-GOING INTERESTED PERSON TRANSACTIONS .......................................................... OTHER TRANSACTIONS ......................................................................................................... REVIEW PROCEDURES FOR FUTURE INTERESTED PERSONS TRANSACTIONS .......... 27 POTENTIAL CONFLICT OF INTERESTS INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDER OR THEIR ASSOCIATES ............................................................................................................................ INTERESTS OF EXPERTS ...................................................................................................... 28 29 CLEARANCE AND SETTLEMENT .......................................................................................... GENERAL AND STATUTORY INFORMATION ....................................................................... 164 167 168 169 156 157 160 161 162 135 136 140 142 144 144 146 150
APPENDIX A INDEPENDENT AUDITORS REPORT ON THE COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008 .............. APPENDIX B SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION ..................... APPENDIX C DESCRIPTION OF RELEVANT PRC LAWS AND REGULATIONS .................... APPENDIX D DESCRIPTION OF SINGAPORE COMPANY LAW RELATING TO SHARES ..................................................... APPENDIX E DESCRIPTION OF SINGAPORE LAW RELATING TO TAXATION .................... APPENDIX F TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE ...................................................................................................... APPENDIX G RULES OF THE GREAT GROUP PERFORMANCE SHARE SCHEME .............
A-1 B-1 C-1
D-1 E-1
F-1 G-1
CORPORATE INFORMATION
Board of Directors : Weng Wenwei () (Executive Chairman and CEO) Weng Wenju () (Executive Director) Teoh Teik Kee (Lead Independent Director) Lee Kim Lian, Juliana (Independent Director) Lim Yeow Hua @ Lim You Qin (Independent Director) Ong Wei Jin, LL.B. (Hons) Goh Wei Lin, LL.B. (Hons) 200804077W 8 Cross Street #11-00 PWC Building Singapore 048424 Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City, Fujian Province, the PRC () Boardroom Corporate & Advisory Services Pte. Ltd. 3 Church Street #08-01 Samsung Hub Singapore 049483 Daiwa Securities SMBC Singapore Limited 6 Shenton Way #26-08 DBS Building Tower Two Singapore 068809 Nexia TS Public Accounting Corporation 5 Shenton Way UIC Building #23-03 Singapore 068808 Director-in-Charge: Henry SK Tan FCPA Singapore, ACA Solicitors to the Invitation and Legal Advisers to our Company on Singapore Law Solicitors to the Manager, the Underwriter and the Placement Agent : Colin Ng & Partners LLP 36 Carpenter Street Singapore 059915 KhattarWong 80 Raffles Place #25-01 UOB Plaza 1 Singapore 048624 Yuan Tai Law Offices 14/F, Huaxia Bank Plaza 256 South Pudong Road Shanghai, 200120, the PRC
Company Secretary
Company Registration Number Registered Office
: :
Principal Office and Contact Details
Share Registrar and Share Transfer Agent
Manager, Underwriter and Placement Agent
Independent Auditor
Legal Advisers to our Company on PRC Law
CORPORATE INFORMATION
Principal Bankers : Bank of China, Quanzhou Branch () Bank of China Building, Fengze Street, Quanzhou City, Fujian Province, the PRC () Industrial Bank Co., Ltd., Quanzhou Branch () Industrial Bank Building, Fengze Street, Quanzhou City, Fujian Province, the PRC () China Construction Bank, Quanzhou Licheng Sub-branch () Wenling Street Zhongduan, Quanzhou City, Fujian Province, the PRC () Industrial and Commercial Bank of China, Quanzhou Licheng Sub-branch () Wenling Street Zhongduan, Quanzhou City, Fujian Province, the PRC () Receiving Banker : The Bank of East Asia, Limited 137 Market Street Bank of East Asia Building Singapore 048943 G&W Investment Management Co., Ltd. Horizon Chambers, P.O. Box 4622 Road Town, Tortola British Virgin Islands Kingbest Capital Limited Horizon Chambers, P.O. Box 4622 Road Town, Tortola British Virgin Islands
Vendors
DEFINITIONS
In this Prospectus, the accompanying Application Forms and in relation to the Electronic Applications, the instructions appearing on the screens of the ATMs of Participating Banks, the IB websites of the relevant Participating Banks, unless the context otherwise requires, the following definitions apply throughout where the context so admits: Companies in our Group Company Fujian Great : : Great Group Holdings Limited Fujian Great Fashion Industry Co., Ltd. ( ) (Company Registration No.:350500400003382), a company incorporated in PRC Great Worldwide (Tradings) Limited () (Company Registration No.:1520699), a company incorporated in the BVI Our Company and our subsidiaries, namely Fujian Great and Quanzhou Great, following the completion of the Restructuring Exercise, as well as Great Worldwide Quanzhou Great Garments Co., Ltd. ( ) (Company Registration No.:350500400004203), a company incorporated in PRC
Great Worldwide
Group
Quanzhou Great
Other Companies, Organisations and Agencies Authority CDP or Depository CPF EU : : : : Monetary Authority of Singapore The Central Depository (Pte) Limited The Central Provident Fund The European Union, currently comprising 27 member states namely Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom G&W Investment Management Co., Ltd. Great Holdings HK Limited () (Company Registration No.: 805309), formerly known as Great HK Garment Limited () a company incorporated in HKSAR. This company is wholly owned by our Executive Chairman and CEO, Weng Wenwei and his spouse International Organisation for Standardisation, a worldwide federation of national standards bodies from some 130 countries, whose mission is to develop industrial standards that facilitate international trade Kingbest Capital Limited
G&W HK Great
: :
ISO
Kingbest
DEFINITIONS
Manager, Underwriter or Placement Agent Quanzhou Huiyu : Daiwa Securities SMBC Singapore Limited
Quanzhou Huiyu Antimicrobial Technology Co., Ltd. ( ) Securities Clearing & Computers Services (Pte) Ltd Singapore Exchange Securities Trading Limited
SCCS SGX-ST
: :
General Acquisitions : The acquisitions of Fujian Great and Quanzhou Great by our Company as described in the section entitled Restructuring Exercise of this Prospectus The Companies Act (Chapter 50) of Singapore, as amended or modified from time to time The printed application forms for the Invitation Shares and which form part of this Prospectus The list of applications for the subscription and/or purchase of the Invitation Shares (a) In relation to an entity, means: (i) in a case where the entity is a substantial shareholder, controlling shareholder, substantial interest-holder or controlling interest-holder, its related corporation, related entity, associated company or associated entity; or in any other case: (A) (B) a director or an equivalent person; where the entity is a corporation, a controlling shareholder of the entity; where the entity is not a corporation, a controlling interest-holder of the entity; a subsidiary, a subsidiary entity, an associated company, or an associated entity; or a subsidiary, a subsidiary entity, an associated company, or an associated entity of the controlling shareholder or controlling interest-holder, as the case may be,
Act or Companies Act
Application Forms
Application List
Associate
(ii)
(C)
(D)
(E)
of the entity; and
DEFINITIONS
(b) in relation to an individual, means: (i) his immediate family (being spouse, child, adopted child, step-child, sibling and parent); a trustee of any trust of which the individual or any member of the individuals immediate family is: (A) (B) a beneficiary; or where the trust is a discretionary trust, a discretionary object;
(ii)
when the trustee acts in that capacity; or (iii) any corporation in which he and his immediate family (whether directly or indirectly) have interests in voting shares of an aggregate of not less than 30% of the total votes attached to all voting shares
ATM ATM Application
: :
Automated teller machine of a Participating Bank An application for Offer Shares made through an ATM subject to and in accordance with the terms and conditions of this Prospectus The audit committee of our Company as at the date of this Prospectus The board of Directors of our Company as at the date of this Prospectus British Virgin Islands Chief Executive Officer of our Company as at the date of this Prospectus A person who has an interest in our Shares of an aggregate of not less than 15% of the total votes attached to our Shares, or in fact exercises control over our Company The directors of our Company as at the date of this Prospectus Applications for the Offer Shares made through an ATM or the IB websites of the relevant Participating Banks in accordance with the terms and conditions of this Prospectus Earnings per Share The executive Directors of our Company as at the date of this Prospectus
Audit Committee
Board
BVI CEO
: :
Controlling Shareholder
Directors
Electronic Applications
EPS Executive Directors
: :
DEFINITIONS
Executive Officers : The executive officers of our Group as at the date of this Prospectus Financial year ended or, as the case may be, ending 31 December Hong Kong Special Administrative Region of the PRC Internet banking An application for Offer Shares made through an IB website in accordance with the terms and conditions of this Prospectus The independent Directors of our Company as at the date of this Prospectus The invitation by our Company and the Vendors to the public to subscribe for and/or purchase the Invitation Shares at the Invitation Price, upon the terms and subject to the conditions set out in this Prospectus S$0.295 for each Invitation Share The 80,000,000 Shares which are the subject of this Invitation, comprising 65,000,000 New Shares and 15,000,000 Vendor Shares 4 September 2009, being the latest practicable date before the registration of this Prospectus with the Authority The lead Independent Director of our Company as at the date of this Prospectus Listing manual of the SGX-ST, as amended, modified or supplemented from time to time The Macau Special Administrative Region of the PRC A day on which the SGX-ST is open for trading in securities Net asset value The 65,000,000 new Shares for which our Company invites applications to subscribe for at the Invitation Price pursuant to the Invitation, upon the terms and subject to the conditions set out in this Prospectus The nominating committee of our Company as at the date of this Prospectus Net tangible assets
FY
HKSAR, HK or Hong Kong IB IB Application
: : :
Independent Directors
Invitation
Invitation Price Invitation Shares
: :
Latest Practicable Date
Lead Independent Director
Listing Manual
Macau Market Day
: :
NAV New Shares
: :
Nominating Committee
NTA
DEFINITIONS
Offer : The offer by our Company and/or the Vendors of the Offer Shares to the public in Singapore for subscription and/ or purchase at the Invitation Price, upon the terms and subject to the conditions set out in this Prospectus The 2,000,000 Invitation Shares which are the subject of the Offer DBS Bank Ltd. (including POSB) (DBS), OverseaChinese Banking Corporation Limited (OCBC) and United Overseas Bank Limited and its subsidiary, Far Eastern Bank Limited (the UOB Group) The new Shares (not exceeding 15% of the issued share capital of our Company on the date preceding the grant of an award under the PSS) which may be allotted and issued upon the vesting of awards under PSS The placement of the Placement Shares by the Placement Agent on behalf of our Company and the Vendors for subscription and/or purchase at the Invitation Price, upon the terms and subject to the conditions set out in this Prospectus The 78,000,000 Invitation Shares which are the subject of the Placement Peoples Republic of China, excluding Macau and HKSAR, for the purposes of this Prospectus and for geographical reference only This Prospectus dated 16 September 2009 in respect of the Invitation The Great Group Performance Share Scheme, adopted by our Company on 18 June 2009, the terms of which are set out in Appendix G Rules of the Great Group Performance Share Scheme of this Prospectus Research and development The remuneration committee of our Company as at the date of this Prospectus FY2006, FY2007 and FY2008 The restructuring exercise undertaken by our Group in connection with the Invitation as described under the section entitled Restructuring Exercise of this Prospectus The securities account maintained by a depositor with CDP but does not include a securities sub-account
Offer Shares
Participating Banks
Performance Shares
Placement
Placement Shares
PRC or China
Prospectus
PSS
R&D Remuneration Committee
: :
Relevant Period Restructuring Exercise
: :
Securities Account
10
DEFINITIONS
Securities and Futures Act or SFA : The Securities and Futures Act (Chapter 289) of Singapore, as amended or modified from time to time The Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005, as amended or modified from time to time The service agreement entered into between our Company and our Executive Chairman and CEO, Weng Wenwei as described in the section entitled Directors, Executive Officers and Employees - Service Agreement of this Prospectus Registered holders of Shares Ordinary shares in the share capital of our Company Sub-division of each ordinary share in the issued and paid-up share capital of our Company into 20,000 shares as described in the section entitled General Information on Our Group - Share Capital of this Prospectus A person who has an interest or interests in one or more voting shares in our Company and the total votes attached to that shares, or those shares, is not less than 5.0% of the total votes attached to all the voting shares in our Company The United Kingdom The United States of America G&W and Kingbest The 15,000,000 issued and fully paid-up Shares owned by the Vendors for which the Vendors invite applications to purchase on the terms and subject to the conditions set out in this Prospectus Wholly foreign owned enterprise
Securities and Futures Regulations or SFR
Service Agreement
Shareholders Shares Sub-division
: : :
Substantial Shareholder
UK USA Vendors Vendor Shares
: : : :
WFOE Currencies, Units and Others EUR HK$ and HK cents RMB and RMB cents S$ or $ and cents US$ and US cents % or per cent. n.a.
: : : : : : :
Euro Hong Kong dollars and cents respectively PRC Renminbi and cents respectively Singapore dollars and cents respectively United States dollars and cents respectively Per centum Not applicable
11
DEFINITIONS
n.m. sq ft sq m : : : Not meaningful Square feet Square metres
The expressions associated company, associated entity, related corporation, related entity, entity at risk, interested person, subsidiary, and subsidiary entity shall have the meanings ascribed to them respectively in the Fourth Schedule of the SFR. The expression Business Trust has the same meaning as in Section 2 of the Business Trusts Act (Chapter 31A of Singapore). The expression Entity includes a corporation, an unincorporated association, a partnership and the government of any state, but does not include a trust. The expressions Depositor, Depository Agent and Depository Register shall have the meanings ascribed to them respectively in Section 130A of the Companies Act. References in this Prospectus to Appendix or Appendices are references to an appendix or appendices respectively to this Prospectus. Any discrepancies in tables included herein between the total sum of amounts listed and the totals shown are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. Words importing the singular shall, where applicable, include the plural and vice versa and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. References to persons shall include corporations. Any reference in this Prospectus, the Application Forms and Electronic Applications to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Companies Act, the Securities and Futures Act or any statutory modification thereof and used in this Prospectus, the Application Forms and Electronic Applications shall, where applicable, have the meaning ascribed to it under the Companies Act, the Securities and Futures Act or any statutory modification thereto, as the case may be. Any reference in this Prospectus, the Application Forms and Electronic Applications to Shares being allotted and/or allocated to you includes allotment and/or allocation to CDP for your account. Any reference to a time of day in this Prospectus, the Application Forms or the Electronic Applications is a reference to Singapore time unless otherwise stated. Any reference to we, us and our in this Prospectus is a reference to our Company, our Group or any member of our Group as the context requires. Certain names with Chinese characters have been translated into English. Such translations which are provided solely for the convenience of investors may not have been registered with the relevant PRC authorities and should not be construed as representations that the English names actually represent the Chinese characters.
12
GLOSSARY OF TECHNICAL TERMS

To facilitate a better understanding of our business, the following glossary provides a description of some of the technical terms and abbreviations commonly found in our industry. The terms and their assigned meanings may not correspond to standard industry or common meanings, as the case may be: cotton : A soft, staple fibre that grows around the seeds of the cotton plant and most often is spun into yarn or thread to make a soft, breathable natural-fiber textile which is widely used An occupational and safety management system standard prescribed in 2001 by the General Administration of Quality Supervision Inspection and Quarantine of the PRC ( ) An internationally recognised standard for organisations to manage the environmental effects of their activities and processes A constituent part of the ISO 9000 series which states the requirements for a quality management system and covers the following eight management principles: customer focus, leadership, involvement of people, process approach, system approach management, continual improvement, factual approach to decision making and mutually beneficial supplier relationship A bio-based fibre made by spinning reconstituted cellulose from beech trees. It is soft and popular for both clothing and household textiles. Textiles made from modal are generally resistant to shrinkage and fading A synthetic fibre made from basic ingredients originating from the petrochemical industry. It is a strong and elastic material that is used in the manufacture of undergarments, stockings and swimsuits Original design manufacturer An international testing and certification system for textiles, limiting the use of certain chemicals and harmful substances in the manufacture of textiles and clothing. The Oeko-Tex certificate is issued for a period of one year and can be extended subject to further successful testing. Successfully tested textile products are allocated to four different product classes: (i) product class I textiles and textile products for babies and small children up to 3 years old; (ii) product class II textiles with direct contact to skin; (iii) product class III textiles which do not come into contact with the skin; and (iv) product class IV furnishing material for decorative purposes Original equipment manufacturer A lightweight but strong synthetic fibre. It can be blended with cotton, rayon, or other synthetics to produce fabrics. Fabrics that are manufactured from polyester can be easily washed, dried and are not easily creased
GB/T28001-2001
ISO 14001:2004
ISO 9001:2000
modal
nylon
ODM Oeko-Tex Standard 100
: :
OEM polyester
: :
13
GLOSSARY OF TECHNICAL TERMS

SA 8000:2001 : An international standard developed by the Social Accountability International which provides a framework for a fair and equitable working environment so as to improve workplace conditions An elastic synthetic fiber commonly used in the manufacture of stretchable clothing such as undergarments, swimwear and athletic apparel. It is always blended with other types of fibres to improve comfort, fit and shape retention in fabrics Weaving involves the interlacing of two sets of threads or yarn at the right angles to each other, namely, the warp and weft, and turning them into fabric The general term for any assemblage of fibres that has been put together in a continuous strand suitable for knitting, weaving and other textile techniques
spandex
weaving
yarn
14
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

All statements contained in this Prospectus, statements made in press releases and oral statements that may be made by us or our Directors, Executive Officers or employees acting on our behalf or the Vendors that are not statements of historical fact, constitute forward-looking statements. You can identify some of these forward-looking statements by terms such as expect, believe, plan, intend, estimate, anticipate, may, will, would and could or similar words and phrases. However, you should note that these words are not the exclusive means of identifying forward-looking statements. All statements regarding our expected financial position, business strategy, plans and prospects are forward-looking statements. These forward-looking statements, including statements as to: (a) (b) (c) (d) (e) (f) our revenue and profitability; expected growth in demand; expected growth in our production capacity; expected industry trends; anticipated expansion plans; and other matters discussed in this Prospectus regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expected, expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, among others: (a) changes in political, social, economic and stock or securities market conditions and the regulatory environment in the countries in which we conduct business; changes in currency exchange or interest rates; our anticipated growth strategies and expected internal growth; changes in the availability and prices of raw materials we need to operate our business; changes in customer preferences; changes in competitive conditions and our ability to compete under these conditions; the availability of alternative production technologies and products; changes in our future capital needs and the availability of financing and capital to fund these needs; other factors beyond our control; and the factors described in the Risk Factors section of this Prospectus.
(b) (c) (d) (e) (f) (g) (h) (i) (j)
All forward-looking statements made by or attributable to us, or persons acting on our behalf, contained in this Prospectus are expressly qualified in their entirety by such factors. Given the risks and uncertainties that may cause our actual future results, performance or achievements to be materially different from those expected, expressed or implied by the forward-looking statements in this Prospectus, we advise you not to place undue reliance on those statements which apply only as at the date of this Prospectus. Neither our Company, the Vendors, the Manager, the Underwriter and the Placement Agent nor any other person represents or warrants to you that our actual future results, performance or achievements will be as discussed in those statements.
15
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Our actual future results may differ materially from those anticipated in these forward-looking statements as a result of the risks faced by us. We, the Vendors, the Manager, the Underwriter and the Placement Agent disclaim any responsibility to update any of those forward-looking statements or publicly announce any revisions to those forward-looking statements to reflect future developments, events or circumstances for any reason, even if new information becomes available or other events occur in the future. We are, however, subject to the provisions of the Securities and Futures Act and the Listing Manual regarding corporate disclosure. In particular, pursuant to Section 241 of the Securities and Futures Act, if after this Prospectus is registered but before the close of the Invitation, our Company becomes aware of (a) a false or misleading statement in this Prospectus; (b) an omission from this Prospectus of any information that should have been included in it under Section 243 of the Securities and Futures Act; or (c) a new circumstance that has arisen since this Prospectus was lodged with the Authority and would have been required by Section 243 of the Securities and Futures Act to be included in this Prospectus, if it had arisen before this Prospectus was lodged and that is materially adverse from the point of view of an investor, our Company may lodge a supplementary or replacement prospectus with the Authority.
16
SELLING RESTRICTIONS
This Prospectus does not constitute an offer, solicitation or invitation to subscribe for and/or purchase our Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation. No action has been or will be taken under the requirements of the legislation or regulations of, or of the legal or regulatory authorities of, any jurisdiction, except for the lodgement and/or registration of this Prospectus in Singapore in order to permit a public offering of our Shares and the public distribution of this Prospectus in Singapore. The distribution of this Prospectus and the offering of our Shares in certain jurisdictions may be restricted by the relevant laws in such jurisdictions. Persons who may come into possession of this Prospectus are required by us, the Vendors, the Manager, the Underwriter and the Placement Agent to inform themselves about, and to observe and comply with, any such restrictions at their own expense and without liability to us, the Vendors, the Manager, the Underwriter and the Placement Agent. Persons to whom a copy of this Prospectus has been issued shall not circulate to any other person, reproduce or otherwise distribute this Prospectus or any information herein for any purpose whatsoever nor permit or cause the same to occur. Selling Restrictions in Hong Kong This Prospectus has not been and will not be registered with the Registrar of Companies in Hong Kong. Accordingly, except as mentioned below, this document may not be issued, circulated or distributed in Hong Kong. This document may be issued (i) to professional investors as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any other applicable rules made under that Ordinance; or (ii) in other circumstances which do not result in the document being a prospectus as defined in the Companies Ordinance (Cap. 32) of Hong Kong or in a manner which does not constitute an invitation or offer to the public in Hong Kong to subscribe for and/or purchase the Invitation Shares within the meaning of either the Securities and Futures Ordinance or the Companies Ordinance. No advertisement, invitation or document relating to the Invitation Shares, whether in Hong Kong or elsewhere, has been or will be issued, or has been or will be in the possession of any person for the purposes of issue, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Invitation Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors in Hong Kong as defined in the Securities and Futures Ordinance (Cap. 571) and any rules made under that Ordinance. Selling Restrictions in the United Kingdom This document is only addressed to and directed at: (a) in the United Kingdom: (i) persons who are a qualified investor (Qualified Investor) within the meaning of Section 86(7) of the United Kingdom Financial Services and Markets Act 2000 (FSMA); (ii) less than 100 persons other than those who are Qualified Investors; (iii) persons who are a professional client (Professional Client) or an eligible counterparty (Eligible Counterparty) within the meaning given in COBS 3.5.1 and COBS 3.6.1, respectively, of the FSA Conduct of Business Sourcebook as at 1st November 2007; and/or (iv) persons who: (A) have professional experience in matters relating to investments falling within Article 19(5) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the Order); (B) are high net worth companies, unincorporated associations etc. falling within Article 49(2) of the Order; or (C) are certified sophisticated investors within the meaning of Article 50 of the Order; or in other member states of the European Economic Area (EEA), persons who are: (i) a qualified Investor within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC); and/or (ii) a Professional Client or an Eligible Counterparty within the meaning of Article 4(1) (11) and Article 24 (2), (3) and (4), respectively, of Directive 2004/39/EC (MiFID) as MiFID is implemented into national law of the relevant EEA state, (together, Relevant Persons).
(b)
17
SELLING RESTRICTIONS
This document has not been approved by an authorised person for the purposes of the FSMA. Any investment to which this document relates in the United Kingdom is available only to (and any investment activity to which it relates will be engaged only with) Relevant Persons. This document is directed in the United Kingdom only at Relevant Persons and persons in the United Kingdom who are not Relevant Persons should not take any action based upon this document and should not rely on it. It is a condition of you receiving this document in the United Kingdom that you warrant to the Placement Agent or its respective designated sub-placement agents that you are a Relevant Person. Selling Restrictions in Switzerland This document is being communicated in Switzerland to a small number of selected investors only. Each copy of this document is addressed to a specifically named recipient and must not be passed on to third parties. The securities, the subject of this document, are not to be offered to the public in Switzerland, and neither this document nor any other offering materials relating to such securities may be distributed in connection with any such public offering.
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DETAILS OF THE INVITATION

LISTING ON THE SGX-ST Application has been made to the SGX-ST for permission to deal in and for quotation of all our Shares already issued (including the Vendor Shares), the New Shares which form part of the Invitation and the Performance Shares on the Official List of the SGX-ST. Such permission will be granted when we have been admitted to the Official List of the SGX-ST. Acceptance of applications of the Invitation Shares will be conditional upon the completion of the Invitation, which is subject to certain conditions, including the SGX-ST granting permission to deal in and for quotation of all our existing issued Shares (including the Vendor Shares), the New Shares and the Performance Shares. In the event that completion of the Invitation does not occur or such permission from the SGX-ST is not granted or for any other reason, monies paid in respect of any application accepted will be returned to you at your own risk, without interest or any share of revenue or other benefit arising therefrom and you will not have any claim against our Company, the Vendors, the Manager, the Underwriter or the Placement Agent. Pursuant to Section 242 of the Securities and Futures Act, the Authority may, in the following circumstances issue a stop order (the Stop Order) to our Company after the registration of this Prospectus by the Authority, directing that no Invitation Share or no further Share to which this Prospectus relates, be allotted and/or allocated or issued and/or sold: (a) the Authority is of the opinion that this Prospectus contains a false or misleading statement or matter; there is an omission from this Prospectus of any information that should have been included in it in accordance with Section 243 of the Securities and Futures Act; the Authority is of the opinion that this Prospectus does not comply with the requirements of the Securities and Futures Act; or the Authority is of the opinion that it is in the public interest to do so.
(b)
(c)
(d)
Where applications to subscribe for and/or purchase the Invitation Shares to which this Prospectus relates have been made prior to the Stop Order, and: (a) where the Invitation Shares have not been issued and/or sold to you, your application shall be deemed to have been withdrawn and cancelled and our Company (on behalf of itself and the Vendors) shall, within 14 days from the date of the Stop Order, return to you at your own risk all monies you have paid on account of your application for the Invitation Shares, without interest or any share of revenue or other benefit arising therefrom; or where the Invitation Shares have been issued to you, the issue and/or sale of the Invitation Shares shall be deemed to be void and our Company shall (on behalf of itself and the Vendors), within 14 days from the date of the Stop Order, return to you at your own risk all monies you have paid on account of your applications for the Invitation Shares, without interest or any share of revenue or other benefit arising therefrom; or in the case where the Invitation Shares have been transferred to you, the sale of the Invitation Shares shall be deemed to be void and (i) if documents purporting to evidence title have been issued to you, our Company shall, and on behalf of the Vendor shall, within 7 days from the date of the Stop Order, inform you to return such documents to our Company within 14 days from that date, and within 7 days from the date of receipt of such documents (if applicable) or the date of the Stop Order, whichever is the later, or (ii) if no such documents have been issued to you within 7 days from the date of the Stop Order, return to you at your own risk all monies you have paid on account of your applications for the Invitation Shares, without interest or any share of revenue or other benefit arising therefrom.
(b)
(c)
In each of the above instances where monies are refunded to you pursuant to a Stop Order, you will not have any claim against our Company, the Vendors, the Manager, the Underwriter or the Placement Agent.
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The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Prospectus. Admission to the Official List of the SGX-ST is not to be taken as an indication of the merits of the Invitation, our Company, our subsidiaries, our existing issued Shares (including the Vendor Shares), the New Shares or the Performance Shares. A copy of this Prospectus together with copies of the Application Forms have been lodged with and registered by the Authority. The Authority assumes no responsibility for the contents of this Prospectus. Registration of this Prospectus by the Authority does not imply that the Securities and Futures Act, or any other legal or regulatory requirements have been complied with. The Authority has not, in any way, considered the merits of our existing issued Shares (including the Vendor Shares), the New Shares and the Performance Shares, as the case may be, being offered or in respect of which the Invitation is made, for investment. We have not lodged or registered this Prospectus in any other jurisdiction. Neither our Company, the Vendors, our Directors, the Manager, the Underwriter, the Placement Agent, the promoters, the experts nor any other parties involved in the Invitation is making any representation to any person regarding the legality of an investment in our Shares by such person under any investment or other laws or regulations. No information in this Prospectus should be considered as being business, legal or tax advice. You should consult your own professional or other advisers for business, legal or tax advice regarding an investment in our Shares. No person has been or is authorised to give any information or to make any representation not contained in this Prospectus in connection with the Invitation and, if given or made, such information or representation must not be relied upon as having been authorised by our Company, the Vendors, the Manager, the Underwriter or the Placement Agent. Neither the delivery of this Prospectus and the Application Forms nor any documents relating to the Invitation shall, under any circumstances, constitute a continuing representation or create any suggestion or implication that there has been no change or development reasonably likely to involve a change in our affairs or in the statements of fact or information contained in this Prospectus since the date of this Prospectus. Where such changes occur, we will promptly make an announcement of the same to the SGX-ST and to the public and, if required, lodge a supplementary or replacement prospectus with the Authority and make an announcement of the same to the SGX-ST and to the public and will comply with the requirements of the Securities and Futures Act. You should take note of any such announcement and, upon release of such an announcement, shall be deemed to be given notice of such changes. Save as expressly stated in this Prospectus, nothing herein is, or may be relied upon as, a promise or representation as to the future performance or policies of our Company or our subsidiaries. In the event that a supplementary or replacement prospectus is lodged with the Authority, the Invitation shall be kept open for at least 14 days after the lodgement of such supplementary or replacement prospectus. Where prior to the lodgement of the supplementary or replacement prospectus, applications have been made under this Prospectus to subscribe for and/or purchase our Invitation Shares and: (a) where the Invitation Shares have not been issued and/or sold to you, our Company (on behalf of itself and the Vendors) shall either: (i) within 2 days (excluding any Saturday, Sunday or public holiday) from the date of lodgement of the supplementary prospectus or replacement prospectus, give you notice in writing of how to obtain, or arrange to receive, a copy of the same and provide you with an option to withdraw your applications and take all reasonable steps to make available within a reasonable period the supplementary or replacement prospectus to applicants who have indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary or replacement prospectus; or within 7 days from the date of lodgement of the supplementary or replacement prospectus, give you the supplementary or replacement prospectus, as the case may be, and provide you with an option to withdraw your applications; or
(ii)
20

(iii) treat the applications as withdrawn and cancelled, in which case your applications shall be deemed to have been withdrawn and cancelled, and our Company shall (on behalf of itself and the Vendors), within 7 days from the date of lodgement of the supplementary or replacement prospectus, return all monies paid in respect of any application to you at your own risk, without interest or any share of revenue or other benefit arising therefrom; or
(b)
where the Invitation Shares have been issued and/or sold to you, our Company shall (on behalf of itself and the Vendors) either: (i) within 2 days (excluding any Saturday, Sunday or public holiday) from the date of lodgement of the supplementary prospectus or replacement prospectus, give you notice in writing of how to obtain, or arrange to receive, a copy of the same and provide you with an option to return to our Company the Invitation Shares, which you do not wish to retain title in, and take all reasonable steps to make available within a reasonable period the supplementary or replacement prospectus to applicants who have indicated they wish to obtain, or who have arranged to receive, a copy of the supplementary or replacement prospectus; or within seven 7 days from the date of lodgement of the supplementary or replacement prospectus, give you the supplementary or replacement prospectus, as the case may be, and provide you with an option to return to our Company the Invitation Shares, which you do not wish to retain title in; or treat the issue and/or sale of our Shares as void, in which case the issue and/or sale shall be deemed void and our Company shall (on behalf of itself and Vendors), within 7 days from the date of lodgement of the supplementary or replacement prospectus, return all monies paid in respect of any application to you at your own risk, without interest or any share of revenue or other benefit arising therefrom.
(ii)
(iii)
If you wish to exercise your option under paragraph (a)(i) and (ii) above to withdraw your application in respect of the Invitation Shares, you shall, within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify our Company of this, whereupon our Company shall (on behalf of itself and the Vendors), within 7 days from the receipt of such notification, return to you all monies you have paid on account of your application for such Invitation Shares, without interest or any share of revenue or other benefit arising therefrom, at your own risk. If you wish to exercise your option under paragraph (b)(i) and (ii) above to return the Invitation Shares issued and/or sold to you, you shall, within 14 days from the date of lodgement of the supplementary or replacement prospectus, notify our Company of this and return all documents, if any, purporting to be evidence of title to those Shares, to our Company, whereupon our Company shall (on behalf of itself and the Vendors), within 7 days from the receipt of such notification and documents, if any, return to you all monies you have paid for those Shares without interest or any share of revenue or other benefit arising therefrom and the issue and/or sale of those Shares shall be deemed to be void. This Prospectus has been prepared solely for the purpose of the Invitation and may only be relied upon by you in connection with your application for the Invitation Shares and may not be relied upon by any other person or for any other purpose. This Prospectus does not constitute an offer of, or invitation or solicitation to subscribe for and/or purchase the Invitation Shares in any jurisdiction in which such offer or invitation or solicitation is unlawful or is not authorised nor does it constitute an offer or invitation or solicitation to any person to whom it is unlawful to make such offer or invitation or solicitation. Copies of this Prospectus and the Application Forms and envelopes may be obtained on request, subject to availability, during office hours from: Daiwa Securities SMBC Singapore Limited 6 Shenton Way #26-08, DBS Building Tower Two Singapore 068809
21

and from members of the Association of Banks in Singapore and members of the SGX-ST and merchant banks in Singapore. A copy of this Prospectus is also available at: (a) (b) the SGX-STs website at http://www.sgx.com; and the Authoritys website at http://www.mas.gov.sg
The Application List will close at 12.00 noon on 23 September 2009 or for such further period or periods as our Company and the Vendors may, in consultation with the Manager, in their absolute discretion decide, subject to any limitations under all applicable laws, PROVIDED ALWAYS THAT where a supplementary prospectus or replacement prospectus has been lodged with the Authority pursuant to Section 241 of the Securities and Futures Act, the Application List shall be kept open for at least fourteen (14) days after the lodgement of the supplementary prospectus or replacement prospectus. Details of the procedures for applications to subscribe for and/or purchase the Invitation Shares are set out in Appendix F Terms, Conditions and Procedures for Application and Acceptance of this Prospectus.
22

INDICATIVE TIMETABLE FOR LISTING An indicative timetable is set out below for your reference: Indicative date/time 12.00 noon on 23 September 2009 24 September 2009 Event Close of Application List Balloting of applications, or otherwise as may be approved by the SGX-ST (in the event of an over-subscription for the Offer Shares) Commence trading on a ready basis Settlement date for all trades done on a ready basis on 25 September 2009
9.00 a.m. on 25 September 2009 30 September 2009
The above timetable is only indicative as it assumes that the date of closing of the Application List is 23 September 2009, the date of admission of our Shares to the Official List of the SGX-ST will be 25 September 2009, the SGX-STs shareholding spread requirement will be complied with and the New Shares will be issued and fully paid-up prior to 25 September 2009. The actual date on which our Shares will commence trading on a ready basis will be announced when it is confirmed by the SGX-ST. The above timetable and procedures may be subject to such modification as the SGX-ST may, in its discretion, decide, including the commencement date of trading on a ready basis. In the event of any changes in the closure of the Application List or the time period during which the Invitation is open, we will publicly announce the same: (i) through a SGXNET announcement to be posted on the Internet at the SGX-ST website http://www. sgx.com; and in local newspaper(s).
(ii)
Results of the Invitation including the allotment and/or allocation of the Invitation Shares and balloting (in the event of an over-subscription for the Offer Shares) will be provided through the channels in (i) and (ii) above. You should consult the SGX-ST announcement on ready trading date on the Internet (at the SGX-ST website http://www.sgx.com), teletext or the newspapers, or check with your brokers on the date on which trading on a ready basis will commence.
23
THE INVITATION
Invitation Size : 80,000,000 Invitation Shares comprising 2,000,000 Offer Shares and 78,000,000 Placement Shares. The New Shares, which form part of the Invitation, will, upon issue and allotment, rank pari passu in all respects with our existing issued Shares. S$0.295 for each Invitation Share. Our Directors consider that the listing and quotation of our Shares on the Official List of the SGX-ST will enhance our public image and enable us to tap the capital markets for the expansion of our business operations. The Invitation will also provide the members of the public with an opportunity to participate in the equity of our Company. The Offer comprises an invitation by our Company and the Vendors to the public in Singapore to subscribe for and/or purchase the 2,000,000 Offer Shares at the Invitation Price, subject to and on the terms and conditions of this Prospectus. The Placement comprises 78,000,000 Placement Shares by way of placement, subject to and on the terms and conditions of this Prospectus. Our Shares will be quoted on the Official List of the SGX-ST in Singapore dollars, subject to our admission to the Official List of the SGX-ST and permission for dealing in and for quotation of our Shares being granted by the SGX-ST and that no Stop Order is issued by the Authority.
Invitation Price Purpose of Invitation
: :
The Offer
The Placement
Listing Status
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PLAN OF DISTRIBUTION
Prior to the Invitation, there has been no public market for the Invitation Shares. The Invitation Price was determined by us and the Vendors in consultation with the Manager, the Underwriter and the Placement Agent based on, inter alia, market conditions and estimated market demand for our Shares determined through a book-building process. The Invitation Price is the same for all Invitation Shares and is payable in full on application. The Invitation comprises the following: 1) Offer Shares The Offer Shares are made available to the members of the public for subscription and/or purchase at the Invitation Price. Applications for the Offer Shares may be made by way of Offer Shares Application Forms or by way of Electronic Application. The terms and conditions and procedures for application and acceptance are described in Appendix F Terms, Conditions and Procedures for Application and Acceptance of this Prospectus. Pursuant to the terms and conditions contained in the Management and Underwriting Agreement signed between our Company, the Vendors, the Manager and the Underwriter dated 16 September 2009, the Manager has agreed to manage the Invitation and the Underwriter has agreed to underwrite the Offer Shares. The Underwriter may, at its absolute discretion, appoint one or more sub-underwriters. In the event of an under-subscription for the Offer Shares as at the close of the Application List, that number of Offer Shares not subscribed and/or purchased for shall be made available to satisfy excess applications for the Placement Shares to the extent there is an over-subscription for the Placement Shares as at the close of the Application List. In the event of an over-subscription for the Offer Shares as at the close of the Application List where the Placement Shares are fully subscribed and/or purchased or over-subscribed as at the close of the Application List, the successful applications for the Offer Shares will be determined by ballot or otherwise as determined by our Directors and the Vendors, in consultation with the Manager, and approved by the SGX-ST. 2) Placement Shares The Placement Shares are reserved for placement to members of the public and institutional investors at the Invitation Price. Applications for the Placement Shares may only be made by way of Placement Shares Application Forms. The terms, conditions and procedures for application of Placement Shares are set out in Appendix F Terms, Conditions and Procedures for Application and Acceptance of this Prospectus. Pursuant to the terms and conditions in the Placement Agreement signed between our Company, the Vendors and the Placement Agent dated 16 September 2009, the Placement Agent has agreed to subscribe for and/or purchase and/or procure subscriptions and/or purchases of the Placement Shares at the Invitation Price. The Placement Agent may, at its absolute discretion, appoint one or more sub-placement agents. In the event of an under-subscription for the Placement Shares as at the close of the Application List, that number of Placement Shares not subscribed for and/or purchased shall be made available to satisfy excess applications for the Offer Shares to the extent that there is an over-subscription for the Offer Shares as at the close of the Application List. Subscribers and/or purchasers of Placement Shares may be required to pay a brokerage up to 1.0% of the Invitation Price (plus prevailing Singapore goods and services tax thereon, if applicable), as well as stamp duties and other similar charges. None of our Controlling Shareholders or our Directors intends to subscribe for and/or purchase Shares in the Invitation.
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PLAN OF DISTRIBUTION
None of the members of our Companys management or our employees intends to subscribe for and/or purchase more than five per cent. (5.0%) each of the Invitation Shares in the Invitation. To the best of our knowledge, we are unaware of any person who intends to subscribe for and/or purchase more than five per cent (5.0%) of the Invitation Shares. However, through a book-building process to assess market demand for our Shares, there may be persons who may indicate their interests to subscribe for and/or purchase more than five per cent. (5.0%) of the Invitation Shares. If such persons were to make an application for more than five per cent. (5.0%) of the Invitation Shares pursuant to the Invitation and subsequently be allotted and/or allocated such number of Shares, we will make the necessary announcements at an appropriate time. The final allotment and/or allocation of Shares will be in accordance with the shareholding spread and distribution guidelines as set out in Rule 210 of the Listing Manual. Further, no Share shall be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus. Please also refer to the section entitled Management, Underwriting and Placement Arrangements of this Prospectus for further details on our Management and Underwriting Agreement and Placement Agreement.
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USE OF PROCEEDS AND LISTING EXPENSES

The total net proceeds to be raised from the Invitation (after deducting estimated Invitation expenses incurred in relation to the Invitation of approximately S$4.1 million (equivalent to approximately RMB19.7 million)(1)) will be approximately S$19.5 million (equivalent to approximately RMB92.4 million) (1). Net Proceeds from the issue of the New Shares The net proceeds to be raised by our Company from the issue of the New Shares (after deducting estimated Invitation expenses incurred in connection with the Invitation to be borne by our Company of approximately S$3.3 million) is estimated to be approximately S$15.8 million. The estimated allocation of the proceeds of the issue of New Shares to our principal intended uses and the estimated Invitation expenses are as follows: As a percentage of the gross proceeds from the issue of New Shares (%) 41.7 Estimated amount for each dollar of gross proceeds from New Shares ($) 0.417
Use of Proceeds (a) Construction of new premises at the Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province ( ) Expansion of production capacity and facilities Promoting GRAT.UNIT () and increasing marketing effort Enhancing R&D capabilities Working Capital
S$000 8,000
(b)
3,000
15.7
0.157
(c)
3,000
15.7
0.157
(d) (e)
1,000 813
5.2 4.2
0.052 0.042
Invitation Expenses to be borne by our Company (a) (b) (c) Listing expenses Professional fees Underwriting commission, placement commission and brokerage Miscellaneous expenses 61 1,838 958 0.3 9.6 5.0 0.003 0.096 0.050
(d)
505 19,175
2.6 100.0
0.026 1.000
Gross Proceeds from the Invitation

Note: (1)
Based on the exchange rate of S$1.00 to RMB4.750 as at the Latest Practicable Date.
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USE OF PROCEEDS AND LISTING EXPENSES

Please refer to the sections entitled Business Strategies and Future Plans and Management, Underwriting and Placement Arrangements of this Prospectus for further details. Pending the deployment of the net proceeds from the issue of New Shares as aforesaid, the fund may be placed in short-term deposits with banks and financial institutions or invested in money market instruments or used for our working capital requirements as our Directors deem fit in their absolute discretion. In the reasonable opinion of our Directors, no minimum amount must be raised from the Invitation. We will make periodic announcements on the use of the net proceeds from the issue of the New Shares as and when the funds are materially disbursed, and provide a status report on the use of the proceeds in our annual report. Net Proceeds from the sale of the Vendor Shares The net proceeds to be raised by the Vendors from the sale of the Vendor Shares (after deducting estimated Invitation expenses incurred in connection with the Invitation to be borne by the Vendors of approximately S$0.8 million) is estimated to be approximately S$3.6 million. All expenses will be borne by our Company and the Vendors in the proportion in which the number of Invitation Shares offered by each of them bears to the total number of Invitation Shares. The estimated amount of expenses of the Invitation is approximately S$4.1 million, of which S$3.3 million will be borne by our Company and approximately S$0.8 million will be borne by the Vendors. In the event that the estimated expenses listed above are in excess of the actual expenses incurred in connection with the Invitation, such excess will be applied towards our working capital. In the event that any part of our proposed uses of the net proceeds from the issue of the New Shares does not materialise or proceed as planned, our Directors will carefully evaluate the situation and may reallocate the intended funding to other purposes and/or hold such funds on short-term deposits for so long as our Directors deem it to be in the interest of our Company and our Shareholders, taken as a whole. Any change in the use of the net proceeds will be subject to the Listing Manual and appropriate announcements will be made by our Company on SGXNET.
28
MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS

Pursuant to the management and underwriting agreement dated 16 September 2009 (the Management and Underwriting Agreement), our Company and the Vendors appointed the Manager, and the Manager has agreed, to manage the Invitation. The Manager will receive a management fee from our Company and the Vendors for its services rendered in connection with the Invitation as the Manager, payable by our Company and the Vendors. Pursuant to the Management and Underwriting Agreement, the Underwriter agreed to underwrite the subscription or purchase of the Offer Shares on the terms and conditions therein, and our Company and the Vendors agreed to pay to the Underwriter an underwriting commission of 5.0% of the aggregate Invitation Price for the total number of the Offer Shares, in the proportion in which the number of Invitation Shares offered by each of our Company and the Vendors bears to the total number of the Invitation Shares. Payment of the commission shall be made whether or not any allotment, issue or transfer of the Offer Shares is made to the Underwriter or its nominees, except that no underwriting commission shall be payable for any portion of the Offer Shares which have been applied to satisfy excess applications for the Placement Shares. Pursuant to the placement agreement dated 16 September 2009 (the Placement Agreement), the Placement Agent has agreed to subscribe for and/or purchase and/or procure subscriptions and/ or purchases for the Placement Shares at the Invitation Price. In consideration of the agreement of the Placement Agent to subscribe for and/or purchase and/or procure subscriptions and/or purchases for the Placement Shares, our Company and the Vendors agreed to pay to the Placement Agent a placement commission of 5.0% of the aggregate Invitation Price for the total number of the Placement Shares subscribed and/or purchased and the Offer Shares applied to satisfy excess applications for the Placement Shares, in the proportion in which the number of the Invitation Shares offered by each of our Company and the Vendors bears to the total number of the Invitation Shares. Brokerage will be paid by our Company and the Vendors, in the proportion in which the number of the Invitation Shares offered by each of them bears to the total number of the Invitation Shares, to the Underwriter, members of the SGX-ST, banks and merchant banks and members of the Association of Banks in Singapore (other than DBS Bank Ltd) in respect of accepted applications made on Application Forms bearing their respective stamps, or to Participating Banks in respect of successful applications made through ATM applications or IB applications, at the rate of 0.25%, and in the case of DBS, 0.50% of the Invitation Price for each Offer Share. In addition, DBS levies a minimum brokerage fee of $10,000. Subscribers and purchasers of the Placement Shares may be required to pay a brokerage of up to 1.00% of the Invitation Price (plus prevailing Singapore goods and services tax thereon, if applicable) to the Placement Agent (or any sub-placement agent appointed by the Placement Agent), stamp duties and other similar charges in accordance with the laws and practices of the country of purchase, in addition to the Invitation Price, as applicable. Save as aforesaid, no commission, discount or brokerage, has been paid or other special terms granted by our Company within the two years preceding the date of this Prospectus or is payable to any Director, promoter, expert, proposed Director or any other person for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in or debentures of our Company or our subsidiaries. If there shall have been, since the date of the Management and Underwriting Agreement and prior to or on the close of the Application List: (a) any breach of the warranties or undertakings in the Management and Underwriting Agreement or any of such warranties is untrue or incorrect in any material respect; or any occurrence of certain specified events which comes to the knowledge of the Manager or the Underwriter; or any adverse change, or any development involving a prospective adverse change, in the condition (financial or otherwise) of our Company or of our Group as a whole; or
(b)
(c)
29

(d) any introduction or prospective introduction of or any change or prospective change in any legislation, regulation, order, policy, rule, guideline or directive (whether or not having the force of law and including, without limitation, any directive or request issued by the Authority, the Securities Industry Council of Singapore or the SGX-ST) or in the interpretation or application thereof by any court, government body, regulatory authority or other competent authority in Singapore; or any change, or any development involving a prospective change, in local, national or international financial (including stock market, foreign exchange market, inter-bank market or interest rates or money market), political, industrial, economic, legal or monetary conditions, taxation or exchange controls (including without limitation, the imposition or any moratorium, suspension or material restriction on trading in securities generally on the SGX-ST due to exceptional financial circumstances or otherwise); or any imminent threat or occurrence or any local, national or international outbreak or escalation of hostilities, insurrection or armed conflict, terrorist attacks (whether or not involving financial markets); or the outbreak of any infectious diseases, including any recurrence of severe acute repiratory syndrome on avian influenza; or any regional or local outbreak of disease that may have an adverse effect on the financial markets; or any other occurrence of any nature whatsoever,
(e)
(f)
(g)
(h)
(i)
which event or events shall in the opinion of the Manager (i) result or be likely to result in a material adverse fluctuation or adverse conditions in the stock market in Singapore or elsewhere or (ii) be likely to prejudice the success of the subscription or offer and/or purchase of the Invitation Shares (whether in the primary market or in respect of dealings in the secondary market) or (iii) make it impracticable, inadvisable, inexpedient or uncommercial to proceed with any of the transactions contemplated in the Management and Underwriting Agreement or (iv) be likely to have an adverse effect on the business, trading position, operations or prospects of our Company or of our Group as a whole or (v) be such that no reasonable underwriter would have entered into the Management and Underwriting Agreement or (vi) result or be likely to result in the issue of a stop order by the Authority pursuant to the SFA, or (vii) make it uncommercial or otherwise contrary to or outside the usual commercial practices of underwriters in Singapore for the Manager to observe or perform or be obliged to observe or perform the terms of the Management and Underwriting Agreement. Daiwa Securities SMBC Singapore Limited may terminate the Management and Underwriting Agreement if: (a) at any time up to the commencement of trading of our Shares on the SGX-ST, a Stop Order shall have been issued by the Authority in accordance with Section 242 of the SFA, whereupon the Management and Underwriting Agreement shall forthwith terminate and Daiwa Securities SMBC Singapore Limited shall be released and discharged from its obligations but without prejudice to their rights under or arising out of the Management and Underwriting Agreement, and the Management and Underwriting Agreement shall be of no further effect and (save for any antecedent breaches) no party to the Management and Underwriting Agreement shall have any claim or liability against the others for costs, damages, compensation or otherwise, except that our Company and the Vendors shall continue to be bound by their joint and several obligations to pay or make payment of the agreed management fee (and the associated termination fee) to Daiwa Securities SMBC Singapore Limited free from deduction or withholding for or on account of any taxes, duties or other levies (including but not limited to any taxes, duties or levies on the supply of goods and services), and our Company and the Vendors shall bear any tax, duty or levy payable by Daiwa Securities SMBC Singapore Limited arising from or in connection with The Goods and Services Tax Act (Chapter 117A) of Singapore in respect of the fees and/or commissions receivable by Daiwa Securities SMBC Singapore Limited under the Management and Underwriting Agreement in the proportion in which the number of the Invitation Shares offered by each of them bears to the total number of the Invitation Shares; or 30

(b) at any time after the registration of this Prospectus by the Authority but before the close of the Application List, our Company and the Vendors fail and/or neglect to lodge a supplementary or replacement prospectus (as the case may be) if they become aware of: (i) (ii) a false or misleading statement in this Prospectus; an omission from this Prospectus of any information that should have been included in this Prospectus under Section 243 of the Securities and Futures Act; or a new circumstance that has arisen since this Prospectus was lodged with the Authority and would have been required by Section 243 of the Securities and Futures Act to be included in this Prospectus if it had arisen before this Prospectus was lodged,
(iii)
that is materially adverse from the point of view of an investor; or (c) our Shares have not been admitted to the Official List of the SGX-ST on or before 25 September 2009 (or such other date as our Company, the Vendors and the Manager may agree).
The obligations under the Placement Agreement are conditional upon the Management and Underwriting Agreement not being determined or rescinded pursuant to the provisions of the Management and Underwriting Agreement. In the case of the non-fulfilment of any of the conditions in the Management and Underwriting Agreement or the release or discharge of Daiwa Securities SMBC Singapore Limited from its obligations under or pursuant to the Management and Underwriting Agreement, the Placement Agreement shall be terminated and the parties shall be released from their respective obligations under the Placement Agreement. In the event that the Management and Underwriting Agreement and/or the Placement Agreement is terminated, our Company reserves the right, at our absolute discretion, to cancel the Invitation. Save as disclosed and save for Daiwa Securities SMBC Singapore Limiteds role as the Manager, the Underwriter and the Placement Agent in connection with the Invitation, we do not, in the reasonable opinion of our Directors, have any material relationship with Daiwa Securities SMBC Singapore Limited.
31
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and is subject to, the more detailed information and financial statements (including the notes thereto) appearing elsewhere in this Prospectus. You should carefully consider all the information presented in this Prospectus, particularly the matters set out in the section entitled Risk Factors of this Prospectus before making an investment decision. OUR GROUP On 29 February 2008, our Company was incorporated in Singapore under the Companies Act as a limited liability company by shares under the name of Great Group Holdings Pte. Ltd.. On 22 June 2009, in connection with the Invitation, we were converted into a public limited company and changed our name to Great Group Holdings Limited. Our Group comprises our Company and our three wholly-owned subsidiaries, namely Fujian Great and Quanzhou Great in the PRC and Great Worldwide in the BVI. OUR BUSINESS Our Group is principally engaged in the design, manufacture, distribution and sales of mens and womens undergarments. We also manufacture and sell childrens and infants apparel. Our operations are principally based in the PRC. Our principal business activities can be categorised as follows: contract manufacturing of: mens and womens undergarments generally carried out on an ODM basis; and childrens and infants apparel generally manufactured on an OEM basis, which are mainly sold directly to owners of international brands and retail chains or through their purchasing agents or through trading companies mainly based in the PRC; manufacture and sale in the PRC of mens undergarments bearing our own GRAT.UNIC ( ) brand which are sold through various points of sales in the PRC. We also manufacture and sell in the PRC a limited range of womens undergarments bearing our own GRAT.UNIC () brand. Our GRAT.UNIC () brand of mens and womens undergarments is targeted at the middle to upper class consumer segments in the PRC with a preference for branded, high quality undergarments that are fashionable and comfortable; and manufacture and sale in the PRC of mens undergarments bearing the Superman trademark licensed from Warner Bros. Consumer Products Inc.. Further details of our business are set out in the section entitled "Business Overview" of this Prospectus.
32
PROSPECTUS SUMMARY
OUR FINANCIAL PERFORMANCE Our financial performance for the Relevant Period is summarised below. Please refer to the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations of this Prospectus for further details. Audited FY2007 262,286 56,463
(RMB000) Revenue Net profit
FY2006 146,363 22,248
FY2008 400,835 70,807
(S$000) Revenue Net profit

Note: (1)
FY2006 29,080 4,420
FY2007 51,938 11,181
FY2008 81,470 14,392
The financial information presented in Singapore dollars has been translated for the sole purpose of investor convenience and has not been audited. These translations are made with reference to the RMB/S$ exchange rate as shown in the section entitled Exchange Rates of this Prospectus and should not be construed as a representation that S$1.00 actually represent such RMB or could be converted into RMB at the rates indicated or any other rate.
OUR COMPETITIVE STRENGTHS Our Directors consider the following to be our core competitive strengths: (i) (ii) We have implemented a stringent quality inspection and quality control system; We have received industry recognition for our GRAT.UNIC () brand of undergarments which are targeted at the middle to upper class consumers; We have established an extensive sales and distribution network in PRC; We have established strong relationships with our customers; We have an experienced and professional management team; Our production facilities are strategically located; and We engage in continuous product design and development.
(iii) (iv) (v) (vi) (vii)
A detailed discussion of our competitive strengths is set out in the section entitled Competitive Strengths of this Prospectus. OUR PROSPECTS Our Directors believe that barring any unforeseen circumstances, our Groups prospects and the overall outlook of our business is favourable due to the following factors: (i) there was a growing demand for clothing contract manufacturing services, especially contract manufacturing undergarments and childrens and infants apparel offered in the PRC and expect this trend to continue. with increasing sophistication and brand awareness of consumers, there exists strong growth potential in the PRC market for our GRAT.UNIC () products.
(ii)
33
PROSPECTUS SUMMARY
Please refer to the section entitled Prospects of this Prospectus for a detailed discussion of our prospects. OUR BUSINESS STRATEGIES AND FUTURE PLANS Our business strategies and future plans for the growth and expansion of our businesses are as follows: (i) (ii) To expand our production capacity and facilities; To promote our GRAT.UNIC () brand within the PRC as well as to increase our marketing efforts for our contract manufacturing services and products; To enhance our R&D capabilities; To expand the range of our products; To enhance our logistics system; and To consider acquiring potential business in apparel and garments industry.
(iii) (iv) (v) (vi)
A detailed discussion of our business strategies and future plans is set out in the section entitled Business Strategies and Future Plans of this Prospectus. WHERE YOU CAN FIND US Our principal place of operations is in the PRC. Our registered office is located at 8 Cross Street, #1100 PWC Building, Singapore 048424 and our business address is Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City, Fujian Province, the PRC ( ). Our telephone number is (86) 595 28980997 and our facsimile number is (86) 595 28050997. Our internet address is http//:www.asia-great.com. Information contained on our website does not constitute part of this Prospectus.
34
INVITATION STATISTICS
INVITATION PRICE NAV
(1)
29.50 cents
NAV per Share based on the combined audited balance sheet of our Group as at 31 December 2008: (a) before adjusting for the estimated net proceeds from the issue of the New Shares and based on our Companys pre-Invitation share capital of 200,000,000 Shares after adjusting for the estimated net proceeds from the issue of the New Shares and based on our Companys post-Invitation share capital of 265,000,000 Shares 16.32 cents
(b)
18.29 cents
Premium of Invitation Price per Share over the NAV per Share as at 31 December 2008: (a) before adjusting for the estimated net proceeds from the issue of the New Shares and based on our Companys pre-Invitation share capital of 200,000,000 Shares after adjusting for the estimated net proceeds from the issue of the New Shares and based on our Companys post-Invitation share capital of 265,000,000 Shares
(2)
80.71%
(b)
61.31%
EPS
Historical net EPS of our Group for FY2008 based on our Company preInvitation share capital of 200,000,000 Shares Historical net EPS of our Group for FY2008 based on our Company preInvitation share capital of 200,000,000 Shares, assuming that the Service Agreement had been in place from the beginning of FY2008 PRICE EARNINGS RATIO Historical price earnings ratio based on the Invitation Price and the historical net EPS of our Group for FY2008 Historical price earnings ratio based on the Invitation Price and the historical net EPS of our Group for FY2008, assuming that the Service Agreement had been in place from the beginning of FY2008 NET OPERATING CASH FLOW
(3)
7.20 cents
7.15 cents
4.10 times
4.13 times
Historical net operating cash flow per Share of our Group for FY2008 based on our Companys pre-Invitation share capital of 200,000,000 Shares Historical net operating cash flow per Share of our Group for FY2008 based on our Companys pre-Invitation share capital of 200,000,000 Shares, assuming that the Service Agreement had been in place from the beginning of FY2008
1.44 cents
1.39 cents
35
INVITATION STATISTICS
PRICE TO NET OPERATING CASH FLOW RATIO Ratio of Invitation Price to historical net operating cash flow per Share of our Group for FY2008 based on our Companys pre-Invitation share capital of 200,000,000 Shares Ratio of Invitation Price to historical net operating cash flow per Share of our Group for FY2008 based on our Companys pre-Invitation share capital of 200,000,000 Shares, assuming that the Service Agreement had been in place from the beginning of FY2008 MARKET CAPITALISATION Our market capitalisation based on the post-Invitation share capital of 265,000,000 Shares at the Invitation Price
Notes: (1) (2) (3) NAV as at 31 December 2008 is computed based on exchange rate of RMB4.760 to S$1.00, being the closing rate as at 31 December 2008. The EPS for FY2008 is computed based on exchange rate of RMB4.920 to S$1.00, being the average rate for FY2008. Net operating cash flow is defined as net cash provided by operating activities which is derived from net profit after adjustments as set out in Appendix A Independent Auditors Report on the Combined Financial Statement for the Financial Years ended 31 December 2006, 2007 and 2008. Net operating cash flow is calculated based on exchange rate of RMB4.920 to S$1.00, being the average rate for FY2008.
20.45 times
21.17 times
S$78.18 million
36
RISK FACTORS
Prospective investors should carefully consider and evaluate each of the following considerations and all other information set forth in this Prospectus before deciding to invest in our Shares. To the best of our Directors knowledge and belief, all risk factors that are material to investors in making an informed judgement have been set out below. If any of the following considerations and uncertainties develop into actual events, our business, financial conditions, results of operations and prospects could be materially and adversely affected. In such cases, the trading price of our Shares could decline and you may lose all or part of your investment in our Shares. This Prospectus also contains forward-looking statements having direct and/or indirect implications on our future performance. Our actual results may differ materially from those anticipated by these forwardlooking statements due to certain factors including the risks and uncertainties faced by us, as described below and elsewhere in this Prospectus. RISKS RELATING TO OUR BUSINESS We are vulnerable to the uncertain economic outlook Our business is, to a large extent, subject to the general economic conditions in the markets that we operate in, be it domestically or overseas. Factors such as the demand of the end consumers for our products and the delivery schedule can affect our business operations. A more cautious consumer spending behaviour is observed during periods of economic downturn, which in turn will affect the overall demand for our products. As a result, our GRAT.UNIC () brand of products which are targeted at the middle to upper class consumer segments in the PRC and which are higher-priced, may not gain a wide level of market acceptance as anticipated by our Group. Products sold by our overseas contract manufacturing customers are predominantly household brands with basic designs which are reasonably priced and targeted at the mass market and which are believed to be more popular and less volatile in view of their practicality and value-for-money compared to those with fashionable or complex designs. As such, we believe that there will be a continuous demand for our contract manufacturing products. There is, however, no assurance that the demand for our contract manufacturing products would not be adversely affected. Given the uncertainties as to the future economic outlook, we cannot give any assurance that we will be able to maintain our existing level of orders for our contract manufacturing products and for products bearing our GRAT.UNIC () brand and Superman licensed trademark or that we will be able to react promptly to any change in economic conditions. In the event we fail to react promptly to the changing economic conditions, our performance and profitability could be adversely affected. There is also no assurance that the factors which have contributed to the success of our Group during the past few years will continue to occur in the future. Our business performance, future plans and operations will be adversely affected if these conditions deteriorate in the future. We are exposed to risks arising from credit terms extended to our customers We are exposed to payment delays and/or defaults by our customers who are granted credit terms. These customers may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons resulting from the current disruption in the global credit markets. As at 31 December 2008, our trade receivables balance was approximately RMB80.9 million, which accounted for approximately 40.2% of our current assets balance. Our Group typically extends to our customers credit terms of up to 90 days. For FY2006, FY2007 and FY2008, our average trade receivable turnover days are 37 days, 53 days and 63 days respectively. Therefore, our financial position and profitability are dependent on the creditworthiness of our customers. The Group has factored export trade receivables with carrying amounts of approximately RMB2.2 million, RMB3.9 million and RMB22.3 million to banks in exchange for cash during the Relevant Period. The transactions have been accounted for as collateralised borrowing as the banks have full recourse to the Group in the event of default by the debtors.
37
RISK FACTORS
As a result of the current global economic downturn, we are exposed to credit risks due to the inherent uncertainties in our customers business environment, particularly those of our major overseas customers, most of whom are based in the EU. We are subject to the risk that our overseas customers may default in payment. In November 2008, we obtained an export credit insurance to cover such losses of up to US$5.0 million. Please refer to the section entitled Insurance of this Prospectus for more information. Although there has been no material collection problem for trade receivables or bad debts in the Relevant Period and up to the Latest Practicable Date, there is no guarantee as to whether our customers will be able to fulfill their debt obligations in the future. Any inability on the part of our customers to pay or pay on time, such amounts due to us may have a material adverse impact on our financial performance and operating cash flow. Please refer to the section entitled Credit Management of this Prospectus for more details. We are exposed to risks arising from advances made to our suppliers In FY2008, we have over 300 suppliers, including one-off suppliers due mainly to the variety and wide range of our product offerings. We may be required to place advances with our suppliers for the following circumstances: (i) when ordering from new suppliers; (ii) when ordering customised raw materials with the existing suppliers; and (iii) to secure better pricing for large orders. We have advances of RMB50.2 million placed with 290 suppliers as at 31 December 2008 and RMB50.1 million placed with 205 suppliers as at the Latest Practicable Date. During the Relevant Period, the largest amount of deposit we placed with our suppliers were RMB14.1 million, RMB26.3 million and RMB62.1 million respectively on an aggregate basis (based on month-end balances). As at the Latest Practicable Date, advances of between RMB1.1 million and RMB5.4 million have been made to eight suppliers. We are exposed to defaults by our suppliers with whom we have placed advances. These suppliers may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons resulting from the current disruption in the global credit markets. Although there has been no default from advances to our suppliers in the Relevant Period and up to the Latest Practicable Date, there is no guarantee that they will be able to fulfill their obligations in the future. Any inability on the part of our suppliers to fulfill their obligations may have a material adverse impact on our financial performance and operating cash flow. Please refer to the section entitled Credit Management of this Prospectus for more details. We may not be able to successfully implement our expansion plan We intend to expand our business by expanding our production capacity and facilities as described in the section entitled Business Strategies and Future Plans of this Prospectus although our current production facilities are not fully utilised. There is no assurance that our business expansion will be successful or lead to an increase in our profits as our business expansion plan entails a number of risks, including but not limited to capital expenditure incurred in respect of the cost of setting up new production facility and working capital requirement. It is estimated that we will incur a total cost of approximately S$26.0 million to finance the construction of new production premises and the acquisition of additional production lines. As our new production facilities will be newly established, there is no assurance that it will be able to meet its targeted operating efficiency. Failure to do so will result in us not being able to realise our expected financial returns and may adversely affect our business and financial performance. To tap on the potential growing demand for our products and in anticipation that higher production capacity required to cater for this growing demand shall exceed the current production capacity even on a full utilisation rate basis, we intend to increase our existing production capacity by 100%. However, we cannot give any assurance that we will be able to secure sufficient orders to fully utilise our production facilities. The increase in capital expenditure without corresponding increase in revenue will have an adverse impact on our profitability and financial performance.
38
RISK FACTORS
Our ability to recruit and retain relevant qualified employees and to control our costs will be crucial in order to manage any future growth of our operation and personnel resulting from our business expansion. In the event that we fail to manage our business expansion, our business and financial performance will be adversely affected. We are susceptible to fluctuations in the prices of raw materials and the availability of such raw materials The main raw materials that we use in the manufacture of our products include fabrics, yarn, spandex, elastic bands, lace and accessories. Accordingly, our operations may be vulnerable to fluctuations in the supply and market prices of these raw materials. For FY2006, FY2007 and FY2008, the cost of our raw materials accounted for approximately 80.7%, 86.6% and 88.6% of our total cost of sales respectively. Any significant increase in prices of our main raw materials will adversely impact on our profitability and financial performance if we are unable to pass on such price increases to our customers or if we are unable to find alternative sources of raw materials at equivalent or competitive prices. In addition, in the event that any of our suppliers ceases or limits the supply of raw materials to us or is unable to deliver the raw materials that we require on time, we may face difficulty in obtaining sufficient quantities of raw materials for our business operations and this will adversely affect our business and financial performance. As at the Latest Practicable Date, we have not experienced any material price fluctuations or shortage in the supply of raw materials. We are exposed to risks associated with outsourcing the production of some of our contract manufacturing products to a third party contract manufacturer We have outsourced the production of some of our contract manufacturing products to a third party manufacturer in the PRC. As at the Latest Practicable Date, the total amount of cost of sales relating to such outsourcing accounted for less than 10% each of our turnover and cost of sales respectively. While we select our third party manufacturer by assessing his technical expertise, financial strength and track record, there is no assurance that the third party manufacturer whom we rely upon will not default in the delivery of our products or will be able to conform to our customers specifications and requirements. In the event our third party manufacturer fails to produce our contract manufacturing products in accordance with the specifications of our customers on a timely basis, we may face delays in the delivery of, or be unable to meet demand for our contract manufacturing products as we remain accountable to our customers in respect of the contract manufacturing products. This would in turn have an adverse impact on our financial performance and profitability. In addition, any failure by such third party manufacturer to satisfy product standards and safety requirements prescribed by our customers and regulatory authorities may adversely affect our reputation in the industry and our ability to continue to provide contract manufacturing services to our customers. This may in turn adversely affect our business operation, prospects and financial condition. We may not be able to sustain our current growth in sales as we do not have any long-term contracts with our customers to whom we provide contract manufacturing services Our contract manufacturing services are entirely operated on an order-by-order basis and we do not enter into long-term contracts for such services with our customers. As such, our sales may fluctuate depending on our customers orders. The future growth of our business depends on our ability to maintain and increase the orders for our products from our existing customers and our ability to procure new customers. In the event that these customers cease or significantly reduce their purchase of our merchandise, or we are unable to maintain good relationship with our customers to whom we provide contract manufacturing services or we are unable to obtain substitute orders of comparable size in a timely manner, our profitability and financial performance will be adversely affected.
39
RISK FACTORS
We may fail to successfully build up our GRAT.UNIC () brand and any negative publicity on our brand will adversely affect our performance and prospects We first launched our own range of mens undergarments and womens undergarments under our GREAT () brand in the PRC in February 2006. We subsequently re-branded our undergarments merchandise under the GRAT.UNIC () brand in March 2007. To create market awareness and promote our own range of undergarments, we adopted various marketing strategies as described under the section entitled Sales and Marketing of this Prospectus. We, however, face strong competition in the mens undergarment industry in the PRC from several domestic and established international brands who may engage in aggressive marketing campaigns or reduce their selling prices to vie for consumers attention and greater market share in the industry. Should we be unable to build the recognition and distinctiveness of our GRAT.UNIC () brand, we may not be able to capture market share successfully and our prospects and profitability will in turn be adversely affected. In addition, consumer perception of our brand may be affected by various factors such as negative publicity if we are unable to maintain the quality of our products or if the retail activities of our distributors and retailers are poorly managed. In such event, any adverse publicity against our brand may erode the consumers confidence and perception of our products and consequently, we may not achieve the consumers acceptance level as planned. As a result, our profitability and financial performance will be adversely affected. We are dependent on our established network of distributors Our GRAT.UNIC () brand and Superman licensed trademark of undergarments are sold through various points of sales comprising specialty stores or dedicated shelf spaces located strategically in shopping malls, departmental stores and commercial areas of major cities in the PRC. We sell directly to these points of sales or through our distribution networks. This is a strategic arrangement by our Group so as to minimise our Groups capital expenditure in establishing our own direct retail stores. Hence we are dependent on our relationship with our network of distributors and retailers to effectively market and sell our GRAT.UNIC () brand and Superman licensed trademark merchandise in the PRC. Please refer to the section entitled Sales and Marketing of this Prospectus for further details. Should we fail to maintain a close working relationship with our distributors and retailers, our results of operation and financial position will be adversely affected. We may face product liability claims which are costly and may result in negative publicity We undertake contract manufacturing of undergarments and childrens and infants apparel. We also manufacture and sell undergarments under our own GRAT.UNIC () brand and under Superman trademark which has been licensed to us for used in the PRC (including Hong Kong and Macau). Whilst we adhere to stringent quality control procedures during our production process, there is no assurance that our products will be free from defects. Any production accident or negligence by our production staff during the production process may result in defects in our products and render them unsuitable or unsafe for their intended use. If any of our products are found to be unsafe or unfit for its intended purpose, we may face product liability claims from consumers arising from injuries, loss or damages suffered by them. As we do not maintain any product liability insurance, the occurrence of any product liability claim brought against us, with or without merit, could harm our reputation in the industry and lead to significant legal fees which will adversely affect our financial position, business operations and prospects. We are subject to foreign exchange risk As at the Latest Practicable Date, our revenue is mainly denominated in RMB and US$. In FY2006, FY2007 and FY2008, approximately 63.6%, 32.5% and 27.3% respectively of our revenue were denominated in RMB whilst 36.4%, 67.5% and 70.1% respectively of our revenue were denominated in US$. Our costs of sales are denominated in RMB. During the Relevant Period and up to the Latest Practicable Date, all of our total purchases were denominated in RMB.
40
RISK FACTORS
To the extent that our revenue and purchases are not matched in the same currency and to the extent that there are timing differences between invoicing and collection or payment, as the case may be, we are exposed to any adverse fluctuations of US$ against RMB or vice versa. To mitigate our foreign exchange exposure risk, we have entered into foreign exchange forward contracts to hedge our foreign exchange exposure. Please refer to the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations Foreign Exchange Management for further details on our Groups hedging policy. However, there is no assurance that such measures will be sufficient in hedging against all foreign currency fluctuations. In the event that we are not able to sufficiently hedge our foreign exchange exposure, and should there be any significant fluctuations on the exchange rate of RMB and US$, our financial position may be adversely affected. We may have to relocate from our office and production facilities located in Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) as the lessor of these premises do not possess the requisite building certificates in respect of these premises As at the Latest Practicable Date, we operate four production lines located at Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) as described in more details in the section entitled Properties and Fixed Assets of this Prospectus, which represents approximately 22.2% of our total 18 production lines of our Group. The lessor of these premises, Ruiming Industry and Trade Co., Ltd. () does not possess the relevant building ownership certificate in respect of these premises and as such, the lessor does not have the legal capacity to lease these premises to us and we may be required to vacate these premises. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have, for the purpose of this Prospectus, advised on 27 July 2009 that other than the risk that we may have to relocate from these premises, we do not face other legal liabilities under the PRC law which may arise from the lease where the lessor of these premises does not possess the relevant building ownership certificate in respect of these premises. Although we estimate our relocation costs to be approximately between RMB100,000 to RMB200,000, any relocation is also likely to involve costs which cannot be quantified at present, such as disruption to the production process and business operations during the relocation. In the event that such further costs arise and are significant, our financial performance and profitability will be adversely affected. We may be exposed to possible infringements of our intellectual property rights and the availability of counterfeit GRAT.UNIC () and GREAT () products in the market We believe that our trademarks are an integral aspect of our Groups strategy on branding and play a key role in increasing brand awareness for our products. We currently own GRAT.UNIC, and trademarks in the PRC and are in the process of transferring certain trademarks including GREAT from our Executive Chairman and CEO, Weng Wenwei to our Group. We are also in the process of applying for the registration of other trademarks in the PRC for the branding, marketing and sale of our products. In addition, we have been granted an exclusive licence by Mr Weng to use several patents in the PRC for mens undergarment designs. Further information on our intellectual property rights are set out in the section entitled Intellectual Property of this Prospectus. However, there is no assurance that our intellectual property rights will not be infringed. In the event that other parties infringe our intellectual property rights by unlawfully passing off their merchandise under our brand names, or by infringing on our patents, we may face great difficulties and costly litigation in order to fully protect our intellectual property rights which may in turn affect our profitability. There can also be no assurance that our trademarks pending registration will be registered by the relevant authorities in the PRC. In the event that our trademark applications are not approved for registration, we will have no legal recourse to prevent the use of such trademarks by third parties. We are not aware of any violations or infringements of our intellectual property rights from the Relevant Period and up to the Latest Practicable Date. However, there is no assurance that measures taken by us to protect our trademarks will be adequate to prevent brand infringement, product imitation and counterfeit 41
RISK FACTORS
by third parties. In the event that we are unsuccessful in preventing the abuse of our intellectual property rights, the availability of counterfeit goods in the market may reduce the demand for our products and this would adversely affect our brand reputation, operating results and financial condition. We may inadvertently infringe third-party intellectual property rights We may be subject to legal suits if we infringe third party intellectual property rights. Our intellectual property rights and proprietary know-how may be subject to dispute and it is possible that there is competing technical know-how vested in third parties. As at the date of this Prospectus, we are not aware of any violations or infringements of intellectual property rights of third parties by us. However, there is no assurance that third parties may not assert claims against us that we have infringed their intellectual property rights. These is also no assurance that as we develop design and marketing methods for our products, we will not inadvertently infringe the intellectual property rights of third party. Any such claims, with or without merit, could be time consuming, result in costly litigation and diversion of technical and management personnel, cause product shipment delays, require us to develop non-infringing products or enter into licensing agreements. Such licensing agreements, if required, may not be available on terms acceptable to us or at all. In the event of a successful claim of intellectual property rights infringement against us and our failure or inability to develop non-infringing products or to license the infringed intellectual property rights in a timely or cost-effective basis, our business, operations and financial performance will be adversely affected. Some of the international brand owners we have relationships with are sensitive about environmental and social responsibility standards and any perception on their part that we may fail to meet those standards could adversely affect our operations and profitability Apparel brand owners have become increasingly sensitive about their reputations with respect to environmental and social responsibilities. Accordingly, certain international brand owners (including some of whom we have relationships with) may require undergarment manufacturers to meet certain environmental standards, corporate social responsibility standards and/or social responsibility standards set forth by governmental or non-governmental organizations. In January 2008, we received the SA 8000:2001 as a testimony of our compliance with global social accountability standards for having in place a fair and equitable work environment. As at the Latest Practicable Date, our Directors are not aware of any failure on our part to meet the environmental standards, corporate social responsibility standards, and social or regulatory environmental requirements (if any) of our customers. In the event that we fail to fulfill these standards or if we are publicly perceived to have failed to fulfill those standards or if we are otherwise publicly associated with poor environmental or social responsibility standards, we may face complaints or claims from our customers or experience decreased business from our customers which could adversely affect our operations and financial performance. There is no assurance that we may continue to be in compliance with the product standards and safety requirements prescribed by customers and regulatory authorities Our contract manufacturing products are mainly exported to owners of international brands and retail chains in various countries such as the Netherlands, Germany, Spain and UK. To qualify as a supplier to these overseas customers, we may be required to comply with certain standards and obtain certifications in relation to product standards and safety requirements such as the Oeko-Tex Standard 100 certification. In the event that there is any change in the product standards and/or safety requirements, and if we are unable to comply with the revised standards or requirements and obtain the requisite certifications, we may not be able to continue providing our contract manufacturing services to these overseas customers and this will in turn adversely affect our financial performance. We are reliant on our management team, in particular our Executive Chairman and CEO, Weng Wenwei We attribute our success to the leadership and contributions of our management team comprising our Executive Directors and Executive Officers, in particular our Executive Chairman and CEO, Weng Wenwei, who are responsible for implementing our business plans and driving our growth.
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In addition to being familiar with our business, our management team has established strong relationships with our customers and suppliers. Our continued success is therefore dependent to a large extent on our ability to retain our key management personnel. The loss of our key management staff without suitable and timely replacements or our inability to attract and retain experienced personnel may adversely affect the business and future growth of our Group. We operate in a highly competitive industry As our manufacturing operations in Fujian Province, the PRC are located amongst clusters of textile and garment industries, there are many undergarment and childrens and infants apparel manufacturers who may offer similar services and products. As such, we face keen competition from these manufacturers for our contract manufacturing business. As for our GRAT.UNIC () brand of products, our Directors believe that our competitors include well-known international brands and PRC domestic brands of undergarments. Some of these competitors may have significantly greater financial, technical and marketing resources, stronger brand name recognition and larger existing customer base than our Group. Our Directors also believe that these competitors may have the ability to offer more competitive pricing, respond more quickly to new or emerging technologies, adapt more quickly to changes in customer requirements and devote greater resources to the development, promotion and sales of their products and services than us. Amid the current global economic downturn, the owner of international brands and retail chains who outsource their manufacturing requirements to undergarment, childrens and infants apparel contract manufacturers in the PRC may become more cost-conscious. Accordingly, we may lose our existing overseas customers to our competitors if we fail to maintain our competitiveness in terms of pricing, product offerings and services. Increased competition may result in price reduction, reduced margin and loss of market share, any of which could materially and adversely affect our results of operations. In the event that we are not able to remain competitive and compete effectively with existing or new competitors in the future, our profitability and operations will be adversely affected. Please refer to the sections entitled Competition and Competitive Strengths of this Prospectus for more information on our major competitors and competitive strengths. We may not be able to respond to fashion and market trends successfully and produce commercially viable products We believe our success depends on our ability to keep abreast of changing fashion and market trends and to produce commercially viable merchandise with sufficient mass market appeal. Our design team in our R&D Department, together with our sales and marketing staff is responsible for developing new designs for our mens and womens undergarments. There is however no assurance that all new designs that we develop will be commercially viable or successful. If we are unable to continuously develop products which appeal to customers and meet the changing fashion trends and customer needs such that our products will be commercially viable, our profitability and operating results will be adversely affected. In the long term, this could also lead to a loss or diminution in the commercial value of our GRAT.UNIC () brand. We may be affected by the shortage of skilled employees and any significant increase in labour cost in the PRC Our business is labour intensive and our continued success depends in part on our ability to attract, motivate and retain a sufficient number of skilled employees such as designers, seamstresses and other operational personnel. Any failure to recruit a sufficient number of skilled personnel to support our business operations or any material increase in employee turnover rates could have an adverse impact on our business operations and financial performance. Competition for skilled employees may require us to pay higher wages to attract and retain sufficient and capable employees. In the event of any substantial increase in labour costs, our profitability and financial performance may be adversely affected.
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Our labour costs will also be affected by increases in the mandatory minimum wage guidelines prescribed by the local government in Fujian, the PRC, where our production facilities are located. In the event of an increase in any of the minimum wage requirements, we would need to increase the wages of our affected employees and we may also need to increase the wages of other employees who are paid above the minimum wage due to higher pay expectations. This will result in an increase in our costs of operations. Consequently, if we are not able to pass on the increased labour costs to our customers, our financial performance will be adversely affected. We may be affected by the legal, social, economic and political conditions in the countries/ territories where our customers are based We sell our GRAT.UNIC () brand and Superman licensed trademark of merchandise to customers within the PRC through various points of sales in the PRC while sales of our contract manufacturing merchandise are export-oriented. Accordingly, the sales of our products may be affected by changes in the social, economic, political and regulatory conditions in the countries in which our customers are based. Factors such as fluctuations in exchange rates, economic recession, inflation, changes in government or regulatory policies, changes in labour policies and environmental policies, implementation of trade and non-trade barriers can affect our operations and financial results. Our revenue and profits will be adversely affected if there is any change in policies and/or other economic and/or political developments and/or general consumer spending behaviour that may have a negative impact on our operations and business. Overseas countries that our products are sold in may impose import restrictions on our products. Specifically, we may be affected by changes in laws and regulations in the PRC and the EU relating to the export of textiles and clothing products from the PRC to the EU For FY2008, approximately 87.6% of our revenue was derived from sales of our merchandise exported either through purchasing agents of or through trading companies mainly based in the PRC, or directly to our overseas customers to whom we provide contract manufacturing services. Most of these customers are based in the EU countries such as the Netherlands, Germany, Spain and UK. In 2005, 2006 and 2007, the PRC authorities had imposed export quotas limiting the export of certain textile and clothing products to the EU pursuant to an agreement between the EU and the PRC in June 2005. This agreement affected the export of ten categories of products from the PRC to the EU, namely pullovers, mens trousers, blouses, T-shirts, dresses, cotton fabrics, bras, flax yarn, bed linen, table and kitchen linen. With effect from 1 January 2008, export quotas were lifted pursuant to an announcement by the PRC Ministry of Commerce in November 2007, and a company exporting textile products from the PRC to the EU was no longer subject to export quotas save for eight categories of products, namely T-shirts, pullovers, mens trousers, blouses, dresses, bras, bed linen and flax yarn, which had to be prequalified from the PRC. Other than our mens top undergarments (which are classified as T-shirts) and bras which had to be pre-qualified for export, other types of undergarments that we manufacture were not affected. Our PRC subsidiary, Quanzhou Great was pre-qualified for having met the relevant pre-requisites imposed by the PRC authorities for the export of our products, namely, bras and mens top undergarments from the PRC to the EU. Though one of our PRC subsidiaries, Fujian Great, was not pre-qualified for exports, this by itself did not affect our Group as we were able to use Quanzhou Great to manufacture and sell products that fall under the restricted categories. With effect from 1 January 2009, the above pre-qualification requirements have ceased to apply. Therefore as at the Latest Practicable Date, the export of our products to the EU is not subject to any limits or restrictions. There is, however, no assurance that export quotas or other measures restricting the export of textile products will not be imposed by the PRC authorities after 2009. Such limits or restrictions may include limits on the aggregate quantity of textiles and clothing product exported from the PRC to the EU, or the imposition of tariffs or other duties on any textiles or clothing products exported from the PRC to the EU.
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There is also no assurance that the EU or the PRC government will not, in the future, reinstate limits or restrictions on the export of textile and clothing products from the PRC to the EU. Such limits or restrictions may include limits on the aggregate quantity of textiles and clothing product exported from the PRC to the EU, or the imposition of tariffs or other duties on any textiles or clothing products exported from the PRC to the EU. In the event that such limits or restrictions are imposed, the exports of our products to the EU may be adversely and materially affected. If quotas are imposed, we may not be able to obtain sufficient allocation of quotas to fulfil orders from our customers. If tariffs or other duties are imposed and if our customers do not agree to fully bear such tariffs or duties, our operating costs and profitability will be materially and adversely affected. Our operations may be affected should we fail to comply with the conditions stipulated in our licences, permits or approvals, or in the event that any of our licences or approvals is not renewed or extended We are required to obtain the relevant licences, permits and approvals from the PRC authorities to carry on our business. As at the date of this Prospectus, we have obtained all the necessary licences and permits for our business operations in the PRC and have complied with all relevant laws and regulations of the PRC. However, some of these permits and business licences are subject to periodic renewal and reassessment as well as fulfillment of conditions imposed by the relevant government authorities, and the standards of compliance required in relation thereto may from time to time be subject to changes. Non-renewal or revocation of our licences, permits and approvals will have a material adverse effect on our operations as we may not be able to carry on our business without such licences, permits and approvals being granted or renewed. In such an event, our business and financial performance may be adversely affected. In addition, it may be costly for us to comply with any subsequent modifications of, additions or new restrictions to, these compliance standards. Should there be any subsequent modifications of, or additions or new restrictions to, the current compliance standards, we may incur additional costs to comply with the new or modified standards which may adversely affect our business and financial performance. RISKS RELATING TO THE PRC Uncertainty in the PRC legal system may make it difficult for us to predict the outcome of any disputes that we may be involved in The PRC legal system is based on the PRC Constitution and is made up of written laws, regulations, circulars, administrative directives and internal guidelines. The PRC government is still in the process of developing its legal system, so as to meet the needs of investors and to encourage foreign investment. As the PRC economy is undergoing development generally at a faster pace than its legal system, some degree of uncertainty exists in connection with whether and how existing laws and regulations will apply to certain events or circumstances. Some of the laws and regulations, and the interpretation, implementation and enforcement thereof, are still subject to policy changes. There is no assurance that the introduction of new laws, changes to existing laws and the interpretation or application thereof or the delays in obtaining approvals from the relevant authorities will not have an adverse impact on our business or prospects. Further, precedents on the interpretation, implementation and enforcement of PRC laws and regulations are limited, and unlike other common law countries such as Singapore, decisions on precedent cases are not binding on lower courts. As such, the outcome of dispute resolutions may not be consistent or predictable as in the other more developed jurisdictions and it sometimes may be difficult to obtain swift or equitable enforcement of the laws in PRC, or obtain enforcement of judgement by a court of another jurisdiction.
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Our operations and business could be adversely affected by changes in the PRCs political, economic and social conditions Since 1978, the PRC government has undertaken various reforms of its economic systems. Such reforms have resulted in economic growth for the PRC in the last two decades. However, many of the reforms are unprecedented or experimental, and are expected to be refined and modified from time to time. Other political, economic and social factors may also lead to further readjustment of the reform measures. This refinement and adjustment process may consequently have a material impact on our operations in the PRC or a material adverse impact on our financial performance. Our results and financial condition may be adversely affected by changes in the PRCs political, economic and social conditions and by changes in policies of the PRC government or changes in laws, regulations or the interpretation or implementation thereof. We may be adversely affected by changes to the laws and regulations of the PRC and the interpretation and implementation thereof As the PRC economy is developing at a rapid pace, there may be some ambiguity in the application of existing laws and regulations, and the interpretation adopted by us may be different from that adopted by the relevant PRC authorities. Furthermore, some PRC laws and regulations and the interpretation, implementation and enforcement thereof are still in transition and may therefore be subject to policy changes. In the event of changes in the PRC central or provincial laws, in provincial regulations or in policies in the PRC which are unfavourable to our business, our Groups business operations and financial performance may be adversely affected. The PRC legal system is a codified legal system comprising written laws, regulations, circulars, administrative directives and internal guidelines. Unlike common law jurisdictions like Singapore, decided cases do not form part of the legal structure of the PRC and thus have no binding effect. Experience in the implementation, interpretation and enforcement of the laws and regulations and of commercial contracts, undertakings and commitments entered into are also limited. As such, the administration of PRC laws and regulations may be subject to a certain degree of discretion by the authorities. The outcome of dispute resolutions may not have the level of consistency or predictability as in other countries with more developed legal systems. Due to such inconsistency and unpredictability, if we should be involved in any legal dispute in the PRC, we may experience difficulties in obtaining legal redress or in enforcing our legal rights. Our business and operations in the PRC entail the procurement of licences and permits from the relevant authorities. Thus, our business and operations in the PRC are subject to the PRC laws and regulations. From time to time, changes in laws and regulations or the implementation thereof may also require us to obtain additional approvals and licenses from the PRC authorities for the conduct of our operations in the PRC. In such event, we may need to incur additional expenses in order to comply with such requirements. This will in turn affect our financial performance as our business cost will increase. Furthermore, there can be no assurance that such approvals or licences will be granted to us promptly or at all. If we experience delay in obtaining or are unable to obtain such required approvals or licenses, our operations and business in the PRC, and hence our overall financial performance and condition, will be adversely affected. New rules on mergers and acquisitions of domestic enterprise by foreign investors On 8 August 2006, six regulatory bodies acting together (including the Ministry of Commerce (MOC), China Security Regulatory Commission (CSRC)) at state level issued the new Regulations on Foreign Investors Merging with or Acquiring Domestic Enterprises (the 2006 M&A Rules) which took effect on 8 September 2006. Pursuant to Articles 39 and 40 of Section 3 of Chapter 4 of the of the 2006 M&A Rules, the overseas listing of offshore special purpose vehicles (SPV), which are directly or indirectly established or controlled by PRC entities or individuals, are subject to the prior approval from CSRC (the CSRC Approval). On 21 September 2006, CSRC promulgated permit guidelines on Domestic Enterprises Indirectly Overseas Issuing or Listing and Trading Their Securities (the CSRC Permit Guidelines). The CSRC Permit Guidelines provide that SPVs referred to in Articles 39 and 40 of the New M&A Rules are subject to CSRC Approval. However, the CSRC Permit Guidelines do not elaborate whether SPVs, which have completed their restructuring exercises prior to 8 September 2006 must retroactively obtain the CSRC Approval. 46
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As the 2006 M&A Rules are applicable only to a foreign investor or a SPV who (i) purchases the stock right of a shareholder of a non-foreign-invested enterprise in the PRC; (ii) increases the capital of a domestic company so as to convert and re-establish a domestic company as a foreign-invested enterprise; (iii) establishes a foreign-invested enterprise and through this foreign-invested enterprise purchases and operates the assets of a domestic enterprise by agreement of that enterprise; or (iv) purchases the assets of a domestic enterprise by an agreement and uses this asset to establish a foreign-invested enterprise and operate the assets, Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have, for the purpose of this Prospectus, advised on 2 September 2009 that the 2006 M&A Rules are not applicable to the Company since the PRC subsidiaries of the Company, namely Fujian Great and Quanzhou Great, were not domestic enterprises but were directly established as wholly-owned foreign enterprises prior to the 2006 M&A Rules. However, there is no assurance that the relevant PRC authorities (including CSRC) will reach the same conclusion as the Legal Advisers to our Company on PRC Law, Yuan Tai Law Offices. If CSRC or any other PRC regulatory bodies subsequently determine that we need to obtain the CSRC approval for the acquisition of our PRC subsidiaries, namely Fujian Great and Quanzhou Great, we may face regulatory actions or other sanctions from the CSRC or the PRC regulatory bodies. This may have a material adverse impact on our business, financial condition, results of operations, remittance of profits as well as the trading price of our Shares. Foreign exchange control in the PRC may affect the expatriation of funds from our subsidiaries in the PRC Our PRC subsidiaries are subject to the rules and regulations imposed by the PRC government on currency conversion. In the PRC, the State Administration for Foreign Exchange (SAFE) regulates the conversion of RMB into foreign currencies, and vice versa. Currently, foreign investment enterprises (FIEs) are required to apply to SAFE for Foreign Exchange Registration Certificate for Foreign Investment Enterprise. Such registration certificates are renewable annually and allow FIEs to open foreign currency accounts for the payment of: (1) recurring items, including the distribution of dividends and profits to foreign investors of FIEs upon presentation of board resolutions which authorise the distribution of profits or dividends (the Current Account); and capital items, such as repatriation of capital, repayment of loans and for securities investment (the Capital Account).
(2)
Currency transactions within the scope of the Current Account can be effected without requiring the approval of SAFE, while the conversion of currency in the Capital Account still requires the approval of SAFE. In order to regulate PRC domestic residents participation and involvement in trans-territorial capital transactions involving investment and financing activities via overseas special purpose companies, SAFE had, on 21 October 2005, promulgated the Notice Concerning the Foreign Exchange Administration in the Financing and Round-trip Investment Conducted by PRC Residents via Special Purpose Vehicle Companies ( ) (the Notice 75). According to the Notice 75, a PRC domestic resident shall, before establishing or controlling an overseas special purpose company (SPV), submit the prescribed materials to the local branch of SAFE (SAFE Branch) in order to apply for foreign exchange registration of overseas investments. Where a PRC domestic resident contributes the assets of or stock rights in a PRC domestic enterprise to a SPV owned by such PRC domestic resident or engages in stock right financing abroad after contributing assets or stock rights to a SPV, it shall go through the procedures for modification of foreign exchange registration of overseas investments with regard to the net asset equities of the SPV it holds. After a SPV accomplishes overseas financing, the relevant PRC domestic resident may, transfer funds to the PRC as set forth in or contemplated by the Prospectus. A PRC domestic resident, may after complying with the prescribed procedures for foreign exchange registration of overseas investments or for modification thereof, pay the profits, dividends, liquidation expenses, stock right assignment expenses, capital decrease expenses. to the SPV. Where there is a major change in the capital structure of a SPV, such as capital increase or decrease, stock rights or credits or provision of guarantee to a foreign party, and the SPV is not involved in round trip investment (the Major Events), the PRC domestic resident 47
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shall, within 30 days from occurence of a Major Event, apply to the SAFE Branch for modification or filing of the foreign exchange registration of the overseas investment. Notice 75 has been in effect as of 1 November 2005. We have complied with all the relevant registration requirements required of the relevant branch of SAFE. Our Executive Chairman and CEO, Weng Wenwei has given an undertaking to our Company to comply with the above requirements in relation to the registration with the local foreign exchange authority if any Major Events occur in the future. We have obtained the Foreign Exchange Registration Certificate for FIEs which is renewable annually upon application to SAFE. Although we do not anticipate any difficulty in meeting our foreign exchange needs, there can be no assurance that SAFE will not continue to issue new rules and regulations and/or further interpretations of the Notice 75 that will strengthen foreign exchange control. As our subsidiaries in the PRC generate all of our Groups sales and these sales are denominated mainly in RMB, the ability of our subsidiaries to pay dividends or make other distributions to us may be restricted by PRC foreign exchange control restrictions. There can be no assurance that the relevant regulations will not be amended to our detriment and that the ability of our PRC subsidiaries to distribute dividends to us will not be adversely affected. Changes to tax laws and regulations may have an adverse impact on our net profit Under PRC laws and regulations, tax rebates on value added tax incurred during the production of certain products, such as textile products, may be granted if such products are exported overseas. In accordance with the Notices on Adjustment of Export Tax Rebate Rate issued jointly by PRC Ministry of Finance and State Administration for Taxation, the export tax rebate rate for textile products was revised from 11% to 13% with effect from 1 August 2008, increased from 13% to 14% after 1 November 2008, from 14% to 15% with effect from 1 February 2009 and subsequently, from 15% to 16% with effect from 1 April 2009. There is no assurance that such rate will not be reduced or there will not be suspension of such policies in the future. Any reduction to the rate of rebate or suspension of such policies may affect our business and our customers businesses which in turn may adversely affect our profitability. Fujian Great and Quanzhou Great, being FIEs, are exempted from the state enterprise income tax, namely, the Enterprise Income Tax, for a period of two years from its first profit making year, and is subject to the Enterprise Income Tax at a 50% reduction (subject to the approval from the relevant PRC tax authorities) for the next three years subsequently. Fujian Great was exempted from Enterprise Income Tax in FY2006 and FY2007 and for income earned in FY2008 to FY2010, Fujian Great will enjoy a 50% concessionary tax rate and will only be required to pay half the prevailing state enterprise income tax rate. The income tax rate applicable to Fujian Great in respect of its income for FY2009 is 12.5%. Our other subsidiary, Quanzhou Great, was exempted from Enterprise Income Tax in FY2003 and FY2004 and was subject to the Enterprise Income Tax at a 50% reduction for FY2005, FY2006 and FY2007. From FY2008 onwards, Quanzhou Great, no longer enjoys any income tax exemptions or concessionary tax rates. On March 16, 2007, the National Peoples Congress of the PRC passed the Enterprise Income Tax Law of the PRC (the New EIT Law), which came into effect as of 1 January 2008. In accordance with the new law, a unified enterprise income tax rate of 25% and unified tax deduction standards will be applied equally to both domestic-invested enterprises and FIEs. However, it adopts some transitional preferential measures for enterprises established before the promulgation of the EIT Law which enjoy low tax rates or regular tax reduction and exemption preferential treatment under current tax laws and administrative regulations. According to these transitional measures, existing enterprises which are entitled to enjoy the current preferential income tax treatment at low tax rates under the tax laws applicable prior to the New EIT Law may, pursuant to the regulations of the State Council, continue to enjoy a gradually increasing transitional income tax rate within five years of the New EIT Law becoming effective. Existing enterprises, which are entitled to enjoy regular tax reduction and exemption preferential treatment under the tax laws applicable prior to the New EIT Law may continue to enjoy the remaining incentives in accordance with the requirements and period specified by such income tax laws applicable prior to the implementation
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of the New EIT Law. However, for enterprises that have not made any profits and thus not enjoyed such preferential treatment, the period for enjoying preferential income tax treatment shall be calculated from the year in which the New EIT Law becomes effective. Quanzhou Great is currently subject to a prevailing state enterprise income tax rate of 25%. Subject to any changes in the prevailing state enterprise rate in the future, Fujian Great shall be subject to a state enterprise income tax rate of 25% commencing from FY2011. As the tax laws and regulations in the PRC may be further reformed by the PRC government, we cannot assure you that Fujian Great will continue to enjoy any of these special or preferential tax treatments or other incentives in future. RISKS RELATING TO AN INVESTMENT IN OUR SHARES There has been no prior market for our Shares and this offering may not result in an active or liquid market for our Shares Prior to this Invitation, there has been no public market for our Shares. Therefore, we cannot predict the extent to which a trading market will develop or how liquid that market might become. No assurance can be given that an active trading market for our Shares will develop or, if developed, will be sustained. The market price and trading activity of our Shares could be subject to significant fluctuations in response to various factors and events, including the liquidity of the market for our Shares, differences between our actual financial operating results and those expected by investors and analysts, changes in analysts recommendations or projections, changes in general market conditions and broad market fluctuations. If an active trading market is not developed or sustained, the liquidity and trading price of our Shares could be materially and adversely affected. You should not take the listing as an indication of the merits of the Invitation, our Company, our subsidiaries, our Shares or the Invitation Shares. Our share price may be volatile which could result in substantial losses for investors purchasing Shares pursuant to the Invitation The trading price of our Shares may fluctuate significantly and rapidly after the Invitation as a result of, among others, the following factors, some of which are beyond our control: (i) (ii) (iii) (iv) (v) (vi) (vii) variations of our operating results; changes in securities analysts estimates of our financial performance; announcements by us of significant acquisitions, strategic alliances or joint ventures; additions or departures of key personnel; fluctuations in stock market prices and volume; involvement in litigation; and changes in general economic and stock market conditions.
As a result, our public Shareholders may not be able to resell their Shares at or above the Invitation Price. Future sale or issuance of Shares could adversely affect our Share price Any future sale, availability or issuance of Shares can have a downward pressure on our Share price. The sale of a significant amount of Shares in the public market after the Invitation, or the perception that such sales may occur, could materially and adversely affect the market price of our Shares. These factors would also affect our ability to sell additional equity securities. Except as otherwise described in the section entitled Moratorium of this Prospectus, there will be no restriction on the ability of our existing Shareholders to sell their Shares either on the SGX-ST or otherwise.
49
RISK FACTORS
Negative publicity which includes those relating to any of our Directors, Executive Officers or our Controlling Shareholder may adversely affect our Share price Negative publicity or announcement relating to any of our Directors, Executive Officers or our Controlling Shareholder may adversely affect the market perception or the share performance of our Company, whether or not it is justified. Examples of these include unsuccessful attempts in joint venture, acquisitions or takeovers, or involvement in insolvency proceedings. We may require additional funding for our growth plans, and such funding may result in a dilution of your investment We attempted to estimate our funding requirements in order to implement our growth plans as set out in the section entitled Business Strategies and Future Plans of this Prospectus. In the event that the costs of implementing such plans should exceed these estimates significantly or that we come across opportunities to grow through expansion plans which cannot be predicted at this juncture, and our funds generated from our operations prove insufficient for such purposes, we may need to raise additional funds to meet these funding requirements. These additional funds may be raised by issuing equity or debt securities or by borrowing from banks or other resources. We cannot ensure that we will be able to obtain additional financing on terms that are acceptable to us, or at all. If we fail to obtain additional financing on terms that are acceptable to us, we will not be able to implement such plans fully. Such financing even if obtained, may be accompanied by conditions that limit our ability to pay dividends or require us to seek lenders consent for payment of dividends, or restrict our freedom to operate our business by requiring lenders consent for certain corporate actions. Further, in the event that we raise additional funds by way of a limited placement or by a rights offering or through the issuance of new shares, any Shareholders who are unable or unwilling to participate in such additional rounds of fund raising may suffer dilution in their investment. Investors in our Shares would face immediate and substantial dilution in the NAV per Share and may experience future dilution Our Invitation Price is higher than our Groups NAV per Share of 18.29 cents based on the post-Invitation issued share capital. If we were liquidated immediately following the Invitation, each investor subscribing to the Invitation would receive less than the price they paid for their Shares. Please refer to the section entitled Dilution of this Prospectus for further details. Control by our Controlling Shareholder G&W who will own approximately 68.49% of our enlarged share capital after the Invitation, may limit your ability to influence the outcome of decisions requiring the approval of Shareholders After the completion of the Invitation, our Controlling Shareholder G&W will own approximately 68.49% of our enlarged share capital after the Invitation. As a result, G&W will be able to significantly influence all matters requiring approval by our Shareholders. Such concentration of ownership will place G&W in a position to affect significantly our corporate actions such as mergers or takeover attempts (notwithstanding that the same may be synergistic or beneficial to our Group) in a manner that could conflict with the interests of our public Shareholders.
50
EXCHANGE RATES
The financial statements of our Company are prepared in RMB. The following table set forth, for the financial periods indicated, the exchange rate between RMB and S$, based on the average of the closing exchange rates on the last trading day of each month during each financial year. Where applicable, the exchange rates in this table are used for the translation of our Groups financial statements in respect of the same financial year and financial period disclosed elsewhere in this Prospectus: RMB / S$ Average FY2006 FY2007 FY2008 5.033 5.050 4.920 Closing 5.088 5.068 4.760
The table below sets forth the highest and lowest exchange rates between RMB and S$ for each month for the six months prior to the Latest Practicable Date: RMB / S$ Highest March 2009 April 2009 May 2009 June 2009 July 2009 August 2009
Note: (1) Source: Bloomberg L.P.
Lowest 4.399 4.499 4.604 4.671 4.667 4.708
4.530 4.605 4.732 4.754 4.747 4.768
As at the Latest Practicable Date, the exchange rate between Singapore dollars and RMB was S$1.00 to RMB4.750. The tables above indicate the RMB exchange rate to one S$. The above rates are provided solely for information only and should not be construed as representations that the RMB amounts actually represent such S$ amounts or could be converted to S$ at the rate indicated or any other rate. Bloomberg L.P. has not consented to the inclusion of the exchange rates quoted under this section and is thereby not liable for the relevant exchange rates under Sections 253 and 254 of the Securities and Futures Act. While our Company has taken reasonable action to ensure that the above exchange rates are reproduced in its proper form and content and that the above exchange rates are extracted accurately and fairly, our Company has not verified the accuracy of the information.
51
EXCHANGE CONTROLS
The following is a description of the exchange control restrictions existing in the jurisdictions in which our Group primarily operates. Singapore There are no Singapore governmental laws, decrees, regulations and other legislation that may affect the following: (a) the import or export of capital, including the availability of cash and cash equivalents for use by our Group; and the remittance of dividends, interest or other payments to non-resident holders of our Companys securities.
(b)
PRC Please refer to Appendix C Description of Relevant PRC Laws and Regulations of this Prospectus for more details on the foreign exchange control system of the PRC. As our operations are primarily located in the PRC, we are required to comply with the PRC foreign exchange restrictions when we transfer funds from our PRC subsidiaries to our Company (whether in the form of dividends or not). Save as disclosed above, there are no restrictions on the ability of our subsidiaries to transfer funds to our Company in the form of cash dividends, loans or advances.
52
DIVIDEND POLICY
Our subsidiaries, Quanzhou Great and Fujian Great had declared and paid dividends of approximately RMB25,039,000 and RMB5,859,000 respectively in FY2007. Save as disclosed above, neither our Company nor any of our subsidiaries has declared or paid any dividend in the Relevant Period and up to the Latest Practicable Date. We currently do not have a formal dividend policy. Any declaration and payment of dividends in the future will be determined at the sole discretion of the Board subject to Shareholders approval, and will depend upon our Groups operating results, financial conditions, other cash requirements including capital expenditures, the terms of the borrowing arrangements (if any), and other factors deemed relevant by our Directors. Therefore, there can be no assurance that dividends will be paid in the future or of the amount or timing of any dividends that will be paid in the future. Our Directors may declare an interim dividend, without the approval of our Shareholders. Our Directors intend to recommend and distribute dividends of at least 20% of our net profit attributable to our Shareholders for each of FY2009 and FY2010. However, investors should note that the intention to recommend the aforesaid dividends should not be treated as a legal obligation on our Company to do so or that the level of dividends intended to be recommended be treated as an indication of our Companys future dividend policy. The foregoing statements of our present intentions may be subject to modification (including the reduction or non-declaration of any dividends) in the sole and absolute discretion of our Directors. In determining dividends in respect of subsequent financial years, consideration will be given to maximising Shareholders value. No inference should or can be made from any of the foregoing statements as to our actual future profitability or ability to pay dividends in any of the periods discussed. We may declare dividends, if any, in RMB. Shareholders whose Shares are held through CDP will receive their dividends in Singapore dollars. CDP will make the necessary arrangements to convert these dividends received from our Company in RMB into S$ equivalent at such foreign exchange rate as CDP may determine for onward distribution to such entitled Shareholder. Shareholders should note that there will be exchange rate exposure in respect of dividends which are declared in RMB and subsequently paid to them in the S$ equivalent amounts. Neither our Company nor CDP will be liable for any loss howsoever arising from such conversion. Information relating to taxes payable on dividends are set out in Appendix E Description of Singapore Law Relating to Taxation of this Prospectus.
53
CAPITALISATION AND INDEBTEDNESS

The following table shows our cash and cash equivalents and capitalisation and indebtedness: (a) based on our unaudited management accounts as at 30 April 2009, as adjusted for the Restructuring Exercise and Sub-division; and as adjusted for the Invitation.
(b)
You should read this table in conjunction with the Independent Auditors Report on the Combined Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 set out in Appendix A of this Prospectus and the related notes under the section entitled Managements Discussion and Analysis of Financial Condition and Results of Operations. As at 30 April 2009 RMB000 Cash and cash equivalents Short term debts Bank borrowings (secured and guaranteed) Bills payables (secured and guaranteed) Export trade receivables factoring (secured and guaranteed) Total indebtedness Total shareholders equity Total capitalisation and indebtedness 40,928 As adjusted for the Invitation RMB000 116,038
9,000 11,410 26,055 46,465 180,370 226,835
9,000 11,410 26,055 46,465 255,480 301,945
As at the Latest Practicable Date, we have short-term debts amounting to RMB60.5 million, consisting of RMB21.0 million short-term bank borrowings, RMB12.3 million bills payables and RMB27.2 million export trade receivables factoring. These short-term debts are secured by, amongst others, bank deposits, mortgages over leasehold buildings, land-use rights and receivables, as well as guarantees from third parties (which include our Executive Chairman and CEO, Weng Wenwei as well as his Associates). To the best of our Executive Directors knowledge and belief, we are not in breach of the terms of any of our banking facilities. Contingent Liabilities As at the Latest Practicable Date, our Group does not have any material contingent liabilities.
54
DILUTION
Dilution is defined herein as the amount by which the Invitation Price paid by the subscribers and/or purchasers of our Shares in the Invitation exceeds our NAV per Share immediately after the Invitation. The NAV of our Group as at 31 December 2008 adjusted for the Restructuring Exercise and Sub-division, before adjusting for the estimated net proceeds from the Invitation and based on the pre-Invitation issued and paid-up share capital of 200,000,000 was 16.32 cents per Share. Pursuant to the issue of 65,000,000 New Shares at the Invitation Price and after adjusting for the estimated net proceeds from the Invitation and based on the post-Invitation issued and paid-up share capital of 265,000,000 Shares, the NAV per Share of our Company as at 31 December 2008 would have been 18.29 cents. This represents an immediate increase in NAV per Share of 1.97 cents to our existing Shareholders and an immediate dilution in NAV per Share of 11.21 cents (or approximately 38.01%) to our new investors. The following table illustrates this dilution: Cents Invitation Price 29.50
the NAV per Share, as at 31 December 2008, based on the preInvitation share capital of 200,000,000 Shares Increase in NAV per Share pursuant to the Invitation the NAV per Share after the Invitation
16.32
1.97 18.29
Dilution in NAV per Share to public investors
11.21
The following table summarises the total number of Shares acquired by our existing Shareholders (adjusted for the Restructuring Exercise and the Sub-division) during the period of three years prior to the date of this Prospectus, the total consideration paid by them and the effective cost per Share to them, and to the new investors pursuant to the Invitation: Number of Shares acquired Controlling Shareholder G&W(1) Pre-Invitation Investor Kingbest(1) New Investors
Note: (1) Please refer to the section entitled Shareholding and Ownership Structure of this Prospectus for more details.
Total Contribution (S$)
Effective cost per Share (cents)
194,500,000
4,720,900
2.43
5,500,000 80,000,000
1,000 23,600,000
0.02 29.50
55
SELECTED COMBINED FINANCIAL INFORMATION

The following selected financial information of our Group should be read in conjunction with the full text of this Prospectus, including the Independent Auditors Report on the Combined Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 as set out in Appendix A of this Prospectus. COMBINED OPERATING RESULTS OF OUR GROUP FY2006 RMB000 (Audited) Revenue Cost of sales Gross profit Other income/(loss) Expenses - Selling and distribution - Administrative - Other operating - Finance Profit before income tax(1) Income tax expense Net profit(1) Attributable to: Equity holders of the Company EPS (RMB cents)(2) EPS as adjusted for the Invitation (RMB cents)(3)
Notes: (1) Had the Service Agreement (as set out in the section entitled Directors, Executive Officers and Employees Service Agreement of this Prospectus) been in place since 1 January 2008, the profit before income tax and net profit attributable to Shareholders for FY2008 would have been approximately RMB86.8 million and RMB70.3 million respectively. The EPS would have been 35.11 RMB cents for FY2008. For comparative purposes, EPS is calculated based on our net profit and the pre-Invitation share capital of 200,000,000 Shares. For comparative purposes, EPS as adjusted for the Invitation is calculated based on our net profit and the post-Invitation share capital of 265,000,000 Shares.
FY2007 RMB000 (Audited) 262,286 (191,288) 70,998 (240)
FY2008 RMB000 (Audited) 400,835 (296,495) 104,340 2,393
146,363 (115,237) 31,126 948
(3,734) (1,864) (1,524) (282) 24,670 (2,422) 22,248
(4,620) (3,523) (1,226) (691) 60,698 (4,235) 56,463
(8,044) (6,197) (3,203) (1,862) 87,427 (16,620) 70,807
22,248 11.12 8.40
56,463 28.23 21.31
70,807 35.40 26.72
(2) (3)
56

COMBINED FINANCIAL POSITION OF OUR GROUP As at 31 December 2008 RMB000 (Audited) ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Other current assets
33,135 131,097 34,005 3,089 201,326
Non-current Assets Property, plant and equipment Intangible assets Deposit for land-use rights
17,355 1,636 2,630 21,621
Total Assets
222,947
LIABILITIES Current Liabilities Trade and other payables Borrowings Current income tax liabilities Total Liabilities NET ASSETS
12,345 42,035 13,156 67,536 155,411
EQUITY Share capital Retained earnings TOTAL EQUITY NAV per Share (RMB cents)(1)
Note: (1)
25,614 129,797 155,411 77.71
NAV per Share has been computed based on the NAV and pre-Invitation share capital of 200,000,000 Shares.
57

The following financial information presented in Singapore dollars has been translated for the sole purpose of investors convenience and has not been audited. These translations are made with reference to the RMB/S$ exchange rate as shown in the section entitled Exchange Rates of this Prospectus and should not be construed as a representation that $1.00 actually represent such RMB or could be converted into RMB at the rates indicated or any other rate. OPERATING RESULTS OF OUR GROUP (translated into Singapore dollars) FY2006 S$000 Revenue Cost of sales Gross profit Other income/(loss) Expenses - Selling and distribution - Administrative - Other operating - Finance Profit before income tax(1) Income tax expense Net profit(1) Attributable to: Equity holders of the Company(1) EPS (cents)(2) 4,420 2.21 11,181 5.59 14,392 7.20 (742) (370) (303) (56) 4,901 (481) 4,420 (915) (697) (243) (137) 12,019 (838) 11,181 (1,635) (1,259) (651) (378) 17,770 (3,378) 14,392 29,080 (22,896) 6,184 188 FY2007 S$000 51,938 (37,879) 14,059 (48) FY2008 S$000 81,470 (60,263) 21,207 486
EPS as adjusted for the Invitation (cents)(3)

Notes: (1)
1.67
4.22
5.43
Had the Service Agreement (as set out in the section entitled Directors, Executive Officers and Employees Service Agreement of this Prospectus) been in place since 1 January 2008, the profit before income tax and net profit attributable to Shareholders for FY2008 would have been approximately S$17.7 million and S$14.3 million respectively. The EPS would have been 7.14 cents for FY2008. For comparative purposes, EPS is calculated based on our net profit and the pre-Invitation share capital of 200,000,000 Shares. For comparative purposes, EPS as adjusted for the Invitation is calculated based on our net profit and the post-Invitation share capital of 265,000,000 Shares.
(2) (3)
58

COMBINED FINANCIAL POSITION OF OUR GROUP (translated into Singapore dollars) As at 31 December 2008 S$000 ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Other current assets
6,961 27,541 7,144 649 42,295
Non-current Assets Property, plant and equipment Intangible asset Deposit for land-use rights
3,646 344 552 4,542
Total Assets LIABILITIES Current Liabilities Trade and other payables Borrowings Current income tax liabilities Total Liabilities NET ASSETS EQUITY Share capital Retained earnings TOTAL EQUITY NAV per Share (cents)(1)
Note: (1)
46,837
2,593 8,831 2,764 14,188 32,649
5,381 27,268 32,649 16.32
NAV per Share has been computed based on the NAV and pre-Invitation share capital of 200,000,000 Shares.
59
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our business and results of operations for the Relevant Period should be read in conjunction with the Independent Auditors Report on the Combined Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 set out in Appendix A of this Prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Factors that might cause future results to differ significantly from those projected in the forward-looking statements include but are not limited to, those discussed below and contained elsewhere in this Prospectus, particularly in the sections entitled Risk Factors and Cautionary Note on ForwardLooking Statements of this Prospectus. The figures in this section are approximate figures and where appropriate, for ease of reference, we have rounded the figures to one decimal place. OVERVIEW We are principally engaged in the design, manufacture, distribution and sales of mens and womens undergarments. We also manufacture and sell childrens and infants apparel. Our revenues are denominated principally in RMB and US$. Revenues generated from the PRC are denominated in RMB and revenues generated from overseas are principally denominated in US$. Our operations are principally based in the PRC and all our expenses are denominated in RMB. Our Groups sales increased by approximately RMB115.9 million, or 79.2% from RMB146.4 million in FY2006 to RMB262.3 million in FY2007. For FY2008, our Groups sales increased by approximately RMB138.5 million, or 52.8% from RMB262.3 million in FY2007 to RMB400.8 million in FY2008. Revenue from sales of goods is recognised based on the transfer of significant risks and rewards of ownership of the goods to the customers in the PRC and overseas, which generally coincides with the delivery of the goods sold. Our business activities can be categorised as follows: (a) Contract Manufacturing and Sale of Mens and Womens Undergarments and Childrens and Infants Apparel We are principally engaged in the contract manufacturing of mens and womens undergarments which are generally carried out on an ODM basis and contract manufacturing of a wide range of childrens and infants apparel, which are generally carried out on an OEM basis. Our contracts with our customers are typically entered into on a purchase order basis. This is because the products we produced are based on the specifications of the contract manufacturing customers. In the Relevant Period, our contract manufacturing products were sold directly to our end customers which are owners of international brands and retail chains or through their purchasing agents or through trading companies mainly based in the PRC. In FY2006, FY2007 and FY2008, the sale of mens and womens undergarments and childrens and infants apparel under contract manufacturing accounted for approximately 98.4%, 92.4% and 87.6% of our total revenue respectively. (b) ) Manufacture and Sale of Undergarments bearing our GRAT.UNIC ( Brand We design, manufacture and sell mens undergarments under our GRAT.UNIC () proprietary brand. We also design and sell, to a lesser extent, womens undergarments under our GRAT. UNIC () brand. Our GRAT.UNIC () brand of mens and womens undergarments are targeted at the middle to upper class consumer segments in the PRC with a preference for branded, high quality undergarments that are fashionable and comfortable.
60

We first launched our own range of mens undergarments and womens undergarments under our GREAT () brand in the PRC in February 2006. We subsequently re-branded our undergarment merchandise under the GRAT.UNIC () brand in March 2007. As at the Latest Practicable Date, our GRAT.UNIC () brand of undergarments are retailed across 16 provinces/ municipalities/ autonomous region throughout the PRC at 102 points of sales. We undertake direct sales to our retailers where 23 of these points of sales are located whilst the remaining 79 points of sales are serviced by our network of distributors. In FY2006, FY2007 and FY2008, the sales of mens undergarments and womens undergarments bearing our GRAT.UNIC () brand accounted for approximately 1.6%, 7.6% and 12.2% of our total revenue respectively. (c) Manufacture and Sale of Undergarments bearing Trademarks from Warner Bros Consumer Products Inc. (Warner Bros) In line with our strategy to capitalise on an international renowned brand and to enable us to offer more choices to our consumers, we applied and were successfully licensed by Warner Bros to manufacture and sell products bearing the Superman and Supergirl trademarks in the PRC (including Hong Kong and Macau) for three years commencing from 1 June 2007. Under the licence agreement with Warner Bros dated 12 June 2007, there is no sales or manufacturing quota which needs to be met by our Group. We launched our first series of mens undergarments bearing the Superman trademark in March 2008. As at the Latest Practicable Date, our Superman range of undergarments is distributed and sold through the same distribution channels as those of our GRAT.UNIC () brand of products as described above. In FY2008, the sales of mens undergarments bearing the Superman trademark accounted for approximately 0.2% of our total revenue. Contract manufacturing products were our main source of revenue during the Relevant Period. However, in line with our brand building strategy, we are increasingly focused on marketing and promoting our own brand of products under GRAT.UNIC (). Our revenue may also be affected by the following key factors: (i) (ii) (iii) (iv) (v) (vi) the demand for our products in the PRC and overseas; our ability to promote customer loyalty and to procure new customers; our ability to continuously develop new and high quality products; our ability to expand our business network in the PRC and overseas; our capability to expand production capacity to meet the demand of our major customers; our ability to compete effectively with existing competitors or new market entrants given the highly competitive industry we operate in; the general economic conditions and/or change to the laws and regulations in the PRC and countries in which our customers operate; the fluctuation in RMB/US$ exchange rate as the revenue generated from our contract manufacturing products are principally denominated in US$; and our product mix and the selling prices of each product.
(vii)
(viii)
(ix)
The above should be read in conjunction with the section entitled Risk Factors of this Prospectus. 61

Cost of sales The main components of our cost of sales are direct materials, direct labour and manufacturing overhead. Cost of sales for FY2006, FY2007 and FY2008 were as follows: FY2006 RMB000 Direct materials Direct labour Manufacturing overhead Total 92,978 18,934 3,325 115,237 FY2007 RMB000 165,603 22,034 3,651 191,288 FY2008 RMB000 262,844 29,281 4,370 296,495
% 80.7 16.4 2.9
% 86.6 11.5 1.9
% 88.6 9.9 1.5
100.0
100.0
100.0
The cost of sales as a percentage of total revenue for FY2006, FY2007 and FY2008 were 78.7%, 72.9%, and 74.0% respectively. Our direct materials comprise mainly raw materials used in the production process such as fabrics, yarn, spandex, elastic bands, lace and accessories. Direct materials, the largest component of our cost of sales, accounted for approximately 80.7%, 86.6% and 88.6% of cost of sales for FY2006, FY2007 and FY2008 respectively. We did not experience any significant fluctuation in the prices of raw materials during the Relevant Period. Direct labour costs comprise mainly payroll and payroll related expenses for our staff directly involved in the production process. Our direct labour costs represent 16.4%, 11.5%, and 9.9% of our cost of sales for FY2006, FY2007 and FY2008 respectively. We did not experience material fluctuation in the direct labour costs during the Relevant Period. Manufacturing overhead comprises mainly indirect labour costs, utilities, rental, maintenance and depreciation of plant, equipment and machinery that are used in our production. Our manufacturing overhead represents 2.9%, 1.9% and 1.5% of our cost of sales for FY2006, FY2007 and FY2008 respectively. We did not experience material fluctuation in the manufacturing overhead during the Relevant Period. Our cost of sales may be affected by the following key factors: (i) (ii) (iii) (iv) (v) fluctuation in the prices of our direct materials; direct labour costs; depreciation and level of production activity; our ability to control our manufacturing overhead; and our ability to recruit and retain employees with the requisite skills and experiences.
Other income/(loss) Other income/(loss) comprises mainly interest income, gains from sales of raw materials, net fair value gains or losses on derivative financial instruments and government grants.
62

Operating expenses Our operating expenses comprise selling and distribution expenses, administrative expenses and other operating expenses. Selling and distribution expenses Our selling and distribution expenses comprise mainly marketing expenses, freight charges, travelling and accommodation, entertainment expenses, payroll and payroll related expenses of sales and marketing staff and other expenses. These accounted for approximately 52.4%, 49.3% and 46.1% of our Groups total operating expenses in FY2006, FY2007 and FY2008 respectively. Marketing expenses mainly accounted for advertisement fee and exhibition fee for promotion of our products. Freight charges include distribution and port charges for delivery of our products to our customers in the PRC and outside the PRC respectively. Travelling and accommodation include mainly hotel accommodation, travelling costs, transportation reimbursement given to our sales and marketing staff. Entertainment expenses mainly include expenses incurred for entertaining business associates by our sales and marketing staff. Payroll and payroll related expenses comprise mainly salary and social insurance contribution paid to our sales and marketing staff. Other expenses comprise mainly telecommunication, insurance and office expenses of our sales and marketing staff. Administrative expenses Our administrative expenses comprise mainly staff payroll and payroll related expenses of our managerial staff, administrative and accounting staff, directors remuneration, depreciation of furniture & fitting and office equipment, and motor vehicles, stamp duty and levy and office expenses. The administrative expenses represented 26.2%, 37.6% and 35.5% of our Groups total operating expenses in FY2006, FY2007 and FY2008 respectively. Staff payroll and payroll related expenses relate to salaries and social insurance contribution of our managerial staff, administrative and accounting staff. Directors remuneration includes directors salary, social insurance contribution and other benefits. Depreciation relates to provision for a decrease in value of furniture & fitting and office equipment and motor vehicles. Stamp duty and levy consists of stamp duty and local levy on our properties. Office expenses include telecommunication expenses, utilities, printing and stationery, bank charges and IPO related expenses. Other operating expenses Our other operating expenses mainly include foreign exchange loss and allowance for impairment of trade receivables. These expenses accounted for approximately 21.4%, 13.1% and 18.4% of our Groups total operating expenses in FY2006, FY2007 and FY2008 respectively.
63

Finance expenses Our finance expenses comprise interests incurred on short-term bank borrowings and export trade receivables factoring. The proceeds from the bank borrowings and export trade receivables factoring were utilised mainly for general working capital, and purchase of property, plant and equipment for our Groups business operations. The amount of bank borrowings as at 31 December 2006, 31 December 2007 and 31 December 2008 were approximately RMB4.1 million, RMB6.7 million and RMB6.0 million with the corresponding annual weighted average interest rates of 6.8%, 7.9% and 7.4% respectively. The amount of export trade receivables factoring as at 31 December 2006, 31 December 2007 and 31 December 2008 were approximately RMB2.2 million, RMB3.9 million and RMB22.3 million with the corresponding annual weighted average interest rates of 5.4%, 4.5% and 8.0% respectively. Income tax expenses Our Company, incorporated in Singapore, is taxed in accordance with the relevant income tax rate in Singapore. As our Company was incorporated on 29 February 2008 as an investment holding company and did not generate any assessable income in FY2008, we are not subject to any Singapore income tax for the Relevant Period. Quanzhou Great and Fujian Great were incorporated as wholly foreign-owned enterprises. Quanzhou Great and Fujian Great, as FIEs, are exempted from the Enterprise Income Tax for a period of two years from its first profit making year, and is subject to the Enterprise Income Tax at 50% of the applicable tax rate for the next three (3) years. Quanzhou Great elected the financial year ended 2003 as its first profit making year. From FY2005 to FY2007, it was subject to the Enterprise Income Tax at the reduced rate of 12%. Since FY2008, Quanzhou Great no longer enjoys any income tax exemptions or concessionary tax rates and has been subject to a unified Enterprise Income Tax rate of 25%. Fujian Great elected the financial year ended 2006 as its first profit making year. It was exempted from the Enterprise Income Tax for FY2006 and FY2007. And for the subsequent three years from FY2008, Fujian Great was subject to the Enterprise Income Tax rate of 12.5%. Our Groups effective income tax rate for FY2006, FY2007 and FY2008 were 9.8%, 7.0% and 19.0% respectively. REVIEW OF PAST PERFORMANCE Breakdown of Our Past Performance by Business Segments: The breakdown of our revenue, gross profit and gross profit margin by business segments for FY2006, FY2007 and FY2008 is set out below: Revenue FY2006 RMB000 Contract manufacturing GRAT.UNIC () Superman Total 144,007 2,356 _ 146,363 % 98.4 1.6 _ 100.0 FY2007 RMB000 242,406 19,880 _ 262,286 % 92.4 7.6 _ 100.0 FY2008 RMB000 351,101 48,730 1,004 400,835 % 87.6 12.2 0.2 100.0
64

Gross Profit FY2006 RMB000 Contract manufacturing GRAT.UNIC () Superman Total Gross Profit Margin FY2006 % Contract manufacturing GRAT.UNIC () Superman Overall Sales Volume FY2006 Unit000 Contract manufacturing GRAT.UNIC () Superman Total Average selling price per unit FY2006 RMB Contract manufacturing GRAT.UNIC () Superman 6.15 28.16 _ FY2007 RMB 6.10 28.80 _ FY2008 RMB 6.23 28.94 27.53 23,434 84 _ 23,518 % 99.6 0.4 _ 100.0 FY2007 Unit000 39,749 690 _ 40,439 % 98.3 1.7 _ 100.0 FY2008 Unit000 56,363 1,684 36 58,083 % 97.0 2.9 0.1 100.0 21.1 29.5 _ 21.3 FY2007 % 26.6 32.6 _ 27.1 FY2008 % 24.9 34.3 32.9 26.0 30,432 694 _ 31,126 % 97.8 2.2 _ 100.0 FY2007 RMB000 64,525 6,473 _ 70,998 % 90.9 9.1 _ 100.0 FY2008 RMB000 87,309 16,700 331 104,340 % 83.7 16.0 0.3 100.0
65

Breakdown of Our Past Performance by Geographical Regions The breakdown of our revenue by geographical regions(1) for FY2006, FY2007 and FY2008 is set out below: FY2006 RMB000 Asia Europe North America South America Others(2) Total
Notes: (1) (2) The geographical regions are segmented by destination of shipment instructed by our customers. Namely Algeria, Egypt, Angola, South Africa, New Zealand and Madagascar.
% 67.8 29.0 2.6 0.6 100.0
FY2007 RMB000 122,575 109,299 19,325 10,467 620 262,286
% 46.7 41.7 7.4 4.0 0.2 100.0
FY2008 RMB000 184,555 151,787 18,728 35,502 10,263 400,835
% 46.0 37.9 4.7 8.9 2.5 100.0
99,300 42,458 3,810 795 146,363
All the undergarment products under our GRAT.UNIC () proprietary brand and Superman licensed trademark are sold in the PRC. All the contract manufacturing products manufactured on the ODM and OEM basis are either sold directly to our overseas end customers who are owners of international brands and retail chains or through their purchasing agents or through trading companies mainly based in the PRC. The increases in our revenue arising from sales to Europe from RMB42.5 million in FY2006 to RMB109.3 million in FY2007, and to RMB151.8 million in FY2008, were mainly due to the following reasons: (i) (ii) more new customers were secured through our participation in trade fairs and exhibitions; and there was a higher demand from our existing customers for our contract manufacturing products such as womens undergarments and childrens apparel.
The increases in our revenue arising from sales to Asia from RMB99.3 million in FY2006 to RMB122.6 million in FY2007, and to RMB184.6 million in FY2008, were mainly due to the following reasons: (i) there was a higher demand from our existing customers for our contract manufacturing products such as womens undergarment and childrens apparel; and the expansion of our distribution network for our GRAT.UNIC() brand of products in the PRC.
(ii)
The increases in our revenue arising from sales to South America from nil in FY2006 to RMB10.5 million in FY2007, and to RMB35.5 million in FY2008, were mainly due to more new customers secured through our participation in trade fairs and exhibitions. In line with our brand building strategy, we are increasingly focused on marketing and promoting our own brand of products under GRAT.UNIC (). Since the launch of our GREAT () brand of products in February 2006 which was subsequently re-branded to GRAT.UNIC () brand in March 2007, the revenue contribution from GRAT.UNIC () brand of products has increased from 1.6% in FY2006 to 12.2% of our total revenue in FY2008.
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REVIEW OF RESULTS OF OPERATIONS FY2006 to FY2007 Revenue Our revenue increased by approximately RMB115.9 million, or 79.2% from RMB146.4 million in FY2006 to RMB262.3 million in FY2007. The increase was due mainly to an increase in revenue of RMB98.4 million from the sale of contract manufacturing products and an increase in revenue of RMB17.5 million from the sale of our GRAT.UNIC () brand of products. The average selling price per unit for our contract manufacturing products decreased marginally by RMB0.05, or 0.8% from RMB6.15 per unit in FY2006 to RMB6.10 per unit in FY2007. We maintained our selling price in FY2007 in order to keep our pricing competitive. The decrease in average selling price per unit resulted in RMB1.9 million or 1.9% decrease in revenue from sales of contract manufacturing products. The average selling price per unit for our GRAT.UNIC () brand of products increased by RMB0.64 per unit, or 2.3% from RMB28.16 per unit in FY2006 to RMB28.80 per unit in FY2007. The increase was due mainly to higher demand from our customers in the PRC following our marketing activities and fashion shows in the PRC. The sales volume for our contract manufacturing products and our GRAT.UNIC () brand of products increased from 23.4 million units in FY2006 to 39.7 million units in FY2007 and approximately 0.1 million units in FY2006 to 0.7 million units in FY2007 respectively, representing an increase of 16.3 million units, or 69.7% and 0.6 million unit, or six-fold respectively. The increase in the sales volume for contract manufacturing products was attributable mainly to higher purchase orders following our competitive pricing and our enhanced product design capabilities. The increase in sales volume contributed RMB100.3 million, or 101.9% increase in revenue from sales of contract manufacturing products. The increase in the sales volume for our GRAT.UNIC () brand of products was as a result of our effective marketing efforts and expansion of distribution networks in the PRC. Gross profit and gross profit margin Our cost of sales increased by RMB76.1 million, or 66.1% from RMB115.2 million in FY2006 to RMB191.3 million in FY2007. The increase was due to the increase of RMB72.6 million, or 78.1% in direct materials from RMB93.0 million in FY2006 to RMB165.6 million in FY2007, RMB3.1 million, or 16.4% in direct labour from RMB18.9 million in FY2006 to RMB22.0 million in FY2007 and RMB0.4 million, or 12.1% in manufacturing overhead from RMB3.3 million in FY2006 to RMB3.7 million in FY2007. The increase in cost of sales was in line with the increase in sales. Cost of sales as a percentage of total revenue decreased from 78.7% in FY2006 to 72.9% in FY2007, due mainly to improved production efficiencies through continuous staff training. As a result, our average production cost per unit was lower in FY2007. The average production costs per unit for contract manufacturing products and GRAT.UNIC () brand of products were RMB4.85 and RMB19.79 respectively in FY2006 and RMB4.48 and RMB19.43 respectively in FY2007. Our gross profit increased by approximately RMB39.9 million, or 128.3% from RMB31.1 million in FY2006 to RMB71.0 million in FY2007. The increase in gross profit was at a faster rate than the increase in our revenue in FY2007. Our overall gross profit margin improved from 21.3% in FY2006 to 27.1% in FY2007. Our gross profit margin for our contract manufacturing products had improved from 21.1% in FY2006 to 26.6% in FY2007 due mainly to lower production cost per unit arising from economies of scale achieved with the increase in production volume. Our gross profit margin for our GRAT.UNIC () brand of products increased from 29.5% in FY2006 to 32.6% in FY2007. The increase was due mainly to lower production cost per unit arising from economies of scale achieved with the increase in production volume.
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Other income/(loss) Other loss amounted to approximately RMB0.3 million in FY2007 compared to other income of RMB0.9 million in FY2006. The loss was due mainly to net fair value losses on derivative financial instruments which comprised currency forward contracts for US$ to manage our exposure to currency risk arising from sales denominated in US$, partially offset by interest income. At each balance sheet date, the open currency forward contracts are measured at market currency rates as specified by the relevant banks. The net fair value losses were incurred as a result of differences between the forward currency rates entered by our Group and the market currency rates prevailing at the balance sheet date. Selling and distribution expenses Selling and distribution expenses increased by approximately RMB0.9 million, or 24.3%, from RMB3.7 million in FY2006 to RMB4.6 million in FY2007. This was due mainly to an increase of RMB0.8 million in payroll and payroll related expenses, RMB0.3 million in travelling and accommodation, RMB0.2 million in freight charges and RMB0.1 million in entertainment expenses. The increases were partially offset by a decrease of RMB0.5 million in marketing expenses. The increase in the payroll and payroll related expenses was due mainly to our expansion of staff strength. The increase in travelling and accommodation was in line with our strategy to increase marketing efforts for our GRAT.UNIC () brand of products. In FY2007, our sales and marketing staff stepped up efforts in major cities and/or provinces in the PRC to organise publicity events, participate in trade fair, work closely with the distributors on identifying suitable retail locations, conduct staff training for the sales personnel at retail outlets or departmental stores and provide advice on brand management. Administrative expenses Administrative expenses increased by approximately RMB1.6 million, or 84.2%, from RMB1.9 million in FY2006 to RMB3.5 million in FY2007. The increase was due mainly to an increase of approximately RMB0.8 million in office expenses, RMB0.3 million in payroll and payroll related expenses and RMB0.2 million in stamp duty and levy. The increase, incurred for daily management activities, was in line with the expansion of our business operation. Other operating expenses Other operating expenses accounted for a decrease of RMB0.3 million, or 20.0% from RMB1.5 million in FY2006 to RMB1.2 million in FY2007. The decrease was due mainly to no allowance for impairment of trade receivables in FY2007 compared to RMB0.2 million of allowance for impairment of trade receivables in FY2006 and a decrease of RMB1.0 million in unrealised foreign exchange loss, partly offset by an increase of RMB0.9 million in realised foreign exchange loss. Finance expenses Finance expenses rose by RMB0.4 million, or 133.3% from RMB0.3 million in FY2006 to approximately RMB0.7 million in FY2007. The increase in finance expenses was due mainly to a higher amount of shortterm borrowings during FY2007 as compared to FY2006 and an increase in annual weighted average interest rate from 6.0% in FY2006 to 6.8% in FY2007. For FY2006, the amount of short-term borrowings was RMB6.3 million, consisting of RMB4.1 million bank borrowings and RMB2.2 million export trade receivables factoring. For FY2007, the amount of shortterm borrowings was RMB10.6 million consisting of RMB6.7 million bank borrowings and RMB3.9 million export trade receivables factoring. Profit before income tax Our profit before income tax increased by approximately RMB36.0 million, or 145.7% from RMB24.7 million in FY2006 to RMB60.7 million in FY2007. The increase in profit before income tax was mainly due to an increase in gross profit of approximately RMB39.9 million, partly offset by the increase in operating expenses of approximately RMB2.2 million, the increase in finance expenses of RMB0.4 million and the decrease in other income of RMB1.2 million.
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Income tax expenses Our income tax expenses increased by approximately RMB1.8 million, or 75.0% from RMB2.4 million in FY2006 to RMB4.2 million in FY2007, due to an increase in taxable income. Effective tax rates for FY2006 and FY2007 were 9.8% and 7.0% respectively. The lower effective tax rate was due mainly to a larger proportionate sum of the taxable income contributed from Fujian Great which was fully exempted from the PRC Enterprise Income Tax in FY2007. FY2007 to FY2008 Revenue Our revenue increased by approximately RMB138.5 million, or 52.8%, from RMB262.3 million in FY2007 to RMB400.8 million in FY2008. The increase in revenue was mainly contributed by an increase of approximately RMB108.7 million from the sales of our contract manufacturing products and RMB28.9 million from the sales of products under our GRAT.UNIC () brand. The average selling price per unit for our contract manufacturing products increased by RMB0.13, or 2.1% from RMB6.10 per unit in FY2007 to RMB6.23 per unit in FY2008. The increase was due mainly to (i) higher growth in sales of childrens and infants apparel in FY2008 bearing a higher selling price as compared to mens and womens undergarments; and (ii) higher quality of raw materials used in the manufacture of childrens and infants apparel which led to an increase in cost of raw materials used. The increase in average selling price per unit contributed RMB7.4 million, or 6.8% of the increase in revenue of contract manufacturing products. The average selling price per unit for our GRAT.UNIC () brand of products increased marginally, by RMB0.14 per unit, or 0.5% from RMB28.80 per unit in FY2007 to RMB28.94 per unit in FY2008. The increase in average selling price per unit contributed RMB0.3 million, or 1.0% of the increase in revenue of GRAT.UNIC () brand of products. The sales volume for our contract manufacturing products and our GRAT.UNIC () brand of products increased from 39.8 million units in FY2007 to 56.4 million units in FY2008 and approximately 0.7 million units in FY2007 to 1.7 million units in FY2008 respectively, representing an increase of 16.6 million units, or 41.7% and 1.0 million units, or 142.9% respectively. The increase in sales volume contributed RMB101.3 million, or 93.2% and RMB28.6 million, or 99.0% of the increase in revenue of contract manufacturing products and our GRAT.UNIC () brand of products respectively. The increase was due mainly to our competitive pricing and our continuous marketing efforts to acquire new customers for our contract manufacturing products and to promote our GRAT.UNIC () brand of products. Additionally, we commenced the manufacturing and sale of products bearing Superman licensed trademark in March 2008. It contributed approximately RMB1.0 million, or 0.2% of our total revenue in FY2008. The average selling price per unit and sales volume for our products bearing Superman licensed trademark were RMB27.53 and 36,000 units respectively in FY2008. Gross profit and gross profit margin Our cost of sales increased from RMB191.3 million in FY2007 to RMB296.5 million in FY2008, accounted for an increase of RMB105.2 million, or 55.0%. The increase was due to the increase of RMB97.2 million, or 58.7% in direct materials from RMB165.6 million in FY2007 to RMB262.8 million in FY2008, RMB7.3 million or 33.2% in direct labour from RMB22.0 million in FY2007 to RMB29.3 million in FY2008, and RMB0.7 million, or 18.9% in manufacturing overhead from RMB3.7 million in FY2007 to RMB4.4 million in FY2008. The increase in cost of sales was in line with the increase in revenue. Our gross profit increased by approximately RMB33.3 million, or 46.9% from RMB71.0 million in FY2007 to RMB104.3 million in FY2008. The increase was contributed by the higher sales volume of our contract manufacturing products. Overall gross profit margin of our Group recorded a marginal decrease from 27.1% in FY2007 to 26.0% in FY2008. 69

The lower gross profit margin in FY2008 was due mainly to a decrease in gross profit margin for our contract manufacturing products from 26.6% to 24.9%, partly offset by improved gross profit margin for our GRAT.UNIC () brand of products from 32.6% to 34.3%. Though we had increased our selling prices in line with the increase in the cost of sales including cost of raw materials, such increase was not proportionate to the increase in cost of sales as we wanted to continue offering competitive pricing to our customers. This led to an overall decrease in gross profit margin. Other income Other income amounted to approximately RMB2.4 million in FY2008, compared to other loss of approximately RMB0.3 million in FY2007. This was due to an increase in government grants of approximately RMB1.3 million, consisting of export subsidies of RMB0.6 million, research and development subsidies of approximately RMB0.4 million and government support fund for small and medium sized enterprises of RMB0.3 million, net fair value gains on derivative financial instruments of approximately RMB0.5 million, interest income of approximately RMB0.4 million and reversal of allowance for impairment of trade receivables of RMB0.2 million. The net fair value gains on derivative financial instruments recorded as a result of settlement of all open forward currency contracts brought forward from FY2007. Selling and distribution expenses Selling and distribution expenses increased by approximately RMB3.4 million, or 73.9% to RMB8.0 million in FY2008 from RMB4.6 million in FY2007. The increase was due mainly to an increase of approximately RMB2.5 million in marketing expenses, which include mainly advertisement fee to boost our product sales, approximately RMB0.5 million in freight charges, RMB0.3 million in payroll and payroll related expenses for our sales and marketing staff, RMB0.1 million in entertainment expense and RMB0.1 million in other expenses, partly offset by a decrease of RMB0.1 million in travelling and accommodation. The increase was in line with the increase in our revenue in FY2008. Administrative expenses Administrative expenses increased by approximately RMB2.7 million, or 77.1%, from RMB3.5 million in FY2007 to RMB6.2 million in FY2008. The increase was due mainly to an increase of RMB0.8 million in our payroll and payroll related expenses to our administration staff for expansion of our business operation, RMB0.3 million in stamp duty and levy, RMB0.6 million in office expenses and approximately RMB1.0 million of IPO related expenses incurred for the preparation of our companys proposed listing on the SGX-ST. Other operating expenses Other operating expenses increased by approximately RMB2.0 million, or 166.7% from RMB1.2 million in FY2007 to RMB3.2 million in FY2008. The increase was due to an increase of RMB3.2 million in unrealised foreign exchange loss, partly offset by a decrease of RMB1.2 million in realised foreign exchange loss. Finance expenses Finance expenses rose by approximately RMB1.2 million, or 171.4% from RMB0.7 million in FY2007 to RMB1.9 million in FY2008, due mainly to higher amount of short-term borrowings of RMB28.3 million in FY2008 compared to RMB10.6 million in FY2007 and an increase in annual weighted average interest rate from 6.8% in FY2007 to 7.7% in FY2008. Profit before income tax Profit before income tax increased by approximately RMB26.7 million, or 44.0%, from RMB60.7 million in FY2007 to RMB87.4 million in FY2008. The increase was contributed by an increase in gross profit of approximately RMB33.3 million and an increase in other income of approximately RMB2.6 million, partly offset by the increase in selling and distribution expenses of approximately RMB3.4 million, increase in administrative expenses of approximately RMB2.7 million, increase in operating expenses of approximately RMB2.0 million and increase of finance expenses of approximately RMB1.2 million.
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Income tax expenses Our income tax expenses increased by RMB12.4 million, or 295.2% from RMB4.2 million in FY2007 to RMB16.6 million in FY2008, due to an increase in taxable income. Effective tax rates for FY2007 and FY2008 were 7.0% and 19.0% respectively. The higher effective tax rate in FY2008 was due mainly to Quanzhou Great being subject to the Enterprise Income Tax at a rate of 25% in FY2008 and Fujian Great being subject to the Enterprise Income Tax at a rate of 12.5%. REVIEW OF FINANCIAL POSITION Non-current assets As at 31 December 2008, our non-current assets comprised mainly property, plant and equipment amounting to RMB17.4 million, intangible assets amounting to RMB1.6 million and deposit for land-use rights amounting to RMB2.6 million, reflecting 7.8%, 0.7% and 1.2% of our total assets respectively. The property, plant and equipment comprise mainly machinery and equipment, leasehold building, furniture & fitting and office equipment and motor vehicles. We depreciate the property, plant and equipment using the straight-line method to allocate their depreciable amounts over their estimated useful lives as set out below: Estimated useful lives (years) Property, plant and equipment Machinery and equipment Leasehold building Furniture & fitting and office equipment Motor vehicles 10 20 5 5
Intangible assets comprise mainly land-use rights, trademark and licenses, and computer software licenses. We amortise the intangible assets using the straight-line method to allocate their amortisable amounts over their estimated useful lives as set out below: Estimated useful lives (years) Intangible assets Land-use rights Trademark and licenses Computer software licenses 50 3 5
As at 31 December 2008, deposit for land-use rights amounted to RMB2.6 million, representing 12.0% of our total non-current assets. Current assets Our current assets comprise cash and cash equivalents, trade and other receivables, inventories and other current assets, amounting to RMB201.3 million, representing 90.3% of our total assets as at 31 December 2008. Cash and cash equivalents accounted for RMB33.1 million, representing 16.4% of our total current assets as at 31 December 2008. Cash and cash equivalents comprise cash at bank and cash on hand and short-term bank deposits. As at 31 December 2008, RMB9.0 million of the short-term bank deposits were pledged with banks for obtaining short-term bank facilities in the form of letters of credit relating to the purchase of raw materials of approximately RMB13.8 million in FY2008.
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Trade and other receivables accounted for RMB131.1 million, reflecting 65.1% of our total current assets as at 31 December 2008. The other receivables amounted to approximately RMB50.2 million as at 31 December 2008. It comprises advances to suppliers which was used as deposits for raw materials purchases. As at the Latest Practicable Date, the suppliers have fulfilled all the orders to which RMB50.2 million relates. Inventories accounted for RMB34.0 million, representing 16.9% of our total current assets as at 31 December 2008. The inventories comprise raw materials of RMB20.2 million, work-in-progress of RMB7.5 million and finished goods of RMB6.3 million as at 31 December 2008. Other current assets accounted for RMB3.1 million, representing 1.5% of our total current assets as at 31 December 2008. The other current assets comprise prepayments of RMB1.5 million and deferred IPO costs incurred for the preparation of our Companys proposed listing on the SGX-ST of RMB1.6 million as at 31 December 2008. Current liabilities Our current liabilities comprise trade and other payables, borrowings and current income tax liabilities amounting to RMB67.5 million, representing 100% of our total liabilities as at 31 December 2008. Trade and other payables accounted for RMB12.3 million, representing 18.2% of our total current liabilities as at 31 December 2008. The trade payables amounted to RMB3.7 million as at 31 December 2008. The other payables comprise accrued operating expenses of RMB5.1 million, advances from customers of RMB2.0 million and other payables of RMB1.0 million as at 31 December 2008. Non-trade amounts due to our Executive Chairman and CEO, Weng Wenwei, amount to RMB0.5 million as at 31 December 2008. Accrued operating expenses comprise mainly of payroll and payroll related expenses for our employees. Advances from customers comprise mainly of deposits received from contract manufacturing customers. Borrowings accounted for RMB42.0 million, reflecting 62.2% of our total current liabilities as at 31 December 2008. The borrowings comprise bank borrowings of RMB6.0 million, bills payables of RMB13.7 million and export trade receivables factoring of RMB22.3 million as at 31 December 2008. The borrowings were used mainly for general working capital and purchase of property, plant and equipment for our Groups business operations. Current income tax liabilities amounted to RMB13.2 million, reflecting 19.6% of our total liabilities as at 31 December 2008. Equity Our total equity amounts to approximately RMB155.4 million as at 31 December 2008. The total equity comprise share capital of RMB25.6 million and retained earnings of approximately RMB129.8 million as at 31 December 2008. LIQUIDITY AND CAPITAL RESOURCES Since our establishment, our business growth and operations have been funded by a combination of shareholders equity, cash generated from operating activities as well as credit facilities provided for by various financial institutions. Our principal uses of cash have mainly been for working capital requirement, capital expenditures, operating expenses, financial expenses as well as purchase and upgrading of plant and machinery used for our production process. As at the Latest Practicable Date, we had cash and cash equivalents of RMB33.4 million. Based on our shareholders equity of RMB155.4 million as at 31 December 2008, our gearing ratio (defined as the ratio of total interest bearing borrowings divided by shareholders equity) was approximately 0.18 times. We had unutilised banking facilities of RMB3.2 million as at 31 December 2008.
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Our Directors are of the opinion that as at the Latest Practicable Date, after taking into account our present bank borrowings, cash and cash equivalents and cash flow generated from our operations, we will have sufficient working capital available for our present requirements. We have been able to service our borrowings on a timely basis. The following table sets out a summary of our cash flow for the Relevant Period: RMB000 Net cash (used in)/provided by operating activities Net cash used in investing activities Net cash provided by/(used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of financial year Cash and cash equivalents at the end of financial year Net cash (used in)/provided by operating activities FY2006 In FY2006, our net operating cash outflow was RMB0.9 million. This comprised operating cash flow before working capital changes of approximately RMB25.8 million and offset by the net working capital outflows of RMB26.1 million. The net working capital outflows were due mainly to increases in trade and other receivables of RMB38.4 million and inventories of RMB2.1 million, partially offset by a decrease of other current assets of RMB0.4 million and increases in trade and other payables of RMB3.4 million and bill payables of RMB10.6 million. In addition, we received interest income of RMB0.3 million and paid income tax of RMB0.6 million and interest expense of RMB0.3 million. The increase in trade and other receivables for FY2006 was due to the increase in amount due from our Executive Chairman and CEO Weng Wenwei of RMB24.1 million, trade receivables of RMB9.2 million and advances to suppliers of RMB5.1 million. The increase in (i) trade receivables; (ii) advances to suppliers; and (iii) bills payable was in line with the increase in our Groups revenue and profit. FY2007 In FY2007, our net operating cash inflow was RMB25.0 million. This comprised operating cash flow before working capital changes of approximately RMB63.2 million and partially offset by the net working capital outflows of RMB36.9 million. The working capital outflows were due mainly to increases in trade and other receivables of RMB20.0 million, inventories of RMB20.9 million and other current assets of RMB2.5 million and decrease in bills payable of RMB0.8 million, partially offset by an increase in trade and other payables of RMB7.3 million. We also received interest income of RMB0.2 million and paid interest expenses of RMB0.7 million and income tax of RMB0.8 million respectively. The increase in trade and other receivables for FY2007 was due mainly to increase in trade receivables of RMB37.5 million and advances to supplier of RMB10.4 million, which is in line with the increasing trend of our Groups revenue and profit. FY2008 In FY2008, our net operating cash inflow was RMB14.2 million. This comprised operating cash flow before working capital changes of approximately RMB90.2 million and partially offset by the net working capital outflows of RMB64.9 million. The net working capital outflows were due mainly to an increase in trade and other receivables of RMB52.3 million, inventories of RMB6.3 million and a decrease in trade and other payables of RMB9.6 million, partially offset by an increase in bill payables of RMB3.3 million. In addition, we received interest income of RMB0.4 million and paid income tax of RMB9.6 million and interest expenses of RMB1.9 million respectively. FY2006 (868) (2,354) 3,535 313 1,175 1,488 FY2007 24,983 (5,165) (17,927) 1,891 1,488 3,379 FY2008 14,197 (7,724) 14,274 20,747 3,379 24,126
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Net cash used in investing activities In FY2006, our net cash used in investing activities of RMB2.4 million was due to purchases of property, plant and equipment. In FY2007, our net cash used in investing activities of RMB5.1 million was due to purchases of property, plant and equipment of RMB2.0 million, purchases of trademark and licenses and computer software, totalling RMB0.5 million and deposit for land-use rights of RMB2.6 million. In FY2008, our net cash used in investing activities of RMB7.7 million was due to purchases of property, plant and equipment of RMB7.7 million and purchase of computer software licences of totalling RMB0.04 million. Net cash provided by/(used in) financing activities In FY2006, we recorded net cash provided by financing activities of RMB3.5 million. This was due mainly to proceeds from borrowings of RMB6.3 million and proceeds from injection of additional share capital of RMB1.6 million, partially offset by an increase of RMB4.3 million in short-term bank deposits pledged. In FY2007, we recorded net cash used in financing activities of RMB17.9 million. This was due mainly to a dividend payment of RMB30.9 million and an increase of RMB0.7 million in bank deposits pledged, partially offset by proceeds from borrowings amounting to RMB4.3 million and proceeds from injection of additional share capital of RMB9.4 million. In FY2008, we recorded net cash provided by financing activities of RMB14.3 million. This was due mainly to proceeds from borrowings of RMB17.7 million, partially offset by an increase of RMB3.4 million in the short term bank deposits pledged. CAPITAL EXPENDITURES, DIVESTMENTS AND COMMITMENTS Capital Expenditures Our capital expenditures comprise purchases of property, plant and equipment. The purchases or construction of such assets are financed mainly by funds generated from shareholders contributions, operations and bank borrowings. Details of our capital expenditures are set out below: 1 January 2009 to the Latest Practicable Date 180 17 2,960(3) 3,157
RMB000 Plant and machinery Leasehold building Furniture & fitting and office equipment Motor vehicles Construction-in-progress(2) Land-use rights Deposit for land-use rights(5) Total
Notes: (1) (2)
FY2006 1,826 42 122 364 2,354
FY2007 1,213 279 505 29(4) 2,630 4,656
FY2008 4,073(1) 195 (3) 3,415 7,683
We incurred approximately RMB4.1 million on plant and machinery which comprise mainly sewing machines so as to increase our production capacity. This does not form part of the cost of acquisition by the Group of the land use rights to the stated-owned land located at Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province () (Land).
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(3) The land use right in respect of the Land was acquired through a public tender held in April 2008. Fujian Great was the successful bidder for the Land. Though completion of the land acquisition was subject to the entry into by Fujian Great with the National Land and Resource Administration Bureau of Quanzhou City, Fujian Province, PRC ( ) of a contract for the grant of land use rights for state-owned construction land ( ), we sought to carry out preparatory works on the land that included building roads on the Land, leveling of the Land, and building of a boundary wall so that these works would be completed concurrently with the land acquisition and we would be able to commence construction of our new production facilities in an expeditious manner. These works have been completed. The estimated cost of such expenditure was around RMB6.315 million and this cost has been funded through our Groups internal resources. Please refer to the sections entitled Properties and Fixed Assets and Business Strategies and Future Plans of this Prospectus for more information on the new production facilities. This expenditure relates to certain governmental fees incurred in connection with the proposed acquisition of the Land in FY2007. Due to subsequent regulatory changes in the PRC requiring that the acquisition of the Land be carried out through public tender, the purchase was delayed until the public tender was carried out in April 2008. The Group had initially sought to acquire the Land from Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province Development and Construction Co., Ltd () (Jiangnan) in FY2007 and in connection with such acquisition, paid an initial deposit of RMB2.0 million and a first instalment payment of RMB1.63 million. However as there was a change in PRC law, the land use rights in respect of the Land had to be acquired through a public tender and this initial acquisition was terminated. The instalment payment of RMB1.63 million was then applied in FY2008 towards the land acquisition price in connection with the public tender and of the initial deposit of RM2.0 million, the sum of RMB1.0 million was refunded to us in FY 2008 and the balance RMB 1.0 million is held by Jiangnan and will be applied by Jiangnan towards the land acquisition price in connection with the public tender pursuant to an undertaking letter by Jiangnan to us dated 24 March 2009. This sum of RMB1.0 million which will be applied, together with the sum of RMB1.63 million which has been paid have been, towards the acquisition of land were accordingly accounted for in FY2007. Please refer to the section entitled Properties and Fixed Assets of this Prospectus for more information on the deposit for land-use rights.
(4)
(5)
Divestments During the period from FY2006 to FY2008 and from 1 January 2009 till the Latest Practicable Date, we did not dispose of any fixed assets. Commitments Capital commitments As at the Latest Practicable Date, we have capital commitments of approximately RMB13.2 million comprising RMB12.6 million for the land-use rights and RMB0.6 million for the property, plant and equipment. We intend to fund the capital commitments through a combination of internal funds generated from operations and bank borrowings. Operating lease commitments Our operating lease commitments are set out below: RMB000 Not later than one year Between two to five years Total As at 31 As at the Latest December 2008 Practicable Date 437 437 874 437 146 583
The above lease commitments relate to the rental of properties for the purpose of our business operations. Please refer to the section entitled Properties and Fixed Assets of this Prospectus for details of our operating lease commitments. Save as disclosed above, we do not have any other material capital commitments as at the Latest Practicable Date.
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FOREIGN EXCHANGE MANAGEMENT Accounting treatment of foreign currencies Our subsidiaries operate principally in the PRC. The functional reporting currency for our Company and our subsidiaries is RMB and we maintain our books and records in RMB. Foreign currency monetary assets and liabilities at the balance sheet date are translated into the functional currency using the exchange rates at each balance sheet date. All resultant exchange differences are dealt with through the income statements. Foreign exchange exposure All our sales in the PRC, operating expenses and purchases are denominated in RMB. Our sales to overseas customers are mainly in US$. The breakdown of the percentage of our revenue denominated in RMB, US$ and EUR are as followsAs a % of Groups revenue RMB US$ EUR FY2006 63.6 36.4 FY2007 32.5 67.5 FY2008 27.3 70.1 2.6
At present, we do not have any formal policy for hedging against foreign exchange exposure. We have, in the past, used financial hedging instruments such as currency forward contracts for US$ to manage foreign exchange risks. We will continue to monitor our foreign exchange exposure and may employ hedging instruments to manage our foreign exchange exposure in material foreign exchange transactions after taking into considerations the foreign currency amount, exposure period and transaction costs. Our net foreign exchange loss for FY2006, FY2007 and FY2008 are as follows: RMB000 Foreign exchange loss, net INFLATION Inflation generally did not have a material impact on our Groups financial results from FY2006 to FY2008. FY2006 1,336 FY2007 1,226 FY2008 3,203
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GENERAL INFORMATION ON OUR GROUP

SHARE CAPITAL Our Company was incorporated in Singapore on 29 February 2008 under the Companies Act as a private limited company under the name of Great Group Holdings Pte. Ltd.. On 22 June 2009, our name was changed to Great Group Holdings Limited in connection with our Companys conversion to a public company limited by shares. As at the date of incorporation, our issued and paid-up capital was S$2 divided into 2 Shares of S$1 each. On 31 December 2008, the share capital of our Company was increased from S$2 to S$4,720,902 by the creation of an additional 9,998 Shares in the capital of our Company pursuant to the Restructuring Exercise (please see the section entitled Restructuring Exercise of this Prospectus for further details). Pursuant to an extraordinary general meeting held on 18 June 2009, our Shareholder approved, inter alia, the following: (a) conversion of our Company into a public limited company and the change of our name to Great Group Holdings Limited; the adoption of a new set of Articles of Association; the adoption of the PSS; the payment of the fees of the Directors for the financial year 2009, to be paid quarterly in arrears; the authorisation of our Directors, pursuant to Section 161 of the Companies Act, to (i) issue shares whether by way of rights, bonus or otherwise (including Shares as may be issued pursuant to any Instrument (as defined below) made or granted by our Directors while this Resolution is in force notwithstanding that the authority conferred by this Resolution may have ceased to be in force at the time of issue of such Shares); and/or make or grant offers, agreements or options (collectively, Instruments) that might or would require Shares to be issued, including but not limited to the creation and issue of warrants, debentures or other instruments convertible into Shares,
(b) (c) (d) (e)
(ii)
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 (including Shares issued pursuant to any Instrument but excluding Shares which may be issued pursuant to any adjustments (Adjustments) effected under any relevant Instrument, which Adjustment shall be made in compliance with the provisions of the Listing Manual for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of our Company), shall not exceed 50% of the issued share capital of our Company immediately after the Invitation, and provided that the aggregate number of such Shares to be issued other than on a pro rata basis in pursuance to such authority (including Shares issued pursuant to any Instrument but excluding shares which may be issued pursuant to any Adjustment effected under any relevant Instrument) to the existing Shareholders shall not exceed 20% of the issued share capital of our Company immediately after the Invitation, and, unless revoked or varied by our Company in general meeting, such authority shall continue to be 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, whichever is the earlier. For the purpose and pursuant to Rule 806(3) and Rule 806(4) of the Listing Manual, the postInvitation issued share capital of our Company shall mean our enlarged issued and paid-up share capital after the Invitation after adjusting for the conversion of any convertible securities and employee share options on issue as at the date of the passing of the resolution and any subsequent consolidation or sub-division of Shares. Unless revoked or varied by our Company in general meeting, such authority shall continue in full force until the conclusion of the next annual general meeting of our Company or the date by which the next annual general meeting is required by law or by our Articles of Association to be held, whichever is earlier. 77

Pursuant to a subsequent extraordinary general meeting held on 14 September 2009, our Shareholders approved, inter alia, the following: (a) the sub-division of each Share in the issued and paid-up share capital of our Company into 20,000 ordinary Shares (the Sub-division); and the allotment and issue of 65,000,000 New Shares pursuant to the Invitation which when fully paid, allotted and issued, will rank pari passu in all respects with the existing issued Shares.
(b)
As at the date of this Prospectus, our Company has only one class of shares, being ordinary shares. The rights and privileges of our Shares are stated in our Articles of Association. There are no founder, management or deferred shares. No person has been, or is entitled to be, given an option to subscribe for or purchase any securities of our Company or our subsidiaries. As at the date of this Prospectus, the issued and paid-up capital of our Company is S$4,720,902 comprising 200,000,000 Shares. Upon allotment and issue of the New Shares, the resultant issued and paid-up capital of our Company will be S$23,895,902 comprising 265,000,000 Shares. Details of the changes to the issued and paid-up share capital of our Company since our incorporation and our issued and paid-up share capital immediately after the Invitation are as follows: Resultant number of issued Shares Issued and paid-up share capital as at 29 February 2008, being the date of incorporation Issue of 9,998 new Shares pursuant to the Restructuring Exercise Sub-division New Shares to be issued pursuant to the Invitation Post-Invitation issued and paid-up share capital 2 Resultant issued and paid-up share capital (S$) 2
10,000
4,720,902
200,000,000 65,000,000 265,000,000
4,720,902 19,175,000 23,895,902(1)
The issued and paid-up share capital and shareholders equity of our Company as at the date of incorporation, after the Restructuring Exercise and Sub-division and after the Invitation are set forth below. This should be read in conjunction with the Independent Auditors Report on the Combined Financial Statements for Financial Years Ended 31 December 2006, 2007 and 2008 set out in Appendix A of this Prospectus.
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After the Restructuring Exercise and Sub-division (S$) 4,720,902 4,720,902
As at the date of incorporation (S$) Issued and paid-up share capital Reserves Shareholders equity
Note: (1)
After completion of the Invitation (S$) 23,895,902(1) 23,895,902
2 2
This is based on gross proceeds arising from the Invitation and does not take into account the expenses in connection with the Invitation.
RESTRUCTURING EXERCISE The Restructuring Exercise, comprising the following steps, was undertaken by our Group in preparation for the listing of our Group on the SGX-ST: (a) Incorporation of our Company Our Company was incorporated on 29 February 2008 in Singapore as an investment holding company with an initial issued and paid-up share capital of S$2 comprising 2 ordinary shares of S$1 each, all of which was issued and allotted to G&W. G&W, an investment holding company incorporated in the BVI, is wholly owned by our Executive Chairman and CEO, Weng Wenwei. (b) Acquisition of Fujian Great Immediately prior to the Restructuring Exercise, Fujian Great was wholly owned by HK Great, a company incorporated in Hong Kong. HK Great is wholly owned by our Executive Chairman and CEO, Weng Wenwei, and his spouse in the proportion of 60 per cent and 40 per cent respectively. In order for our Company to acquire the entire share capital of Fujian Great from HK Great, our Company had on 7 October 2008 entered into a share transfer agreement with HK Great (the Fujian Great Share Transfer Agreement) to acquire the entire issued share capital of Fujian Great from HK Great for a purchase consideration of HK$15 million. The consideration of HK$15 million was arrived at based on the registered capital of Fujian Great as at the date of the Fujian Great Share Transfer Agreement. The NAV of Fujian Great at the time of the Fujian Great Share Transfer Agreement was RMB68.3 million (based on the NAV as at 30 September 2008). Under the Fujian Great Share Transfer Agreement, the consideration for the aforesaid transfer was to be settled by cash. Pursuant to a side letter dated 9 November 2008 (the Side Letter), the payment of the consideration was deferred to 31 December 2008 at the request of our Company. The deferment of payment of consideration was requested by our Company as our Company was newly established as a holding company and therefore, required additional time for payment. The consideration for the acquisition of Fujian Great has been settled as at 31 December 2008 by way of a set-off as described below in paragraph (d) of the section entitled Restructuring Exercise of this Prospectus. (c) Acquisition of Quanzhou Great Immediately prior to the Restructuring Exercise, the entire equity interest of Quanzhou Great was held by HK Great. Pursuant to a share transfer agreement dated 7 October 2008 (the Quanzhou Great Share Transfer Agreement), our Company acquired the entire share capital in Quanzhou Great from HK Great for a consideration of HK$10 million. The consideration of HK$10 million was arrived at based on the registered capital of Quanzhou Great as at the date of the Quanzhou Great Share Transfer Agreement. The NAV of Quanzhou Great was RMB67.8 million as at 30 September 2008. Under the Quanzhou Great Share Transfer Agreement, the consideration for the aforesaid transfer was to be settled by cash. Pursuant to the Side Letter, the payment of the consideration was deferred to 31 December 2008 at the request of our Company. The deferment of payment of 79

consideration was requested by our Company as our Company was newly established as a holding company and therefore, required additional time for payment. The consideration for the acquisition of Quanzhou Great has been settled as at 31 December 2008 by way of a set-off as described below in paragraph (d) of the section entitled Restructuring Exercise of this Prospectus. On 10 October 2008, our Company has obtained the approval from the Quanzhou City Licheng District Foreign Trade and Economic Cooperative Bureau () in respect of the Acquisitions. Our Companys equity interest in both Fujian Great and Quanzhou Great has been registered with the Quanzhou Administrative Bureau for Industry and Commerce () in accordance with the relevant PRC laws and regulations. Following completion of the Acquisitions, Fujian Great and Quanzhou Great became wholly-owned subsidiaries of our Company. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have on 23 December 2008, for the purpose of this Prospectus, advised that the Acquisitions are legal, valid and binding, and in compliance with all relevant PRC laws and regulations, and that all the necessary approvals and registrations in relation to the Acquisitions have been duly obtained or completed, and no other PRC legal and/or regulatory approvals are required in relation to the Acquisitions. Yuan Tai Law Offices have also for the purpose of this Prospectus, advised on 19 December 2008 that the Side Letter is not in breach of the PRC laws and that no further regulatory approvals are required within the PRC. (d) Settlement of the consideration for the acquisition of Fujian Great and Quanzhou Great On 31 December 2008, HK Great agreed to subscribe for 9,998 Shares in our Company for an aggregate consideration of HK$25 million (the Subscription Consideration), agreed to be equivalent to S$4,720,900. Under the terms of this subscription agreement, HK Great and our Company agreed that the Subscription Consideration shall be offset against the consideration for the Fujian Great Share Transfer Agreement and the Quanzhou Great Share Transfer Agreement. HK Great also directed our Company to issue the 9,998 Shares to G&W. The corporate structure of our Group after the completion of the Restructuring Exercise is set out in the section entitled Group Structure of this Prospectus. GROUP STRUCTURE Our Group structure following completion of the Restructuring Exercise and immediately before the Invitation is as follows:
Great Group Holdings Limited (Singapore)
100%
100%
100%
Fujian Great (PRC)
Quanzhou Great (PRC)
Great Worldwide (BVI)
Our subsidiaries The details of each of our subsidiaries as at the date of this Prospectus are as follows:
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Principal Place of Business/ Registered Address Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City, Fujian Province ( ) Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City, Fujian Province ( ) Issued and Paidup Capital/ Registered Capital HK$15,000,000 % Ownership/ % voting power held by our Company 100%
Name of Company Fujian Great
Date and Place of Incorporation 27 May 2005/ PRC
Principal Activities Producing garments, apparel products and weaving ( )
Quanzhou Great
31 July 2000/ PRC
Producing garments, weaving, ribbon, printing, shoes, hats, and bags (exporting the commodity which is not related with the management of the export permit quota) ( ( ) Trading
HK$10,000,000
100%
Great Worldwide
10 February 2009/ BVI
Sea Meadow House, Blackburne Highway (P.O. Box 116), Road Town, Tortola, BVI
US$1.00
100%
None of our subsidiaries are listed on any stock exchange. We do not have any associated companies.
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SHAREHOLDING AND OWNERSHIP STRUCTURE Our Shareholders and their respective shareholdings immediately before and after the Invitation are summarised below:
Before the Invitation Direct Interest No. of Shares % Directors Weng Wenwei(1) Weng Wenju(1) Teoh Teik Kee Lee Kim Lian, Juliana Lim Yeow Hua @ Lim You Qin Controlling Shareholder (other than Directors) G&W(2) Other Shareholders (less than 5%) Kingbest(3) Public Shareholders TOTAL Deemed Interest No. of Shares % 194,500,000 97.25 After the Invitation Direct Interest No. of Shares % Deemed Interest No. of Shares % 181,500,000 68.49
194,500,000
97.25
181,500,000
68.49
5,500,000 200,000,000
2.75(3) 100.0
194,500,000
97.25
3,500,000 80,000,000 265,000,000
1.32 30.19 100.0
181,500,000
68.49
Notes: (1) (2) Weng Wenwei is the brother of Weng Wenju. G&W is an investment holding company incorporated in the BVI. Our Executive Chairman and CEO, Weng Wenwei, is the sole shareholder and director of G&W. Accordingly, Weng Wenwei is deemed to be interested in all the Shares held by G&W in our Company by virtue of Section 4 of the Securities and Futures Act. Kingbest is an investment holding company incorporated in the BVI and is owned by Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen in the proportion of approximately 66.7%, 22.2% and 11.1% respectively. They are not related to our Groups Directors, Executives Officers or Controlling Shareholder. Pursuant to a Consultancy Agreement dated 1 June 2007 (Consultancy Agreement) entered into amongst our Groups Executive Chairman and CEO, Weng Wenwei in his personal capacity, Fujian Great, Quanzhou Great and Richkey International Capital Pte. Ltd. (Richkey) pursuant to which our Group shall pay US$100,000 as well as a sum equivalent to 1.75% of the proceeds from the Invitation to Richkey as part of the consideration for assisting our Group in preparing for the Invitation. In addition, our Groups Executive Chairman and CEO, Weng Wenwei, in his personal capacity, agreed to procure G&W to transfer 2.75% of the pre-Invitation Shares to the three shareholders of Richkey, namely, Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen for a nominal consideration of S$1,000 payable by them as a demonstration of his personal appreciation to them. Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen have directed G&W to transfer the said 2.75% of the pre-Invitation Shares to Kingbest. As at the date of this Prospectus, the transfer of the pre-Invitation Shares from G&W to Kingbest pursuant to the Consultancy Agreement and upon the directions of Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen as described in footnote (3) above has been completed.
(3)
(4)
Saved as disclosed above, there are no other relationships between our Directors and our Controlling Shareholder. As at the Latest Practicable Date, our Company has only one class of shares, being our Shares which are in registered form. There is no restriction on the transfer of fully paid ordinary shares in scripless form except where required by law or the Listing Manual. Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severally or jointly, by any person or government.
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The Shares held by our Directors and Controlling Shareholder do not carry voting rights that are different from the Invitation Shares. As at the Latest Practicable Date, to the best of our Directors knowledge and belief, our Directors are not aware of any arrangements, the operation of which may at a subsequent date result in a change in the control of our Company. There has not been any public take-over, by a third party in respect of our Companys Shares or by our Company in respect of the shares of another corporation or units of a business trust, which has occurred between the beginning of the most recent completed financial year and the Latest Practicable Date. There are no shares in our Company that are held by or on behalf of our Company or by our subsidiaries. VENDORS The name of the Vendors and the number of Vendor Shares which they will each offer (in proportion to their respective shareholdings before the Invitation) pursuant to the Invitation are set out below:
Shares held immediately before the Invitation Number of Shares 194,500,000 % of preInvitation share capital 97.25 Vendor Shares offered pursuant to the Invitation Number of Vendor Shares 13,000,000 % of preInvitation share capital 6.50 Shares held after the Invitation Number of Shares 181,500,000 % of postInvitation share capital 68.49
Name / Address G&W(1)/ Horizon Chambers, P. O. Box 4622 Road Town, Tortola, BVI Kingbest(2)/ Horizon Chambers, PO Box 4622, Road Town, Tortola, BVI TOTAL
5,500,000
2.75
2,000,000
1.00
3,500,000
1.32
200,000,000
100.00
15,000,000
7.50
185,000,000
69.81
Notes: (1) G&W is an investment holding company incorporated in the BVI. Our Executive Chairman and CEO, Weng Wenwei, is the sole shareholder and director of G&W. Accordingly, Weng Wenwei is deemed to be interested in all the Shares held by G&W in our Company by virtue of Section 4 of the Securities and Futures Act. Kingbest is an investment holding company incorporated in the BVI and is owned by Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen in the proportion of approximately 66.7%, 22.2% and 11.1% respectively. They are not related to our Groups Directors, Executives Officers or Controlling Shareholder. Pursuant to a Consultancy Agreement dated 1 June 2007 entered into amongst our Groups Executive Chairman and CEO, Weng Wenwei in his personal capacity, Fujian Great, Quanzhou Great and Richkey pursuant to which our Group shall pay US$100,000 as well as a sum equivalent to 1.75% of the proceeds from the Invitation to Richkey as part of the consideration for assisting our Group in preparing for the Invitation. In addition, our Groups Executive Chairman and CEO, Weng Wenwei, in his personal capacity, agreed to procure G&W to transfer 2.75% of the pre-Invitation Shares to the three shareholders of Richkey, namely, Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen for a nominal consideration of S$1,000 payable by them as a demonstration of his personal appreciation to them. Tsoi Tsun Lou, Huang Jianquan and Huang Qingzhen have directed G&W to transfer the said 2.75% of the pre-Invitation Shares to Kingbest.
(2)
Save in respect of our Executive Chairman and CEO, Weng Wenwei, who is the sole shareholder of G&W, none of the Vendors is related to each other and/or to our Directors or Controlling Shareholder. Save as disclosed above, none of our Directors or Controlling Shareholder has any direct or indirect interest in the Vendor Shares. Save as disclosed above, none of the Vendors has had any position, office or other material relationship with our Company, Directors and/or Controlling Shareholder within the last 3 years before the date of the lodgement of this Prospectus.
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Significant changes in percentages of shareholdings The significant changes in percentage of ownership of Shares in our Company within the last three years preceding the Latest Practicable Date are set out as follows:
As at the date of Incorporation Number of Shares G&W(1) Kingbest
Note: (1) Our Executive Chairman and CEO, Weng Wenwei, is the sole shareholder and director of G&W.
After the Restructuring Exercise After the Sub-division Number of Shares 10,000 % 100 Number of Shares 194,500,000 5,500,000 % 97.25 2.75
As at the date of the Prospectus Number of Shares 194,500,000 5,500,000 % 97.25 2.75
% 100
MORATORIUM To demonstrate its commitment to our Group, G&W, who owns 181,500,000 Shares representing 68.49 % of our Companys issued share capital after the Invitation, has undertaken not to transfer, sell, assign, pledge, hypothecate, create a security interest in or lien on, place in trust (voting or otherwise) or in any other way subject to any encumbrance or dispose of, whether or not voluntarily, any part of its interest in the issued share capital of our Company immediately after the Invitation for a period of 6 months commencing from the date of admission of our Company to the Official List of the SGX-ST. Our Executive Chairman and CEO, Weng Wenwei who owns the entire issued share capital of G&W has also undertaken not to transfer, sell, assign, pledge, hypothecate, create a security interest in or lien on, place in trust (voting or otherwise) or in any other way subject to any encumbrance or dispose of, whether or not voluntarily, any part of his interests in the issued share capital of G&W for a period of 6 months commencing from the date of admission of our Company to the Official List of the SGX-ST. To demonstrate its commitment to our Group, Kingbest, who owns 3,500,000 Shares representing 1.32 % of our Companys issued share capital after the Invitation, has undertaken not to transfer, sell, assign, pledge, hypothecate, create a security interest in or lien on, place in trust (voting or otherwise) or in any other way subject to any encumbrance or dispose of, whether or not voluntarily, any part of its interest in the issued share capital of our Company immediately after the Invitation for a period of 6 months commencing from the date of admission of our Company to the Official List of the SGX-ST. In addition, the shareholders of Kingbest have also undertaken not to transfer, sell, assign, pledge, hypothecate, create a security interest in or lien on, place in trust (voting or otherwise) or in any other way subject to any encumbrance or dispose of, whether or not voluntarily, any part of their respective interests in the issued share capital of Kingbest for a period of 6 months commencing from the date of admission of our Company to the Official List of the SGX-ST.
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HISTORY AND BUSINESS

HISTORY Our Company was incorporated as a private limited company in Singapore on 29 February 2008. On 22 June 2009, our Companys name was changed to Great Group Holdings Limited. Pursuant to the Restructuring Exercise, our Company became the holding company of Quanzhou Great and Fujian Great. Please refer to the section entitled Group Structure of this Prospectus for a diagrammatic representation of our Group. The history of our Group can be traced back to the establishment of Quanzhou Great in the PRC as a WFOE on 31 July 2000. Our Executive Chairman and CEO, Weng Wenwei was then the legal representative and general manager of Quanzhou Great which was then solely owned by a company, known as Hang Wan Hing Enterprise Co (a sole-proprietorship in Hong Kong owned by a distant relative of Weng Wenwei). Quanzhou Great was sold to HK Great (a company in Hong Kong which was then owned by Weng Wenwei and his spouse) in July 2002 due to the poor health of the owner. The consideration for the acquisition was approximately HK$0.65 million. The NAV of Quanzhou Great at the time of the acquisition was HK$0.65 million, which was equivalent to its paid-up capital. Subsequently, in October 2008, the entire share capital in each of Quanzhou Great and Fujian Great which were then owned by HK Great, were sold to us. Please refer to the section entitled Restructuring Exercise of this Prospectus for more information. Prior to the establishment of Quanzhou Great, our Executive Chairman and CEO, Weng Wenwei had, since 1993, been engaged in the business of OEM manufacturing of undergarments in Quanzhou City, Fujian Province, the PRC, though on a comparatively smaller scale. As at the Latest Practicable Date, he has no interest in the abovementioned OEM business. In early 2001, Quanzhou Great commenced construction of its office building and production plant at Jiangnan Industrial Zone, Licheng District, Quanzhou City, the PRC. Quanzhou Great commenced production at this plant in February 2003 and started with an initial staff strength of more than 300 personnel. The facility allowed Quanzhou Great to engage in a full range of production processes for the manufacture of undergarments, including weaving and sewing. During the initial phase of our business development, we focused on providing OEM manufacturing of mens undergarments to major retail chains. Initially, our sales to these major retail chains were through their purchasing agents or through trading companies mainly based in the PRC. These retail chains include Metro Group (one of Europes largest retail chain based in Germany), Auchan (a retail group based in France with various businesses including hypermarkets in several countries) and Zeeman Group (a leading textile supermarket based in the Netherlands with more than 1,000 outlets in various countries in Europe) in 2003.1 In January 2004, we expanded our product range to include childrens and infants apparel in order to meet our customers demands as many of our customers also sell childrens and infants apparel. Childrens and infants apparel is manufactured using similar production facilities as undergarments, and yields higher profit margins. In January 2005, with expanding sales and production of childrens and infants apparel, we leased a second production factory at the Zhiteng Building located at Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City (), which we used solely for the production of childrens and infants apparel. In May 2004, having established ourselves as a reliable undergarments and childrens and infants apparel OEM manufacturer, we established a design department providing design services for undergarments so as to be able to offer ODM manufacturing services for mens and womens undergarments to our customers. We secured our first ODM contract from TMI Solutions Limited, a trading company in the United Kingdom, in March 2005. By offering ODM services, it enhanced our Groups competitiveness and provided more value-added services to our customers who require customised design and product specification services. At the same time, leveraging on our design capability and with plans to seize emerging business opportunities in mens undergarments business in the PRC market, we also started planning and developing our own brand of mens undergarments. We believed that the establishment of
Our Directors understanding of the background of Metro Group, Auchan and Zeeman Group is based on publicly available information, and this information has not been independently verified.
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our brand would enable us to have full control over product quality, design and development and serve as a strategic move towards differentiating ourselves as a manufacturer of high quality mens undergarments targeted at the middle to upper class consumer segments in the PRC. To reduce our reliance on purchasing agents or trading companies, we sought to establish direct sales to these major retail chains, particularly those retail chains that are established in Europe. We secured our first direct sales to our first major overseas customer in February 2005 when we sold directly to the Zeeman Group. On 27 May 2005, in line with our vision to build a strong brand name of our own, we established Fujian Great primarily to focus on the design, manufacture and sale of mens undergarment merchandise under our GREAT () brand. In November 2005, we established our third factory at the Ruiming Building located at Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) to principally focus on the manufacture of undergarments under our GREAT () brand. In February 2006, we launched our GREAT () brand at the 87th China Knitwear Cotton Trade Fair (87) (also known as China World Knitwear Expo ()). Following our participation in the exposition, we successfully signed up three distributors to promote and sell our GREAT () undergarments merchandise in the PRC. In September 2006, we commenced direct sales of our first line of mens undergarments under our GREAT () brand at Quanzhou Grand Ocean Department Store Co., Ltd. (), a departmental store in the PRC. In 2007, as we continued evolving our reputation to be the brand of choice for consumers who prefer fashionable, fitting and comfortable undergarments of high quality, we undertook a re-branding exercise where we re-branded our brand from GREAT () to GRAT.UNIC () to enhance our brand visual identity and its distinctness. An image of a unicorn , a mythical horse-like creature,
was incorporated in our GRAT.UNIC () brand to appear as such that our GRAT.UNIC () brand is synonymous with qualities such as elegance, purity and strength associated with the unicorn. In March 2007, we participated in the 89th Session of China Knitwear Cotton Trade Fair (89 ) and we were awarded the Best Brand Award () for our GRAT.UNIC () brand. Following our participation in this trade fair, we officially launched our range of mens and womens undergarments under our GRAT.UNIC () brand. In March 2007, our anti-microbial processed fabrics were voluntarily registered with the Society of Industrial Technology for Antimicrobial Articles (SIAA) in Japan. In March 2008, we successfully launched our male undergarments with anti-microbial features under our GRAT.UNIC () brand. To be well-positioned to capture growing consumer affluence in the PRC, we placed great emphasis on innovative products offerings and active marketing. For each spring/summer and autumn/winter season since the inception of our GRAT.UNIC () brand, we have developed and launched a new line of undergarments bearing our GRAT.UNIC () brand featuring different styles and designs for daily wear or various occasions such as sports, leisure and wedding. In June 2007, in line with our strategy to capitalise on an international renowned brand, we applied and were successfully licensed by Warner Bros. Consumer Products Inc. to manufacture and sell our undergarments with the Superman trademark for a period of three years in the PRC (including the HKSAR and Macau). We also hold a license for the Supergirl trademark. However, as at Latest Practicable Date, we have not sold any undergarments with the Supergirl trademark. We sought to increase the market awareness and visibility of our own GRAT.UNIC () brand by selling our GRAT.UNIC () and Superman range of undergarments together in all our authorised retail outlets and departmental stores. We launched our first series of undergarments carrying the Superman licensed trademark in March 2008. In addition to capitalising on the strong brand image of Superman, our Directors believe that it complements well with our GRAT.UNIC () range of undergarments and enables us to offer more choices to our consumers. 86

In December 2007, we organised our first major publicity event in Shanghai to promote our GRAT. UNIC () brand and to showcase our GRAT.UNIC () and Superman undergarments. We themed this major publicity event as Unicorn Returns () to boost our brand image and to distinguish ourselves from other market players. A fashion show featuring our latest 2008 spring and summer undergarment collection bearing our GRAT.UNIC () brand and our Superman range of undergarments was held. This major publicity event was attended by invited guests including media, managers of departmental stores and existing distributors from across the PRC. In January 2008, we have been accredited SA 8000:2001 as a testimony of our compliance with global social accountability standards for having in place a fair and equitable work environment. In September 2008, with an aim to further enlarging our market share, we entered into an advertising contract with Shanghai Fenzhong Defeng Advertisement and Media Co., Ltd. ( ) (Shanghai Fenzhong), pursuant to which our advertisement was placed on liquid crystal display (LCD) screens located in office buildings through Shanghai Fenzhongs digital outdoor media network across various cities in the PRC, namely Shanghai, Hangzhou, Nanjing, Fuzhou, Chongqing, Lanzhou and Dalian till 8 February 2009. In October 2008, we were the official undergarment sponsor for the 6th PRC National Sports Game of Peasants () held in Quanzhou City, Fujian Province, the PRC. Through our various marketing and promotional activities in recent years and growing network of distributors and retailers such as departmental stores and other retail shops, we have steadily increased the sale of our GRAT.UNIC () and Superman undergarments in the PRC. As at the Latest Practicable Date, our GRAT.UNIC () and Superman undergarments are retailed across 16 provinces/ municipalities/ autonomous regions throughout the PRC at 102 points of sales. We undertake direct sales to our retailers where 23 of these points of sales are located whilst the remaining 79 points of sales are serviced by our network of distributors. In view of increasing business volume from overseas customers, we had, on 10 February 2009, incorporated Great Worldwide in the BVI to spearhead our overseas sales. On 11 March 2009, we had entered into an Agreement for Transfer of Land-Use Rights of State-owned Land () with the National Land and Resource Administration Bureau of Quanzhou City, Fujian Province, the PRC () for acquisition of land-use rights in relation to a plot of land with approximately 36,223.1 sq m located at Jiangnan HighTech Information Industrial Zone, Quanzhou City, Fujian Province ( ) for the purpose of constructing our headquarters that will house our business and production operations, and new production facilities as our main manufacturing base in the PRC. Please refer to the section entitled Business Strategies and Future Plans of the Prospectus for more information on our new headquarters. BUSINESS OVERVIEW Our Group is principally engaged in the design, manufacture, distribution and sales of mens and womens undergarments. We also manufacture and sell childrens and infants apparel. Our operations are principally based in the PRC. Our principal business activities can be categorised as follows: contract manufacturing of: mens and womens undergarments generally carried out on an ODM basis; and childrens and infants apparel generally manufactured on an OEM basis
which are mainly sold either directly to owners of international brands and retail chains or through their purchasing agents or through trading companies mainly based in the PRC;
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manufacture and sale in the PRC of mens undergarments bearing our own GRAT.UNIC ( ) brand which are sold through various points of sales in the PRC. We also manufacture and sell in the PRC a limited range of womens undergarments bearing our own GRAT.UNIC () brand. Our GRAT.UNIC () brand of mens and womens undergarments is targeted at the middle to upper class consumer segments in the PRC with a preference for branded, high quality undergarments that are fashionable and comfortable; and manufacture and sale in the PRC of mens undergarments bearing the Superman trademark licensed from Warner Bros. Contract Manufacturing and Sale of Mens and Womens Undergarments and Childrens and Infants Apparel We are principally engaged in the contract manufacturing of mens and womens undergarments which are generally carried out on an ODM basis and contract manufacturing of a wide range of childrens and infants apparel, which are generally carried out on an OEM basis. Our ODM services include participating in the design process of our customers, and selection of raw materials such as fabrics, yarn, spandex, elastic bands, lace and accessories. We also produce samples for our customers review. Our OEM service is in accordance with the design and specifications of our customers. In the Relevant Period, our end customers included owners of international brands and retail chains such as Zeeman (the Netherlands), Zara (Spain), Next (UK), Pelican (Russia), Hema BV (the Netherlands), Target (Australia), George (UK), Wal-Mart (Canada), Lindex (UK), Adams (UK) and Etam (UK). Our products are sold directly to them or through their purchasing agents or through trading companies mainly based in the PRC. Our contracts with our customers are typically entered into on a purchase order basis. Upon receiving an order, our in-house design team and our sales and marketing team will work closely with our ODM customers to ensure that our product design and quality meet or exceed the requirements of our customers. In FY2006, FY2007 and FY2008, the sale of mens undergarments, womens undergarments and childrens and infants apparel under contract manufacturing accounted for approximately 98.4%, 92.4% and 87.6% of our total revenue respectively. Manufacture and Sale of Undergarments bearing our GRAT.UNIC () Brand We design, manufacture and sell mens undergarments under our GRAT.UNIC () proprietary brand. We also design and sell, to a lesser extent, womens undergarments under our GRAT.UNIC ( ) brand. The design of our GRAT.UNIC () brand logo features a unicorn which is a mythical horse-like creature associated with qualities such as elegance, purity and strength. Our GRAT.UNIC ( ) products are targeted at the middle to upper class consumer segments in the PRC with a preference for branded, high quality undergarments that are fashionable and comfortable. Our GRAT.UNIC ( ) proprietary brand of products are sold in the PRC through our network of distributors or directly to retailers such as departmental stores and other retail shops in the PRC. As at the Latest Practicable Date, our GRAT.UNIC () brand of undergarments are retailed across 16 provinces/ municipalities/ autonomous regions throughout the PRC at 102 points of sales. We undertake direct sales to our retailers where 23 of these points of sales are located whilst the remaining 79 points of sales are serviced by our network of distributors. In FY2006, FY2007 and FY2008, the sales of mens undergarments and womens undergarments bearing our GRAT.UNIC () brand accounted for approximately 1.6%, 7.6% and 12.2% of our total revenue respectively.
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To build up our GRAT.UNIC () brand, we have adopted the following business strategies: (a) Design We have an in-house design team who works closely with our Sales and Marketing Department for product designs and packaging designs. Our design team attends trade fairs to keep abreast of latest market trend in materials, packaging and styles that appeal to our customers as well as to determine our Groups product designs and development directions. We organise new product launches twice a year, typically during the last quarter of each year to showcase our spring/summer undergarment collection and in the second quarter of each year to showcase our autumn/winter undergarment collection. Please refer to the section entitled Sales and Marketing of this Prospectus for more details of our promotional activities. (b) Product development Our design team also works closely with our R&D Department for development and research on new materials, new processing methods or new products styles that may improve the quality, comfort and fit of our products while extending our product offerings. In March 2008, we developed and launched a new range of undergarments with anti-microbial qualities under our GRAT.UNIC () brand. Such undergarments are treated with an anti-microbial additive following a process that was jointly developed by us and Quanzhou Huiyu. The results of the joint development have been examined by the Fujian Provincial Department of Science and Technology ( ) which has confirmed that the anti-microbial technique applied to our products complies with PRC textile industry standards and the FZ/T 73023-2006 AAA-rate requirements in relation to antimicrobial products(1). We have also developed and patented several new designs of mens undergarments which serve to better facilitate the act of urination for males. We intend to commence production of mens undergarments featuring such new designs and carry out sales of such new products in the second half of 2009. Please refer to the section entitled Intellectual Property of this Prospectus for further details.
Note: (1) The statement is extracted from the Scientific and Technical Achievement Report () issued by the Fujian Provincial Department of Science and Technology () in June 2007 which was not issued for the purpose of incorporation in this Prospectus. Fujian Provincial Department of Science and Technology has not consented to the inclusion of the information in the report in this section and is thereby not liable for these statements under Sections 253 and 254 of the Securities and Futures Act. Our Directors are not aware of any disclaimer made by Fujian Provincial Department of Science and Technology in relation to the reliance on the contents of the statement. We have included the above information in their proper form and context in this Prospectus, and our Company and our respective officers, agents and employees have not and are unable to verify the accuracy of the contents of such information nor conducted an independent review of the contents of the report. Our Directors are aware that Fujian Provincial Department of Science and Technology does not guarantee or assume responsibility that the information in its publication is accurate, current or reliable, or maybe used for any purpose other than for general reference.
(c)
Marketing and promotion To create market awareness and recognition of our GRAT.UNIC () brand, we adopt various marketing strategies and activities such as advertisements, fashion shows, event sponsorships and point-of-sale promotions. Please refer to the section entitled Sales and Marketing of this Prospectus for more details.
(d)
Distribution and sales Our GRAT.UNIC () brand of products are sold at various points of sales located strategically in shopping malls, departmental stores and commercial areas of major cities and provinces in the PRC. We sell directly to our retailers or through our network of distributors who then distribute our products to retail outlets in various cities throughout the PRC such as Shanghai, Chongqing, Tianjin, Dalian, Guilin, Harbin, Haikou, Hefei, Hangzhou, Lanzhou, Nanjing, Shijiazhuang and
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Xiamen. As at the Latest Practicable Date, we have 102 points of sales. We sell directly to our retailers where 23 of these points of sales are located, with the remaining 79 points of sales serviced by our distributors. Manufacture and Sale of Undergarments bearing trademarks from Warner Bros Under the terms of the licence agreement with Warner Bros dated 12 June 2007 (Licence Agreement), we are licensed to manufacture and sell our products bearing the Superman and Supergirl trademarks in the PRC (including Hong Kong and Macau) for three years commencing from 1 June 2007. Under the Licence Agreement, there is no sales or manufacturing quota which needs to be met by our Group. As at the Latest Practicable Date, we only sell mens undergarments with the Superman trademark licensed by Warner Bros. We launched our first series of mens undergarments bearing the Superman trademark in March 2008. As at the Latest Practicable Date, we have, however, not commenced the manufacture and sale of undergarments with the Supergirl trademark. Our Superman range of undergarments is distributed and sold through the same distribution channels as those of our GRAT.UNIC () brand of products as described above. As we only commenced sale of mens undergarments with the Superman trademark in March 2008, the sales generated under this segment accounted for 0.2% of our revenue in FY2008. Brief descriptions of our products are as follows: Products Mens undergarments Style and range The various styles include boxers, briefs, boxer briefs, trunks, short-sleeve and long-sleeve T-shirts, pyjamas and swimwear. Our product range for GRAT.UNIC () brand of mens undergarments include athletic range, fashionable range, classic range, business range, and those for special occasions such as weddings. The various styles include panties, bras, tank tops, long-sleeve pyjama tops, matching long pyjama pants and swimwear. Our product range for GRAT.UNIC () brand of womens undergarments include fashionable range and those for special occasions such as weddings. The various styles for childrens apparel include dresses, skirts, pants, shorts, shirts, T-shirts, undergarments, pyjamas, tank tops and swimwear. Our various types of infants apparel include T-shirts, pants, one-piece rompers, knitted tops, knitted hats, baby napkins, socks and pyjamas.
Womens undergarments
Childrens and infants apparel
Mens and womens undergarments offered under our own GRAT.UNIC () brand are similar in styles compared to those manufactured on a contract manufacturing basis.
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PRODUCTION PROCESS The following diagram illustrates the principal stages involved in the manufacture of our products:
Design and Confirmation of Samples
Order Confirmation
Sourcing of Material and Manufacture of Fabrics
Assessment and Confirmation of Production Samples
Type Setting, Cutting and Sewing
Anti-microbial Processing (where required)
Ironing
Packaging
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1. Design and Confirmation of Samples We receive enquiries from customers on our products. Upon receipt of such requests, our R&D Department and in-house designer team will commence the design process. As part of this process, our Production Department will work closely with our R&D Department to formulate the production plan as well as to consider the type of raw materials to be used for the manufacture of such undergarments including the type of fabrics, yarn, spandex, elastic bands, lace and accessories, as well as the appropriate packaging for such products. Our in-house designer team creates new designs for our own GRAT.UNIC () brand based on the latest fashion trends. For the ODM segment of our business, our customers would either provide the design specifications or broad design concepts based on which our in-house designers would then work closely with the customers to agree on the final design. Sample pieces are made before feedbacks are solicited and corresponding adjustments are made to the designs and samples until final confirmation from the customers. For undergarments bearing our GRAT.UNIC () brand, we work with our distributors to ensure that each retail outlet carries the appropriate range of our products that are suitable for the consumers preferences in the geographical regions where the distributors operate. We gather feedback from our distributors during our semi-annual product launches. 2. Order Confirmation Products under our contract manufacturing services Customers will, after confirming the designs and samples, provide us with purchase orders for the products. Products under our GRAT.UNIC () brand We will confirm the orders for the manufacture of our products following our product launches, through orders from distributors and retailers and taking into account market demand and consumers preferences of the various sales territories within the PRC. 3. Sourcing of Materials and Manufacture of Fabrics Our key raw materials include fabrics, yarn, spandex, elastic bands, lace and accessories. The fabrics which are made mainly from materials such as cotton, polyester and nylon, are mostly purchased as ready-made knitted or woven fabrics from our suppliers. We also knit, to a lesser extent, our own fabrics, particularly those with spandex fibres using our spinning machines. For modal and spandex which are mainly used for the manufacture of GRAT.UNIC () undergarments, these are either: In the case of modal, purchased as yarn from authorised Lenzing Modal vendors and in the case of spandex, purchased as fibres from Lycra vendors, in which case we will knit yarn or fibres into the fabrics, or in the form of ready knitted or weaved fabrics from third party suppliers. We will then forward samples of the fabrics to the respective authorised centres of Invista (for Lycra) and Lenzing AG (for Lenzing Modal) with details of the identity of the sellers from whom we purchase yarn or fabrics and other relevant information such as the quantity of yarn or fabrics purchased and the number of garments proposed to be manufactured. The authorised centres will then carry out testing of the fabrics to ensure that the composition, quality of Lycra and Lenzing Modal, and quality of the products, are in accordance with the standards prescribed by Invista and Lenzing AG. Upon approval, we will be assigned an approval number.
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We will then use the approval number and submit sample undergarments to obtain from the authorised centres of Invista and Lenzing AG the appropriate number of Lycra and Lenzing Modal labels which we can affix to our undergarments. Incoming materials are inspected for defects and tested to assess whether they meet our production requirements. All the raw materials that meet our quality standards will be put into our raw material warehouse for storage and any defective materials would be rejected. 4. Assessment and Confirmation of Production Samples Several samples are made before commencement of actual production. The samples will be jointly assessed by our R&D Department, Quality Control Department, Production Department and Sales and Marketing Department. Feedbacks from the various departments will be considered to ensure that the products are in compliance with our customers specifications. For our contract manufacturing products, samples will be sent to our customers for confirmation before commencement of mass production. 5. Typesetting, Cutting and Sewing Once samples are confirmed by our customers and various departments, we use a computer-aided design (CAD) software that will design the silhouette for the individual pieces of cloth forming the undergarment and apparel. This typesetting process assists us to minimise wastage of the cloth. The cloth is then cut, following the silhouette, into individual pieces through a cutting process and are then sewn by our sewing department on sewing machines into a complete undergarment and apparel. 6. Anti-microbial Processing (where required) Products carrying our own GRAT.UNIC () brand will, where required, be put through antimicrobial processing. We undertake the anti-microbial process at this stage to ensure that the additive is applied to all parts of the undergarment. 7. Ironing Our finished products are steam-ironed according to required standards before they are sent for packing. 8. Packaging Our finished products are packaged and labeled and are subject to a final inspection before they are delivered to customers or warehoused. Other than quality control checks on the final products, we have implemented stringent quality control measures throughout the entire production process as described in more details in the section entitled Quality Assurance of this Prospectus. PRODUCTION FACILITIES AND CAPACITY We have 3 production facilities, all of which are located in Quanzhou City, Fujian Province, the PRC: the production facility, located at Zhiteng Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City (), comprises four production lines generally engaged in the production of childrens and infants apparel and has two production lines generally engaged in the production of mens undergarments; the production facility located at Honghao Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City (), comprises six production lines generally engaged in the production of mens undergarments and two production lines generally engaged in the production of womens undergarments;
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the production facility located at Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City (), comprises four production lines generally engaged in the production of mens undergarments (of which three production lines were installed in February 2008). Where necessary, with minor modification to our sewing machines, all our production lines can be used interchangeably to produce mens undergarments, womens undergarments or childrens and infants apparel. Accordingly, we are able to deploy any of our production lines to support the other production lines. We have also outsourced the production of some of our contract manufacturing products to a third party contract manufacturer on a per order basis so as to meet some of the sales orders received by Great Worldwide. We may increase such outsourcing to third party contract manufacturers in the future, where necessary. Our overall production capacity is calculated based on the production capacity of our sewing machines. Each production line has varying number of sewing machines. The allocation of sewing machines between our different product lines can be adjusted to suit our production demands. There are ancillary processes involved before and after the sewing of our garments, such as cutting, ironing and packaging; however, these ancillary processes are not capital intensive and can be scaled up without difficulty. We have determined our utilisation rate based on the number of hours that our sewing machines and production lines are in operation. Our production volume and utilisation rate are affected by factors such as (a) the complexity of the designs of our products; and (b) the manufacturing processes being employed.
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Based on our managements estimate, the annual production capacity and the utilisation rate for the production of our products for the Relevant Period are set out below. The production capacity is based on the type of designs and product mix usually encountered.
FY2007 FY2008
FY2006
Actual Production (number of pieces) Approximate Utilisation Rate (%)(4) 45.9 15,148,639 21,600,000(1) 70.1 22,332,290
Maximum Production Capacity (number of pieces) Actual Production (number of pieces) Approximate Utilisation Rate (%)(4) Actual Production (number of pieces)
Maximum Production Capacity (number of pieces)
Maximum Production Capacity (number of pieces) 24,300,000(1)
Approximate Utilisation Rate (%)(4)
Mens undergarments 56.8 16,590,050 17,625,600(2) 94.1
11,147,751
24,300,000(1)
91.9
Womens undergarments 63.1 9,122,287 11,232,000(3) 81.2
7,360,725
12,960,000(2)
18,773,940
21,384,000(2)
87.8
Childrens and infants apparel 52.0 40,860,976 50,457,600 81.0
5,017,539
7,956,000(3)
16,977,197
17,643,600(3)
96.2
Total
23,526,015
45,216,000
58,083,427
63,327,600
91.7
Notes:
(1)
Based on each sewing machine producing 15 pieces of mens undergarments per hour, 12 hours per day, 300 days per year.
(2)
Based on each sewing machine producing 18 pieces of womens undergarments per hour, 12 hours per day, 300 days per year.
(3)
Based on each sewing machine producing 13 pieces of childrens and infants apparel per hour, 12 hours per day, 300 days per year.
(4)
Approximate utilisation rate for the production of our products is based on the actual number of pieces of mens undergarments, womens undergarments and childrens and infants apparel produced as a percentage of the maximum number of pieces of such products which may be produced based on maximum production capacity.
The above maximum production capacity in FY2008 were calculated taking into account the three additional production lines at our Ruiming Building that were installed in February 2008 and which are used generally for the production of mens undergarments. For illustration purpose only, we have assumed that the production lines are not used interchangeably to produce mens undergarments, womens undergarments and childrens and infants apparel.
The number of machines are allocated based on production planning. At present, we operate between 10 to 12 hours per day and will increase our operating hours depending on our production needs. 95

Save as disclosed under the section entitled Risk Factors in this Prospectus, there is no PRC regulatory requirement that may materially affect the use of our fixed assets which are located in the PRC. Production facilities located at Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) As disclosed under the risk factor entitled We may have to relocate from our office and production facilities located at the building of Ruiming Industry and Trade Co., Ltd., Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City () as the lessor of these premises do not possess the requisite building certificates in respect of these premises in the section entitled Risk Factors of this Prospectus, there is a risk that we may be required to relocate our production facilities located at Ruiming Building as the lessor of these premises does not possess the relevant building ownership certificate in respect of these premises and as such, the lessor may not have the legal capacity to lease these premises to us. Our Directors are of the view that in the event that we are required by the PRC authorities to vacate these premises, our business operations will not be materially affected as: we currently operate four production lines at Ruiming Building. As at the Latest Practicable Date, this comprises approximately 22.2% of our total 18 production lines of our Group. in the event that we are required to vacate the Ruiming Building, we are able to relocate our production equipments to our existing premises located at Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City () in the interim. We believe such relocation will be completed within one month. if required, we are able to utilise the existing spare capacity at our production facilities at Honghao Building and at Zhiteng Building both located at Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City () to manufacture the mens undergarments produced at Ruiming Building. As at the Latest Practicable Date, our production facilities at Honghao Building and at Zhiteng Building operate one shift. If required, our workers from Ruiming Building can operate a second shift at the production facilities at Honghao Building and at Zhiteng Building. QUALITY ASSURANCE We believe that the quality of our products and services is crucial to our continued growth and we therefore accord high priority to quality control and strive to maintain our reputation as a manufacturer of quality products. As at the Latest Practicable Date, our quality control and assurance team comprises 120 quality assurance personnel and 24 quality control inspectors. Our team of 120 quality assurance personnel carries out the following functions: institute the overall quality control process and standards for the entire production process; institute the inspection procedures for use by the quality control inspectors; and audit the entire quality control process and carry out random sampling inspection of the works of the quality control inspectors. We also have 24 quality control inspectors involved in inspection of the production process at every stage to ensure that the production process comply with the prescribed quality control standards and procedures.
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The quality control measures which we have implemented throughout the entire production process to ensure the quality of our products are described as follows: (a) Selection of suppliers/ sourcing and procurement of raw materials Our main raw materials include fabrics, yarn, spandex, elastic bands, lace and accessories. Prior to the procurement, we will carefully assess all potential suppliers, taking into account their reputation and reliability in terms of their product quality, service quality and timely delivery of products as well as the prices quoted. In order to better understand a suppliers qualifications and to determine whether a supplier meets our requirements and supply needs, we conduct on-site assessment of suppliers to evaluate the quality of their products as and when we deem appropriate. For each purchase of main raw materials, we generally obtain quotes from at least two suppliers. We also generally request our suppliers to provide us with samples for evaluation of the quality of their products. (b) Incoming quality control When raw materials or ready-made fabrics are delivered to our production facilities or when woven fabrics produced at our production facilities are ready for further processing, such fabrics are visually inspected at first instance and subject to random sample testing of various aspects such as the exterior appearance, elasticity, colour fastness and weight to ensure that our prescribed standards and specifications are met. If the raw materials fail to conform to our specifications, such raw materials will be rejected or returned to our suppliers for rectification. (c) Production quality control Each stage of our production process, from cutting and sewing, ironing to anti-microbial processing, is monitored by our production operators and is subject to thorough inspection by our quality control personnel to ensure that the production process conforms to our stringent quality requirements and that the semi-finished products meet the specifications prescribed by our customers and our internal quality control standards. Prior to actual production, we carry out a trial production to ensure that the product meets our specifications and standards. During such trial production, we conduct all the necessary quality control testing, technical and visual checking at each stage of our manufacturing process to minimise the occurrence of product defects. A report will be produced upon each trial production conducted in order to ensure that our customers specifications are met. Certain of our customers require that certain of the raw materials used in the production of their products or samples of finished products be sent to third party testing centres designated by them to test that the raw materials or finished products meet their specifications. Pursuant to the PRC Product Quality Law (), we are required to submit to the prescribed inspection bureau in the PRC for testing, samples of our finished products carrying our GRAT.UNIC () brand and the Superman trademark in relation to the composition, colour fastness, PH-level, formaldehyde content of the products as well as dimensional stability of the product after washing, in accordance with various quality standards and requirements such as GB 18401-2003 National General Safety Technical Code for Textile Products which prescribed the safety requirements for textile products that are deemed to be in direct contact with skin. The inspection bureau will then issue a quality inspection report upon satisfaction that our products have complied with the requisite quality standards and requirements. In addition, our products are also subject to random inspection by the prescribed or authorised inspection bureau.
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Our staffs are required to comply strictly with our procedures to ensure that defective products are removed from the production process. We also conduct regular staff training on the quality assurance procedures as described in more details under the section entitled Staff Training of this Prospectus. (d) Outgoing quality control We carry out 100% quality inspection and testing of our finished products before packaging our finished products to ensure that the requisite quality standards and requirements are met. The final quality testing and inspection of the finished goods which is conducted by our quality control specialists includes an assessment of the products measurements, its exterior appearance and its workmanship. Products that do not meet our requirements are re-processed and where reprocessing is impractical, disposed of. (e) Handling of complaints & customer survey Upon receiving any complaint addressed by our customers regarding our product quality and/or services, we conduct internal meeting, investigations and where necessary, interview the customers to resolve the issue and if applicable, adopt appropriate service recovery actions and measures in handling the complaint to ensure customers satisfactions. We also conduct more comprehensive annual customer surveys on pricing, customers satisfaction on services provided and quality of products so as to obtain feedback on our products as well as to address any issues which our customers may encounter in relation to our products. Such surveys also allow us to foster and maintain close relationships with our customers. Our Directors believe that it is essential to maintain consistent quality in our products in order to promote customers loyalty and to boost our Groups reputation. For the Relevant Period and up to the Latest Practicable Date, we have not received any major complaints from our customers. As a testament to our emphasis on and commitment to the high standards of our production process and the quality of our products, we have received the following certifications:
Certification ISO9001:2000 Name of Subsidiary Fujian Great and Quanzhou Great Significance Issuing Body Issue Date/ Expiry Date(1)
The management SGS United Kingdom 9 December 2008/ system of our Ltd Systems & 8 December 2011 production processes Services Certification complies with the ISO9001:2000 requirements In compliance with internationally prescribed standards in relation to occupational health and safety management Certifying that our environmental management system complies with the prescribed standards China United Certification Centre () 17 December 2008/ 16 December 2011
GB/T28001-2001 (OHSAS 18001:1999)
Fujian Great and Quanzhou Great
GB/T 24001-2004 idt ISO 14001:2004
China United Certification Centre ()
17 December 2008/ 16 December 2011
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Name of Subsidiary Quanzhou Great Issue Date/ Expiry Date(1)
Certification Oeko-Tex Standard 100 (products class II)
Significance Our products have been tested for harmful substances and satisfy the prescribed requirements for the human ecological safety of the textiles tested Our products have been tested for harmful substances and satisfy the prescribed requirements for the human ecological safety of the textiles tested Certifying that we comply with global social accountability standards for having in place a fair and equitable work environment Certifying that our anti-microbial processed fabrics voluntarily register with SIAA
Issuing Body
Institute of the 11 September 2009/ International 30 June 2010 Association for Research and Testing in the Field of Textile Ecology (TESTEX)
Oeko-Tex Standard 100 (products class I)
Quanzhou Great
Institute of the 23 March 2009/ International 31 March 2010 Association for Research and Testing in the Field of Textile Ecology (TESTEX)
SA 8000:2001
SGS Hong Kong 1 January 2008/ Limited Systems & 31 December 2010 Services Certification
Certificate for AntiFujian Great microbial Article ( )
Japans Society of Industrial Technology for Antimicrobial Articles (SIAA)
Issued on 13 March 2007
Notes: (1) The above quality certifications are renewable upon expiry, subject to inspection by the issuing bodies that we have fulfilled the requisite requirements and/or quality standards for the respective certifications.
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SALES AND MARKETING As at the Latest Practicable Date, our Sales and Marketing Department comprises of 32 sales and marketing personnel. We have: a sales and marketing team comprising 13 staff focusing on the sales and marketing in the PRC of our undergarments bearing our GRAT.UNIC () brand and the Superman licensed trademark; and a sales and marketing team comprising 19 staff focusing on the sales and marketing of our contract manufacturing merchandise. Our Sales and Marketing Department is responsible for cultivating and developing new customers as well as managing relationships with existing customers in the PRC and overseas markets. We take a different approach for sales and marketing for our products bearing our GRAT.UNIC () brand and the Superman licensed trademark and for our contract manufacturing products. Our GRAT. UNIC () brand of products are sold through various points of sales comprising specialty stores or dedicated shelf spaces located strategically in shopping malls, departmental stores and commercial areas of major cities in the PRC. We sell to these points of sales directly or through our distribution networks. Sales of our contract manufacturing merchandise are export-oriented, which we sell directly to major retail chains and/or owners of international brands or through their purchasing agents or through trading companies mainly based in the PRC. Marketing and Promotion of Products bearing our GRAT.UNIC () brand and the Superman licensed trademark We recognise the importance of the brand image of GRAT.UNIC () and we have a variety of marketing and promotional activities to create market awareness and recognition of our brand. We carry out various marketing and promotional activities such as: (i) New Product Launches Nationwide Product Launches Launches of our new products are carried out semi-annually typically in the last quarter of each year for spring/summer designs and in the second quarter of each year for autumn/winter designs. We may carry out the launches in cities where we have existing points of sales or in cities where we intend to expand into based on our market development strategy. We may invite existing and potential distributors, media, reporters and procurement specialists from departmental stores or retailers from across the PRC to our launches. These launches are held to showcase our new product designs, promote our GRAT.UNIC ( ) brand and Superman licensed trademark, and to secure new distributors and points of sales for our products. During these product launches, we also take the opportunity to gather further feedback from our customers and distributors as well as their views on design trends in the undergarment industry. We are of the view that it is crucial for us to understand the local market conditions in which each of our distributors and retailers operates in order to maintain a mutually beneficial and long-term relationship. We organised a major publicity event in Shanghai to promote our GRAT.UNIC () brand in December 2007. We themed this major publicity event as Unicorn Returns () to boost our brand image and to distinguish ourselves from other market players. A fashion show featuring the launch of our latest 2008 spring and summer undergarment collection carrying with our GRAT.UNIC () brand and official launch of Superman range of mens and womens undergarments was held.
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Regional Product Promotional Events In 2008, our distributors, in collaboration with us, carried out regional product promotional events in Dalian, Zhengzhou, Lanzhou and Xian with a focus on expanding existing distributorship network by attracting new distributors, promoting sales of our GRAT.UNIC () and Superman range of products and creating brand awareness in these cities of the PRC. (ii) Fashion Exhibitions and Fairs We attend and participate in trade fairs to showcase and create market awareness of our GRAT. UNIC () and Superman range of products, to identify potential distributors, to assess the latest market trends and to determine our Groups design and development directions. In the Relevant Period and up to the Latest Practicable Date, some of the trade fairs and exhibitions we have participated in include:
Name of Exhibition/Trade Fair China Knitwear cotton trade fair () (also known as China World Knitwear Expo ( )) Organizer China Textiles Commerce Association ( ) Date 21 February 2006 and 16 March 2007 Significance The expo is held semi-annually and is one of the largest knitwear exhibition events in the PRC held on a regular basis
(iii)
Merchandise Catalogues/ Brochures We provide to our distributors and our points of sales a catalogue of our products semi-annually. We constantly update this catalogue when there are new launches of our product lines.
(iv)
Public Promotional Brochures We publish a semi-annual publication of our products and distribute them to the public at various locations such as hotels, airports and shopping and commercial districts to promote our products and increase brand awareness among the public.
(v)
Advertisements We advertise on outdoor billboards in shopping malls, departmental stores and commercial areas where retail stores selling our products are located. We have also advertised our GRAT.UNIC () brand of products in popular fashion magazines such as Mr. Fashion and Weekend Pictorial that are distributed nationally. In 2007, we had also placed an advertisement on a national television network to promote our major publicity event () in Shanghai. In September 2008, as part of our constant efforts in enhancing our market share, we have advertised through a different platform by entering into an advertising contract with Shanghai Fenzhong, pursuant to which our advertisement was placed on LCD screens located in office buildings through Shanghai Fenzhongs digital outdoor media network across various cities in the PRC, namely Shanghai, Hangzhou, Nanjing, Fuzhou, Chongqing, Lanzhou and Dalian till 8 February 2009.
(vi)
Products Sponsor We have entered into a product sponsorship agreement for the 6th PRC National Sports Games of Peasants () (Games) where we sponsored the anti-microbial undergarments for the sportsmen. In return, we were featured as the official undergarment sponsor for the Games and featured as a sponsor in the promotional materials for the Games. We also received advertising opportunities during the Games, with advertising spaces reserved for us. In addition, being a Games sponsor, we were entitled to use the Games emblems, its mascot, related logos and the advertising site at the Games location, and entitled to associate ourselves with the Games for our advertising and promotions purposes. The Games was held in October 2008 in Quanzhou City, Fujian Province, the PRC.
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(vii) Sales and Distribution Our GRAT.UNIC () brand of products are sold through various points of sales comprising specialty stores or dedicated shelf spaces located strategically in shopping malls, departmental stores and commercial areas of major cities in the PRC. Our Superman range of undergarments is distributed and sold through the same distribution channels as those of our GRAT.UNIC () brand of products as described above. We sell directly to these points of sales or through our distribution networks. Our products are distributed through an extensive distribution network across various cities the PRC such as Shanghai, Chongqing, Tianjin, Dalian, Guilin, Harbin, Haikou, Hefei, Hangzhou, Lanzhou, Nanjing, Shijiazhuang and Xiamen. As at the end of each of the Relevant Period and as at the Latest Practicable Date, the number of points of sales and the areas in the PRC where these points of sales are located are set out in the table below: Province/ Municipality/ Autonomous region
Number of points of sales As at the end of FY2006 FY2007 2 11 23 11 1 4 2 7 6 8 6 1 1 10 93 FY2008 2 11 26 9 1 4 1 7 6 6 6 2 4 3 1 10 99 As at the Latest Practicable Date 2 11 26 9 2 4 1 7 6 6 6 2 4 3 3 10 102
Anhui Chongqing Fujian Gansu Guangxi Hainan Hebei Henan Hubei Heilongjiang Jiangsu Liaoning Shaanxi Shandong Shanghai Tianjin Zhejiang Total
2 10 2 1 1 2 18
As at the Latest Practicable Date, we have 102 points of sales. We sell directly to retailers such as departmental stores and other retail outlets where 23 of these points of sales are located, with the remaining 79 points of sales serviced by our network of distributors.
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We constantly obtain sales feedback from our distributors and retailers for detailed analysis and assessment. This allows us to achieve a better understanding of market demand and sales trend. Our distributors and our retailers represent the principal customers of our Group. By selling to distributors and to direct points of sales, we believe we are able to enhance our brand image with minimum capital investment and low inventory risk as we have not established our own direct retail stores. Our sales and marketing team is responsible for direct sales and for building and managing our distribution networks. Our sales and marketing team also provide after sales support to our direct sales customers and to our distributors. Our distributors are appointed either as provincial or regional distributors based on their distribution abilities, financial strength, credit track record and scale of operations. Provincial distributors are generally responsible for the sale of our products in authorised provinces or municipality, such as Anhui and Chongqing while regional distributors are generally responsible for sale of our products in specific regions such as Dalian and Guilin. We enter into distributorship agreements with all our distributors under which our distributors are required to fully develop the market for our products within the assigned territory by launching agreed numbers of stores or points of sales in shopping malls, departmental stores or commercial areas which are located at the approved location and in accordance with the given renovation plans within specified time frame. Generally, such agreements are reviewed and renewed on a yearly basis. We will take into consideration various factors such as the purchase/order volume, operational performance, credit track record of each distributors and whether they are proactive in the distribution of our products in deciding the renewal of agreements with respective distributors. We determine and are entitled to vary the range of undergarments supplied to our direct points of sales to cater to the varying demands and consumers preferences in different territories. We also provide advice to our distributors on the product mix that the distributors should carry. To ensure consistency, we liaise with our distributors and points of sales to formulate promotional activities to enhance the recognition of our GRAT.UNIC () brand and Superman trademark in the PRC. We carry out regular visits to our distributors to foster a closer business relationship with our distributors. We also provide advice on our brand management and conduct training for sales personnel at retail outlets or departmental stores. Sales and Marketing of our Contract Manufacturing Services and Products Our contract manufacturing services and products are mainly focused on owners of international brands and international retail chains located outside the PRC as well as on their purchasing agents or trading companies mainly based in the PRC. We have dedicated sales personnel assigned to each brand owner or retail chain to provide frequent, personalised one-on-one contact to ensure our responsiveness to their specific needs and to ensure full accountability for sales-related activities and customer service. In the Relevant Period, our end customers included owners of international brands and retail chains such as Zeeman (the Netherlands), Zara (Spain), Next (UK), Pelican (Russia), Hema BV (the Netherlands) Target (Australia), George (UK), Wal-Mart (Canada), Lindex (UK), Adams (UK) and Etam (UK). These products are sold directly to them or through their purchasing agents or through trading companies mainly based in the PRC. We promote our contract manufacturing services and products by participating in various fashion fairs and exhibitions, and by advertising our products and services in various international industry magazines such as Global Source and HKTDC Enterprise, which is a publication of the Hong Kong Trade Development Council () and on several business to business (b2b) websites such as Alibaba.
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Trade fairs and exhibitions we participated in to promote our contract manufacturing services and products in the Relevant Period and up to the Latest Practicable Date include: Name of Exhibition/Trade Fair China Import and Export Fair ( ) Organiser China Foreign Trade Centre ( ) Date April and October of 2005, 2006, 2007, April and November of 2008, as well as May 2009 Significance This exhibition is one of the PRCs largest and most comprehensive international trade fairs. The purpose of the exhibition was to facilitate trade as well as promote interaction and networking amongst the participants and attendees. More than 18,000 international as well as domestic participants and attendees were present. This trade fair is one of the largest regional economic and trade fairs in the PRC which showcases consumer goods including fashion, garments, home textiles and gifts. More than 3,500 exhibitors from the PRC and overseas countries such as US, UK and Japan attended this exhibition. This exhibition on undergarments and swimwear was first held in Hong Kong in March 2007 which serves as a platform for the participants to showcase their products. The purpose of the exhibition is to facilitate trade as well as promote interaction and networking amongst the participants and attendees.
East China Fair ()
Jointly organised by: 9 provincial and municipal governments of Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Nanjing, Ningbo
March 2006
China Globalsources Fair (())
Globalsources
April and October of 2007, April and November of 2008 as well as April 2009
In FY2006, FY2007 and FY2008, our sales and marketing expenses accounted for 2.6%, 1.8% and 2.0% respectively of our total revenue.
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OUR MAJOR CUSTOMERS Major Customers of our contract manufacturing products Our contract manufacturing products are exported mainly to the owners of international brands and retail chains directly or through their purchasing agents or through trading companies mainly based in the PRC. Our contract manufacturing products are sold to two principal categories of customers: Owners of international brands or major retail chains Our customers who are the owners of international brands or major retail chains and who purchase directly from us include: Zeeman Group (the Netherlands) a leading textiles supermarket based in the Netherlands with outlets in various countries in Europe; Pelican (Russia) a Russian based clothing retailer offering a range of products for adults and children; Next (UK) an international retail organisation based in the UK offering products in clothing for men, women and children as well as footwear, accessories and homeware; Hema BV (the Netherlands) an international retail organisation based in the Netherlands offering a wide range of consumer products from clothing to infant care products; Oviesse SPA (Italy) an international retail organisation based in Italy offering clothing for men, women, children and infants; Wibra Supermarket BV (the Netherlands) a supermarket based in the Netherlands offering a range of products from clothing to homeware; and KIK Textilien und Non-Food GmbH (Germany) a textile retailer based in the Germany offering a range of products from clothing to household goods.
Note: Our Directors understanding of the background of the above direct customers is based on publicly available information, and this information has not been independently verified.
Purchasing agents or trading companies mainly based in the PRC which purchase our products for their customers Our customers who are purchasing agents or trading companies mainly based in the PRC which purchase our products for their customers include: Xiamen Greatex Import and Export Trading Co., Ltd () a PRC trading company which onsells our products to Zara (Spain); Cookie Company BV a Dutch company which is specialized in designing and selling childrens wear and onsells our products to Walt Disney (USA); and Norwest Industries Ltd a PRC sourcing company which onsells our products to George (UK).
) Major Customers of our GRAT.UNIC ( brand and Superman licensed trademark of products Our GRAT.UNIC () brand of products are principally sold to customers in the PRC through various points of sales comprising specialty stores or dedicated shelf spaces located strategically in shopping malls, departmental stores and commercial areas of major cities in the PRC. We sell to these points of sales directly or through our distribution networks.
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Our Superman range of undergarments is distributed and sold through the same distribution channels as those of our GRAT.UNIC () brand of products as described above. Our Directors believe that we have maintained good working relationships with our PRC and overseas customers. Certain of our customers may provide us with forecast of their expected orders for periods of up to one year. These are non-binding and provided by customers to us to allow us to plan our production. Customers would, when they require delivery, confirm their purchase by issuing us with specific purchase orders.
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The following table sets forth our major customers accounting for 5% or more of our Groups total revenue for the Relevant Period:
FY2006 Percentage of total revenue (%) 15.5 FY2007 FY2008 Percentage of total revenue (%) Amount of sales (RMB000) 47,726 11.9
Name of customer Mens and womens undergarments, childrens and infants apparel 9,842 6.7 19,238 7,342 5.0 40,709
Description of customer
Products sold by our Group
Amount of sales (RMB000)
Percentage of total revenue (%) Amount of sales (RMB000)
Collect Source HK Limited(1) (Collect Source)
Purchasing agent/trading company
Dajia and Dajin Group(2)
Mens and womens undergarments, Distributor of GRAT. UNIC () brand and childrens and infants apparel Superman licensed trade mark of products Mens and womens undergarments, and childrens apparel 7,192 4.9
7.3
56,885
14.2
ZEEMAN TEXTIELSUPERS B.V(3) (Zeeman)
Owner of international brand(s) and/or retail chain(s) Mens and womens undergarments, and childrens apparel 15,534
33,136
12.6
34,698
8.7
Xiamen Greatex Import and Export Trading Co., Ltd.(4) (formerly known as ) (Xiamen Greatex) Mens and womens undergarments, childrens and infants apparel
10.6
17,180
6.6
10,239
2.6
Fujian Agrotech Oriental Imp. & Exp. Co., Ltd.(5) () (formerly known as Fujian Haolun Dongfang Trading Co., Ltd.) () (Fujian Agrotech)
35,224
24.1
1,119
0.4
TMI group of companies(6)
Mens and womens undergarments, childrens and infants apparel
20,099
13.7
8,475
3.2
1,036
0.3
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Notes:
(1)
Our sales to Collect Source as a percentage to our total revenue decreased in FY2008 due mainly to the comparatively greater growth of our total revenue.
(2)
Dajia and Dajin Group comprises Xiamen Dajia Economic and Trade Co., Ltd () (Dajia) and Xiamen Da Jin Industry Co., Ltd ()(Dajin). Dajia and Dajin are being grouped together and treated as a single customer as they are related to each other. We started our business with Dajia and Dajin in FY2006 and our revenue from sales to the Dajia and Dajin Group increased from FY2006 to FY2008 due to an increase in demand for mainly our GRAT.UNIC () products. In addition, we have over the years established a good relationship with Dajia and Dajin.
(3)
From FY2006 to FY2007, our sales to Zeeman increased substantially from 4.91% to 12.63% of our total revenue as we undertook direct sales to Zeeman instead of through other trading companies in FY2007. Our average monthly sales to Zeeman remained stable in FY2008 although as a percentage of our total revenue, there was a decrease in FY2008 due mainly to the comparatively greater growth of our total revenue.
(4)
Our Executive Chairman and CEO, Weng Wenwei previously held 50% of the equity interest in Xiamen Greatex. Please refer to the section entitled Interested Person Transactions of this Prospectus for more information. From FY2006 to FY2007, our sales to Xiamen Greatex increased in value annually. From FY2006 to FY2007, our sales to Xiamen Greatex as a percentage of our total revenue decreased due mainly to the growth of our total revenue in FY2007. In FY2008, some of the customers of Xiamen Greatex such as Pelican opted to purchase directly from us. Accordingly, our sales to Xiamen Greatex decreased in FY2008.
(5)
Our sales to Fujian Agrotech ceased in FY2008 as we sought to establish direct sales with the owners of international brands or major retailers and to reduce our reliance on such trading company.
(6)
TMI group of companies refers to a group of companies which are mainly engaged in garment trading.
(7)
As a purchasing agent/trading company may act for several and changing end customers, we may not be aware of the identity of the end customers of our customers who are purchasing agents/ trading companies.
The proportion of our sales to our customers comprising (i) owners of international brands or major retail chains and who purchase our contract manufacturing products directly from us, (ii) purchasing agents or trading companies which purchase our contract manufacturing products and (iii) customers of our GRAT.UNIC () brand and Superman licensed trademark of products is 5.7%, 92.7% and 1.6% respectively for FY2006, 23.8%, 68.7% and 7.6% respectively for FY2007, and 24.5%, 63.0% and 12.4% respectively for FY2008.
Our Company is of the view that there is no vulnerability arising from reliance on purchasing agents or trading companies for our contract manufacturing products given that there is a spread of purchasing agents and trading companies on whom our Group relied. In FY2008, the Company sold its contract manufacturing products to more than 100 purchasing agents and trading companies, of which only sales to one purchasing agent comprised more than 5% of the Groups sales for FY2008.
Save as disclosed above, none of our Directors, Executive Officers, Controlling Shareholder or any of their Associates is related to or has any interest, direct or indirect, in any of the above major customers. To the best of our Directors knowledge and belief, there are no arrangements or understanding with any of our customers pursuant to which any of our Directors and Executive Officers was appointed.
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OUR MAJOR SUPPLIERS The key raw materials used in our production process include fabrics, yarn, spandex, elastic bands, lace and accessories. The selection of our suppliers is based on the following criteria: the suppliers reputation; the ability of the supplier to supply raw materials which is of a quality that meets our stringent standards; the ability of the supplier to supply raw materials to us at competitive prices; and the ability of the supplier to make timely deliveries and provide quality service. In FY2008, we have over 300 suppliers, including one-off suppliers due mainly to the variety and wide range of our products offerings. For example, certain designs require specific types of cloth (including the material, colour and design), thread, lace, accessories, trademark tags and packaging which the raw materials vary for each line of product specification due to changes in season, changes in design trends or specific requirements from owners of international brands with whom we have relationships or retail chains. We purchase our materials based on changing design trends and the product specifications of our customers. The raw materials that we purchase may also be subject to additional processes, such as dyeing and design printing, which we sub-contract to our suppliers. In addition, we generally obtain price quotes from at least two suppliers for each type of main raw materials for comparison and selection. We have established long-term relationships with certain of our major suppliers. For certain suppliers, we have signed long-term purchasing agreements. These are generally in respect of fabrics, yarn, spandex, elastic bands, lace and accessories that we usually use. We are not particularly reliant on any one of our suppliers.
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The following table sets out our major supplier accounting for 5% or more of our Groups total purchases for the Relevant Period:
FY2006
FY2007
FY2008
Name of supplier 8,514 9.0% 11,083 6.0%
Products Supplied/ Services Provided
Amount of purchases (RMB000)
Percentage of total purchases (%) Amount of purchases (RMB000)
Percentage of total purchases (%)
Amount of purchases (RMB000) 12,763
Percentage of total purchases (%) 4.7%
Fujian Fengzhu Textile and Science Stock Company(1) ()
Cloth and dye services
Note:
(1)
We increased our purchases from this supplier from FY2006 to FY2007 as we were satisfied with the quality and prices of the products supplied. In FY2008, the monthly average purchases from this supplier remained relatively stable although our purchases as a percentage of the total purchases decreased as a result of the comparatively greater growth of our total purchases.
None of our Directors, Executive Officers, Controlling Shareholder or any of their associates is related to or has any interest, direct or indirect, in any of the above major suppliers. To the best of our Directors knowledge and belief, there are no arrangements or understanding with any of our suppliers pursuant to which any of our Directors and Executive Officers was appointed.
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CREDIT MANAGEMENT Credit policy of our customers We typically extend to our customers credit terms of between 30 to 90 days. In assessing the credit terms to be extended to a customer, we take into account the nature of the contract with such customer, creditworthiness of such customer, payment history of such customer (if an existing customer) and the relationship that we have with such customer. The creditworthiness of such customer is assessed by our Finance Department after reviewing the market reputation and financial position of such customer through public records (where available). The credit terms extended to each customer are subject to the approval of our Sales Manager, Wei Xuefen, and our Chief Financial Officer, Zhang Shiwu, for credit amounts of less than RMB200,000 and subject to the additional approval of our Executive Chairman and CEO, Weng Wenwei, for credit amounts of RMB200,000 and above. We typically invoice our customers upon delivery. However, for new distributors of our GRAT.UNIC ( ) products, we will require them to make full payment before delivery. For new contract manufacturing customers, we will require 30% initial payment upon receipt of orders with the remaining balance to be fully paid upon delivery. In the event that a customer fails to pay us within the stipulated period, our Finance Department and Sales and Marketing Department will follow-up with the customer to attempt to recover the debt before seeking legal recourse. Our average trade receivables turnover days for the Relevant Period are as follows: FY2006 Average trade receivables turnover days
Note: (1) Average Trade receivables turnover days = (simple average of the opening and closing trade receivables balance/total revenue) x 365 days.
(1)
FY2007 53
FY2008 63
37
The increase in average trade receivables turnover days from 37 days in FY2006 to 63 days in FY2008 was due mainly to (i) higher revenues in the second half of each financial year which led to a higher proportion of trade receivables that remained outstanding as at the end of each financial year when compared to the preceding year; and (ii) longer credit terms extended to some of our customers with good credit history. Our trade receivables turnover days for the Relevant Period accord with our prevailing credit policy for our customers. We monitor all outstanding debts closely in order that specific provision may be made in the event that the recovery of any debt appears doubtful. The quantum of such provision is dependent on the duration for which the debt is overdue as well as our assessment of the likelihood that such debt may be unrecoverable. We did not have any bad debts written off for the Relevant Period but we provided allowance for impairment of trade receivables of RMB188,000 for FY2006 and this allowance had been recovered fully in FY2008.
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The aging schedules for our trade receivables as at the end of FY2008 are as follows: As at 31 December 2008 RMB000 Within 30 days 31 60 days 61 90 days Over 90 days Total 40,682 16,809 11,687 11,760 80,938 % 50.3 20.8 14.4 14.5 100.0
As at the Latest Practicable Date, all of the trade receivables amounting to RMB80.9 million as at 31 December 2008 had been collected. The Group has factored export trade receivables with carrying amounts of approximately RMB2.2 million, RMB3.9 million and RMB22.3 million to banks in exchange for cash during the Relevant Period. The transactions have been accounted for as collateralised borrowing as the banks have full recourse to the Group in the event of default by the debtors. The increase in the amount of trade receivables factoring to banks over the Relevant Period was due to the increase in our Groups turnover and the Company increased its trade receivables factoring to the bank as a mean to improve the capital position of our Group. In November 2008, we obtained an export credit insurance to cover losses of up to US$5 million arising from our customers bankruptcy and/or inability to pay due debt. We obtained the export credit insurance for the following reasons: (i) in light of the recent global economic crisis, the PRC government had encouraged export-oriented enterprises in the PRC to take up export credit insurance; we were able to minimise our credit risk in relation to our exports; under the terms of the export credit insurance, we could claim up to 90% in compensation from the insurer for losses arising from the buyers bankruptcy and/or inability to pay due debt; and under the terms of the export credit insurance, we could claim up to 80% in compensation from the insurer for losses arising from the buyers refusal to collect the cargo.
(ii) (iii)
(iv)
Please refer to the section entitled Insurance of this Prospectus for more information on the export credit insurance which we have obtained. As at the Latest Practicable Date, to the best of the Executive Directors information, knowledge and belief, none of the Companys overseas customers have been made insolvent and there is no information to suggest that any of the Groups customers may default on the debts due to the Group. Credit policy of our suppliers Credit terms granted to us by our suppliers vary from supplier to supplier and are dependent, amongst others, on our relationship with the particular supplier and the size of our purchases, usually it will be negotiated on an order by order basis. For new suppliers or when placing orders for raw materials with customised specifications from our existing suppliers, we will typically be required to make an advance payment of 30% upon placing our orders with the remaining balance to be paid depending on the credit terms offered to us by the suppliers. To the best of the Executive Directors information, knowledge and belief, such rate of advance payment is consistent with market practice in the PRC. In addition, for certain existing suppliers, we may also make an advance payment for large orders in order to secure better
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pricing. The amount of advances which we will be required to place with individual suppliers will vary in accordance with the nature of the order in relation to the type of materials ordered and quantum of such order. Prior to placing of advances with our suppliers, we take into account the nature of the contract with such supplier, creditworthiness of such supplier and the relationship that we have with such supplier. The creditworthiness of such supplier is assessed by our Finance Department after reviewing the market reputation and financial position of such supplier through public records (where available). The advances to be deposited with each of our suppliers are subject to the approval of our Executive Director and Procurement Manager, Weng Wenju, and our Chief Financial Officer, Zhang Shiwu, for amounts of purchases of less than RMB200,000 and subject to the additional approval of our Executive Chairman and CEO, Weng Wenwei, for amounts of purchases of RMB200,000 and above. As at 31 December 2008 and the Latest Practicable Date, the amount of advances placed on deposit with our suppliers were RMB50.2 million and RMB50.1 million respectively. The breakdown of the RMB50.2 million and RMB50.1 million advances made to suppliers are as follows: Quantum of advance as at 31 December 2008 Above RMB1.0 million Above RMB0.5 million and up to RMB1.0 million RMB0.5 million or less Quantum of advance as at the Latest Practicable Date Above RMB1.0 million Above RMB0.5 million and up to RMB1.0 million RMB0.5 million or less
Notes: (1) (2) As at 31 December 2008, of these five suppliers, an advance of RMB2.0 million has been made to one supplier and advances of between RMB1.1 million and RMB1.6 million have been made to four suppliers. As at the Latest Practicable Date, advances of between RMB1.1 million to RMB5.4 million have been made to eight suppliers.
Number of suppliers 5(1) 12 273 Number of suppliers 8(2) 12 185
The timeframe for the delivery of these orders by the suppliers is typically between 3 to 6 months. As at the Latest Practicable Date, to our best of the Executive Directors information, knowledge and belief, our Executive Directors do not expect any default by the suppliers and/or inability of the suppliers to fulfil their obligations. The usual credit terms extended to us by our suppliers generally range from 30 to 90 days after delivery of goods. We typically pay within the given credit period. Our average trade and bills payables turnover days for the Relevant Period are as follows: FY2006 Average trade and bills payables turnover days
Note: (1) Average trade and bills payables turnover days = (simple average of the opening and closing trade and bills payable balance / total cost of sales) x 365 days.
(1)
FY2007 40
FY2008 25
37
The marginal increase in the average trade and bills payables turnover days from 37 days in FY2006 to 40 days in FY2007 was due mainly to increase in trade payables. The decrease in the average trade and bills payables turnover days from 40 days in FY2007 to 25 days in FY2008 was due mainly to higher amounts of advances paid to suppliers as compared to FY2007.
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RESEARCH AND DEVELOPMENT Our R&D activities are centered primarily on product development and innovation so as to create new products and expand our product offering as well as to improve the quality, comfort, fit and functionality of our existing products. As at the Latest Practicable Date, we have a R&D team consisting of 16 employees. We also engage external consultants from various research institutes or freelance designers to provide expertise or assist us in the design and development of our products on an ad-hoc basis when necessary. Our R&D efforts are mainly focused on two main areas, namely product design and development, as well as improvement of our production techniques and processes. Product Design and Development We focus our product design and development efforts in the following key areas: Design - Creating innovative designs and styles for our products so as to keep abreast of the latest fashion trends and consumers preferences; Quality of materials and fabrics - Utilising new materials with improved texture and composition to enhance the look and feel of our products, or having specific qualities such as our antimicrobial fabrics; and Functionality - Improving the functionality of our products. Innovative designs and styles for our products Our product design team works closely with our sales and marketing team to understand product designs, materials, packaging and styles that appeal to our customers. Our product designers stay current with changing fashion trends and consumers preferences by attending fashion trade fairs and reviewing fashion trade magazines. We also work with freelance fashion designers from time to time and invite them to submit their designs to us. New designs may take into account local territorial tastes and preference, and may be selected through a review of industry literature feedback from our suppliers and customers or arising from recommendations from various external consultants in the industry. In FY2008, our design team created more than 250 new designs for undergarments under our GRAT.UNIC () brand and the Superman licensed trademark. Samples of the new designs are made and assessed by our R&D Department, Production Department and Sales and Marketing Department to discuss factors such as the commercial feasibility of producing the new designs. In evaluating the new designs, we will consider the aesthetic appeal, the fabrics to be used, the production cost and suitability for mass production. Use of new materials and fabrics We also carry out studies on how various types of materials with varying textures and composition can be used in our products to enhance the quality, comfort and fit. We have successfully incorporated modal from Lenzing Modal and spandex fibers from Lycra in our fabrics used for the manufacture of our undergarments to improve the comfort and fit of our products. We have developed and launched a new range of undergarments with anti-microbial qualities under our GRAT.UNIC () brand in March 2008. Such undergarments are treated with an anti-microbial additive through a process jointly developed by us and the Quanzhou Huiyu, pursuant to a collaboration agreement entered into between us and Quanzhou Huiyu on 1 March 2007. The resulting products and application technique shall belong to us and we shall have an exclusive right to use the additives provided by Quanzhou Huiyu within the undergarments and childrens and infants apparel industry in the PRC. The results of such collaboration have been examined by the Fujian Provincial Department of Science and Technology () which have confirmed that the anti-microbial technique that is applied to our products complies with PRC textile industry standards and the FZ/T 73023-2006 AAArate requirements in relation to anti-microbial products.(1)
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In March 2007, our anti-microbial processed fabrics were voluntarily registered with the Society of Industrial Technology for Antimicrobial Articles in Japan. In March 2008, we launched our mens undergarments with anti-microbial features under our GRAT.UNIC () brand.
Note: (1) The statement is extracted from the Scientific and Technical Achievement Report () issued by the Fujian Provincial Department of Science and Technology () in June 2007 which was not issued for the purpose of incorporation in this Prospectus. Fujian Provincial Department of Science and Technology has not consented to the inclusion of the information in the report in this section and is thereby not liable for these statements under Sections 253 and 254 of the Securities and Futures Act. Our Directors are not aware of any disclaimer made by Fujian Provincial Department of Science and Technology in relation to the reliance on the contents of the statement. We have included the above information in their proper form and context in this Prospectus, our Company and our respective officers, agents and employees have not and are unable to verify the accuracy of the contents of such information nor conducted an independent review of the contents of the report. Our Directors are aware that Fujian Provincial Department of Science and Technology does not guarantee or assume responsibility that the information in its publication is accurate, current or reliable, or maybe used for any purpose other than for general reference.
New or improved functionality of our products As at the Latest Practicable Date, we have also developed nine patents of mens undergarments consisting of a utility model (which is a type of patent recognised in the PRC for incremental improvements to or adaptations of existing products) and eight related design patents all of which serve to better facilitate the act of urination for males, all of which are currently registered under the name of our Executive Chairman and CEO, Weng Wenwei, and will be transfered to us at our request, pending which we shall have the exclusive licence to use. We intend to commence production of mens undergarments featuring certain of these new designs and carry out sales of such new products in the second half of 2009. Please refer to the section entitled Intellectual Property of this Prospectus for more information of our patents. Improvement of Production Process Our R&D department, in conjunction with our Production Department, carry out continuing R&D into evaluating and improving the existing production equipments and production processes, to further enhancing the functions and quality of our products in relation to hygiene, safety and health care. For FY2006, FY2007 and FY2008, our R&D expenses were 0.1%, 0.1%, 1.0% of our Groups total revenue respectively. INTELLECTUAL PROPERTY Patents As at the Latest Practicable Date, our Group had been granted an exclusive licence to use the following patents by our Executive Chairman and CEO, Weng Wenwei:
Patent Name Male Underpants (1) Trousers (3) (1) Trousers (1) (1) Trousers (2) (1) Trousers (4) (1) Shorts(4) (1) Shorts(1) (1) Patent Type Utility Model Design Design Design Design Design Design Application Number ZL 2007 2 0001230.5 ZL2007 3 0000243.6 ZL 2007 3 0000244.0 ZL 2007 3 0000245.5 ZL 200730000246.X ZL 2007 3 0000247.4 ZL 2007 3 0000248.9 Validity Period From 9 January 2007 to 8 January 2017 From 18 January 2007 to 17 January 2017 From 18 January 2007 to 17 January 2017 From 18 January 2007 to 17 January 2017 From 18 January 2007 to 17 January 2017 From 18 January 2007 to 17 January 2017 From 18 January 2007 to 17 January 2017
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Patent Name Shorts(2) (1) Shorts(3) (1)
Note: (1) The above nine patents of mens undergarments consisting of a utility model (which is a type of patent recognised in the PRC for incremental improvements to or adaptations of existing products) and eight related design patents all serve to better facilitate the act of urination for males are currently registered under the name of our Executive Chairman and CEO, Weng Wenwei. Pursuant to an Intellectual Property Licence and Transfer Agreement () which we have entered into with Weng Wenwei on 13 October 2008, Weng Wenwei has agreed to transfer to us, any or all of these patents at our request at a minimum amount permitted under the PRC laws and regulations and pending such transfer, we have been granted an exclusive licence to use these patents at nil consideration. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have, for the purpose of this Prospectus, advised on 2 September 2009 that under the prevailing laws of the PRC, there is no restriction on the minimum consideration amount for the transfer of patents between non stateowned entities, and thus any nominal consideration for such transfer or even gift is permitted.
Patent Type Designs Designs
Application Number ZL 2007 3 0000249.3 ZL 2007 3 0000250.6
Validity Period From 18 January 2007 to 17 January 2017 From 18 January 2007 to 17 January 2017
Trademarks As at the Latest Practicable Date, our Group has registered the following trademarks:
Trademark Owners Class(1) Registration Number 300809659 Issuing Authority Validity Period
Fujian Great
18,24, 25, 26,35
Trade Marks Registry, Intellectual Property Department, Hong Kong ( ) Trade Marks Registry, Intellectual Property Department, Hong Kong ( ) Trade Marks Registry, Intellectual Property Department, Hong Kong ( ) Trademark Office of State Administration for Industry and Commerce ( )
From 5 February 2007 to 4 February 2017
GRAT.UNIC
Fujian Great
18, 24, 25, 26, 35
300809668
From 5 February 2007 to 4 February 2017
Fujian Great
18, 25, 35
300570852
From 25 January 2006 to 24 January 2016
Fujian Great
18
5070897
From 21 June 2009 to 20 June 2019
Note: (1) The following class headings give general information about the types of goods and services which belong to each class. A specification indicating the class heading does not amount to a claim for all the goods or services in that class. This list is not exhaustive and serves as a quick reference to help you locate the correct class: Class 18 refers to leather and imitations of leather, and goods made of these materials and not included in other classes; animal skins, hides; trunks and travelling bags; umbrellas, parasols and walking sticks; whips, harness and saddlery. Class 24 refers to textiles and textile goods, not included in other classes; bed and table covers. Class 25 refers to clothing, footwear, headgear. Class 26 refers to lace and embroidery, ribbons and braid; buttons, hooks and eyes, pins and needles; artificial flowers. Class 35 refers to advertising; business management; business administration; office functions.
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As at the Latest Practicable Date, our Group has applied for the registration of the following trademarks in the PRC and Singapore:
Trademark Applicant Class(1) Application Number 5070899, 5070898 Issuing Authority Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Application Date(2) 20 December 2005
Fujian Great 25,35
GRAT.UNIC
Fujian Great 18, 24, 25, 26, 35
5886125, 5886123, 5886121, 5886124, 5886122
2 February 2007
Fujian Great 18,24,25, 26,35
5886139,5886120, 5886138,5886137, 5886136
Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( )
2 February 2007
GRAT.UNIC
Fujian Great 3, 5, 7, 9, 11,14, 16, 28, 30, 32, 33, 34, 41, 43
5956698, 5956700, 5956702, 5956704, 5956706, 5956826, 5956824, 5956823 5956726, 5956707, 5956709, 5956711, 5956713, 5956715, 5956697 6369327
5956699, 5956701, 5956703, 5956705, 5956846, 5956825,
22 March 2007
Fujian Great
5, 7, 9, 11, 14, 16, 28, 30, 32, 33, 34, 41, 43
5956727, 5956708, 5956710, 5956712, 5956714, 5956716,
Trademark Office of State Administration for Industry and Commerce ( )
22 March 2007
UNDREX
Fujian Great 25
9 November 2007
UNDRELA
Fujian Great 25
6369328
Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( )
9 November 2007
Fujian Great 25
6369329
9 November 2007
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Trademark GRIXPRO Applicant Class(1) Application Number 6369330 Issuing Authority Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Application Date(2) 9 November 2007
Fujian Great 25
GLOZZ.U
Fujian Great 25
6369331
9 November 2007
Fujian Great 25
6566885
27 February 2008
Fujian Great 25
6951070
12 September 2008
Company
25,35
T08/13797B
Intellectual Property Office of Singapore
7 October 2008
Notes: (1) The following class headings give general information about the types of goods and services which belong to each class. A specification indicating the class heading does not amount to a claim for all the goods or services in that class. This list is not exhaustive and serves as a quick reference to help you locate the correct class: Class 3 refers to bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices. Class 5 refers to pharmaceutical and veterinary preparations; sanitary preparations for medical purposes; dietetic substances adapted for medical use, food for babies; plasters, materials for dressings; material for stopping teeth, dental wax; disinfectants; preparations for destroying vermin; fungicides, herbicides. Class 7 refers to machines and machine tools; motors and engines (except for land vehicles); machine coupling and transmission components (except for land vehicles); agricultural implements other than hand-operated; incubators for eggs. Class 9 refers to scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signaling, checking (supervision), life-saving and teaching apparatus and instruments; apparatus and instruments for conducting, switching, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission or reproduction of sound or images; magnetic data carriers, recording discs; automatic vending machines and mechanisms for coin-operated apparatus; cash registers, calculating machines, data processing equipment and computers; fireextinguishing apparatus. Class 11 refers to apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes. Class 14 refers to precious metals and their alloys and goods in precious metals or coated therewith, not included in other classes; jewellery, precious stones; horological and chronometric instruments. Class 18 refers to leather and imitations of leather, and goods made of these materials and not included in other classes; animal skins, hides; trunks and travelling bags; umbrellas, parasols and walking sticks; whips, harness and saddlery. Class 25 refers to clothing, footwear, headgear. Class 28 refers to games and playthings; gymnastic and sporting articles not included in other classes; decorations for Christmas trees.
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(2) Class 33 refers to alcoholic beverages (except beers). Class 34 refers to tobacco; smokers articles; matches. Class 35 refers to advertising; business management; business administration; office functions. Class 41 refers to education; providing of training; entertainment; sporting and cultural activities. Class 43 refers to services for providing food and drink; temporary accommodation.
The trademark registration process in the PRC typically takes between 2 to 3 years from the time of such trademark application is filed with the Trademark Office of State Administration for Industry and Commerce ( ) to the time such trademark is registered. As such, our various trademark applications in the PRC that were made in 2005 and 2007 are still pending registration.
As at the Latest Practicable Date, we have applied for the transfer of the following trademarks from our Executive Chairman and CEO, Weng Wenwei, to us:
Registration/ Application Number 4206928
Trademark
(1)
Applicants Weng Wenwei
Class 25
Issuing Authority Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( )
Validity Period From 21 May 2008 to 20 May 2018
GREAT (1)
Weng Wenwei
25
3809376
From 14 February 2007 to 13 February 2017 From 21 April 2009 to 20 April 2019
HKGREAT (1)
Weng Wenwei
25
4759030
(2)
Weng Wenwei
25
4200131
From 28 March 2008 to 27 March 2018
Notes: (1) The above trademarks are currently registered under the name of our Executive Chairman and CEO, Weng Wenwei. Based on a Trademarks Transfer Agreement (/) dated 25 August 2008 which we have entered into with Weng Wenwei, the above trademarks have been transferred to us from Weng Wenwei. We are in the process of registering such transfer with the Trademark Office of State Administration for Industry and Commerce (). This trademark is currently registered under the name of our Executive Chairman and CEO, Weng Wenwei. Based on a Supplemental Agreement of Trademarks Transfer Agreement (/) dated 1 February 2009 which we have entered into with Weng Wenwei, this trademark has been transferred to us from Weng Wenwei. As at the Latest Practicable Date, we are in the process of registering such transfer with the Trademark Office of State Administration for Industry and Commerce ().
(2)
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As at the Latest Practicable Date, our Executive Chairman and CEO, Weng Wenwei, has registered the following trademarks which he has undertaken to transfer to us. These trademarks are:
Trademark Applicants Class Application Number 4495634 Issuing Authority Validity Period
(1)(2)
Weng Wenwei
25
Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( ) Trademark Office of State Administration for Industry and Commerce ( )
From 7 May 2009 to 6 May 2019
HKG (1)(2)
Weng Wenwei
25
4759034
From 21 April 2009 to 20 April 2019
(1)(2)
Weng Wenwei
25
4894355
(1)(2)
Weng Wenwei
25
4200131
(1)(3)
Weng Wenwei
35
4759032
From 28 January 2009 to 27 January 2019
Notes: (1) (2) The above trademarks are currently registered under the name of our Executive Chairman and CEO, Weng Wenwei. Pursuant to the Trademarks Transfer and Exclusive Right to Use Agreement () entered into with Weng Wenwei on 13 October 2008, Weng Wenwei has agreed, at our Groups request, to transfer to our Group certain trademarks and/or trademark applications. The consideration for the transfer of such trademarks and/or trademark applications shall be such minimum amount permitted under PRC laws and regulations. Our Executive Chairman and CEO, Weng Wenwei had on 4 July 2005 submitted an application to the Trademark Office of State Administration for Industry and Commerce () to register the trademark under Class 35. The application for registration has been approved and the validity period is from 28 January 2009 to 27 January 2019. Pursuant to a Supplemental Agreement of the Trademarks Transfer and Exclusive Right to Use Agreement ( ) entered into with Weng Wenwei on 27 March 2009, Weng Wenwei has agreed, at our Groups request, to transfer to our Group this trademark. The consideration for the transfer of this trademark shall be such minimum amount permitted under PRC laws and regulations.
(3)
As at the Latest Practicable Date and save as disclosed above, our business or profitability is not materially dependent on any patent, licence or new manufacturing process. Superman Trademark In June 2007, to complement our own GRAT.UNIC () brand of undergarments, we acquired a licence from Warner Bros to manufacture and sell our undergarments with the Superman trademark. We also hold a licence bearing Supergirl trademark. However, we have not sold any undergarments under the Supergirl trademark. The licence is for a period of three years for the territory of PRC (including the HKSAR and Macau) from 1 June 2007 to 31 May 2010.
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Use of Lycra and Lenzing Modal labels Our products which are manufactured from fabrics containing modal fibers from Lenzing Modal or Lycra spandex fibres will carry the Lenzing Modal and Lycra labels respectively. The supply of Lycra labels is strictly controlled by Invista as Lycra is a registered trademark of Invista whilst the supply of Lenzing Modal labels is strictly controlled by Lenzing AG. Please refer to the section entitled Production Process of this Prospectus for more information. We have on 11 December 2008 renewed our agreement with Invista in relation to the use of the Lycra labels. This agreement with Invista will expire when our Group has finished the use of the specified number of hangtags authorised by Invista or on 31 December 2009, whichever is earlier. We intend to renew our existing agreement with Invista before its expiry. LICENCES, PERMITS AND APPROVALS We have obtained all the necessary licences and permits for our business operations in the PRC and have complied with all relevant laws and regulations of the PRC. As at the Latest Practicable Date, save as disclosed under the section entitled Risk Factors and in the section entitled Description of Relevant PRC Laws and Regulations in Appendix C of this Prospectus, our business operations in the PRC are not subject to any special legislation or regulatory controls other than those generally applicable to companies and businesses incorporated and/or operating in those jurisdictions. AWARDS AND ACHIEVEMENTS We have received the following awards from relevant authorities and organisations in the PRC as set out below:
Award Honorary Title of Recommended Business Units of Products and Services ( ) Honorary Title of Best Brand Award ( ) Issuing Body Fujian Economic and Trade Committee () Issue Date 2006 Nature Award given in recognition of our service quality and products
The 89th Session of China World Knitwear Expo (89 ) Peoples Government of Quanzhou City () The Ministry of Science and Technology of the PRC () Fujian Administration of Industry and Commerce ()
February 2007
Award given in recognition of our GRAT.UNIC ( ) brand as one of the best brands Award given in recognition of our creditworthiness
Reliable and Credible Enterprise ( ) National Key Innovative Product Certification ()
April 2007 and December 2008
December 2007 (effective till December 2010)
Certification given in recognition of our innovative anti-microbial technique Award given in recognition of our creditworthiness
2007-2008 Reliable and Credible Enterprise at Fujian Provincial Level (2007-2008 )
December 2008
INVENTORY MANAGEMENT Our inventory comprises mainly raw materials such as fabrics, yarn, spandex, elastic bands, lace and accessories, work-in-progress and finished products. 121

As at 31 December 2008, our raw materials, work-in-progress and finished goods amounted to RMB20.2 million, RMB7.5 million and RMB6.3 million respectively. We have 3 warehouses, located at Zhiteng Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City (),Honghao Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) and Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) respectively. We adopt the first-in first-out method of inventory management, which means that materials received first will be the first to be used in our manufacturing process. We conduct a monthly stock-take of selected inventory and a more thorough stock-take of all inventories on a half-yearly basis. The results are carefully verified against and reconciled with our inventory records. Any discrepancy will be thoroughly investigated and corrective measures will be implemented. As at the Latest Practicable Date, we have not encountered any material damage or loss of absolescence of our inventory. During the Relevant Period, we have not made any allowance for inventory obsolescence or inventory write-off. Our average inventory turnover days for the Relevant Period are as follows: FY2006 Average inventory turnover days(1)
Note: (1) Average inventory turnover days = (Average inventory balance/purchase) x 365 days.
FY2007 33
FY2008 38
18
The increase in the average inventory turnover days from 18 days in FY2006 to 33 days in FY2007 was due mainly to increase in raw materials and work-in-progress to cater to our increasing orders of contract manufacturing products and increase in finished goods as we were keeping inventory for our GRAT.UNIC () brand of products in anticipation of orders from our customers. Our average inventory turnover days increased from 33 days in FY2007 to 38 days in FY2008 was due mainly to our increase in stock of raw materials as we wanted to ensure that we had sufficient inventories of raw materials to meet our increase in sales volume and to avoid any disruption to our raw materials supply. PROPERTIES AND FIXED ASSETS As at the Latest Practicable Date, our Group owns the following land use right:
Description and Location Jiangnan Industrial Park, Licheng District, Quanzhou City ( )(2) Approximate Land Area (sq m) 5,295.10 Expiry date/ Use 15 December 2055 / Industrial purpose Land-Use Right Certificate No. Quan Guo Yong (2007) No. 100009 ( (2007) 100009)
Proprietor Quanzhou Great
Encumbrance Mortgaged (1)
Notes: (1) Pursuant to a mortgage contract dated 25 May 2009, Quanzhou Great mortgaged its land-use right and property ownership right in respect of its land and premises located at Jiangnan Industrial Zone, Licheng District, Quanzhou City ( ) in favour of China Construction Bank Co., Ltd., Fujian Branch () in respect of loan facilities not exceeding RMB12.133 million granted to Fujian Great. Please refer to the section entitled Interested Person Transactions of this Prospectus for further information on this mortgage provided by Quanzhou Great. The address is based on the land-use right certificate, though this land is more specifically known to be located at Linjiang Industrial Zone, Nanhuan Road which is part of Jiangnan Industrial Park.
(2)
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As at the Latest Practicable Date, our Group owns the following properties:
Description and Location Honghao Building, Jiangnan Industrial Park, Licheng District, Quanzhou City ( ) (2) Approximate Built-up Area (sq m) 10,432.53 Building Certificate No. Quan Fang Quan Zheng Li Cheng Qu (Li) Zi No. 200510995 ( () 200510995)
Proprietor Quanzhou Great
Use Production facilities
Encumbrance Mortgaged (1)
Notes: (1) Pursuant to a mortgage contract dated 25 May 2009, Quanzhou Great mortgaged its land-use right and property ownership right located at Jiangnan Industrial Zone, Licheng District, Quanzhou City () in favour of China Construction Bank Co., Ltd., Fujian Branch () in respect of loan facilities not exceeding RMB12.133 million granted to Fujian Great. Please refer to the section entitled Interested Person Transactions of this Prospectus for further information on this mortgage provided by Quanzhou Great. The address is based on the land-use right certificate, though this building is more specifically known to be located at Linjiang Industrial Zone, Nanhuan Road which is part of Jiangnan Industrial Park.
(2)
As at the Latest Practicable Date, the following properties are leased by our Group:
Approximate Leased Floor Area (sq m) Lease Term 1,500 1 March 2008 to 31 December 2010 (2) Annual Rental (RMB) 75,600
Lessee Fujian Great
Location Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( ) Ruiming Building, Nanhuan Road, Licheng District, Quanzhou City ( ) Zhiteng Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City ( )
Usage Production facilities
Lessor Quanzhou Ruiming Industry and Trade Co., Ltd. ( ) (1)
Encumbrance Nil
Fujian Great
4,568
1 January 2008 to 31 December 2010 (2)
246,000
Office and production facilities
Quanzhou Ruiming Industry and Trade Co., Ltd. ( ) (1)
Nil
Fujian Great
3,300
1 April 2008 to 31 December 2010 (2)
158,400
Office and production facilities
Quanzhou Zhiteng Machine Manufacturing Co., Ltd. ( )
Nil
Notes: (1) The lessor has not obtained the requisite building certificates for these two properties. Please refer to the risk factor Risks Relating to Our Business - We may have to relocate from our office and production facilities at Ruiming Building, Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City () as the lessor of these premises do not possess the requisite building certificates in respect of these premises in the section entitled Risk Factors and the section entitled Production Facilities and Capacity of this Prospectus for more information. Fujian Great has a right to renew the respective leases for a further two years upon the expiry of the existing lease terms.
(2)
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We acquired the land use rights to a plot of state-owned land located at the Jiangnan High-Tech Information Industrial Zone, Quanzhuo City, Fujian Province () (Land) through a public tender held in April 2008 where our Company was the successful bidder for the Land. Though completion of the land acquisition was subject to the entry into by our Company with National Land and Resource Administration Bureau of Quanzhou City, Fujian Province, PRC ( ) (Quanzhou Land Bureau) of a contract for the grant of land use rights for state-owned construction land (), our Company sought to carry out preparatory works on this plot of Land that include building roads on the land, leveling of the land, and building of a boundary wall so that these works would be completed concurrent with the land acquisition and that our Company would be able to commence construction of our headquarters and new production facilities in an expeditious manner. These works have been completed and the cost of these works has been funded through our Groups internal resources. We had, on 11 March 2009, entered into the Contract for the Grant of Land Use Rights for State-Owned Construction Land () with the Quanzhou Land Bureau for the acquisition of land use rights for a period of 50 years to at a cost to us of RMB15.25 million of which RMB12.62 million remains outstanding as at the Latest Practicable Date. for the purpose of constructing our headquarter that will house our business and production operations, and new production facilities as our manufacturing base in the PRC. We intend to fund the remaining cost of RMB12.62 million through our internal resources and through bank borrowings. The Land has a land area of 36,223.1 sq m and is intended for industrial use, in particular for textiles or apparels manufacturing industry. For more information on our new headquarter and new production facilities, please refer to the section entitled Business Strategies and Future Plans of this Prospectus. The acquisition of such land use rights is subject to completion of procedural formalities for obtaining the land use rights certificate, provided that all land fee is fully paid up by our Group. It is expected that this acquisition will be completed by March 2010. While our Company initially expected the acquisition of such land use rights to be completed in around the middle of 2009, the acquisition has been delayed pending the completion of the public works by the Local government such as the construction of a public access road, to allow access to the land. The costs of these public works are borne by the local government. Our Company has been informed in writing that the public works are expected to be completed no later than April 2010. Accordingly, the completion of the acquisition of land use rights has been delayed to March 2010. STAFF TRAINING We believe in providing our staff with the necessary training to equip them with the relevant skills and expertise to carry out their jobs competently and efficiently. The training of our employees varies in accordance with the job requirements and needs of each department. Our staff training is focused on three key aspects, namely orientation training, on-the-job training as well as continuing training programs conducted either internally or through external courses. All new employees are required to undergo a series of orientation sessions and briefings on our Groups policies, culture and business operations. New employees in our Production Department are also required to undergo training on work safety conducted by our senior staff. Training for our new production staff also includes emphasis on quality control requirements, production processes and techniques in relation to the operation and maintenance of our machinery such as sewing machines and weaving looms. We also provide on-the-job training and conduct in-house training programs for our employees in accordance with their job scope with the aim of improving the overall job skills and competency of our employees. We place strong emphasis on the training of our management staff and have periodically conducted internal programs to provide training on modern management practice, work management skills and people management skills. In addition, we have organised various team building activities with an objective to improve communication and foster team work amongst our staff.
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From time to time, we sponsor our management staff for external courses and seminars relevant to their job scope. Occasionally, we may invite external speakers to conduct seminars. These courses include courses in areas such as financial and business management, human resource management, accounting and finance, technical skills and production techniques as well as environmental and occupational safety. We also encourage our staff, in particular our designer team as well as our sales and marketing staff, to attend trade fairs and exhibitions so as to keep abreast of the latest design and industry trends. Our staff training expenditure for the Relevant Period has not been material as compared to our total expenses as most of our staff training is conducted in-house by the respective management staff. INSURANCE As at the Latest Practicable Date, our Groups insurance policies include the following: Insurance Comprehensive Property Insurance Policies () Export Credit Insurance () Description Insurance coverage for buildings, machinery, office equipment, raw materials, semi-finished and finished products. Under this insurance, we are insured for approximately RMB44.9 million for losses. Insurance for any and all loss during export business with credit letters, and the loss arising from a buyers bankruptcy and/or incapability to pay due debt, refusal to accept the goods and/or political risks during export business without credit letters. Under this insurance, we are able to claim compensation of up US$5.0 million arising from such losses. Under this insurance, we are insured for approximately RMB6.0 million for all our properties in the event of fire. Under this insurance, we are insured for RMB47.4 million for accidental injuries and medical treatment for our workers.
Fire Insurance () Short-Term Health Insurance and Acident Insurance ()
Our subsidiaries, Fujian Great and Quanzhou Great, have in place social insurance for their employees. The premium is borne by our subsidiaries and the employees in such proportion as set out in the relevant PRC laws and regulations. We also maintain insurance for our motor vehicles. We do not maintain any product liability insurance arising from the manufacture and/or sale of our products in the PRC currently as our Directors believe that it is not an industry practice in the PRC to procure such insurance coverage. However, our Audit Committee will assess on a regular basis as to whether we should purchase insurance against product liabilities arising from the manufacture and sale of our products by our Group. Nevertheless, to minimise our product liability risk, we have instituted stringent quality assurance measures so as to avoid or reduce the incidence of production defects. Please refer the section entitled Quality Assurance of this Prospectus for more information. There has been no material product liability claims against us in the Relevant Period. Our Directors believe that our existing policies are sufficient for our current business operations. Our insurance premiums have not been material as compared to our total expenses incurred during the Relevant Period.
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COMPETITION Contract manufacturers in the PRC We face keen competition from numerous other undergarment, childrens and infants apparel contract manufacturers located in the PRC. Some of our competitors may have, in comparison to us, lower costs of operation, wider range of merchandise, and greater resources to invest in product development and customer support. We may also face increased competition from new competitors who may reduce their prices to increase their market share. Our Executive Directors believe that our contract manufacturing business compete with other undergarment, childrens and infants apparel contract manufacturers on product design, quality, pricing, timely delivery and customer service. In our contract manufacturing business, our Executive Directors regard the following manufacturers as our principal competitors in view of their comparable scale and nature of operations: Competitors Green Holdings (Hong Kong) Limited ( () ) also operating through its subsidiary Quanzhou Green Garments Co., Ltd. () Quanzhou Jinxing Garments Co., Ltd. () Guangdong Zhongshan Anqi Clothes Manufacturing Factory () International and PRC undergarment brands Our GRAT.UNIC () brand and Superman licensed trademark of merchandise face competition from well-known international brands which may have longer operating histories and greater brand name recognition and are able to leverage on their economies of scale to gain market share. We also compete with PRC domestic brands of undergarments. Our Executive Directors regard the following international brands that are sold domestically in the PRC as our principal competitors: Competitors Calvin Klein (US) Product Offerings An international brand that offers various fashion and lifestyle products such as apparel, undergarments, swimwear, watches and fragrances for men and women under its various Calvin Klein brands. An international menswear brand that offers formal and casual menswear, mens undergarments and accessories such as socks. An international clothing brand that offers clothing, undergarments and swimwear for men and women. An international brand that offers mainly undergarments for men, women and children. An international brand that offers various fashion and lifestyle products such as apparel, undergarments, swimwear, watches and fragrances for men and women. Product Offerings Undergarments, childrens and infants apparels
Undergarments, childrens and infants apparels
Undergarments
Byford (UK)
Schiesser (Germany)
Jockey (US)
Pierre Cardin (France)
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Our Executive Directors also regard the following PRC brands sold in the PRC as our principal competitors: Competitors Three Gun () Product Offerings Three Gun is a PRC brand that originated in Shanghai, PRC and offers mainly undergarments for men, women and various other fashion and lifestyle products such as knitwear, padding dyed shirts, knitted fabrics, body shaping garments and thermal wear for sale within the PRC as well as overseas markets. Proman is a PRC brand that originated in Shandong, PRC and offers mainly undergarments for men, women, and to a lesser extent, such other products include childrens apparels and socks. Yiershuang is a brand that originated in Taiwan and offers mainly undergarments for men and women.
Proman ()
Yiershuang()
Our Directors believe that products sold under our GRAT.UNIC () brand and Superman licensed trademark compete against products sold under other domestic and international brands based on, amongst others, brand image and recognition, product designs, quality and pricing. None of our Directors or Controlling Shareholders has any interest, direct or indirect, in any of our above competitors. COMPETITIVE STRENGTHS Our Directors consider the following to be our core competitive strengths: We have implemented a stringent quality inspection and quality control system Our Directors believe that our ability to continuously provide high quality products is a key factor that has contributed to the growth of our revenue. To ensure quality consistency in our products so as to meet our customers high quality standards, we implement stringent quality control measures at every stage of our production process, from raw materials procurement to production. In this regard, we have obtained various quality control and assurance certifications including the OekoTex Standard 100 ecological textile certification and ISO 9001 quality management system certification. Please refer to the section entitled Quality Assurance of this Prospectus for more information. At the same time, as a testament of our management systems, we have been accredited SA 8000:2001 as a testimony of our compliance with global social accountability standards for having in place a fair and equitable work environment, the BG/T28001-2001 (OHSAS 18001:1999) in relation to occupational health and safety management system certification and the ISO 14001 environmental management system certification. We have received industry recognition for our GRAT.UNIC ( brand of undergarments ) which are targeted at the middle to upper class consumers Our management was quick to notice the trend of an increasing demand for high quality and branded undergarments amongst PRC consumers. Recognising the importance of brand image, we have created our GRAT.UNIC () brand of undergarments targeted at the middle to upper class consumers in the PRC. Through our marketing and brand development activities which are described in more details under the section entitled Sales and Marketing of this Prospectus, we have gained industry recognition and increasing awareness for our GRAT.UNIC () brand of products. In 2007, our GRAT.UNIC () brand was awarded the Best Brand Award () at the 89th China Knitwear Cotton Trade Fair (89) (also known as China World Knitwear Expo ()). 127

We have established an extensive sales and distribution network in the PRC We have an extensive sales and distribution network in the PRC for the sale of our GRAT.UNIC ( ) products. As at the Latest Practicable Date, our GRAT.UNIC () brand and Superman licensed trademark of undergarments are retailed across 16 provinces/ municipalities/ autonomous regions throughout the PRC at 102 points of sales. We undertake direct sales to our retailers where 23 of these points of sales are located whilst the remaining 79 points of sales are serviced by our network of distributors. Our distributors and direct sales customers located in different geographical locations are able to promote our products to a wide customer base. In addition, the extensive number of points of sales at which our products are sold makes our products easily available to the public. We have established strong relationships with our customers We have established a good track record, reputation and goodwill by continuously providing our customers with high quality products and services, timely deliveries, stringent quality control, dedicated customer services and competitive product pricing. We have a diversified customer base spreading across a wide geographical region covering the AsiaPacific region and Europe, and includes major retail chains and owners of international brands, such as Zeeman Group (the Netherlands), Pelican (Russia), Hema BV (the Netherlands) and Next (UK). We believe that we have developed close rapport with our existing customers. We believe that our relationships with our customers allow us to maintain our competitive edge against our competitors. We have an experienced and professional management team We have an experienced management team led by our Executive Chairman and CEO, Weng Wenwei, who has over 16 years of experience in business management, particularly in the mens undergarment industry. He is supported by a dedicated, qualified and experienced management team. We believe that the commitment, experience and qualifications of our management team have been a key factor contributing to the success of our Group and will continue to be the driving force in the growth and development of our Group. Details on the working experience of our Directors and Executive Officers can be referred to the section Directors, Executive Officers and Employees of this Prospectus. Our production facilities are strategically located As our manufacturing operations are located in Licheng District, Quanzhou City, Fujian Province, the PRC, where there are many similar apparel/garment manufacturers, it creates a convenient access to most of the suppliers of raw materials and fabrics which thereby decreases our overall cost of raw materials and operational expenses. Accordingly, our manufacturing operations are highly cost competitive. We engage in continuous product design and development We place strong emphasis on product design and development. As part of our continued efforts in product development, we have entered into collaboration arrangement with Quanzhou Huiyu to develop anti-microbial technique and additive that are applied to our products. The results of such collaboration have been examined by the Fujian Provincial Department of Science and Technology () which have confirmed that the anti-microbial technique that is applied to our products complies with PRC textile industry standards and the FZ/T 73023-2006 AAA-rate requirements in relation to anti-microbial products. Following such collaboration, we have launched undergarments that utilise fabrics with antimicrobial qualities in March 2008. Please refer to the section entitled Research and Development of this Prospectus for more information. We have also developed and patented a utility model as well as several new designs of mens undergarments. Please refer to the section entitled Intellectual Property of this Prospectus for more information. Our Directors believe that our production design and development capabilities will enable us to increase our competitiveness in the market.
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PROSPECTS, BUSINESS STRATEGIES AND FUTURE PLANS

PROSPECTS Our Directors believe that barring any unforeseen circumstances, our Groups prospects and the overall outlook of our business is favourable due to the following factors: Contract manufacturing undergarments and childrens and infants apparel We observed that there was a growing demand for undergarment and childrens and infants apparel contract manufacturing services offered in the PRC and expect this trend to continue. In particular, the export value of mens briefs and womens panties of the PRC has grown steadily between 2003 and 2008, as shown in Table 1 below:(1) TABLE 1
Export Value of Men's Briefs and Women's Panties of the PRC

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2003 2004 2005 2006 2007 2008
US$billion
Men Women
(1)
Information and statistics are extracted from the industry report entitled Undergarment Industry Research Report ( ) by Alibaba (China) Technology Co., Ltd. () (Alibaba). The Alibaba has not consented to the inclusion of the relevant statement and is thereby not liable for the relevant statement under Section 253 and Section 254 of the SFA. Our Directors are aware that the Alibaba does not guarantee or assume responsibility that the information in its paper is accurate, adequate, current or reliable, or may be used for any other purpose other than for general reference. While our Company has taken reasonable action to ensure that the relevant information is reproduced in its proper form and context, and that the information is extracted accurately and fairly, all other parties and ourselves have not conducted an independent review of the statement and have not verified the accuracy of the statement.
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The export value of childrens apparel of the PRC has also risen steadily between 2005 and 2008, as shown in Table 2 below:(2) TABLE 2
Export Value of Children's Apparel of the PRC 3.5 3 2.5 2 1.5 1 0.5 0 2005 2006 Year 2007 2008
Currently, we provide contract manufacturing services mainly for EU-based retail chains and renowned brand owners and according to the data from European Commission, China was in 2007 the leading supplier of clothing to the EU, accounting for 37.7% share of the EU market for imported clothing. Total clothing imports from the PRC to the EU have been steadily increasing in recent years from EUR16.96 million in 2005 to EUR21.88 million in 2007.(3) Our Directors believe that many overseas apparel companies are outsourcing their manufacturing activities to subcontractors for the following reasons: (a) To reduce production costs. By sub-contracting their manufacturing requirements, apparel companies are able to reduce their production overheads and labour costs; To accelerate time-to-market delivery. Short fashion cycles require apparel companies to reduce the time it takes to produce and deliver a product to the market place. Contract manufacturers, being specialists in apparel manufacturing, are able to provide a one-stop centre service (that is, apparel design services, established facilities and manufacturing expertise) and hence, are able to provide the time-to-market delivery which apparel companies require; and To focus on market branding. With increasing competition among apparel companies, overseas apparel companies are concentrating their resources on gaining market share by developing their brands, customer loyalty and distribution systems. By outsourcing the manufacturing of apparel, they are able to focus more on increasing their market share.
(b)
(c)
(2)
Information and statistics are extracted from the industry report entitled Childrens Apparel Industry Report () by Alibaba (China) Technology Co., Ltd. () (Alibaba). The Alibaba has not consented to the inclusion of the relevant statement and is thereby not liable for the relevant statement under Section 253 and Section 254 of the SFA. Our Directors are aware that the Alibaba does not guarantee or assume responsibility that the information in its paper is accurate, adequate, current or reliable, or may be used for any other purpose other than for general reference. While our Company has taken reasonable action to ensure that the relevant information is reproduced in its proper form and context, and that the information is extracted accurately and fairly, all other parties and ourselves have not conducted an independent review of the statement and have not verified the accuracy of the statement. Information and statistics are sourced from the website of the European Commission at http://ec.europa.eu/enterprise/testile/ statistics.htm. Accessed on 22 October 2008. The European Commission has not consented to the inclusion of the relevant statement and is thereby not liable for the relevant statement under Section 253 and Section 254 of the SFA. Our Directors are aware that the European Commission does not guarantee or assume responsibility that the information in its paper is accurate, adequate, current or reliable, or may be used for any other purpose other than for general reference. While our Company has taken reasonable action to ensure that the relevant information is reproduced in its proper form and context, and that the information is extracted accurately and fairly, all other parties and ourselves have not conducted an independent review of the statement and have not verified the accuracy of the statement.
(3)
US$ billion
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The continued cost competitiveness, strong labour work force and design capabilities in the PRC will continue to result in overseas retail outlets and brand owners outsourcing their manufacturing requirements to the undergarment, childrens and infants apparel manufacturers in the PRC. ) Proprietary GRAT.UNIC ( brand of undergarments in the PRC The strong economic growth and development in the PRC in recent years has generally led to an increase in the affluence and spending power of the PRC population. Along with greater affluence, as well as influences of western culture through various media such as television, consumers in the PRC are becoming more sophisticated, health-conscious and brand-conscious. Demand for undergarments has gone beyond purely meeting ones basic needs or serving as an inner wear to provide warmth and for hygiene purpose. The selection, styles and designs of undergarments available to consumers are nowadays constantly changing and increasingly varied so as to offer consumers a wide range of fashionable, comfortable and good quality undergarments of varied designs, styles, materials and functions for different occasions. In this context, our Directors are of the view that with increasing sophistication and brand awareness of consumers, there exists strong growth potential in the PRC market for high quality and branded undergarments. Our Directors believe that we will be able to capitalise on this trend and expand our market presence for our GRAT.UNIC () products in the PRC. ORDER BOOK As at the Latest Practicable Date, we have confirmed unfulfilled customers orders amount to approximately RMB64.6 million. We expect the majority of such orders to be fulfilled within four months from the Latest Practicable Date. However, due to the possibility of changes in our customers delivery schedules, potential cancellations and potential delays in delivery, our order book as at any particular date may not be indicative of sales for any succeeding period. Save as disclosed in this Prospectus, barring any unforeseen circumstances, our Directors believe that there are no other significant known trends in production, sales and inventory, and in the costs and selling prices of our products and services or other known trends, uncertainties, demand, commitments, or events that are reasonably likely to have a material effect on our net sales or revenue, profitability, liquidity or capital resources, or that will cause the financial information disclosed in the Prospectus to be not necessarily indicative of our future operating results or financial condition. SEASONALITY We typically record higher sales in the second half of each financial year as a result of the following: (i) more orders are placed by our customers in the second half of each financial year in anticipation of higher consumer spending during the festive seasons such as Christmas, New Year, Valentines Day and Chinese New Year. We usually receive orders from our customers at least two to three months ahead of the festive seasons and the sales from such orders are typically recorded in the second half of each financial year; and a wider variety of products is offered in the autumn/winter seasons such as long sleeve T-shirts and long pants (similar to thermal undergarments) and childrens pajamas (with thicker/thermal fabric).
(ii)
In addition to the above, higher sales revenue typically in the second half of each financial year is contributed by higher selling prices of autumn/winter apparel compared to spring/summer apparel.
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TREND INFORMATION Based on our Directors knowledge of the industry and experience, our Directors have observed the following trends for the current financial year: (a) the average selling prices of our contract manufacturing products, products bearing our GRAT. UNIC () brand and the Superman licensed trademark remain relatively stable. As sales of our contract manufacturing products to our overseas customers are primarily denominated in US$ dollars, fluctuation of the RMB against the US$ will impact on the revenue of our contract manufacturing products when converted to RMB. To mitigate our foreign exchange exposure risk, we have entered into foreign exchange forward contracts to hedge our foreign exchange exposure. However, there is no assurance that such efforts will be successful in hedging against all foreign currency fluctuations; the contribution to the revenue from our products bearing our GRAT.UNIC () brand and the Superman licensed trademark has increased with greater market awareness and recognition of our brand through our marketing and brand promotional activities; the cost of sales for our products has moderately increased due to expected increases in the costs of raw materials and packaging materials, labour costs and general overheads. Notwithstanding the above, operating expenses is expected to remain relatively stable due to better economies of scale; and increased production capacity with three additional production lines installed in FY2008 mainly for the production of our mens undergarments including those with our GRAT.UNIC () brand and the Superman licensed trademark.
(b)
(c)
(d)
Save as discussed above and in the section entitled Risk Factors of this Prospectus and barring any unforeseen circumstances, our Directors are not aware of any significant recent trends in production, sales and inventory, and in the costs and selling prices of products and services, or other known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on net sales or revenues, profitability, liquidity or capital resources, or that would cause financial information disclosed in this Prospectus to be not necessarily indicative of our future operating results or financial condition. Your attention is also drawn to the section Cautionary Note Regarding Forward-Looking Statements of this Prospectus. BUSINESS STRATEGIES AND FUTURE PLANS To expand our production capacity and facilities To consolidate our business and production operation in one location and to expand our production capacity, we intend to construct new production facilities and to acquire additional production equipment. We had, on 11 March 2009, entered into the Contract for the Grant of Land Use Rights for State-Owned Construction Land () with the National Land and Resource Administration Bureau of Quanzhou City, Fujian Province, the PRC () for the acquisition of land use right for a period of 50 years to a plot of state-owned land located at Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province ( ) for the purpose of constructing our headquarter that will house our business and production operations, and new production facilities as our manufacturing base in the PRC. We intend to commence construction in 2010. The acquisition for such land use right has not been completed as at the Latest Practicable Date. For more information, please refer to the section entitled Fixed Assets and Properties of this Prospectus. We expect such construction to be completed by early 2011, upon which our Directors believe that we will be one of the larger producers of undergarments in Quanzhou City, Fujian Province, the PRC. The total cost for this project is estimated to be approximately S$26.0 million, consisting of approximately S$3.3 million payment towards the acquisition of land use right of the land, approximately S$1.5 million incurred in relation to roadwork and preliminary land development undertaken by our Company, an estimated S$15.0 million for the construction of new production facilities and an estimated S$6.2 million for the acquisition of additional production lines. The actual total cost of this project and/or the breakdown of such cost may vary due to, amongst others, changes in the costs of construction and equipment, and changes to the project. 132

We anticipate that there will be increasing demand for our products for the following reasons: in particular, our contract manufacturing products which consist mainly of basic designs, are believed to be more popular and less volatile in view of their practicality and value-for-money compared to those with fashionable or complex design amid the current economic crisis where more cautious spending behaviour are being observed; our products are of high quality, yet offered at competitive prices; and extensive marketing efforts put forward by us to promote our contract manufacturing products and our GRAT.UNIC () brand of products are expected to enhance our market presence and in turn increase the demand for our products. We intend to expand our product range for both contract manufacturing products and GRAT.UNIC ( ) brand of products upon the completion of the abovementioned construction. As we envisaged that a higher production capacity will be required in order to meet the increasing demand and cater to the production of a wider range of products and that the higher production capacity required shall exceed the current capacity even on a full utilisation basis, we plan to, upon the completion of the abovementioned construction, expand our production capacity by 100% by acquiring 18 additional production lines despite the fact that the current production facilities are not fully utilised. We intend to utilise approximately S$8.0 million of the net proceeds from the issue of New Shares to finance the above construction of the new premises as well as S$3.0 million of the net proceeds from the issue of New Shares to finance the acquisition of additional production lines. We intend to utilise internal funds and bank borrowings to finance the balance of approximately S$15.0 million for the construction of the new premises and the acquisition of additional production lines. To promote our GRAT.UNIC () brand within the PRC as well as to increase our marketing efforts for our contract manufacturing services and products We believe that the growth of our sales, in particular our GRAT.UNIC () brand, will be further enhanced if we continue to promote our brand so as to increase brand awareness among customers and end customers. We intend to increase our advertising activities by placing more advertisements on our GRAT.UNIC () products on television networks, newspapers and magazines. We will continue to increase our existing market share by expanding our distribution network in various cities. In FY2009, we intend to focus our marketing efforts on increasing our sales in Fujian, Shanghai, Jiangsu, Zhejiang, Liaoning, Gansu and Chongqing. To achieve this, we intend to carry out product launches where we will focus on creating brand awareness, promote our new design and attract new distributors. We intend to continue to carry out promotion events as part of our brand building strategy. We also intend to increase the number of our points of sales from 102 to 200 within the next three years, and to increase our sales through our existing points of sales. In October 2008, we were the official undergarment sponsor for the 6th PRC National Game of Farmers () where we sponsored the anti-microbial undergarments for the sportsmen. We will continue to seek sponsorship of events for corporate or non-profit organisations to promote our GRAT.UNIC () brand. We will also increase our overseas marketing efforts by participating in overseas trade fairs and exhibitions to attract more potential overseas customers for our contract manufacturing services and products. We intend to utilise approximately S$3.0 million from the net proceeds of the issue of New Shares to carry out various sales and marketing activities for the above purpose. To enhance our R&D capabilities We intend to establish a R&D centre to expand our R&D capabilities. A dedicated R&D centre will upgrade our R&D capabilities in the following manner: 133

Allowing us to develop new products. These new products include products with new designs or new functions, for example, anti-microbial undergarments or undergarments which have a high degree of ventilation or are suitable for specialised uses such as sportsmen; Having the equipment to carry out testing of the durability, functionality and comfort of our products to meet consumers preferences as well as customers specifications, for example, durability of the zippers used on our garments. Specialised equipment will also allow us to ensure that the design, feel and fit of our undergarments conform to the human shape and sense of comfort; and Improving the standards and efficiency of our production processes. We intend to utilise approximately S$1.0 million from the net proceeds of the issue of New Shares to enhance our R&D capabilities. To expand the range of our products and establish new brand names We are committed to continually improve the quality, functionality and comfort of our products so as to remain competitive and offer products which are in line with market and fashion trends. We may, as part of our business strategies and development, create new brand names to appeal to broader customer segments. We have developed several new designs of mens undergarments which serve to better facilitate the act of urination for males and patented under the name of our Executive Chairman and CEO, Weng Wenwei. Weng Wenwei has undertaken to transfer these patents at our request, and pending such transfer, we have been granted an exclusive license by our Executive Chairman and CEO, Weng Wenwei to use these patents. For more information, please refer to section entitled Intellectual Property of this Prospectus. We intend to commence production and sale of this new range of undergarments in the second half of 2009. To enhance our logistics system With the establishment of our new production facilities at Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province (), and with the increase in points of sales for our GRAT.UNIC () brand and Superman licensed trademark of products, we intend to enhance our existing logistics procedures. We intend to establish a logistics department with the following key functions: manage our procurement and inventory of raw materials; and manage the supply and inventory of finished products at our warehouse and at our points of sales, to minimise the holding cost of finished products at our warehouse and points of sales while ensuring availability of our full range of products at our points of sales. To consider acquiring potential business in apparel and garments industry We may consider acquisitions, investments, strategic alliance with our suppliers, customers, distributors and purchasing agents as and when the suitable opportunities arise. This would allow us to expand or diversify our core business and network of customers, lower our operational risks and cost as well as to increase our range of services available to our customers through vertical integration. As we are at the planning stage and exploring different alternatives to carry out the abovementioned expansion plan, no specific details has been confirmed as at the date of this Prospectus.
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DIRECTORS, EXECUTIVE OFFICERS AND EMPLOYEES

MANAGEMENT REPORTING STRUCTURE Our management reporting structure as at the Latest Practicable Date is as follows:
Board of Directors
Weng Wenwei () Executive Chairman and CEO
Zhang Shiwu () Chief Financial Officer
Weng Wenju () Procurement Manager
Cai Ane () General Manager (Production)
Wei Xuefen () Sales Manager
Liang Choong Wai Group Financial Controller
Wang Jianxin () Deputy Production Manager
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DIRECTORS Our Directors are entrusted with the responsibility for the overall management of our Group. The particulars of our Directors as at the Latest Practicable Date are listed below: Name Weng Wenwei () Age 38 Address No. 33, Dou Men Tou Street, Licheng District, Quanzhou City, Fujian Province, the PRC (33) Position Executive Chairman and CEO
Weng Wenju ()
23
No. 55, Fourth District, Yingdun Village, Executive Director and Yonghe Town, Jinjiang City, Fujian Procurement Manager Province, the PRC (55) 2D, Bishopsgate, Singapore 249968 Blk 115, Bukit Purmei Road, #01-258, Singapore 090115 64, Waterloo Street, #08-02, Singapore 187959 Lead Independent Director Independent Director
Teoh Teik Kee Lee Kim Lian, Juliana
50 42
Lim Yeow Hua @ Lim You Qin
47
Independent Director
Information on the business and working experience, education and professional qualifications, if any, and areas of responsibilities of our Directors is set out below: Weng Wenwei () is the Executive Chairman and CEO of our Company. He was appointed to our Board on 29 February 2008 and is responsible for the overall strategic and business management of our Group. Weng Wenwei has over 16 years of business and management experience in the textile industry. In May 2005, he founded Fujian Great and was appointed as its general manager responsible for its business strategies and development. In July 2000, he was appointed as the general manager of Quanzhou Great where he was responsible for its business operations and management. In January 1997, he founded Dachuan Textile Factory () in Licheng District, Quanzhou City. Dachuan Textile Factory was engaged in the manufacture of undergarments for export to its overseas customers and as the director and head of the factory, Weng Wenwei was responsible for its management and business operations from January 1997 to April 2003. From February 1993 to December 1996, he was the head of Hesheng Apparel Factory in Yonghe town (), a small workshop that manufactured clothing for clients. He graduated from the Zimao Vocational High School () in Jinjiang City, Fujian Province in 1988 with a high school graduation certification. He has been the vice president of the Industry and Commerce Association (Chamber of Commerce) of Licheng District (( )) since 2007. Weng Wenju () is the Executive Director and Procurement Manager of our Company. He was appointed to our Board on 23 December 2008 and is responsible for the sourcing and procurement of raw materials and accessories used in our production process. He has been our procurement manager since August 2005. In August 2004, he joined our Group as assistant to the general manager, responsible for assisting the general manager in the daily operation and management of Quanzhou Great. He started his career in April 2004 as a technician in Quanzhou Jitong Computer Company () in charge of computer technical maintenance, until July 2004 before joining our Group.
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He graduated from Quanzhou Business and Trade School () with a graduation certification in Computer and Application in 2004. Weng Wenju is the brother of our Executive Chairman and CEO, Weng Wenwei. Teoh Teik Kee is the Lead Independent Director of our Company. He was appointed to our Board on 18 June 2009. He is currently and has been the executive director of ecoWise Holdings Ltd., a company listed on the SGX-ST since April 2003, overseeing the groups corporate planning, merger and acquisitions, as well as charting and implementing business strategies locally and regionally. Mr Teoh has more than 20 years of experience in auditing, accounting and corporate development. In April 2001, he established iSpring Capital Sdn Bhd, a company engaged in providing corporate advisory, fund raising, incubation and venture capital investment services. In January 1996, he was appointed as the general manager of Shah Alam Branch of Hwang-DBS Securities Bhd, where he was in charge of overall management of the stock broking operation in Shah Alam until March 2001. Between June 1993 and December 1995, he held the position of senior manager (business development) of DBS Securities Pte. Ltd., where he was the head of China Desk, responsible for business development activities in China, Hong Kong and Taiwan. Between December 1990 and May 1993, he worked at DBS Bank Ltds investment banking department, involving in IPOs and providing corporate advisory services. Mr Teoh is a Chartered Accountant by training, and worked with KPMG Peat Marwick McLintock (currently known as KPMG) in London from October 1986 to December 1989 and Pricewaterhouse (currently known as PricewaterhouseCoopers) in Singapore from December 1989 to November 1990. Mr Teoh graduated from Aston University with a Bachelor of Science in 1983. He obtained a Diploma in Corporate Treasury Management awarded by the Association of Corporate Treasurers in United Kingdom in 1989. He has been an associate member of Institute of Chartered Accountants in England and Wales since 1986. Lee Kim Lian, Juliana is our Independent Director and was appointed to our Board on 18 June 2009. She is currently a director of Aptus Law Corporation, a law firm in Singapore. Ms Lee has more than 17 years of experience in legal practice. In 1999, she joined Chui, Sim, Goh & Lim (currently known as Aptus Law Corporation) and currently heads the corporate practice of Aptus Law Corporation. Her main areas of practice are general corporate and corporate finance. In 1992, she joined Colin Ng & Partners (currently known as Colin Ng Partners LLP) as a legal assistant, assisting in the areas of corporate and corporate secretarial and was made a partner in 1994. Prior thereto, she joined the Registry of Companies and Business (currently known as ACRA) in 1990 as an assistant registrar responsible for the area of compliance and prosecution. She obtained a Bachelor of Laws (Honours) degree from the National University of Singapore in 1989 and is a full member of the Singapore Institute of Directors. Lim Yeow Hua @ Lim You Qin is our Independent Director and was appointed to our Board on 18 June 2009. He is currently the managing director of Asia Pacific Business Consultants Pte. Ltd., a Singapore company providing tax and business consultancy services. Mr Lim has more than 22 years of experience in the tax, financial services and investment banking industries. Prior to founding Asia Pacific Business Consultants Pte. Ltd. in January 2006, he was a senior regional tax manager with British Petroleum (BP), one of the worlds leading energy companies, responsible for BP group tax matters in Asia Pacific countries. Prior to that, he has held several senior management positions in various organisations including the positions of director (Structured Finance) at UOB Asia Limited from October 2001 to November 2002, regional tax manager at BP from July 2000 to October 2001, senior tax manager at KPMG from August 1998 to June 2000, senior vice president (Structured Finance) at Macquarie Investment Pte Ltd., a Singapore subsidiary of Macquarie Bank (Australia) from August 1996 to July 1998, and senior tax manager at Pricewaterhouse (currently known as PricewaterhouseCoopers) from July 1994 to August 1996. He joined the Inland Revenue Authority of Singapore in October 1987, and was promoted to the position of deputy director in July 1993, where he served until June 1994 before he left to join the private sector. He joined Ernst & Whinney (now known as Ernst & Young) as an auditor from July 1986 to October 1987. 137

Mr Lim holds a Bachelors Degree in Accountancy and a Masters Degree in Business Administration from the National University of Singapore, obtained in 1986 and 1992 respectively. He is a fellow member of the Institute of Certified Public Accountants of Singapore (ICPAS) and a full member of the Singapore Institute of Directors. All our Independent Directors, namely Teoh Teik Kee, Lee Kim Lian, Juliana and Lim Yeow Hua @ Lim You Qin have prior experience as directors of public listed companies in Singapore. Our other Directors, Weng Wenwei and Weng Wenju do not have prior experience as directors of public listed companies in Singapore, but have received relevant training to familiarise themselves with the roles and responsibilities of a director of a company listed on the SGX-ST. The list of present and past directorships of each Director over the last five years preceding the date of this Prospectus, excluding those held in our Company, is set out below: Name Weng Wenwei () Present Directorships Group Companies Fujian Great Quanzhou Great Great Worldwide Other Companies Great Holdings HK Limited () Quanzhou Chuancheng Cultural Co., Ltd. () Xiamen Great Cultural and Media Co., Ltd. () Quanzhou City Yuanteng Industry and Trade Development Co., Ltd. () Past Directorships Group Companies
Other Companies Quanzhou City Licheng Dachuan Textile Manufactory () (Struck Off) Hong Hao Great Holdings Limited () (Struck Off) Xiamen Greatex Import & Export Trade Co., Ltd. ( ) (now known as ) Group Companies Other Companies
Weng Wenju ()
Group Companies Other Companies Quanzhou Honghao Colour Printing Co., Ltd. ()
Teoh Teik Kee
Group Companies
Group Companies
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Name Present Directorships Other Companies ecoWise Holdings Limited ecoWise Energy Pte. Ltd. Envirox Pte. Ltd. Geocycle Singapore Pte. Ltd., (formerly known as ecoWise Materials Pte Ltd) Luzhou Bio-Chem Technology Limited Peeka Strategic Pte Ltd Concordia Pte Ltd Kilang Beras Seng Wor Sdn Bhd Teoh Peng Heong & Sons Sdn Bhd City e-Solutions Ltd Past Directorships Other Companies Westcomb Financial Group Limited Sinetics Associates Pte Ltd iSpring Capital Group Pte Ltd (Struck off) iSpring Capital Pte Ltd (Struck off) China Timber Investment Management Pte Ltd (Struck off) HDM Management Services Sdn Bhd HDM Properties Sdn Bhd HDM Capital Sdn Bhd iSpring Capital Sdn Bhd Group Companies Other Companies FM Holdings Limited Niant Technologies Pte. Ltd. (Struck Off) Oceanus Bio-Tech (Holdings) Limited WYC Business Consultants Pte. Ltd.
Lee Kim Lian, Juliana
Group Companies Other Companies Aarlex Pte. Ltd. Aptus Law Corporation Aurilex Pte. Ltd. Corporate House Pte. Ltd. Forever Star Shipping (2000) Pte. Ltd. Hsing-Hua Aviation Technologies Pte. Ltd.(1) Jackspeed Corporation Limited Lee Metal Group Ltd. Zhongguo Pengjie Fabrics Limited
Lim Yeow Hua @ Lim You Group Companies Qin Other Companies Advanced Integrated Manufacturing Corp. Ltd. Asia Pacific Business Consultants Pte. Ltd. Brightop International Pte. Ltd. China Eratat Sports Fashion Limited JCY Holdings Pte. Ltd. KSH Holdings Limited KTL Global Limited
Note: (1)
Group Companies Other Companies JDK International Pte Ltd (Struck Off) JLL International Pte. Ltd. (Struck Off)
Hsing-Hua Aviation Technologies Pte. Ltd. is underway to be wound up in Singapore pursuant to creditors request, although no application has yet been made as at the date of this Prospectus.
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EXECUTIVE OFFICERS The day-to-day operation of our Group is entrusted to our Executive Officers whose particulars as at the Latest Practicable Date are as follows: Name Cai An e () Age 37 Address No. 33, Dou Men Tou Street, Licheng District, Quanzhou City, Fujian Province, the PRC (33) Ruanshitang Village, Jiangjia Town, Chunan County, Zhejiang Province, the PRC () Dongmei Garden, Fengze District, Quanzhou City, Fujian Province, the PRC () Renwuzu, Qingshan Street, Meishan Town, Jinzhai County, Anhui Province, the PRC () Block 147 Lorong 2 Toa Payoh #28-338 Singapore 310147 Principal Occupation General Manager (Production)
Wang Jianxin ()
34
Deputy Production Manager
Wei Xuefen ()
38
Sales Manager
Zhang Shiwu ()
44
Chief Financial Officer
Liang Choong Wai
38
Group Financial Controller
Information on the business and working experience, education and professional qualifications, if any and areas of responsibilities of our Executive Officers is set out below: Cai Ane () has been our General Manager (Production) since May 2000 and is responsible for overseeing the production process and day-to-day management of our Groups Production Department. Cai Ane has more than 10 years of experience in the textile industry. Between January 1997 and April 2003, she was assisting the head of Dachuan Textile Factory () in managing its operations. Between February 1993 and December 1996, she was an assistant to the head of Hesheng Apparel Factory in Yonghe town () and was assisting in the management of its production of clothing for clients. Prior to that, she worked as an apprentice for various garment manufacturing factories in the PRC to gain experience in the garment manufacturing business from September 1983 to February 1993. Ms Cai is the wife of our Executive Chairman and CEO, Weng Wenwei. Wang Jianxin () has been our Deputy Production Manager since January 2006 and is responsible for assisting our General Manager (Production) in overseeing the production process of our Group and management of our Production Department. He joined our Group in September 2002 as the factory head of production, in charge of managing the production department. He was subsequently promoted as the deputy production manager in January 2006. Prior to that, he joined Zhengli Garment-making (Xiamen) Co., Ltd. () in March 1996 as a tailor and as its typesetting operator in July 1997. In August 1998, he was promoted as its supervisor and in October 1999, was promoted to assistant manager cum production supervisor, assisting the manager in production operation until August 2000. He started his career in February 1994 as weaving worker at Hangzhou Chunan First Silk Factory ( ) till November 1995. He graduated from Jiangjiaqu Adult Science and Technology School () with a high school graduation certification in 1991. Wei Xuefen () has been our Sales Manager since February 2003 and is responsible for product sales and marketing activities, such as developing sales and marketing strategies, maintaining customer relationships, securing new customers, monitoring market trend and providing customers with after-sales service. Prior to joining our Group in February 2003, she worked in Quanzhou Licheng Dachuan Textile 140

Factory () in March 2000 where she was responsible for following up with customers on trade receivables. In March 1999, she joined Quanzhou Green Garments Co., Ltd. ( ) as a procurement staff and left in March 2000. Between September 1993 and September 1998, she worked at Shishi Huasheng Computer Printing Co., Ltd. () as sales manager in 1993. She started her career in July 1992 as a secretary to the general manager in Shishi Lihui Computer Printing Co., Ltd. () and left in September 1993. She obtained a graduation certification (Business Administration) from Continuing Education School of Huaqiao University () in 1992. Zhang Shiwu () is our Chief Financial Officer and has been with our Group since May 2007. He is responsible for the financial, accounting and taxation matters of our Group. From December 2003 to April 2007, he was the chief financial officer of Labixiaoxin (Fujian) Food Industry Co., Ltd. ( () ) and was in charge of its financial management. In November 2002, he joined Guilin Seamild Biology Technology Development Co., Ltd. () as the manager of its auditing department and was in charge of its finance and auditing affairs until December 2003. Prior to that, he was the manager of the auditing department of Dongguan Hsu Fu Chi Food Co., Ltd. ( ) from March 1999 to November 2002. From January 1998 to December 1998, he was the general manager at Wanxi Shule Sanitary Articles Co., Ltd. (). Between August 1990 and December 1997, he was the finance manager at Anhui Jinzhai County Silk Group ( ). He graduated from Anhui Agricultural College () with a Bachelor in Finance and Accountancy in July 1990 and he was conferred the title of accountant by the Ministry of Personnel, the PRC in July 1994. He was accredited as senior accountant in December 1996. Liang Choong Wai has been our Group Financial Controller since October 2008 and he is responsible for our Groups finance and accounting matters. Prior to joining our Group, he worked as a group accountant in Guangzhao Industrial Biotechnology Forest Group Ltd., a listed company in Singapore between October 2005 and September 2008, in charge of preparing consolidated financial statement for quarterly announcement on SGX-ST and reviewing of subsidiaries accounts. From April 2001 to September 2005, he worked at YL Chin & Co (an audit firm in Singapore) as an audit senior, in charge of auditing consolidated accounts and reviewing audit files. Between January 2000 and March 2001, he worked at S S Ang & Co (an audit firm in Singapore), as audit semi-senior. He worked as an audit semisenior in Ong Boon Bah & T K Lim Co in Malaysia between June 1996 and June 1999. He has been the affiliate of ACCA (the Association of Chartered Certified Accountants) since 2005. The list of present and past directorships of each Executive Officer over the last five years preceding the date of this Prospectus, excluding those held in our Company, is set out below: Name Cai An e () Present Directorships Group Companies Other Companies Great Holdings HK Ltd. () Quanzhou Honghao Colour Printing Co., Ltd. () Quanzhou City Ganglong Logistic Co. Ltd. () Wang Jianxin () Group Companies 141 Past Directorships Group Companies Other Companies Hong Hao Great Holdings Limited () (Struck Off)
Group Companies

Name Present Directorships Other Companies Wei Xuefen () Group Companies Other Companies Zhang Shiwu () Group Companies Other Companies Liang Choong Wai Group Companies Other Companies SERVICE AGREEMENT On 24 June 2009, our Company entered into a service agreement (the Service Agreement) with our Executive Chairman and CEO, Weng Wenwei for an initial period of three (3) years (the Initial Term) commencing with effect from the date of our listing on the SGX-ST. During the Initial Term, the parties to the Service Agreement may terminate the service agreement by either party giving not less than six (6) months notice in writing to the other (save that such notice of termination may not be given by Weng Wenwei during the Initial Term). We may also terminate the Service Agreement by notice upon the occurrence of certain events such as serious misconduct, bankruptcy or criminal conviction. Pursuant to the terms of the Service Agreement, our Executive Chairman and CEO, Weng Wenwei will receive a monthly basic salary of S$7,000 and RMB20,000. Our Group will also extend to our Executive Chairman and CEO, Weng Wenwei insurance, medical and dental benefits in line with our Groups prevailing policy. All entertainment expenses, and traveling, hotel and other out-of-pocket expenses reasonably incurred by him in the process of discharging his duties on behalf of our Group will also be borne by us. Apart from the above, our Executive Chairman and CEO, Weng Wenwei will be entitled to receive an annual performance bonus (the Performance Bonus) of a sum calculated based on the audited PBT of our Group. For the avoidance of doubt, in respect of any partial period of a financial year where the Service Agreement is effective, Weng Wenwei will be entitled to a pro-rated amount of the Performance Bonus for that financial year. PBT for the purposes of computing the Performance Bonus means the consolidated audited profit before tax of our Group (before the Performance Bonus and minority interests, and excluding extraordinary items) for the relevant financial year. Past Directorships Other Companies Group Companies Other Companies Group Companies Other Companies Group Companies Other Companies
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The entitlements of our Executive Chairman and CEO, Weng Wenwei to the Performance Bonus are set out below: PBT If PBT is equivalent or less than RMB80 million If PBT is above RMB80 million and up to RMB130 million If PBT is above RMB130 million and up to RMB180 million If PBT is above RMB180 million Amount of Performance Bonus Nil
1.5% of PBT in excess of RMB80 million
The aggregate of (i) RMB0.75 million and (ii) 2.0% of PBT in excess of RMB130 million The aggregate of (i) RMB1.75 million and (ii) 2.5% of PBT in excess of RMB180 million
The remuneration package of our Executive Chairman and CEO, Weng Wenwei shall be reviewed by our Remuneration Committee at the end of each financial year of our Company. The first review shall take place at the end of the financial year ending 31 December 2009. In addition, our Executive Chairman and CEO, Weng Wenwei has agreed that he shall not during his employment and within a period of one (1) year upon his ceasing to be employed by our Company within Singapore or any other country in which our Group carries on business, directly or indirectly, except with the prior written consent of our Company: (i) either on his own account or for any other person directly or indirectly solicit, interfere with or endeavour to entice away from any company in our Group any person who to his knowledge is now or has been a client, customer or executive of, or in the habit of dealing with our Group; and either alone or jointly with or as a manager, agent for, director or executive of any person, firm or company, directly or indirectly carry on or be engaged or concerned or interested in the business undertaken or engaged by our Group (the Relevant Business) or in any business similar to or in competition with the Relevant Business.
(ii)
Our Executive Chairman and CEO, Weng Wenwei has also further agreed that he shall not during his employment with our Company and at all times thereafter without limit in point of time, directly or indirectly, except with the prior written consent of our Company: (i) use the name GREAT or or any name similar to that of or used by our Group or any colourable imitation thereof in connection with any business; and use any trade mark, patent or any other intellectual property right of our Group (which includes those trademarks and patents that Mr Weng Wenwei has granted an exclusive licence to the Group as disclosed in the section entitled Intellectual Property of this Prospectus) in connection with any business not belonging to our Group.
(ii)
Had the Service Agreement been in existence for FY2008, the aggregate remuneration (including contributions, bonus, and benefits-in-kind) paid to the Executive Director would have been approximately RMB764,685 instead of approximately RMB175,880 and the profit before tax of our Group would have been approximately RMB86.8 million instead of approximately RMB87.4 million. Our Group has also previously entered into various letters of employment with all our Executive Officers. Such letters typically provide for the salary payable to our Executive Officers, their working hours, medical benefits, grounds of termination and certain restrictive covenants. There is no existing or proposed service agreement entered into or to be entered into by our Directors or Executive Officers with our Group which provide for benefits upon termination of employment.
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Save for the Service Agreement, none of our Directors is appointed for any fixed term. Every Director shall retire from office once every three years and for this purpose, at each annual general meeting. One-third of the number of Directors for the time being (or if their number is not a multiple of three, the number nearest to but not less than one-third) shall retire from office by rotation. A retiring Director shall be eligible for re-election. DIRECTORS AND EXECUTIVE OFFICERS REMUNERATION The compensation(1) paid to our Directors and our Executive Officers for FY2007, FY2008 and the estimated compensation to be paid to our Directors and our Executive Officers for FY2009 (on an aggregate basis and in remuneration bands (2)) are as follows: FY2007 Directors Weng Wenwei Weng Wenju Teoh Teik Kee Lee Kim Lian, Juliana Lim Yeow Hua @ Lim You Qin Executive Officers Cai Ane Wang Jianxin Wei Xuefen Zhang Shiwu Liang Choong Wai
Notes: (1) (2) Compensation includes salary, bonus, directors fee and benefits-in-kind for FY2007 and FY2008. Compensation that has already been paid includes deferred compensation accrued for the financial year in question and payable at a later date. A means between S$0 and S$249,999. B means between S$250,000 and S$499,999. C means between S$500,000 and S$999,999. D means between S$1,000,000 and S$1,499,999. E means between S$1,500,000 and S$1,999,999. For the purpose of this estimation, no account is made for the bonuses or profit sharing that our Executive Directors are entitled under their service agreements (if any), the details of which are set out under the section entitled Service Agreement of this Prospectus.
FY2008 A A N.A. N.A. N.A.
Estimated amount for FY2009(3) A A A A A
A A N.A. N.A. N.A.
A A A A N.A.
A A A A A
A A A A A
(3)
EMPLOYEES Our employees are unionised. The relationship and co-operation between management and employees has been good and is expected to continue in the future. There has not been any incidents of industrial disputes or work stoppages with our employees which affected our operations. The number of our employees has increased in the Relevant Period, in tandem with the increase in our business operations. Save for our Group Financial Controller, Liang Choong Wai, who is based in Singapore, our other employees are based in the PRC.
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Employees of our Group As at the end of FY2006 17 8 109 910 26 12 3 1,085 As at the end of FY2007 19 10 193 1,340 33 16 5 1,616 As at the end of FY2008 18 12 200 1,643 34 16 4 1,927 As at the Latest Practicable Date 18 12 200 1,348 32 16 4 1,630
Departments Management and administration Finance Quality Control Production Sales and Marketing Research and Development Procurement Total Number of Staff
The drop in the number of our production staff from 1,643 as at end FY2008 to 1,348 as at the Latest Practicable Date was due to employees resigning during the Lunar New Year period. This is a seasonal trend in the PRC where employees returning home for Lunar New Year will not return to work. In anticipation of this trend, we had increased the number of temporary workers and finished goods inventory prior to the Lunar New Year. The majority of the employees who resigned were unskilled workers and therefore, their resignations do not impact our production process. In FY2008, the average number of our temporary workers varies during the year depending on our requirements, and may reach up to around 160 temporary workers just prior to the Lunar New Year in January 2009. During the other periods of the year, the number of temporary workers could be substantially lower. Remuneration of Employee Related to Our Directors and Controlling Shareholder As at the Latest Practicable Date, save for (i) Cai Zongren and Shi Ronglin (both of whom are production staff in our Production Department) and Shi Rongxuan (who is a sales staff in our Sales and Marketing Department) who are cousins of our Executive Chairman and CEO, Weng Wenwei; and (ii) Weng Baoting (who is an accounts staff in our Finance Department) who is the sister of our Executive Directors, Weng Wenwei and Weng Wenju, we do not have any other employees who are related to our Directors and Controlling Shareholder. The remuneration of employees who are related to our Directors and Controlling Shareholder will be reviewed annually by our Remuneration Committee to ensure that their remuneration packages are in line with our staff remuneration guidelines and commensurate with their respective job scopes and level of responsibilities. In the event that a member of our Remuneration Committee is related to the employee under review, he will abstain from the review. The aggregate remuneration of employees who are related to our Directors and Controlling Shareholder (excluding the remuneration of our Directors and Executive Officers) in FY2008, which included salaries, bonuses and benefits-in-kind, was no more than RMB200,000. The basis for determining their remuneration was generally the same as the basis for determining the remuneration of unrelated employees in our Group. The remuneration paid to employees who are related to our Directors and Controlling Shareholder will be disclosed in our annual reports in the event that such remuneration exceeds S$150,000 for that financial year.
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There is no arrangement or understanding with our Controlling Shareholder, customers, suppliers or any other person, pursuant to which any of our Directors or Executive Officers was selected as our Director or Executive Officer. Pension or retirement benefits Based on the PRC government regulations, we are required to contribute to our employees pension funds. In FY2006, FY2007 and FY2008, we contributed approximately RMB173,000, RMB369,200 and RMB571,000 respectively towards our employees pension funds. Save as disclosed and as required for the purpose of compliance with relevant laws, we have not set aside or accrued any amounts to provide for pension, retirement or similar benefits for any of our employees. CORPORATE GOVERNANCE Corporate governance refers to the processes and structure by which the business and affairs of a company are directed and managed, in order to enhance long-term shareholder value through enhancing corporate performance and accountability. Good corporate governance therefore embodies both enterprise (performance) and accountability (conformance). Recognising the importance of corporate governance and the importance of offering high standards of accountability to our Shareholders, our Company has implemented the corporate governance model as set out below: Board of Directors
Audit Committee Chairman Teoh Teik Kee
Remuneration Committee Chairman Lim Yeow Hua @ Lim You Qin Members Lee Kim Lian, Juliana Teoh Teik Kee
Nominating Committee Chairman Lee Kim Lian, Juliana
Members Lee Kim Lian, Juliana Lim Yeow Hua @ Lim You Qin
Members Lim Yeow Hua @ Lim You Qin Teoh Teik Kee Weng Wenwei
Board of Directors Our Articles of Association provide that the number of Directors on our Board shall not be less than two. We currently have five Directors on our Board, comprising two Executive Directors and three Independent Directors. Mr Teoh Teik Kee, Ms Lee Kim Lian, Juliana and Mr Lim Yeow Hua @ Lim You Qin have been appointed as our Independent Directors. Our Directors consider Mr Teoh Teik Kee, Ms Lee Kim Lian, Juliana and Mr Lim Yeow Hua @ Lim You Qin to be independent as they do not have any existing business or professional relationship with our Group, our Directors or Controlling Shareholder. They are also not related to any of our Directors or Controlling Shareholder. Notwithstanding Mr Weng Wenweis concurrent appointment as our Executive Chairman and CEO, the Board is of the view, given the scope and nature of the operations of the Group and the strong element of independent presence on the Board, that it is not necessary to separate the functions of the Chairman and CEO. However to ensure that there is no concentration of power and authority vested in one individual, we have appointed Mr Teoh Teik Kee as our Lead Independent Director, pursuant to the recommendations in Commentary 3.3 of the Code of Corporate Governance 2005. In accordance with 146

the recommendations in the said Commentary 3.3, the Lead Independent Director will be available to Shareholders where they have concerns which contact through the normal channels of our Executive Chairman and CEO, Weng Wenwei has failed to resolve or for which such contacts is inappropriate. Audit Committee Our business and operations are presently under the management and close supervision of our Executive Directors who are assisted by our Executive Officers. After our listing on the SGX-ST, our Executive Directors and Executive Officers will manage the business and operations of our Group. The Audit Committee will assist our Board of Directors with regards to discharging its responsibility to safeguard our Companys assets, maintain adequate accounting records, and develop and maintain effective systems of internal controls with an overall objective to ensure that our management has created and maintained an effective control environment in our Company, and that our management demonstrates and stimulates the necessary aspect of our Groups internal control structure among all parties. Our Audit Committee comprises our Independent Directors, Mr Teoh Teik Kee, Ms Lee Kim Lian, Juliana and Mr Lim Yeow Hua @ Lim You Qin. Our Audit Committee will be chaired by Mr Teoh Teik Kee. Our Audit Committee will meet periodically to perform, inter alia, the following functions: (a) review the audit plans of our internal auditors and of the independent auditors, including the results of our internal auditors and the independent auditors review and evaluation of our system of internal control; review of the annual consolidated financial statements of our Company and the independent auditors report on those financial statements, and discuss any significant adjustments, major risk areas, changes in accounting policies, compliance with Singapore financial reporting standards, concerns and issues arising from their audits including any matters which the auditors may wish to discuss in the absence of management, where necessary, before submission to our Board for approval; review and discuss with our internal auditors and the independent auditors, any suspected fraud, irregularity or infringement of any relevant laws, rules or regulations, which has or is likely to have a material impact on our operating results or financial position and our managements response; review the co-operation given by our Companys officers to the independent auditor; nominate the independent auditor for appointment or re-appointment; review and approve internal control procedures and arrangements for all interested person transactions, and if during these periodic reviews, the Audit Committee believes that the procedures are not sufficient, we will revise our internal controls procedures; review and ratify all interested person transactions falling within the scope of Chapter 9 of the Listing Manual; review any potential conflicts of interest; review on a regular basis, any foreign exchange exposure and procedures to manage foreign currency risk, including review of the policies/procedures put in place by our Company if our Company decides to enter into hedging transactions; review our key financial risk areas, with a view to providing an independent oversight on our Groups financial reporting, the outcome of such review to be disclosed in the annual reports or, where the findings are material, announced immediately via SGXNET;
(b)
(c)
(d) (e) (f)
(g)
(h) (i)
(j)
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(k) undertake such other views and projects as may be requested by our Board and report to our Board its finding from time to time on matters arising and requiring the attention of our Audit Committee; and generally undertake such other functions and duties as may be required by the relevant laws and provisions of the Listing Manual (as may be amended from time to time).
(l)
Apart from the above functions, our Audit Committee will also commission and review the findings of internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal controls, or infringement of any law, rule or regulation which has or is likely to have a material impact on our Companys operating results or financial position. The Audit Committee shall also commission an annual internal control audit until such time as the Audit Committee is satisfied that our Groups internal controls are robust and effective enough to mitigate our Groups internal control weaknesses (if any). Prior to the decommissioning of such an annual audit, our Board is required to report to the SGX-ST on how the key internal control weaknesses have been rectified, and the basis for the decision to decommission the annual internal control audit. Thereafter, such audits may be initiated by the Audit Committee as and when it deems fit to satisfy itself that our Groups internal controls remain robust and effective. Upon completion of the internal control audit, appropriate disclosure must be made via SGXNET of any material, price-sensitive internal control weaknesses and any follow-up actions to be taken by our Board. The Audit Committee notes that Mr Zhang Shiwus most recent experience includes being the chief financial officer of Labixiaoxin (Fujian) Food Industry Co., Ltd. ( () ) from December 2003 to April 2007, which is a subsidiary of China Lifestyles Food and Beverages Group Limited, a company listed on the SGX-ST in 2005 with substantial operations in the PRC. The Audit Committee further notes that Mr Zhang Shiwu will in his work be assisted by our Group Financial Controller, Mr Liang Choong Wai who has previous audit experience in Singapore auditing firms. The Audit Committee notes that prior to Mr Liangs employment with our Group, Mr Liang has had three years experience working as a group accountant in Guangzhao Industrial Biotechnology Forest Group Ltd., a listed company in Singapore. The Audit Committee notes the work scope of Mr Liang, and that Guangzhao Industrial Biotechnology Forest Group Ltd is a company having substantial operations in the PRC. The Audit Committee further notes that Mr Liang has former audit experience in two audit firms in Singapore. The Audit Committee has, in the course of preparing for the listing of our Company on SGX-ST, observed and noted both Mr Zhangs and Mr Liangs contributions at various occasions, discussions and meetings such as their responses to questions posed to them at various meetings. By the responses provided by both Mr Zhang and Mr Liang to such questions, the Audit Committee has formed the view that they have demonstrated their understanding of the business of, and familiarity with the finance and accounting functions of, our Group. Mr Zhang, in particular, who has been with our Group for over 2 years, has demonstrated his understanding of, and has been able to answer question raised regarding the various business transactions entered into by our Group. The Audit Committee noted the manner in which both Mr Zhang and Mr Liang worked, in consultation with the Independent Auditor, on the combined financial statements for inclusion in the Prospectus and applied the proper accounting treatment. Their treatment and preparation of, and their discussion with the Independent Auditor, on the said combined financial statements demonstrated their knowledge of the Singapore Financial Reporting Standards, and listing requirements in Singapore. Coupled with Mr Zhangs and Mr Liangs qualifications and experience, the Audit Committee is of the view that both Mr Zhang and Mr Liang are able to carry out the finance functions of our Group in their respective capacities as Chief Financial Officer and Group Financial Controller. In addition, our Audit Committee shall, in one years time from the listing of our Company on the SGX-ST, review the suitability for continued service as our Chief Financial Officer and Group Financial Controller of Mr Zhang Shiwu and Mr Liang Choong Wai respectively and the overall effectiveness of the finance
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functions of our Group, which includes the current reporting structure between Mr Zhang Shiwu and Mr Liang Choong Wai, taking into consideration the comments of the Independent Auditor. Each member of our Audit Committee will abstain from voting in respect of matters in which he is interested. In addition, all future transactions with related parties shall comply with the requirements of the Listing Manual. Our Directors shall also abstain from voting in any contract or arrangement or proposed contract/ arrangement in which he has a personal material interest. Remuneration Committee Our Remuneration Committee comprises our Independent Directors, Mr Teoh Teik Kee, Ms Lee Kim Lian, Juliana and Mr Lim Yeow Hua @ Lim You Qin. Our Remuneration Committee is chaired by Mr Lim Yeow Hua @ Lim You Qin. Our Remuneration Committee is responsible for the following: (a) to recommend to our Board a framework of remuneration for Directors and Executive Officers, and to determine specific remuneration packages for each Executive Director and the CEO (or executive of equivalent rank), if the CEO is not an Executive Director, such recommendations to be made in consultation with the Chairman of our Board and submitted for endorsement by our entire Board and should cover all aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options, benefits-in-kind; in the case of service contracts, to consider what compensation commitments the Directors or Executive Officers contracts of service, if any, would entail in the event of early termination with a view to be fair and avoid rewarding poor performance; and to conduct annual reviews on the remuneration of employees related to the Directors and Substantial Shareholders.
(b)
(c)
Each member of the Remuneration Committee shall abstain from voting on any resolution in respect of his remuneration package. Nominating Committee Our Nominating Committee comprises our Independent Directors, Mr Teoh Teik Kee, Ms Lee Kim Lian, Juliana, Mr Lim Yeow Hua @ Lim You Qin and our Executive Chairman and CEO, Weng Wenwei. Our Nominating Committee is chaired by Ms Lee Kim Lian, Juliana. The Nominating Committee is responsible for the following: (a) to make recommendations to the Board on all board appointments, including re-nominations, having regard, to the directors contribution and performance (for example, attendance, preparedness, participation and candour) including, if applicable, as an independent director; all directors should be required to submit themselves for re-nomination and re-election at regular intervals and at least every three years; to determine annually whether or not a director is independent; in respect of a director who has multiple board representations on various companies, to decide whether or not such director is able to and has been adequately carrying out his/her duties as director, having regard to the competing time commitments that are faced when serving on multiple boards; and to decide how the Boards performance may be evaluated and propose objective performance criteria, as approved by the Board that allows comparison with its industry peers, and address how the Board has enhanced long term shareholders value.
(b) (c)
(d)
Each member of the Nominating Committee shall abstain from voting on any resolution relating to his renomination as Director.
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GREAT GROUP PERFORMANCE SHARE SCHEME

SUMMARY OF GREAT GROUP PERFORMANCE SHARE SCHEME The PSS was adopted by our Company on 18 June 2009. The rules of the PSS are set out in Appendix G Rules of the Great Group Performance Share Scheme of this Prospectus. Purpose of the PSS The purpose of the PSS is to provide an opportunity for Directors (including Non-Executive Directors) and employees of our Group who have met performance targets to be remunerated not just through cash bonuses but also by an equity stake in our Company so as to motivate them to greater dedication, loyalty and higher standards of performance, and to give recognition to those who have contributed to the success and development of our Company and our Group. Our Company believes that the retention of outstanding employees within our Group is paramount to our long-term objective of pursuing continuous growth and expansion in our business and operations. Our Group also acknowledges that it is important to preserve financial resources for future business developments and to withstand difficult times. As such, one of our Groups strategies is to contain the remuneration of our employees and executives that is a major component of our Groups operating costs. The PSS is formulated with those objectives in mind. It is hoped that through the PSS, our Company would be able to remain an attractive and competitive employer and better able to manage its fixed overhead costs without compromising on performance standards and efficiency. No awards will be granted under the PSS for a period of 3 months after the admission of our Company to the Official List of the SGX-ST. Summary of the Rules A summary of the rules of the PSS is set out below. It is qualified in its entirety by reference to the detailed rules which are set out in Appendix G Rules of the Great Group Performance Share Scheme of this Prospectus. 1. Eligibility The following persons shall be eligible to participate in the PSS: (i) Group employees who have attained the age of 21 years on or before the commencement date of the PSS; Group Executive Directors; and Non-Executive Directors (including Independent Directors) who, in the opinion of the committee comprising Directors duly authorised and appointed by the Board to administer the PSS (the Committee), will contribute to the success of our Group.
(ii) (iii)
Controlling Shareholders are not eligible to participate in the PSS. However, their Associates are eligible to participate in the PSS. As our Executive Chairman and CEO, Weng Wenwei, is a Controlling Shareholder, he will not participate in the PSS. His Associates (i) Cai Ane who is our General Manager (Production) and is the wife of Weng Wenwei; and (ii) Weng Wenju who is our Executive Director and Procurement Manager and is the brother of Weng Wenwei are eligible to participate in the PSS. 2. Awards Awards represent the right of a participant to receive fully paid Shares free of charge, upon the participant achieving prescribed performance targets. Performance targets set under the PSS are intended to be based on medium-term corporate objectives covering market competitiveness, quality of returns, business growth and productivity growth. The performance targets are stretched targets aimed at sustaining long-term growth. Examples of performance targets to be set include targets based on criteria such as sales growth, earnings per share and return on investment.
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Awards may only be vested, and consequently any Shares comprised in such awards shall only be delivered, upon the Committee being satisfied that the prescribed performance target(s) have been achieved. There are no vesting periods beyond the performance achievement periods. The selection of a participant and the number of Shares which are the subject of each award to be granted to a participant in accordance with the PSS shall be determined at the absolute discretion of the Committee, which shall take into account criteria such as his rank, job performance, years of service and potential for future development, his contribution to the success and development of our Group and the extent of effort required to achieve the performance target within the performance period. The Committee shall decide, in relation to each award to be granted to a participant: (i) (ii) (iii) (iv) the date on which the award is to be vested; the number of Shares which are the subject of the award; the prescribed performance target(s); the performance period during which the prescribed performance target(s) are to be satisfied; and the extent to which our Shares under that award shall be released on the prescribed performance target(s) being satisfied (whether fully or partially) or exceeded, as the case may be, at the end of the prescribed performance period. No Shares under the award shall be released for the portion of the prescribed performance target(s) which is not satisfied by the participant at the end of the prescribed performance period.
(v)
Awards may be granted at any time in the course of a financial year. An award letter confirming the award and specifying, inter alia, in relation to the award, the prescribed performance target(s) and the performance period during which the prescribed performance target(s) are to be satisfied, will be sent to each participant as soon as reasonably practicable after the making of an award. Special provisions for the vesting and lapsing of awards apply in certain circumstances, including the following: (i) (ii) (iii) (iv) (v) the termination of the employment of a participant; the ill health, injury, disability or death of a participant; the bankruptcy of a participant; the misconduct of a participant; the participant, being a Non-Executive Director, ceasing to be a Director of our Company or the relevant subsidiary of our Company for any reason whatsoever; and a take-over, winding-up or reconstruction of our Company.
(vi) 3.
Size and duration of the PSS The total number of new Shares which may be issued pursuant to awards granted under the PSS shall not exceed 15% of the issued share capital of our Company on the day preceding the relevant date of award. Subject to such adjustment as may be made to this PSS as a result of any variation in the capital structure of our Company, no more than 25% of the total number of Shares in respect of which our Company may grant Award under this Scheme may be offered in aggregate to the Associates of Controlling Shareholders and the total number of Shares to be offered to each of its Associate must not exceed 10% of the total number of Shares in respect of which our Company may grant Award in the future. 151

The PSS shall continue in force at the discretion of the Committee, subject to a maximum period of 10 years commencing on the date the PSS is adopted by our Company in general meeting, provided always that the PSS may continue beyond the above stipulated period with the approval of Shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. Notwithstanding the expiry or termination of the PSS, any awards made to participants prior to such expiry or termination will continue to remain valid. 4. Operation of the PSS Subject to prevailing legislation and SGX-ST guidelines, our Company will deliver Shares to participants upon vesting of their awards by way of an issue of new Shares, deemed to be fully paid upon their issuance and allotment. The financial effects of the delivery of Shares to participants upon vesting of the awards are set out below. New Shares allotted and issued on the release of an award shall rank in full for all entitlements, including dividends or other distributions declared or recommended in respect of the then existing Shares, the record date for which is on or after the relevant vesting date, and shall in all other respects rank pari passu with other existing Shares then in issue. The Committee has the right to make computational adjustments to the audited results of our Company or our Group, as the case may be, to take into account such factors as the Committee may determine to be relevant, including changes in accounting methods, taxes and extraordinary events, and the right to amend the performance target(s) if the Committee decides that a changed performance target would be a fairer measure of performance. 5. Adjustments and alterations under the PSS 5.1 Variation of Capital If a variation in the issued ordinary share capital of our Company (whether by way of a capitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation or distribution) shall take place, then: (i) the class and/or number of Shares which are the subject of an award to the extent not yet vested; and/or the class and/or number of Shares over which future awards may be granted under the PSS, shall be adjusted in such manner as the Committee may determine to be appropriate.
(ii)
The issue of securities as consideration for an acquisition or a private placement of securities or the cancellation of issued Shares purchased or acquired by our Company by way of a market purchase of such Shares undertaken by our Company on the SGX-ST during the period when a share purchase mandate granted by Shareholders (including any renewal of such mandate) is in force shall not normally be regarded as a circumstance requiring adjustment. Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the auditors of our Group (acting only as experts and not arbitrators) to be in their opinion, fair and reasonable. 5.2 Modifications or alterations to the PSS The rules of the PSS may be modified and/or altered from time to time by a resolution of the Committee, subject to compliance with the Listing Manual and such other regulatory authorities as may be necessary.
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However, no modification or alteration shall adversely affect the rights attached to awards granted prior to such modification or alteration except with the written consent of such number of participants under the PSS who, if their awards were released to them, would thereby become entitled to not less than three-quarters in number of all our Shares which would be issued in full pursuant to all outstanding awards under the PSS. No alteration shall be made to the rules of the PSS to the advantage of the holders of the awards except with the prior approval of Shareholders in general meeting. 6. Disclosures in annual reports The following disclosures (as applicable) will be made by our Company in its annual report for so long as the PSS continues in operation: (a) (b) the names of the members of the Committee administering the PSS; in respect of the following participants of the PSS: (i) (ii) (iii) Directors of our Company; Associates of the Controlling Shareholders; and participants (other than those in paragraph (i) and (ii) above) who have received Shares pursuant to the release of awards granted under the PSS which, in aggregate, represent 5% or more of the total number of new Shares available under the PSS, the following information: (aa) (bb) name of the participant; number of Shares issued comprised in awards granted to such participant during the financial year under review (including terms); aggregate number of Shares comprised in awards granted to such participant since the commencement of the PSS to the end of the financial year under review; aggregate number of Shares comprised in awards which have vested from the commencement of the PSS to the end of the financial year under review; number of Shares comprised in awards not released as at the end of the financial year under review; and total number of Shares issued or delivered to such participant under the PSS during the financial year under review.
(cc)
(dd)
(ee)
(ff)
(c) 7.
such other information as may be required by the Listing Manual or the Act.
Role and composition of the Committee The Remuneration Committee of our Company, which comprises Mr Lim Yeow Hua @ Lim You Qin, Ms Lee Kim Lian, Juliana and Mr Teoh Teik Kee, will be designated as the Committee responsible for the administration of the PSS. The Committee oversees executive development in our Group with the aim of building capable and committed management teams, through focused management and progressive policies which can attract and retain a pool of talented executives to meet the current and future growth of our Group. In compliance with the requirements of the Listing Manual, any participant of the PSS who is a member of the Committee shall not be involved in its deliberations in respect of awards to be granted to or held by that member of the Committee.
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8. Rationale for the PSS By implementing the PSS, our Company hopes to inculcate in all participants, a stronger and more lasting sense of identification with our Group. The PSS will also operate to attract, retain and provide incentive to participants to encourage greater dedication and loyalty by enabling our Company to give recognition for past contributions and services as well as motivating participants generally to contribute towards our Groups long-term prosperity. The purpose of adopting the PSS is to give our Company greater flexibility to align the interests of employees, especially key executives, with those of Shareholders. It is also intended that the PSS will serve to reward, retain and motivate employees to achieve superior performance. The PSS will further strengthen our Companys competitiveness in attracting and retaining employees, especially employees who have the requisite knowledge, technical skills and experience and who our Company believes could contribute to the development and growth of our Group. The PSS contemplates the award of fully-paid Shares to employees after pre-determined performance target(s) has been accomplished. The PSS is targeted at key executives who are in the best position to drive the growth of our Company through superior performance. Our Company believes that with the PSS in place, it will be more effective than merely having pure cash bonuses in place to motivate executives to work towards determined goals. The awards given to a particular participant under the PSS and the proportion of Shares under the PSS will be determined at the discretion of the Committee, who will take into account factors such as the participants capability, scope of responsibility, skill and vulnerability to leaving the employment of our Group. In deciding on an award to be granted to a participant, the Committee will also consider the compensation and/or benefits to be given to the participant under other sharebased incentive schemes of our Company, if any. The Committee may also set specific criteria and performance targets for each business unit or department of our Group, taking into account factors such as (i) our Companys and our Groups business goals and directions for each financial year; (ii) the participants actual job scope and duties; and (iii) the prevailing economic conditions. The number of new Shares to be issued under the PSS will be subject to the maximum limit of 15% of our Companys total issued share capital from time to time. Rationale for participation by Non-Executive Directors While the PSS caters principally to Group employees, it is recognised that there are other persons who make significant contributions to our Group through their close working relationships with our Group, even though they are not employed within our Group. Such persons include the NonExecutive Directors in our Group. Our Non-Executive Directors (including Independent Directors) are persons from different professions and working backgrounds, bringing to our Group their wealth of knowledge, business expertise and contacts in the business community. They play an important role in helping our Group shape its business strategy by allowing our Group to draw on the backgrounds and diverse working experience of these individuals. It is crucial for our Company to attract, retain and incentivise the Non-Executive Directors. By aligning the interests of the Non-Executive Directors with the interests of Shareholders, our Company aims to inculcate a sense of commitment on the part of the NonExecutive Directors towards serving the short and long-term objectives of our Group. Our Directors are of the view that including the Non-Executive Directors in the PSS will show our Companys appreciation for, and further motivate them in, their contribution towards the success of our Group. However, as their services and contributions cannot be measured in the same way as the full-time employees of our Group, while it is desired that participation in the PSS be made open to the Non-Executive Directors of our Group, any awards that may be granted to any such NonExecutive Director would be intended only as a token of our Companys appreciation.
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For the purpose of assessing the contributions of the Non-Executive Directors, the Committee will propose a performance framework comprising mainly non-financial performance measurement criteria such as the extent of involvement and responsibilities shouldered by the Non-Executive Directors. In addition, the Committee will also consider the scope of advice given, the number of contacts and size of deals which our Group is able to procure from the contacts and recommendations of the Non-Executive Directors. The Committee may also decide that no awards shall be made in any financial year or no grant and/or award may be made at all. It is envisaged that the vesting of awards, and hence the number of Shares to be delivered to the Non-Executive Directors based on the criteria set out above will be relatively small, in terms of frequency and numbers. Based on this, our Directors are of the view that the participation by the non-executive directors who are Independent Directors in the PSS will not compromise their independent status. 9. Financial effects of the PSS 9.1 Share capital The PSS will result in an increase in our Companys issued share capital when new Shares are issued to participants pursuant to the grant of the awards. This will in turn depend on, inter alia, the number of Shares comprised in the awards to be issued. 9.2 Net tangible assets The PSS will result in a charge to our Companys profit and loss account equal to the fair value over the vesting period with a corresponding increase in equity. Accordingly, there will be no impact to the consolidated NTA of our Company. However, it should be noted that the delivery of Shares to participants of the PSS is contingent upon the participants meeting prescribed performance targets and conditions. Accordingly, it would have resulted in significant added value to our Companys consolidated NTA before our Shares are delivered. 9.3 Costs to our Company The Financial Reporting Standards (in particular, FRS102, Share-based Payment) require the recognition of an expense in respect of awards granted under the PSS. The expense will be based on the fair value of the awards at each grant date and recognised at each financial reporting date of our Company. Although the PSS will have a dilutive impact on our Companys consolidated EPS, it should be noted that the delivery of Shares to participants of the PSS is contingent upon the participants meeting prescribed performance targets and conditions. 10. Abstention from Voting Shareholders who are eligible to participate in the PSS shall abstain from voting on any resolution relating to the PSS. 11. SGX-ST requirements While the PSS is structured such that we have the discretion to make the appropriate allotments depending on the prevailing circumstances of our Company, it conforms with the requirements as set out in the Listing Manual for employee share option schemes. In-principle approval has been obtained from the SGX-ST for the listing and quotation of the new Shares to be issued pursuant to awards under the PSS. However, in-principle approval of the SGX-ST is not to be taken as an indication of the merits of the PSS or such new Shares.
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INTERESTED PERSON TRANSACTIONS

In general, transactions between our Group and any of our interested persons (namely, our Directors, Controlling Shareholder of our Company or the Associates of such Directors or Controlling Shareholder) are Interested Person Transactions. This section sets out the Interested Person Transactions entered into by our Group for the Relevant Period and the period commencing from 1 January 2009 to the Latest Practicable Date on the basis of each member of our Group (namely, our Company and each of our subsidiaries) being an Entity At Risk and with Interested Persons being construed accordingly. Save as disclosed in this section and under the section entitled Restructuring Exercise in this Prospectus, there has been no Interested Person Transaction in the Relevant Period and for the period commencing from 1 January 2009 to the Latest Practicable Date involving our Group which are material in the context of this Invitation. INTERESTED PERSONS INTERESTED/RELATED PERSONS Weng Wenwei Cai Ane : : RELATIONSHIP WITH OUR GROUP Executive Chairman and CEO The wife of Executive Chairman and CEO, Weng Wenwei. Accordingly, she is the Associate of our Executive Chairman and CEO, Weng Wenwei. She is an Executive Ofcer and is our General Manager (Production). Yuanteng is a company established on 2 June 2003 in the PRC. According to its business licence, Yuanteng is able to engage in the production and sale of plastic articles, hardware, dresses and bags. However, other than its ownership of certain landuse rights, it has been a dormant company since its establishment. Yuanteng is wholly-owned by our Executive Chairman and CEO, Weng Wenwei. Accordingly, Yuanteng is an Associate of our Executive Chairman and CEO, Weng Wenwei. Xiamen Greatex is a company established on 7 July 2005 in the PRC. According to its business licence, it is able to engage in the import and export activities of merchandise and technology (save for those restricted or prohibited by law or regulations). Since its establishment, it has been engaged in the export of knitted apparel such as undergarments and childrens apparel. Our Executive Chairman and CEO, Weng Wenwei was a shareholder of Xiamen Greatex holding 50% of its equity interest and was also its legal representative until 12 March 2009 when Weng Wenwei disposed of his entire shareholding to his unrelated business partner and at the same time, stepped down as its legal representative. Accordingly, Xiamen Greatex is an Associate of our Executive Chairman and CEO, Weng Wenwei during the period from 7 July 2005 to 12 March 2009, when Weng Wenwei was a shareholder and legal representative of Xiamen Greatex. Following the disposal of our Executive Chairman and CEO, Weng Wenweis equity interests in Xiamen Greatex, Xiamen Greatex ceased to be an Associate of our Executive Chairman and CEO, Weng Wenwei. 156
Quanzhou City Yuanteng Industry & Trade Development Co., Ltd. () (Yuanteng)
Xiamen Greatex Import and Export Trading Co., Ltd. (formerly known as ) (Xiamen Greatex)

INTERESTED/RELATED PERSONS Quanzhou Honghao Colour Printing Co., Ltd. () (Quanzhou Honghao) RELATIONSHIP WITH OUR GROUP Quanzhou Honghao is a company established on 3 July 2007 in the PRC. According to its business licence, Quanzhou Honghao is able to engage in packaging, decorating and printing, as well as advertising. Our Executive Director and Procurement Manager, Weng Wenju and General Manager (Production), Cai Ane are shareholders of Quanzhou Honghao, each holding 50% of its equity interest. Accordingly, Quanzhou Honghao is an Associate of our Executive Chairman and CEO, Weng Wenwei, our Executive Director, Weng Wenju and our General Manager (Production), Cai Ane.
PAST INTERESTED PERSON TRANSACTIONS Advances to and from our Executive Chairman and CEO, Weng Wenwei During the Relevant Period and for the period from 1 January 2009 to the Latest Practicable Date, our Executive Chairman and CEO, Weng Wenwei had made several advances to our Group for working capital purposes. In addition, our Group had also made several advances to our Executive Chairman and CEO, Weng Wenwei for his personal use and for business expenses. The net amounts advanced to and from our Executive Chairman and CEO, Weng Wenwei as at 31 December 2006, 31 December 2007, 31 December 2008 and as the Latest Practicable Date are as follows: As at the end of FY2006 (RMB000) Net amount advanced to/ (from) Mr Weng Wenwei 27,930 FY2007 (RMB000) (3,309) FY2008 (RMB000) (517) As at the Latest Practicable Date (RMB000) (284)
During the Relevant Period and from 1 January 2009 to the Latest Practicable Date, the largest net amount due to our Executive Chairman and CEO, Weng Wenwei was RMB3,309,000 (based on monthend balances) and the largest net amount owing from our Executive Chairman and CEO, Weng Wenwei was RMB27,930,000 (based on month-end balances). The above advances to and from our Executive Chairman and CEO, Weng Wenwei were made on an unsecured, interest-free basis and with no fixed terms of repayment. These advances are not considered loans made on an arms length basis nor on normal commercial terms. We will not make any personal advances to our Executive Chairman and CEO, Weng Wenwei save for advances required by our Executive Chairman and CEO, Weng Wenwei for business purposes which shall be limited to a maximum of S$10,000 at any one time in the future. Transfer of and licence to use certain intellectual property rights registered under our Executive Chairman and CEO, Weng Wenwei to our Group On 13 October 2008, our Executive Chairman and CEO, Weng Wenwei entered into an Intellectual Property Licence and Transfer Agreement () with Fujian Great and Quanzhou Great pursuant to which Weng Wenwei shall at our Groups request, transfer to our Group certain patents, the consideration of which shall be at such minimum amount permitted under PRC laws and regulations. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law have, for the purpose of this Prospectus, advised on 20 May 2009 that under prevailing laws of the PRC, such patents may be transferred at nominal consideration, and we intend to do so. The patents will be transferred to our Group when our Group requires them. This is to save administrative cost of transfer of patents. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have further advised on 27 July 157

2009, for the purpose of this Prospectus that in accordance with PRC laws, transfers of the patents will not come into effect until the transfers have been approved and registered with the relevant government authorities. As at the date of this Prospectus, we have not requested our Executive Chairman and CEO, Weng Wenwei to transfer any of these patents to us. Pending the transfer of such patents, our Group has been granted an exclusive licence to use the patents at nil consideration. Our Executive Chairman and CEO, Weng Wenwei has also agreed to transfer to our Group certain trademarks that are pending registration with the Trademark Office of State Administration for Industry and Commerce (). Pursuant to an Intellectual Property Licence and Transfer Agreement in relation to trademarks that are pending registration () dated 13 October 2008 and Supplemental Agreement of the Trademarks Transfer And Exclusive Right To Use Agreement () dated 27 March 2009, pursuant to which Weng Wenwei shall at our Group's request, transfer to our Group certain trademarks and/or trademark applications. The consideration for the transfer of such trademarks and/or trademark applications shall be such minimum amount permitted under PRC laws and regulations. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law have, for the purpose of this Prospectus, advised on 20 May 2009 that under prevailing laws of the PRC, such trademarks and/or trademark applications may be transferred at nominal consideration, and we intend to do so. The trademarks and/or trademark applications will be transferred to our Group when our Group requires them. This is to save administrative cost of transfer of trademarks and trademarks applications. Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have further advised on 27 July 2009, for the purpose of this Prospectus that in accordance with PRC Laws, transfers of such trademarks and/or trademark applications will not come into effect until the transfers have been approved and registered with the relevant government authorities. Our Executive Chairman and CEO, Weng Wenwei has also agreed to transfer to our Group certain trademarks that are already registered with the Trademark Office of State Administration for Industry and Commerce () under the Trademark Transfer Agreement (/ ) dated 25 August 2008 and Supplemental Agreement of the Trademark Transfer Agreement (/) dated 1 February 2009. These trademarks have been transferred to our Group at nil consideration. Details of the patents and pending trademarks to be transferred by our Executive Chairman and CEO, Weng Wenwei to our Group at our Groups request are more information set out in the section entitled Intellectual Property of this Prospectus. The above transactions were not entered into on an arms length basis nor on normal commercial terms. Guarantees and other collaterals given by our Executive Chairman and CEO Weng Wenwei and his Associate, Yuanteng During the Relevant Period and up to the Latest Practicable Date, our Executive Chairman and CEO, Weng Wenwei and his Associate Yuanteng provided the following collaterals in connection with banking facility obtained by our Group from Industrial Bank Co., Ltd, Quanzhou Branch (): (i) a mortgage by Yuanteng over its land-use rights at Quangang district, Shanyaoyanchang Industrial District () under a Maximum Mortgage Contract () dated 27 April 2006 to secure loans not exceeding RMB5.7 million for the period from 27 April 2006 to 25 April 2008; and personal guarantees by our Executive Chairman and CEO, Weng Wenwei for the respective loans of RMB3.7 million and RMB1.0 million. The guarantees are each for a period of two years from the due date of each loan.
(ii)
The above collaterals were to secure the following bank loans for working capital purposes: (i) a loan of RMB3.7 million for a period of 12 months commencing 24 January 2007 under a Loan Contract () (Reference No.: 13450047-07-1) dated 24 January 2007; and a loan of RMB1.0 million for a period of 12 months commencing 2 August 2007 under a Loan Contract () (Reference No.: 13450047-07-3) dated 2 August 2007. 158
(ii)

The guarantees and mortgage were provided by our Executive Chairman and CEO, Weng Wenwei and Yuanteng to Quanzhou Great without any fees, interest or other benefits being paid by our Group and were not entered into on an arms length basis or on normal commercial terms. The above loans have been repaid and the securities have been discharged as at the Latest Practicable Date. Transactions with Xiamen Greatex Since 2005, Xiamen Greatex has been purchasing merchandise produced by our Group on a contract manufacturing basis for export to the EU. The sale price of such merchandise to Xiamen Greatex was determined on an arms length basis and on normal commercial terms after taking into account the prevailing market prices for such products. The aggregate value of our sales to Xiamen Greatex for the Relevant Period and up to the Latest Practicable Date were as follows: From 1 January 2009 to the Latest Practicable Date (RMB000) 1,066
FY2006 (RMB000) Sales of contract manufacturing merchandise to Xiamen Greatex 15,534
FY2007 (RMB000) 17,180
FY2008 (RMB000) 10,239
On 12 March 2009, our Executive Chairman and CEO Weng Wenwei disposed of his entire shareholding in Xiamen Greatex to his unrelated business partner of Xiamen Greatex and at the same time, stepped down as its legal representative. Following the disposal of our Executive Chairman and CEO, Weng Wenweis equity interests in Xiamen Greatex, Xiamen Greatex ceased to be an Associate of our Executive Chairman and CEO, Weng Wenwei. Our transactions with Xiamen Greatex will continue subsequent to the Invitation. Notwithstanding the above, all our future transactions with Xiamen Greatex will be subject to periodic review by the Audit Committee to ensure that they are carried out on normal commercial terms and are not prejudicial to the interests of our Company or our Shareholders. Guarantees given by our Executive Chairman and CEO Weng Wenwei, Baichuan and Fujian Great On 17 January 2008, our Executive Chairman and CEO, Weng Wenwei, Baichuan(1) and Fujian Great provided a joint and several guarantee of up to RMB10.0 million to secure an export trade receivable factoring facility not exceeding RMB10.0 million (or its US$ equivalent) expiring on 17 January 2009 granted by China Citic Bank Co., Ltd, Quanzhou Branch (). The guarantee was provided by Weng Wenwei, Baichuan and Fujian Great to Quanzhou Great without any fees, interest or other benefits being paid by our Group and were not entered into on an arms length basis or on normal commercial terms. The above facility has been repaid and the security has been discharged as at the Latest Practicable Date.
Note: (1) Please refer to the section entitled Interested Person Transactions - Other Transactions for further information on Baichuan and Cai Xinghuo.
Mortgage by Yuanteng On 5 June 2008, Yuanteng and the Industrial Commercial Bank of China, Quanzhou Licheng Sub-branch () (ICBC) entered into a Maximum Mortgage Contract ( ) pursuant to which Yuanteng mortgaged its land-use rights in respect of its land located 159

at Quangang district, Shanyaoyanchang Industrial District () in favour of ICBC to secure banking facilities of up to RMB6.5 million to Fujian Great during the period from 5 June 2008 to 4 June 2009. This mortgage was subsequently renewed on 11 June 2009. Please refer to section entitled On-going Interested Person Transactions of this Prospectus for further information. The mortgage was provided by Yuanteng without any fees, interest or other benefits being paid by our Group and was not entered into on an arms length basis or on normal commercial terms. ON-GOING INTERESTED PERSON TRANSACTIONS Guarantees and other securities provided by our Executive Chairman and CEO, Weng Wenwei and others During the Relevant Period and up to the Latest Practicable Date, our Executive Chairman and CEO, Weng Wenwei, his Associate, Yuanteng and other non-interested persons have provided guarantees and other securities to secure certain credit facilities granted to our Group for working capital purposes. The guarantees and other securities existing as at the Latest Practicable Date are set out below: Guarantees and other securities by Joint and several guarantee of up to RMB11.0 million by Weng Wenwei, Baichuan(1) and Cai Xinghuo(1) Joint and several guarantee by Weng Wenwei, Cai Ane of up to RMB6.0 million and by Baichuan(1) of up to RMB6.5 million Joint and several guarantee of up to RMB4.0 million by Weng Wenwei, Cai Ane and Quanzhou Great Joint and several guarantee of RMB7.7 million by Weng Wenwei and Cai Ane Guarantee of up to RMB3.0 million by Quanzhou Honghao
Notes: (1) (2) Please refer to the section entitled Interested Person Transactions - Other Transactions for further information on Baichuan and Cai Xinghuo. This loan besides being secured by personal guarantee, is also secured by a mortgage provided by Quanzhou Great. Pursuant to a mortgage contract dated 25 May 2009, Quanzhou Great mortgaged its land-use rights and building ownership right in respect of its land and premises located at Jiangnan Industrial Zone, Licheng District, Quanzhou City (
Purpose of guarantees/ amount guaranteed or secured/ expiry date To guarantee a facility comprising a term loan and an export trade receivable factoring facility not exceeding RMB11.0 million and expiring on 23 April 2010 granted by Huaxia Bank Co., Ltd, Fuzhou Branch () To guarantee an export trade receivable factoring facility not exceeding RMB6.0 million expiring on 25 December 2009 granted by China Construction Bank Co., Ltd., Quanzhou Licheng Sub-branch ( ) To guarantee an export trade receivable factoring facility not exceeding RMB4.0 million (or its US$ equivalent) expiring on 8 December 2009 granted by Bank of China, Quanzhou Branch ( ) To guarantee the loan of RMB7.7 million to Fujian Great expiring on 25 May 2010 granted by China Construction Bank Co., Ltd., Fujian Branch ( )(2) To guarantee the loan of RMB3.0 million to Fujian Great expiring on 25 May 2010 granted by Quanzhou City Commercial Bank ()
Facility utilised as at the Latest Practicable Date Term loan of RMB6.0 million and export trade receivable factoring of RMB4.7 million
Export trade receivable factoring of RMB4.4 million
Export trade receivable factoring of RMB3.8 million
RMB7.7 million
RMB3.0 million
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) in favour of China Construction Bank Co., Ltd., Fujian Branch (). This mortgage has a security limit of RMB12.133 million, which is higher than the loan amount. Please refer to the section entitled Properties and Fixed Assets of this Prospectus for further information on this mortgage provided by Quanzhou Great.
These guarantees and other collaterals were provided by each of the guarantors without any fees, interest or other benefits being paid by our Group and were not entered into on an arms length basis or on normal commercial terms. Subsequent to the Invitation and upon renewal of the loans, we intend to obtain the release and discharge of the guarantees from the respective banks and replace them with corporate guarantees provided by our Group and/or third-party guarantors. We do not expect the revised terms and conditions of the banking facilities following the discharge of the guarantees and the replacement by corporate guarantees provided by us and/or third-party guarantors, to have any material adverse impact on our Group. In the event that we are unable to procure the discharge of the guarantees or procure the replacement of the guarantors, our Executive Chairman and CEO, Weng Wenwei who does not receive any interest or other benefits from this transaction, has undertaken to continue to provide the guarantees for so long as they are required by the respective banks. In the event the relevant bank(s) do not consent to the provision of guarantee provided solely by our Executive Chairman and CEO, Weng Wenwei, our Directors are of the view that they are able to secure alternative banking facilities on terms no less favourable to those applicable to our current facilities. Mortgage by Yuanteng On 11 June 2009, Yuanteng and the Industrial Commercial Bank of China, Quanzhou Licheng Subbranch () (ICBC) entered into a Maximum Mortgage Contract ( ) pursuant to which Yuanteng mortgaged its land-use rights in respect of its land located at Quangang District, Shanyaoyanchang Industrial District () in favour of ICBC to secure banking facilities of up to RMB6.8 million to Fujian Great during the period from 11 June 2009 to 10 June 2010. The mortgage was provided by Yuanteng without any fees, interest or other benefits being paid by our Group and was not entered into on an arms length basis or on normal commercial terms. OTHER TRANSACTIONS ) Guarantee provided by Cai Xinghuo ( Cai Xinghuo is the brother-in-law of our Executive Chairman and CEO, Weng Wenwei and he is also the brother of our Executive Officer, Cai Ane. In April 2008, Cai Xinghuo provided a personal guarantee of up to RMB11.0 million to secure banking facilities granted by Huaxia Bank Co., Ltd, Fuzhou Branch () to Quanzhou Great. Please refer to the section entitled On-going Interested Person Transactions - Guarantees provided by our Executive Chairman and CEO, Weng Wenwei and others of this Prospectus for more information. This guarantee was provided by Cai Xinghuo without any fees, interest or other benefits being paid by our Group and were not entered into on an arms length basis or on normal commercial terms. Quanzhou Baichuan Fashion Industry Co., Ltd. ( (Baichuan) ) Baichuan is a company established on 17 May 2004 in the PRC and is primarily engaged in production and sale of woven fabric, woven ribbon and garments. Cai Xinghuo has been the legal representative and general manager of Baichuan since its establishment. Baichuan is wholly owned by Li Shumin who is a distant relative of Cai Ane. None of Weng Wenwei, Cai Ane or Weng Wenju has any interest, direct or indirect, in Baichuan. Although Baichuan falls outside the definition of an interested person as set out under the Listing Manual, we have nonetheless for purposes of full disclosure disclosed the transactions with Baichuan.
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Guarantees provided by Baichuan and Quanzhou City Licheng Dachuan Textile Factory ( ) (Dachuan) During the Relevant Period and up to the Latest Practicable Date, Baichuan and Dachuan provided guarantees to secure the banking facilities granted to Quanzhou Great for working capital purposes. Dachuan is a company established in the PRC in 1997. At the time of its establishment, it was wholly owned by our Executive Chairman and CEO, Weng Wenwei. Our Executive Chairman and CEO, Weng Wenwei transferred his entire shareholding in Dachuan to Cai Xinghuo in 2003. Dachuan was struck off in May 2008. The guarantees provided by Baichuan which are existing as at the Latest Practicable Date are set out in the above section entitled On-going Interested Person Transactions - Guarantees provided by our Executive Chairman and CEO, Weng Wenwei and others of this Prospectus. In addition to the above, Baichuan had provided the following guarantees: (a) the joint and several guarantee together with Quanzhou City Licheng Dachuan Textile Factory (), Fujian Great and our Executive Chairman and CEO, Weng Wenwei dated 29 June 2006 to secure bank loans of up to RMB6.0 million granted by the Bank of China, Quanzhou Branch () to Quanzhou Great. This guarantee has been fully discharged as at the Latest Practicable Date; and a guarantee dated 26 March 2008 to secure an export trade receivable factoring facility not exceeding RMB6.0 million granted by China Construction Bank, Quanzhou Licheng Sub-branch () to Fujian Great. This guarantee has been fully discharged as at the Latest Practicable Date.
(b)
These guarantees were provided by Baichuan without any fees, interest or other benefits being paid by our Group and were not entered into on an arms length basis or on normal commercial terms. Guarantee provided by our Group to Baichuan On 8 May 2007, Quanzhou Great provided a guarantee of up to RMB4.0 million to secure banking facilities granted by Quanzhou Commercial Bank, Kaiyuan Sub-branch () to Baichuan for working capital purposes. The guarantee has been discharged on 27 October 2008. The guarantee was provided by Quanzhou Great without any fees, interest or other benefits being paid by Baichuan and was not entered into on an arms length basis or on normal commercial terms. REVIEW PROCEDURES FOR INTERESTED PERSONS TRANSACTIONS All future transactions with interested parties shall comply with the requirements of the Listing Manual. As required by Rule 210(7) of the Listing Manual, we adopted a set of new Articles of Association which requires a Director to abstain from voting in any contract or arrangement in which he has a personal material interest. We shall conduct all future interested person transactions, if any, on an arms length basis and on normal commercial terms. The Audit Committee shall conduct regular and periodic reviews of the principal terms and conditions of any such transactions to ensure that they are on normal commercial terms. Whenever an Audit Committee member is interested in any interested party transaction, he shall abstain from reviewing and voting on that particular transaction. In addition, our Directors will ensure that all future business dealings exceeding S$50,000 in value between us and our interested parties will be on an arms length basis by imposing internal controls. Such internal controls include the following: (a) when purchasing items from or engaging the services of an interested party, to the extent that reasonably comparable goods or services are available and quotations thereon are practicable to obtain, our Directors shall take into account the prices and terms of at least two other comparative offers from third parties, contemporaneous in time. The purchase price or fee for services shall not be higher than the most competitive price or fee of the two comparative offers from third parties. 162

In determining the most competitive price or fee, all pertinent factors, including but not limited to quality, delivery time, standard of services, specification compliance, track record, experience and expertise, and where applicable, preferential rates, rebates or discounts accorded for bulk purchases will be taken into consideration; (b) when selling items or supplying services to an interested party, to the extent that successful sales of comparable goods or services have occurred and information thereon is practicable to obtain, our Directors shall take into account the prices and terms of at least two other successful sales to third parties, contemporaneous in time. The sale price shall not be lower than the lowest sale price of the other two successful sales to third parties; and should any future interested party transactions be on less preferential terms than as determined in (a) and (b) above, the Board of Directors must grant prior approval.
(c)
In the event that it is not possible for such quotations to be obtained, our Audit Committee, will determine whether the prices and terms offered by or to the interested persons are fair and reasonable and the terms of supply from or to the interested persons are made on normal commercial terms and are not prejudicial to the interests of our Company and our minority Shareholders. In addition, any interested person transaction of a value equal to or exceeding three per cent. of our Groups latest audited NTA must be approved by our Audit Committee prior to its entry and any interested person transaction of a value equal to or exceeding five per cent. of our Groups latest audited NTA is subject to the approval of Shareholders in general meeting prior to its entry. Designated persons of the respective companies are required to submit details of all interested person transactions entered into immediately to our Chief Financial Officer and Group Financial Controller, including the value of the transactions. As a minimum, a report is to be submitted every half-yearly. A nil return is expected if there is no interested person transaction for a previous half-year. For monitoring purposes, our Chief Financial Officer and Group Financial Controller will maintain a register of interested person transactions (the IPT Register). This IPT Register will be updated half-yearly based on submissions by the designated persons. It will record all interested person transactions which are entered into (including the basis on which they are entered into) and the approval or review by the Audit Committee. Our Audit Committee will review all such interested person transactions, if any, on a half-yearly basis through reporting by our Group Financial Controller to ensure that they are carried out on an arms length basis and in accordance with the procedures outlined above. It will take into account all relevant non-quantitative factors. In the event that a member of the Audit Committee is interested in any such interested person transaction, he will abstain from reviewing that particular transaction. Furthermore, if during these periodic reviews, the Audit Committee believes that the guidelines and procedures as stated above are not sufficient to ensure that interests of minority Shareholders are not prejudiced, we will adopt new guidelines and procedures. In addition, our Audit Committee will include the review of such interested person transactions as part of its standard procedures while examining the adequacy of our internal controls. Our Board will also ensure that all disclosure, approval and other requirements on interested person transactions, including those required by prevailing legislation, the Listing Manual and accounting standards, are complied with. In addition, such transactions will also be subject to Shareholders approval if deemed necessary by the Listing Manual. Under Chapter 9 of the Listing Manual, a listed company may seek a Shareholders mandate for recurrent transactions of revenue or trading nature or those necessary for its day-to-day operations such as supplies and materials, which may be carried out with the listed companys interested persons, but not for the purchase or sale of assets, undertakings or businesses. There is currently no general mandate from our Shareholders for recurrent interested person transactions of revenue or trading nature or those necessary for our day-to-day operations. In the event that such a general mandate is required in the future, we shall obtain it in accordance with the provisions of the Listing Manual.
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POTENTIAL CONFLICT OF INTERESTS

INTERESTS OF DIRECTORS, CONTROLLING SHAREHOLDER OR THEIR ASSOCIATES Save as disclosed herein and under the section entitled Interested Person Transactions during the Relevant Period and up to the Latest Practicable Date: (i) none of our Directors or Controlling Shareholder or their Associates has had any interest, direct or indirect, in any material transactions to which we were or are to be a party; none of our Directors or Controlling Shareholder or their Associates has any interest, direct or indirect, in any company carrying on the same business or carrying on a similar trade as us; and none of our Directors or Controlling Shareholder or their Associates has any interest, direct or indirect, in any enterprise or company that is our customer or supplier of goods or services.
(ii)
(iii)
The following summarises potential conflict of interests which may involve us and these parties and the undertakings which have been obtained from these parties in the interest of our Group: Shanghai Neiyuan Trade and Development Co., Ltd. ( ) (Shanghai Neiyuan) Shanghai Neiyuan is a PRC company and under its business license, it is able to engage in the sales of apparel, shoes and hats, knitted textile, general merchandise, gifts, cosmetics, sports articles, electronic products, communication equipment, construction material and hardware, conduct the consulting business (save for brokering) and corporate image planning (save for those business activities required to be administrative licensed). As at the Latest Practicable Date, our Executive Chairman and CEO, Weng Wenwei holds 70% of the equity interest in Shanghai Neiyuan, whilst the remaining 30% is held by Zhu Kui, an unrelated third party. Since its establishment, Shanghai Neiyuan has been a dormant company. Our Executive Chairman and CEO, Weng Wenwei has undertaken that he will dispose of his entire equity interest in Shanghai Neiyuan or to procure that Shanghai Neiyuan be struck off before the registration of the Prospectus with the Authority. On 30 June 2009, Mr Weng Wenwei entered into a share transfer agreement with an unrelated party Mr Li Jianjiang pursuant to which Mr Weng Wenwei disposed of his entire equity interest in Shanghai Neiyuan to Mr Li Jianjiang. Mr Weng is in the process of registering the share transfer with the relevant authorities and expect that completion of the share transfer will be by the end of September 2009. In the meantime, our Executive Chairman and CEO, Weng Wenwei has undertaken that: (i) he shall procure that Shanghai Neiyuan shall remain a dormant company and shall not be engaged in any business activities; and as long as Mr Weng Wenwei remains a Director and/or Substantial Shareholder of our Company, it shall not, and shall procure that its subsidiaries and associated companies (whether present or future) shall not whether by themselves, their servant or agent or any of them or jointly with any other person firm or company and whether directly or indirectly and whether for the account of them or any one of them or any other person firm or company and whether as shareholder, participator, partner, promoter, director, officer, agent, manager, employee or consultant of, in or to any other person, firm or company or otherwise howsoever: (a) (b) carry on business that is directly or indirectly in competition with the business of our Group; have any interest in or provide any financial assistance, technical support or business knowhow to any other person to carry on business or other activities that will directly or indirectly compete with our Group; use any company name, company logo, trade name, trade mark, patent or any other intellectual property right of our Group and its associated companies in connection with any business not belonging to any company in our Group;
(ii)
(c)
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(d) act in any way that will directly or indirectly tarnish or adversely affect the reputation of our Groups brands including the /GREAT brand; obtain or conspire to obtain any information which is proprietary or confidential to our Group or act in any way that will directly or indirectly adversely affect the business and operations of our Group; solicit, market or entice away, from our Group any of our Groups customers; induce or seek to induce any person who is currently an employee of any company in our Group to become employed, whether as employee, consultant or otherwise by it, its subsidiaries or its associated companies whilst such person is an employee of our Group and within one (1) year from the date of such persons cessation or termination of employment with our Group; and engage in any fund raising activities or enter into any merger and/or acquisition or joint venture transaction in competition with our Group.
(e)
(f) (g)
(h)
Yuanteng City Industry & Trade Development Co., Ltd. () (Yuanteng) Yuanteng is a PRC company and under its business licence, it is able to engage in the production and sale of plastic articles, hardware, dress and bags. As at the Latest Practicable Date, our Executive Chairman and CEO, Weng Wenwei owns the entire equity interest in Yuanteng. However, other than its ownership of certain land-use rights, Yuanteng has been a dormant company since its establishment. Notwithstanding the above, our Directors believe that any potential conflicts of interests in the future may be mitigated as Yuanteng has undertaken that, so long as Mr Weng Wenwei is the Director and/ or Substantial Shareholder of our Company, it shall not, and shall procure that its subsidiaries and associated companies (whether present or future) shall not whether by themselves, their servant or agent or any of them or jointly with any other person firm or company and whether directly or indirectly and whether for the account of them or any one of them or any other person firm or company and whether as shareholder, participator, partner, promoter, director, officer, agent, manager, employee or consultant of, in or to any other person, firm or company or otherwise howsoever: (i) (ii) carry on business that is directly or indirectly in competition with the business of our Group; have any interest in or provide any financial assistance, technical support or business know-how to any other person to carry on business or other activity that will directly or indirectly compete with our Group; use any company name, company logo, trade name, trade mark, patent or any other intellectual property right of our Group and its associated companies in connection with any business not belonging to any company in our Group; act in any way that will directly or indirectly tarnish or adversely affect the reputation of our Groups brands including the /GREAT brand; obtain or conspire to obtain any information which is proprietary or confidential to our Group or act in any way that will directly or indirectly adversely affect the business and operations of our Group; solicit, market or entice away, from our Group any of our Groups customers; induce or seek to induce any person who is currently an employee of any company in our Group to become employed, whether as employee, consultant or otherwise by it, its subsidiaries or its associated companies whilst such person is an employee of our Group and within one (1) year from the date of such persons cessation or termination of employment with our Group; and engage in any fund raising activities or enter into any merger and/or acquisition or joint venture transaction in competition with our Group.
(iii)
(iv)
(v)
(vi) (vii)
(viii)
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Non-compete Undertakings from our Executive Chairman and CEO, Weng Wenwei In his Service Agreement, our Executive Chairman and CEO, Weng Wenwei has undertaken as follows: (i) that he shall not and shall procure that his Associates shall not during his employment with our Company and within a period of one year upon his ceasing to be an executive of our Company within Singapore, the PRC or such other country in which our Company carries on business directly or indirectly, except with our Companys prior written consent: (a) either on his own account or for any other person directly or indirectly solicit, interfere with or endeavour to entice away from any company in our Group any person who to his knowledge is now or has been a client, customer or executive of, or in the habit of dealing with any company in our Group; and either alone or jointly with or as a manager, agent for, director or executive of any person, firm or company, directly or indirectly carry on or be engaged or concerned or interested in the business (the Relevant Business) undertaken or engaged by any company in our Group or in any business similar to or in competition with the Relevant Business; and
(b)
(ii)
that he shall not during his employment hereunder and at all times thereafter without limit in point in time, directly or indirectly, except with our Companys prior written consent: (a) use the name Great or or any name similar to that of any company in our Group or any colourable imitation thereof in connection with any business; and use any trade mark, patent or any other intellectual property right of any company in our Group in connection with any business not belonging to any company in our Group.
(b)
In addition, our Executive Chairman and CEO, Weng Wenwei has separately undertaken as follows: (i) that so long as he remains a Director and/or Substantial Shareholder of our Company that he shall not, and shall procure that his Associates (whether present or future) will not whether by themselves, their servant or agent or any of them or jointly with any other person firm or company and whether directly or indirectly and whether for the account of them or any one of them or any other person firm or company and whether as shareholder, participator, partner, promoter, director, officer, agent, manager, employee or consultant of, in or to any other person, firm or company or otherwise howsoever: (a) engage in the design and/or manufacture of undergarments, childrens and infants apparel and other products sold or manufactured by our Group; engage in the sale and/or distribution of undergarments and childrens and infants apparel that will be competing with our Groups products; engage in any development of any proprietary undergarment brand that will be competing with our Groups products; have any interest in or provide any financial assistance, technical support or business knowhow to any other person to carry on business or other activity that will directly or indirectly compete with our Group; subject to item (ii) (b) below and save for Xiamen Great Cultural and Media Co., Ltd.s ( )(1) use of its existing company name, namely, in connection with its business which is not directly or indirectly in competition with the business activities of our Group, use any company name, company logo, trade name, trademark, patent or any other intellectual property right of our Group and its associated companies in connection with any business not belonging to any company in our Group;
(b)
(c)
(d)
(e)
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(f) act in any way that will directly or indirectly tarnish or adversely affect the reputation of our Groups brands including the /GREAT brand; obtain or conspire to obtain any information which is proprietary or confidential to our Group or act in any way that will directly or indirectly adversely affect the business and operations of our Group; solicit, market or entice away, from our Group any of our Groups customers; induce or seek to induce any person who is an employee of our Company to become employed, whether as employee, consultant or otherwise, by him, or his Associates within one (1) year from the date of such persons cessation or termination of employment with our Group; and engage in any fund raising activities or enter into any merger and/or acquisition or joint venture transaction in competition with our Group.
(g)
(h) (i)
(j)
(ii)
that so long as he remains a Director and/or Substantial Shareholder of our Company, (a) he shall not sell, transfer, assign or otherwise dispose of any of his interest in all or any of his shares in the following enterprises, namely Xiamen Great Cultural and Media Co., Ltd. (), Quanzhou Chuancheng Culture Co., Ltd. ( ), and Quanzhou City Yuanteng Industry and Trade Development Co., Ltd. () and Shanghai Neiyuan Trade and Development Co., Ltd. ( ) without first making an offer in writing to sell such shares to our Group based on the valuation as determined by an independent valuer; he shall and shall procure that his Associates shall, when he or they come across any business opportunities related to our Groups business in the PRC, introduce such business opportunities exclusively to our Group for our Groups consideration. And he shall, as a Director of our Company, abstain from voting on any transaction which he is interested in; and he shall and shall procure that his Associates shall, upon our Groups request, cease the use of and GREAT or any name similar to that of our Group and its associated companies or any colourable imitation thereof in connection with any business.
(b)
(c)
Note: (1) The shareholders of Xiamen Great Culture and Media Co., Ltd. () (XGCM) are Mr Weng Wenwei holding 69% and Mr Wei Ye () holding 31% of the equity interest in XGCM. Weng Wenwei is the legal representative and director of XGCM. XGCM was carved out of Mr Weng Wenweis undertaking because its business scope which is in relation to the production and operation of radio and television programs, media and advertising, is not in competition with the Groups business although the name of XGCM contains the Chinese characters which is a trademark owned by the Group.
INTERESTS OF EXPERTS No expert is interested, directly or indirectly, in the promotion of, or in any property or assets which have, within the 3 years preceding the date of this Prospectus, been acquired or disposed of by or leased to our Company or our subsidiaries or are proposed to be acquired or disposed of by or leased to our Company or our subsidiaries. No expert is employed on a contingent basis by any company in our Group which has a material interest, whether direct or indirect, in our Shares or has a material economic interest, whether direct or indirect, in our Company, including an interest in the success of the Invitation.
167
CLEARANCE AND SETTLEMENT

CLEARANCE AND SETTLEMENT Upon listing and quotation on the SGX-ST, our Shares will be traded under the book-entry settlement system of the CDP, and all dealings in and transactions of our Shares through SGX-ST will be effected in accordance with the terms and conditions for the operation of securities accounts with the CDP, as amended from time to time. Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf of persons who maintain, either directly or through depository agents, securities accounts with CDP. Persons named as direct securities account holders and depository agents in the depository register maintained by the CDP, rather than CDP itself, will be treated, under our Articles and the Companies Act, as members of our Company in respect of the number of Shares credited to their respective securities accounts. Persons holding our Shares in securities account with CDP may withdraw the number of Shares they own from the book-entry settlement system in the form of physical share certificates. Such share certificates will, however, not be valid for delivery pursuant to trades transacted on SGX-ST, although they will be prima facie evidence of title and may be transferred in accordance with our Articles. A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal of more than 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement system and obtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as our Directors may decide, is payable to the share registrar for each share certificate issued and a stamp duty of S$10.00 is also payable where our Shares are withdrawn in the name of the person withdrawing our Shares or S$0.20 per S$100.00 or part thereof of the last-transacted price where it is withdrawn in the name of a third party. Persons holding physical share certificates who wish to trade on SGX-ST must deposit with CDP their share certificates together with the duly executed and stamped instruments of transfer in favour of CDP, and have their respective securities accounts credited with the number of Shares deposited before they can effect the desired trades. A fee of S$20.00 is payable upon the deposit of each instrument of transfer with CDP. Transactions in our Shares under the book-entry settlement system will be reflected by the sellers securities account being debited with the number of Shares sold and the buyers securities account being credited with the number of Shares acquired. No transfer of stamp duty is currently payable for our Shares that are settled on a book-entry basis. A Singapore clearing fee for trades in our Shares on the SGX-ST is payable at the rate of 0.05% of the transaction value subject to a maximum of S$200.00 per transaction. The clearing fee, instrument of transfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax at the prevailing rate of 7.0%. Dealings of our Shares will be carried out in Singapore dollars and will be effected for settlement on CDP on a scripless basis. Settlement of trades on a normal ready basis on the SGX-ST generally takes place on the third Market Day following the transaction date, and payment for the securities is generally settled on the following business day. CDP holds securities on behalf of investors in securities accounts. An investor may open a direct account with CDP or a sub-account with a CDP depository agent. The CDP depository agent may be a member company of the SGX-ST, bank, merchant bank or trust company.
168
GENERAL AND STATUTORY INFORMATION

1. INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS Save as disclosed below, none of our Directors, Executive Officers or Controlling Shareholder: (i) has, at any time during the last 10 years, had an application or a petition under any bankruptcy laws of any jurisdiction filed against him or against a partnership of which he was a partner at the time he was a partner or at any within 2 years from the date he ceased to be a partner; has, at any time during the last 10 years, had an application or a petition under any law of any jurisdiction filed against an entity (not being a partnership) of which he was a director or an equivalent person or key executive at the time when he was a director or an equivalent person or a key executive of that entity or at any time within 2 years from the date he ceased to be a director or an equivalent person or a key executive of that entity, for the winding up or dissolution of that entity or, where that entity is the trustee of a business trust, that business trust, on the ground of insolvency; has any unsatisfied judgement against him; has ever been convicted of any offence, in Singapore or elsewhere, involving fraud or dishonesty which is punishable with imprisonment, or has been the subject of any criminal proceedings (including any pending criminal proceedings of which he is aware) for such purpose; has ever been convicted of any offence, in Singapore or elsewhere, involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or has been the subject of any criminal proceedings (including any pending criminal proceedings of which he is aware) for such breach; has, at any time during the last 10 years, had judgement entered against him in any civil proceedings in Singapore or elsewhere involving a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere, or a finding of fraud, misrepresentation or dishonesty on his part, nor has he been the subject of any civil proceedings (including any pending civil proceedings of which he is aware) involving an allegation of fraud, misrepresentation or dishonesty on his part; has ever been convicted in Singapore or elsewhere of any offence in connection with the formation or management of any entity or business trust; has ever been disqualified from acting as a director or equivalent person of any entity (including the trustee of a business trust), or from taking part directly or indirectly in the management of any entity or business trust; has ever been the subject of any order, judgement or ruling of any court, tribunal or governmental body, permanently or temporarily enjoining him from engaging in any type of business practice or activity; has ever, to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, of the affairs of: (a) any corporation which has been investigated for a breach of any law or regulatory requirement governing corporations in Singapore or elsewhere; or any entity (not being a corporation) which has been investigated for a breach of any law or regulatory requirement governing such entities in Singapore or elsewhere, or any business trust which has been investigated for a breach of any law or regulatory requirement governing business trusts in Singapore or elsewhere; or
(ii)
(iii) (iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(b)
(c)
169

(d) any entity or business trust which has been investigated for a breach of any law or regulatory requirement that relates to the securities or futures industry in Singapore or elsewhere,
in connection with any matter occurring or arising during the period when he was so concerned with the corporation or partnership or entity or business trust; and (xi) has ever been the subject of any current or past investigation or disciplinary proceedings, or has been reprimanded or issued any warning, by the Authority or any other regulatory authority, exchange, professional body or government agency, whether in Singapore or elsewhere.
Ms Lee Kim Lian, Juliana has been the director of Hsing-Hua Aviation Technologies Pte Ltd. since October 2001. Hsing-Hua Aviation Technologies Pte Ltd. is underway to be wound up in Singapore pursuant to creditors request, although no application has yet been made as at the date of this Prospectus. 2. SHARE CAPITAL Save as disclosed below and under the sections entitled Restructuring Exercise, Share Capital and Vendors of this Prospectus, there were no changes in the issued and paid-up capital of our Company and our subsidiaries within the three years preceding the Latest Practicable Date.
Number of Shares Issue Price / Consideration Purpose of Issue Resultant Issued Share Capital
Date of Issue Our Company 29 February 2008 31 December 2008
2 9,998
S$1 for each Share HK$25 million (equivalent to S$4,720,900)
Incorporation Restructuring Exercise
S$2 S$4,720,902
Date of Contribution
Amount of Capital Contributed
Resultant Registered Capital
Purpose of Contribution
Fujian Great 16 October 2006 28 November 2006 4 December 2006 12 December 2006 11 June 2007 15 June 2007 19 June 2007 25 June 2007 26 June 2007 27 June 2007 2 August 2007 8 August 2007
HK$19,000.00 US$49,000.00 US$50,000.00 US$50,000.00 US$149,000.00 US$150,000.00 US$100,000.00 US$250,003.82 US$20,000.00 US$123,000.00 US$100,000.00 US$155,800.00
HK$43,107,255.59 HK$4,691,760.64 HK$5,080,461.29 HK$5,469,142.86 HK$6,633,475.46 HK$7,806,079.13 HK$8,587,879.03 HK$10,541,449.73 HK$12,103,974.09 HK$13,064,992.42 HK$13,847,861.38 HK$15,067,621.44 Resultant Issued Share Capital
Working capital Working capital Working capital Working capital Working capital Working capital Working capital Working capital Working capital Working capital Working capital Working capital
Date of Issue Great Worldwide 10 February 2009
Number of Shares
Issue Price / Consideration
Purpose of Issue
Authorised Share Capital
US$1 for each Share
Incorporation
US$1
US$50,000
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3. MEMORANDUM AND ARTICLES OF ASSOCIATION (i) Memorandum of Association The Memorandum of Association of our Company states, among others, that the liability of members of our Company is limited. (ii) Articles of Association An extract of the relevant provisions of our Articles of Association of our Company, providing, inter alia, for (i) a Directors power to vote on a proposal, arrangement or contract in which the Director is interested; (ii) the Directors power to vote on remuneration for himself or for any other director; (iii) borrowing powers exercisable by the Directors and variation thereof; (iv) retirement or non-retirement of Directors under an age limit requirement; (v) number of shares, if any, required for Directors qualification; (vi) the rights, preferences and restrictions attaching to each class of shares; (vii) any change in capital; (viii) any change in the respective rights of the various classes of shares; (ix) any time limit after which a dividend entitlement will lapse; and (x) any limitation on the right to own Shares, are set out in Appendix B of this Prospectus. The complete Articles of Association of our Company are available for inspection by Shareholders. See paragraph 11 of this section. 4. MATERIAL CONTRACTS The following contracts, not being contracts entered into in the ordinary course of business, to which our Company or any member of our Group is a party, for the period of two years before the date of lodgement of this Prospectus, and are or may be material: (i) Trademarks Transfer Agreement (/) dated 25 August 2008 and Supplemental Agreement of the Trademark Transfer Agreement (/ ) dated 1 February 2009 between Weng Wenwei and Fujian Great, pursuant to which Weng Wenwei shall transfer the applied and the registered trademarks to Fujian Great, the consideration of which is nil; Intellectual Property Licence and Transfer Agreement () dated 13 October 2008 among Weng Wenwei, Fujian Great and Quanzhou Great, pursuant to which Weng Wenwei shall at our Groups request, transfer to our Group certain patents, the consideration of which shall be at such minimum amount permitted under PRC laws and regulations and pending such transfer, our Group has been granted an exclusive license to use these patents at nil consideration; Trademarks Transfer and Exclusive Right to Use Agreement ( ) dated 13 October 2008 and the Supplemental Agreement of the Trademarks Transfer and Exclusive Right to Use Agreement () dated 27 March 2009 among Weng Wenwei, Fujian Great and Quanzhou Great, pursuant to which Weng Wenwei shall at our Group's request, transfer to our Group certain trademarks and/or trademark applications. The consideration for the transfer of such trademarks and/ or trademark applications shall be such minimum amount permitted under PRC laws and regulations; Fujian Great Share Transfer Agreement dated 7 October 2008 between our Company and HK Great, as amended by a side letter dated 9 November 2008, for the acquisition of the entire issued share capital of Fujian Great from HK Great, details of which are set out under the section entitled Restructuring Exercise of this Prospectus; Quanzhou Great Share Transfer Agreement dated 7 October 2008 between our Company and HK Great, as amended by a side letter dated 9 November 2008, for the acquisition of the entire issued share capital of Quanzhou Great from HK Great, details of which are set out under the section entitled Restructuring Exercise of this Prospectus; 171
(ii)
(iii)
(iv)
(v)

(vi) Subscription Agreement dated 31 December 2008 entered into amongst our Company, HK Great and G&W pursuant to which HK Great shall subscribe for 9,998 ordinary shares in our Company at an aggregate consideration of HK$25 million, agreed to be equivalent to S$4,720,900 and our Company shall issue such number of ordinary shares to G&W at HK Greats direction, details of which are set out under the section entitled Restructuring Exercise of this Prospectus; and Contract for the Grant of Land Use Rights for State-Owned Construction Land ( ) dated 11 March 2009, entered into between Fujian Great and the National Land and Resource Administration Bureau of Quanzhou City, Fujian Province, PRC ( ) pursuant to which Fujian Great shall acquire land-use rights for a period of 50 years to a plot of state-owned land located at Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province ( ) at a cost of RMB15,250,000.
(vii)
5.
LITIGATION None of the companies in our Group is engaged in any legal or arbitration proceedings, including those which are pending or known to be contemplated, which may have or which have had in the 12 months immediately preceding the date of lodgement of the prospectus, a material effect on our Groups financial position or profitability.
6.
FINANCIAL CONDITION AND OPERATIONS OF OUR GROUP Our Directors are not aware of any event which has occurred since 31 December 2008 (being the end of the period covered by the most recent audited financial statements of our Group included in the Prospectus) to the Latest Practicable Date which may have a material effect on the financial position and results of our Group.
7.
INDEPENDENT AUDITOR Details, including the name, address and professional qualifications (including membership in a professional body) of the Independent Auditor of our Company are as follows: Name, professional qualication and address Nexia TS Public Accounting Corporation Public Accountants and Certied Public Accountants 5 Shenton Way UIC Building #23-03 Singapore 068808 Director-in-charge / Professional Qualication Henry SK Tan / Bachelor of Accountancy (First Class Honours), National University of Singapore
Professional Body Institute of Certied Public Accountants of Singapore (ICPAS)
We currently have no intention of changing the Independent Auditor of our Company after the listing of our Company on the SGX-ST. 8. MISCELLANEOUS (i) All application monies received by our Company in respect of successful applications (including any excess application monies and successfully balloted applications that are subsequently rejected) will be placed in a separate non-interest bearing account with The Bank of East Asia, Limited as the Receiving Banker. There is no sharing arrangement between the Receiving Banker and our Company in respect of any interest or revenue or any other benefit in respect of the deployment of application monies in the inter-bank monies market, if any. In the ordinary course of business, the Receiving Banker will deploy these monies in the interbank money market. All profits derived from the deployment of such monies will accrue to the Receiving Banker. Any refund of the application monies to unsuccessful or partially successful applicants will be made without any interest or share of revenue or any benefit arising therefrom. 172

(ii) No property has been purchased or acquired or proposed to be purchased or acquired by our Company or our 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 in respect to which the contract for the purchase or acquisition whereof was entered into in the ordinary course of business of our Company or our subsidiaries, such contract not being made in contemplation of the Invitation nor the Invitation in consequence of the contract. Save as disclosed in this Prospectus, our Directors are not aware of any relevant material information including trading factors or risks not mentioned elsewhere in this Prospectus which is unlikely to be known or anticipated by the general public and which could materially affect the profits of our Company. 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 in respect of this Invitation. Save as disclosed in the sections entitled Risk Factors, Managements Discussion and Analysis of Results of Operations and Financial Condition, Prospects, Business Strategies and Future Plans of this Prospectus, the financial condition and operations of our Company are not likely to be affected by any of the following: (a) known trends or known demands, commitments, events or uncertainties that will result in or are reasonably likely to result in our Companys liquidity increasing or decreasing in any material way; material commitments for capital expenditure; unusual or infrequent events or transactions or any significant economic changes that materially affect the amount of reported income from operations; and known trends or uncertainties that have had or that we reasonably expect to have a material favourable or unfavourable impact on revenue or operating income.
(iii)
(iv)
(v)
(b) (c)
(d)
(vi)
No Shares shall be allotted and/or allocated on the basis of this Prospectus later than six months after the date of registration of this Prospectus by the Authority. As at the Latest Practicable Date, our business and profitability are not materially dependent on any industrial, commercial or financial contract (including a contract with a customer or supplier).
(vii)
9.
CONSENTS (i) The Independent Auditor has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion of the Independent Auditors Report on the Combined Financial Statements for Financial Years Ended 31 December 2006, 2007 and 2008 as set out in Appendix A of this Prospectus. Each of the Manager and the Underwriter has given and has not withdrawn its written consent to the issue of this Prospectus with the inclusion of its names and reference thereto in the form and context in which it appear in this Prospectus and to act in such capacity in relation to this Prospectus. The Legal Advisers to our Company on PRC Law has given and has not withdrawn its consent to the issue of this Prospectus with the inclusion of its opinion in sections entitled General Information on Our Group - Restructuring Exercise and Interested Person Transactions - Past Interested Person Transactions of this Prospectus in the form and context in which it is included and references to its name in the form and context in which it appears in this Prospectus and to act in such capacity in relation to this Prospectus. 173
(ii)
(iii)

(iv) Each of the Placement Agent, Solicitors to the Invitation and Legal Advisers to our Company on Singapore Law, Solicitors to the Manager, the Underwriter and the Placement Agent, the Share Registrar and Share Transfer Agent, the Receiving Banker and the Principal Bankers does not make or purport to make any statement in this Prospectus and is not aware of any statement in this Prospectus which purports to be based on a statement made by it and each of them makes no representation regarding any statement in this Prospectus and to the maximum extent permitted by law, expressly disclaim and take no responsibility for any statement or opinions in, or omission from, this Prospectus.
10.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS AND THE VENDORS This Prospectus has been seen and approved by the Directors and the Vendors, and they individually and collectively accept full responsibility for the accuracy of the information given in this Prospectus and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and the opinions expressed in this Prospectus are fair and accurate in all material respects as at the date of this Prospectus and that there are no material facts the omission of which would make any statement herein misleading, and that this Prospectus constitutes full and true disclosure of all material facts about the Invitation and our Group.
11.
DOCUMENTS FOR INSPECTION Copies of the following documents may be inspected at 8 Cross Street #11-00 PWC Building Singapore 048424 during normal business hours for a period of six months from the date of registration of this Prospectus: (i) (ii) the Memorandum and Articles of Association of our Company; the Independent Auditors Report on the Combined Financial Statements for the Financial Years Ended 31 December 2006, 2007 and 2008 as set out in Appendix A of this Prospectus; the material contracts referred to in Material Contracts in paragraph 4 above of the section entitled General and Statutory Information of this Prospectus; Letters of consent referred to in Consents in paragraph 9 above of the section entitled General and Statutory Information of this Prospectus; and the Service Agreement referred to in the section entitled Service Agreement of this Prospectus.
(iii)
(iv)
(v)
174
APPENDIX A INDEPENDENT AUDITORS REPORT AND COMBINED FINANCIAL STATEMENTS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008
GREAT GROUP HOLDINGS LIMITED STATEMENT BY DIRECTORS FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2006, 2007 AND 2008 In the opinion of the directors, (i) the combined financial statements set out on pages A-4 to A-44 are drawn up so as to present fairly, the state of affairs of the Group at 31 December 2006, 2007 and 2008, and of the results, changes in equity and cash flows of the Group for the financial years then ended; and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(ii)
The directors have, on the date of this statement, authorised these financial statements for issue.
On behalf of the directors
Weng Wenwei Director 16 September 2009
Weng Wenju Director
A-1
16 September 2009 The Board of Directors Great Group Holdings Limited 8 Cross Street #11-00 PWC Building Singapore 048424
Dear Sirs We have audited the accompanying combined financial statements of Great Group Holdings Limited (the Company) and its subsidiaries (collectively the Group) as set out on pages A-4 to A-44 comprising the combined balance sheets as at 31 December 2006, 2007 and 2008, and combined income statements, combined statements of changes in equity and combined cash flow statements for the financial years ended 31 December 2006, 2007 and 2008 and a summary of significant accounting policies and other explanatory notes. Managements Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Singapore Financial Reporting Standards. This responsibility includes: (a) devising and maintaining a system of internal accounting control sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair income statements and balance sheets and to maintain accountability of assets; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
(b) (c)
Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
A-2
Opinion In our opinion, the accompanying combined financial statements of the Group give a true and fair view of the state of affairs of the Group as at 31 December 2006, 2007 and 2008 and of the results, changes in equity and cash flows of the Group for the financial years ended 31 December 2006, 2007 and 2008 in accordance with the basis of preparation set out in Notes 3.2 and 4.4 to the combined financial statements and Singapore Financial Reporting Standards. Report on Other Legal and Regulatory Requirements This report has been prepared for inclusion in the Prospectus in connection with the initial public offering of the ordinary shares of the Company on the Singapore Exchange Securities Trading Limited.
Nexia TS Public Accounting Corporation Public Accountants and Certified Public Accountants Director-in-charge: Henry SK Tan (Appointed for the financial year ended 31 December 2008)
A-3
Great Group Holdings Limited and Its Subsidiaries Combined Income Statements For the financial years ended 31 December 2006, 2007 and 2008 2006 RMB000 146,363 (115,237) 31,126 7 948 2007 RMB000 262,286 (191,288) 70,998 (240) 2008 RMB000 400,835 (296,495) 104,340 2,393
Note Revenue Cost of sales Gross profit Other income/(loss) Expenses - Selling and distribution - Administrative - Other operating - Finance Profit before income tax Income tax expense Net profit 11 8 6
(3,734) (1,864) (1,524) (282) 24,670 (2,422) 22,248
(4,620) (3,523) (1,226) (691) 60,698 (4,235) 56,463
(8,044) (6,197) (3,203) (1,862) 87,427 (16,620) 70,807
Attributable to: Equity holders of the Company Earnings per share (cents per share) 12 22,248 11.12 56,463 28.23 70,807 35.40
The annexed notes form an integral part of and should be read in conjunction with this combined financial statements
A-4
Great Group Holdings Limited and Its Subsidiaries Combined Balance Sheets As at 31 December 2006, 2007 and 2008 2006 RMB000 2007 RMB000 2008 RMB000
Note ASSETS Current Assets Cash and cash equivalents Trade and other receivables Inventories Other current assets Derivative financial assets
13 14 15 16 17
6,387 58,813 6,816 473 72,489
8,966 78,777 27,715 3,044 314 118,816
33,135 131,097 34,005 3,089 201,326
Non-current Assets Property, plant and equipment Intangible assets Deposit for land-use rights
18 19
10,599 1,385 11,984
11,266 1,773 2,630 15,669 134,485
17,355 1,636 2,630 21,621 222,947
Total Assets
84,473
LIABILITIES Current Liabilities Trade and other payables Borrowings Derivative financial liabilities Current income tax liabilities Total Liabilities NET ASSETS
20 21 17
14,572 17,481 2,752 34,805 49,668
21,886 20,999 814 6,182 49,881 84,604
12,345 42,035 13,156 67,536 155,411
EQUITY Share capital Retained earnings TOTAL EQUITY
22
16,243 33,425 49,668
25,614 58,990 84,604
25,614 129,797 155,411
A-5
Great Group Holdings Limited and Its Subsidiaries Combined Statements of Changes in Equity For the financial years ended 31 December 2006, 2007 and 2008 Share Capital RMB000 14,650 22 1,593 16,243 22 23 9,371 25,614 25,614 Retained Earnings RMB000 11,177 22,248 33,425 56,463 (30,898) 58,990 70,807 129,797 Total Equity RMB000 25,827 22,248 1,593 49,668 56,463 9,371 (30,898) 84,604 70,807 155,411
Note As at 1 January 2006 Total recognised income Net profit Injection of additional share capital As at 31 December 2006 Total recognised income Net profit Injection of additional share capital Final dividend relating to 2006 paid As at 31 December 2007 Total recognised income Net profit As at 31 December 2008
A-6
Great Group Holdings Limited and Its Subsidiaries Combined Cash Flow Statements For the financial years ended 31 December 2006, 2007 and 2008 2006 RMB000 2007 RMB000 2008 RMB000
Note Cash flows from operating activities Net profit Adjustments for: - Income tax expense - Amortisation and depreciation - Unrealised fair value losses/(gains) from derivative financial instruments - Interest expense - Interest income
22,248
56,463
70,807
2,422 1,126 282 (253) 25,825
4,235 1,480 500 691 (168) 63,201 (19,964) (20,899) (2,571) 7,314 (770) 26,311 168 (691) (805)
16,620 1,772 (500) 1,862 (353) 90,208 (52,320) (6,290) (45) (9,541) 3,340 25,352 353 (1,862) (9,646)
Changes in working capital - Trade and other receivables - Inventories - Other current assets - Trade and other payables - Bills payables Cash (used in)/generated from operations Interest received Interest paid Income tax paid Net cash (used in)/provided by operating activities
(38,351) (2,111) 360 3,433 10,640 (204) 253 (282) (635)
(868)
24,983
14,197
A-7
Great Group Holdings Limited and Its Subsidiaries Combined Cash Flow Statements (continued) For the financial years ended 31 December 2006, 2007 and 2008 2006 RMB000 2007 RMB000 2008 RMB000
Note Cash flows from investing activities Purchases of property, plant and equipment Purchases of intangible assets Deposit for land-use rights Net cash used in investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from injection of additional share capital Increase in short-term bank deposits pledged Dividend paid Net cash provided by/(used in) financing activities
(2,354) (2,354)
(2,026) (509) (2,630) (5,165)
(7,683) (41) (7,724)
6,291 1,593 (4,349)
4,288 9,371 (688) (30,898)
17,696 (3,422)
3,535
(17,927)
14,274
Net increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year
313
1,891
20,747
1,175
1,488
3,379
13
1,488
3,379
24,126
A-8
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 1 Introduction The combined financial statements of Great Group Holdings Limited (the Company) and its subsidiaries (collectively, the Group) have been prepared for inclusion in the offering documents of Great Group Holdings Limited in connection with initial public offering (IPO) by the Company of 65,000,000 new ordinary shares. 2 Corporate Information The Company was incorporated in the Republic of Singapore on 29 February 2008 under the Singapore Companies Act as a private limited company under the name of Great Group Holdings Pte Ltd. The Company was incorporated for the purpose of acquiring the existing companies of the Group pursuant to the Group Restructuring Exercise (Note 3). On 22 June 2009, the name of the Company was changed to Great Group Holdings Limited in connection with the Companys conversion to a public company limited by shares. At the date of incorporation, the issued and paid-up capital was S$2 comprising two ordinary shares. The principal activities of the Company is investment holding. The registered office and business address is located at 8 Cross Street, #11-00, PWC Building, Singapore 048424. Principal activities of the subsidiaries are disclosed in Note 3.1. The principal place of business of the subsidiaries is located at Ruiming Building, Nanhuan Road, Licheng District, Quanzhou, Fujian Province, Peoples Republic of China (PRC). 3 Restructuring Exercise and Basis of Preparation 3.1 Restructuring Exercise The Restructuring Exercise comprised the following steps: (a) Incorporation of the Company The Company was incorporated on 29 February 2008 in the Republic of Singapore as an investment holding company with an initial issued and paid-up share capital of S$2 comprising two ordinary shares, all of which was issued and allotted to G&W Investment Management Co., Ltd. (G&W). G&W, an investment holding company incorporated in the British Virgin Island (BVI), is wholly-owned by Executive Director and CEO, Weng Wenwei. On 22 June 2009, the Company was converted into a public company and changed its name to Great Group Holdings Limited.
A-9
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 3 Restructuring Exercise and Basis of Preparation (continued) 3.1 Restructuring Exercise (continued) (b) Acquisition of Fujian Great Fashion Industry Co., Ltd (Fujian Great) Immediately prior to the Restructuring Exercise, Fujian Great was wholly owned by Great Holdings HK Limited (HK Great), a company incorporated in Hong Kong. HK Great is wholly-owned by the Executive Chairman and CEO, Weng Wenwei and his spouse in the proportion of 60 per cent and 40 per cent respectively. In order for the Company to acquire the entire share capital of Fujian Great from HK Great, the Company had on 7 October 2008 entered into a share transfer agreement with HK Great (the Fujian Great Share Transfer Agreement) to acquire the entire issued share capital of Fujian Great from HK Great for a purchase consideration of HK$15 million. The consideration of HK$15 million was arrived at based on the registered capital of Fujian Great as at the date of the Fujian Great Share Transfer Agreement. The net asset value (NAV) of Fujian Great at the time of the Fujian Great Share Transfer Agreement was RMB68.3 million (based on NAV as at 30 September 2008). Under the Fujian Great Share Transfer Agreement, the consideration for the aforesaid transfer was to be settled by cash. Pursuant to a side letter dated 9 November 2008 (the Side Letter), the payment of the consideration was deferred to 31 December 2008 at the request of the Company. The deferment of payment of consideration was requested by the Company as the Company was newly established as a holding company and therefore, required additional time for payment. The consideration for the acquisition of Fujian Great has been settled as at 31 December 2008 by way of a setoff as described in paragraph (d) of the section entitled Restructuring Exercise of this prospectus. (c) Acquisition of Quanzhou Great Garments Co., Ltd (Quanzhou Great) Immediately prior to the Restructuring Exercise, the entire equity interest of Quanzhou Great was held by HK Great. Pursuant to a share transfer agreement dated 7 October 2008 (the Quanzhou Great Share Transfer Agreement), the Company acquired the entire share capital in Quanzhou Great from HK Great for a consideration of HK$10 million. The consideration of HK$10 million was arrived at based on the registered capital of Quanzhou Great as at the date of the Quanzhou Great Share Transfer Agreement. The NAV of Quanzhou Great was RMB67.8 million as at 30 September 2008. Under the Quanzhou Great Share Transfer Agreement, the consideration for the aforesaid transfer was to be settled by cash. Pursuant to the Side Letter, the payment of the consideration was deferred to 31 December 2008 at the request of the Company. The deferment of payment of consideration was requested by the Company as the Company was newly established as a holding company and therefore, required additional time for payment. The consideration for the acquisition of Quanzhou Great has been settled as at 31 December 2008 by way of a set-off as described in paragraph (d) of the section entitled Restructuring Exercise of this prospectus. On 10 October 2008, the Company has obtained the approval from the Quanzhou City Licheng District Foreign Trade and Economic Cooperative Bureau in respect of the Acquisition. The Companys equity interest in both Fujian Great and Quanzhou Great has been registered with the Quanzhou Administrative Bureau for Industry and Commerce in accordance with the relevant PRC laws. Following completion of the abovesaid acquisitions, Fujian Great and Quanzhou Great became wholly-owned subsidiaries of the Company. A-10
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 3 Restructuring Exercise and Basis of Preparation (continued) 3.1 Restructuring Exercise (continued) (d) Settlement of the consideration for the acquisition of Fujian Great and Quanzhou Great On 31 December 2008, HK Great agreed to subscribe for 9,998 ordinary shares in the Company for an aggregate consideration of HK$25 million (Subscription Consideration), agreed to be equivalent to S$4,720,900. Under the terms of this subscription agreement, HK Great and the Company agreed that the Subscription Consideration shall be offset against the consideration for the Fujian Great Share Transfer Agreement and the Quanzhou Great Share Transfer Agreement. HK Great also directed the Company to issue the 9,998 ordinary shares to G&W. Group Structure Upon the completion of the Restructuring Exercise, the Company has the following subsidiaries:
Principal Place of Business/ Registered Address Linjiang Industrial Zone, Nanhuan Road, Quanzhou City, Fujian Province Linjiang Industrial Zone, Nanhuan Road, Licheng District, Quanzhou City Issued and Paid-up Capital/ Registered Capital HKD15,000,000 % Ownership Held by the Company 100%
Name of Company Fujian Great
Date and Place of Incorporation 27 May 2005
Principal Activities Producing garments, apparel products and weaving
Quanzhou Great
31 July 2000
Producing garments, weaving, ribbon, printing, shoes, hats and bags (exporting the commodity which is not related with the management of the export permit quota)
HKD10,000,000
100%
3.2
Basis of Preparation The Restructuring Exercise involved companies which are under common control since all the entities which took part in the Restructuring Exercise were controlled by the same ultimate shareholders before and immediately after the Restructuring Exercise. The objective of the combined financial statements is to show what the historical information might have been had the Combined Group as described in Note 3.1 above and after the Restructuring Exercise had been in place since 1 January 2006 under the pooling-of-interest method. Such manner of presentation reflects the economic substance of the combining companies, which were under common control throughout the financial years ended 31 December 2006, 2007 and 2008 presented, as a single economic enterprise, although the legal parentsubsidiary relationships were not established as at respective balance sheet dates. A-11
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 3 Restructuring Exercise and Basis of Preparation (continued) 3.2 Basis of Preparation (continued) The combined financial statements have been prepared for inclusion in the Prospectus in connection with the IPO of the ordinary shares of the Company. These combined financial statements comprise: (i) the audited combined income statements for the financial years ended 31 December 2006, 2007 and 2008; the audited combined balance sheets as at 31 December 2006, 2007 and 2008; the audited combined statements of changes in equity for the financial years ended 31 December 2006, 2007 and 2008; and the audited combined cash flow statements for the financial years ended 31 December 2006, 2007 and 2008.
(ii) (iii)
(iv)
Basis of Preparation of the Combined Financial Information The combined financial statements for the financial years ended 31 December 2006, 2007 and 2008 are based on the following: (i) the financial results of Combined Group for the financial years ended 31 December 2006, 2007 and 2008 as if the Group structure as of the date of registration of the Prospectus had been in place since 1 January 2006; the financial positions of the Combined Group as at 31 December 2006, 2007 and 2008 as if the Group structure as of the date of registration of the Prospectus had been in place since 1 January 2006; the changes in equity of the Combined Group for the financial years ended 31 December 2006, 2007 and 2008 as if the Group structure as of the date of registration of the Prospectus had been in place since 1 January 2006; and the cash flows of the Combined Group for the financial years ended 31 December 2006, 2007 and 2008 as if the Group structure as of the date of registration of the Prospectus had been in place since 1 January 2006.
(ii)
(iii)
(iv)
The accounting policies set out below have been applied consistently to all periods presented in these combined financial statements and in preparing an opening Singapore Financial Reporting Standards (FRS) balance sheet at 1 January 2006 based on FRS. The accounting policies have been applied consistently by the Combined Group.
A-12
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies 4.1 Statement of Compliance The combined financial statements of the Group are prepared in accordance with FRS including related Interpretations promulgated by the Accounting Standards Council (ASC) (formerly known as Singapore Council on Corporate Disclosure and Governance). The combined financial statements are prepared in accordance with FRS. The combined financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The combined financial statements are presented in Chinese Renminbi (RMB), unless otherwise stated. 4.2 Use of Estimates and Judgements The preparation of the combined financial statements in accordance with FRS requires the Companys management to exercise its judgement in the process of the Groups accounting policies. It also requires the use of certain critical accounting estimates and assumptions. Areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the combined financial statements, are disclosed in Note 5. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of judgements about carrying values of assets and liabilities and which are not readily apparent from other sources. Actual results may differ from these estimates. At the date of this report, the Directors of the Company have considered and anticipated that the adoption of FRS that were in issue but not effective will not have any material impact on the combined financial statements. The Group and the Company have adopted all the applicable new/revised FRS issued by the Accounting Standards Council (ASC) (formerly known as Singapore Council on Corporate Disclosure and Governance) that are relevant to its operations and effective for annual period beginning 1 January 2008. The adoption of these new/revised FRS has had no material effect on the combined financial statements for the current and prior financial years. 4.3 Changes in Accounting Policies The Group has early adopted FRS and Interpretations to FRS (INT FRS), which are effective for accounting periods beginning on or after 1 January 2008, issued by the ASC for the preparation of these combined financial statements of the Group since 1 January 2006. FRS 101, First-time Adoption of Financial Reporting Standards, have been applied in preparing these combined financial statements. The early adoption of FRS and INT FRS which are effective for periods beginning on or after 1 January 2008 did not result in any substantial changes to the Groups accounting policies nor any significant impact on these combined financial statements.
A-13
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.3 Changes in Accounting Policies (continued) FRS 108, Operating Segments, was early adopted by the Group in 2008. FRS 108 replaces FRS 14, Segment Reporting. The new standard requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in an increase in the number of reportable segments presented. In addition, the segments are reported in a manner that is more consistent with the internal reporting provided to the chief operating decision-maker. There has been no further impact on the measurement of the Groups assets and liabilities. Comparative for 2006, 2007 and 2008 have been restated. 4.4 Common Control Business Combination Outside the Scope of FRS 103 A business combination involving entities under common control is a business combination in which all the combining entities or businesses are ultimately controlled by the same party or parties both before and after the business combination, and that control is not transitory. The Restructuring Exercise described in Note 3.1 resulted in a business combination involving common control entities, and accordingly the accounting treatment is outside the scope of FRS 103 Business Combinations. For such common control business combinations, the merger accounting principles are used to include the assets, liabilities, results, equity changes and cash flows of the combining entities in the combined financial statements. In applying merger accounting, financial statement items of the combining entities or businesses for the reporting period in which the common control combination occurs, and for any comparative periods disclosed, are included in the combined financial statements of the combined entity as if the combination had occurred from the date when the combining entities or businesses first came under the control of the controlling party or parties. A single uniform set of accounting policies is adopted by the combined entity. Therefore, the combined entity recognises the assets, liabilities and equity of the combining entities or businesses at the carrying amounts in the combined financial statements of the controlling party or parties prior to the common control combination. The carrying amounts are included as if such combined entity applied a single uniform set of accounting policies to all periods presented. There is no recognition of any goodwill or excess of the acquirers interest in the net fair value of the acquirees identifiable assets, liabilities and contingent liabilities over cost at the time of the common control combination. The effects of all transactions between the combining entities or businesses, whether occurring before or after the combination, are eliminated in preparing the combined financial statements of the combined entity. Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group to the date on which that control ceases. In preparing the combined financial statements, intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.
A-14
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.5 Revenue Recognition Sales comprise the fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Groups activities. Sales are presented, net of value-added tax, rebates and discounts. The Group recognises revenue when the amount of revenue and related costs can be reliably measured, it is probable that economic benefits will flow to the entity and when the specific criteria for each of the Groups activities are met as follows: (a) Sale of goods Revenue from sale of goods is recognised when the Group has delivered the products to its customers, the customers have accepted the products and the recoverability of the related receivables is reasonably assured. (b) Interest income Interest income is recognised using effective interest method. 4.6 Property, Plant and Equipment (a) Measurement Property, plant and equipment are initially recognised at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. (b) Depreciation Depreciation is calculated using the straight-line method to allocate their depreciable amounts over their estimated useful lives as follows: Useful lives 10 years 20 years 5 years 5 years
Machinery and equipment Leasehold building Furniture & fitting and office equipment Motor vehicles
The residual values, estimated useful lives and depreciation method of property, plant and equipment are reviewed, and adjusted as appropriate, at each balance sheet date. The effects of any revision are recognised in the income statement when the changes arise. (c) Subsequent expenditure Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance expense is recognised in the income statement when incurred. A-15
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.6 Property, Plant and Equipment (continued) (d) Disposal On disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is recognised in the income statement. 4.7 Intangible Assets (a) Land-use rights Land-use rights is initially recognised at cost and is subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to the income statement using the straight-line method over 50 years, which is the shorter of the estimated useful lives and periods of contractual rights. The portion of the land-use rights to be amortised over the next 12 months is reflected as current assets. The amortisation expense is recognised in the combined income statements. (b) Acquired trademark and licenses Trademarks and licenses acquired are initially recognised at cost and are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to the income statement using the straight-line method over three years, which is the shorter of their estimated useful lives and periods of contractual rights. (c) Acquired computer software licenses Acquired computer software licenses are initially capitalised at cost which includes the purchase price (net of any discounts and rebates) and other directly attributable cost of preparing the asset for its intended use. Direct expenditure including employee costs, which enhances or extends the performance of computer software beyond its specifications and which can be reliably measured, is added to the original cost of the software. Costs associated with maintaining the computer software are recognised as an expense when incurred. Computer software licenses are subsequently carried at cost less accumulated amortisation and accumulated impairment losses. These costs are amortised to the income statement using the straight-line method over their estimated useful lives of five years. The amortisation period and amortisation method of intangible assets are reviewed at least at each balance sheet date. The effects of any revision are recognised in the income statement when the changes arise. 4.8 Borrowing Costs Borrowings costs are recognised in the income statement using the effective interest method.
A-16
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.9 Impairment of Non-financial Assets Intangible assets and property, plant and equipment are tested for impairment whenever there is any objective evidence or indication that these assets may be impaired. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs. If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the income statement. An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in the income statement. 4.10 Loans and Receivables Loans and receivables are non-derivative assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are presented as trade and other receivables and cash and cash equivalents in the combined balance sheets. These financial assets are initially recognised at fair value plus transaction cost and subsequently carried at amortised cost using the effective interest method. They are presented as current assets, except for those maturing later than 12 months after the balance sheet date which are presented as non-current assets. The Group assesses at each balance sheet date whether there is objective evidence that these financial assets are impaired and recognises an allowance for impairment when such evidence exists. Allowance for impairment is calculated as the difference between the carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. 4.11 Inventories Inventories are carried at the lower of cost and net realisable value. Cost is determined using the weighted average method. The cost of finished goods comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
A-17
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.12 Trade and Other Payables Trade and other payables are initially recognised at fair value, and subsequently carried at amortised cost using the effective interest method. 4.13 Borrowings Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date. Borrowings are initially recognised at fair value (net of transaction costs) and subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. 4.14 Income Taxes Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is recognised for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax arises from the initial recognition of an asset or liability that affects neither accounting nor taxable profit or loss at the time of the transaction. A deferred income tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilised. Deferred income tax is measured: (i) at the tax rates that are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date; and based on the tax consequence that will follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
(ii)
Current and deferred income taxes are recognised as income and expense in the income statement. 4.15 Employee Compensation Defined contribution plans Defined contributions plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities such as the Central Provident Fund, on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The Groups contributions are recognised as employee compensation expense when they are due.
A-18
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.16 Leases When the Company is the lessee: Leases of property, plant and equipment where the Company assumes substantially the risks and rewards of ownership are classified as finance leases. The leased assets and the corresponding lease liabilities (net of finance charges) under finance leases are recognised in the combined balance sheets as property, plant and equipment and borrowings respectively at the inception of the leases at the lower of the fair values of the leased assets and the present values of the minimum lease payments. Each lease payment is apportioned between the finance charge and the reduction of the outstanding lease liability. The finance charge is recognised in the income statement and allocated to each period during the lease term so as to achieve a constant periodic rate of interest on the remaining balance of the finance lease liability. Leases of property, plant and equipment where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place. 4.17 Provisions for Other Liabilities and Charges Provisions for other liabilities and charges are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating leases. 4.18 Currency Translation (a) Functional and presentation currency Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (functional currency). The financial statements are presented in Chinese Renminbi (RMB). (b) Transactions and balances Transactions in a currency other than the functional currency (foreign currency) are translated into the functional currency using the exchange rates at the dates of the transactions. Currency translation differences from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at the closing rates at the balance sheet date are recognised in the income statement.
A-19
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 4 Summary of Significant Accounting Policies (continued) 4.19 Share Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new equity instruments, other than for the acquisition of businesses, are taken to equity as a deduction, net of tax, from the proceeds. 4.20 Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Executive Chairman and Chief Executive Officer (CEO) who makes strategic decisions. 4.21 Derivative Financial Instruments A financial derivative contract is initially recognised at the fair value on the date the derivative contract is entered into and is subsequently re-measured at its fair value. Changes in fair value of financial derivative instruments are recognised in the income statement. The Group uses derivative financial instruments such as currency forward contracts to hedge its exposure to currency risk arising from sales denominated in United States dollar. Derivative financial instruments are classified as financial assets or liabilities at fair value through profit or loss and are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at fair value at each balance sheet date. The fair values of currency forward contracts are determined using actively quoted forward prices at the balance sheet date. 4.22 Dividends Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the shareholders. 4.23 Fair Value Estimation The carrying amounts of current assets and liabilities, carried at amortised cost, are assumed to approximate their fair values. The fair values of financial liabilities carried at amortised cost are estimated by discounting the future contractual cash flows at the current market interest rates that are available to the Group for similar financial liabilities. 4.24 Government Grants Government grants are recognised at their fair values where there is reasonable assurance that the grants will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income in the income statement over the periods necessary to match it on a systematic basis to the costs which it is intended to compensate. A-20
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 5 Critical Accounting Estimates, Assumptions and Judgements Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group is subject to the uncertainty caused by the world financial crisis. The world economy has experienced significant downward pressure and credit has become very tight. Significant judgement is required to determine the fair value and forecasts of business that may have impact on cashflow, collectability and realisability of assets. In making these judgements, the Group has relied on past experience and its view of the economy. Areas involving a higher degree of judgement or complexity, or areas where estimates and assumptions are significant to the financial statements are disclosed below. (a) Impairment of loans and receivables Management reviews its loans and receivables for objective evidence of impairment at least annually. Significant financial difficulties of the debtor, the probability that the debtor will enter bankruptcy, and default or significant delay in payments are considered objective evidence that a receivable is impaired. In determining this, management makes judgements as to whether there is observable date indicating that there has been a significant change in the payment ability of the debtor, or whether there have been significant changes with adverse effect in the market, economic or legal environment in which the debtor operates in. Where there is objective evidence of impairment, management makes judgements as to whether an impairment loss should be recognised in the income statement. (b) Net realisable value of inventories Net realisable value of inventories is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. These estimates are based on the current market condition and the historical experience of selling products of similar nature. It could change significantly as a result of competitor actions in response to severe industry cycles. Management will reassess the estimations at the balance sheet date. 6 Revenue 2006 RMB000 Contract manufacturing GRAT.UNIC Superman 144,007 2,356 146,363 2007 RMB000 242,406 19,880 262,286 2008 RMB000 351,101 48,730 1,004 400,835
A-21
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 7 Other Income/(Loss) 2006 RMB000 Gains from sales of raw materials Interest income Net fair value gains/(losses) on derivative financial instruments Reversal of impairment of trade receivables Government grants 595 253 100 948 8 Finance Expenses 2006 RMB000 Interest expense: - Bank borrowings - Trade receivables factoring 2007 RMB000 2008 RMB000 2007 RMB000 168 (500) 92 (240) 2008 RMB000 353 500 188 1,352 2,393
231 51 282
548 143 691
1,065 797 1,862
Expenses by Nature 2006 RMB000 Purchase of inventories Amortisation and depreciation Allowance for impairment of trade receivables Courier, freight, custom and port charges Employee compensation (Note 10) Entertainment and travelling Foreign exchange loss, net IPO related expenses Marketing, advertising and exhibition Rental expense on operating lease Stamp and other duties Utilities Other expenses Changes in inventories Total cost of sales, selling and distribution, administrative and other operating expenses 95,088 1,126 188 1,612 20,371 547 1,336 1,431 314 206 1,182 1,069 (2,111) 2007 RMB000 186,503 1,480 1,811 25,052 928 1,226 245 959 283 429 1,275 1,365 (20,899) 2008 RMB000 269,134 1,772 2,311 32,949 809 3,203 1,229 3,425 491 744 1,424 2,738 (6,290)
122,359 A-22
200,657
313,939
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 10 Employee Compensation 2006 RMB000 Salaries and wages Employers contribution to defined contribution plans Other short-term benefits 20,005 173 193 20,371 11 Income Taxes 2006 RMB000 Tax expense attributable to profit is made up of: - Current income tax - Under-provision of current income tax in prior financial years 2007 RMB000 2008 RMB000 2007 RMB000 24,349 369 334 25,052 2008 RMB000 31,997 571 381 32,949
2,422 2,422
4,235 4,235
16,471 149 16,620
All the PRC subsidiaries were incorporated as wholly-owned foreign enterprises. The subsidiaries are established in the Linjiang economic open zones and subject to state income tax rate of 24% and local tax rate of 3% for financial years 2006 and 2007 and uniform rate of 25% for financial year 2008. Based on the Income Tax Law of the PRC for Enterprises with Foreign Investments and Foreign Enterprises, the subsidiaries are entitled to full exemption from the income tax for the first two profitable years and a 50% reduction in the income tax for the next three years. The subsidiaries were also exempted from local tax rate of 3% for financial years 2006 and 2007. Quanzhou Great elected the financial year ended 2003 as the first profitable year for the purpose of determining the tax exemption period. In financial years 2006 to 2007, Quanzhou Great was taxed at 12% of state income tax. With effect from 1 January 2008, Quanzhou Great is taxed at the new tax regime of 25%. Fujian Great elected the financial year ended 2006 as the first profitable year for the purpose of determining the tax exemption period. Fujian Great was exempted from tax in financial years 2006 and 2007 and was taxed at 12.5% of state income tax from 1 January 2008. According to the New Income Tax Law, from 1 January 2008, the rate of enterprise income tax applicable to all resident enterprises, including foreign investments enterprises and domestic companies in China shall be at a uniform rate of 25%. Enterprises established prior to 16 March 2007 shall continue to be eligible for preferential tax treatment in accordance with the current prevailing tax laws and administrative regulations. However, under the State Council regulations, such enterprises will gradually become subject to the new tax regime over a 5-year transition period starting from 1 January 2008. A-23
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 11 Income Taxes (continued) The tax expense on profit differs from the amount that would arise using the PRCs statutory rate of income tax for Licheng District, Quanzhou, Fujian Province as follows: 2006 RMB000 Profit before income tax Tax calculated at income tax rate of 25% (2006 2007: 24%) Effects of: - Expenses not deductible for tax purposes - Tax incentive - Other Tax charge 12 Earnings per Share For illustrative purpose, the calculation of the basic earnings per share is based on the net profit attributable to equity holders of the Company for the financial years ended 31 December 2006, 2007 and 2008 and on 200,000,000 ordinary shares in issue as at the date of this report, representing the pre-invitational share capital. There were no diluted earnings per share for the financial years ended 31 December 2006, 2007 and 2008 as there were no potential ordinary shares outstanding. 13 Cash and Cash Equivalents 2006 RMB000 Cash at bank and on hand Short-term bank deposits 1,488 4,899 6,387 2007 RMB000 3,379 5,587 8,966 2008 RMB000 24,126 9,009 33,135 24,670 2007 RMB000 60,698 2008 RMB000 87,427
5,921 695 (4,035) (159) 2,422
14,568 146 (10,518) 39 4,235
21,857 1,183 (6,645) 76 16,471
For the purpose of presenting the combined cash flow statements, the combined cash and cash equivalents comprise the following: 2006 RMB000 Cash and bank balances (as above) Less: Short-term bank deposits pledged to banks Cash and cash equivalents in the cash flow statements A-24 6,387 (4,899) 1,488 2007 RMB000 8,966 (5,587) 3,379 2008 RMB000 33,135 (9,009) 24,126
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 13 Cash and Cash Equivalents (continued) Short-term bank deposits relate to bank balances that the Group has to maintain with the banks for obtaining short-term bank facilities for letters of credit relating to the purchase of raw materials of approximately RMB13,760,000 (2007: RMB10,420,000) (2006: RMB11,190,000) (Note 21). 14 Trade and Other Receivables 2006 RMB000 Trade receivables: - Non-related parties - Entity related by common shareholder 19,718 19,718 (188) 19,530 27,930 11,353 58,813 55,804 1,380 57,184 (188) 56,996 21,781 78,777 79,268 1,670 80,938 80,938 50,159 131,097 2007 RMB000 2008 RMB000
Less: Allowance for impairment Trade receivables net Non-trade amounts due from director Advances to suppliers
The Group has factored trade receivables with carrying amounts of approximately RMB22,275,000 (2007: RMB3,879,000) (2006: RMB2,191,000) to banks in exchange for cash during the financial year ended 31 December 2008. The transaction has been accounted for as collateralised borrowing as the banks have full recourse to the Group in the event of default by the debtors (Note 21). The non-trade amounts due from director are unsecured, interest-free and are repayable on demand. 15 Inventories 2006 RMB000 Raw materials Work-in-progress Finished goods 6,561 124 131 6,816 2007 RMB000 11,619 10,602 5,494 27,715 2008 RMB000 20,179 7,562 6,264 34,005
The cost of inventories recognised as an expense and included in cost of sales amounts to RMB262,844,000 (2007: RMB165,603,000) (2006: RMB92,977,000).
A-25
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 16 Other Current Assets 2006 RMB000 Refundable deposit Prepayments Deferred IPO costs 473 473 17 Derivative Financial Instruments 2006 RMB000 Derivative financial assets (Non-hedging instruments) - Currency forwards 2007 RMB000 2008 RMB000 2007 RMB000 1,000 1,254 790 3,044 2008 RMB000 1,449 1,640 3,089
314
Derivative financial liabilities (Non-hedging instruments) - Currency forwards
814
Derivative financial assets (Non-hedging instruments) - Currency forwards
17,114
Derivative financial liabilities (Non-hedging instruments) - Currency forwards Currency forwards
27,675
The Group enters into currency forwards to reduce the impact of changes in the exchange rate of highly probable forecast transactions denominated in foreign currency. While the currency forwards provide hedging effects as required by the Groups risk management policy, the derivatives do not meet the criteria for hedge accounting under the specific rules in FRS 39 Financial Instruments: Recognition and Measurement.
A-26
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 18 Property, Plant and Equipment
Machinery and Equipment RMB000 5,498 1,826 7,324 1,213 8,537 4,073 12,610 Furniture & Fitting and Office Equipment RMB000 720 122 842 279 1,121 195 1,316
Cost As at 1 January 2006 Additions As at 31 December 2006 Additions As at 31 December 2007 Additions As at 31 December 2008
Leasehold Building RMB000 4,131 42 4,173 4,173 4,173
Motor Vehicles RMB000 830 364 1,194 505 1,699 1,699
Construction in-progress RMB000 29 29 3,415 3,444
Total RMB000 11,179 2,354 13,533 2,026 15,559 7,683 23,242
Accumulated Depreciation As at 1 January 2006 Charge for the financial year As at 31 December 2006 Charge for the financial year As at 31 December 2007 Charge for the financial year As at 31 December 2008 Net Book Value 31 December 2006 31 December 2007 31 December 2008 902 577 1,479 718 2,197 938 3,135 512 187 699 188 887 188 1,075 138 144 282 170 452 197 649 284 190 474 283 757 271 1,028 1,836 1,098 2,934 1,359 4,293 1,594 5,887
5,845 6,340 9,475
3,474 3,286 3,098
560 669 667
720 942 671
29 3,444
10,599 11,266 17,355
Bank borrowings are secured by the leasehold building of the Group with carrying amounts of approximately RMB3,098,000 (2007: RMB3,286,000) (2006: RMB3,474,000) (Note 21). 19 Intangible Assets 2006 RMB000 Composition: Land-use rights Trademark and licenses Computer software licenses 1,385 1,385 2007 RMB000 1,357 316 100 1,773 2008 RMB000 1,326 186 124 1,636
A-27
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 19 Intangible Assets (continued) (a) Land-use rights 2006 RMB000 Beginning and end of financial year 1,462 2007 RMB000 1,462 2008 RMB000 1,462
Beginning of financial year Amortisation charge End of financial year Net book value
49 28 77 1,385
77 28 105 1,357
105 31 136 1,326
The land-use rights represent medium term land-use rights situated in the PRC. Amortisation is provided to write-off the land-use rights over a period of 50 years. Bank borrowings are secured by the land-use rights of the Group with carrying amounts of approximately RMB1,326,000 (2007: RMB1,357,000) (2006: RMB1,385,000) (Note 21). (b) Trademarks and licenses 2006 RMB000 Beginning of financial year Additions End of financial year 2007 RMB000 394 394 2008 RMB000 394 394
Beginning of financial year Amortisation charge End of financial year Net book value
78 78 316
78 130 208 186
A-28
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 19 Intangible Assets (continued) (c) Computer software licenses 2006 RMB000 Beginning of financial year Additions End of financial year 2007 RMB000 115 115 2008 RMB000 115 41 156
Beginning of financial year Amortisation charge End of financial year Net book value (d)
15 15 100
15 17 32 124
Amortisation expense included in the combined income statements is analysed as follows: 2006 RMB000 Cost of sales Administrative expenses Total 28 28 2007 RMB000 106 15 121 2008 RMB000 161 17 178
20
Trade and Other Payables 2006 RMB000 Trade payables Non-related parties Accrued operating expenses Advances from customers - Non-related parties - Entity related by common shareholder 8,100 1,234 1,047 3,846 4,893 345 14,572 2007 RMB000 11,955 3,991 1,040 1,040 3,309 1,591 21,886 2008 RMB000 3,677 5,112 1,947 1,947 517 1,092 12,345
Non-trade amounts due to director Other payables
The non-trade amounts due to director are unsecured, interest-free and are repayable on demand.
A-29
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 21 Borrowings 2006 RMB000 2007 RMB000 2008 RMB000
Bank borrowings Bills payables Trade receivables factoring Total borrowings
4,100 11,190 2,191 17,481
6,700 10,420 3,879 20,999
6,000 13,760 22,275 42,035
The exposure of the borrowings of the Group to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows: 2006 RMB000 6 months or less 17,481 2007 RMB000 20,999 2008 RMB000 42,035
Bank borrowings of the Group are secured over leasehold building (Note 18) and land-use rights (Note 19) of the Group and joint and several guarantee from the shareholder and its related parties. Bills payables of the Group are secured by certain short-term bank deposits of the Group (Note 13) and corporate guarantee. Trade receivables factoring of the Group are secured by certain trade receivables (Note 14) and joint and several guarantee from the shareholder and its related parties. 22 Share Capital As the Company officially took over the Group subsequent to 31 December 2008, the share capital in the combined balance sheets as at 31 December 2006, 2007 and 2008 represented the Groups share of paid-up capital of Quanzhou Great and Fujian Great, in which the equity holders of the Company held direct interest. The details of the share capital of Quanzhou Great and Fujian Great are as follows:
Quanzhou Great Registered share capital HKD000 As at 1 January 2006 Issued during the financial year As at 31 December 2006 Issued during the financial year As at 31 December 2007 and 2008 9,629 Registered share capital RMB000 10,594 Fujian Great Registered share capital HKD000 3,898 1,571 Registered share capital RMB000 4,056 1,593 Total share capital RMB000 14,650 1,593
9,629
10,594
5,469 9,598
5,649 9,371
16,243 9,371
9,629
10,594
15,067
15,020
25,614
A-30
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 23 Dividend 2006 RMB000 2007 RMB000 2008 RMB000
Final dividend paid in respect of financial year 2006
30,898
On 27 January 2007, Quanzhou Great and Fujian Great declared a final dividend of 236.35% and 39.01% of the share capital amounting to approximately RMB25,039,000 and RMB5,859,000 respectively. 24 Commitments (a) Capital commitments Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements are as follows: 2006 RMB000 Land-use rights Property, plant and equipment (b) Operating lease commitments where the Group is a lessee The Group leases land, factories and warehouses from non-related parties under noncancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future minimum lease payables under non-cancellable operating leases contracted at the balance sheet date but not recognised as liabilities, are as follows: 2006 RMB000 Not later than one year Between two to five years 452 452 2007 RMB000 437 875 1,312 2008 RMB000 437 437 874 2007 RMB000 2008 RMB000 12,620 2,900 15,520
A-31
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 25 Related Party Transactions In addition to the related party information disclosed elsewhere in the combined financial statements, the following related party transactions took place between the Group and related parties at terms agreed between the parties: (a) Sales, purchases and other expenses 2006 RMB000 Sales of goods to entity related by common shareholder Payments made on behalf of director Payments made on behalf by director (b) 2007 RMB000 2008 RMB000
15,534 (29,468) 5,340
17,180 (8,008) 39,247
10,239 (6,085) 3,293
Key management personnel compensation (representing compensation to directors and executive officers of the Group) is as follows: 2006 RMB000 (Audited) Wages and salaries Employers contribution to defined contribution plans 223 19 242 2007 RMB000 (Audited) 489 31 520 2008 RMB000 (Audited) 782 64 846
Included in the above is total compensation to directors of the Group amounting to RMB233,000 (2007: RMB217,000) (2006: RMB118,000). 26 Financial Risk Management The Groups activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk. The Groups overall risk management strategy seeks to minimise adverse effects from the unpredictability of financial markets on the Groups financial performance. The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management for the Group. This includes establishing policies such as authority levels, oversight responsibilities, risk identification and measurement and exposure limits. (a) Market risk (i) Currency risk The Group operates in the PRC with most of the transactions settled in RMB. However, the Group makes sales transactions with overseas customers in United States dollar (USD) and is therefore exposed to currency risk. To manage the currency risk, the Group enters into currency forwards with local banks.
A-32
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 26 Financial Risk Management (continued) (a) Market risk (continued) (i) Currency risk (continued) The Groups risk management policy is to hedge between 30% to 50% of highly probable forecast transactions (mainly export sales) in the next three to twelve months. The management monitors the requirement to enter into currency forward agreements based on the current exchange rates between USD and RMB by considering the quotation from local banks, past trends and anticipated fluctuation in the exchange rates and current PRC and world market conditions. The Groups currency exposure based on the information provided to key management is as follows: RMB RMB000 At 31 December 2006 Financial assets Cash and cash equivalents Trade and other receivables USD RMB000 Total RMB000
5,671 44,761 50,432
716 14,052 14,768
6,387 58,813 65,200
Financial liabilities Borrowings Other financial liabilities
15,290 14,027 29,317
2,191 725 2,916 11,852 USD RMB000
17,481 14,752 32,233 32,967 Total RMB000
Currency exposure
21,115 RMB RMB000
At 31 December 2007 Financial assets Cash and cash equivalents Trade and other receivables Other financial assets
7,527 30,106 3,630 41,263
1,439 48,671 314 50,424
8,966 78,777 3,944 91,687
17,120 21,640 38,760
3,879 1,060 4,939 45,485
20,999 22,700 43,699 47,988
Currency exposure
2,503
A-33
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 26 Financial Risk Management (continued) (a) (i) Market risk (continued) Currency risk (continued) RMB RMB000 At 31 December 2008 Financial assets Cash and cash equivalents Trade and other receivables Other financial assets USD RMB000 Other RMB000 Total RMB000
29,944 69,307 2,630 101,881
2,758 58,454 61,212
433 3,336 3,769
33,135 131,097 2,630 166,862
32,060 12,345 44,405
9,975 9,975 51,237
3,769
42,035 12,345 54,380 112,482
Currency exposure
57,476
If the USD change against the RMB by 6% (2007: 6%) (2006: 3%) with all other variables including tax rate being held constant, the effects arising from the net financial liability/asset position to the net profit will be as follows: 2006 RMB000 USD against RMB - weakened - strengthened (ii) Cash flow and fair value interest rate risks Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Groups interest rate risk mainly arises from bank borrowings at fixed interest rates. The Group manages its interest rate risk by keeping bank borrowings to the minimum required to sustain the operations of the Group. The reasonably possible change in the movement in the RMB interest rate with all other variables held constant, as assessed by management is 1% (2007: 1%) (2006: 1%). Management has assessed the impact to net profit as being not material. 2007 RMB000 2008 RMB000
356 (356)
2,729 (2,729)
3,074 (3,074)
A-34
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 26 Financial Risk Management (continued) (b) Credit risk Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining cash deposits where appropriate to mitigate credit risk. For other financial assets, the Group adopts the policy of dealing only with high credit quality counterparties. Credit exposure to an individual counterparty is restricted by credit limits and terms that are approved by the CEO. In assessing the credit limits and terms granted, the Group considers the nature of the contract, creditworthiness, payment history and the relationship with the customers. In order to manage the credit risk, the Group purchases insurance from reputable insurance company in PRC. As the Group does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the balance sheet. The Groups major classes of financial assets are trade receivables and advances to suppliers. The credit risk for trade receivables based on the information provided to key management is as follows: 2006 RMB000 By geographical areas Asia Europe North America South America Other 6,373 11,911 1,227 19 19,530 By types of customers Related parties Non-related parties: - Multi-national companies - Other companies 2007 RMB000 19,035 30,196 3,571 4,174 20 56,996 2008 RMB000 37,214 31,210 2,437 6,528 3,549 80,938
14,052 5,478 19,530
1,380 48,671 6,945 56,996
1,670 61,789 17,479 80,938
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 26 Financial Risk Management (continued) (b) Credit risk (continued) Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with a good collection track record with the Group. The Group has no trade receivables past due or impaired that were re-negotiated during the financial year. There is no other class of financial assets that is past due and/or impaired except for trade receivables. The age analysis of trade receivables past due but not impaired is as follows: 2006 RMB000 Past due 0 to 3 months Past due 3 to 6 months Past due over 6 months 3,578 1,317 1,929 6,824 2007 RMB000 1,991 5,791 1,140 8,922 2008 RMB000 5,036 337 180 5,553
The carrying amount of trade receivables individually determined to be impaired and the movements in the related allowance for impairment are as follows: 2006 RMB000 Gross amount Less: Allowance for impairment 188 (188) Beginning of financial year Allowance made Allowance written back End of financial year 188 188 2007 RMB000 188 (188) 188 188 2008 RMB000 188 (188)
The impaired trade receivables arise mainly from sales to distributors located in PRC which have suffered significant losses in their operations. Although certain goods sold to these distributors can be re-possessed, it is uncertain that the distributors are still in possession of those goods.
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 26 Financial Risk Management (continued) (c) Liquidity risk The table below analyses the maturity profile of the Groups financial liabilities based on contractual undiscounted cash flows. 2006 RMB000 Less than one year Trade and other payables Borrowings 2007 RMB000 2008 RMB000
14,572 17,481 32,053
21,886 20,999 42,885
12,345 42,035 54,380
The Group manages the liquidity risk by maintaining sufficient cash and cash equivalents to enable them to meet their normal operating commitments and having an adequate amount of committed credit facilities. (d) Capital risk The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payment, return capital to shareholders, issue new shares, buy back issued shares, obtain new borrowings or sell assets to reduce borrowings. Management monitors capital based on a gearing ratio. The Group targets to maintain gearing ratios within 20% to 45%. The gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as borrowings plus trade and other payables less cash and bank balances. Total capital is calculated as equity plus net debt. 2006 RMB000 Net debt Total equity Total capital Gearing ratio (%) 25,666 49,668 75,334 34 2007 RMB000 33,919 84,604 118,523 29 2008 RMB000 21,245 155,411 176,656 12
The Group has no externally imposed capital requirements for the financial years ended 31 December 2006, 2007 and 2008.
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 27 Operating Segmental Information Management determines the operating segments based on the reports reviewed and used by the Executive Chairman and CEO to make strategic decisions. The Executive Chairman and CEO considers the business from both geographical and business segment perspectives. The reportable operating segments derive their revenue primarily from contract manufacturing, GRAT.UNIC and Superman. Geographically, management considers the performance of the business of contract manufacturing, GRAT.UNIC and Superman in Asia, Europe, North America, South America and other countries. The segment information provided to the Executive Chairman and CEO for the reportable segments for the financial years ended 31 December 2006, 2007 and 2008 are as follows: For the financial year ended 31 December 2006 Contract Manufacturing RMB000 Revenue Segment result 144,007 30,432 GRAT.UNIC RMB000 2,356 694 Superman RMB000 Total RMB000 146,363 31,126
Other income Unallocated costs Finance expense Profit before income tax Income tax expense Net profit Other segment items Additions to: - Property, plant and equipment Depreciation Amortisation Impairment losses: - Trade receivables Segment assets Segment liabilities
948 (7,122) (282)
24,670 (2,422) 22,248
1,319 733 28 188 43,611 14,969
387 17 980 215
1,706 750 28 188 44,591 15,184
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 27 Operating Segmental Information (continued) For the financial year ended 31 December 2007 Contract Manufacturing RMB000 Revenue Segment result 242,406 64,525 GRAT.UNIC RMB000 19,880 6,473 Superman RMB000 Total RMB000 262,286 70,998
Other income Unallocated costs Finance expense Profit before income tax Income tax expense Net profit Other segment items Additions to: - Property, plant and equipment - Intangible assets Depreciation Amortisation Segment assets Segment liabilities
(240) (9,369) (691)
60,698 (4,235) 56,463
696 806 28 105,355 16,487
399 53 5,935 387
394 78 315
1,095 394 859 106 111,605 16,874
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 27 Operating Segmental Information (continued) For the financial year ended 31 December 2008 Contract Manufacturing RMB000 Revenue Segment result Other income Unallocated costs Finance expense Profit before income tax Income tax expense Net profit 351,101 87,309 GRAT.UNIC RMB000 48,730 16,700 Superman RMB000 1,004 331 Total RMB000 400,835 104,340 2,393 (17,444) (1,862)
87,427 (16,620) 70,807
Other segment items Additions to: - Property, plant and equipment Depreciation Amortisation Segment assets Segment liabilities
*
865 1,030 31 137,497 40,278
1,187 153 11,487
82 6 130 1,500
2,134 1,189 161 150,484 40,278
Certain property, plant and equipment and intangible assets are shared by the three business segments. Management is of the opinion that it is not practicable to separate the assets and its related cost for each business segment.
There are no inter-business segment sales. The revenue from external parties reported to the Executive Chairman and CEO is measured in a manner consistent with that in the combined income statements. The Executive Chairman and CEO assesses the performance of the operating segments based on segment results. Segment results represent the profit earned by each segment without allocation of selling and distribution expenses, administration expenses, other operating expenses, other income/loss, finance expenses and income tax expense. This is the measure reported to the Executive Chairman and CEO for the purposes of resource allocation and assessment of segment performance.
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 27 Operating Segmental Information (continued) Reportable segments assets are reconciled to total assets as follows: The amounts provided to the Executive Chairman and CEO with respect to total assets are measured in a manner consistent with that of the combined financial statements. For the purposes of monitoring segment performance and allocating resources between segments, the Executive Chairman and CEO monitors the property, plant and equipment, intangible assets, inventories and receivables attributable to each segment. The Group is principally engaged in the design, manufacture, distribution and sales of men and womens undergarments and children and infants apparel. Unallocated assets mainly relate to property, plant and equipment which cannot be identified specifically to each segment as these are common property, plant and equipment that are being used in the production of contract manufacturing, GRAT.UNIC and Superman, intangible assets, deposit for land-use rights, cash and cash equivalents, trade and other receivables, other current assets and derivative financial assets. The management is of the opinion that it is not practicable to separate these common assets for each segment. 2006 RMB000 Segment assets Unallocated - Cash and cash equivalents - Trade and other receivables - Other current assets - Derivative financial assets - Property, plant and equipment - Intangible assets - Deposit for land-use rights 44,591 6,387 31,742 473 1,280 84,473 2007 RMB000 111,605 8,966 5,967 3,044 314 1,859 100 2,630 134,485 2008 RMB000 150,484 33,135 26,524 3,089 6,961 124 2,630 222,947
A-41
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 27 Operating Segmental Information (continued) Reportable segments liabilities are reconciled to total liabilities as follows: The amounts provided to the Executive Chairman and CEO with respect to total liabilities are measured in a manner consistent with that of the combined financial statements. These liabilities are allocated based on the operations of the segments. Unallocated segment liabilities mainly relate to trade and other payables incurred for common materials and other services which cannot be identified specifically to each segment, borrowings, derivative financial liabilities and current income tax liabilities. The management is of the opinion that it is not practicable to separate these common liabilities for each segment. 2006 RMB000 Segment liabilities Unallocated - Trade and other payables - Borrowings - Derivative financial liabilities - Current income tax liabilities 15,184 1,579 15,290 2,752 34,805 Revenue from major products Revenues from external customers are derived mainly from the sale of contract manufacturing, GRAT.UNIC and Superman products. Breakdown of the revenue is as follows: 2006 RMB000 Contract manufacturing GRAT.UNIC Superman 144,007 2,356 2007 RMB000 242,406 19,880 2008 RMB000 351,101 48,730 1,004 2007 RMB000 16,874 8,891 17,120 814 6,182 49,881 2008 RMB000 40,278 6,802 7,300 13,156 67,536
146,363
262,286
400,835
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Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 27 Operating Segmental Information (continued) The Groups three business segments operate in five main geographical areas: 2006 RMB000 Asia Europe North America South America Other 99,300 42,458 3,810 795 146,363 All non-current assets of the Group are located in the PRC. 28 New or Revised Accounting Standards and Interpretations Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for the Groups accounting periods beginning on or after 1 January 2009 or later periods and which the Group has not early adopted. The Groups assessment of the impact of adopting those standards, amendments and interpretations that are relevant to the Group is set out below: (a) FRS 1(R) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009) The revised standard requires: All changes in equity arising from transactions with owner in their capacity as owners to be presented separately from components of comprehensive income; Components of comprehensive income not to be included in statement of changes in equity; Items of income and expenses and components of other comprehensive income to be presented either in a single income statement of comprehensive income with subtotals, or in two separate statements (a separate income statement followed by a statement of comprehensive income); Presentation of restated balance sheet as at the beginning of the comparative period when entities make restatements or reclassifications of comparative information. 2007 RMB000 122,575 109,299 19,325 10,467 620 262,286 2008 RMB000 184,555 151,787 18,728 35,502 10,263 400,835
A-43
Great Group Holdings Limited and Its Subsidiaries Notes to the Combined Financial Statements For the financial years ended 31 December 2006, 2007 and 2008 28 New or Revised Accounting Standards and Interpretations (continued) (a) FRS 1(R) Presentation of Financial Statements (effective for annual periods beginning on or after 1 January 2009) (continued) The revisions also include changes in the titles of some of the financial statements primary statements. The Group will apply the revised standard from 1 January 2009 and provide comparative information that conforms to the requirements of the revised standard. The key impact of the application of the revised standard is the presentation of an additional primary statement, that is, the statement of comprehensive income. (b) Revised FRS 23 Borrowing Costs (effective for annual periods beginning on or after 1 January 2009) The revised standard removes the option to recognise immediately as an expense borrowing costs that are attributable to qualifying assets, except for those borrowing costs on qualifying assets that are measured at fair value or inventories that are manufactured or produced in large quantities on a repetitive basis. The Group will apply the revised FRS 23 from 1 January 2009. The revised standard is not expected to have any impact to the Group. 29 Events Occurring after Balance Sheet Date On 10 February 2009, the Group incorporated a wholly-owned subsidiary in the BVI, Great Worldwide to spearhead its overseas sales. On 11 March 2009, the Group entered into an Agreement for Transfer of Land-Use Rights of Stateowned Land with the National Land and Resource Administration Bureau of Quanzhou City, Fujian Province, PRC for the acquisition of land-use rights for a plot of state-owned land located at the Jiangnan High-Tech Information Industrial Zone, Quanzhou City, Fujian Province for a period of 50 years at a cost of approximately RMB15,250,000. The acquisition of this land-use rights is still subject to other approvals and examinations of the relevant authorities in PRC and the completion of procedural formalities necessary to effect such acquisition. 30 Authorisation of Combined Financial Statements for Issue The combined financial statements of Great Group Holdings Limited for the financial years ended 31 December 2006, 2007 and 2008 were authorised for issue in accordance with a resolution of the Board of Directors on 16 September 2009.
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APPENDIX B SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION

The following provisions in our Articles of Association relate to restrictions on voting rights, remuneration and borrowing powers of our Directors, and to the variation of members rights, increase of capital, alteration of capital, dividends, the transfer of shares and voting rights of members: Restrictions on Voting Rights of Directors Article 105(1) A Director who is in any way whether directly or indirectly interested in a contract or proposed contract with our Company shall declare the nature of his interest at a meeting of the Directors in accordance with Section 156 of the Act. Article 105(2) A Director shall not vote in respect of any contract or proposed contract or arrangement with our Company in which he has directly or indirectly a personal material interest and if he shall do so his vote shall not be counted nor save as provided by Article 106 shall he be counted in the quorum present at the meeting. Article 105(3) A Director may hold any other office or place of profit under our Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine. No Director or intending Director shall, be disqualified by his office from contracting with our Company either with regard to his tenure of any such other office or place of profit or as a vendor, purchaser or otherwise. Subject to this Article 105, no such contract, and no contract or arrangement entered into by or on behalf of our Company, in which any Director is in any way interested shall be liable to be avoided nor shall any Director so contracting or being so interested be liable to account to our Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relationship thereby established. Article 106 Subject to Article 105(2) above, a Director notwithstanding his interest may be counted in the quorum present at any meeting whereat he or any other Director is appointed to hold any such office or place of profit under our Company or whereat the terms of any such appointment are arranged. No Share Qualification Article 100 A Director shall not be required to hold any share in our Company. Directors Remuneration Article 101(3) An alternate Director shall be entitled to contract and be interested in and benefit from contracts, arrangements or transactions to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to receive from our Company any remuneration in respect of his appointment as alternate Director except only such part (if any) of the remuneration otherwise payable to his appointor in which event any fee paid by our Company to an alternate Director shall be deducted from the fees of the Director appointing the alternate. Article 102(1) The Directors shall be entitled to receive by way of fees for their services as Directors in each year such sum as shall from time to time, subject to Section 169 of the Act, be determined by our Company by resolution passed at a General Meeting, the notice of which shall specify the proposals concerning the same. Such remuneration shall be divided amongst the Directors as they shall determine or failing agreement equally.
B-1

Article 102(2) The fees payable to the Directors shall not be increased except pursuant to a resolution passed at a General Meeting, where notice of the proposed increase has been given in the notice convening the Meeting. Article 102(3) The remuneration of a non-executive Director shall be by a fixed sum and not by a commission on or percentage of profits or turnover. The remuneration of an executive Director may not include a commission on or a percentage of turnover. Article 102(4) The provisions of this Article are without prejudice to the power of the Directors to appoint any of their number to be employee or agent of our Company at such remuneration and upon such terms as they think fit without the approval of the Members in General Meeting provided that such remuneration may include a commission on or percentage of profits but not a commission on or percentage of turnover. Article 102(5) Subject to the provisions of the Statutes, the Directors shall have power to pay and agree to pay pensions or other retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director for the time being holding any executive office and for the purpose of providing any such pensions or other benefits to contribute to any scheme of fund to pay premiums. Article 103 If any Director, being willing and having been called upon to do so, shall hold an executive office in our Company, shall render or perform extra or special services of any kind, including services on any committee established by the Directors, or shall travel or reside abroad for any business or purposes of our Company, he shall be entitled to receive such sum as the Directors may think fit for expenses, and also such remuneration as the Directors may think fit, either as a fixed sum or as provided in Article 102(3) (but not by way of commission on or percentage of turnover) and such remuneration may, as the Directors shall determine, be either in addition to or in substitution for any other remuneration he may be entitled to receive, and the same shall be charged as part of the ordinary working expenses of our Company. Article 105(3) A Director may hold any other office or place of profit under our Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine. No Director or intending Director shall be disqualified by his office from contracting with our Company either with regard to his tenure of any such other office or place of profit or as a vendor, purchaser or otherwise. Subject to this Article 105, no such contract and no contract or arrangement entered into by or on behalf of our Company in which any Director is in any way interested shall be liable to be avoided nor shall any Director so contracting or being so interested be liable to account to our Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relationship thereby established. Article 114 The Directors shall (subject to the provisions of any contract between the Managing Director or a person holding an equivalent position and our Company) from time to time fix the remuneration of the Managing Director (or a person holding an equivalent position) which may be by way of fixed salary, commission or participation in profits (but not turnover) of our Company or by any or all of these modes. Borrowing Powers of Directors Article 62 The Directors may, from time to time, exercise all the powers of our Company to raise or borrow or secure the payment of any sum or sums of moneys for the purposes of our Company.
B-2

Article 63 The Directors may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects as they think fit, and, in particular, by the issue of debentures or debenture stock of our Company, perpetual or otherwise, charged upon or by mortgage charge or lien of and on the undertaking of the whole or any part of the property of our Company (both present and future), including its uncalled capital for the time being, or by making, accepting, endorsing or executing any cheque, promissory note or bill of exchange. Variation of Members Rights Article 9 Subject to the provisions of the Statutes, all or any of the special rights or privileges for the time being attached to any preference share for the time being issued may from time to time (whether or not our Company is being wound up) be modified, affected, altered or abrogated and preference capital other than redeemable preference shares may be repaid if authorised by a Special Resolution passed by holders of such preference shares at a special meeting called for the purpose. To any such special meeting, all provisions of these Articles as to General Meetings of our Company shall mutatis mutandis apply but so that the necessary quorum shall be two persons at least holding or representing by proxy not less than one third of the issued preference shares concerned and that every holder of the preference shares concerned shall be entitled on a poll to one vote for every such share held by him and that any holder of the preference shares concerned present either in person or by proxy may demand a poll Provided Always that where the necessary majority for such a Special Resolution is not obtained at the meeting, consent in writing if obtained from holders of three-fourths of the preference shares concerned within two months of the meeting shall be as valid and effectual as a Special Resolution carried at the meeting. Article 61 Subject to the Statutes and save as provided by these Articles, all or any of the special rights or privileges attached to any class of shares in the capital of our Company for the time being issued may, at any time, as well before as during liquidation, be modified, affected, altered or abrogated, either with the consent in writing of the holders of not less than three-fourths of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting, but so that the quorum thereof shall be not less than two persons personally present and holding or representing by proxy one-third of issued shares of the class, and that any holder of shares of the class, present in person or by proxy, shall on a poll be entitled to one vote for each share of the class held or represented by him, and if at any adjourned meeting of such holders such quorum as aforesaid is not present, any two holders of shares of the class who are personally present shall be a quorum. The Directors shall comply with the provisions of Section 186 of the Act as to forwarding a copy of any such consent or Resolution to the Registrar of Companies. Increase of Capital Article 57 Our Company in General Meeting may from time to time by Ordinary Resolution, whether all the shares for the time being issued have been fully paid up or not, increase its capital by the creation and issue of new shares, such aggregate increase to be of such amount and to be divided into shares of such respective amounts as our Company by the resolution authorising such increase shall direct. Article 58(1) Unless otherwise determined by our Company in General Meeting or except as permitted under the Exchanges listing rules, all new shares shall, before issue, be offered to such persons who as at the date of the offer are entitled to receive notices from our Company of General Meetings, in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they are entitled.
B-3

Article 58(2) The offer shall be made by notice specifying the number of shares offered and limiting a time within which the offer, if not accepted, will be deemed to be declined, and, after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the Directors may dispose of those shares in such manner as they think most beneficial to our Company. The Directors may likewise so dispose of any new shares which (by reason of the ratio which the new shares bear to shares held by persons entitled to an offer of new shares) cannot, in the opinion of the Directors, be conveniently offered in the manner hereinbefore provided. Article 59 Subject to any directions that may be given in accordance with the powers contained in the Memorandum of Association or these Articles, any capital raised by creation of new shares shall be considered as part of the original capital and all new shares shall be subject to the same provisions with reference to the payment of calls, transfer, transmission, forfeiture, lien and otherwise as if it had been part of the original capital. Alteration of Capital Article 60(1) Our Company may by Ordinary Resolution: (a) (b) consolidate and divide all or any of its share capital; or cancel the number of shares which at the date of the passing of the resolution have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the number of the shares so cancelled; or sub-divide its existing shares or any of them. The resolution by which the subdivision is effected may determine that, as between the holders of the resulting shares, one or more of such shares may have any such preferred, deferred or other special rights or be subject to any restriction as our Company has power to attach to unissued or new shares; or subject to the Statutes, convert any class of shares into any other class of shares.
(c)
(d)
Article 60 (2) Our Company may by Special Resolution reduce its share capital in any manner and with and subject to any requirement authorised and consent required by law. Dividends Article 135 The profits of our Company, subject to any special rights relating thereto created or authorised to be created by these Articles and subject to the provisions of these Articles as to the reserve fund shall be divisible among the Members in proportion to the number of shares held by them respectively. Article 136 Our Company in General Meeting may by Ordinary Resolution declare a dividend on or in respect of any share to the Members according to their rights and interest in the profits and may fix the time for payment. No larger dividend shall be declared than is recommended by the Directors but our Company in General Meeting may declare a smaller dividend. Article 137 No dividend shall be payable except out of the profits of our Company. No dividend shall carry interest. Article 138 The declaration of the Directors as to the net profits of our Company shall be conclusive. B-4

Article 139 The Directors may from time to time pay to the Members such interim dividends as in their judgment the position of our Company justifies provided no such dividends shall be declared more than once in six months. Article 140 The Directors may retain any dividends on which our Company has a lien and may apply the same in or towards satisfaction of the debts, liabilities, or engagements in respect of which the lien exists. Article 141 A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer or the entry of the shares against the Depositors name in the Depository Register, as the case may be. Article 142 Any General Meeting declaring a dividend may direct payment of such dividend wholly or in part by the distribution of specific assets, and in particular of wholly or partly paid-up shares, debentures, or debenture stock of our Company, or wholly or partly paid-up shares, debentures, or debenture stock of any other company, or in any one or more of such ways, and the Directors shall give effect to such resolution; and where any difficulty arises in regard to the distribution, they may settle the same as they think expedient, and in particular may issue fractional certificates, and may fix the value for distribution of such specific assets, or any part thereof and may determine that cash payments shall be made to any Member upon the footing of the value so fixed, in order to adjust the rights of all parties, and may vest any such specific assets in trustees upon such trusts for the persons entitled to the dividends as may seem expedient to the Directors. Where requisite, a proper contract shall be filed in accordance with Section 63 of the Act, and the Directors may appoint any person to sign such contract on behalf of the persons entitled to the dividend, and such appointment shall be effective. Article 143 The Directors may retain the dividends payable upon shares in respect of which any person is under the provisions as to the transmissions of shares hereinbefore contained entitled to become a Member, or which any person under those provisions is entitled to transfer until such person shall become a Member in respect of such shares or shall duly transfer the same. Article 144 In case several persons are registered in the Register or entered in the Depository Register, as the case may be, as the holders of any share, any resolution of the Directors or our Company in General Meeting declaring a dividend on shares of any class may specify that the dividend shall be payable to such persons at the close of business on a particular date and thereupon the dividend shall be payable in accordance with their respective holdings so registered. Any person registered in the Register or in the Depository Register, as the case may be, as the holder or joint holder of any share or is entitled jointly to a share in consequence of the death or bankruptcy of the holder may give effectual receipts for dividends, bonuses, other moneys payable or properties distributable and payment on account of dividends on or in respect of such shares. Article 145 Notice of declaration of any dividend, whether interim or otherwise, may be given by advertisement. Article 146 Unless otherwise directed, any dividend may be paid by cheque, dividend warrant or Post Office Order, sent through the post to the registered address appearing in the Register or the Depository Register, as the case may be, of the Member or person entitled, or where two or more persons are registered in the Register or entered in the Depository Register, as the case may be, as joint holders or are entitled to the dividend as a result of the death or bankruptcy of the holder, to that one whose name shall stand first on the Register or the Depository Register, as the case may be, in respect thereof and every cheque, B-5

dividend warrant or Post Office Order so sent shall be made payable to the order of the person to whom it is sent or to any person and address as such Member(s) or persons(s) may direct in writing. Our Company shall not be responsible for the loss of any cheque, dividend warrant or Post Office Order, which shall be sent by post duly addressed to and at the sole risk of the Member or person for whom it is intended. Payment of the cheque, dividend warrant or Post Office Order by the bank upon which they are respectively drawn shall be a full and valid discharge to our Company. Notwithstanding the provisions of these Articles, payment by our Company to the Depository of any dividend payable to a Depositor shall also be a full and valid discharge of our Company from liability to the Depositor in respect of that payment to the extent of the payment made to the Depository. Article 147 The Depository will hold all dividend unclaimed for six years after having been declared and paid before release to the Directors, and the Directors may invest or otherwise make use of the unclaimed dividends for the benefit of our Company until claimed. Transfer of Shares Article 40 Save as provided by these Articles, there shall be no restriction on the transfer of fully paid shares (except where required by law or by the rules, bye-laws or listing rules of the Exchange). All transfers of shares may be effected by way of book-entry in the Depository Register Provided Always that the legal title in the shares may be transferred by the registered holders thereof by an instrument of transfer in the form approved by the Exchange. The instrument of transfer shall be left at the Office accompanied by the certificate of the shares to be transferred and such other evidence (if any) as the Directors may reasonably require to show the right of the transferor to make the transfer. The transferor shall be deemed to remain the registered holder of the shares until the name of the transferee is entered in the Register in respect thereof. Article 41 The instrument of transfer shall be signed both by the transferor and by the transferee, and it shall be witnessed Provided Always that an instrument of transfer in respect of which the transferee is the Depository shall be effective although not signed or witnessed by or on behalf of the Depository. Article 42 Shares of different classes shall not be comprised in the same instrument of transfer. Article 43 No share shall in any circumstances be transferred to any infant, bankrupt or person of unsound mind. Article 44(1) All instruments of transfer which are registered shall be retained by our Company, but any instrument of transfer which the Directors may refuse to register shall (except in any case of fraud) be returned to the party presenting the same. Article 44(2) Our Company shall be entitled to destroy: (a) all instruments of transfer which have been registered at any time after the expiration of six years from the date of registration thereof; all dividend mandates and notifications of change of address at any time after the expiration of six years from the date of recording thereof; and all share certificates which have been cancelled at any time after the expiration of six years from the date of the cancellation thereof.
(b)
(c)
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Article 44(3) It shall be conclusively presumed in favour of our Company that every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed was duly and properly made and that: (a) every instrument of transfer so destroyed was a valid and effective instrument duly and properly registered; every share certificate so destroyed was a valid and effective certificate duly and properly cancelled; and every other document hereinbefore mentioned so destroyed was a valid and effective document;
(b)
(c)
in accordance with the recorded particulars thereof in the books or records of our Company. Article 44(4) Articles 44(2) and 44(3) shall apply only to the destruction of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant. Article 44(5) Nothing contained in this Article 44 shall be construed as imposing upon our Company any liability in respect of the destruction of any such document earlier than as aforesaid or in any other circumstance which would not attach to our Company in the absence of this Article 44, and references in this Article 44 to the destruction of any document include references to the disposal thereof in any manner. Article 45 The Directors may decline to accept any instrument of transfer unless: (a) all or any part of the stamp duty (if any) payable on each share transfer and such fee not exceeding two Singapore Dollars for each transfer or such other sum as may from time to time be prescribed by the Exchange is paid to our Company; and such fee not exceeding two Singapore Dollars as the Directors may from time to time determine is paid to our Company in respect of the registration of any instrument of transfer, probate, letters of administration, certificate of marriage or death, power of attorney or any document relating to or affecting the title to the shares.
(b)
Article 46 The Directors may refuse to register the transfer of shares or allow the entry of or against a persons name in the Depository Register in respect of shares transferred or to be transferred to such person: (a) (b) which are not fully paid up; or on which our Company has a lien.
Article 47 If the Directors refuse to register any transfer of any share they shall, where required by the Statutes, serve on the transferor and transferee, within one month beginning with the day on which the transfer was lodged with our Company, a notice in writing informing each of them of such refusal and of the facts which are considered to justify the refusal. Article 48 The Register may be closed at such times and for such periods as the Directors may from time to time determine Provided Always that the Register shall not be closed for more than thirty days in any year Provided Always that our Company shall give prior notice of such closure as may be required to the Exchange stating the period and purpose or purposes for which such closure is to be made. B-7

Voting Rights of Members Article 10 Preference shareholders shall have the same rights as ordinary Members as regards the receiving of notices, reports and balance sheets and the attending of General Meetings of our Company. Preference shareholders shall also have the right to vote at any meeting convened for the purpose of reducing the capital of our Company or winding up or sanctioning the sale of the undertaking of our Company or where the proposal to be submitted to the meeting directly affects their rights and privileges or when the dividend on the preference shares is more than six months in arrears. Article 13(3) The joint holder first named in the Register or the Depository Register, as the case may be, shall as regards voting, proxy, service of notices and delivery of certificates and dividend warrants, be deemed to be the sole owner of such share. Article 80 At every General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands by the Members present in person and entitled to vote, unless before or upon the declaration of the result of the show of hands a poll be demanded by: (a) (b) (c) the Chairman of the meeting; or not less than two Members present in person or by proxy and entitled to vote; or a Member or Members present in person or by proxy, holding or representing, as the case may be: (i) not less than one-tenth of the total voting rights of all Members entitled to vote at the meeting; or shares in our Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.
(ii)
Article 81(1) If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the results of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. Article 81(2) No poll shall be demanded on the election of a Chairman of a meeting or on a question of adjournment. A poll demanded on any other question shall be taken at such time as the Chairman of the meeting directs. Article 82 Unless a poll be so demanded, a declaration by the Chairman of the meeting that a resolution has been carried, or has been carried by a particular majority, or lost, or not carried by a particular majority shall be conclusive, and an entry to that effect in the minute book of our Company shall be conclusive evidence thereof, without proof of the number or proportion of the votes recorded in favour of or against such resolution. Article 83(1) No objection shall be raised as to the admissibility of any vote except at the meeting or adjourned meeting, as the case may be, at which the vote objected to is or may be given, tendered or cast, and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the Chairman of the meeting whose decision shall be final and conclusive.
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Article 83(2) If any votes shall be counted which ought not to have been counted, or might have been rejected, the error shall not vitiate the result of the voting unless it be pointed out at the same meeting, or at any adjournment thereof, and unless in the opinion of the Chairman at the meeting or at any adjournment thereof as the case may be, it shall be of sufficient importance to vitiate the result of the voting. Article 84 In case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded, as the case may be, shall have a second or casting vote. Article 85(1) Subject to and without prejudice to any special privileges or restriction as to voting for the time being attached to any special class of shares for the time being forming part of the capital of our Company: (a) every Member who is present in person or by proxy shall have one vote on a show of hands, the Chairman to decide which proxy shall be entitled to vote where a Member is represented by two proxies; and every Member who is present in person or by proxy, in case of a poll, shall have one vote for every share which he holds or represents and upon which all calls or other sums due thereon to our Company have been paid.
(b)
Article 85(2) For the purpose of determining the number of votes which a Member, being a Depositor, or his proxy may cast at any General Meeting upon a poll being called, the number of shares held or represented shall, in relation to the shares of that Depositor, be the number of shares entered against his name in the Depository Register as at the Cut-Off Time as certified by the Depository to our Company. Article 86 In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders; and for this purpose seniority shall be determined by the order in which the names stand in the Register or the Depository Register, as the case may be. Article 87 Unless the Directors otherwise determine, no person other than a Member who shall have paid everything for the time being due from him and payable to our Company in respect of his shares, shall be entitled to be present or to vote on any question either personally or by proxy at any General Meeting. Article 88 A Member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll by the committee, curator bonis, or other person in the nature of committee or curator bonis appointed by that Court, and any such committee, curator bonis, or other person may, on a poll, vote by proxy. Article 89 On a poll, votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way. Article 90(1) A proxy need not be a Member.
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Article 90(2) A Member shall not be entitled to appoint more than two proxies to attend and vote at the same General Meeting Provided Always that where the Member is a Depositor, our Company shall be entitled and bound: (a) to reject any instrument of proxy lodged if the Depositor is not shown to have any shares entered against his name in the Depository Register as at the Cut-Off Time as certified by the Depository to our Company; to accept as the maximum number of votes which in aggregate the proxy or proxies appointed by the Depositor is or are able to cast on a poll a number which is the number of shares entered against the name of that Depositor in the Depository Register as at the Cut-Off Time as certified by the Depository to our Company, whether that number be greater or smaller than the number specified in any instrument of proxy executed by or on behalf of that Depositor; and in determining rights to vote and other matters in respect of a completed instrument of proxy submitted to it, to have regard to the instructions (if any) given by and the notes (if any) set out in the instrument of proxy.
(b)
(c)
Article 90(3) In any case where a form of proxy appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy. If no proportion is specified, our Company shall be entitled to treat the first named proxy as representing the entire number of shares entered against his name in the Depository Register and any second named proxy as an alternate to the first named or at our Companys option to treat the instrument of proxy as invalid. Article 91 Any corporation which is a Member may, by resolution of its directors or other governing body, authorise any person to act as its representative at any meetings of our Company or any class of Members of our Company, and such representative shall be entitled to exercise the same powers on behalf of the corporation which he represents as if he had been an individual shareholder. Article 92 An instrument appointing a proxy shall be in writing in any usual or common form (including the form approved from time to time by the Depository) or in any other form which the Directors may approve and: (1) (2) in the case of an individual shall be signed by the appointor or his attorney; in the case of a corporation shall be either given under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation.
Article 93 Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or the power of attorney or other authority, if any, or a duly certified copy thereof shall (failing previous registration with our Company) if required by law, be duly stamped and be deposited at the Office, not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid. Article 94 The signature on an instrument of proxy need not be witnessed.
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Article 95 A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal or revocation of the proxy or transfer of the share in respect of which the vote is given Provided Always that no notice in writing of the death or revocation or transfer shall have been received at the Office one hour at least before the time fixed for holding the meeting. Article 96 An instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll and to speak at the meeting. Article 97 Where the capital of our Company consists of shares of different monetary denominations, voting rights shall be prescribed in such manner that a unit of capital in each class, when reduced to a common denominator, shall carry the same voting power when such right is exercisable. Qualification of a Director Pursuant to Section 153 of the Companies Act, no person over the age of 70 years shall be appointed or act as a director of our Company or its subsidiaries unless shareholders have, by an ordinary resolution passed at a general meeting of our Company or its subsidiaries, appointed or re-appointed the person as a director of our Company or its subsidiaries to hold office, or has authorised him to continue in office as a director of our Company or its subsidiaries.
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APPENDIX C DESCRIPTION OF RELEVANT PRC LAWS AND REGULATIONS

1. PRC legal system The PRC legal system is based on the PRC Constitution () and is made up of written laws, regulations and directives. Decided court cases do not constitute binding precedents. The National Peoples Congress of the PRC (NPC) and the Standing Committee of the NPC are empowered by the PRC Constitution to exercise the legislative power of the state. The NPC has the power to amend the PRC Constitution and to enact and amend primary laws governing the state organs and civil and criminal matters. The Standing Committee of the NPC is empowered to interpret the PRC Constitution and laws, enact and amend laws other than those required to be enacted by the NPC and during the period of prorogation of the National Peoples Congress, the Standing Committee thereof may make partial amendments and supplements to the laws enacted by the National Peoples Congress, but such amendment or supplement shall not contravene the basic principles of the corresponding laws. The State Council of the PRC is the highest organ of state administration and has the power to enact administrative rules and regulations. Ministries and commissions under the State Council of the PRC are also vested with the power to issue orders, directives and regulations within the jurisdiction of their respective departments. Administrative rules, regulations, directives and orders promulgated by the State Council and its ministries and commissions must not be in conflict with the PRC Constitution or the national laws. At the regional level, the peoples congresses of provinces and municipalities and their standing committees may enact local rules and regulations and the peoples government may promulgate administrative rules and directives applicable to their own administrative area. These local laws and regulations may not be in conflict with the PRC Constitution, any national laws or any administrative rules and regulations promulgated by the State Council. The People's Congress of a province, autonomous region, or municipality directly under the Central Government and the Standing Committee thereof may, according to the specific circumstances and actual needs of the jurisdiction, enact local regulations provided that such enactment does not contravene any provision of the Constitution, laws or administrative regulations. The people's congresses and standing committees thereof of comparatively large cities may, according to the specific circumstances and actual needs of the jurisdiction, enact local regulations provided that they do not contravene any provision of the Constitution, laws, administrative regulations or local regulations in force in the province or autonomous region in whose jurisdiction the city is situated, for implementation upon approval by the standing committee of the People's Congress of the province or autonomous region. The standing committee of the People's Congress of the province or autonomous region shall review the legality of a regulation submitted to it for approval, and shall grant approval within four months if such regulation does not contravene any provision of the Constitution, laws, administrative regulations, and the local regulations in force in the province or autonomous region in which the city is situated. If, in the course of reviewing a local regulation submitted by a comparatively large city for approval, the standing committee of the People's Congress of the province or autonomous region finds it in contradiction with a local rule of the people's government of the province or autonomous region, it shall have authority to decide how to handle such situation. For the purposes of this Law, a comparatively large city refers to a city where the peoples government of the province or autonomous region is situated, or a city where a special economic zone is situated, or any other city so approved by the State Council.) The power to interpret laws is vested by the PRC Constitution in the Standing Committee of the NPC. According to the Resolution of the Standing Committee of the National Peoples Congress Providing an Improved Interpretation of the Law ( ) passed on 10 June 1981, In cases where the limits of articles of laws and decrees need to be further defined or additional stipulations need to be made, the Standing Committee of the National People's Congress shall provide interpretations or make stipulations by means of decrees. C-1

Interpretation of questions involving the specific application of laws and decrees in court trials shall be provided by the Supreme People's Court. Interpretation of questions involving the specific application of laws and decrees in the procuratorial work of the procuratorates shall be provided by the Supreme People's Procuratorate. If the interpretations provided by the Supreme People's Court and the Supreme People's Procuratorate are at variance with each other in principle, they shall be submitted to the Standing Committee of the National People's Congress for interpretation or decision. 2. Judicial system The Peoples Courts are the judicial organs of the PRC. Under the PRC Constitution and the Law of Organization of the Peoples Courts of the Peoples Republic of China ( ), the Peoples Courts comprise the Supreme Peoples Court, the local each level peoples courts, military courts and other special peoples courts. The local peoples courts are divided into three levels, namely, the basic peoples courts, intermediate peoples courts and higher peoples courts. The basic peoples courts are divided into civil, criminal and administrative divisions. The intermediate peoples courts have divisions similar to those of the basic peoples courts and, where the circumstances so warrant, may have other special divisions (such as intellectual property divisions). The judicial functions of peoples courts at lower levels are subject to supervision of peoples courts at higher levels. The peoples procuratorates also have the right to exercise legal supervision over the proceedings of peoples courts of the same and lower levels. The Supreme Peoples Court is the highest judicial organ of the PRC. It supervises the administration of justice by the peoples courts of all levels. The peoples courts adopt a two-tier final appeal system. A party may before the taking effect of a judgment or order appeal against the judgment or order of the first instance of a local peoples court to the peoples court at the next higher level. Judgments or orders of the second instance of the same level and at the next higher level are final and binding. Judgments or orders of the first instance of the Supreme Peoples Court are also final and binding if no appeals are made before they take effect. If, however, the Supreme Peoples Court or a peoples court at a higher level finds an error in a final and binding judgment which has taken effect in any peoples court at a lower level, or the presiding judge of a peoples court finds an error in a final and binding judgment which has taken effect in the court over which he presides, a retrial of the case may be conducted according to the judicial supervision procedures. The PRC civil procedures are governed by the Civil Procedure Law of the Peoples Republic of China (, the Civil Procedure Law) adopted on 9 April 1991 and amended on 28 October 2007. The Civil Procedure Law contains regulations on the institution of a civil action, the jurisdiction of the peoples courts, the procedures in conducting a civil action, trial procedures and procedures for the enforcement of a civil judgment or order. All parties to a civil action conducted within the territory of the PRC must comply with the Civil Procedure Law. A civil case is generally heard by a court located in the defendants place of domicile. The jurisdiction may also be selected by express agreement by the parties to a contract provided that the jurisdiction of the peoples court selected is the place where the defendant has his domicile, where the contract is performed, where the contract is signed, where the plaintiff has his domicile or where the object of the action is located to have jurisdiction over the case, provided that the provisions of this Law regarding jurisdiction by level and exclusive jurisdiction shall not be violated. A foreign national or foreign enterprise is accorded the same litigation rights and obligations as a citizen or legal person of the PRC. But If the courts of a foreign country impose restrictions on the civil litigation rights of the citizens, legal persons and other organizations of the PRC, the people's courts of the PRC shall follow the principle of reciprocity regarding the civil litigation rights of the citizens, enterprises and organizations of that foreign country.If any party to a civil action refuses to comply with a judgment or order made by a peoples court or an award made by an arbitration body in the PRC, the aggrieved party may apply to the peoples court to enforce the judgment, order or award. There are time limits on the right to apply for such enforcement. Where at least one of the parties to the dispute is an individual, the time limit is one year. If both parties to the dispute are legal persons or other entities, the time limit is six months.
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A party seeking to enforce a judgment or order of a peoples court against a party who or whose property is not within the PRC may apply to a foreign court with jurisdiction over the case for recognition and enforcement of such judgment or order. A foreign judgment or ruling may also be recognised and enforced according to PRC enforcement procedures by the peoples courts in accordance with the principle of reciprocity or if there exists an international or bilateral treaty with or acceded to by the foreign country that provides for such recognition and enforcement, unless the peoples court considers that the recognition or enforcement of the judgment or ruling will violate fundamental legal principles of the PRC or its sovereignty, security or social or public interest. 3. Arbitration and enforcement of arbitral awards The Arbitration Law of the PRC (), the Arbitration Law) was promulgated by the Standing Committee of the NPC on 31 August 1994 and came into effect on 1 September 1995. It is applicable to, among other matters, trade disputes involving foreign parties where the parties have entered into a written agreement to refer the matter to arbitration before an arbitration committee constituted in accordance with the Arbitration Law. Under the Arbitration Law, an arbitration committee may, before the promulgation by the PRC Arbitration Association of arbitration regulations, formulate interim arbitration rules in accordance with the Arbitration Law and the PRC Civil Procedure Law. Where the parties have by an agreement provided arbitration as a method for dispute resolution, the parties are not permitted to institute legal proceedings in a peoples court. Under the Arbitration Law, an arbitral award is final and binding on the parties and if a party fails to comply with an award, the other party to the award may apply to the peoples court for enforcement. A peoples court may refuse to enforce an arbitral award made by an arbitration committee if there were mistakes, an absence of material evidence or irregularities over the arbitration proceedings, or the jurisdiction or constitution of the arbitration committee. A party seeking to enforce an arbitral award of a foreign affairs arbitration body of the PRC against a party who or whose property is not within the PRC may apply to a foreign court with jurisdiction over the case for enforcement. Similarly, an arbitral award made by a foreign arbitration body may be recognised and enforced by the PRC courts in accordance with the principles of reciprocity or any international treaty concluded or acceded to by the PRC. In respect of contractual and non-contractual commercial-law-related disputes which are recognised as such for the purposes of PRC law, the PRC has acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Award (the New York Convention) adopted on 10 June 1958 pursuant to a resolution of the Standing Committee of the NPC passed on 2 December 1986. The New York Convention provides that all arbitral awards made by a state which is a party to the New York Convention shall be recognised and enforced by other parties to the New York Convention subject to their right to refuse enforcement under certain circumstances including where the enforcement of the arbitral award is against the public policy of the state to which the application for enforcement is made. It was declared by the Standing Committee of the NPC at the time of the accession of the PRC that (1) the PRC would only recognise and enforce foreign arbitral awards on the principle of reciprocity; and (2) the PRC would only apply the New York Convention in disputes considered under PRC laws to be arising from contractual and non-contractual mercantile legal relations. 4. Foreign exchange control Major reforms have been introduced on the foreign exchange control system of the PRC since 1993. The Peoples Bank of China (PBOC), with the authorisation of the State Council, issued on 28 December 1993 the Notice on the Further Reform of the Foreign Exchange Control System () and on 26 March 1994 the Provisional Regulations on the Settlement, Sale and Payment of Foreign Exchange () which came into effect on 1 April 1994 respectively. On 29 January 1996, the State Council promulgated the PRC Foreign Exchange Administration Regulations () which took effect on 1 April 1996 and which were amended on 14 January 1997 and 1 August 2008. On 20 June 1996, the PBOC issued the C-3

Administration Regulations on the Settlement, Sale and Payment of Foreign Exchange ( ), which took effect on 1 July 1996 and at the same time the Provisional Regulations on the Settlement, Sale and Payment of Foreign Exchange ( ) was nullified. On 25 October 1998, the PBOC and the State Administration for Foreign Exchange (SAFR) issued a Joint Announcement on Abolishment of Foreign Exchange Swap Business which stated that from 1 December 1998, all foreign exchange transactions for foreign investment enterprises (the FIEs) may only be conducted through authorised banks. These regulations contain detailed provisions regulating the holding, sale and purchase of foreign exchange by individuals, enterprises, economic bodies and social organizations in the PRC. On 21 July 2005, the Public Announcement of the Peoples Bank of China on Reforming the RMB Exchange Rate Regime (, the Announcement) was promulgated by the PBOC. In accordance with the Announcement, the PRC government has reformed the RMB exchange rate regime into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies, giving more flexibility as compared with the former system in which the RMB was pegged to the US dollar. Under such reformed system, the PBOC announces the closing price of a foreign currency traded against the RMB in the inter-bank foreign exchange market after the closing of the market on each working day, and will make it the central parity for trading against the RMB on the following working day. PRC banks licensed to engage in foreign exchange transactions use the closing price announced by the PBOC as a basis and decide a rate of their own to enter into foreign exchange sale and purchase transactions with customers, such rate shall be within a specified floating band around the central parity which may be adjusted by the PBOC from time to time according to the economic and financial condition in the PRC. In general, all organisations and individuals within the PRC, including FIEs, are entitled to keep their foreign exchange earnings aboard and/or remit such earnings to the PRC in accordance with the Amendments on PRC Foreign Exchange Administration Regulations dated 1 August 2008. At present, control on the purchase of foreign exchange is being relaxed. Enterprises which require foreign exchange for their current activities such as trading activities and payment of staff remuneration may purchase foreign exchange from designated banks, subject to the production of relevant supporting documents without the need for any prior approvals of the SAFE. In addition, where an enterprise requires any foreign exchange for the payment of dividends that are payable in foreign currencies under applicable regulations, such as the distribution of profits by a foreign investment enterprise to its foreign investment party, then, subject to the due payment of tax on such dividends the amount required may be withdrawn from funds in foreign exchange accounts maintained with designated banks, and where the amount of the funds in foreign exchange is insufficient, the enterprise may purchase additional foreign exchange from designated banks upon the presentation of the resolutions of the board of directors on the profit distribution plan of that enterprise. Despite the relaxation of foreign exchange control over current account transaction, the approval of the foreign exchange administration authority is still required before a PRC enterprise may borrow a loan in foreign currency or provide any foreign exchange guarantee or make any investment outside of the PRC or to enter into any other capital account transaction involving the purchase of foreign exchange. When conducting actual foreign exchange transactions, the designated banks may, based on the exchange rate published by the PBOC and subject to certain limits, freely determine the applicable exchange rate. The China Foreign Exchange Trading Centre (CFETC) was formally established and came into operation on 18 April 1994. CFETC has set up a computerised network with sub-centres in several major cities, thereby forming an inter-bank market in which designated PRC banks can trade in foreign exchange and settle their foreign currency obligations. Prior to 1 December 1998, enterprises with foreign investment may at their own choice enter into exchange transactions C-4

through Swap Centre or through designated PRC banks. From 1 December 1998 onwards, exchange transactions will have to be conducted through designated banks. Swap Centres became restricted to conducting foreign exchange transactions between authorised banks and inter-bank lending between PRC banks. 5. Taxation The applicable income tax laws, regulations, notices and decisions (collectively referred to as Applicable Foreign Enterprises Tax Law) related to FIEs and their investors include the follows: (1) Enterprise Income Tax Law of the PRC () promulgated by the NPC, which came into effect on 1 January 2008 Implementing Rules of Enterprise Income Tax Law of the PRC ( ) promulgated by the State Council () and came into effect on 1 January 2008 Notice Relating to taxes Applicable to Foreign Investment Enterprises / Foreign Enterprises and Foreign Nationals in Relation to Dividends and Gains obtained from Holding and Transferring of Shares ( ( ) ) promulgated by State Tax Bureau on 21 July 1993 Income Tax Law Applicable to Individuals of the PRC () promulgated by Standing Committee of NPC on 10 September 1980 and last amended on29 December 2007. Notice on Relevant Policies Concerning Individual Income Tax ( ) issued by Ministry of Finance and the State Tax Bureau on 13 May 1994 Notice on the Implementation of Preferential Transitional Enterprise Income Tax Policy ( ) promulgated by the State Council and came into effect on 1 January 2008 Income tax on foreign investment enterprise(FIE) PRC enterprise income tax is calculated based on taxable income determined under PRC accounting principles. In accordance with the Provisional Regulations of China on Enterprises Income Tax and the Income Tax Law of China for Enterprises with Foreign Investment and Foreign Enterprises, each of which has been abolished since 1 January 2008, foreign investment enterprises (including sino-foreign equity joint ventures, sinoforeign co-operative joint ventures and wholly foreign owned enterprises established in the territory of the PRC) is required to pay a national income tax at a rate of 30.0% of their taxable income and a local income tax at a rate of three per cent. of their taxable income. A foreign investment enterprise engaged in production having a period of operation of not less than ten years shall be exempted from income tax for the first two profit making years and a 50.0% reduction in the income tax payable for the next three years. The income tax concession for foreign investment enterprises engaged in the exploitation of resources such as petroleum, natural gas, rare metals and precious metals are regulated separately by the State Council. Foreign investment enterprises established in special economic zones, foreign enterprises having an establishment in special economic zones engaged in production or business operations and foreign investment enterprises engaged in production in economic and technological zones may pay income tax at a reduced rate of 15%. Foreign investment enterprises engaged in production established in coastal economic open zones or in the old urban districts of cities where the special economic zones or the economic and technological development zones are located may pay income tax at a reduced rate of 24%. Losses incurred in a tax year may be carried forward for not more than five years. The peoples governments of provinces, autonomous regions and municipalities directly under the central government may grant exemptions from or reduced local income tax for a foreign investment enterprise engaged in an industry or a project encouraged by the State.
(2)
(3)
(4)
(5)
(6)
(a)
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On March 16, 2007, the NPC enacted the Enterprise Income Tax Law, or the EIT Law, which became effective on January 1, 2008. Under the EIT Law, foreign invested enterprises, or FIEs, including EJV, CJV and WFOE, and domestic companies are subject to a uniform income tax rate of 25%. The EIT Law provides a five-year transition period starting from its effective date for those enterprises which were established before the promulgation date of the EIT Law and which were entitled to a preferential lower income tax rate under the then effective tax laws or regulations. According to a new notice regarding the implementation of preferential income tax treatments during the transition period issued by the State Council dated December 26, 2007, the income tax rate of the enterprises which have been entitled to a income tax rate of 15% will be increased to 18% for year 2008, 20% for 2009, 22% for 2010, 24% for 2011 and 25% for and after 2012. For those enterprises which are enjoying tax holidays, such tax holidays may continue until their expiration in accordance with the original tax regulations, but where the tax holiday has not yet started because of losses, such tax holiday shall be deemed to commence from the first effective year of the EIT Law. While the EIT Law equalises the income tax rates for FIEs and domestic companies, preferential tax treatment will continue to be given to companies in certain encouraged sectors and to entities classified as high-technology companies supported by the PRC government, whether FIEs or domestic companies. According to the EIT Law, entities that qualify as high-technology companies especially supported by the PRC government will benefit from a tax rate of 15% as compared to the uniform tax rate of 25%. However, according to the Implementing Rules of Enterprise Income Tax Law of PRC, or the Implementation Rules, enacted by the State Council dated December 6, 2007 and effective January 1, 2008, there are a number of requirements for a company to qualify as a hightechnology company especially supported by the PRC government, including those relating to business scope, and the new accreditation rules of the high-technology company especially supported by the PRC government, or the New Accreditation Rules, are yet to be promulgated by relevant authorities. (b) Value added tax The Provisional Regulations of the Peoples Republic of China Concerning Value Added Tax () promulgated by the State Council came into effect on 1 January 1994 and amended on 5 November 2008. Under these regulations and the Implementing Rules of the Provisional Regulations of the Peoples Republic of China Concerning Value Added Tax (), value added tax (the VAT) is imposed on goods sold in or imported into the PRC and on processing, repair services provided within the PRC. VAT payable in the PRC is charged on an aggregated basis at a rate of 13% or 17% (depending on the type of goods involved) on the full price collected for the goods sold or, in the case of taxable services provided, at a rate of 17% on the charges for the taxable services provided but excluding, in respect of both goods and services, any amount paid in respect of value added tax included in the price or charges, and less any deductible value added tax already paid by the taxpayer on purchases of goods and services in the same financial year. In accordance with the Notice on the Adjustment of the Export Rebate Tax Rate of Certain Commodity such as Textile and Apparel ( ) promulgated jointly by Ministry of Finance () and State Administration for Taxation and came into effect on 1 August 2008, the export rebate tax rate of 13% will apply to certain textile products. In accordance with the Notice of Increase in Export Tax Rebate Rate for Certain Products (), the export tax rebate rate for certain textile products was revised from 13% to 14% after 1 November 2008. In accordance with the Notice of Increase in Export Tax Rebate Rate for Textiles and Apparel Products (), the export tax rebate rate for textile products was revised from 14% to 15% with effect from 1 February 2009. In accordance with the Notice of Increase in Export Tax Rebate Rate for Certain Products such as Textile, Electronic Products (), the export tax rebate rate for textile products was revised from 15% to 16% with effect from 1 April 2009.
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(c) Business tax With effect from 1 January 1994 and amended on 5 November 2008, the Provisional Regulations of the Peoples Republic of China on Business Tax ( ) described that business that provide services (except entertainment business), assign intangible assets or sell immovable property became liable to business tax at a rate ranging from 3% to 5% of the charges of the services provided, intangible assets assigned or immovable property sold, as the case may be. (d) Tax on dividends from PRC enterprise with foreign investment According to the Enterprises Income Tax Law and its Implementary Rules, income such as dividends and profits distribution from the PRC derived from a foreign enterprise which has no establishment in the PRC is subject to a 10% preferential Enterprise Income Tax rate of 10%,.Additionally, based on the Agreement between the Government of the Republic of Singapore and the Government of the Peoples Republic of China for the Avoidance of Double Taxation And the Prevention of Fiscal Evasion with Respect to Taxes on Income ( ) which was promulgated on 18 April 1986 and was amended on 11 July 2007, income of foreign parties from the dividends and profit distributions from foreign invested enterprises in which the equity interest owned by foreign party exceeds 25% is entitled to 5% preferential income tax rate. 6. Wholly foreign-owned enterprise WFOE is governed by the Law of the peoples Republic of China Concerning Enterprises with Sole Foreign Investments (), which was promulgated on 12 April 1986 and was subsequently amended on 31 October 2000, and its Implementation Regulations promulgated on 12 December 1990 and was subsequently amended on 12 April 2001 (together the Foreign Enterprises Law). (a) Procedures for establishment of a WFOE The establishment of a WFOE will have to be approved by Ministry of Commerce (or its delegated authorities) (the MOFCOM). If two or more foreign investors jointly apply for the establishment of a WFOE, a copy of the contract between the parties must also be submitted to MOFCOM (or its delegated authorities) for its record. A WFOE must also obtain a business licence from the State Administration of Industry and Commerce (or its delegated authorities) before it can commence business. (b) Nature A WFOE is a limited liability company or other forms approved by the relevant government under the Foreign Enterprise Law. A Limited liability company is a legal person which may independently assume civil obligations, enjoy civil rights and has the right to own, use and dispose of property. It is required to have a registered capital contributed by the foreign investor(s). The liability of the foreign investor(s) is limited to the amount of registered capital contributed. The foreign investor may make its contributions by installments and the registered capital must be contributed within the period as approved by the MOFCOM (or its delegated authorities) in accordance with relevant regulations. (c) Profit distribution The Foreign Enterprise Law provides that after payment of taxes, a WFOE must make contributions to a reserve fund and an employee bonus and welfare fund. The allocation ratio for the employee bonus and welfare fund may be determined by the WFOE. However, at least 10% of the after tax profits must be allocated to the reserve fund. If the accumulative amount of allocated reserve funds reaches 50% of an enterprises registered capital, the WFOE will not be required to make any additional contribution. The WFOE is prohibited from distributing dividends unless the losses (if any) of previous years have been made up.
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7. New Mergers and Acquisitions Rules On 8 August 2006, six regulatory bodies acting together (including the Ministry of Commerce (MOC), China Security Regulatory Commission (CSRC)) at state level issued the new Regulations on Foreign Investors Merging with or Acquiring Domestic Enterprises (the 2006 M&A Rules) which took effect on 8 September 2006. Pursuant to Articles 39 and 40 of Section 3 of Chapter 4 of the 2006 M&A Rules, the overseas listing of an offshore special purpose vehicle (SPV), which is defined as an overseas company which a domestic company or an individual directly or indirectly controls for the purpose of making its actual domestic company equities get listed abroad, are subject to the prior approval of the CSRC. On 21 September 2006, the CSRC issued the Guidelines on Domestic Enterprises Indirectly Issuing or Listing and Trading Their Stocks on Overseas Stock Exchanges (the CSRC Guidelines). The CSRC Guidelines provide that the transaction for overseas listing of an offshore special purpose vehicles (SPVs) referred to in Articles 39 and 40 of the 2006 M&A Rules are subject to the approval of the CSRC. Under Articles 39 and 40 of the 2006 M&A Rules, the transactions for overseas listing of SPVs which are, directly or indirectly, established or controlled by PRC entities or individuals are subject to prior approval from the CSRC. However, the CSRC Guidelines do not elaborate on whether an SPV which has completed its restructuring exercise prior to 8 September 2006 in preparation for listing on an overseas stock exchange should, nevertheless, obtain the approval of the CSRC prior to such listing and trading. As of the Latest Practicable Date, the 2006 M&A Rules have not been updated to require or indicate that approval from the CSRC for such listing must, nevertheless, be obtained in cases where the restructuring exercise or the listing procedures have substantially been completed prior to 8 September 2006. As the 2006 M&A Rules are applicable only to a foreign investor or a SPV who (i) purchases the stock right of a shareholder of a non-foreign-invested enterprise in the PRC; (ii) increases the capital of a domestic company so as to convert and re-establish a domestic company as a foreign-invested enterprise; (iii) establishes a foreign-invested enterprise and through this foreigninvested enterprise purchases and operates the assets of a domestic enterprise by agreement of that enterprise; or (iv) purchases the assets of a domestic enterprise by an agreement and uses this asset to establish a foreign-invested enterprise and operate the assets, Yuan Tai Law Offices, the Legal Advisers to our Company on PRC Law, have, for the purpose of this Prospectus, advised on 2 September 2009 that the 2006 M&A Rules are not applicable to the Company since the PRC subsidiaries of the Company, namely Fujian Great and Quanzhou Great, were not domestic enterprises but were directly established as wholly-owned foreign enterprises prior to the 2006 M&A Rules. 8. Labour Law Pursuant to the Labour Law of the PRC ( promulgated in 5 July 1994) and the Labour Contract Law of the PRC () promulgated by the Standing Committee of the NPC () and came into effect on 1 January 2008, companies must enter into written employment contracts with their employees, based on the principles of equality, consent and agreement through consultation. Companies must establish and effectively implement system of ensuring occupational safety and health, educating employees on occupational safety and health, preventing work-related accidents and reducing occupational hazards. Companies must also pay for their employees social insurance premium. 9. Environmental Protection Regulations Laws of Peoples Republic of China on Environmental Protection ( , the Environmental Protection Law) promulgated by the Standing Committee of the National Peoples Congress (the Standing Committee of NPC) on 26 December 1989, establishes the legal framework of environmental protection in China. The Environmental Protection Law is formulated for the purpose of protecting and improving living environment and ecological environment, preventing pollution and other public hazards and safeguarding human health. The administration department of environmental protection of the State of Council is in charge of unified supervision and management on the national environmental protection work, and the administration department of environmental protection of the State of Council also establishes the national standards for C-8

pollutants discharge, etc. The Environmental Protection Bureaus at or above the county level are responsible for the environmental protection works within their respective jurisdictions. Enterprises that cause environmental pollution and other public hazards shall incorporate the work of environmental protection into their plans and establish a responsibility system for environmental protection. Such enterprise shall also take effective measures to prevent and control the pollution and harms caused to the environment by waste gas, waste water, waste residue, dust, malodorous gas, radioactive substance, noise, vibration and electromagnetic radiation generated in the course of production, construction and other activities. Enterprises discharging pollutants shall apply for registration in accordance with the requirement stimulated by the administration department of environmental protection of the State Council. Enterprise discharging pollutants in access of prescribed national or local discharge standards shall pay a fee for the excessive discharge according to the state provisions. The government may, according to the circumstances and the extent of the pollution, impose the administrative penalties of different types and degrees to the violators (enterprise or individual) of the Environmental Protection Law. Such penalties include: warnings, fines, order to make treatment within a specific period, order to suspend production, order to reinstall or put to use the pollution treatment facilities that has been dismantled or left idle without prior approval, administrative sanction on relevant responsible personnel and orders to close the business. The governmental may also impose fines together with any of the above-mentioned penalties. The organization or individual that has caused environmental pollution hazard would be responsible to compensate the victim. If a violation of the Environmental Protection Law causes a serious environmental pollution accident, the personnel directly responsible for such an accident shall be investigated for a criminal liability. The Laws of the Peoples Republic of China on the Prevention and Control of the Atmospheric Pollution (, the Atmospheric Pollution and Prevention Law) promulgated by the Standing Committee of NPC on 5 September 1987, revised on 29 August 1995, and further revised on 29 April 2000, establishes the provisions of the prevention, treatment and management of the atmospheric pollution. New construction project, expansion, or reconstruction project that discharges pollutants into the air shall comply with the Atmospheric Pollution and Prevention Law and other state regulations on environmental protection for such project. Enterprises that discharge pollutants into the atmosphere must report to the local administrative department of environmental protection its existing discharge and treatment facilities for pollutants and the categories, quantities and concentrations of pollutants discharged under normal operation conditions and submit to the same department relevant technical data concerning the prevention and control of atmospheric pollution. An enterprise that discharges pollutants into the atmosphere shall pay a discharge fee according to the type and amount of pollutants discharged. The concentration of the discharged pollutants shall not surpass the national and local standards. Where the Atmospheric Protection and Control Law is violated, the administrative department of environmental protection may impose the following penalties on the violators: order to stop the illegal activities, order to rectify within a specific period, warning, fine, order to make treatment within a specific period, order to suspend or close the business. The enterprise that has caused the atmospheric pollution shall be responsible for removing the hazard and indemnifying the entities or individuals that have suffered direct losses. The Laws of the Peoples Republic of China on the Prevention and Control of the Water Pollution (, the Water Pollution and Prevention Law) promulgated by the Standing Committee of NPC on 11 May 1984 and revised on 15May 1996, establishes the legal standards for the prevention and control of pollution of rivers, lakes, canals, irrigation channels, reservoirs and other surface water bodies and of underground water bodies within the Chinese territory. New construction project, expansion, reconstruction project, and other instalment on water that directly or indirectly discharge pollutants into water bodies shall be subject to the Water Pollution and Prevention Law and other state regulations on environmental protection for such project. Enterprises that discharge pollutants into a body of water must report to and register with the local administrative department of environmental protection its existing facilities for discharging and treating pollutants, and the categories, quantities and concentrations of pollutants discharged under normal operation conditions, and also submit to the same department relevant technical data C-9

concerning the prevention and control of water pollution. An enterprise that discharges pollutants into water shall pay a discharge fee pursuant to the regulations. If the discharge of pollutants exceeds the prescribed standards, the enterprise must pay an excess fee for the pollutant discharge. Where the Water Protection and Control Law is violated, the administrative department of environmental protection may, according to the circumstances, impose warning, fine, or even order to close the business of the violators. The enterprise that has caused the water pollution shall be responsible for removing the hazard and indemnifying the entities or individuals that have suffered direct losses. The Laws of the Peoples Republic of China on the Prevention and Control of the Noise Pollution (, the Noise Pollution and Prevention Law) promulgated by the Standing Committee of NPC on 29 October 1996, establishes the provisions for the prevention, treatment and management of noise pollution. New construction project, expansion, or reconstruction project that discharges noise which may disturb the surrounding living environment shall comply with the Noise Pollution and Prevention Law. Enterprises that make noise pollution must report to the local administrative department of environmental protection its existing facilities for discharging and treating pollutants, and the categories, quantities and concentrations of pollutants discharged under normal operation conditions, and also submit to the same department relevant technical data concerning the prevention and control of noise pollution. If the discharge of pollutants exceeds the prescribed standards, the enterprise must pay an excess fee for the pollutant discharge. Where the Noise Protection and Control Law is violated, the administrative department of environmental protection may, according to the circumstances, impose warning, fine, or even order to close the business of the violators. The enterprise that has caused the noise pollution shall be responsible for indemnifying the entities or individuals that have suffered losses. The Laws of the Peoples Republic of China on the Prevention and Control of the Solid Waste Pollution (, the Solid Waste Pollution and Prevention Law) promulgated by the Standing Committee of NPC on 30 October 1995 and revised on 29 December 2004, establishes the provisions for the prevention, treatment and management of solid waste pollution within the Chinese territory. Enterprises or individuals that collect, reserve, conveyance, employ or treat solid waste must take proper measures to prevent environmental pollution caused by the solid waste in compliance with the Solid Waste Pollution and Prevention Law. Enterprises that discharge industrial solid waste pollutants must report to and register with the local administrative department of environmental protection its existing discharge and treatment facilities for pollutants and the categories, quantities and concentrations of pollutants discharged under normal operation conditions. An enterprise that discharges and illegally treats dangerous solid waste pollutants shall pay a dangerous waste discharge fee. Where the Solid Waste Pollution and Prevention Law is violated, the administrative department of environmental protection may impose the following penalties on the violators: order to stop the illegal activities, order to rectify within a specific period, fine, order to make treatment within a specific period, order to suspend or close the business. The enterprise that has caused the solid waste pollution shall be responsible for removing the hazard and indemnifying the entities or individuals that have suffered losses. 10. Other Provisions and Regulations Foreign Trade of Textiles In accordance with PRC Foreign Trade Law () promulgated by the Standing Committee of NPC () and came into effect on 1 July 1994, as amended on 6 April 2004, foreign trade operators are subject to the registration to the MOC (or its delegated entities), and foreign trade restriction and/or administration may be applied in accordance with relative laws and regulations, including quotas and/or approvals. Based on the Announcement by MOC, General Customs Administration () and General Administration of Quality Supervision, Inspection and Quarantine () with the reference number of 2006 No. 106 (2006106) on 14 December 2006, quotas applies to the export of textiles of specific statutory categories to the European Union and the United States of America.
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Based on the Announcement by MOC with the reference number of 2007 No. 91 (200791) promulgated by MOC on 13 November 2007, the aforesaid quotas regarding the export of ten categories of textiles to the European Union have been relived, and export approvals will be applied to the export of eight specific statutory categories of textiles to the European Union in 2008. According to the memorandum between PRC and the European Union and the United States of America respectively, export approvals will not be applied to the export of textiles to the European Union and to the United States as from 1 January 2009.
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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 our Company. These statements summarise the material provisions of the Articles but are qualified in entirety by reference to the Articles. ORDINARY SHARES All of the ordinary shares of our Company are in registered form. Our Company may, subject to the provisions of the Companies Act (Chapter 50) of Singapore (Companies Act) and the rules of the Singapore Exchange Securities Trading Limited (SGX-ST), purchase its own ordinary shares. However, it may not, except in circumstances permitted by the Companies Act, grant any financial assistance for the acquisition or proposed acquisition of its own ordinary shares. NEW ORDINARY SHARES New ordinary shares may only be issued with the prior approval in a general meeting of the shareholders of our Company. The aggregate number of shares to be issued pursuant to such approval may not exceed 50% (or such other limit as may be prescribed by the SGX-ST) of its issued share capital at the time of grant of such approval for the time being, 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 at the time of grant of such approval for the time being. The approval, if granted, will lapse at the conclusion of the annual general meeting following the date on which the approval was granted. Subject to the foregoing, the provisions of the Companies Act and any special rights attached to any class of shares currently issued, all new ordinary shares are under the control of the board of Directors of our Company (the Board of Directors) who may allot and issue the same with such rights and restrictions as it may think fit. SHAREHOLDERS Only persons who are registered in the register of shareholders of our Company and, in cases in which the person so registered is The Central Depository (Pte) Limited (CDP), the persons named as the depositors in the depository register maintained by CDP for the ordinary shares, are recognised as shareholders of our Company. Our Company will not, except as required by law, recognise any equitable, contingent, future or partial interest in any ordinary share or other rights for any ordinary share other than the absolute right thereto of the registered holder of that ordinary share or of the person whose name is entered in the depository register for that ordinary share. Our Company may close the register of shareholders for any time or times if it provides the Singapore Registry of Companies and Businesses at least 14 days notice and the SGX-ST at least ten clear market days notice. However, the register may not be closed for more than 30 days in aggregate in any calendar year. Our Company typically closes the register to determine shareholders entitlement to receive dividends and other distributions. 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 by-laws of any stock exchange on which our Company is listed. The Board of Directors may decline to register any transfer of ordinary shares which are not fully paid shares or ordinary shares on which our Company has a lien. Ordinary shares may be transferred by a duly signed instrument of transfer in a form approved by any stock exchange on which our Company is listed. The Board of Directors may also decline to register any instrument of transfer unless, among other things, it has been duly stamped and is presented for registration together with the share certificate and such other evidence of title as they may require. Our 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 $2 and furnishes any evidence and indemnity that the Board of Directors may require.
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GENERAL MEETINGS OF SHAREHOLDERS Our Company is required to hold an annual general meeting every year. The Board may convene an Extraordinary General Meeting whenever it thinks fit and must do so if shareholders representing not less than 10% of the total voting rights of all shareholders request in writing that such a meeting be held. In addition, two or more shareholders holding not less than 10% of the issued share capital of our Company may call a meeting. Unless otherwise required by law or by the Articles, voting at general meetings is by ordinary resolution, requiring an affirmative vote of a simple majority of the votes cast at that meeting. An ordinary resolution suffices, for example, for the appointment of directors. A special resolution, requiring the affirmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters under Singapore law, including voluntary winding up, amendments to the Memorandum of Association and the Articles, a change of the corporate name and a reduction in the share capital, share premium account or capital redemption reserve fund. Our Company must give at least 21 days notice in writing for every general meeting convened for the purpose of passing a special resolution. Ordinary resolutions generally require at least 14 days notice in writing. The notice must be given to every shareholder who has supplied our Company with an address in Singapore for the giving of notices and must set forth the place, the day and the hour of the meeting and, in the case of special business, the general nature of that business. VOTING RIGHTS A shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy. Proxies need not be a shareholder. A person who holds ordinary shares through the SGX-ST book-entry settlement system will only be entitled to vote at a general meeting as a shareholder if his name appears on the depository register maintained by CDP 48 hours before the general meeting. Except as otherwise provided in the Articles, two or more shareholders must be present in person or by proxy to constitute a quorum at any general meeting. Under the Articles, on a show of hands, every shareholder present in person and by proxy shall have one vote (provided that in the case of a shareholder who is represented by two proxies, only one of the two proxies as determined by that shareholder or, failing such determination, by the Chairman of the meeting in his sole discretion shall be entitled to vote on a show of hands), and on a poll, every shareholder present in person or by proxy shall have one vote for each ordinary share which he holds or represents. A poll may be demanded in certain circumstances, including by the chairman of the meeting or by any shareholder present in person or by proxy and representing not less than 10% of the total voting rights of all shareholders having the right to attend and vote at the meeting or by any two shareholders present in person or by proxy and entitled to vote. In the case of a tie vote, whether on a show of hands or a poll, the chairman of the meeting shall be entitled to a casting vote. DIVIDENDS Our Company may, by ordinary resolution of its shareholders, declare dividends at a general meeting, but it may not pay dividends in excess of the amount recommended by the Board of Directors. Our Company must pay all dividends out of its profits; however, our Company may capitalise its share premium account and apply it to pay dividends, if such dividends are satisfied by the issue of shares to shareholders of our Company. See Bonus and Rights Issue. The Board of Directors may also declare an interim dividend without the approval of its shareholders. All dividends are paid pro rata among the shareholders in proportion to the amount paid up on each shareholders ordinary shares, unless the rights attaching to an issue of any ordinary share provides otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the post to each shareholder at his registered address. Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable to a shareholder whose name is entered in the depository register shall, to the extent of payment made to CDP, discharge our Company from any liability to that shareholder in respect of that payment.
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CAPITALISATION AND RIGHTS ISSUES The Board of Directors may, with approval by the shareholders at a general meeting, capitalise any profits and distribute the same as shares credited as paid-up to the shareholders in proportion to their shareholdings. The Board of Directors may also issue rights to take up additional ordinary shares to shareholders in proportion to their shareholdings. Such rights are subject to any conditions attached to such issue and the regulations of any stock exchange on which our Company is listed. TAKEOVERS The Securities and Futures Act (Chapter 289) of Singapore and the Singapore Code on Takeovers and Mergers regulate the acquisition of ordinary shares of public companies and contain certain provisions that may delay, deter or prevent a future takeover or change in control of our Company. Any person acquiring an interest, either on his own or together with parties acting in concert with him, in 30% or more of the voting shares in our Company must extend a takeover offer for the remaining voting shares in accordance with the provisions of the Singapore Code on Takeovers and Mergers. Parties acting in concert include a company and its related and associated companies, a company and its directors (including their relatives), a company and its pension funds, a person and any investment company, unit trust or other fund whose investment such person manages on a discretionary basis, 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. 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 six months. A mandatory takeover offer is also required to be made if a person holding, either on his own or together with parties acting in concert with him, between 30% and 50% of the voting rights acquires additional voting shares representing more than 1% of the voting shares in any six month period. LIQUIDATION OR OTHER RETURN OF CAPITAL If our Company liquidates or in the event of any other return of capital, holders of ordinary shares will be entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special rights attaching to any other class of shares. INDEMNITY As permitted by Singapore law, the Articles provide that, subject to the Companies Act, the Board of Directors and officers shall be entitled to be indemnified by our Company against any liability incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted to have been done as an officer, director or employee and in which judgment 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. Our Company may not indemnify directors and officers against any liability which by law would otherwise attach to them in respect of any negligence, default, breach of duty or breach of trust of which they may be guilty in relation to our Company. LIMITATIONS ON RIGHTS TO HOLD OR VOTE SHARES Except as described in Voting Rights and Takeovers above, there are no limitations imposed by Singapore law or by the Articles on the rights of non-resident shareholders to hold or vote on ordinary shares.
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MINORITY RIGHTS The rights of minority shareholders of Singapore-incorporated companies are protected under Section 216 of the Companies Act, which gives the Singapore courts a general power to make any order, upon application by any shareholder of our Company, as they think fit to remedy any of the following situations: (a) the affairs of our Company are being conducted or the powers of the Board of Directors are being exercised in a manner oppressive to, or in disregard of the interests of, one or more of the shareholders; or our Company takes an action, or threatens to take an action, or the shareholders pass a resolution, or propose to pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of the shareholders, including the applicant.
(b)
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 Companies Act itself. Without prejudice to the foregoing, Singapore courts may: (a) (b) (c) direct or prohibit any act or cancel or vary any transaction or resolution; regulate the conduct of the affairs of our Company in the future; authorise civil proceedings to be brought in the name of, or on behalf of, our Company by a person or persons and on such terms as the court may direct; provide for the purchase of a minority shareholders shares by the other shareholders or by our Company and, in the case of a purchase of shares by our Company, a corresponding reduction of its share capital; provide that the Memorandum of Association or the Articles be amended; or provide that our Company be wound up.
(d)
(e) (f)
EXCHANGE CONTROLS There are no Singapore governmental laws, decrees, regulations or other legislation that may affect the following: (a) the import or export of capital, including the availability of cash and cash equivalents for use by our Group; and the remittance of dividends, interest or other payments to non-resident holders of our Companys securities.
(b)
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APPENDIX E DESCRIPTION OF SINGAPORE LAW RELATING TO TAXATION

The discussion below is not intended to constitute a complete analysis of all tax consequences relating to purchase, ownership or disposal of the Shares and does not constitute legal or tax advice. Prospective investors should consult their own tax advisors concerning the tax consequences of their particular situations. This description is based on laws, regulations and interpretations now in effect and available as at the Latest Practicable Date. The laws, regulations and interpretations, however, may change at any time, and any change could be retroactive. 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. The statements made herein is limited to a general description of certain tax consequences in Singapore with respect to ownership of the Shares by Singapore investors and do not purport to be a comprehensive or exhaustive description of all tax considerations that may be relevant to a decision to purchase, hold or dispose of the Shares. Nor do the statements address the tax treatment of investors subject to specific rules. Prospective investors should consult their tax advisers regarding Singapore tax and other tax consequences of owning and disposing the Shares. It is emphasised that neither our Company, the Directors, nor any other parties involved in the Compliance Placement accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Shares. Dividends payable by our Company on the Shares will be declared and paid to Shareholders in S$. SINGAPORE TAXATION The following is a discussion of certain tax matters relating to Singapore income tax, capital gains tax, stamp duty and estate duty consequences in relation to the purchase, ownership and disposal of our Shares. The discussion is limited to a general description of certain tax consequences in Singapore with respect to ownership of our Shares by Singapore investors, and does not purport to be a comprehensive nor exhaustive description of all of the tax considerations that may be relevant to a decision to purchase our Shares. The laws, regulations and interpretations, however, may change at any time, and any change could be retroactive to the date of issuance of our Shares. These laws and regulations are also subject to various interpretations and the relevant tax authorities or the courts of Singapore could later disagree with the explanations or conclusions set out below. Singapore Income Tax - General Singapore resident taxpayers are subject to Singapore income tax on income accruing in or derived from Singapore and on foreign income received or deemed received in Singapore. However, foreign income in the form of branch profits, dividends and service income (specified foreign income) received or deemed received in Singapore on or after 1 June 2003 by a resident taxpayer are exempted from tax in Singapore provided the following conditions under Section 13 (9) of the Income Tax Act are met: (i) such income is subject to tax of a similar character to income tax (by whatever name called) under the law of the jurisdiction from which such income is received; at the time the income is received in Singapore, the highest rate of tax of a similar character to income tax in the jurisdiction from which the income is received is at least 15%; and the Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the person resident in Singapore.
(ii)
(iii)
As a concession, the subject to tax condition in (i) above would, with effect from 30 July 2004, be considered met for specified foreign income which are exempt from tax in the foreign jurisdiction from which the specified foreign income is received if the exemption is due to a tax incentive granted by the foreign jurisdiction for carrying out substantive business activities in that jurisdiction. Generally, substantive business activities refer to business activities that are carried out through staff with certain expertise and actual expenditure is incurred to carry out the activities. In addition, all foreign-sourced personal income received or deemed received in Singapore by a Singapore tax resident individual (except where such income is received through a partnership in Singapore) on or after 1 January 2004 will be exempt from tax in Singapore if the Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the individual.
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Non-Singapore tax-resident corporate taxpayers are subject to Singapore income tax on income accruing in or derived from Singapore, and on foreign income received or deemed received in Singapore, subject to certain exceptions. Non-Singapore tax-resident individual taxpayers, subject to certain exceptions, are subject to Singapore income tax only on income accruing in or derived from Singapore. A company is regarded as a tax resident in Singapore if the control and management of its business is exercised in Singapore. An individual is regarded as a tax resident in Singapore in a year of assessment if, in the preceding calendar year, he was physically present in Singapore or exercised an employment in Singapore (other than as a director of a company) for 183 days or more, or if he ordinarily resides in Singapore. Expansion of scope of Foreign-Source Income Exemption (FSIE) under specified period: It was announced in the 2009 Budget that FSIE scope is temporarily expanded to cover all foreign-source income: earned or accrued outside Singapore on or before 21 January 2009; and received in Singapore during the period from 22 January 2009 to 21 January 2010;
It was also announced that the conditions under Section 13 (9) of the Income Tax Act are temporarily lifted. Rates of Tax The corporate tax rate in Singapore is currently 18% and is adjusted to 17% with effect from Year of Assessment (YA) 2010. In addition, 75% of up to the first $10,000 of a companys normal chargeable income, and 50% of up to the next $290,000 (with effect from the YA2008) is exempt from corporate tax. The remaining chargeable income (after the partial tax exemption) will be taxed at 18% for YA2009 and at 17% with effect from YA2010. The above partial tax exemption will not apply to Singapore franked dividends received by companies. Full tax exemption: (a) From YA2005 to YA2008 For the first three consecutive years of assessment of newly incorporated Singapore tax resident companies with not more than 20 individual shareholders, the first $100,000 of their normal chargeable income (excluding Singapore franked dividends) are fully exempted from tax and 50% of their next $200,000 (with effect from year of assessment 2008) normal chargeable income are exempt from tax. Similarly, the start up tax exemption does not apply to Singapore franked dividends. (b) With effect from YA2009 This condition is revised as newly incorporated Singapore tax resident companies with not more than 20 shareholders throughout the basis period to that YA where: (i) (ii) all of the shareholders are individuals beneficially holding the shares in their own names; or at least one shareholder is an individual beneficially holding at least 10% of the issued ordinary shares of our Company.
Singapore tax-resident individuals are subject to tax based on progressive rates, currently ranging from 0% to 20% for the Year of Assessment 2007 onwards. As amended in the 2009 Budget, all resident individual taxpayers will get a tax rebate of 20% for the YA2009, capped at $2,000. Non-Singapore resident individuals are generally subject to tax at 20% on their income except for employment income which is taxed at the higher of 15% or resident rates, whichever gives rise to higher tax.
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Dividend Distributions (a) Franked Dividends Up to 31 December 2002, Singapore adopted a full imputation system to all dividends (other than normal exempt dividends) paid by companies resident in Singapore. Under the imputation system, the tax paid by our company at the prevailing corporate tax rate is deemed to be paid by its shareholders and thus, the shareholders received dividends net of the tax paid by our company. The corporate tax paid by our company effectively became available to its shareholders as a tax credit to offset their overall Singapore income tax liability. If the amount of Singapore tax payable by the shareholder was less than the tax credit, the shareholder was entitled a refund on the difference from the Inland Revenue Authority of Singapore (IRAS). A non-resident shareholder was effectively taxed on dividends at the corporate tax rate. Thus, no further Singapore income tax was imposed on the net dividend received by a non-resident holder of the Singapore companys shares. With the introduction of the one-tier system which took effect from 1 January 2003, Singapore tax resident companies which have unutilised franking credits as at 31 December 2002 are, given a 5 year transitional period from 1 January 2003 to 31 December 2007 to use these credits to frank dividends. They are allowed to continue to pay dividends under the imputation system during this period, subject to the availability of franking credits and provided that they have not elected to move to the one-tier system. Shareholders will continue to receive these dividends with tax credits attached. (b) One-tier Exempt Dividends Under this system which took effect from 1 January 2003, the tax collected from corporate profits is final and any Singapore dividends paid by a Singapore resident company are tax exempt in the hands of the shareholder (individual or corporate) regardless of whether the shareholder is a Singapore tax resident. Singapore Withholding Tax Dividend received in respect of our Shares by either a resident or non-resident of Singapore are not subject to Singapore withholding tax. Our Company is on the one-tier corporate tax system and can only declare tax exempt (one-tier) dividends to our Shareholders. Singapore Capital Gains Tax There is no capital gains tax in Singapore. Thus any gains derived from the disposal of our Shares acquired for long-term investment will not be taxable in Singapore. On the other hand, where the taxpayer is deemed by the IRAS to be carrying on a trade or business of dealing in shares in Singapore, gains from disposal of shares are of an income nature (rather than capital gains) and thus subject to Singapore income tax. However, there are no specific laws or regulations which deal with the characterisation of capital gains, and hence, gains may be construed to be of an income nature and subject to tax especially if they arise from activities which the IRAS regards as the carrying on of a trade in Singapore. Any profits from the disposal of our Shares are not taxable in Singapore unless the seller is regarded as having derived gains of an income nature, in which case, the disposal profit would be taxable. Bonus Shares Any bonus shares received by our Shareholders are not taxable.
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Stamp Duty No stamp duty is payable on the subscription and issuance of our Shares. Where existing Shares evidenced in certificated form are acquired in Singapore, stamp duty is payable on the instrument of transfer of the Shares at the rate of S$2.00 for every S$1,000 or any part thereof of the consideration for, or market value of the Shares, whichever is higher. The purchaser is liable for stamp duty, unless otherwise agreed. No stamp duty is payable if no instrument of transfer is executed (such as in the case of scripless shares, the transfer of which does not require instruments of transfer to be executed) or if the instrument of transfer is executed outside Singapore. However, stamp duty may be payable if the instrument of transfer which is executed outside Singapore is subsequently received in Singapore. Goods And Services Tax (GST) - General The sale of shares is considered a supply of services for Singapore GST purposes. Generally, a supply of services made by a GST-registered person is subject to GST at the current standard rate of 7% unless the services can qualify for zero-rating (that is, charge GST at 0%) under Section 21(3) of the GST Act (Chapter 117A) of Singapore (GST Act), or can qualify for exemption under the Fourth Schedule to the GST Act. GST incurred on purchases by a person not registered for GST in Singapore will represent an additional cost as he will not be able to recover the GST charged. Acquisition of Shares No GST is payable on the purchase of shares except for (possible) GST payable on other incidental charges, such as brokerage mentioned below. Sale of Shares The sale of shares by a GST-registered investor in the course of or furtherance of a business carried on by him through the SGX-ST or to another person belonging in Singapore can qualify for exemption under the Fourth Schedule to the GST Act. In other words, no GST is chargeable on the sales. However, any (possible) input tax incurred in making wholly exempt supplies will not be recoverable by the GSTregistered person. This is not applicable if the investor is a bank operating in Singapore. The bank will recover the input tax based on a fixed rate prescribed by the IRAS. If the sale of shares by a GST-registered investor is made to another person belonging outside Singapore, and that person is outside Singapore at the time the sale is executed, the sale would qualify for zerorating under Section 21(3)(j) of the GST Act. In other words, GST is chargeable at 0% on the sales. Any (possible) input GST which is incurred by the GST-registered investor in making wholly zero-rated supplies is fully recoverable from the IRAS. This is not applicable if the investor is a bank operating in Singapore. The bank will recover the input tax based on a fixed rate prescribed by the IRAS. Other Incidental Charges Brokerage, handling and clearing fees in connection with the sale or acquisition of shares charged by a GST-registered person (such as broker) to an investor belonging to Singapore is subject to GST at the current rate of 7%. Similar services rendered to an investor belonging outside Singapore should qualify for zero-rating if the investor is outside Singapore when the services are performed and the services provided do not directly benefit any Singapore persons.
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APPENDIX F TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE

You are invited to apply and subscribe for and/or purchase the Invitation Shares at the Invitation Price for each Offer Share and each Placement Share subject to the following terms and conditions: For the purpose of Appendix F Terms, Conditions and Procedures for Application and Acceptance, reference to we, our and us should be taken as reference to our Company and the Vendors. 1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 INVITATION SHARES AND INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF INVITATION SHARES WILL BE REJECTED. Your application for Offer Shares may be made by way of printed Offer Shares Application Forms or by way of Electronic Applications through ATMs of the Participating Banks (ATM Electronic Applications) or through Internet Banking (IB) web-sites of the relevant Participating Banks (Internet Electronic Applications which, together with ATM Electronic Applications, shall be referred to as Electronic Applications). Your application for the Placement Shares may only be made by way of Placement Shares Application Forms. YOU MAY NOT USE CENTRAL PROVIDENT FUND (CPF) FUNDS TO APPLY FOR THE INVITATION SHARES. You are allowed to submit only one application in your own name for the Offer Shares or the Placement Shares. If you submit an application for Offer Shares by way of an Application Form, you MAY NOT submit another application for Offer Shares by way of an Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and may be liable to be rejected at the discretion of our Company and the Vendors. If you submit an application for Offer Shares by way of Internet Electronic Application, you MAY NOT submit another application for Offer Shares by way of ATM Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and may be liable to be rejected at the discretion of our Company and the Vendors. If you (not being an approved nominee company) have submitted an application for Offer Shares in your own name, you should not submit any other application for Offer Shares, whether by way of an Application Form or by way of an Electronic Application, for any other person. Such separate applications shall be deemed to be multiple applications and may be liable to be rejected at the discretion of our Company and the Vendors. If you have made an application for Placement Shares, you should not make any application for Offer Shares either by way of an Application Form or by way of an Electronic Application and vice versa. Such separate applications shall be deemed to be multiple applications and may be liable to be rejected at the discretion of our Company and the Vendors. Conversely, if you have made an application for Offer Shares either by way of an Electronic Application or by way of an Application Form, you may not make any application for Placement Shares. Such separate applications shall be deemed to be multiple applications and may be liable to be rejected at the discretion of our Company and the Vendors. Joint applications shall be rejected. Multiple applications for Invitation Shares may be liable to be rejected at the discretion of our Company and the Vendors. If you submit or procure submissions of multiple share applications for Offer Shares, Placement Shares or both Offer Shares and Placement Shares, you may be deemed to have committed an offence under the Penal Code, (Chapter 224) of Singapore and the Securities and Futures Act, (Chapter 289) of Singapore and your applications may be referred to the relevant authorities for investigation. Multiple applications or those appearing to be or suspected of being multiple applications may be liable to be rejected at our discretion of our Company and the Vendors. 4. We will not accept applications from any person under the age of 21 years, undischarged bankrupts, sole-proprietorships, partnerships or non-corporate bodies, joint Securities Account holders of CDP and from applicants whose addresses (furnished in their Application Forms or, in the case of Electronic Applications, contained in the records of the relevant Participating Banks)
2.
3.
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bear post office box numbers. No person acting or purporting to act on behalf of a deceased person is allowed to apply under the Securities Account with CDP in the name of the deceased person at the time of application. 5. We will not recognise the existence of a trust. Any application by a trustee or trustees must be made in his/their own name(s) and without qualification or, where the application is made by way of an Application Form, in the name(s) of an approved nominee company or approved nominee companies after complying with paragraph 6 and 7 below. WE WILL ONLY ACCEPT NOMINEE APPLICATIONS FROM APPROVED NOMINEE COMPANIES. Approved nominee companies are defined as banks, merchant banks, finance companies, insurance companies, licensed securities dealers in Singapore and nominee companies controlled by them. Applications made by persons acting as nominees other than approved nominee companies shall be rejected. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do not have an existing Securities Account with CDP in your own name at the time of your application, your application will be rejected (if you apply by way of an Application Form), or you will not be able to complete your Electronic Application (if you apply by way of an Electronic Application). If you have an existing Securities Account but fail to provide your Securities Account number or provide an incorrect Securities Account number in Section B of the Application Form or in your Electronic Application, as the case may be, your application is liable to be rejected. Subject to paragraph 8 below, your application shall be rejected if your particulars, such as name, NRIC/passport number, nationality and permanent residence status provided in your Application Form or in the records of the relevant Participating Bank at the time of your Electronic Application, as the case may be, differ from those particulars in your Securities Account as maintained with CDP. If you possess more than one individual direct Securities Account with CDP, your application shall be rejected. If your address as stated in the Application Form or, in the case of an Electronic Application, contained in the records of the relevant Participating Bank, as the case may be, is different from the address registered with CDP, you must inform CDP of your updated address promptly, failing which the notification letter on successful allotment and/or allocation and other correspondences from CDP will be sent to your address last registered with CDP. Our Company and the Vendors reserve the right to reject any application which does not conform strictly to the instructions set out in the Application Form and in this Prospectus or which does not comply with the instructions for Electronic Applications or with the terms and conditions of this Prospectus or, in the case of an application by way of an Application Form, which is illegible, incomplete, incorrectly completed or which is accompanied by an improperly drawn up or improper form of remittance. Our Company and the Vendors further reserve the right to treat as valid any applications not completed or submitted or effected in all respects in accordance with the instructions set out in the Application Forms or the instructions for Electronic Applications or the terms and conditions of this Prospectus and also to present for payment or other processes all remittances at any time after receipt and to have full access to all information relating to, or deriving from, such remittances or the processing thereof. Our Company and the Vendors reserve the right to reject or to accept, in whole or in part, or to scale down or to ballot any application, without assigning any reason therefore, and we will not entertain any enquiry and/or correspondence on the decision of our Company and the Vendors. This right applies to applications made by way of Application Forms and by way of Electronic Applications. In deciding the basis of allotment, our Company and the Vendors will give due consideration to the desirability of allotting and/or allocating the Invitation Shares to a reasonable number of applicants with a view to establishing an adequate market for our Shares.
6.
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8.
9.
10.
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11. Share certificates will be registered in the name of CDP and will be forwarded only to CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after the close of the Application List, a statement of account stating that your Securities Account has been credited with the number of Invitation Shares allotted and/or allocated to you. This will be the only acknowledgement of application monies received and is not an acknowledgement by our Company and the Vendors. You irrevocably authorise CDP to complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or other documents required for the issue or transfer of the Invitation Shares allotted to you. This authorisation applies to applications made by way of Application Forms and by way of Electronic Applications. You irrevocably authorise CDP to disclose the outcome of your application, including the number of Invitation Shares allotted and/or allocated to you pursuant to your application to our Company, the Vendors, the Manager, the Underwriter, the Placement Agent and any other parties so authorised by CDP, our Company, the Manager, the Underwriter and/or the Placement Agent. You consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent resident status, CDP Securities Account number, CPF Investment Account number (if applicable) and share application amount from your account with the relevant Participating Bank to the Share Registrar, SCCS, SGX-ST, CDP, CPF, Issuer and the Manager. CDP shall not be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to the electronic application. 13. In the event that our Company lodges a supplementary or replacement prospectus (Relevant Document) pursuant to the Securities and Futures Act or any applicable legislation in force from time to time prior to the close of the Invitation, and the Invitation Shares have not been issued and/or transferred, our Company and the Vendors will (as required by law) at our sole and absolute discretion either: (a) within 2 days (excluding any Saturday, Sunday or public holiday) from the date of the lodgement of the Relevant Document, give you notice in writing of how to obtain, or arrange to receive, a copy of the same and provide you with an option to withdraw your application and take all reasonable steps to make available within a reasonable period the Relevant Document to you if you have indicated that you wish to obtain, or have arranged to receive, a copy of the Relevant Document; within 7 days of the lodgement of the Relevant Document, give you a copy of the Relevant Document, as the case may be, and provide you with an option to withdraw your application; or deem your application as withdrawn and cancelled and (on behalf of the Vendors as well) refund your application monies (without interest or any share of revenue or other benefit arising therefrom) to you within 7 days from the lodgement of the Relevant Document.
12.
(b)
(c)
Where you have notified us and the Vendors within 14 days from the date of lodgement of the Relevant Document of your wish to exercise your option under the SFA to withdraw your application, we shall and will on behalf of the Vendor pay to you all monies paid by you on account of your application for the Invitation Shares without interest or any share of revenue or other benefit arising there from and at your own risk, within seven days from the receipt of such notification. In the event that at any time of the lodgement, the Invitation Shares have already been issued but trading has not commenced, we will (on behalf of the Vendors as well) (as required by law) and subject to the Securities and Futures Act, either: (a) within two days (excluding Saturday, Sunday or public holiday) from the date of the lodgement of the supplementary or replacement prospectus, give you notice in writing of how to obtain, or arrange to receive, a copy of the same and provide you with an option to return to our Company and the Vendors the Invitation Shares which you do not wish to F-3

retain title in and take all reasonable steps to make available within a reasonable period the supplementary or replacement prospectus to you if you have indicated that you wish to obtain, or have arranged to receive, a copy of the supplementary or replacement prospectus. (b) within 7 days of the lodgment of the supplementary or replacement prospectus, give you a copy of the supplementary or replacement prospectus, as the case may be, and provide you with an option to return the Invitation Shares; or (i) in the case of the New Shares, deem the issue of the New Shares as void and refund your application monies for the New Shares (without interest or any share of revenue or other benefit arising therefrom) to you within seven days from the lodgement of the Relevant Document, and (ii) in the case of the Vendor Shares, deem the sale of the Vendor Shares as void, and (1) in the case where documents to evidence title to the Vendor Shares (Title Documents) have been issued to you, within 7 days from the lodgement of the Relevant Document, inform you to return the Title Documents within 14 days from the date of lodgement of the Relevant Document, and within 7 days from receipt of the Title Documents or the date of lodgement of the Relevant Document, whichever is the later, refund your payment for the Vendor Shares (without interest or any share of revenue or other benefit arising therefrom), or (2) in the case where no Title Documents have been issued to you, refund your payment for the Vendor Shares (without interest or any share of revenue or other benefit arising therefrom) within 7 days from the date of lodgement of the Relevant Document.
(c)
Additional terms and instructions applicable upon the lodgement of the Relevant Document, including instructions on how you can exercise the option to withdraw your application or return the Invitation Shares allotted and allocated to you, may be found in such Relevant Document. Where an applicant has notified us within 14 days from the date of lodgement of the Relevant Document of your wish to exercise your option under the Securities and Futures Act to withdraw your application or return the Invitation Shares allotted to you, our Company (for itself as well as on behalf of the Vendors) shall, subject to the Securities and Futures Act, pay to you all monies paid by you on account of your application for the Invitation Shares without interest or any share of revenue or other benefit arising therefrom and at your own risk, within 7 days from the receipt of such notification. 14. In the event of an under-subscription for Offer Shares as at the close of the Application List, we will make available that number of Offer Shares under-subscribed to satisfy applications for Placement Shares to the extent that there is an over-subscription for Placement Shares as at the close of the Application List. In the event of an under-subscription for Placement Shares as at the close of the Application List, we will make available that number of Placement Shares under-subscribed to satisfy applications for Offer Shares to the extent that there is an over-subscription for Offer Shares as at the close of the Application List. In the event of an over-subscription for Offer Shares as at the close of the Application List and/or Placement Shares are fully subscribed and/or purchased or over-subscribed as at the close of the Application List, the successful applications for Offer Shares will be determined by ballot or otherwise as determined by our Company and the Vendors in consultation with the Manager and approved by the SGX-ST, if required. In the event of an under-subscription for the Offer Shares and/or Placement Shares as at the close of the Application List, the number of Offer Shares and/or Placement Shares under-subscribed shall be subscribed and/or purchased by the Underwriter and/or Placement Agent respectively.
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In all the above instances, the basis of allotment and/or allocation of the Invitation Shares as may be decided by our Company and the Vendors in ensuring a reasonable spread of shareholders of our Company, shall be made public, as soon as practicable, via an announcement through the SGX-ST and by advertisement in a local newspaper. 15. You irrevocably authorise CDP to disclose the outcome of your application, including the number of Invitation Shares allotted and/or allocated to you pursuant to your application, to our Company, the Vendors, the Issue Manager and/or the Underwriter and Placement Agent and any other parties so authorised by the foregoing persons. Any reference to you or the applicant in this section shall include an individual, a corporation, an approved nominee and trustee applying for the Offer Shares by way of an Offer Shares Application Form or by way of an Electronic Application, or applying for the Placement Shares by way of a Placement Shares Application Form. By completing and delivering an Application Form or by making and completing an Electronic Application by (in the case of an ATM Electronic Application) pressing the Enter or OK or Confirm or Yes key or any other relevant on the ATM (as the case may be) or by (in the case of an Internet Electronic Application) clicking Submit or Continue or Yes or Confirm or any other relevant key on the IB website screen (as the case may be) in accordance with the provisions of this Prospectus, you: (a) irrevocably offer, agree and undertake to subscribe and/or purchase for the number of Invitation Shares specified in your application (or such smaller number for which the application is accepted) at the Invitation Price and agree that you will accept such Invitation Shares as may be allotted and/or allocated to you, in each case on the terms of this Prospectus and on the terms of the conditions set out in this Prospectus and the Memorandum and Articles of Association of our Company; agree that in the event of any inconsistency between the terms and conditions for application set out in this Prospectus and those set out in the IB websites of or ATMs of the relevant Participating Banks, the terms and conditions set out in this Prospectus shall prevail; agree that the aggregate Invitation Price for the Invitation Shares applied for is due and payable to our Company and the Vendors forthwith; warrant the truth and accuracy of the information made, contained and representations and declarations made, in your application and acknowledge and agree that such information, representations and declarations will be relied on by our Company and the Vendors in determining whether to accept your application and/or whether to allot any Shares to you; and agree and warrant that if the laws of any jurisdictions outside Singapore are applicable to your application, you have complied with all such laws and none of our Company and the Vendors, the Manager, the Underwriter and/or the Placement Agent will infringe any such laws as a result of the acceptance of your application.
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(b)
(c)
(d)
(e)
18.
Our acceptance of applications will be conditional upon, inter alia, our Company and the Vendors being satisfied that: (a) permission has been granted by the SGX-ST to deal in and for quotation for all our existing Shares (including the Vendor Shares), the New Shares and the Performance Shares on the Official List of the SGX-ST; the Management and Underwriting Agreement and the Placement Agreement referred to under the section entitled Management and Underwriting Arrangements of this Prospectus have become unconditional and have not been terminated or cancelled prior to such date as our Company and the Vendors may determine; and F-5
(b)

(c) the Authority has not served a stop order which directs that no or no further shares to which this Prospectus relates be allotted and/or allocated.
19.
In the event that a stop order in respect of the Invitation Shares is served by the Authority or other competent authority, and (a) the Invitation Shares have not been issued, we (and on behalf of the Vendor as well) will (as required by law) deem all applications withdrawn and cancelled and our Company shall refund the application monies (without interest or any share of revenue or other benefit arising therefrom) to you within 14 days of the date of the stop order; or If the New Shares have already been issued but trading has not commenced, the issue will (as required by law) be deemed void and we (and on behalf of the Vendor as well) shall refund the application monies (without interest or any share of revenue or other benefit arising therefrom) to you within 14 days of the stop order; and in the sale of the Vendor Shares, if the Vendor Shares have already been transferred but trading has not commenced, the transfer will be required by law to be deemed void and Our Company (and on behalf of the Vendor as well) will: (i) if the documents evidencing title to the Vendor Shares have been issued to you, within 7 days from the date of the stop order, inform you to return such documents within 14 days from the date of the stop order and within 7 days from the receipt of those documents, or the date of the stop order, whichever is later, refund your payment for the Vendor Shares (without interest or ay share of revenue or other benefit arising therefrom) to you; and if the documents evidencing title to the Vendor Shares have not been issued to you, refund your payment for the Vendor Shares (without interest or any share of revenue or other benefit arising therefrom) within 7 days from the date of the stop order. This shall not apply where only an interim stop order has been served.
(b)
(ii)
20.
In the event that an interim stop order in respect of the Invitation Shares is served by the Authority or other competent authority, no Invitation Shares shall be issued to you until the Authority revokes the interim stop order. The Authority is not able to serve a stop order in respect of the Invitation Shares if the Invitation Shares have been issued and listed on a securities exchange and trading in them has commenced. In the event of any changes in the closure of the Application List or the time period during which the Invitation is open, we will publicly announce the same through a SGXNET announcement to be posted on the Internet at the SGX-ST website http://www.sgx.com and through a paid advertisement in a local English newspaper. We will not hold any applications in reserve. We will not allot and allocate Shares on the basis of this Prospectus later than six months after the date of this Prospectus. Additional terms and conditions for applications by way of Application Forms are set out below. Additional terms and conditions for applications by way of Electronic Applications are set out below.
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23. 24.
25. 26.
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS Applications by way of Application Forms shall be made on, and subject to, the terms and conditions of this Prospectus including but not limited to the terms and conditions appearing below and including those set out under the section on TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE of this Prospectus, as well as our Memorandum and Articles of Association. F-6

1. Applications for the Offer Shares must be made using the WHITE Application Forms and WHITE official envelopes A and B, accompanying and forming part of this Prospectus. Application for the Placement Shares must be made using the BLUE Application Forms for the Placement Shares accompanying and forming part of this Prospectus. Attention is drawn to the detailed instructions contained in the respective Application Forms and this Prospectus for the completion of the Application Forms which must be carefully followed. Our Company and the Vendors reserve the right to reject applications which do not conform strictly to the instructions set out in the Application Forms and this Prospectus or to the terms and conditions of this Prospectus or which are illegible, incomplete, incorrectly completed or which are accompanied by improperly drawn up remittances or improper form remittances. The Application Forms must be completed in English. Please type or write clearly in ink using BLOCK LETTERS. All spaces in the Application Forms except those under the heading FOR OFFICIAL USE ONLY must be completed and the words NOT APPLICABLE or N.A. should be written in any space not applicable. Individuals, corporations, approved nominee companies and trustees must give their names in full. Applications must be made, in the case of individuals, in their full names appearing in their identity cards (if applicants have such identification documents) or in their passports and, in the case of corporations, in their full names as registered with a competent authority. An applicant, other than an individual, completing the Application Form under the hand of an official must state the name and capacity in which that official signs. A corporation completing the 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. If an application by a corporate applicant is successful, a copy of its Memorandum and Articles of Association or the equivalent constitutive document of the corporation must be lodged with our Share Registrar and Share Transfer Office. Our Company and the Vendors reserve the right to require any applicant to produce documentary proof of identification for verification purposes. Individual and corporate applicants, whether incorporated or unincorporated and wherever incorporated or constituted, will be required to declare whether they are citizens or permanent residents of Singapore or corporations in which citizens or permanent residents of Singapore or any body corporate constituted by 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. 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 whether incorporated or unincorporated and wherever incorporated or constituted, in which citizens or permanent residents of Singapore or any body corporate whether incorporated or unincorporated and wherever incorporated or constituted by 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. (a) (b) All applicants must complete Sections A and B and sign on page 1 of the Application Forms. All applicants are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Forms. Where paragraph 7(a) is deleted, the applicants must also complete Section C of the Application Forms with particulars of the beneficial owner(s). 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 Forms are liable to have their applications rejected.
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(c)
6.
Each application must be accompanied by a remittance in Singapore currency for the full amount payable, in respect of the number of Invitation Shares applied for, in the form of a BANKERS DRAFT or CASHIERS ORDER drawn on a bank in Singapore, made out in favour of GREAT GROUP SHARE ISSUE ACCOUNT, crossed A/C PAYEE ONLY, with the name and address of the applicant written clearly on the reverse side. APPLICATIONS NOT ACCOMPANIED BY ANY PAYMENT OR ACCOMPANIED BY ANY OTHER FORM OF PAYMENT WILL NOT BE F-7

ACCEPTED. Remittances bearing NOT TRANSFERABLE or NON TRANSFERABLE crossings will be rejected. No acknowledgement of receipt will be issued by our Company, the Vendors or the Manager for applications or application monies received. 7. It is expected that unsuccessful applications will be returned to the applicants (without interest or any share of revenue earned or other benefit arising therefrom) by ordinary post at the risk of the applicants within 24 hours after balloting. Where an application is rejected or accepted in part only, the full amount or the balance of the application monies will be refunded to the applicant (without interest or any share of revenue earned or other benefit arising therefrom) by ordinary post at your own risk, 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 application monies have been received in the designated share issue account. If the Invitation does not proceed for any reason, the full amount of the application monies received will be refunded (without interest or any share of revenue or other benefit arising therefrom) to you by ordinary post or telegraphic transfer at your own risk within five Market Days after the Invitation is discontinued. In the event that the Invitation is cancelled by us following the issuance of a stop order by the Authority, the application monies received will be refunded (without interest or any share of revenue or other benefit arising therefrom) to you by ordinary post or telegraphic transfer at your own risk within 14 days from the date of the stop order. Capitalised terms used in the Application Forms and defined in this Prospectus shall bear the meanings assigned to them in this Prospectus. By completing and delivering the Application Form, you agree that: (a) In consideration of our Company having distributed the Application Form to the applicant and agreeing to close the Application List at 12:00 noon on 23 September 2009 or such later time or date as we may, in consultation with the Manager, decide and by completing and delivering the Application Form, each applicant agrees that: (i) (ii) your application is irrevocable; your remittance will be honoured on first presentation and that any application monies returnable may be held pending clearance of your payment and you will not be entitled to any interest or any share of revenue or other benefit arising therefrom;
8.
9.
(b)
all applications, acceptances and contracts resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and that you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts; in respect of the Invitation Shares for which your application has been received and not rejected, acceptance of your application shall be constituted by written notification by or on behalf of our Company and the Vendors and not otherwise, notwithstanding any remittance being presented for payment by or on behalf of our Company and the Vendors; your will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of your application; all applications, acceptances and contracts resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and that you irrevocably submits to the non-exclusive jurisdiction of the Singapore courts; reliance is placed solely on the information contained in this Prospectus and none of our Company, the Vendors, 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;
(c)
(d)
(e)
(f)
F-8

(g) you consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent resident status, CDP securities account number, CPF Investment Account Number (if applicable) and the share application amount to our Share Registrar, CDP, SCCS, SGX-ST, CPF, our Company, the Vendors, the Manager, the Underwriter and Placement Agent or other authorised operators; and you irrevocably agrees and undertake to subscribe for and/or purchase the number of Invitation Shares applied for as stated in the Application Form or any smaller number of such Invitation Shares that may be allotted and/or allocated to you in respect of your application. In the event that our Company and the Vendors decide to allot and/or allocate a smaller number of Invitation Shares or not to allot and/or allocate any Invitation Shares to you, you agree to accept such decision as final.
(h)
Applications For Offer Shares 1. Your applications for Offer Shares MUST be made using the WHITE Offer Shares Application Forms and WHITE official envelopes A and B. ONLY ONE APPLICATION should be enclosed in each envelope. You must: (a) enclose the WHITE Offer Shares Application Form, duly completed and signed, together with the correct remittance in accordance with the terms and conditions of this Prospectus in the WHITE envelope A provided; in the appropriate spaces on WHITE envelope A: (i) (ii) (iii) (c) (d) write your name and address; state the number of Offer Shares applied for; and affix adequate Singapore postage;
2.
(b)
SEAL WHITE ENVELOPE A; write, in the special box provided on the larger WHITE envelope B addressed to Boardroom Corporate & Advisory Services Pte. Ltd., the number of Offer Shares you have applied for; and insert WHITE envelope A into WHITE envelope B, seal WHITE envelope B and affix adequate Singapore postage and thereafter DESPATCH BY ORDINARY POST OR DELIVER BY HAND at your own risk to Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street #08-01 Samsung Hub Singapore 049483 to arrive by 12.00 noon on 23 September 2009 or such other time as we may, in consultation with the Manager, decide. Local Urgent Mail or Registered Post must NOT be used. No acknowledgement of receipt will be issued for any application or remittance received.
3.
Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly drawn remittances improper form of remittance or which are not honoured upon their first presentation are liable to be rejected. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receipt will be issued for any application or remittance received.
4.
Applications for Placement Shares 1. Applications for Placement Shares must be made using the BLUE Placement Shares Application Forms.
F-9

2. The completed BLUE Placement Shares Application Form and the correct remittance with the name and address of the applicant written clearly on the reverse side, must be enclosed and sealed in an envelope to be provided by the applicant. The sealed envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at the applicants own risk to Boardroom Corporate & Advisory Services Pte. Ltd., 3 Church Street #08-01 Samsung Hub Singapore 049483, to arrive by 12:00 noon on 23 September 2009 or such later date and time as we may, in consultation with the Manager, decide. Local Urgent Mail or Registered Post must NOT be used. ONLY ONE APPLICATION should be enclosed in each envelope. No receipt or acknowledgement will be issued for any application or remittance received. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperly drawn remittances or improper form of remittance or which are not honoured upon their first presentation are liable to be rejected. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgement of receipt will be issued for any application or remittance received.
3.
4.
ADDITIONAL TERMS AND CONDITIONS FOR ELECTRONIC APPLICATIONS The procedures for Electronic Applications are set out on the ATM screens (in the case on ATM Electronic Applications) and the IB website screens (in the case of Internet Electronic Applications) of the relevant Participating Banks. Currently, DBS Bank and the UOB Group are the only Participating Banks through which Internet Electronic Applications can be made. For illustration purposes, the procedures for Electronic Applications through ATMs of UOB Group and the IB website of UOB Group are set out respectively in the Steps for Electronic Applications through ATMs of UOB Group and the Steps for Electronic Application through the IB website of UOB Group (collectively the Steps) appearing below. The Steps set out the actions that you must take at an ATM of UOB Group or the IB website of UOB Group to complete an Electronic Application. Please read carefully the terms of this Prospectus, the Steps and the terms and conditions for Electronic Applications set out below before making an Electronic Application. Any reference to you in the additional terms and conditions for Electronic Applications and the Steps shall refer to you making an application for Offer Shares through an ATM or the IB website of a relevant Participating Bank. Applicants applying for Offer Shares by way of Electronic Applications may incur an administrative fee and/or such related charges as stipulated by respective Participating Banks from time to time. You must have an existing bank account with and be an ATM cardholder of one of the Participating Banks before you can make an Electronic Application at the ATMs. An ATM card issued by one Participating Bank cannot be used to apply for Offer Shares at an ATM belonging to other Participating Banks. For an Internet Electronic Application, you must have an existing bank account with and an IB User Identification (User ID) and a Personal Identification Number/Password given by a relevant Participating Bank. The actions that you must take at ATMs or the IB websites of other Participating Banks are set out on the ATM screens or the IB website screens of the relevant Participating Banks. Upon the completion of your Electronic Application transaction, you will receive an ATM transaction slip (Transaction Record), confirming the details of your Electronic Application. Upon completion of your Internet Electronic Application, there will be an on-screen confirmation (Confirmation Screen) of the application which you can print out for your record. The Transaction Record or your printed record of the Confirmation Screen is for your retention and should not be submitted with any Application Form. You must ensure that you enter your own Securities Account number when using the ATM card issued to you in your own name. If you operate a joint bank account with any of the Participating Banks, you must ensure that you enter your own Securities Account number when using the ATM card issued to you in your own name. Using your own Securities Account number with an ATM card which is not issued to you in your own name will render your Electronic Application liable to be rejected.
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For an Internet Electronic Application, you must have a bank account with and a User Identification ID (User ID) and a Personal Identification Number (PIN) given by the relevant Participating Banks. Upon completion of your Internet Electronic Application through the IB website of UOB Group, there will be an on-screen confirmation (Confirmation Screen) of the application which can be printed out by you for your record. This printed record of the Confirmation Screen is for your retention and should not be submitted with any printed Application Form. You must ensure, when making an Internet Electronic Application, that your mailing address is in Singapore and the application is being made in Singapore and you will be asked to declare accordingly. Otherwise, your application is liable to be rejected. You shall make an Electronic Application on the terms and subject to the conditions of this Prospectus including but not limited to the terms and conditions appearing below and those set out under the section on TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE of this Prospectus as well as the Memorandum and Articles of Association of our Company. 1. In connection with your Electronic Application for Offer Shares, you are required to confirm statements to the following effect in the course of activating your Electronic Application: (a) that you have received a copy of this Prospectus (in the case of an ATM Electronic Application only) and have read, understood and agreed to all the terms and conditions of application for Offer Shares and this Prospectus prior to effecting the Electronic Application and agree to be bound by the same; that you consent to the disclosure of your name, NRIC/passport number, address, nationality, permanent resident status, CDP Securities Account number, CPF Investment account number (if applicable) and share application amount (the Relevant Particulars) from your account with that Participating Bank to the Share Registrar, SGX-ST, CDP, CPF, SCCS, our Company and the Manager or other authorised operators (the Relevant Parties); and that this is your only application and it is made in your own name and at your own risk.
(b)
(c)
Your application will not be successfully completed and cannot be recorded as a completed transaction unless you press the Enter or OK or Confirm or Yes or any other relevant key in the ATM or click OK or submit or Continue or Yes or any other relevant button on the Internet screen. By doing so, you shall be treated as signifying your confirmation of each of the above three statements. In respect of statement 1(b) above, your confirmation, by pressing the Enter or OK or Confirm or Yes in the ATM or click OK or submit or Continue or Yes or any other relevant button on the Internet screen, shall signify and shall be treated as your written permission, given in accordance with the relevant laws of Singapore including Section 47(4) of the Banking Act (Chapter 19) of Singapore to the disclosure by the relevant Participating Bank of the Relevant Particulars to the Relevant Parties. BY MAKING AN ELECTRONIC APPLICATION, YOU CONFIRM THAT YOU ARE NOT APPLYING FOR OFFER SHARES AS A NOMINEE OF ANY OTHER PERSON AND THAT ANY ELECTRONIC APPLICATION THAT YOU MAKE IS THE ONLY APPLICATION MADE BY YOU AS BENEFICIAL OWNER. YOU SHOULD MAKE ONLY ONE ELECTRONIC APPLICATION FOR OFFER SHARES AND SHOULD NOT MAKE ANY OTHER APPLICATION FOR OFFER OR PLACEMENT SHARES, WHETHER AT THE ATM OR THE IB WEBSITES OF ANY PARTICIPATING BANK OR ON THE APPLICATION FORMS. IF YOU HAVE MADE AN APPLICATION FOR OFFER SHARES OR PLACEMENT SHARES ON AN APPLICATION FORM, YOU SHALL NOT MAKE AN ELECTRONIC APPLICATION FOR OFFER SHARES AND VICE VERSA.
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2. You must have sufficient funds in your bank account with your Participating Bank at the time you make your Electronic Application, failing which your Electronic Application will not be completed or accepted. Any Electronic Application which does not conform strictly to the instructions set out on the screens of the ATM or IB website through which your Electronic Application is being made shall be rejected. You may make an ATM Electronic Application at the ATM of any Participating Bank or an Internet Electronic Application at the IB website of the relevant Participating Bank for the Offer Shares using only cash by authorising such Participating Bank to deduct the full amount payable from your account with such Participating Bank. You irrevocably agree and undertake to subscribe for and to accept the number of Offer Shares applied for as stated on the Transaction Record or the Confirmation Screen or any lesser number of Offer Shares that may be allotted and/or allocated to you in respect of your Electronic Application. In the event that we and the Vendors decide to allot and/or allocate any lesser number of such Offer Shares or not to allot and/or allocate any Offer Shares to you, you agree to accept such decision as final. If your Electronic Application is successful, your confirmation (by your action of pressing the Enter or OK or Confirm or Yes or any other relevant key on the ATM or clicking Confirm or OK or any other relevant key on the IB website screen) of the number of Offer Shares applied for shall signify and shall be treated as your acceptance of the number of Offer Shares that may be allotted and/or allocated to you and your agreement to be bound by the Memorandum and Articles of Association of our Company. We will not keep any applications in reserve. Where your Electronic Application is unsuccessful, the full amount of the application monies will be refunded in Singapore currency (without interest or any share of revenue or other benefit arising therefrom) to you by being automatically credited to your account with your Participating Bank within 24 hours after balloting provided that the remittance in respect of such application which has been presented for payment or other processes has been honoured and the application monies have been received in the designated share issue account. Trading on a WHEN ISSUED basis, if applicable, is expected to commence after such refund has been made. Where your Electronic Application is rejected or accepted in part only, the full amount or the balance of the application monies, as the case may be, will be refunded in Singapore currency (without interest or any share of revenue or other benefit arising therefrom) to you by being automatically credited to your account with your Participating Bank within 14 days after the close of the Application List provided that that the remittance in respect of such application which has been presented for payment or other processes has been honoured and the application monies have been received in the designated share issue account.. Responsibility for timely refund of application monies arising from unsuccessful or partially successful Electronic Applications lies solely with the respective Participating Banks. Therefore, you are strongly advised to consult your Participating Bank as to the status of your Electronic Application and/or the refund of any moneys to you from unsuccessful or partially successful Electronic Application, to determine the exact number of Offer Shares allotted and/or allocated to you before trading the Offer Shares on the SGX-ST. You may also call CDP Phone at 6535 7511 to check the provisional results of your application by using your T-pin (issued by CDP upon application for the service) and keying in the stock code (that will be made available together with the results of the allotment and/or allocation via announcement through SGX-ST and by advertisement in a local English newspaper). To sign up for the service, you may contact CDP Customer Service Officers. Neither the SGX-ST, the CDP, the SCCS, the Participating Banks, our Company, the Vendors or the Manager, Underwriter and Placement Agent assume any responsibility for any loss that may be incurred as a result of you having to cover any net sell positions or from buy-in procedures activated by the SGX-ST. 6. If your Electronic Application is made through the ATMs of the Participating Banks and is unsuccessful, no notification will be sent by such Participating Bank. F-12
3.
4.
5.

If your Internet Electronic Application made through the IB website of the Participating Banks is unsuccessful, no notification will be sent by such Participating Bank. If you make Electronic Applications through the ATMs of the following banks or IB websites where applicable, you may check the results of your Electronic Applications as follows:
Available at ATM/ Internet ATM (OtherTransactions IPO Enquiry)(1) http://www.uobgroup.com(1)(2) DBS 1 800 339 6666 (for POSB Account holders) 1800 111 1111 (for DBS Account holders) OCBC 1800 363 3333 Internet Banking Service expected from Evening of the balloting day
Bank UOB Group
Telephone 1800 222 2121
Operating Hours ATM / Phone Banking 24 hours a day
Internet Banking - 24 hours a day 24 hours a day
Evening of the balloting day Evening of the balloting day
http://www.dbs.com(2)
ATM/Phone Banking/ Internet Banking/ http://www.ocbc.com(3)
24 hours a day
Evening of the balloting day
Notes: (1) (2) If you have made your Electronic Application through the ATM or IB website of UOB Group, you may check the results of your application through UOB Personal Internet Banking, UOB Group ATMs or UOB Phone Banking Services. If you have made your Internet Electronic Application through the IB websites of DBS Bank or UOB Group, you may check the results through the same channels listed in the table above in relation to ATM Electronic Applications made at ATMs of DBS Bank or UOB Group. If you have made your Electronic Application through the ATM of OCBC Bank, you may check the result of your application through OCBC Personal Internet Banking, OCBC ATMs or OCBC Phone Banking Services.
(3)
7.
Electronic Applications shall close at 12.00 noon on 23 September 2009 or such other time as we and the Vendors may, in consultation with the Manager, decide. Subject to paragraph 8 below, an Internet Electronic Application is deemed to be received only upon its completion, that is, when there is an on-screen confirmation of the application. You are deemed to have irrevocably requested and authorised our Company and Vendors to: (a) register the Offer Shares allotted and/or allocated to you in the name of CDP for deposit into your Securities Account; send the relevant Share certificate(s) to CDP; return or refund (without interest or any share of revenue earned or other benefit arising therefrom) the application monies in Singapore currency, should your Electronic Application be rejected, by automatically crediting your bank account with your Participating Bank with the relevant amount within 24 hours after balloting; and return or refund (without interest or any share of revenue or other benefit arising therefrom) the balance of the application monies in Singapore currency, should your Electronic Application be accepted in part only, by automatically crediting your bank account with your Participating Bank with the relevant amount within 14 days after the close of the Application List.
8.
(b) (c)
(d)
F-13

9. You irrevocably agree and acknowledge that your Electronic Application is subject to risks of electrical, electronic, technical and computer-related faults and breakdowns, fires, acts of God and other events beyond the control of our Company, the Vendors, the Manager and/or the Participating Bank and if, in any such event, our Company, the Vendors, the Manager and/or the relevant Participating Bank do not receive your Electronic Application, or data relating to your Electronic Application is lost, corrupted or not otherwise accessible, whether wholly or partially for whatever reason, you shall be deemed not to have made an Electronic Application and you shall have no claim whatsoever against our Company, the Vendors, the Manager and/or the relevant Participating Bank for Offer Shares applied for or for any compensation, loss or damage. We do not recognise the existence of a trust. Any Electronic Application by a trustee must be made in your own name and without qualification. We and the Vendors will reject any application by any person acting as nominee except those made by approved nominee companies only. All your particulars in the records of your Participating Bank at the time you make your Electronic Application shall be deemed to be true and correct and your Participating Bank and the Relevant Parties shall be entitled to rely on the accuracy thereof. If there has been any change in your particulars after making your Electronic Application, you shall promptly notify your Participating Bank. You should ensure that your personal particulars as recorded by both CDP and the relevant Participating Bank are correct and identical, otherwise, your Electronic Application is liable to be rejected. You should promptly inform CDP of any change in address, failing which the notification letter on successful allotment and/or allocation and other correspondence from CDP will be sent to your address last registered with CDP. By making and completing an Electronic Application, you are deemed to have agreed that: (a) In consideration of our Company and the Vendors making available the Electronic Application facility, through the Participating Banks acting as our agents, at the ATMs and IB websites (if any): (i) (ii) your Electronic Application is irrevocable; and your Electronic Application, our acceptance and the contract resulting therefrom under the Invitation shall be governed by and construed in accordance with the laws of Singapore and you irrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
10.
11.
12.
13.
(b)
neither our Company, the Vendors, the Manager, the Underwriter and Placement Agent, the Participating Banks nor CDP shall be liable for any delays, failures or inaccuracies in the recording, storage or in the transmission or delivery of data relating to your Electronic Application to us or CDP due to breakdowns or failure of transmission, delivery or communication facilities or any risks referred to in paragraph 8 above or to any cause beyond their respective controls; in respect of Offer Shares for which your Electronic Application has been successfully completed and not rejected, acceptance of your Electronic Application shall be constituted by written notification by or on behalf of our Company and the Vendors and not otherwise, notwithstanding any payment received by or on behalf of our Company and the Vendors; you will not be entitled to exercise any remedy of rescission for misrepresentation at any time after acceptance of your application; and in making your application, reliance is placed solely on the information contained in this Prospectus and none of our Company, the Vendors, 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. F-14
(c)
(d)
(e)

Steps for Electronic Applications through ATMs and the IB website of UOB Group The instructions for Electronic Applications will appear on the ATM screens and the IB website screens of the respective Participating Banks. For illustrative purposes, the steps for making an Electronic Application through UOB Groups ATMs or through the IB website of UOB Group are shown below. Instructions for Electronic Applications appearing on the ATM screens and the IB website screens (if any) of the relevant Participating Banks (other than UOB Group) may differ from that represented below. Owing to space constraints on UOBs ATM screens, the following terms will appear in abbreviated form: & : and
A/C and A/CS : ACCOUNT AND ACCOUNTS, respectively ADDR AMT APPLN CDP CPF CPFINVT A/C ESA IC/PSSPT NO or NO. : ADDRESS : AMOUNT : APPLICATION : THE CENTRAL DEPOSITORY (PTE) LIMITED : CENTRAL PROVIDENT FUND BOARD : CPF INVESTMENT ACCOUNT : ELECTRONIC SHARE APPLICATION : NRIC or PASSPORT NUMBER : NUMBER
PERSONAL NO : PERSONAL IDENTIFICATION NUMBER REGISTRARS SCCS SGX : SHARE REGISTRARS : SECURITIES CLEARING & COMPUTER SERVICES (PTE) LTD : SINGAPORE EXCHANGE SECURITIES TRADING (PTE) LTD
UOB/ICB CPFIS : UOB OR ICB CPF INVESTMENT SCHEME YR : YOUR
Steps for an ATM Electronic Application through ATMs of UOB Group Step 1: Insert your personal Unicard, Uniplus card or UOB VISA/MASTER card and key in your personal identification number. Select CASHCARD/OTHER TRANSACTIONS. Select SECURITIES APPLICATION. Select the share counter which you wish to apply for.
2: 3: 4:
F-15

5: Read and understand the following statements which will appear on the screen: THIS OFFER OF SECURITIES (OR UNITS OF SECURITIES) WILL BE MADE IN, OR ACCOMPANIED BY, A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENTS. ANYONE WISHING TO ACQUIRE THESE SECURITIES (OR UNITS OF SECURITIES) WILL NEED TO MAKE AN APPLICATION IN THE MANNER SET OUT IN THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENTS (Press ENTER to continue) PLEASE CALL 1800-22-22-121 IF YOU WOULD LIKE TO FIND OUT WHERE YOU CAN OBTAIN A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENT WHERE APPLICABLE, A COPY OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENT HAS BEEN LODGED WITH AND REGISTERED BY THE MONETARY AUTHORITY OF SINGAPORE WHO ASSUMES NO RESPONSIBILITY FOR THE CONTENTS OF THE PROSPECTUS/DOCUMENT OR SUPPLEMENTARY DOCUMENT (Press the ENTER key to confirm that you have read and understood the above statements.) 6: Read and understand the following terms which will appear on the screen: YOU HAVE READ, UNDERSTOOD & AGREED TO ALL THE TERMS OF THE PROSPECTUS/DOCUMENT/SUPPLEMENTARY DOCUMENT & THIS ELECTRONIC APPLICATION YOU CONSENT TO DISCLOSE YR NAME, IC/PSSPT, NATIONALITY, ADDR, APPLN AMT, CPFINVT A/C NO AND CDP A/C NO FROM YOUR A/CS TO CDP, CPF, SCCS, SHARE REGISTRARS, SGX-ST AND ISSUER/VENDOR(S) THIS IS YOUR ONLY FIXED PRICE APPLN & IS IN YOUR NAME AND AT YOUR RISK (Press ENTER to continue)
7:
Screen will display: NRIC/Passport No. XXXXXXXXXXXX IF YOUR NRIC NO / PASSPORT NO IS INCORRECT, PLEASE CANCEL THE TRANSACTION AND NOTIFY THE BRANCH PERSONALLY. (Press CANCEL or CONFIRM)
8:
Select mode of payment i.e. (CASH ONLY). You will be prompted to select Cash Account type to debit (i.e., CURRENT ACCOUNT / I- ACCOUNT, CAMPUS ACCOUNT OR SAVINGS ACCOUNT / TX-ACCOUNT). Should you have a few accounts linked to your ATM card, a list of linked account numbers will be displayed for you to select. After you have selected the account, your CDP Securities Account number will be displayed for you to confirm or change (This screen with your CDP Securities Account number will be shown if your CDP Securities Account number is already stored in the ATM system of UOB). If this is the first time you are using UOBs ATM to apply for Shares, your CDP Securities Account number will not be stored in the ATM system of UOB, and the following screen will be displayed for your input of your CDP Securities Account number.
9:
F-16

10: Read and understand the following terms which will appear on the screen: 1. PLEASE DO NOT APPLY FOR YOUR JOINT A/C HOLDER OR OTHER THIRD PARTIES PLEASE USE YOUR OWN ATM CARD DO NOT KEY IN THE CDP A/C NO. OF YOUR JOINT A/C HOLDER OR OTHER THIRD PARTIES KEY IN YOUR CDP A/C NO. (12 DIGITS) 1681-XXXX-XXXX PRESS ENTER KEY
2. 3.
4. 5. 11 : 12: 13: 14:
Key in your CDP Securities Account number (12 digits) and press the ENTER key. Select your nationality status. Key in the number of Shares you wish to apply for and press the ENTER key. Check the details of your Electronic Application on the screen and press ENTER key to confirm your Electronic Application. Select NO if you do not wish to make any further transactions and remove the Transaction Record. You should keep the Transaction Record for your own reference only.
15:
Owing to space constraints on UOB Groups IB website screens, the following terms will appear in abbreviated form: CDP CPF NRIC or I/C PR SGD or S$ SCCS SGX-ST : The Central Depository (Pte) Limited : The Central Provident Fund : National Registration Identity Card : Permanent Resident : Singapore Dollars : Securities Clearing & Computer Services (Pte) Ltd : Singapore Exchange Securities Trading Limited
Steps for an Internet Electronic Application through the IB website of UOB Group Step 1: 2: 3: 4: 5: Connect to UOB website at http://www.uobgroup.com Locate the Login icon on the left hand side next to Internet Banking Click on Login and at drop list select UOB Personal Internet Banking Enter your Username and Password and click Submit Select Investment Services (IPO Application should be the default transaction that appears, if not click IPO Application) Read the IMPORTANT notice and complete the declarations found on the bottom of the page by answering Yes/No to the questions
6:
F-17

7: 8: Click Continue Select your country of residence (you must be residing in Singapore to apply), and click Continue Select the IPO counter from the drop list (if there are concurrent IPOs) and click Continue Check the share counter, select the mode of payment and account number to debit and click on Continue Read the important instructions and click on Continue to confirm that: 1. You have read, understood and agreed to all terms of this application and Prospectus/Document or Supplementary Document. You consent to disclose your name, I/C or passport number, address, nationality, CDP Securities Account number, CPF Investment Account number (if applicable), and application details to the share registrars, SGX-ST, SCCS, CDP, CPF Board and issuer/vendor(s). This application is made in your own name for your own account and at your own risk. For FIXED/MAX price shares application, this is your only application. For TENDER price shares application, this is your only application at the selected tender price. For FOREIGN CURRENCY securities, subject to the terms of the issue, please note the following: The application monies will be debited from your bank account in S$, based on the Banks prevailing board rates at the time of application. The different prevailing board rates at the time of application and at the time of refund of application monies may result in either a foreign exchange profit or loss, or application monies may be debited and refunds credited in S$ at the same exchange rate. For 1st-Come-1st Serve securities, the number of securities applied for may be reduced, subject to the availability at the point of application.
9: 10:
11:
2.
3.
4.
5.
6.
12:
Check your personal details, details of the share counter you wish to apply for and account to debit Select (a) Nationality; Enter (b) your CDP securities account number; and (c) the number of shares applied for Click Submit Check details of your application, your NRIC/Passport number, CDP securities account number and the number of shares applied for, share counter, payment mode and account to debit. Click Confirm, Edit or Cancel. Print the Confirmation Screen (optional) for own your reference and retention only
13:
14: 15:
F-18
APPENDIX G RULES OF THE GREAT GROUP PERFORMANCE SHARE SCHEME

1. Name of the Scheme The Scheme shall be called the Great Group Performance Share Scheme. 2. Definitions In the Scheme, unless the context otherwise requires, the following words and expressions shall have the following meanings: Act : The Companies Act, Chapter 50 of Singapore, as amended or modified from time to time The date on which the Scheme is adopted by our Company in general meeting The contingent award of Shares under the Scheme The auditors of our Company, for the time being The board of directors of our Company, for the time being The Central Depository (Pte) Limited The Central Provident Fund The date of commencement of the Scheme A committee comprising Directors of our Company, duly authorised, appointed and nominated by the Board pursuant to the Rules to administer the Scheme Great Group Holdings Limited, a company incorporated in Singapore A Shareholder who, in relation to our Company, has control A director of our Company, for the time being Our Company and its subsidiaries A full-time employee who has been employed by our Company or any member of our Group for a minimum of one (1) year and who is selected by the Committee to participate in the Scheme in accordance with Rule 4.1(a) A director of our Company and/or any of its subsidiaries, as the case may be, who performs an executive function The Listing Manual of the SGX-ST A day on which the SGX-ST is open for trading of securities The new Shares which may be issued and allotted from time to time pursuant to the vesting of the Awards granted under the Scheme
Adoption Date
Award Auditors Board CDP CPF Commencement Date Committee
: : : : : : :
Company
Controlling Shareholder Director Group Group Employee
: : : :
Group Executive Director
Listing Manual Market Day New Shares
: : :
G-1

Non-Executive Director : A director of our Company (including an independent Director) and/or any of its subsidiaries, as the case may be, other than a Group Executive Director A person who is selected by the Committee to participate in the Scheme in accordance with the provisions of the Scheme The performance targets prescribed by the Committee to be fulfilled by a Participant for any particular period under the Scheme The rules of the Scheme, as the same may be amended from time to time The Great Group Performance Share Scheme, as modified or altered from time to time Singapore Exchange Securities Trading Limited The registered holders of our Shares or in the case of Depositors, Depositors who have Shares entered against their names in the Depository Register Ordinary shares in the capital of our Company Percentage or per centum Singapore dollars
Participant
Performance Targets
Rules
Scheme
SGX-ST Shareholders
: :
Shares % $ or S$
: : :
2.2
For the purposes of the Scheme: (a) in relation to a Shareholder (including, where the context requires, our Company), control means the capacity to dominate decision-making, directly or indirectly, in relation to the financial and operating policies of that company; unless rebutted, a person who holds directly or indirectly, a shareholding of 15% or more of our Companys issued share capital shall be presumed to be a Controlling Shareholder; and in relation to a Controlling Shareholder, his associate shall have the meaning ascribed to it by the Listing Manual or any other publication prescribing rules or regulations for corporations admitted to the Official List of the SGX-ST (as modified, supplemented or amended from time to time).
(b)
(c)
2.3
The terms Depositor and Depository Agent shall have the meanings ascribed to them respectively by Section 130A of the Act. Any reference in the Scheme to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act and used in these Rules shall have the meaning assigned to it under the Act. Words importing the singular number shall include the plural number where the context admits and vice versa. Words importing the masculine gender shall include the feminine gender where the context admits. Any reference to a time of day shall be a reference to Singapore time.
2.4
2.5
2.6
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2.7 Any reference in the Scheme to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any statutory modification thereof and used in the Scheme shall have the meaning assigned to it under the Act. Purpose The purpose of the Scheme is to provide an opportunity for Group Employees and Directors (including Non-Executive Directors) who have met the Performance Targets to be remunerated not just through cash bonuses but also by an equity stake in our Company so as to motivate them to greater dedication, loyalty and higher standards of performance, and to give recognition to those who have contributed to the success and development of our Company and our Group. Our Company believes that the retention of outstanding employees within our Group is paramount to our Groups long-term objective of pursuing continuous growth and expansion in its business and operations. Our Group also acknowledges that it is important to preserve financial resources for future business developments and to withstand difficult times. As such, one of our Groups strategies is to contain the remuneration of its employees and executives which is a major component of our Groups operating costs. The Scheme is formulated with those objectives in mind. It is hoped that through the Scheme, our Company would be able to remain an attractive and competitive employer and to manage its fixed overhead costs without compromising on performance standards and efficiency. 4. 4.1 Eligibility The following persons (provided that such persons are not undischarged bankrupts at the relevant time) shall be eligible to participate in the Scheme at the absolute discretion of the Committee: (a) Group Employees who have attained the age of 21 years on or before the Commencement Date; Group Executive Directors; and Non-Executive Directors (including independent directors) who, in the opinion of the Committee, will contribute to the success of our Group.
3.
(b) (c)
4.2
Persons who are Controlling Shareholders shall not be eligible to participate in the Scheme. However, their Associates are eligible to participate in the PSS. For the purposes of paragraph 4.1(a) above, the secondment of a Group Employee to another company within our Group shall not be regarded as a break in his employment or his having ceased by reason only of such secondment to be a full-time employee of our Group. There shall be no restriction on the eligibility of any Participant to participate in any other share option or share incentive schemes implemented by our Company or any other company within our Group. Subject to the Act and any requirement of the SGX-ST, the terms of eligibility for participation in the Scheme may be amended from time to time at the absolute discretion of the Committee. Limitations under the Scheme The aggregate number of Shares to be delivered pursuant to the vesting of the Awards on any date, when added to the number of Shares issued and issuable in respect of such other Shares issued and/or issuable under such other share-based incentive schemes of our Company shall not exceed 15% of the issued Shares of our Company on the day preceding that date. Subject to such adjustment as may be made to this PSS as a result of any variation in the capital structure of our Company, no more than 25% of the total number of Shares in respect of which our Company may grant Award under this Scheme may be offered in aggregate to the Associates
4.3
4.4
4.5
5. 5.1
5.2
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of Controlling Shareholders and the total number of Shares to be offered to each of its Associate must not exceed 10% of the total number of Shares in respect of which our Company may grant Award in the future. 5.3 Awards may only be vested, and consequently any Shares comprised in such Awards shall only be delivered, upon the Committee being satisfied that the Participant has achieved the Performance Targets. Date of Grant The Committee may grant Awards at any time during the financial year of our Company, provided that in the event that an announcement on any matter of an exceptional nature involving unpublished price sensitive information is imminent, Award may only be vested and hence any Shares comprised in such Awards may only be delivered on or after the second Market Day from the date on which the aforesaid announcement is made. 7. 7.1 Awards Awards are personal to the Participant to whom it is given and shall not be transferred (other than to a Participants personal representative on the death of that Participant), charged, assigned, pledged or otherwise disposed of, in whole or in part, unless with the prior approval of the Committee. Once an Award is finalised by the Committee, the Committee shall send an Award letter to the Participant confirming the said Award. The said Award letter shall specify inter alia, the following: (a) (b) (c) (d) the date on which the Award is to be vested; the number of Shares which are the subject of the Award; the prescribed Performance Target(s); the performance period during which the prescribed Performance Target(s) are to be satisfied; and the extent to which our Shares under that Award shall be released on the prescribed Performance Target(s) being satisfied (whether fully or partially) or exceeded, as the case may be, at the end of the prescribed performance period. No Shares under the Award shall be released for the portion of the prescribed Performance Target(s) which is not satisfied by the Participant at the end of the prescribed performance period.
6.
7.2
(e)
8. 8.1
Vesting of the Awards Notwithstanding that a Participant may have met his Performance Targets, no Award shall be made: (a) upon the bankruptcy of the Participant or the happening of any other event which results in his being deprived of the legal or beneficial ownership of such Award; or in the event of any misconduct on the part of the Participant as determined by the Committee in its discretion; or in the event that the Committee shall, at its discretion, deem it appropriate that such Award to be given to a Participant shall so lapse on the grounds that any of the objectives of the Scheme (as set out in Rule 3) have not been met.
(b)
(c)
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8.2 A Participant shall be entitled to an Award so long as he has met the Performance Targets notwithstanding that he may have ceased to be employed by our Company after the fulfillment of such Performance Targets. For the purpose of this Rule 8.2, the Participant may cease to be so employed in any of the following events, namely: (a) through ill health, injury or disability (in each case, evidenced to the satisfaction of the Committee); redundancy; retirement at or after the legal retirement age; retirement before the legal retirement age with the consent of the Committee; or any other reason, the cessation of employment is approved by the Committee.
(b) (c) (d) (e)
Save as provided and for the avoidance of doubt, an Award shall nevertheless be given to a Participant for as long as he has fulfilled his Performance Targets and notwithstanding a transfer of his employment within any company in our Group or any apportionment of Performance Targets within any company within our Group. 8.3 If a Participant has fulfilled his Performance Targets but dies before an Award is made, the Award shall in such circumstances be given to the personal representatives of the Participant. Take-over and winding up of our Company Notwithstanding Rule 8 but subject to Rule 9.5, in the event of a take-over being made for our Shares, a Participant shall be entitled to an Award if he has met the Performance Targets which falls within the period commencing on the date on which such offer for a take-over of our Company is made or, if such offer is conditional, the date on which such offer becomes or is declared unconditional, as the case may be, and ending on the earlier of: (a) the expiry of six (6) months thereafter, unless prior to the expiry of such six-month period, at the recommendation of the offeror and with the approvals of the Committee and the SGX-ST, such expiry date is extended to a later date (in either case, being a date falling not later than the last date on which the Performance Targets are to be fulfilled); or the date of expiry of the period for which the Performance Targets are to be fulfilled.
9. 9.1
(b)
Provided that if during such period, the offeror becomes entitled or bound to exercise rights of compulsory acquisition under the provisions of the Act and, being entitled to do so, gives notice to the Participant that it intends to exercise such rights on a specified date, the Participant shall be obliged to fulfil such Performance Target until the expiry of such specified date or the expiry date of the Performance Target relating thereto, whichever is earlier, before an Award can be vested. 9.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for the purposes of, or in connection with, a scheme for the reconstruction of our Company or its amalgamation with another company or companies, each Participant shall be entitled, notwithstanding Rule 8 but subject to Rule 9.5, to any Award so determined by the Committee to be vested in him during the period commencing on the date upon which the compromise or arrangement is sanctioned by the court and ending either on the expiry of sixty (60) days thereafter or the date upon which the compromise or arrangement becomes effective, whichever is later. If an order is made for the winding-up of our Company on the basis of its insolvency, all Awards, notwithstanding that they may have been so vested shall be deemed or become null and void. In the event of a members voluntary winding-up (other than for amalgamation or reconstruction), the Awards shall so vest in the Participant for so long as, in the absolute determination by the Committee, the Participant has met the Performance Targets prior to the date that the members voluntary winding-up shall be deemed to have been commenced or effective in law. G-5
9.3
9.4

9.5 If in connection with the making of a general offer referred to in Rule 9.1 or the scheme referred to in Rule 9.2 or the winding-up referred to in Rule 9.4, arrangements are made (which are confirmed in writing by the Auditors, acting only as experts and not as arbitrators, to be fair and reasonable) for the compensation of the Participants, whether by the payment of cash or by any other form of benefit. No Award shall be made in such circumstances. Shares
10.
10.1 Subject to such consents or other required action of any competent authority under any regulations or enactments for the time being in force as may be necessary and subject to the compliance with the terms of the Scheme and the Articles of Association of our Company, our Company shall, within ten (10) Market Days after the vesting of an Award, allot the relevant Shares and despatch to CDP the relevant share certificates by ordinary post or such other mode as the Committee may deem fit. 10.2 Our Company shall, as soon as practicable after such allotment, apply to the SGX-ST for permission to deal in and for quotation of such Shares. 10.3 Shares which are the subject of an Award shall be issued in the name of CDP to the credit of the securities account of that Participant maintained with CDP, the securities sub-account maintained with a Depository Agent or the CPF investment account maintained with a CPF agent bank. 10.4 Shares issued and allotted upon the vesting of an Award shall be subject to all the provisions of the Articles of Association of our Company, and shall rank in full for all entitlements, excluding dividends or other distributions declared or recommended in respect of the then existing Shares, the Record Date for which falls on or after the relevant vesting date of the Award, and shall in all other respects rank pari passu with other existing Shares then in issue. Record Date means the date fixed by our Company for the purposes of determining entitlements to dividends or other distributions to or rights of holders of Shares. 11. Variation of Capital
11.1 If a variation in the issued ordinary share capital of our Company (whether by way of a, capitalisation of profits or reserves or rights issue, reduction, subdivision, consolidation, distribution or otherwise) shall take place: (a) (b) the class and/or number of Shares comprised in an Award; and/or the class and/or number of Shares which may be granted under the Scheme, shall be adjusted by the Committee to give each Participant the same proportion of the equity capital of our Company as that to which he was previously entitled and, in doing so, the Committee shall determine at its own discretion the manner in which such adjustment shall be made.
11.2 Unless the Committee considers an adjustment to be appropriate: (a) the issue of securities as consideration for an acquisition or a private placement of securities; or the cancellation of issued Shares purchased or acquired by our Company by way of a market purchase of such Shares undertaken by our Company on the SGX-ST during the period when a share purchase mandate granted by shareholders of our Company (including any renewal of such mandate) is in force,
(b)
shall not normally be regarded as a circumstance requiring adjustment. 11.3 Notwithstanding the provisions of Rule 11.1: (a) no such adjustment shall be made if as a result, the Participant receives a benefit that a Shareholder does not receive; and
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(b) any determination by the Committee as to whether to make any adjustment and if so, the manner in which such adjustment should be made, must (except in relation to a capitalisation issue) be confirmed in writing by the Auditors (acting only as experts and not as arbitrators) to be in their opinion, fair and reasonable.
11.4 Any increase in the issued share capital of our Company as a consequence of the delivery of Shares pursuant to the vesting of the Awards from time to time by our Company, or through any other share-based incentive schemes implemented by our Company, will also not be regarded as a circumstance requiring adjustment. 11.5 Upon any adjustment required to be made pursuant to this Rule 11, our Company shall notify the Participant (or his duly appointed personal representatives where applicable) in writing and deliver to him (or his duly appointed personal representatives where applicable) a statement setting forth the class and/or number of Shares thereafter to be issued pursuant to the grant of an Award. Any adjustment shall take effect upon such written notification being given. 12. Administration of the Scheme
12.1 The Scheme shall be administered by the Committee in its absolute discretion with such powers and duties as are conferred on it by the Board, provided that no member of the Committee shall participate in any deliberation or decision in respect of Award granted or to be granted to him. Shareholders who are eligible to participate in the Scheme shall abstain from voting on any resolution relating to the Scheme. 12.2 The Committee shall have the power, from time to time, to make and vary such regulations (not being inconsistent with the Scheme) for the implementation and administration of the Scheme as they think fit including, but not limited to: (a) imposing restrictions on the number of Awards that may be vested within each financial year; and amending Performance Targets if by so doing, it would be a fairer measure of performance for a Participant or for the Scheme as a whole.
(b)
12.3 Any decision of the Committee made pursuant to any provision of the Scheme (other than a matter to be certified by the Auditors) shall be final and binding (including any decisions pertaining to the number of Shares to be vested or to disputes as to the interpretation of the Scheme or any rule, regulation, procedure thereunder or as to any rights under the Scheme). 13. Notices and Annual Report
13.1 Any notice required to be given by a Participant to our Company shall be sent or made to the registered office of our Company or such other addresses as may be notified by our Company to him in writing. 13.2 Any notices or documents required to be given to a Participant or any correspondence to be made between our Company and the Participant shall be given or made by the Committee (or such person(s) as it may from time to time direct) on behalf of our Company and shall be delivered to him by hand or sent to him at his home address according to the records of our Company or at the last known address of the Participant and if sent by post, shall be deemed to have been given on the day following the date of posting. 13.3 Our Company shall disclose the following in its annual report: (a) (b) the names of the members of the Committee administering the Scheme; and in respect of the following Participants: (i) Directors of our Company;
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(ii) (iii) Associates of the Controlling Shareholders; and Group Employees, other than those in (i) and (ii) above who received Shares pursuant to the vesting of the Awards granted under the Scheme which, in aggregate, represent 5% or more of the total number of New Shares available under the Scheme,
the following information: (aa) (bb) name of the participant; number of Shares issued comprised in awards granted to such participant during the financial year under review (including terms); aggregate number of Shares comprised in awards granted to such participant since the commencement of the PSS to the end of the financial year under review; aggregate number of Shares comprised in awards which have vested from the commencement of the PSS to the end of the financial year under review; number of Shares comprised in awards not released as at the end of the financial year under review; and total number of Shares issued or delivered to such participant under the PSS during the financial year under review.
(cc)
(dd)
(ee)
(ff)
(c)
such other information as may be required by the Listing Manual or the Act.
If any of the above is not applicable, an appropriate negative statement shall be included therein. 14. Modifications to the Scheme
14.1 Any or all the provisions of the Scheme may be modified and/or altered at any time and from time to time by resolution of the Committee, except that: (a) any modification or alteration which would be to the advantage of Participants under the Scheme shall be subject to the prior approval of Shareholders in general meeting; and no modification or alteration shall be made without due compliance with the Listing Manual and such other regulatory authorities as may be necessary.
(b)
However, no modification or alteration shall adversely affect the rights attached to Awards granted prior to such modification or alteration except with the written consent of such number of Participants who, if their Awards were released to them, would thereby become entitled to not less than three-quarters in number of all our Shares which would be issued in full pursuant to all outstanding Awards under the Scheme. 14.2 The Committee may at any time by resolution (and without other formality, save for the prior approval of the SGX-ST) amend or alter the rules or provisions of the Scheme in any way to the extent necessary to cause the Scheme to comply with any statutory provision or the provision or the regulations of any regulatory or other relevant authority or body (including the SGX-ST). 14.3 Written notice of any modification or alteration made in accordance with this Rule 14 shall be given to all Participants. 15. Terms of employment unaffected The terms of employment of a Participant (who is a Group Employee) shall not be affected by his participation in the Scheme, which shall neither form part of such terms nor entitle him to take into account such participation in calculating any compensation or damages on the termination of his employment for any reason.
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16. Duration of the Scheme
16.1 The Scheme shall continue to be in force at the discretion of the Committee, subject to a maximum period of ten (10) years commencing on the Adoption Date, provided always that the Scheme may continue beyond the above stipulated period with the approval of our Companys Shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. 16.2 The Scheme may be terminated at any time by the Committee or by resolution of our Company in general meeting subject to all relevant approvals which may be required and if the Scheme is so terminated, no further Awards shall be vested thereafter. 16.3 The termination of the Scheme shall not affect Awards which have been vested, whether such Shares have been delivered or not. 17. Taxes All taxes (including income tax) arising from the grant and/or disposal of Shares pursuant to the Awards granted to any Participant under the Scheme shall be borne by that Participant. 18. Costs and expenses
18.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issue and allotment of any Shares pursuant to the Awards in CDPs name, the deposit of share certificate(s) with CDP, the Participants securities account with CDP, or the Participants securities sub-account with a CDP Depository Agent or CPF investment account with a CPF agent bank (collectively, the CDP Charges). 18.2 Save for the taxes referred to in Rule 17 and such other costs and expenses expressly provided in the Scheme to be payable by the Participants, all fees, costs and expenses incurred by our Company in relation to the Scheme including but not limited to the fees, costs and expenses relating to the allotment, issue and/or delivery of Shares pursuant to the Awards shall be borne by our Company. 19. Disclaimer of liability Notwithstanding any provisions herein contained, the Board, the Committee and our Company shall not under any circumstances be held liable for any costs, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to our Companys delay in issuing its Shares or applying for or procuring the listing of the New Shares on the SGX-ST in accordance with Rule 10.2. 20. Disputes Any disputes or differences of any nature arising hereunder shall be referred to the Committee and its decision shall be final and binding in all respects. 21. Condition of Awards Every Award shall be subject to the condition that no Shares would be issued pursuant to the vesting of any Award if such issue would be contrary to any law or enactment, or any rules or regulations of any legislative or non-legislative governing body for the time being in force in Singapore or any other relevant country having jurisdiction in relation to the issue of Shares hereto. 22. Governing law The Scheme shall be governed by, and construed in accordance with, the laws of the Republic of Singapore. The Participants, by accepting Awards in accordance with the Scheme, and our Company irrevocably submit to the exclusive jurisdiction of the courts of the Republic of Singapore.
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Great Group Holdings 2009 IPO Prospectus

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Great Group Holdings 2009 IPO Prospectus

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PROSPECTUS DATED 16 SEPTEMBER 2009

(Registered by the Monetary Authority of Singapore on 16 September 2009)

Daiwa Securities SMBC Singapore Limited

GROSS PROFIT MARGIN CAGR 65.5% %

NET PROFIT RMBmil 80 70 60 50 40 30 22.2 20 10 0

34.3 32.9 24.9

A-1 B-1 C-1

Company Registration Number Registered Office

Principal Office and Contact Details

Share Registrar and Share Transfer Agent

Manager, Underwriter and Placement Agent

Legal Advisers to our Company on PRC Law

Act or Companies Act

of the entity; and

ATM ATM Application

EPS Executive Directors

HKSAR, HK or Hong Kong IB IB Application

Invitation Price Invitation Shares

Latest Practicable Date

Lead Independent Director

Macau Market Day

NAV New Shares

R&D Remuneration Committee

Relevant Period Restructuring Exercise

Securities and Futures Regulations or SFR

Shareholders Shares Sub-division

UK USA Vendors Vendor Shares

GLOSSARY OF TECHNICAL TERMS

ODM Oeko-Tex Standard 100

GLOSSARY OF TECHNICAL TERMS

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

(b) (c) (d) (e) (f) (g) (h) (i) (j)

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

DETAILS OF THE INVITATION

9.00 a.m. on 25 September 2009 30 September 2009

Invitation Price Purpose of Invitation

USE OF PROCEEDS AND LISTING EXPENSES

Gross Proceeds from the Invitation

USE OF PROCEEDS AND LISTING EXPENSES

MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS

MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS

MANAGEMENT, UNDERWRITING AND PLACEMENT ARRANGEMENTS

(RMB000) Revenue Net profit

FY2006 146,363 22,248

FY2008 400,835 70,807

(S$000) Revenue Net profit

FY2006 29,080 4,420

FY2007 51,938 11,181

FY2008 81,470 14,392

(iii) (iv) (v) (vi) (vii)

(iii) (iv) (v) (vi)

Lowest 4.399 4.499 4.604 4.671 4.667 4.708

4.530 4.605 4.732 4.754 4.747 4.768

CAPITALISATION AND INDEBTEDNESS

9,000 11,410 26,055 46,465 180,370 226,835

9,000 11,410 26,055 46,465 255,480 301,945

Dilution in NAV per Share to public investors

Total Contribution (S$)

Effective cost per Share (cents)